Research in the History of Economic Thought and Methodology: Including A Symposium on Carl Menger at the Centenary of His Death: Volume 39B

Cover of Research in the History of Economic Thought and Methodology: Including A Symposium on Carl Menger at the Centenary of His Death

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(8 chapters)


Pages i-xiii
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Part I: A Symposium on Carl Menger at the Centenary of his Death


This paper examines William Stanley Jevons’s approach to human “improvement” in comparison with that of Carl Menger. In Jevons’s view, people are relatively static when left to their own devices. Thus, to “attack” the “citadel of poverty” they must be improved by those who know what is “best” for them. Menger’s view of people as planners, by contrast, is one in which people are capable of improving themselves. Jevons was a social reformer who placed great faith in education, and painful training and instruction, broadly defined, as key mechanisms of reform. Less frequently acknowledged but no less important, Menger also foresaw “the improvement of mankind” from within, as consumers came to better understand how best to attain their wants and needs over time.


In his article “Geld” of 1909 Menger introduces a principal distinction between “outer exchange value of money” (purchasing power as measured by index numbers) and “inner exchange value of money,” which is affected solely “by influences originating on the side of money,” not on the side of the other goods. Menger chooses constancy of the inner value as policy goal to be achieved by appropriately regulating the quantity of money. In a growing economy, the general price level would have a declining tendency if the money supply were kept constant – a consequence which Menger does not make explicit, and even appears not to have been aware of. There is a fundamental inconsistency in his writings, since in his essays on the currency reform of the Austro-Hungarian monarchy of 1892 Menger warned against undesired consequences of deflation and inflation. Menger’s extensive discussion on how effects on purchasing power on the side of goods could be separated from those attributable to the side of money is referred in the light of then available monetary and price statistics. The inconsistency remains enigmatic. The last part of the present contribution gives a brief overview on how authors of later generations of the Austrian School (Wieser, Mises, Schumpeter, and Hayek), who coined the term “neutrality of money” for Menger’s constancy postulate followed or deviated from Menger’s concepts of the value of money.


This paper provides a reappreciation of the second edition of Carl Menger’s Principles. It reconstructs his new theory of needs, which for Menger analytically precedes the valuation of goods. It is argued that this new theory of needs provides a possible bridge between economics and the natural sciences. It provided important conceptual tools for the interwar work of Ludwig von Mises on praxeology and Friedrich Hayek on expectations and plans. The new first chapter also contains a theory of collective needs, which is contextualized in the broader German-language debate over private and public provision of goods. It is demonstrated that Menger’s approach to collective needs, and the jointness of consumption is in tension with the later Samuelson/Musgrave conception of public goods, and compatible with the institutional theories in this field of James Buchanan and Vincent and Elinor Ostrom.


The objective of this paper is to show the modernity of the approach developed by Carl Menger. The author argues that the Mengerian approach is part of a conceptual pattern composed of four interdependent, hierarchical and coherent parts (ontology, epistemology, methodology and key concepts) and that this conceptual pattern in all its originality and consistency fits perfectly within the approach of complexity. Ontologically (Section 1), the starting point is different from that of Léon Walras and William Stanley Jevons, the economy being apprehended as an open system; from an epistemological point of view (Section 2), Menger adopts a distinct conception of what constitutes a good scientific explanation, which contrasts with the Walrasian conception; methodologically (Section 3), his rejection of mathematics can therefore be understood as a consequence of his ontological and epistemological position: it is not mathematics as such that the author rejects but the functionalist tools then available, which are not adapted to his conception of economic reality; and finally the key concept (Section 4) of the author’s analysis is not that of equilibrium but an analysis of the process of exchange and production, with the emphasis placed on the emergence of organic phenomena.

Part II: Essays


Today Lionel Penrose is recognised as the co-author of one of the two leading indices of power in voting legislatures – a field of study that game theory in general, and cooperative game theory in particular, has been reclaiming from sociology and political science since the 1950s. The main claim of this paper is that Penrose developed his index so as to tackle questions that go vastly beyond the narrow domain of voting; namely, acute social issues during the Cold War such as the outburst and propagation of panics, the ideological susceptibility of populations, the escalation of military conflict and the successful installation of authoritarian regimes. Furthermore, by revisiting the history of the Penrose power index, the paper re-evaluates some of its key underlying assumptions: assumptions that have been heavily – and unfairly, as the paper argues – criticised over the last decade.


Austrian economist Ludwig Mises’s central role in the socialist calculation debates has been consensually acknowledged since the early 1920s. Yet, only recently Nemeth, O’Neill, Uebel, and others have drawn particular attention to Mises’s encounter with logical empiricist Otto Neurath. Despite several surprising agreements, Neurath and Mises certainly provide different answers to the questions “what is meant by rational economic theory” (Neurath) and whether “socialism is the abolition of rational economy” (Mises). Previous accounts and evaluations of the exchange between Neurath and Mises suffer from attaching little regard to their idiosyncratic uses of the term “rational.” The paper at hand reconstructs and critically compares the different conceptions of rationality defended by Neurath and Mises. The author presents two different resolutions to a detected tension in Mises’s deliberations on rationality: the first is implicit in Neurath’s, O’Neill’s, and Salerno’s reading of Mises and faces several interpretational problems; the author proposes a divergent interpretation. Based on the reconstructions of Neurath’s and Mises’s conceptions of rationality, the author suggests some implications with respect to Viennese Late Enlightenment and the socialist calculation debates.

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Research in the History of Economic Thought and Methodology
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