Carl Menger: Pioneer of "Empirical Theory"
The problems and ideas that moved Ludwig von Mises in his early years, writes Jorg Guido Hulsmann, were addressed by the work of four great economic theorists: Carl Menger, Eugen von Böhm-Bawerk, Friedrich von Wieser, and Joseph Schumpeter. He knew all four personally, but Menger had retired from teaching a year before Mises discovered Menger's Principles. They met for the first time around 1910, when Mises was attending Böhm-Bawerk's seminar and preparing his first treatise, The Theory of Money and Credit. It was then customary that young men wishing to pursue an academic career in economics paid Menger a visit. He received them in his house amidst his impressive library and had them talk about their work and projects. FULL ARTICLE
Comments (4)
What an excellent read! I had been introduced to the immense importance of Menger's contributions, but this reading gave me a deeper understanding of the world he was operating in, and thus gave me a greater appreciation for both Menger as a man and Menger as a bold theoretician. If only Murray and Mises had had a "Protektion" like Menger!!
It is also a reminder of why one should not shy away from battles for control of institutions. That S.O.B. Schmoller reminds me of so many petty little bastard deans and provosts. Surely one can fight such little devils without becoming a little devil oneself....
Published: December 29, 2007 2:21 AM
A very good article.
A few minor points might be made against it, such as (contrary to the article) that there is some evidence that Carl Menger's powers declined in old age, but very good.
As Murry Rothbard rightly pointed out in his history of economics, the domination of the Labour Theory of Value in English language economics was far from automatic.
For example, in the 1820's the Labour Theory of Value was very much a minority position among economic writers in Britain. Not only did such men as Samual Bailey write against it, but Richard Whately (the leading man at Oxford) held the theory in open contempt.
Rothbard, I think correctly, blames John Stuart Mill for giving the theory a new boost. Not by argument (that was not J.S. Mill's), but by statement - "the theory of vale is settled" and so on. Much like J.S. Mill's statements (in "Principles of Political Econonmy" and other places) that this or that bit of government activity (drainage, water supply, police - whatever) is something that "everyone" agrees on, when he knew that everyone did NOT agree with it.
Even Adam Smith, in his early lectures, seems close to understanding the mistaken at the heart of the "paradox of value" (i.e. that real buying and selling is not for "water" or "diamonds" as a general class - but a specific amount of these goods at a specific time and place).
Sadly, by the time of the "Wealth of Nations" this seems to be forgotten.
But then there are several differences between the early and the late Adam Smith - hence "the Adam Smith problem".
But David Ricardo seems hopeless.
Addicted to general categories in a more rigid way than Adam Smith, and always seeking for the misunderstood cover of science by seeking to deal in these general classes.
As the article rightly points out, right reasoning starts from real persons, things and events and then applies logical reasoning to them, a fictional example is only useful if it is shown that this is the sort of thing that happens - the sort of thing real people do. Nor is reasoning automatically made any better by adding mathematics to it - indeed adding mathematics may simply cloud the basic issues, drawing attention away from basic errors in starting principles.
Published: December 29, 2007 3:47 PM
Thanks for this remarkable history of subjective value theory. The detailed account of how Menger, Jevons and Walras' theories were built upon different backgrounds is very useful. It helps greatly to understand how austrian and mainstream later diverged.
Published: January 1, 2008 4:22 AM
I think that what Guido H. calls “empirical” is more a phenomenological approach (Husserl in a realistic way) than what anybody would understand today by “empirical testing”. That’s a key issue in social sciences.
Published: January 1, 2008 2:40 PM