by Friedrich von Wieser

A Note from Richard Ebeling: Friedrich von Wieser (1851-1926) was one of the leading contributors in the “second generation” of the Austrian School of Economics. This memorial appreciation of Carl Menger, the founder of the Austrian School, was published in German not long after Menger’s passing in 1921. Wieser explains the state of economics before Menger’s writings on economic theory, the lasting importance of his contributions to economics, and the impact of Menger’s ideas on himself and his brother-in-law, the other noted Austrian economist, Eugen von Böhm-Bawerk.  Wieser’s essay originally appeared in the “Neue Österreichische Biographie” (New Austrian Biographies), Vol. 2, (1923). It has not previously been translated and published in English.

At a ripe old age – three days after he had reached the age of 81 – Carl Menger, the founder of the Austrian School of Economics, died on February 26, 1921.

Carl Menger came from a family of Austrian civil servants and officers. His brothers were the well-known Member of Parliament, Max Menger [1838-1911], and the equally outstanding lawyer and sociological writer, Anton Menger [1841-1906]. Their father, Anton Menger, was a lawyer, first in Neu-Sandez in Galicia, where Carl Menger was born [on February 23, 1840], and later in Bielitz; he was awarded the family nobility title, “Anton Menger Edler von Wolfesgrün,” but his sons chose not to accept the title. The mother Karoline, née Gerzabek, was the daughter of a wealthy merchant who had moved from Bohemia to Galicia and bought there the estate, Maniow, on which the children spent their holidays every year.

Carl Menger’s studies took him from Prague to Vienna, as it had his brothers. His entire life was centered in Vienna, the general outlines of which can be told in a few words. He entered the civil service and found in this work an opportunity for observing the economy, the results of which were published in his Grundsätze der Volkswirtschaftslehre [Principles of Economics] in 1871.[1] With this work, he completed his habilitation in 1872 at the University of Vienna and was appointed as a Privatdozent [an unsalaried lecturer] in political economy. The following year he was appointed an associate professor and soon, thereafter, full professor of political economy. He devoted himself to his professional teaching with the greatest zeal and success.

In 1883 he published his second major work, Untersuchungen über die Methode der Sozialwissenschaften und der Politischen Ökonomie insbesondere [Investigations on the Method of Social Sciences with Special Reference to Economics].[2] He, then, responded to the negative criticisms of Gustav von Schmoller [1838-1917], the leader of the German Historical School of Economics,[3] with a passionate polemic, Die Irrtmüer des Historismus in der deutschenNationalökonomie [The Errors of Historicism in German Political Economy] (1884).

The number of his other publications is not very large, and he retired relatively early from his official duties; yet he remained devoted to his studies until the end of his life, as evidenced by the abundance of manuscripts found among his papers. Special emphasis may be given to an expanded and partially revised edition of his Grundsätze,[4] that first book with which he started [his career] as a young man of 31 years; a work that he created in quiet seclusion without any teacher serving as a role model or other comrades, a work that assures him a rank among the leading economic thinkers in the world.

Economic Fundamentals and Economic Method

It is characteristic of Menger’s scientific nature that he devoted all diligence until the end to clearly and firmly work out the theoretical foundations of economic science. If others were to continue the work he had begun, he was, above all, concerned with penetrating into the last scientifically achievable depths.

The reader who is not an expert in the field may not have an interest in knowing all the details of Menger’s scientific work, but the educated public can be told about his accomplishments that earned him his scientific stature.

What was it that enabled him to become the founder of a new school of economics? If one wishes to properly give an answer to this question, then one has to go back, as Menger did with every problem, to those final – or, shall we say, those “fundamental”? – elements that are still open to human knowledge, and on the basis of which Menger was able to overcome the difficulties that hampered economic thinking before him.

In this context, a exposition that was intended for the professional should not fail to go back to the methodology used by Menger; but a presentation meant for a general educated audience may be shorter and can set aside the entire debate over economic methods. Menger wrote his book on methodology because his earlier Grundsätze had not received a sympathic hearing from the more historically oriented economists in Germany, and he considered it necessary, in general, to justify the value of theoretical economic analysis in comparison to an historically based economic analysis.

Richard Wagner [1813-1883] had followed the composing of his operas with additional writings explaining the vision behind each opera; in the final analysis, any persuasive power possessed in these latter writings only came from the overwhelming impact of the operas, themselves.[5] It is no different with Menger. In the last analysis, his book on economic methodology owes any of its probative power due to the demonstrable results that he had uncovered and presented in his Grundsätze; in this sense, a demonstration of the method applied. Who can deny that Menger became aware of the methodological path to follow based on these findings? It is clear, by the way, that there is no research method that is so precise that it guarantees success. Any method can only offer general direction for any research undertaken and the general nature of the tools to apply; but in any actual application, it is the researcher’s own focus that decides the method to be chosen.

It is certainly the case that in the natural sciences valuable knowledge has been gained from following the experimental method; but it is far more significant when a great thinker succeeds through a lucky experiment that secures an extension of knowledge in a particular area. Menger’s primary methodological achievement is not in his book on method, but the discovery of a series of concrete insights that he demonstrated in his Grundsätze through his detailed analysis at a number of crucial points. It is these specific conceptual insights that won him followers and the founding of a new school of economic thought.

Wieser and Böhm-Bawerk’s Search for Economic Foundations

It is in these specific discoveries that I see the achievement in Menger’s scientific work. I think it best serves my purpose if I speak in detail about its content and importance for our time. In doing so, I do not have to speak in generalities; I have the particular advantage that I can demonstrate the impact of Menger’s Grundsätze in a particular instance because I experienced it myself. Eugen von Böhm-Bawerk [1851-1914], who was my colleague from the beginning of middle school, and I were among the first readers of Menger’s Grundsätze; studying his book forever added to our understanding of theoretical economics. I do not digress from my subject if I first describe our state of mind before and after we came to know Menger’s Grundsätze.

Like all economists in Austria [in the nineteenth century], we came to economics by way of jurisprudence, and we always gratefully recalled what support we received for our understanding of economics as a result of our rigorous legal training. Roman private law, that masterpiece of conceptual explanation, is the law of property and of business. Its clear legal structures are entirely built on economic elements.

Likewise, Roman legal history, by setting out the historical consequences of these legal arrangements, is a form of accomplished economic history long before there was ever the idea of writing economic history. In this respect, the Austrian lawyer is also trained in economic history. We took in its entire rich content, and it was the clear arrangement by which it was offered to us that excited our youthful arrogance. Jurisprudence was seen as something complete, finished, and that did not pose any new problems. But we were eager to know how law gave authority to the legislator; so we set aside our law books and we turned to the unwritten economic “laws” of society.

We wanted to find out what could be discovered in the ideas of contemporary economic science. In vain we searched for an answer. In his lectures on theoretical economics, Lorenz von Stein [1815-1890], (whose importance in other areas we later came to appreciate), offered us brilliant lectures that, however, left the essential concepts hidden from view.[6]  The textbook we first confronted was the distinguished work of Karl Heinrich Rau [1792-1870], through whi