Chukyo University Institute of Economics
Discussion Paper Series
March 2024

No. 2306
Opportunity Cost Theory in the Late 19th and Early 20th Centuries:
Argument and Development Leading to the Chicago and LSE Schools
Kazumi NISHIMOTO and Keita TANAKA

Opportunity Cost Theory in the Late 19th and Early 20th Centuries: Argument andDevelopment Leading to the Chicago and LSE Schools
Kazumi NISHIMOTO1 and Keita TANAKA2 *ABSTRACTThe purpose of this study is to examine the early development of opportunity cost in the English-speaking
world during the late 19th and early 20th centuries and draw a pre-history of opportunity cost theory in the
Chicago and LSE schools. In previous studies, the opportunity cost concept was regarded as a subjective
cost derived from Austrian schools. However, the opportunity cost concept did not develop directly fromthe subjectivist theories of the Austrian school but rather underwent a unique transition in the Englishspeaking world. Therefore, until the early 20th century, the opportunity cost debate did not place as much
importance on Buchanan's two types of subjectivism and objectivism as it does today. Davenport andWicksteed considered opportunity cost from both subjectivist and objectivist perspectives and examined
cost not only from the demand side but also from the supply side. It provides a new perspective that the prehistory of opportunity cost of the Chicago and LSE schools should be understood by the dichotomy, which
is not the division between subjectivism and objectivism but demand and supply, or individuals and society.

JEL classification: B12, B13, D46

Keywords: opportunity cost, history of modern economics, the LSE, the Chicago school, H. J.
Davenport, P. H. Wicksteed, J. M. Buchanan* In alphabetical order
1
Department of Economics, Chukyo University, 101-2, Yagotohonmachi, Syowa-ku, Nagoya-shi, Aichi,
Japan, 466-8666 nishimoto@mecl.chukyo-u.ac.jp
2
Department of Policy Management, Shobi University, 1-1-1, Toyodacho, Kawagoe City, Saitama,
Japan, 350-1110 k-tanaka@s.shobi-u.ac.jp
This work was supported by JSPS KAKENHI Grant Number JP23K01323.

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1

Introduction

The purpose of this study is to examine the early development of opportunity cost in the Englishspeaking world in the late 19th and early 20th centuries and draw a pre-history of opportunity costtheory to the Chicago and the LSE schools.
The opportunity cost is derived from the Austrian school and is introduced into both Chicago andthe LSE. J. M. Buchanan’s Cost and Choice ([1969]1999) reviewed the development, until the middleof the 20th century, of opportunity cost in the English-speaking world from this viewpoint, pointing out
two types of cost concepts: (1) a quantitative cost view based on objectivism, which has continued
from classical economics, and (2) a subjective cost view based on choice theory. He believed theformer view of costs succeeded to the Chicago school's “neoclassical paradigm,” and the latter as a
subjective theory of value that has its origins in the Austrian school. According to Buchanan, two typesof opportunity cost were identified in Chicago by F. H. Knight ([1934a]1965, 1935), who discovered
the idea of subjective cost used by P. H. Wicksteed through L. Robbins.
Recently, Boettke and Rosolino (2020) extended Buchanan's argument by pointing out that theopportunity cost concept developed in the exchange relationship between the LSE and the Chicago
schools in the mid-20th century was connected to Buchanan's Virginia school. Boettke and Rosolino(2020) demonstrate the Wicksted-Knight-Buchanan line to introduce the idea of opportunity cost to
Chicago, depicting the later as joining that of R. H. Coase of the LSE to Chicago. It also suggests thatWicksteed, representing the view of cost as a subjectivist theory of choice, is behind the opportunity
cost concept of the Virginia school today.
The premise of these studies is that the opportunity cost concept is subjective and homogeneousamong Austrian school. However, interpretations of opportunity cost in the English-speaking world in
the late 19th and early 20th centuries varied, and Buchanan's two categories were not always clear to
economists of the time.1
This paper describes various evaluations of the initial opportunity cost in the English-speaking
world. It argues that its development is, in contrast to the Austrian school, not so much subjective or
objective, but rather compatible with these, and, in part, close to the classical school where opportunity
cost affects supply in price determination. This context was generated inside the discussion ofopportunity cost since the 1890s, when opportunity cost theory was first debated.

This is also true of the early Austrian School. Subjectivism and objectivism were theoretically notclear in the early Austrian school, and they were first clearly separated by Robbins and the late
Austrian school, including v. L. v. Mises and F. v. Hayek (to see understanding of Buchanan’s
conception, see Buchanan [1969]1999, p. 12, 26). However, the early Austrians’ cost concept was
still subjectivism, and they kept distance from the classical school; though this paper shows that
there was different context to the Austrians in the English-speaking world when opportunity cost was
discussed.
12This differs from Buchanan’s previous description. He regarded Davenport and Wicksteed as theearliest contributors to the development of subjective cost and classified both Davenport andWicksteed into his (2) category. However, this study shows that Davenport and Wicksteed’s
opportunity cost is not classified in Buchanan’s (2) category.
The remainder of this paper is organized as follows. Section 2 introduces Austrian opportunity costand various evaluations at the beginning of the opportunity cost concept. Section 3 evaluates
economists’ perspective on harmonizing classical and Austrian schools in discussing opportunity cost.
Section 4 introduces Wicksteed’s opportunity cost concept from 1910 and his review of Davenport.
Finally, we provide a summary in section 5.

2

Various Evaluations of Opportunity Cost in the U. S. in the 1890s

The introduction of opportunity cost in the English-speaking world began with the Austrian school costtheory. This existed in von Wieser's Natural Value of 1888 and Böhm-Bawerk's The Positive Theory of
Capital of 1889. These works were first published in German; naturally, there was no literature
available in English immediately after their publication. Their works were translated into English in1890 (Capital and Interest), in 1891 (The Positive Theory of Capital), and 1893 (Natural Value).
Boner first introduced the Austrian school in 1889 in The Quarterly Journal of Economics; after that,
the Austrian ideas became known in the English-speaking world.
After Boner, American economist S. M. Macvane at Harvard University published an article in the
Quarterly Journal of Economics in 1890. In this paper, Macvane examined the Austrian school theory
from a classical perspective. He questioned the Austrian school's assertion that marginal utility
functions as a regulator of exchange values. Macvane's paper was followed by a reply from Wieser in
The Annals of the American Academy of Political and Social Science and Macvane responded with arebuttal in The Quarterly Journal of Economics in 1893.
This sequence of events led to a discussion of the concept of cost based on subjectivism in the
United States. In his 1893 reply to Wieser, Macvane attacked the Austrian school’s cost theory. In
1893, S. N. Patten at the University of Pennsylvania published an article titled “Cost and Expense” in
The Annuals of the American Academy of Political and Social Science. In 1894, D. I. Green of Johns
Hopkins University published “Pain-Cost and Opportunity-Cost” in The Quarterly Journal of
Economics. The same year, Davenport of the University of South Dakota published “Formula ofsacrifice” in The Journal of Political Economy.
Although triggered by the Austrian school, these studies on subjectivist costs are not based on aunified view. Macvane and Green (1894) clearly considered the Austrian school, while Patten (1893)
and Davenport (1894) did not. Macvane and Green also differed in their evaluations of the classical3and Austrian schools, which they used in their side-by-side discussions of the cost theory of theclassical and Austrian schools.
This “disagreement” occurred not because the opportunity cost theory of the “newcomer” Austrianschool was not yet well understood, but rather because of a different understanding and evaluation of
the classical school's view of cost that already existed as a basis for discussion. When discussing
opportunity cost, the anchor for American economists was the cost view of classical economics. Theyinterpreted the classical cost view to evaluate “the new” concept of opportunity cost, and discussed it
based on their interpretations. Consequently, the debate over opportunity cost in the United States has
been contentious.
Macvane (1893), who introduced a series of discussions on opportunity cost in America,
positioned the classical school's view of cost as an objective. He stated:

We have concerned ourselves only with the question, what determines the quantity of otherproducts each man can obtain in exchange for his own? This has been for us the problem of value,
and in the solution of it we have rested on the principle of cost. Viewing each man's production of
one thing as a means whereby to obtain the many things, and assuming the necessary freedom andintelligence on the part of producers, we have argued that the action of intelligent self-interest
must ordinarily keep the terms of exchange in rough accordance with the rule of equal cost forequal cost; that our brick-maker may ordinarily hope to get for his day's product in bricks ageneral assortment of other things that have cost, in the lump, about the same outlay of labor andwaiting. That thesis seems to us to be in accordance with justice, to be a reasonable conclusionfrom undoubted premises, and finally to be substantially borne out by daily observation inpractical life. (Macvane 1893, p. 275)

Macvane believed that the nature of cost should be understood as labor and waiting time, which
can be objectively measured as quantities. This orthodox view of cost is associated with Macvane's
criticism of the Austrian school of thought. From this perspective, it would be natural for him to object
that Wieser’s opportunity cost model does not discuss costs in the first place.
In defining the term cost, Patten (1893) developed a view similar to Macvane’s.

Cost is measured by the disagreeable exertion necessary for production. It is the sum of all those
painful acts which reduce the vitality of the producer, and hence demand certain compensation orrelaxation to replace the producer in the condition he was before the act of production. (Patten
1893, p. 703)

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Patten also places his own concept of cost in common with that of the classical school, in whichcost is measured by labor. This perspective is similar to that of Macvane (1893).
However, unlike Macvane (1893), Patten himself does not go on for the discussion to criticize theAustrian school’s view of cost, but rather develops his own theory. Patten seems to believe that thisclassical view of cost as labor is inadequate in an advanced capitalist society.

In an advance society, however, an act of production demands of the producer more than mere
painful exertion. It also demand sacrifice. Sacrifices differ from costs in that the former relate toacts of consumption while the latter relate to acts of production. Efficient production involves not
only cost, but also changes, delays or losses in consumption, which together make up thesacrifices of production. (Patten 1983, p. 703)

Patten emphasizes that the idea of sacrifice (in his words, “expense”) is an important factor inproduction. It is a feature in advanced societies that differs from primitive societies.
Although this appears to be common with the idea of Austrian cost, in this study, Patten himself
did not connect his viewpoint to the Austrian school’s subjective view of cost. Patten explores new
perspectives not previously discussed by the classics, for example, the choice of time allocation
between leisure and labor (Patten 1893. p. 703). Furthermore, his argument differs from the classicalschool, even though he places the definition of cost in the classical school. For instance, Smith saysthat in pre-capitalist societies, prices are determined by the labor invested, while in capitalist societies,
owing to the development of economic stages, profit and land rent, in addition to labor, make up theprice. Unlike Smith, the changes, delays, and losses in consumption that Patten refers to here are notcaused by the development of economic stages but rather by the allocation of time at the same
economic stage. Patten’s argument that both "cost and sacrifice" are important to production offers us
another unique perspective, different from both the Austrian school of opportunity cost theory and theclassical school. Thus, Macvane and Patten, although they had different arguments, shared acommonality in that they both adopted the idea of cost, which is objectively measured as in theclassical school.
However, Green denied this view of classical cost theory and took a subjective interpretation when
discussing the classical cost view. In response to the 1893 Macvane and Patten papers, and rejected theclassical theory of value. He stated:

Not only does Professor Macvane seem to be in error when he considers “the cost that comeshome to the producers in the form of tired muscles and tedious waiting” as the criterion of
exchange value, but he also appears to me wrong in at- tributing such a doctrine to the classicaltheory of value. (Green 1894, p. 220)5

Green then points out that the classical view of cost has a subjective as well as an objective aspect;
he insisted that A. Smith referred to the subjective cost incurred by the worker in giving up “his ease,
his liberty, his happiness”(Green 1894, p. 220, see also Smith [1776]1976, p. 50).2 Green further
points out, with reference to Smith, D. Ricardo, and J. S. Mill, that the labor described by the classics
implies not only labor as suffering but also efficacy (Green 1894, p. 221, see also Ricardo [1911]1960,
pp. 11-12; J. S. Mill [1948]1915, pp. 458-459). Green goes on to insist that it is so practically difficult
to find an accurate measure of the efficacy and suffering of labor that it is naturally assigned for both
efficacy and suffering. Based on these classical interpretations, Green believes that the idea ofopportunity cost, as a cost concept with an aspect of subjectivity, is an appropriate understanding of thecost of production in the broadest sense.

…when we once recognize the sacrifice of opportunity as an element in the cost of production,
we find that the principle has a very wide application. Not only time and strength, butcommodities, capital, and many of the free gifts of nature, such as mineral deposits and the use offruitful land, must be economized if we are to act reasonably. Before devoting any one of theseresources to a particular use, we must consider the other uses from which it will be withheld by
our action; and the most advantageous opportunity which we deliberately forego constitutes asacrifice for which we must expect at least an equivalent return. The sacrifice of waiting, whichsome writers take so much trouble to establish as a justification of interest, is almost entirely ofthis kind. (Green 1894, p. 224)

Thus, Green's understanding of classical cost theory in its broadest sense attempts to encompass
the classical view of cost with the concept of opportunity cost. In the above discussion, we can observe
considerable differences in our understanding of the classical view of cost.

3

The “Objective and Subjective” Classics and Views Compatible with the Austrian School

regarding Opportunity Cost

In the context of 1890s opportunity cost theory, the classical cost view was interpreted in a wide
variety of ways, ranging from subjectivism to objectivism. Despite the different evaluations of the cost

There is a note by editors for these words in the Glasgow edition of Smith’s Wealth of Nations,which cited statements from Hutcheson and Hume. Hume noted characteristics of labor anddisutility, and he also mentioned that labor frequently brings “enjoyment,” as follows: “In ‘Of
Refinement in the Arts’, however, he made an additional point in stating that men frequently ‘enjoy,
as their reward, the occupation itself, as well as those pleasures which are the fruit of their labour’”(Smith [1776]1976, p. 50; Hume [1752]1777, RA3, Mil 269-70).
2

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view between opportunity and classical costs, there was a compatible view of the relationship between
them. Green believed that a subjective interpretation of the classical cost view could be reconciled withthe opportunity cost concept; Patten believed that by adding his own concept of sacrifice to theclassical cost view, he could discuss production costs that could not be grasped by classical production
costs alone. Even Macvane, who criticized the Austrian school’s subjectivist view of costs, believedthat the Austrian school’s view and the classical view of costs were complementary and not completely
opposed.
Macvane states that marginal utility does not determine value but affects costs by setting
quantitative limits on demand.

It goes to supplement and enrich economic theory at the point of the relations between demandand production. It gives us, in the first place, a new and more fruitful conception of the limitation
imposed on production from the side of demand, the conception of a marginal utility forcommodities in the mass, at the point at which all producers decide that rest is preferable toadditional commodities of any sort. (Macvane 1893, pp. 281-282)

Marginal utility affects costs by adjusting demand. The cost, so adjusted, determines the value of acommodity. Macvane even states that he thinks it is impossible “to see anything in the principle ofmarginal utility that is not entirely in harmony with the old doctrine of cost as the regulator of value."
Although interpreted and evaluated differently by different theorists, opportunity and classical costs
were thought to be compatible, rather than in a counterplan relationship in which one was chosen andthe other was excluded.
Davenport partly shared the view that opportunity cost and classical cost theory are compatible inprice determination.3 While sharing much in common with the Austrian school in his 1894 paper,
Davenport did not completely reject the classical school’s emphasis on supply factors, or the conceptof production costs in price determination. He believed that “the sacrifice formula allows, if notenforces, a recounting of the theory of the cost of production,” and he proposed recounting the cost of
production in terms of sacrifice, stating that “from the individual point of view, the formula for the costof production is not exhaustive” (Davenport 1894, p. 568).

Davenport's opportunity cost theory has generally been discussed in the context of the Austrian
School. Therefore, this perspective may seem opposing. Davenport probably read the Austrian
School theory before writing his first paper (Gunning 1998, p. 105). He also probably wrote his first
paper without having read Green's paper. However, as discussed here, he incorporated debates in thedevelopment of the English-speaking opportunity cost theories.
37

In his 1902 paper, Davenport reflected on discussions that developed in the 1890s. Davenport(1902) included an acknowledgment of Green, explaining how he came to read Green (1894) during
the editing stage of his paper:

By the kindness of the editor my attention has been called to an article by David I. Green–“Pain
Cost and Opportunity Cost”–in the January, 1894, number of this Journal. In many respects Mr.
Green's analysis of "opportunity cost" anticipates the positions taken in the last two or three pagesof this article, and, needless to say, covers the ground much more adequately. His treatment is
especially illuminating for the purposes of this discussion. (Davenport 1902, p. 384)

Because Green (1894) mentioned Patten and Macvane’s paper, Davenport probably read it before
completing his 1902 paper. This is discussed in the final section. Davenport discussed how the cost of
production affects market value dynamically and demonstrated the two factors that Patten explained in
his 1894 paper on how costs change prices by changing the quantity supplied.

Diminishing costs are the characteristics of a progressive social economy: the proximate causes ofmodifications in value are, then, to be found in those changes of productive processes which, bydiminishing the cost, expand supply. A better process implies simply that per unit of product it is
now necessary to divert a smaller total of productive forces from other lines of production. …It
remains to discuss those limitations of supply due, not to choice between different productive
occupations, but to choice of leisure or inaction as against any sort of production…. (Davenport
1902, pp. 380–381)

These examples were paraphrased in Patten’s (1894) arguments. Davenport concluded thefollowing.

The acceptance of sacrifice as at the heart of value concept does not rest upon the cost of
production explanation of value, still less upon the labor-cost theory. It does, however, include
these wherever they rightly apply, –as, for example, in the case where the producer hesitates
between production and leisure. (Davenport 1902, p. 383)

This supply-side factor would lead to Davenport's 1911 paper, “Cost and its significance,” and hisemphasis on the role of entrepreneurs in cost theory in chapter 13 of The Economic Enterprise (1913).
Later, Davenport argued that both classical and opportunity cost influence price determination,
stating the following about price determination in The Economic Enterprise (1913).

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Is price more dependent upon utility than upon cost–upon demand forces than upon supply
forces–upon marginal utility than upon marginal cost; or is it equally dependent upon both? It
may be truly said that the dependence is equally upon both, that price is the equating point
between the two sides of the price equation…In the main, then, the primacy is with the demandside, although this is not to deny the importance–the secondary importance–of supply. (Davenport
1913, p. 71)

Thus, Davenport believed in subjectivist costs and maintained the cost of production as an objective
quantity that played an important role in price determination. His approach is proportional to theclassical school’s view that supply affects price, while supporting subjectivist opportunity cost.

4 Subjectivism and Objectivism in Wicksteed’s Opportunity Cost Theory

The debate has occurred in the United States since the 1890s, although it has sometimes taken place todiscover opportunity cost. Until 1910, Wicksteed lightened and insisted on the importance of subjective
cost in his main book, The Common Sense of Political Economy (Wicksteed [1910]1933; hereafter, The
Common Sense). Wicksteed probably knew the Austrian school’s opportunity cost theory before 1910
because he included the name Böhm-Bawerk in a list of his lectures in 1892.4 Wicksteed was also
influenced by Jevons. Thus, the development of opportunity cost theory in the U. K. was more Austrian
than in the American context, as discussed in relation to the classical school. Thus, Buchanan([1969]1999) points to Wicksteed as the origin of the subjective opportunity cost theory that succeeded
Robbins and the LSE school.
However, unlike Robbins(1928), Wicksteed was not a radical subjectivist.5 In the following section,
we discuss Wicksteed's views on costs regarding demand and supply and subjectivism and objectivism.
Wicksteed expressed opportunity cost as “cost of production,” which is confusing to the classicaldenotation. In The Common Sense, cost of production means “another name for the marginal significanceof certain other things, which have been forgone for its sake” (Wicksteed [1910]1933, p. 380). This
expression seems close to today's concept of opportunity cost, such as calling the marginal utility given
up for a choice an opportunity cost. However, Wicksteed includes a discussion of the production costs
faced by producers as well as the choices made by consumers.

This is confirmed by the contents of Wicksteed's lecture syllabus Wicksteed ([1910]1933, p. 841).
Although he was not a faculty member at any particular university, he did give several lectures in the
University Extension system.
5
Robbins (1928) organizes the development of opportunity cost from a subjectivist viewpoint andcriticizes the objective view of opportunity cost discussed in Knight (1928). In this article, Robbins
approximates his subjectivist viewpoint to Wicksteed.
49

Wicksteed provides the following example: If a chair producer realizes that it is more profitable toproduce tables than chairs, he diverts the common factor of production wood to the production of tables
instead of chairs. At this point, chair production decreases and table production increases, and this change
continues until table prices fall. The rise in chair prices is balanced by the energy and resources requiredfor production. We hereby confirm Wicksteed’s concept of opportunity cost that the costs incurred in the
production process are the value of alternative products (Wicksteed [1910]1933, pp. 378-380).
How are production costs determined? In the above example, the value of the chair is determined by
the choices available to the producer; for instance, the relative importance of the other products that a
producer can produce in place of the chair. Wicksteed presupposed that this producer's choice is in arealistically feasible production situation, and the possibilities of what can practically be produced
instead of a chair are narrowed as the choice becomes more specialized or closer to concrete results.
Furthermore, the predictions and scales of producers comparing options are relevant. Each time adecision is made regarding which path to take, certain possibilities become narrower, limiting the range
of options that can be made in place of a chair. The costs incurred in making a certain product at any
stage are then determined by the value of the other choices and their marginal significance as the otherproduction possibilities are abandoned. As he stated, “We shall have to abandon the favourite
diagrammatic method by which prices, whether market or normal, are indicated by the intersection of acurve of demand and a curve of supply, or a curve of demand and a curve of cost of production,”(Wicksteed [1910]1933, p. 8). The costs of production incurred are related to the valuation of the
producer’s choice on the demand side, not only on the supply side.
Thus, Wicksteed rejected the classical view of cost, unlike in the U.S., where continuity with theclassical school was emphasized. However, he left a margin for the supply to participate in the pricedetermination. Wicksteed noted that while cost as an actual expense does not determine price, it may
determine the lower limit of the price. He stated:

So the “cost of production” of any one thing is only another name for the marginal significance of
certain other things, which have been forgone for its sake. The marginal significance of things thatcan no longer be produced instead of it has no effect on its present price; the marginal significanceof things that can still be produced instead of it will determine the lower limit of the price at which
it will be made to order, and the extent to which manufacturers will continue to make it at all.
(Wicksteed [1910]1933, p. 380.)

Also,…in every case in which the cost of production has not yet been incurred, the manufacturer makes
an estimate of the alternatives still open to him before determining whether, and in what quantities,

10the commodity shall be produced; and the stream of supply thus determined on fixes the marginalvalue and the price. The only sense, then, in which cost of production can affect the value of one
thing is the sense in which it is itself the value of another thing. Thus what has been variously termed
utility, ophelemity, or desiredness, is the sole and ultimate determinant of all exchange values.
(Wicksteed [1910]1933, p. 391)

What is the distinction between the subjective and objective? Wicksteed did not make a strict
distinction between the subjective and the objective. In The Common Sense, he believed that the cost of
production is “the estimated value, measured in gold, of all the alternatives that have been sacrificed”(Wicksteed [1910]1933, p. 385). The point of this statement was that he believed that the cost of
production could be measured using gold. Why can subjective values be measured by using objective
quantities? According to Wicksteed, there are two types of preference scales: “the individual scale,”which is based on subjective values, and “the collective scale,”6 which is based on objective quantities
and values. The individual scale is subjective and includes all aspects of economic decision-making. In
contrast, the collective scale can be objective, that is, “made up of individuals.” (Wicksteed [1910]1933,
p. 393) As an exchange society progresses, the collective scale emerges. He states:

We may call the whole scale of the individual, on which are entered all things that he estimates andconsiders in making his selections and determinations, the vital scale or the psychological scale; andthe collective scale on which only those things which enter into the circle of exchange are registered,the objective scale. (Wicksteed [1910] 1933, p. 147)

As Wicksteed insisted, gold can be used as a common measure of value and as an objective measureof costs in the community. From this point of view, Wicksteed developed an opportunity cost that is not
only subjective but also an objective social existence.7
Interestingly, Wicksteed appears to have viewed his own opportunity cost theory as being compatible
with Davenport's cost theory. Wicksteed (1914) found similarities between Davenport's arguments on
the relationship between production costs and demand and his own perspective. He stated:

Professor Davenport is to be congratulated on the precision and effectiveness with which he has
demonstrated the ruling fact that the usual cross curves of supply and demand, with their point of

6

Wicksteed also describes it as communal scale (Wicksteed [1910]1933, p. 144).

Wicksteed did not consider that the collective scale, which is the aggregate of the individual
scales, would always emerges. The reason is that not all individual choices are exchangeable,
whereas the collective scale emerges inside “the circle of exchange,” meaning exchange in themarketplace.
7

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intersection determining the price, rest on a superficial and misleading analysis.…A precisely
analogous line of investigation stubs out the very roots of the “cost of production” theory of valueby showing that the “cost” of any factor of production is simply its estimated significance in otherbranches of production, so that (like the reserve prices of the holders of a commodity) it should beincorporated bodily in the demand curve. (Wicksteed 1914, pp. 823-824）

Wicksteed sought to incorporate the cost of production into the demand side of the choice process. In
the process of determining price, he pointed out that the cost of production as an objective quantity is an
aspect of price formation.8 He found the common ground between subjectivism and objectivism in thatboth approaches can be compatibly established in the debate over the cost of production. Thus, Wicksteed
related the subjective individual to society, and he considered society to be intersubjective.

5 Concluding Remarks

This study shows that the concept of opportunity cost in the early 20th century was not discussed in thecontext of an opposition between subjectivism and objectivism, at least as presupposed by Buchanan (1969)
and Boettke and Rosolino (2020). The debate over opportunity cost in the English-speaking world until theearly 20th century was not consistently argued from the standpoint of either objectivist or subjectivist
positions. Rather, given that opportunity cost is related to both the supply and demand sides of pricedetermination, objectivism and subjectivism developed harmoniously in this context. In this sense, there
was a transitional period until the 1910s during the time of Wicksteed and Davenport.
This suggests that the history of the opportunity cost theory of the Chicago and the LSE schools must
be reviewed. The meeting of the Chicago and the LSE, as we introduced at the beginning of this paper, wasbrought about by Knight (1934a; 1935), and the background of this event is a series of dialogues between
Knight (1921; 1928) and Robbins (1934). They had a clear distinction between subjectivism andobjectivism; Robbins (1934) criticized Knight’s opportunity cost as “opportunity cost as a technicalquantity” based on this perspective and referred to Wicksteed in his subjectivist opportunity cost theory asa counterpart. This led to Knight’s rediscovery of Wicksteed (1934b, 1935). However, this view may havelost sight of the characteristics of the opportunity cost theory during the transitional period.
In fact, Wicksteed, who lived during the transitional period, held both subjective and objective viewsof cost based on the collective scale, and his opportunity cost view was compatible with rather than
opposing them. Robbins adopted and developed a subjectivist opportunity cost in the LSE school; in thatsense, the inheritance relationship between Robbins and Wicksteed is only partial. On the other hand,

Wicksteed pointed out the relationship between “cost of production” and price, but did not believethat “cost of production” determines price (Wicksteed [1910]1933, p. 358).
812Davenport also tried to view subjectivism and objectivism as mixed, rather than opposing one. Davenport's
argument reinterpreted the concept of production cost derived from the classical school from a subjectivist
perspective; although it differs from Wicksteed’s approach, they shared the same position of finding bothsubjective and objective aspects in opportunity cost.
In other words, Buchanan continued the history of the above line and explained opportunity cost theory
by distinguishing between the subjective and objective, but arguments in the transitional period could havebeen made without separation. Rather, the combination was the actual way in which opportunity cost theory
was developed as a pre-history in the English-speaking world.
This also calls into question the portrayal of history in terms of the oppositional axes of subjectivism
and objectivism. The oppositional viewpoint of subjectivism and objectivism shown here was a newconcept that emerged after the marginal revolution. Therefore, it is impossible to distinguish between
subjectivism and objectivism by using traditional classical theories. Until the beginning of the 20th century,
the period covered by this study, such a distinction has not yet been taken for granted.
For example, Wicksteed related a subjective individual scale to an objective collective scale. The
collective scale acts as an intersubjective social consensus. This appears to be a different approach to thatof the Austrian school, which begins with strict methodological individualism. However, it may have beennatural for him to think of the individual and society as linked. The same can be said for Davenport's pricetheory, which is determined from both the demand and supply sides, in which the objective quantity ofsupply affects the subjective demand.
It is necessary to pay attention to the fact that the traditional dichotomy (for example, supply anddemand, and individual and society) was taken for granted and accepted before the division between
subjectivism and objectivism was not presupposed. This may have been one of the factors that led to thedevelopment of the opportunity cost theory in different ways in the Austrian school. More research should
be conducted to examine the actual history of opportunity cost theory and clarify its connection to the later
history of the Chicago and LSE schools.

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