TGIF: The Great Carl Menger \ stacker news ~econ

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TGIF: The Great Carl Menger libertarianinstitute.org/articles/tgif-great-menger/

532 sats \ 12 comments \ @Rothbardian_fanatic 4 Apr econ

There can be no doubt among competent historians that if … the Austrian School has occupied an almost unique position in the development of economic science, this is entirely due to the foundations laid by this one man…. [I]ts fundamental ideas belong fully and wholly to [?]…. [W]hat is common to the members of the Austrian School, what constitutes their peculiarity and provided the foundations for their later contributions is their acceptance of the teaching of [?]. —F. A. Hayek

Who was Hayek writing about?

Carl Menger, of course. Menger (1840-1921), a professor at the University of Vienna, launched the Austrian school of economics with his trail-blazing Principles of Economics, published in 1871. (It was not translated into English until 1950.) He is famous for being one of three economists who independently and nearly simultaneously shifted economics onto a radically different track: marginal utility. Hence, the term marginal revolution in economics.

This was a radical recasting of value and price theory. “The value of goods arises from their relationship to our needs, and is not inherent in the goods themselves. With changes in this relationship, value arises and disappears…,” Menger wrote. “It is a judgment economizing men make about the importance of the goods at their disposal for the maintenance of their lives and well-being.” Menger was not a moral philosopher but an economist, explaining how human action generates market phenomena such as prices….

If only he could see what reason, capital accumulation, division of labor, and trade have wrought! The lesson we should take from Menger is that all government actions that obstruct the formation of capital and free exchange—such as tariffs, to pick a random example—torpedo human welfare.

Menger was one of the triumvirate of the subjectivist-marginalist revolution in economics. His theories and thoughts led to the latter Austrian school of economics branching off from mainstream economics into its own science of praxeology. He criticized Adam Smith for not going far enough to project the idea of higher order goods into his theory. He is the founder of the Austrian school of economics from which Nobel prize winner in economics, F.A. Hayek evolved his theories. Just being a bit subjective here, I think the Austrian school of economics is the only reasonable school of economics.

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41 sats \ 7 replies \ @Undisciplined 4 Apr

I agree, as far as entire schools of economic thought are concerned.

However, it's worth noting that there are other reasonable areas of economic theory that aren't explicitly Austrian. Public Choice comes to mind as an example.

32 sats \ 6 replies \ @Rothbardian_fanatic OP 4 Apr

Yes, Public Choice came to my mind, also, when thinking about economic theories that are somewhat accurate. However, I don’t think that they are always reasoned and reasonable or reasoned through deductive logic from a valid beginning premise as Austrian economics is. After all, the beginning premise that humans act is a pretty basic premise to begin praxeological reasoning.

30 sats \ 5 replies \ @Undisciplined 4 Apr

I think there are a handful of Austrian conclusions and premises that reasonable economists differ on. Bryan Caplan lays out several in his Why I Am Not an Austrian Economist.

You can agree with the overall approach, without being an Austrian. I think Public Choice basically falls into that category. You could be an Austrian and do Public Choice work, but you don't have to be (and that doesn't inherently make you unreasonable).

23 sats \ 4 replies \ @Rothbardian_fanatic OP 4 Apr

Yes, I understand the point about being an Austrian and still working within the Public Choice arena.

I had an experience one time with an analogy of that: you don’t have to be a Buddhist to do vipassna meditation, you can be a Christian, Hindu or Muslim and still do that style of meditation. However, being a Buddhist gives a deeper understanding of the meditation and why you are doing it that way.

On the reasonable situation, I was making an observation that Austrian economics is deductively reasoned from the basis of the humans act premise to the logical ends it reaches. I wasn’t commenting on how reasonable other theories were.

30 sats \ 3 replies \ @Undisciplined 4 Apr

I get it. My point is that someone like Caplan agrees with the Austrian approach, but not some of the particulars, and it's both Austrians and economists like Caplan who do Public Choice work.

There's not really a whole school of thought covering all of these people. Although, I think some of them do refer to it as the Virginia School.

47 sats \ 2 replies \ @Rothbardian_fanatic OP 4 Apr

Ok, I am not familiar with it. A lot of people disagree with the Austrian approach and its particulars. I have a suspicion that a large part of the disagreement stems from whence the money comes. Austrians seem to have a tough time getting into the professiariat and the apparatus of the state sponsored education environments. It could be because they don’t support state intrusion into the economy and economic matters by sticky fingered middlemen!

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30 sats \ 3 replies \ @BlokchainB 4 Apr

I often thought Menger didn’t get enough credit

108 sats \ 2 replies \ @Rothbardian_fanatic OP 4 Apr

I think that may be because Mises, Rothbard and Hayek came later and sort of shaded him out of the spotlight. I think he made the original break from the mainstream economics of the day and the labor theory of value. That was a great step forward, IMHO.

30 sats \ 1 reply \ @BlokchainB 5 Apr

Yeah that was my take away after reading saif's books

5 sats \ 0 replies \ @Rothbardian_fanatic OP 5 Apr

I think that Menger made a whole lot of basic support for the whole Austrian school. He was basically the foundation on which the whole edifice was erected! He was a great mind.