This book explores the neglected contribution of the American and English ¿psychological¿ school to economic theory, especially to the development and refinement of the Austrian school of economics. It argues that Frank Knight, Frank Fetter, Herbert Davenport, Philip Wicksteed and J.B. Clark among others improved on the original Austrian theory by Menger and Bohm-Bawerk by providing a coherent subjectivist foundation for the theories of production and distribution. They succeeded where economic theory before them failed ¿ to develop the theories of interest, profit, wages and rents based solely on the principles of subjective value and marginal utility, eschewing the last remnants of the old cost of