Carl Menger, Founder of the Austrian School, A Socialist!

At least according to this person after I ask if Menger advocating specific regulation makes him socialist:

Also, I will say that such policies are certainly socialist. So, if Menger did indeed make such statements, then he certainly was recommending socialist policies in such an instance. However, that would be a separate issue from Menger’s work on theory and methodology.

Seriously?! This is simply clear ignorance of an Internet Austrian. Sure the policies advocated are separate from theory, but it is clear that Menger’s theory is one that doesn’t see markets as pure spontaneous order, indeed he notes several times that as great as the automatic system is (spontaneous order), there are indeed limits, and development must be expanded via government. Most Austrians only see the spontaneous order part of Menger and completely forget to flip the other side of the coin, for it is a picture they refuse to accept. The same commenter questions a source in which provides a lot of Menger’s views on policy:

In any case, the source in question is the notes of Crown Prince Rudolf from when Menger was one of his tutors. This is pretty shoddy, because we don’t know if these are the words of Menger, or of Rudolf, nor do we know that these aren’t the words of another of Rudolf’s tutors. In fact, the entire collection is from a classical perspective, and is in fact very Smithian. Further, there is no mention of Menger’s subjectivity, monetary theory, or any of his methodological work at all. That seems a bit strange, doesn’t it? Menger could very well have been instructed to teach Rudolf from a particular perspective. Or, none of those words could be Menger’s. It could be Rudolf’s ode to Smith.

This is really a bad critique on Rudolf’s notes. As noted in these series of lectures, while Rudolf did write the majority of these lectures by memory, Menger revised and corrected the lectures, in other words, these are the final revised lectures. So misrepresentation of Menger’s views is of (very) low possibility. Actually as Oscar Jaszi notes in his The Dissolution of the Habsburg Monarchy (published in 1929 btw) , the lectures by Menger and his student were used to some extent to dismantle the aristocracy in Austria (p 152).

Thus, Menger’s appreciation for Smith, advocacy of forest regulations (p 131-3), government to improve workers’ conditions (p 127), and government to build roads, schools, railroads, canals (p 121) were Menger’s views, this is not a “shoddy” claim, unless one is going to take the position that Menger sucks at revising and correcting his student’s notes on lectures by Menger himself.

This isn’t the only source of Menger’s policy views. In his article “Geld” (the latest edition is the one of 1909), Menger makes it clear that he supports government monopoly of coinage.

In Transcript of Finanz-Wissenschaft von Prof. Carl Menger translated by Mizobata, Menger claims to advocate progressive income tax (p 52).

Why didn’t the lectures have Mengerian issues like subjectivism, I don’t know and I am not going to speculate a reason. The point though is that there is evidence to show Menger’s views and the validity of the lectures. Menger truly was an ideal figure for classical liberalism, his lectures show the importance to stress the limitations of government, while still demonstrating a role for the state, one that goes beyond providing security, courts, and laws. If others want to interpret this as socialistic, go ahead, I am not going to get myself involved into a semantics debate too heavily. I just don’t get why one advocating for an active role of government makes one a socialist, maybe I will never get it, given that I have probably been brainwashed by the socialistic public school system!

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3 responses to “Carl Menger, Founder of the Austrian School, A Socialist!

  1. Nice reply.

    I have left a response over at
    http://factsandotherstubbornthings.blogspot.com/2012/09/democracy-markets-and-classical.html?showComment=1346576677142#c9029255388662335696

    I’ll repost it here:

    The notes were, without doubt, revised and corrected by Menger himself, and approved by him, and that is quite plainly stated on p. 12 of the English edition and translation:

    “[sc. Rudolf’s] … notebooks were then handed to Menger for correction …” (p. 12).

    “Apart from occasional naive remarks and a certain effusiveness, we can thus be sure that on the whole the Notebooks reproduce faithfully what Menger said … ” (p. 12).

    “Rudolf’s text was corrected by Menger …. Parts of Notebooks I and II are altogether in Menger’s handwriting (in ink) … ” (p. x).

    Carl Menger, Carl Menger’s Lectures to Crown Prince Rudolf of Austria (ed. Erich W. Streissler, Monika Streissler).

    You might also note Karen Vaughn’s review of Carl Menger’s Lectures to Crown Prince Rudolf of Austria (edited by Erich W. Streissler and Monika Streissler. Translated by Monika Streissler and David F. Good. Edward Elgar Publishing Ltd., Aldershot, England and Brookfield, Vermont) in Journal of the History of Economic Thought18.1 (1996): 168-70.

    It is true that Menger’s own work on value, exchange and price is absent, and he may have based his lectures on Adam Smith, but why?

    On p. 170:

    “Menger thought that rather than sophisticated economic theory, Rudolf really needed to know what kind of policy the state should adopt, how to manage its finances, what taxes to levy, how to reward public servants and how not to make citizen’s lives more miserable than they already might be. At any rate, this is exactly what Menger taught the prince: principles of public economics
    for a future public administrator.”

    So this was clearly what Menger did think was the proper role of the state in public policy: if it was not, he would have said something else.

  2. Another point: It very interesting to contrast Jörg Guido Hülsmann’s view of Menger’s lectures to Crown Prince Rudolf of Austria, quoted fro, of all people, Erich Streissler :

    “After a careful analysis of Prince Rudolf’s notebooks, Erich Streissler concludes that these books “show Menger to have been a classical economic liberal of the purest water [ … ] with a much smaller agenda for the state in mind than even Adam Smith.” Streissler goes on:

    Menger’s Rudolf Lectures are, in fact, probably one of the most extreme statements of the principles of laissez-faire ever put to paper in the academic literature of economics. There is just cause for economic action only in “abnormal” circumstances. Only when “disaster is impending”, only where “government support becomes indispensable” should the state step in. Otherwise “government interference” is “always [ … ] harmful.”‘

    Menger was smart enough not to present these views on government as his personal opinion. Rather he worked from carefully selected readings to drive his message home. He even chose as his main textbook Adam Smith’s Wealth of Nations.”

    Hulsmann, Guido, Mises: The Last Knight of Liberalism, p. 137.

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