Carl Menger (February 28, 1840 – February 26,
1921) was the founder of the
Austrian
School of
economics, famous for
contributing to the development of the theory of
marginal utility, which contested the
cost-of-production theories of value, developed by the
classical economists such as
Adam Smith and
David
Ricardo.
Menger was
born in Nowy
SÄ…cz
in Austrian
Galicia, (now in Poland
). He
was the son of a wealthy family of minor nobility; his father,
Anton, was a lawyer. His mother, Caroline, was the daughter of a
wealthy Bohemian merchant. He had two brothers, Anton and Max, both
prominent as lawyers.
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 Kraków
. In the 1860s Menger left school and enjoyed a
stint as a journalist reporting and analyzing market news, first at
the Lemberger Zeitung in Lwów
, Ukraine
and later at
the Wiener Zeitung in Vienna
.
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
(Grundsätze der Volkswirtschaftslehre), thus becoming the
father of the
Austrian School of
economic thought. It was in this work that he challenged classical
cost-based theories of value with his theory of marginality.
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 three years Menger accompanied
the prince in his travels, first through continental Europe and
then later through the British Isles. 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 (see the
Mayerling Affair).
In 1878
Rudolf's father, Emperor Franz
Josef, 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.
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 über 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 economic thought in Germany
. 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 Böhm-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). Largely due to his
pessimism about the state of German scholarship Menger resigned his
professorship in 1903 to concentrate on study.
See also
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