Introduction: roundabout ways of looking at Menger’s modernity

1. Re-inventing enlightenment in the age of modern industrial progress

As a scholar living and writing in the age of modern industrial capitalism, Carl Menger (who died one century ago, a few years after the catastrophic war terminating the first long wave of capitalist globalisation) can be counted as a “modern” scholar. However, as discussed at greater length in the roundtable conversation concluding this special issue,¹ modernity is an elusive notion. Over and above all, it is not to be equated with linear progress and continuous improvement in society and theory. It has its vicissitudes, including a kind of dialectic specifically relevant for the development of social sciences: some “modern” scholars (including economists, as Schumpeter pointed out) approach complexities of capitalist dynamism by invoking mental models abstracting from crucial aspects of these “modern” complexities – while others even seek refuge in idealised accounts of premodern social states to combat the ills accompanying modern complexities. From the viewpoint of the history of economic thought and the history of ideas in general, both kinds of reaction to modernity may raise interesting research questions. However, celebrating Menger’s work one hundred years after his death seems to imply that he is not among those “moderns” whose work is mainly remarkable for more or less clever manoeuvres steering clear of modern complexities. Organising a conference on “Menger’s modernity” seems to imply that he is among the thinkers who (in one way or the other) managed to face some of its challenges at an intellectual and scholarly level. Indeed, it may be argued that Menger is among those whose general perspective as social theorists is directed at re-inventing enlightenment (in the concluding roundtable conversation, Gilles Campagnolo calls him an homme des lumières): re-inventing enlightenment by means of socio-economic theorising – in an era in which industrial and scientific progress was accompanied by ambivalent and contradictory tendencies in the intellectual and political sphere, including socialism, romanticism, imperialism, and episodes of political restauration.

All this seems to suggest that the most interesting way of celebrating Menger does not consist in assembling a collection of pertinent achievements or trying to develop a unified account of those achievements. Since modern challenges have many different and multifaceted aspects, no unified master model capturing all aspects does exist – and there are even good reasons for doubting that progress in social sciences will lead to such a master model in the foreseeable future. The history of economic thought and of the social sciences thus reveals a mix of inspiring ideas and insights, clever moves leading to new research strategies, and the development of frameworks and tools enabling scientific tractability, but also of illusions, dead ends, and of appalling instances of oblivion or abeyance. In such a perspective, discussing the background of drawbacks may be as important as elucidating the circumstances conducive to achievements – including the shoulders of past giants as well as open questions and controversies in theory and policy, and a cluster of extra-scientific influences called “ideologies” by Joseph Schumpeter (1949).

Representing a range of quite different approaches to the History of Economic Thought,² the contributions to this special issue reflect some of those different perspectives and thus highlight different aspects and levels of the modernity of the founder of the Austrian School of Economics, and of his importance for the development of social theory and the discipline of scientific economics. In the following, we try to locate the various contributions and strands of arguments in a framing motivated by the above-sketched considerations – and to shed light on the source of the contemporary interest for a scholar whose live span largely coincided with the first wave of capitalist globalisation and its catastrophic conclusion.

In different ways, various contributors to this special issue are pleading for a kind of re-orientation among the different approaches in dealing with past authors, giving priority to studies useful for further critical elaboration of (hitherto underdeveloped) seminal programmatic ideas. Such developments are no doubt enhanced by proper criticism. They are surely hindered by dogmatism for which every proposition advanced by an authority is carved in stone. While error may be not without merit, and dead ends may be interesting for archeologic-historical enquiries, progressive evolution of scientific paradigms most likely requires selection criteria where reasonable critique plays some role.

In his contribution to the concluding round-table conversation, Heinz Kurz gives a specific twist to the eminent role of critique: «Ask not what Menger can do for us - ask what you can do for Menger». The contributions to this issue (in different ways and degrees) are approaching Menger’s thought from both ends: some of them primarily include reflections and findings regarding Menger’s contribution and role in the development of economics (“what he did for us”), and others focus on “what we can do” for the Mengerian heritage, which includes critical perspectives on his theoretical edifice as well as contemporary contributions developing his ideas in a way strengthening their role as integrative aspects of scientific economics.

2. The evolutionary potential of theories and paradigmatic modernisation

As argued in Gilles Campagnolo’s and Richard Sturn’s contribution to the final roundtable conversation, Menger promoted a variety of economic liberalism which was “modern” in his time, but also by the standards of our time. This liberalism was supported by an original combination of economic methodology and economic concepts. To a certain extent, he grasped what was in the air and attempted to transform it into a systematic analysis. As emphasised in the roundtable conversation, an even more interesting aspect of Menger’s thought may yet be found in the way he tried to make sense of (and to theorize) the complexities and vicissitudes of the open-ended process characterising modern economies and societies.

2.1. Epistemic institutionalism and complexity

Employing a process-oriented perspective for analysing developments in the sphere of social science, Peter Boettke is making explicit “progress” in economics as a complex evolutionary process, as alluded to in the above remarks and coming to the fore at greater length in the roundtable. He considers modernity along the lines of Kenneth Boulding’s notion of the “evolutionary potential” of seminal contributions in economics. This is accompanied by a specific theorisation of the fact that the developments bringing about progress in economics cannot be properly accounted for by way of Whig history: «Not all that is good in the ancients is embodied in the moderns».

This suggests that unreflective modernism is ill-suited to discuss “Menger’s modernity.” Instead, Boettke expands on the question: “What is the evolutionary potential of Menger?” in the following way: Starting from point A (the traditional interpretation of Menger as one of the main protagonists of the “marginalist revolution” with some peculiarities) economics evolved towards point B (mainstream economics). However, re-reading Menger more accurately could provide a starting point C. Point C is based on Mengerian specificities such as his conception of the economic actors, his focus on institutions, and the embedded nature of economic transactions. The embedded nature of economic transactions within broader legal, political and social contexts is central to Menger and sets him apart from the early and later marginalists. Point C allows for reconstructing an alternative path which economic analysis might have taken and still may take. Thus, our task is to explore the path from point C to a point D, including a cluster of (actual and potential) developments of contemporary economics. In the context of this broad perspective, a more specific objective of the paper is to consider the evolutionary path from C to D specifically referring to Boettke’s brand of epistemic institutionalism. According to Boettke this got lost in the mainstream but has an evolutionary potential as an empirical-realistic theory, including a research program for comparing different institutional settings in their ability to support coordination. Pertinent analyses are focussing on the potentials of different institutional arrangements to generate knowledge and to support coordination.

In a comparable way, Menger’s contributions to economics may be seen as coherent elements of the nucleus from which the modern scientific paradigm of complexity economics is evolving as a body of knowledge including ideas, concepts, and specific research tools. This is the point of view put forward by Sandye Gloria in the roundtable and in Richard Arena’s paper. They both elaborate on a kind of paradigmatic modernity of the founder of the Austrian school. Arena suggests that the way Menger considers time, rationality and uncertainty displays an analytical and methodological consistency allowing for a reconsideration of Menger’s contribution to economics in line with complexity economics. Gloria starts from the ontological specificity of the Mengerian approach in order to identify the architecture of a comprehensive Neo-Mengerian research program. The ensuing research program combines Mengerian elements, such as the view of the economy as an open-ended process with a genetic-causal approach consisting in focussing on process to explain socio-economic phenomena. This is to be complemented by the mathematical tools adapted to such an endeavour: functional mathematics are most likely unsuitable for investigating phenomena in Menger's sense. Instead of focussing the analysis on the properties of end-state situations, the task of the social scientist should be oriented towards understanding/explaining, in this generativist sense, how social regularities and organic institutions emerge out of individual decentralised interactions in situations of limited knowledge and uncertainty.

2.2. Anticipating entrepreneurship

The above-sketched discussion of evolutionary potential in the context of new paradigms attempts to steers clear of questions pertinent to “anticipation” and “forerunners” in a narrow sense. The latter are notoriously difficult, given the multifaceted and nonlinear nature of the filiation of ideas and concepts in economics. Moreover, the Viennese Austrian School Austrian School founded by Menger included eminent theorists (Böhm-Bawerk, Wieser, Mises, Schumpeter). Together they can be considered a remarkable and interesting case of collective knowledge production, even though talk of a “School” should not be mistaken for a homogeneous body of theory. In this setting which included a variety of strong protagonists who to some extents pursued their own theoretical agenda, it may be difficult to disentangle the roles of the dramatis personae regarding the way in which “Austrian” ideas and concepts could function as a source of inspirations for later generations of scholars. This is reflected by the paradigmatic diversity of Austrian/Mengerian influences. While certain thought collectives no doubt see themselves as Menger’s true heirs (we do not wish to assess such claims here), there can be little doubt that Mengerian/Austrian ideas influenced other economic paradigms, such as neoclassical economics, evolutionary economics, or (as argued above) complexity economics.

Entrepreneurship is a good example for pertinent intricacies. Gilles Campagnolo's article, “Carl Menger on Time and Entrepreneurship” suggests that various conceptions of entrepreneurship taken up by modern Austrians can be found in Menger’s writings. Menger’s definition of entrepreneurial agency includes core elements, such as risk, historical time, and knowledge. The author further suggests that these elements (intrinsic to the specificity of entrepreneurial decision-making) should be seen in the context of the philosophical systems important for Menger, notably those of Aristotle or of Kant. Perhaps surprisingly for some readers, Campagnolo also establishes a pertinent link to Karl Polanyi.

2.3. Economic expertise and modern knowledge-based policy-making

As a protagonist of the modern age, Menger developed a reflective and constructive stance regarding the potentials offered by the use the scientific knowledge for guidance in socio-economic affairs – a distinctive characteristic of the modern era in which the idea of rational reform is looming large. Moreover, he did not shy away from applying economic expertise to policy challenges where his expertise was demanded. This was accompanied by an enlightenment ethos emphasising the importance of sound and balanced economic knowledge for public policy, documented by the way in which he fulfilled his duties as instructor to Crown Prince Rudolf, the heir of Habsburg monarchy’s throne. While his view of the rôle of expert knowledge avoids technocratic pretensions later epitomised as «constructivism» by Friedrich von Hayek, he certainly did not endorse extreme laissez-faire in the sense of therapeutic nihilism.

Inter alia, this comes to the fore in Menger’s writings on monetary theory and policy. Indeed, his expert advice (beyond his role as an instructor of the Crown Prince) concerns in particular work on monetary theory and policy. Two pieces of this issue address this aspect of Menger’s modernity as an expert in monetary affairs. In his contribution “The monetary theories of Carl Menger and Friedrich von Wieser: a comparative study”, Karl-Friedrich Israel compares two comprehensive articles on money by Menger and Wieser: Menger’s (1970) encyclopaedia (Handwörterbuch der Staatswissenschaften) entry on money and von Wieser’s (1926) entry on monetary theory in the Handwörterbuch. Since those two articles are the last publications on the subject by both authors, one may reasonably consider them as the authors’ definitive statements on monetary theory. More specifically, Israel examines the practical implications for monetary policy of the differences between the two Austrian authors, with Menger being less optimistic/more cautious than Wieser on the scope of control of monetary-induced prices fluctuations by monetary authorities.

As Guenther Chaloupek recalls in his paper “Monetary theory and policy: the difficult relationship of Menger’s theory of money and his positions on currency reform and monetary policy”, Menger was one of the experts of a «currency enquete commission» in 1892. Chaloupek examines the coherence of Menger’s monetary theory and his policy stance regarding the Austrian currency reform of 1892 and the introduction of the gold standard in the Habsburg monarchy. This confrontation allows for highlighting some limits and problems of Menger’s theory of money. Moreover, the piece includes a critical examination of the extent to which Menger endorsed a laisser-faire stance in monetary affairs.

3. Menger and beyond

3.1. Overcoming limitations and misinterpretations

Properly understood, “critique” means distinguishing between what is good and bad, or right and wrong. Thus critique should not be translated as “condemnation,” “refutation,” let alone “elimination.” In his paper as well as in his contribution to the roundtable, Heinz Kurz gives a rather critical account of Menger’s value theory and his overall role as an economist. His contribution may be viewed as attempt to identify preconditions for sound starting points from which contemporary economists of the 21^st century (Menger’s heirs, as it were) may contribute to the creative development of seminal ideas and theorisations put forward by the first protagonist of Austrian economics. Kurz’s contributions are a warning against blind admiration and worshipping. They put to the forefront tasks which are sometimes forgotten by scholars who wish to benefit from a great author in their own theoretical endeavours. He refers to Weber’s interpretation of scientific greatness: a great work «cries out to be surpassed and rendered obsolete», it will enable new developments as limits are overcome or, as Menger himself said, it is an incentive to follow a path where error is not entirely without merit. More specifically, Kurz chooses to focus on Menger’s value theory and stresses some of the technical and analytical problems attached to it. Does this cast doubt on Menger’s modernity, and if yes, in which sense? And why and how does this matter? These questions cannot be answered in this introduction. However, given the multiparadigmatic and multifaceted nature of progress in economics (highlighted in several passages of the roundtable conversation and demonstrated by the paradigmatic diversity of perspectives on Menger represented in this special issue), it may suffice to state that being clear regarding the limits of an author does not prevent making creative use of his or her ideas and concepts, but rather is the precondition of progressive evolution.

3.2. Rationalism, subjectivism, and apriorism

At a different level (even though ultimately with a similar purpose) are attempts to correct misinterpretations. Stefano Solari’s piece on “Menger and the continental epistemology of uncertainty” takes issue with interpretations according to which Carl Menger endorses an extremely rationalist stance. According to Solari, this interpretation would be a mistake for at least two reasons related to important influences shaping Menger’s thought. Firstly, because it rests on playing down the Lockean epistemological foundations related to Menger's subjectivism. Moreover, some parallels between Menger's subjectivism and pertinent approaches by Locke and Bacon should not be overlooked. Secondly, Menger's epistemology is also indebted to authors such as Galiani, Condillac, and Turgot. Over and above all, the article suggests that Menger’s theory of choice is owing much to “the continental epistemology of uncertainty”, notably including the Italian branches of continental socio-economic traditions from the end of the 17^th to the beginning of the 19^th century, such as Vico, Galbani, Beccaria, Cattaneo or Rosmini – who (along with the theorists already mentioned) are playing important roles in the development of modern thought and its vicissitudes. Menger took on board such heritage – and he gave it a modern twist by his integration of time, uncertainty, and subjectivism in a framework of theoretical economics.

Scott Scheall questions the status of methodological apriorism as the methodology of Austrian school, confronting Menger’s methodological position with Ludwig von Mises’s development and defence of the Human action axiom and its implications. To what extent, asks Scheall, would Menger have recognised this approach as compatible with his own methodological writings? While such comparisons have been made by authors such as Barry Smith, Scheall specifically refers to Karl Menger’s reminiscences of discussions with his father to give further support to the claim that Carl Menger subscribed to a much less extreme apriorism than Mises with regard to the theoretical social sciences, especially with respect to what is called «the Greater Certainty Thesis» and «the Reason Without Experience Thesis».

However, questioning of the association (if not identification) of Austrian method with Mises’ apriorism (which is common in some currents of contemporary Austrian Economics) is only one aspect of Scheall’s enquiry. In the paper he moreover argues that Carl Menger’s methodological stance would be compatible rather with the tolerant methodological stance of his son and he argues that contemporary Austrians have good reasons for endorsing reasonable pluralism and tolerance. Scheall’s contribution to portraying Menger as a modern thinker is thus twofold: it undermines kinds of dogmatism which are dubious in terms of an adequate understanding of Menger’s theory, and it suggests a respectable alternative path for contemporary theorists interested in the evolutionary potential of Menger’s contributions to the understanding of market processes and the complexities of their socio-economic environment.

Graz and Nice, August 2022

Sandye Gloria, Ludovic Ragni, and Richard Sturn (Editors of the Special Issue)

Notes

1 Roundtable at the International Conference: Carl Menger one century later. Nice, 24th–26th November 2021. The papers of this special issue are revised versions of a selection of contributions presented at the conference.

2 For a discussion of approaches to the History of Economic Thought, see Marcuzzo (2008).