The Genius
of Carl Menger
By F. Hayek
The history
of economics is full of tales of forgotten forerunners, men whose work had no
effect and was only rediscovered after their main ideas had been made popular
by others, of remarkable coincidences of simultaneous discoveries, and of the
peculiar fate of individual books. But there must be few instances, in
economics or any other branch of knowledge, where the works of an author who
revolutionised the body of an already well-developed science and who has been generally
recognised to have done so, have remained so little known as those of Carl
Menger. It is difficult to think of a parallel case where a work such as the Grundsätze has
exercised a lasting and persistent influence but has yet, as a result of purely
accidental circumstances, had so extremely restricted a circulation.
There can
be no doubt among competent historians that if, during the last sixty years,
the Austrian School has occupied an almost unique position in the development
of economic science, this is entirely due to the foundations laid by this one
man. The reputation of the School in the outside world and the development of
its system at important points were due to the efforts of his brilliant
followers, Eugen von Böhm-Bawerk and Friedrich von Wieser. But it is not unduly
to detract from the merits of these writers to say that its fundamental ideas
belong fully and wholly to Carl Menger. If he had not found these principles he
might have remained comparatively unknown, might even have shared the fate of
the many brilliant men who anticipated him and were forgotten, and almost
certainly would for a long time have remained little known outside the
countries of the German tongue. But what is common to the members of the
Austrian School, what constitutes their peculiarity and provided the
foundations for their later contributions is their acceptance of the teaching
of Carl Menger.
The
independent and practically simultaneous discovery of the principle of marginal
utility by William Stanley Jevons, Carl Menger, and Léon Walras is too well
known to require retelling. The year 1871, in which both Jevons' Theory
of Political Economy and Menger's Grundsätze appeared,
is now generally and with justice regarded as the beginning of the modern
period in the development of economics. Jevons had outlined his fundamental
ideas nine years earlier in a lecture (published in 1866) which, however,
attracted little attention, and Walras began to publish his contribution only
in 1874, but the complete independence of the work of the three founders is
quite certain. And indeed, although their central positions, the point in their
system to which they and their contemporaries naturally attached the greatest
importance, are the same, their work is so clearly distinct in general
character and background that the most interesting problem is really how so
different routes should have led to such similar results.
To
understand the intellectual background of the work of Carl Menger, a few words
on the general position of economics at that time are required. Although the
quarter of a century between about 1848, the date of J.S. Mill's Principles,
and the emergence of the new school saw in many ways the greatest triumphs of
the classical political economy in the applied fields, its foundations,
particularly its theory of value, had become more and more discredited. Perhaps
the systematic exposition in J.S. Mill's Principles itself, in
spite or because of his complacent satisfaction about the perfected state of
the theory of value, together with his later retractions on other essential
points of the doctrine, did as much as anything else to show the deficiencies
of the classical system. In any case, critical attacks and attempts at
reconstruction multiplied in most countries.
"It is
somewhat difficult to believe now that Menger was the first to base the
distinction between free and economic goods on the idea of scarcity."
The
doctrines of the classical school were probably too much discredited to provide
a possible basis of reconstruction for those who were still interested in
problems of theory. But there were elements in the writings of the German
economists of the first half of the century which contained the germs for a
possible new development.[2] One of the reasons why
the classical doctrines had never firmly established themselves in Germany was
that German economists had always remained conscious of certain contradictions
inherent in any cost or labor theory of value. Owing, perhaps, partly to the influence
of Condillac and other French and Italian authors of the eighteenth century a
tradition had been kept alive which refused to separate value entirely from
utility. From the early years of the century into the 'fifties and 'sixties a
succession of writers, of whom Hermann was probably the outstanding and most
influential figure (the wholly successful Gossen remaining unnoticed), tried to
combine the ideas of utility and scarcity into an explanation of value, often
coming very near to the solution provided by Menger. It is to these
speculations, which to the more practical minds of the contemporary English
economists must have appeared useless excursions into philosophy, that Menger
owed most. A glance through the extensive footnotes in his Grundsätze,
or the author's index which has been added to the present edition, will show
how extraordinarily wide a knowledge he possessed of these German authors and
also of the French and Italian writers, and how small a role the writers of the
classical English school plays in comparison.
But while
Menger probably surpassed all his fellow-founders of the marginal utility
doctrine in the width of his knowledge of the literature — and only from a
passionate book collector inspired by the example of the encyclopaedic Roscher
could one expect a similar knowledge at the early age the Grundsätze was
written — there are curious gaps in the list of authors to whom he refers which
go far to explain the difference of his approach from that of Jevons and
Walras.[3] Particularly significant
is his apparent ignorance, at the time when he wrote the Grundsätze,
of the work of Cournot, to whom all the other founders of modern economics,
Walras, Marshall, and very possibly Jevons,[4] seem to have been
directly or indirectly indebted. Even more surprising, however, is the fact
that at that time Menger does not seem to have known the work of von Thünen,
which one would have expected him to find particularly congenial. While it can
be said, therefore, that he worked in an atmosphere distinctly favourable to an
analysis on utility lines, he had nothing so definite on which to build a
modern theory of price as his fellows in the same field, all of whom came under
the influence of Cournot, to which must be added, in the case of Walras, that
of Dupuit[5] and, in the case of
Marshall, that of von Thünen.
It is an
interesting speculation to think what direction the development of Menger's
thought would have taken if he had been acquainted with these founders of
mathematical analysis. It is a curious fact that, so far as I am aware, he has
nowhere commented on the value of mathematics as a tool of economic analysis.
There is no reason to assume that he lacked either the technical equipment or
the inclination. On the contrary, his interest in the natural sciences is
beyond doubt, and a strong bias in favour of their methods is evident
throughout his work. And the fact that his brothers, particularly Anton, are
known to have been intensely interested in mathematics, and that his son Karl
became a noted mathematician, may probably be taken as evidence of a definite
mathematical strain in the family. But although he knew later not only the work
of Jevons and Walras, but also that of his compatriots Auspitz and Lieben, he
does not even refer to the mathematical method in any of his writings on methodology.[6] Must we conclude that he
felt rather sceptical about its usefulness?
Among the
influences to which Menger must have been subject during the formative period
of his thought there is a complete absence of influence of Austrian economists,
for the simple reason that, in the earlier part of the nineteenth century in
Austria, there were practically no native economists. At the universities where
Menger studied, political economy was taught as part of the law curriculum,
mostly by economists imported from Germany. And though Menger, like all the
later Austrian economists, proceeded to the degree of Doctor of Law, there is
no reason to believe that he was really stimulated by his teachers in
economics. This, however, leads us to his personal history.
Born on
February 28, 1840, in Neu-Sandec, Galicia, the territory of the present Poland,
the son of a lawyer, he came from an old family of Austrian craftsmen,
musicians, civil servants and army officers, who had, only a generation before,
moved from the German parts of Bohemia to the Eastern provinces. His mother's
father,[7]a Bohemian merchant who had
made a fortune during the Napoleonic wars, bought a large estate in Western
Galicia where Carl Menger spent a great part of his boyhood, and before 1848
still saw the conditions of semi-servitude of the peasants which, in this part
of Austria had persisted longer than in any part of Europe outside Russia. With
his two brothers, Anton, later the well-known writer on law and socialism,
author of the Right to the Whole Produce of Labour, and Carl's
colleague at the faculty of law of the University of Vienna, and Max, in his days
a well-known Austrian parliamentarian and writer on social problems, he went to
the Universities of Vienna (1859–60) and Prague (1860–3). After taking his
doctor's degree at the University of Cracow he devoted himself first to
journalism, writing for papers in Lemberg and later in Vienna, on economic
questions. After a few years he entered the Civil Service in the press
department of the Austrian "Ministerratspräsidium," an office which
had always retained a very special position in the Austrian Civil Service and
attracted many men of great talent.
Wieser
reports that Menger once told him that it was one of his duties to write
surveys of the state of the markets for an official newspaper, the Wiener
Zeitung, and that it was in studying the market reports that he was struck
by the glaring contrast between the traditional theories of price and the facts
which experienced practical men considered as decisive for the determination of
prices. Whether this was really the original cause which led Menger to the study
of the determination of prices or whether, which seems more likely, it only
gave a definite direction to studies which he had been pursuing since he had
left the university, we do not know. There can be little doubt, however, that
during the years intervening between the date when he left the university and
the publication of the Grundsätze he must have worked
intensely on these problems, delaying publication until his system was fully
worked out in his mind.[8]
He is said
to have once remarked that he wrote the Grundsätze in a state
of morbid excitement. This can hardly mean that this book was the product of a
sudden inspiration, planned and written in great haste. Few books can have been
more carefully planned; rarely has the first exposition of an idea been more
painstakingly developed and followed up in all its ramifications. The slender
volume which appeared early in 1871 was intended as a first, introductory part
of a comprehensive treatise. It dealt with the fundamental questions, on which
he disagreed with accepted opinion, with the exhaustiveness necessary to
satisfy the author that he was building on absolutely firm ground. The problems
treated in this "First, General Part," as it is described on the
title page, were the general conditions which led to economic activity, value
exchange, price, and money. From manuscript notes communicated by his son more
than fifty years later, in the introduction to the second edition, we know that
the second part was to treat "interest, wages, rent, income, credit, and
paper money," a third "applied" part the theory of production
and commerce, while a fourth part was to discuss criticism of the present
economic system and proposals for economic reform.
His main
aim, as he says in the preface, was a uniform theory of price which would
explain all price phenomena and in particular also interest, wages, and rent by
one leading idea. But more than half of the volume is devoted to matters which
only prepare the way for that main task — to the concept which gave the new
school its special character, i.e. value in its subjective,
personal sense. And even this is not reached before a thorough examination of
the main concepts with which economic analysis has to work.
The
influence of the earlier German writers with their predilection for somewhat
pedantic classifications and long-winded definitions of concepts is here
clearly noticeable. But in Menger's hands the time-honoured "fundamental
concepts" of the traditional German textbook assume new life. Instead of a
dry enumeration and definition they become the powerful instrument of an
analysis in which every step seems to result with inevitable necessity from the
preceding one. And though Menger's exposition still lacks many of the more
impressive phrases and elegant formulations of the writings of Böhm-Bawerk and
Wieser, it is in substance hardly inferior and in many respects definitely
superior to these later works.
It is not
the purpose of the present introduction to give a connected outline of Menger's
argument. But there are certain less known, somewhat surprising, aspects of his
treatment which deserve special mention. The careful initial investigation of
the causal relationship between human needs and the means for their
satisfaction, which within the first few pages leads him to the now celebrated
distinction between goods of the first, second, third and higher orders, and
the now equally familiar concept of complementarity between different goods, is
typical of the particular attention which, the widespread impression to the
contrary notwithstanding, the Austrian School has always given to the technical
structure of production — an attention which finds its clearest systematic
expression in the elaborate "vorwerttheoretischer Teil" which
precedes the discussion of the theory of value in Wieser's late work, the Theory
of Social Economy, 1914.
"Tall,
with a wealth of hair and full beard, in his prime Menger must have been a man
of extraordinarily impressive appearance."
Even more
remarkable is the prominent role which the element of time plays from the very
beginning. There is a very general impression that the earlier representatives
of modern economics were inclined to neglect this factor. In so far as the
originators of the mathematical exposition of modern equilibrium theory are
concerned, this impression is probably justified. Not so with Menger. To him,
economic activity is essentially planning for the future, and his discussion of
the period, or rather different periods, to which human forethought extends as
regards different wants has a definitely modern ring.
It is
somewhat difficult to believe now that Menger was the first to base the
distinction between free and economic goods on the idea of scarcity. But, as he
himself says, while the very concept was not known in the English literature,
the German authors who had used it before him, and particularly Hermann, had
all been trying to base the distinction on the presence or absence of cost in
the sense of effort. But, very characteristically, while all of Menger's
analysis is grounded on the idea of scarcity, this simple term is nowhere used.
"Insufficient quantity" or "das ökonomische
Mengenverhältnis" are the very exact but somewhat cumbersome expressions
which he uses instead.
It is
characteristic of his work as a whole that he attaches more importance to a
careful description of a phenomenon than to giving it a short and fitting name.
This frequently prevents his exposition from being as effective as might have
been wished. But it also protects him against a certain one-sidedness and a
tendency towards oversimplification to which a brief formula so easily leads.
The classic instance of this is, of course, the fact that Menger did not
originate — nor, so far as I know, ever use — the term marginal utility
introduced by Wieser, but always explained value by the somewhat clumsy but
precise phrase, "the importance which concrete goods, or quantities of
goods, receive for us from the fact that we are conscious of being dependent on
our disposal over them for the satisfaction of our wants," and describes
the magnitude of this value as equal to the importance which attached to the
least important satisfaction which is secured by a single unit of the available
quantity of the commodity.
Another,
perhaps less important but not insignificant instance of Menger's refusal to
condense explanations in a single formula, occurs even earlier in the
discussion of the decreasing intensity of individual wants with increasing
satisfaction. This physiological fact, which later under the name of
"Gossen's law of the satisfaction of wants" was to assume a somewhat
disproportionate position in the exposition of the theory of value, and was
even hailed by Wieser as Menger's main discovery, takes in Menger's system the
more appropriate minor position as one of the factors which enable us to
arrange the different individual sensations of want in order of their
importance.
On yet
another and a more interesting point in connection with the pure theory of
subjective value Menger's views are remarkably modern. Although he speaks
occasionally of value as measurable, his exposition makes it quite clear that
by this he means no more than that the value of any one commodity can be expressed
by naming another commodity of equal value. Of the figures which he uses to
represent the scales of utility he says expressly that they are not intended to
represent the absolute, but only the relative importance of the wants, and the
very examples he gives when he first introduces them makes it perfectly clear
that he thinks of them not as cardinal but as ordinal figures.[9]
Next to the
general principle which enabled him to base the explanation of value on utility
the most important of Menger's contributions is probably the application of
this principle to the case where more than one good is required to secure the
satisfaction of any want. It is here that the painstaking analysis of the
causal relationship between goods and wants in the opening chapters and the
concepts of complementarity and of goods or different orders bears its fruits.
Even to-day it is hardly recognised that Menger answered the problem of the
distribution of the utility of a final product between the several co-operating
commodities of a higher order — the problem of imputation as it was later
called by Wieser — by a fairly developed theory of marginal productivity. He
distinguishes clearly between the case where the proportions in which two or
more factors can be used in the production of any commodity are variable and
the case where they are fixed. He answers the problem of imputation in the
first case by saying that such quantities of the different factors as can be
substituted for each other in order to get the same additional quantity of the
product must have equal value, while in the case of fixed proportions he points
out that the value of the different factors is determined by their utility in
alternative uses.
In this
first part of his book, which is devoted to the theory of subjective value, and
compares well with the later exposition by Wieser, Böhm-Bawerk and others,
there is really only one major point on which Menger's exposition leaves a
serious gap. A theory of value can hardly be called complete and will certainly
never be quite convincing if the role that cost of production plays in
determining the relative value of different commodities is not explicitly
explained.
At an early
point of his exposition Menger indicates that he sees the problem and promises
a later answer. But this promise is never fulfilled. It was left to Wieser to
develop what later became known as the principle of Opportunity cost or
"Wieser's Law," i.e. the principle that the other uses
computing for the factors will limit the quantity available for any one line of
production in such a way that the value of the product will not fall below the
sum of the value which all the factors used in its production obtain in these
competing uses.
"[Menger]
tended to conservatism or liberalism of the old type. He was not without
sympathy for the movement for social reform, but social enthusiasm would never
interfere with his cold reasoning."
It has
sometimes been suggested that Menger and his school were so pleased with their
discovery of the principles governing value in the economy of an individual
that they were inclined to apply the same principles in an all too rapid and
over-simplified way to the explanation of price. There may be some justification
for such a suggestion so far as the works of some of Menger's followers,
particularly the younger Wieser, are concerned. But it certainly cannot be said
of Menger's own work. His exposition completely conforms to the rule later so
much emphasized by Böhm-Bawerk, that any satisfactory explanation of price
would have to consist of two distinct and separate stages of which the
explanation of subjective value is only the first. It only provides the basis
for an explanation of the causes and limits of exchanges between two or more
persons Menger's arrangement in the Grundsätze is exemplary in
this respect. The chapter on exchange which precedes that on price makes the
influence of value in the subjective sense on the objective exchange
relationships quite clear without postulating any greater degree of
correspondence than is actually justified by the assumptions.
The chapter
on price itself, with its careful investigation of how the relative valuations
of the individual participants in the exchange themselves will affect the
ratios of exchange in the case of an isolated exchange of two individuals,
under conditions of monopoly and finally under conditions of competition, is
the third and probably the least known of the main contributions of the Grundsätze.
Yet it is only in reading this chapter that one realises the essential unity of
his thought, the clear aim which directs his exposition from the beginning to
this crowning achievement.
On the
final chapters, which deal with the effects of production for a market, the
technical meaning of the term "commodity" (Ware) as
distinguished from the simple "good," their different degrees of
saleability leading up to the introduction and discussion of money, little need
be said at this point. The ideas contained here and the fragmentary remarks on
capital contained in earlier sections are the only sections of this first work
which were developed further in his printed work later on. Although they embody
contributions of lasting influence, it was mainly in their later, more
elaborate exposition that they became known.
The
considerable space devoted here to the discussion of the contents of the Grundsätze is
justified by the outstanding character of this work among Menger's publications
and, indeed, among all the books which have laid the foundations of modern
economics. It is, perhaps, appropriate to quote in this connection the judgment
of the scholar best qualified to assess the relative merits of the different
variants of the modern school, of Knut Wicksell who was the first, and hitherto
the most successful, to combine what is best in the teaching of the different
groups. "His fame," he says, "rests on this work and through it
his name will go down to posterity, for one can safely say that since Ricardo's Principles there
has been no book — not even excepting Jevon's brilliant if rather aphoristic
achievement and Walras's unfortunately difficult work — which has exercised
such great influence on the development of economics as Menger's Grundsätze."[10]
But the
immediate reception of the book can hardly be called encouraging. None of the
reviewers in the German journals seem to have realised the nature of its main
contribution.[11] At home Menger's attempt
to obtain, on the strength of this work, a lectureship (Privatdozentur)
at the University of Vienna succeeded only after some difficulty. He can
scarcely have known that, just before he began his lectures, there had just
left the University two young men who immediately recognised that his work
provided the "Archimedian point," as Wieser called it, by which the
existing systems of economic theory could be lifted out of their hinges.
Böhm-Bawerk and Wieser, his first and most enthusiastic disciples, were never
his direct pupils, and their attempt to popularise Menger's doctrines in the
seminars of the leaders of the older historical school, Knies, Roscher, and
Hildebrand was fruitless.[12] But Menger gradually
succeeded in gaining considerable influence at home. Soon after his promotion
to the rank of professor extraordinarius in 1873 he resigned
from his position in the prime minister's office, to the great surprise of his
chief, Prince Auersperg, who found it difficult to understand that anybody
should want to exchange a position with prospects to satisfy the greatest
ambition for an academic career.[13] But this did not yet
mean Menger's final adieu to the world of affairs, in 1876 he
was appointed one of the tutors to the ill-fated Crown Prince Rudolph, then
eighteen years of age, and accompanied him during the next two years on his
extensive travels through the greater part of Europe, including England,
Scotland, Ireland, France and Germany. After his return he was appointed in
1879 to the chair of political economy in Vienna, and thenceforward he settled
down to the secluded and quiet life of the scholar which was to be so
characteristic of the second half of his long life.
By this
time the doctrines of his first book — apart from a few short reviews of books
he had published nothing in the intervening period — were beginning to attract
wider attention. Rightly or wrongly, with Jevons and Walras it was the
mathematical form rather than the substance of their teaching which appeared to
be their main innovation, and which contributed the chief obstacle to their
acceptance. But there were no obstacles of this sort to an understanding of
Menger's exposition of the new theory of value. During the second decade after
the publication of the book, its influence began to extend with great rapidity.
At the same time Menger began to acquire considerable reputation as a teacher,
and to attract to his lectures and seminars an increasing number of students,
many of whom soon became economists of considerable reputation. In addition to
those already noted, among the early members of his school his contemporaries
Emil Sax and Johann von Komorzynski, and his students Robery Meyer, Robert
Zuckerkandl, Gustav Gross, and — at a somewhat later date — H. von
Schullern-Schrattenhofen, Richard Reisch and Richard Schüller deserve special
mention.
But, while
at home a definite school was forming, in Germany, even more than in other
foreign countries, economists maintained a hostile attitude. It was at this
time that the younger Historical School, under the leadership of Schmoller, was
gaining the greatest influence in that country. The "Volkswirtschaftliche
Kongress," which had preserved the classical tradition, was superseded
by the newly founded "Verein für Sozialpolitik." Indeed the
teaching of economic theory was more and more excluded from German
universities. Thus Menger's work was neglected, not because the German
economists thought that he was wrong, but because they considered the kind of
analysis he attempted was useless.
Under these
conditions it was only natural that Menger should consider it more important to
defend the method he had adopted against the claims of the Historical School to
possess the only appropriate instrument of research, than to continue the work
on the Grundsätze. It is to this situation that his second great
work, theUntersuchungen über die Methode der Socialwissenschaften und der
politischen Oekonomie insbesondere is due. It is well to remember that
in 1875 when Menger started to work on that book, and even in 1883 when it was
published, the rich crop of works by his disciples which definitely established
the position of the school, had not yet begun to mature, and that he might well
have thought that it would be wasted effort to continue while the question of
principle was not decided.
In their
way the Untersuchungen are hardly less an achievement than
the Grundsätze. As a polemic against the claims of the Historical
School to an exclusive right to treat economic problems the book can hardly be
surpassed. Whether the merits of its positive exposition of the nature of
theoretical analysis can be rated as high is, perhaps, not quite certain. If
this were, indeed, its main title to fame there might be something in the
suggestion occasionally heard among Menger's admirers that it was unfortunate
that he was drawn away from his works on the concrete problems of economics.
This is not to mean that what he said on the character of the theoretical or
abstract method is not of very great importance or that it had not very great
influence. Probably it did more than any other single book to make clear the
peculiar character of the scientific method in the social sciences, and it had
a very considerable effect on professional "methodologists" among
German philosophers. But to me, at any rate, its main interest to the economist
in our days seems to lie in the extraordinary insight into the nature of social
phenomena which is revealed incidentally in the discussion of problems
mentioned to exemplify different methods of approach, and in the light shed by his
discussion of the development of the concepts with which the social sciences
have to work. Discussions of somewhat obsolete views, as that of the organic or
perhaps better physiological interpretation of social phenomena, give him an
opportunity for an elucidation of the origin and character of social
institutions which might, with advantage, be read by present-day economists and
sociologists.
Of the
central contentions of the book only one may be singled out for further
comment; his emphasis on the necessity of a strictly individualistic or, as he
generally says, atomistic method of analysis. It has been said of him by one of
his most distinguished followers that "he himself always remained an
individualist in the sense of the classical economists. His successors ceased
to be so." It is doubtful whether this statement is true of more than one
or two instances. But in any case it fails signally to give Menger full credit
for the method he actually employed. What with the classical economists had
remained something of a mixture between an ethical postulate and a
methodological tool, was developed by him systematically in the latter
direction. And if emphasis on the subjective element has been fuller and more
convincing in the writings of the members of the Austrian School than in those
of any other of the founders of modern economics, this is largely due to
Menger's brilliant vindication in this book.
Menger had
failed to arouse the German economists with his first book. But he could not
complain of neglect of his second. The direct attack on what was the only
approved doctrine attracted immediate attention and provoked, among other
hostile reviews, a magisterial rebuke from Gustav Schmoller, the head of the
school — a rebuke couched in a tone more than usually offensive.[14] Menger accepted the
challenge and replied in a passionate pamphlet, Irrthümer des
Historismus in der deutschen Nationalökonomie, written in the form of
letters to a friend, in which he ruthlessly demolished Schmoller's position.
The pamphlet adds little in substance to the Untersuchungen. But it
is the best instance of the extraordinary power and brilliance of expression
which Menger could achieve when he was engaged, not on building up an academic
and complicated argument, but on driving home the points of a straightforward
debate.
"It is
mainly as one of the most successful teachers at the University that Menger is
best remembered by generations of students, and that he has indirectly had
enormous influence on Austrian public life."
The
encounter between the masters was soon imitated by their disciples. A degree of
hostility not often equalled in scientific controversy was created. The
crowning offence from the Austrian point of view was given by Schmoller himself
who, on the appearance of Menger's pamphlet, took the probably unprecedented
step of announcing in his journal that, although he had received a copy of the
book for review, he was unable to review it because he had immediately returned
it to the author, and reprinting the insulting letter with which the returned
copy had been accompanied.
It is
necessary to realise fully the passion which this controversy aroused, and what
the break with the ruling school in Germany meant to Menger and his followers,
if we are to understand why the problem of the adequate methods remained the
dominating concern of most of Menger's later life. Schmoller, indeed, went so
far as to declare publicly that members of the "abstract" school were
unfit to fill a teaching position in a German university, and his influence was
quite sufficient to make this equivalent to a complete exclusion of all
adherents to Menger's doctrines from academic positions in Germany. Even thirty
years after the close of the controversy Germany was still less affected by the
new ideas now triumphant elsewhere, than any other important country in the
world.
In spite of
these attacks, however, in the six years from 1884 to 1889 there appeared in
rapid succession the books which finally established the reputation of the
Austrian School the world over. Böhm-Bawerk, indeed, had already in 1881
published his small but important study on Rechte und Verhältnisse vom
Standpunkt der wirtschaftlichen Güterlehre, but it was only with the
simultaneous publications of the first part of his work on capital, the Geschichte
und Kritik der Kapitalzinstheorien, and of Wieser's Über den
Ursprung und die Hauptgesetze des wirtschaftlichen Wertes in 1884 that
it became apparent how powerful a support to Menger's doctrines had arisen in
this quarter. Of these two works Wieser's was undoubtedly the more important
for the further development of Menger's fundamental ideas, since it contained
the essential application to the cost phenomenon, now known as Wieser's law of
cost, to which reference has already been made. But two years later appeared
Böhm-Bawerk's Grundzüge einer Theorie des wirtschaftlichen Güterwertes[15] which, although it adds
little except by way of casuistic elaboration to the work of Menger and Wieser,
by the great lucidity and force of its argument has probably done more than any
other single work to popularise the marginal utility doctrine. In the year 1884
two of Menger's immediate pupils, V. Mataja and G. Gross, had published their
interesting books on profits, and E. Sax contributed a small but acute study on
the question of method in which he supported Menger in his fundamental attitude
but criticised him on some points of detail.[16] In 1887 Sax made his
main contribution to the development of the Austrian School by the publication
of his Grundlegung der theoretischen Staatswirtschaft, the first
and most exhaustive attempt to apply the marginal utility principle to the
problems of public finance, and in the same year another of Menger's early
students, Robert Meyer, entered the field with his investigation of the
somewhat cognate problem of the nature of income.[17]
But the
richest crop was that of the year 1889. In this year was published
Böhm-Bawerk's Positive Theorie des Kapitalzinses, Wieser's Natürlicher
Wert, Zuckerkandl's Zur Theorie des Preises,
Komorzynski's Wert in der isolierten Wirtschaft, Sax's Neueste
Fortschritte der nationalökonomischen Theorie, and H. von
Schullern-Schrattenhofen's Untersuchungen über Begriff und Wesen der
Grundrente.[18]
Perhaps the
most successful early exposition of the doctrines of the Austrian School in a
foreign language was M. Pantalconi's Pure Economics which
appeared first in the same year.[19] Of other Italian
economists L. Cossa, A. Graziani and G. Mazzola accepted most or all of
Menger's doctrines. Similar success attended these doctrines in Holland where
the acceptance by the great Dutch economist, N.G. Pierson, of the marginal
utility doctrine in his textbook (1884–1889), published later in English under
the title Principles of Economics, had also considerable influence.
In France Ch. Gide, E. Villey, Ch. Secrétan and M. Block spread the new
doctrine, and in the United States S.N. Patten and Professor Richard Ely had
received it with great sympathy. Even the first edition of A. Marshall's Principles,
which appeared in 1890, showed a considerably stronger influence of Menger and
his group than readers of the later editions of that great work would suspect.
And in the next few years Smart and Dr. Bonar, who had already earlier shown
their adherence to the school, widely popularised the work of the Austrian
School in the English-speaking world.[20] But, and this brings us
back to the special position of Menger's work, it was now not so much his
writings as those of his pupils which continuously gained in popularity. The
main reason for this was simply that Menger's Grundsätze had
for some time been out of print and difficult to procure, and that Menger
refused to permit either a reprint or a translation. He hoped to replace it
soon by a much more elaborate "system" of economics and was, in any
case, unwilling to have the work republished without considerable revision. But
other tasks claimed his prior attention, and for years led to a continual
postponement of this plan.
Menger's
direct controversy with Schmoller had come to an abrupt end in 1884. But
the Methodenstreit was carried on by others, and the problems
involved continued to claim his main attention. The next occasion which induced
him to make a public pronouncement on these questions was the publication, in
1885 and 1886, of a new edition of Schönberg's Handbuch der politischen
Oekonomie, a collective work in which a number of German economists, most
of them not convinced adherents to the Historical School, had combined to
produce a systematic exposition of the whole field of political economy. Menger
reviewed the work for a Viennese legal journal in an article which also
appeared as a separate pamphlet under the title Zur Kritik der
politischen Oekonomie (1887).[21] Its second half is
largely devoted to the discussion of the classification of the different
disciplines commonly grouped together under the name of political economy, a
theme which, two years later, he treated more exhaustively in another article
entitled Grundzüge einer Klassifikation der Wirtschaftswissenschaften.[22] In the intervening year,
however, he published one of his two further contributions to the substance —
as distinguished from the methodology — of economic theory, his important
study, Zur Theorie des Kapitals.[23]
It is
pretty certain that we owe this article to the fact that Menger did not quite
agree with the definition of the term capital which was implied in the first,
historical part of Böhm-Bawerk's Capital and Interest. The
discussion is not polemical. Böhm-Bawerk's book is mentioned only to commend
it. But its main aim is clearly to rehabilitate the abstract concept of capital
as the money value of the property devoted to acquisitive purposes against the
Smithian concept of the "produced means of production." His main
argument that the distinction of the historical origin of a commodity is
irrelevant from an economic point of view, as well as his emphasis on the
necessity of clearly distinguishing between the rent obtained from already
existing instruments of production and interest proper, refer to points which,
even to-day, have not yet received quite the attention they deserve.
It was at
about the same time, in 1889, that Menger was almost persuaded by his friends
not to postpone further the publication of a new edition of the Grundsätze.
But although he actually wrote a new preface to that new edition (excerpts from
which have been printed more than thirty years later by his son in the
introduction to the actual second edition), nevertheless publication was again
postponed. Soon after a new set of publications emerged, which absorbed his
main attention and occupied him for the next two years.
Towards the
end of the 'eighties the perennial Austrian currency problem had assumed a form
where a drastic final reform seemed to become both possible and necessary. In
1878 and 1879 the fall of the price of silver had first brought the depreciated
paper currency back to its silver parity and soon afterwards made it necessary
to discontinue the free coinage of silver; since then the Austrian paper money
had gradually appreciated in terms of silver and fluctuated in terms of gold.
The situation during that period — in many respects one of the most interesting
in monetary history — was more and more regarded as unsatisfactory, and as the
financial position of Austria seemed for the first time for a long period
strong enough to promise a period of stability, the Government was generally
expected to take matters in hand. Moreover, the treaty concluded with Hungary
in 1887 actually provided that a commission should immediately be appointed to
discuss the preparatory measures necessary to make the resumption of specie
payments possible. After considerable delay, due to the usual political
difficulties between the two parts of the dual monarchy, the commission, or
rather commissions, one for Austria and one for Hungary, were appointed and met
in March 1892, in Vienna and Budapest respectively.
The
discussions of the Austrian "Währungs-Enquete-Commission," of which
Menger was the most eminent member, are of considerable interest quite apart
from the special historical situation with which they had to deal. As the basis
of their transactions the Austrian Ministry of Finance had prepared with
extraordinary care three voluminous memoranda, which contain probably the most
complete collection available of documentary material for monetary history of
the preceding period which has appeared in any publication.[24] Among the members
besides Menger there were other well-known economists, such as Sax, Lieben and
Mataja, and a number of journalists, bankers and industrialists, such as
Benedikt, Hertzka and Taussig, all of whom had a more than ordinary knowledge
of monetary problems, while Böhm-Bawerk, then in the Ministry of Finance, was
one of the Government representatives and vice-chairman. The task of the
commission was not to prepare a report, but to hear and discuss the views of
its members on a number of questions put to them by the Government.[25] These questions
concerned the basis of the future currency, the retention, in the case of the
adoption of the Gold Standard, of the existing silver and paper circulation,
the ratio of exchange between the existing paper florin and gold, and the
nature of the new unit to be adopted.
Menger's
mastery of the problem, no less than his gift of clear exposition, gave him
immediately a leading position in the commission and his statement attracted
the widest attention. It even achieved what, for an economist, was perhaps the
unique distinction of causing a temporary slump on the stock exchange. His
contribution consisted not so much in his discussion of the general question of
the choice of the standard — here he agreed with practically all the members of
the commission that the adoption of the Gold Standard was the only practical
course — but in his careful discussion on the practical problems of the exact
parity to be chosen and the moment of time to be selected for the transition.
It is mainly for his evaluation of these practical difficulties connected with
any transition to a new standard of currency, and the survey of the different
considerations that have to be taken into account, that his evidence is rightly
celebrated. It has extraordinarily topical interest to-day, where similar
problems have to be faced by almost all countries.[26]
This
evidence, the first of a series of contributions to monetary problems, was the
final and mature product of several years of concentration on these questions.
The results of these were published in rapid succession in the course of the
same year — a year during which there appeared a greater number of publications
from Menger's hand than at any other period of his life. The results of his
investigations into the special problems of Austria appeared as two separate
pamphlets. The first, entitled Beiträge zur Währungsfrage in
Oesterreich-Ungarn, and dealing with the history and the peculiarities of
the Austrian currency problem and the general question of the standard to be
adopted, is a revised reprint of a series of articles which appeared earlier in
the year in Conrad's Jahrbücher under a different title.[27] The second, called Der
Übergang zur Goldwährung. Untersuchungen über die Wertprobleme der
österreichisch-ungarischen Valutareform (Vienna, 1892), treats
essentially the technical problems connected with the adoption of a Gold
Standard, particularly the choice of the appropriate parity and the factors
likely to affect the value of the currency once the transition had been made.
"So
far as its economic section is concerned [Menger's] library must be ranked as
one of the three or four greatest libraries ever formed by a private
collector."
But the
same year also saw the publication of a much more general treatment of the
problems of money which was not directly concerned with the special question of
the day, and which must be ranked as the third and last of Menger's main
contributions to economic theory. This was the article on money in volume iii
of the first edition of the Handwörterbuch der Staatswissenschaften which
was then in the process of publication. It was his preoccupation with the
extensive investigations carried out in connection with the preparation of this
elaborate exposition of the general theory of money, investigations which must
have occupied him for the preceding two or three years, which brought it about
that the beginning of the discussion of the special Austrian problems found
Menger so singularly equipped to deal with them. He had, of course, always been
strongly interested in monetary problems. The last chapter of the Grundsätze and
parts of theUntersuchungen über die Methode contain important
contributions, particularly on the question of the origin of money. It should
also be noted that, among the numerous review articles which Menger used to
write for daily newspapers, particularly in his early years, there are two in
1873 which deal in great detail with J.E. Cairnes'sEssays on the
effects of the gold discoveries: in some respects Menger's later views are
nearly related to those of Cairnes.[28] But while Menger's
earlier contributions, particularly the introduction of the concepts of the
different degrees of "saleability" of commodities as the basis for
the understanding of the functions of money, would have secured him an
honourable position in the history of monetary doctrines, it was only in this
last major publication that he made his main contribution to the central
problem of the value of money. Until the work of Professor Mises twenty years
later, the direct continuation of Menger's work, this article remained the main
contribution of the "Austrian School" to the theory of money. It is
worth while dwelling a little on the nature of this contribution, for it is a
matter on which there is still much misunderstanding. It is often thought that
the Austrian contribution consists only of a somewhat mechanical attempt to
apply the marginal utility principle to the problem of the value of money. But
this is not so. The main Austrian achievement in this field is the consistent
application to the theory of money of the peculiar subjective or
individualistic approach which, indeed, underlies the marginal utility
analysis, but which has a much wider and more universal significance. Such an
achievement springs directly from Menger. His exposition of the meaning of the
different concepts of the value of money, the causes of changes and the
possibility of a measurement of this value, as well as his discussion of the
factors determining the demand for money, all seem to me to represent a most
significant advance beyond the traditional treatment of the quantity theory in
terms of aggregates and averages. And even where, as in the case of his
familiar distinction between the "inner" and the "outer"
value (innerer und äusserer Tauschwert) of money, the actual terms
employed are somewhat misleading — the distinction does not, as would appear
from the terms, refer to different kinds of value but to the different forces
which affect prices — the underlying concept of the problem is extraordinarily
modern.
With the
publications of the year 1892[29] the list of Menger's
major works which appeared during his lifetime comes to an abrupt end. During
the remaining three decades of his life he only published occasional small
articles, a complete list of which will be found in the bibliography of his
writings at the end of the last volume of the present edition of his collected
works. For a few years these publications were still mainly concerned with
money. Of these, his lecture on Das Goldagio und der heutige Stand der
Valutareform (1893), his article on money and coinage in Austria since
1857 in the Oesterreichische Staatswörterbuch (1897), and
particularly the thoroughly revised edition of his article on money in volume
four of the second edition of theHandwörterbuch der Staatswissenschaften (1900),[30] ought to be specially
mentioned. The latter publications are mainly of the character of reviews,
biographical notes or introductions to works published, by his pupils. His last
published article is an obituary of his disciple Böhm-Bawerk, who died in 1914.
The reason
for this apparent inactivity is clear. Menger now wanted to concentrate
entirely on the major tasks which he had set himself — the long postponed
systematic work on economics, and beyond this a comprehensive treatise on the
character and methods of the social sciences in general. It was to the
completion of this work that his main energy was devoted and in the late
'nineties he looked forward to a publication in the near future and
considerable parts were ready in a definite form. But his interests and the
scope of the proposed work continued to expand to wider and wider circles. He
found it necessary to go far in the study of other disciplines. Philosophy,
psychology and ethnography claimed more and more of his time, and the
publication of the work was again and again postponed. In 1903 he went so far
as to resign from his chair at the comparatively early age of 63 in order to be
able to devote himself entirely to his work.[31] But he was never
satisfied and seems to have continued to work on it in the increasing seclusion
of his old age until he died in 1921 at the advanced age of 81. An inspection
of his manuscript has shown that, at one time, considerable parts of the work
must have been ready for publication. But even after his powers had begun to
fail he continued to revise and rearrange the manuscripts to such an extent
that any attempt to reconstruct this would be a very difficult, if not an
impossible task. Some of the material dealing with the subject-matter of
the Grundsätze and partly intended for a new edition of this
work, has been incorporated by his son in a second edition of this work,
published in 1923.[32] Much more, however,
remains in the form of voluminous but fragmentary and disordered manuscripts,
which only the prolonged and patient efforts of a very skillful editor could
make accessible. For the present, at any rate, the results of the work of
Menger's later years must be regarded as lost.
For one who
can hardly claim to have known Carl Menger in person it is a hazardous
undertaking to add to this sketch of his scientific career an appreciation of
his character and personality. But as so little about him is generally known to
the present generation of economists, and since there is no comprehensive
literary portrait available,[33] an attempt to piece
together some of the impressions recorded by his friends and students, or
preserved by the oral tradition in Vienna, may not be altogether out of place.
Such impressions naturally relate to the second half of his life, to the period
when he had ceased to be in active contact with the world of affairs, and when
he had already taken to the quiet and retired life of the scholar, divided only
between his teaching and his research.
The
impression left on a young man by one of those rare occasions when the almost
legendary figure became accessible is well reproduced in the well-known
engraving of F. Schmutzer. It is possible, indeed, that one's image of Menger
owes as much to this masterly portrait as to memory. The massive, well-modelled
head, with the colossal forehead and the strong but clear lines there delineated
are not easily forgotten. Tall, with a wealth of hair and full beard, in his
prime Menger must have been a man of extraordinarily impressive appearance.
In the
years after his retirement it became a tradition that young economists entering
upon an academic career undertook the pilgrimage to his home. They would be
genially received by Menger among his books and drawn into conversation about
the life which he had known so well, and from which he had withdrawn after it
had given him all he had wanted. In a detached way he preserved a keen interest
in economics and university life to the end and when, in the later years,
failing eyesight had defeated the indefatigable reader, he would expect to be
informed by the visitor about the work he had done. In these late years he gave
the impression of a man who, after a long active life, continued his pursuits
not to carry out any duty or self-imposed task, but for the sheer intellectual
pleasure of moving in the element which had become his own. In his later life,
perhaps, he conformed somewhat to the popular conception of the scholar who has
no contact with real life. But this was not due to any limitation of his
outlook. It was the result of a deliberate choice at a mature age and after
rich and varied experience.
For Menger
had lacked neither the opportunity nor the external signs of distinction to
make him a most influential figure in public life, if he had cared. In 1900 he
had been made a life member of the upper chamber of the Austrian Parliament.
But he did not care sufficiently to take a very active part in its
deliberations. To him the world was a subject for study much more than for
action, and it was for this reason only that he had intensely enjoyed watching
it at close range. In his written work one can search in vain for any
expressions of his political views. Actually, he tended to conservatism or
liberalism of the old type. He was not without sympathy for the movement for
social reform, but social enthusiasm would never interfere with his cold reasoning.
In this, as in other respects, he seems to have presented a curious contrast to
his more passionate brother Anton.[34] Hence it is mainly as
one of the most successful teachers at the University that Menger is best
remembered by generations of students, and that he has indirectly had enormous
influence on Austrian public life.[35] All reports agree in the
praise of his transparent lucidity of exposition. The following account of his
impression by a young American economist who attended Menger's lectures in the
winter 1892–93 may be reproduced here as representative: "Professor Menger
carries his fifty-three years lightly enough. In lecturing he rarely uses his
notes except to verify a quotation or a date. His ideas seem to come to him as
he speaks and are expressed in language so clear and simple, and emphasised
with gestures so appropriate, that it is a pleasure to follow him. The student
feels that he is being led instead of driven, and when a conclusion is reached
it comes into his mind not as something from without, but as the obvious
consequence of his own mental process. It is said that those who attend Professor
Menger's lectures regularly need no other preparation for their final
examination in political economy, and I can readily believe it. I have seldom,
if ever, heard a lecturer who possessed the same talent for combining clearness
and simplicity of statement with philosophical breadth of view. His lectures
are seldom 'over the heads' of his dullest students, and yet always contain
instruction for the brightest."[36] All his students retain
a particularly vivid memory of the sympathetic and thorough treatment of the
history of economic doctrines, and mimeographed copies of his lectures on
public finance were still sought after by the student twenty years after he had
retired, as the best preparation for the examinations.
His great
gifts as a teacher were, however, best shown in his seminar where a select
circle of advanced students and many men who had long ago taken their doctor's
degree assembled. Sometimes, when practical questions were discussed, the
seminar was organised on parliamentary lines with appointed main speakerspro and contra a
measure. More frequently, however, a carefully prepared paper by one of the
members was the basis of long discussions. Menger left the students to do most
of the talking, but he took infinite pains in assisting in the preparations of
the papers. Not only would he put his library completely at the disposal of the
students, and even bought for them books specially needed, but he would go
through the manuscript with them many times, discussing not only the main
questions and the organisation of the paper, but even "teaching them
elocution and the technique of breathing."[37]
For newcomers
it was, at first, difficult to get into closer contact with Menger. But once he
had recognised a special talent and received the student into the select circle
of the seminar he would spare no pains to help him on with his work. The
contact between Menger and his seminar was not confined to academic
discussions. He frequently invited the seminar to a Sunday excursion into the
country or asked individual students to accompany him on his fishing
expeditions. Fishing, in fact, was the only pastime in which he indulged. Even
here he approached the subject in the scientific spirit he brought to
everything else, trying to master every detail of its technique and to be
familiar with its literature.
It would be
difficult to think of Menger as having a real passion which was not in some way
connected with the dominating purpose of his life, the study of economics.
Outside the direct study of his subject, however, there was a further
preoccupation hardly less absorbing, the collection and preservation of his library.
So far as its economic section is concerned this library must be ranked as one
of the three or four greatest libraries ever formed by a private collector. But
it comprised by no means only economics, and its collections on ethnography and
philosophy were nearly as rich. After his death the greater part of this
library, including all economics and ethnography, went to Japan and is now
preserved as a separate part of the library of the school of economics in
Tokyo. That part of the published catalogue which deals with economics alone
contains more than 20,000 entries.[38]
It was not
given to Menger to realise the ambition of his later years and to finish the
great treatise which, he hoped, would be the crowning achievement of his work.
But he had the satisfaction of seeing his great early work bearing the richest
fruit, and to the end he retained an intense and never flagging enthusiasm for
the chosen object of his study. The man who is able to say, as it is reported
he once said, that if he had seven sons, they should all study economics, must
have been extraordinarily happy in his work. That he had the gift to inspire a
similar enthusiasm in his pupils is witnessed by the host of distinguished
economists who were proud to call him their master.
F.A. Hayek
(1899–1992) was a founding board member of the Mises Institute. He shared the
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Notes
[1] This biographical study was written as an Introduction to the Reprint
of Menger's Grundsätze der Volkswirtschaftslehre which
constitutes the first of a series of four Reprints embodying Menger's chief
published contributions to Economic Science and which were published by the
London School of Economics as Numbers 17 to 20 of its Series of
Reprints of Scarce Works in Economics and Political Science.
[2] The same is largely true of France. Even in England there was a kind
of unorthodox tradition, of which the same may be said, but it was completely
obscured by the dominant classical school. It is, however, important here
because the work of its outstanding representative, Longfield, had through the
intermediary ship of Hearn no doubt some influence on Jevons.
[3] It is hardly surprising that he did not know his immediate German
predecessor H.H. Gossen, but neither did Jevons or Walras when they first published
their ideas. The first book which did justice at all to Gossen's work, F.A.
Lange's Arbeiterfrage (2nd ed.), appeared in 1870 when
Menger's Grundsätze was probably already being set up in
print.
[4] Dr. Hicks tells me that he has some reason to believe that Lardner's
diagrammatic exposition of the theory of monopoly, by which Jevons according to
his own testimony was mainly influenced, derives from Cournot. On this point
see Dr. Hicks's article on Léon Walras which is to appear in one of the next
issues of Econometrica.
[5] Menger did, however, know the work of Léon Walras's father,
A.A.Walras, whom he quotes on p. 54 of theGrundsätze.
[6] The only exception to this statement, a review of R. Auspitz and R.
Lieben, Untersuchungen über die Theorie des Preises, in a
daily newspaper (the Wiener Zeitung of July 8th, 1889), can
hardly be called an exception, as he expressly says that he does not want to
comment there on the value of mathematical exposition of economic doctrines.
The general tone of the review as well as his objection to the fact that the
authors in his opinion "use the mathematical method not only as a means of
exposition but as a means of research" confirms the general impression
that he did not consider it as particularly useful.
[7] Anton Menger, the father of Carl, was the son of another Anton
Menger, who came from an old German family that had in 1623 emigrated to Eger
in Bohemia, and of Anna née Muller. His wife, Caroline, was
the daughter of Josef Gerzabek, merchant in Hohenmaut, and of Therese, née Kalaus,
whose ancestors can be traced in the register of baptism of Hohenmaut back into
the 17th and 18th centuries respectively.
[8] The earliest manuscript notes on the theory of value which have been
preserved date from the year 1867.
[9] Further aspects of Menger's treatment of the general theory of value
which might be mentioned are his persistent emphasis on the necessity to
classify the different commodities on economic rather than technical grounds,
his distinct anticipation of the Böhm-Bawerkian doctrine of the underestimation
of future wants, and his careful analysis of the process by which the
accumulation of capital turns gradually more and more of the originally free
factors into scarce goods.
[10] Ekonomisk Tidskrift,
1921, p. 118.
[11] An exception should,
perhaps, be made for Hack's review in the Zeitschrift für die gesamte
Staatswissenschaft, 1872, who not only emphasized the excellence of
the book and the novelty of its method of approach, but also pointed out as
opposed to Menger that the economically relevant relationship between
commodities and wants was not that of cause and effect but one of means and
end.
[12] It might not be
altogether out of place to correct a wrong impression which may be created by
A. Marshall's assertion that between the years 1870 and 1874, when he developed
the details of his theoretical position, "Böhm-Bawerk and Wieser were still
lads at school or college…." (Memorials of Alfred Marshall, p.
417). Both had left the University together and entered civil service in 1872,
and in 1876 were already in a position to expound in reports to Knies's seminar
in Heidelberg the main elements of their later contribution.
[13] Menger had at that time
already declined the offer of professorships in Karlsruhe (1872), Basel (1873),
and a little later also declined an offer of a professorship in the Zurich
Polytechnic with prospects to a simultaneous professorship at the University.
[14] "Zur Methodologie
der Staats- und Sozialwissenschaften," in Jahrbuch für Gesetzgebung,
Verwaltung und Volkswirtschaft im deutschen Reich, 1883. In the reprint of
this article in Schmoller's Zur Litteraturgeschichte der Staats- und
Sozialwissenschaften, 1888, the most offensive passages have been
mitigated.
[15] Originally a series of
articles in (Conrad's) Jahrbücher it has recently been
reprinted as No. 11 of theSeries of Reprints of Scarce Tracts in Economics
and Political Science, published by the London School of Economics
(1932).
[16] V. Mataja, Der
Unternehmergewinn, Vienna, 1884; G. Gross, Lehre vom
Unternehmergewinn, Leipzig, 1884; E. Sax, Das Wesen und die
Aufgaben der Nationalökonomie, Vienna, 1884.
[17] Robert Meyer, Das
Wesen des Einkommens, Berlin, 1887.
[18] In the same year two
other Viennese economists, R. Auspitz and R. Lieben, published theirUntersuchungen
über die Theorie des Preises, still one of the most important works of
mathematical economics. But although they were strongly influenced by the work
of Menger and his group, they build rather on the foundations laid by Cournot
and Thünen, Gossen, Jevons and Walras than on the work of their compatriots.
[19] Maffeo Pantaleoni, Principii
di Economia Pura, Firenze, 1889 (2nd ed. 1894), English translation,
London, 1894. An unjust remark in the Italian edition accusing Menger of
plagiarism of Cournot, Gossen, Jennings, and Jevons was eliminated in the
English edition and Pantaleoni later made amends by editing, with an
introduction from his pen, an Italian translation of the Grundsätze,
cf. C. Menger, Principii fondamentali di economia pura, con
prefazione di Maffeo Pantaleoni, Imola, 1909 (first published as a supplement
to theGiornale degli Economisti in 1906 and 1907 without the
preface of Pantaleoni). The preface is also reprinted in the Italian
translation of the second edition of the Grundsätze (to be
mentioned below) which was published at Bari, 1925.
[20] Cf. particularly J.
Bonar, "The Austrian Economists and their Views on Value." Quarterly
Journal of Economics, 1888, and "The Positive Theory of
Capital," ibid, 1889.
[21] The original review
article appeared in (Grünhut's) Zeitschrift für das Private und
öffentliche Recht der Gegenwart, vol. xiv, the separate pamphlet, Vienna,
1887.
[22] See (Conrad's) Jahrbücher
fur Nationalökonomie und Statistik, N.F., vol. xiv, Jena, 1889.
[23] In the same journal,
N.F., vol. xvii, Jena, 1888. An abridged French translation, by Ch. Secrétan
appeared in the same year in the Revue d'Economie Politique under
the title "Contribution a la théorie du capital."
[24] Denkschrift über den
Gang der Währungsfrage seit dem Jahre 1867. — Denkschrift über das
Papiergeidwesen der österreichisch-ungarischen Monarchie. — Statistische
Tabellen zur Währungsfrage der österreichisch-ungarischen Monarchie. All
published by the k.k. Finanzministerium, Vienna, 1892.
[25] Cf. Stenographische
Protokolle über die vom 8. bis 17. März 1892 abgehaltenen Sitzungen der nach
Wien einberufenen Währungs-Enquete-Commission. Wien, k.k. Hof- und
Staatsdruckerei, 1892. Shortly before the commission met Menger had already
outlined the main problems in a public lecture, "Von unserer Valuta,"
which appeared in the Allgemeine Juristen Zeitung, Nos. 12 and 13
of the volume for 1892.
[26] It is unfortunately
impossible, within the scope of this introduction, to devote to this important
episode in currency history the space it deserves because of its close
connection with Menger and his school and because of the general interest of the
problems which were discussed. It would be well worth a special study and it is
very regrettable that no history of the discussions and measures of that period
exists. In addition to the official publications mentioned before, the writings
of Menger provide the most important material for such a study.
[27] "Die
Valutaregulierung in Oesterreich-Ungarn," (Conrad's) Jahrbücher
für Nationalökonomie und Statistik, III, F., vols. iii and iv, 1892.
[28] These articles appeared
in the Wiener Abendpost (a supplement to the Wiener
Zeitung) of April 30th and June 19th, 1873. As is the case with all the
early journalistic work of Menger, they are anonymous.
[29] In addition to those
already mentioned there appeared in the same year a French article, "La
Monnaie Mesure de la Valeur," in the Revue d'Économie Politique (vol.
vi) and an English article, "On the Origin of Money," in the Economic
Journal (vol. ii).
[30] The reprint of the same
article in vol. iv of the third edition of the Handwörterbuch (1909)
contains only small stylistic changes compared with the second edition.
[31] In consequence, almost
all the living representatives of the "Austrian School," like
Professors H. Mayer, L. von Mises and J. Schumpeter, were not direct pupils of
Menger but of Böhm-Bawerk or Wieser.
[32] Grundätze der
Volkswirtschaftslehre von Carl Menger, Zweite Auflage mit einem
Geleitwort von Richard Schüller aus dem Nachlass herausgegeben von Karl Menger,
Wien, 1923. A full discussion of the changes and additions made in this edition
will be found in F.X. Weiss, "Zur zweiten Auflage von Carl Mengers
Grundsätzen," Zeitschrift für Volkswirtschaft und Sozialpolitik,
N.F., vol. iv, 1924.
[33] Of shorter sketches
those by F. von Wieser in the Neue österreichische Biographie,
1923, and by R. Zuckerkandl in the Zeitschrift für Volkswirtschaft,
Sozialpolitik und Verwaltung, vol. xix, 1911, ought to be specially
mentioned.
[34] The two brothers were
regular members of a group which met in the 'eighties and 'nineties almost
daily in a coffee-house opposite the University and which consisted originally
mainly of journalists and business men, but later increasingly of Carl Menger's
former pupils and students. It was through this circle that, at least until his
retirement from the University, he mainly retained contact with, and exercised
some influence on, current affairs. The contrast between the two brothers is
well described by one of his most distinguished pupils, R. Sieghart. (Cf. the
latter's Die letzen Jahrzehnte einer Grossmacht, Berlin, 1932, p.
21): "Wahrlich ein seltsames und seltenes Brüderpaar die beiden Menger;
Carl, Begründer der österreichischen Schule der Nationalökonomie, Entdecker des
wirtschaftspsychologischen Gesetzes vom Grenznutzen, Lehrer des Kronprinzen
Rudolf, in den Anfängen seiner Laufbahn auch Journalist, die grosse Welt
kennend wenn auch fliehend, seine Wissenschaft revolutionierend, aber als
Politiker eher konservativ; auf der anderen Seite Anton, weltfremd, seinem
eigenen Fach, dem bürgerlichen Recht und Zivilprozess, bei glänzender
Beherrschung der Materie immer mehr abgewandt, dafür zunehmend mit sozialen
Problemen und ihrer Lösung durch den Staat befasst, glühend eingenommen von den
Fragen des Sozialismus. Carl völlig klar, jederman verständlich, nach Ranke's
Art abgeklärt; Anton schwieriger zu verfolgen, aber sozialen Problemen in allen
ihren Erscheinungsformen — im bürgerlichen Recht, in Wirtschaft und Staat —
zugewandt. Ich habe von Carl Menger die nationalökonomische Methode gelernt,
aber die Probleme, die ich mir stellte, kamen aus Anton Mengers Hand."
[35] The number of men who at
one time or another, belonged to the more intimate circle of Menger's pupils
and later made a mark in Austrian public life is extraordinarily large. To
mention only a few of those who have also contributed some form to the
technical literature of economics, the names of K. Adler, St. Bauer, M. Dub, M.
Ettinger, M. Garr, V. Graetz, I. von Gruber-Menninger, A. Krasny, G. Kunwald,
J. Landesberger, W. Rosenberg, H. Schwarzwald, E. Schwiedland, R. Sieghart, E.
Seidler and R. Thurnwald may be added to those mentioned earlier in the text.
[36] H.R. Seager,
"Economics at Berlin and Vienna," Journal of Political
Economy, vol. i, March, 1893, reprinted in Labor and other Essays,
New York, 1931.
[37] Cf. V. Graetz,
"Carl Menger," Neues Wiener Tagblatt, February 27th,
1921.
[38] Katalog der Carl
Menger-Bibliothek in der Handelsuniverstät Tokio. Erster Teil.
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