Principles of Economics by Carl Menger
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INTRODUCTION:
CARL MENGER
By F.A. 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 littleknown 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.
Nowhere, however, had the decline of the classical school of economists
been more rapid and complete than in Germany. Under the onslaughts of
the Historical School not only were the classical doctrines completely
abandoned—they had never taken very firm root in that part of the
world—but any attempt at theoretical analysis came to be regarded with
deep distrust. This was partly due to methodological considerations.
But even more it was due to an intense dislike of the practical
conclusions of the classical English School—which stood in the way of
the reforming zeal of the new group which prided itself on the name of
the “ethical school.” In England the progress of economic theory only
stagnated. In Germany a second generation of historical economists grew
up who had not only never become really acquainted with the one
well-developed system of theory that existed, but had also learnt to
regard theoretical speculations of any sort as useless if not
positively harmful.
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.
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, labour 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. 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,
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
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. 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,
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.
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.
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.
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.
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.”
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.
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.
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. 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, the Untersuchungen
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. Menger accepted the challenge and replied in
a passionate pamphlet, Irrthümer des Historismus in der
deutschen Nationalokönomie, 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.
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 Ursprung und
Haupigesetze 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
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. 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.
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.
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.
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.
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).
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. 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.
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 Grundsätz. 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.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. 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.
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. The second, called Der Uebergang 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.
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 the Untersuchungen
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’s Essays on the effects of the
gold discoveries: in some respects Menger’s later views are nearly
related to those of Cairnes. 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 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 the Handwörterbuch der Staatswissenschaften
(1900),
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.
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.
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,
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.
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. 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.” 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 speakers pro 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.”
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.
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.
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.
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.
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.
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.
Menger did, however, know the work of
Léon Walras’s father, A.A.Walras, whom he quotes on p. 54 of the
Grundsätze.
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.
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.
The earliest manuscript notes on the theory
of value which have been preserved date from the year 1867.
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.
Ekonomisk Tidskrift, 1921, p. 118.
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.
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.
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.
“Zur Methodologie der Staats-und
Sozialwissenschaften,” in Jahrbuch für Gesetz-gebung,
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.
Originally a series of articles in
(Conrad’s) Jahrbücher it has recently been reprinted as
No. 11 of the Series of Reprints of Scarce Tracts in Economics and
Political Science, published by the London School of Economics
(1932).
V. Mataja, Der Unternehmergewinn,
Vienna, 1884; G. Gross, Lehre vom Unternehmergewinn, Leipzig,
1884; E. Sax, Das Wesen und die Aufgaben der Nationalökonomie,
Vienna, 1884.
Robert Meyer, Das Wesen des Einkommens,
Berlin, 1887.
In the same year two other Viennese
economists, R. Auspitz and R. Lieben, published their Untersuchungen
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.
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 the Giornale 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.
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.
The original review article appeared in
(Grünhut’s) Zeitschrift für das Privatund
öffentliche Recht der Gegenwart, vol. xiv, the separate
pamphlet, Vienna, 1887.
See (Conrad’s) Jahrbücher fur
Nationalökonomie und Statistik, N.F., vol. xiv, Jena, 1889.
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.”
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.
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.
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.
“Die Valutaregulierung in
Oesterreich-Ungarn,” (Conrad’s) Jahrbücher für
Nationalökonomie und Statistik, III, F., vols. iii and iv,
1892.
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.
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).
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.
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.
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.
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.
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.”
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.
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.
Cf. V. Graetz, “Carl Menger,” Neues
Wiener Tagblatt, February 27th, 1921.
Katalog der Carl Menger-Bibliothek in der
Handelsuniverstät Tokio. Erster Teil. Sozialwissenschaften.
Tokio, 1926 (731 pp).
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