Founder of the Austrian School of economics (1840?1921)
This article is about the economist. For his son, the mathematician, see
Karl Menger
.
Carl Menger von Wolfensgrun
[2]
(
;
German:
[?m?ŋ?]
; 28 February 1840
[3]
? 26 February 1921) was an Austrian economist and the founder of the
Austrian School of economics
. Menger contributed to the development of the theories of
marginalism
and
marginal utility
,
[4]
which rejected
cost-of-production theory of value
, such as developed by the
classical economists
such as
Adam Smith
and
David Ricardo
. As a departure from such, he would go on to call his resultant perspective, the
subjective theory of value
.
[5]
Biography
[
edit
]
Family and education
[
edit
]
Carl Menger von Wolfensgrun
[2]
was born in the city of Neu-Sandez in
Galicia
,
Austrian Empire
, which is now
Nowy S?cz
in Poland. He was the son of a wealthy family of minor nobility; his father, Anton Menger, was a lawyer. His mother, Caroline Ger?abek, was the daughter of a wealthy
Bohemian
merchant. He had two brothers,
Anton
and Max, both prominent as lawyers. His son,
Karl Menger
, was a mathematician who taught for many years at
Illinois Institute of Technology
.
[6]
After attending
gymnasium
he studied law at the Universities of
Prague
and
Vienna
and later received a doctorate in jurisprudence from the
Jagiellonian University
in
Krakow
. In the 1860s Menger left school and enjoyed a stint as a journalist reporting and analyzing market news, first at the
Lemberger Zeitung
in
Lemberg
, Austrian Galicia (now Lviv,
Ukraine
) and later at the
Wiener Zeitung
in Vienna.
[7]
Career
[
edit
]
During the course of his newspaper work, he noticed a discrepancy between what the classical economics he was taught in school said about
price
determination and what real world market participants believed. In 1867 Menger began a study of
political economy
which culminated in 1871 with the publication of his
Principles of Economics
(
Grundsatze der Volkswirtschaftslehre
),
thus becoming the father of the
Austrian School
of economic thought.
[8]
It was in this work that he challenged classical cost-based theories of value with his theory of marginality ? that price is determined at the margin.
In 1872 Menger was enrolled into the law faculty at the University of Vienna and spent the next several years teaching finance and political economy both in seminars and lectures to a growing number of students. In 1873, he received the university's chair of economic theory at the very young age of 33.
In 1876 Menger began tutoring Archduke
Rudolf von Habsburg
, the Crown Prince of
Austria
in political economy and statistics. For two years, Menger accompanied the prince during his travels, first through continental Europe and then later through the British Isles.
[9]
He is also thought to have assisted the crown prince in the composition of a pamphlet, published anonymously in 1878, which was highly critical of the higher Austrian aristocracy. His association with the prince would last until
Rudolf's suicide in 1889
.
In 1878 Rudolf's father, Emperor
Franz Joseph
, appointed Menger to the chair of political economy at Vienna. The title of
Hofrat
was conferred on him, and he was appointed to the Austrian
Herrenhaus
in 1900.
Dispute with the historical school
[
edit
]
Ensconced in his professorship, he set about refining and defending the positions he took and methods he utilized in
Principles,
the result of which was the 1883 publication of
Investigations into the Method of the Social Sciences with Special Reference to Economics (
Untersuchungen uber die Methode der Socialwissenschaften und der politischen Oekonomie insbesondere
).
The book caused a firestorm of debate, during which members of the
historical school of economics
began to derisively call Menger and his students the "Austrian School" to emphasize their departure from mainstream German economic thought ? the term was specifically used in an unfavorable review by
Gustav von Schmoller
.
In 1884 Menger responded with the pamphlet
The Errors of Historicism in German Economics
and launched the infamous
Methodenstreit
,
or methodological debate, between the Historical School and the Austrian School. During this time Menger began to attract like-minded disciples who would go on to make their own mark on the field of economics, most notably
Eugen von Bohm-Bawerk
, and
Friedrich von Wieser
.
In the late 1880s, Menger was appointed to head a commission to reform the Austrian monetary system. Over the course of the next decade, he authored a plethora of articles which would revolutionize
monetary theory
, including "The Theory of Capital" (1888) and "Money" (1892).
[10]
Largely due to his pessimism about the state of German scholarship, Menger resigned his professorship in 1903 to concentrate on study.
Philosophical influences
[
edit
]
There are different opinions on Menger's philosophical influences. But it is without discussion that there is a rudimentary dispute of Menger with
Plato
and a very meticulous one with
Aristotle
, especially with his ethics.
"Plato holds that money is an agreed sign for change and Aristotle says, that money came into being as an agreement, not by nature, but by law."
[11]
Also, the influence of Kant is provable. Many authors emphasize also
rationalism
and
idealism
, as is represented by
Christian Wolff
. Looking at the literature, most writers think that Menger represents an essential Aristotelian position. This is surprisingly a position that is contrary to his theory of the subjective value and his individualistic methodological position.
Another entry is the use of deduction or induction. With his price theory can be shown that Menger is
nominalistic
and, stronger, anti-essentialistic. That is to say that his approach is inductionalistic.
Economics
[
edit
]
Menger used his
subjective theory of value
to arrive at what he considered one of the most powerful insights in economics: "both sides gain from exchange". Unlike
William Jevons
, Menger did not believe that goods provide "utils," or units of utility. Rather, he wrote, goods are valuable because they serve various uses whose importance differs. Menger also came up with an explanation of how money develops that is still accepted by some schools of thought today.
[12]
Money
[
edit
]
Menger believed that gold and silver were the precious metals that were adopted as money for their unique attributes like costliness, durability, and easy preservation, making them the "most popular vehicle for hoarding as well as the goods most highly favoured in commerce."
[13]
Menger showed that "their special saleableness" tended to make their
bid-ask spread
tighter than any other market good, which led to their adoption as a general
medium of exchange
and evolution in many societies as
money
.
Works
[
edit
]
- 1871 ?
Grundsatze der Volkswirthschaftslehre, Erster, Allgemeiner Theil
. Wien: Wilhelm Braumuller. 1871 – via
Internet Archive
.
; Translated as
Principles of Economics, First, General Part
. Translated by Dingwall, James; Hoselitz, Bert F. Glencoe, Illinois: The Free Press. 1950.
- 1883 ?
Untersuchungen uber die Methode der Socialwissenschaften und der politischen Oekonomie insbesondere
. Leipzig: Duncker & Humblot. 1883 – via
Internet Archive
.
; Translated as
Schneider, Louis, ed. (1963).
Problems of Economics and Sociology [Investigations into the Method of the Social Sciences with Special Reference to Economics]
. Translated by Nock, Francis J. Urbana: University of Illinois Press – via
Internet Archive
.
- 1884 ?
The Errors of Historicism in German Economics
- 1888 ?
The Theory of Capital
- 1892 ?
Menger, Karl (1892). "On the Origin of Money".
The Economic Journal
.
2
(6). Translated by
Caroline A. Foley
: 239?255.
doi
:
10.2307/2956146
.
JSTOR
2956146
.
See also
[
edit
]
References
[
edit
]
- ^
Barry Smith
,
"Aristotle, Menger, Mises:An Essay in the Metaphysics of Economics"
,
History of Political Economy, Annual Supplement to vol. 22
(1990), 263?288.
- ^
a
b
Admin (28 June 2014).
"Carl Menger von Wolfensgrun, o. Univ.-Prof. Dr"
.
650 Plus
. Retrieved
November 19,
2021
.
- ^
Mark Blaug (1992).
Carl Menger (1840?1921)
. E. Elgar. pp. 46, 92.
ISBN
978-1-85278-489-8
.
Note: Some sources say 23 February
- ^
"Carl Menger facts, information, pictures | Encyclopedia.com articles about Carl Menger"
.
www.encyclopedia.com
. Retrieved
June 30,
2017
.
- ^
"Carl Menger | Austrian economist"
.
Encyclopædia Britannica
. Retrieved
June 30,
2017
.
- ^
"Remembering Karl Menger"
.
Illinois Institute of Technology
. Archived from
the original
on April 2, 2009
. Retrieved
March 26,
2009
.
- ^
kanopiadmin (August 18, 2014).
"Biography of Carl Menger: The Founder of the Austrian School (1840?1921)"
. Mises Institute
. Retrieved
June 30,
2017
.
- ^
Hayek, F.A.
(1978). "The Place of Menger's Grundsatze in the History of Economic Thought".
New Studies in Philosophy, Politics, Economics and History of Ideas
. London and Chicago: Routledge and University of Chicago Press. pp.
270-282
– via
Internet Archive
.
- ^
The History of Economic Thought: A Reader
- ^
"On the Origin of Money" (English translation by Caroline A. Foley),
Economic Journal
, Volume 2 (1892), pp. 239?55.
- ^
Menger, Carl (1985).
Investigations into the method of the social sciences, with special reference to economics = formerly published under title, Problems of economics and sociology
. Louis Schneider. New York: New York University Press.
ISBN
0-8147-5396-5
.
OCLC
12082186
.
- ^
Carl Menger (1840?1921)
.
Library of Economics and Liberty
(2nd ed.).
Liberty Fund
. 2008.
- ^
Menger, Karl (June 1892).
"On the Origin of Money"
.
The Economic Journal
.
2
(6): 239?255.
doi
:
10.2307/2956146
.
ISSN
0013-0133
.
JSTOR
2956146
.
Further reading
[
edit
]
- Caldwell, Bruce
, ed. (1990).
Carl Menger and his legacy in economics
. Durham and London: Duke University Press – via
Internet Archive
.
- Ebeling, Richard M.
,
"Carl Menger and the Sesquicentennial Founding of the Austrian School,"
American Institute for Economic Research
, January 5, 2021
- Ebeling, Richard M.,
"Carl Menger's Theory of Institutions and Market Processes,"
American Institute for Economic Research, April 13, 2021
- Hayek, Friedrich A.
(1952). "Hayek on Menger". In Spiegel, Henry William (ed.).
The Development of Economic Thought: Great Economists in Perspective
. New York and London: John Wiley & Sons, Inc.; Chapman & Hall, Limited. pp.
526
- 533 – via
Internet Archive
.
- Hayek, Friedrich A. von
(1968). "Menger, Carl". In Sills, David L. (ed.).
International Encyclopedia of the Social Sciences
. Vol. 10. The Macmillan Company & The Free Press. pp.
124
-127 – via
Internet Archive
.
- Knight, Frank
(1950). "Introduction".
Principles of Economics, First, General Part
. Translated by Dingwall, James; Hoselitz, Bert F. Glencoe, Illinois: The Free Press. pp.
9
- 35 – via
Internet Archive
.
- Schumpeter, Joseph Alois
(1951). "Carl Menger (1840 - 1921)".
Ten Great Economists: From Marx to Keynes
. Translated by Hans W. Singer. New York: Oxford University Press. pp.
80
- 90 – via
Internet Archive
.
- Senechal, Marjorie; Golland, Louise; Sigmund, Karl (2000). "Exact thought in a demented time: Karl menger and his viennese mathematical colloquium".
The Mathematical Intelligencer
.
22
: 34?45.
doi
:
10.1007/BF03024445
.
S2CID
120063990
.
- Stigler, George
(1937). "The Economics of Carl Menger".
Journal of Political Economy
.
45
(2): 229?250.
doi
:
10.1086/255042
.
S2CID
154936520
.
- Streissler, Erich W.
"Menger, Carl, Nationalokonom, * 23.2.1840 Neu-Sandez (Galizien), † 26.2.1921 Wien. (katholisch)"
(in German). Deutsche Biographie
. Retrieved
29 November
2023
.
- White, Lawrence H.
(2008).
"Menger, Carl (1840?1921)"
. In
Hamowy, Ronald
(ed.).
The Encyclopedia of Libertarianism
. Thousand Oaks, CA:
Sage
;
Cato Institute
. pp. 325?326.
doi
:
10.4135/9781412965811.n130
.
ISBN
978-1412965804
.
LCCN
2008009151
.
OCLC
750831024
.
- von Wieser, Friedrich,
"Carl Menger: A Biographical Appreciation"
[1923], American Institute for Economic Research, February 25, 2019
External links
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