Founder of the Austrian School of economics
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  • Carl Menger

    Carl Menger (23 February 1840 - 26 February 1921) was an Austrian economist and the founder of the Austrian School of economics. Menger contributed to the development of the theory of marginalism (marginal utility), which rejected the cost-of-production theories of value, such as were developed by the classical economists such as Adam Smith and David Ricardo. Menger used his “Subjective Theory of Value” to arrive at what he considered one of the most powerful insights in economics: both sides gain from exchange.

    Reference

    Menger, Carl (1840-1921), by Lawrence H. White, The Encyclopedia of Libertarianism, 15 Aug 2008
    Biographical essay
    "Carl Menger was a professor of economics at the University of Vienna and the founder of the Austrian School of economic thought. Among economists, he ranks as the 19th century's greatest contributor to the theory of spontaneous order—the social-scientific tradition supporting the libertarian view that a free society can generate beneficial and sophisticated institutions without state involvement. Menger's highly original approach to the formation of market prices and institutions marked an important advance over the classical economics of Adam Smith ..."
    Related Topics: Labor, Money

    Born

    23 Feb 1840, in Neu Sandez (Nowy Sącz), Poland

    Died

    26 Feb 1921, in Vienna

    Web Pages

    Register of the Carl Menger Papers, 1857-1985
    Rare Book, Manuscript, and Special Collections Library, Duke University

    Articles

    Book Review: Principles of Economics by Carl Menger, by Roger Ream, The Freeman, Feb 1982
    "... it was Menger's Grundsätze (1871), along with the works of Léon Walras and William Stanley Jevons, that began the modern period of economic thought. ... His Principles is so lucid and understandable that it can serve as an introduction to economics for the intelligent laymen with no background in the subject."
    Government: Creator of Uncertainty, by Murray Rothbard, Future of Freedom, Jul 2000
    Discusses economic subjectivism, the principle that different persons attach different values to things or events, as evidenced by the early 2000 stock market downturn
    "Up to the time of Carl Menger, founder of the Austrian school in the late 19th century, much of classical economics was preoccupied with what was regarded as objective, wealth for example, which purportedly existed apart from human plans and purposes. Menger put acting, valuing man at the center of economic study. For Menger, understanding economic phenomena meant seeing them through the eyes of the relevant actors. ... In a market economy consumers endow objects with value, then, following Menger's key principle, value flows from those objects back to the factors of their production."
    Hayek and the Scots on Liberty [PDF], by Gerald P. O'Driscoll, Jr., The Journal of Private Enterprise, 2015
    Explores the influence of the eighteenth-century Scottish moral philosophers, mainly David Hume and Adam Smith, on Hayek's thinking about liberty and concepts such as natural law theory
    "Menger ... argued that a 'portion' of social phenomena 'is not the result of agreement of members of society or of legislation'. He continued: 'Language, religion, law, even the state itself, and, to mention a few economic social phenomena, the phenomena of markets, of competition, of money, and numerous other social structures are already met with in epochs of history where we cannot properly speak of a purposeful activity of the community as such directed at establishing them'. On the same page, he then famously posed 'perhaps the most noteworthy problem of the social sciences.'"
    Ludwig von Mises, socialism's greatest enemy: His life and times, by Jim Powell
    Lengthy biographical essay on Mises, including details on Menger and Böhm-Bawerk
    "Then Mises had a revelation: 'Around Christmas, 1903, I read Menger's Grundsatze der Volkswirtschaftslehre [Principles of Economics] for the first time. It was the reading of this book that made an "economist" of me.' ... Menger's great book, published in 1871, presented a case that prices reflected the subjective values of customers in free markets. ... Menger further resolved the question of value by what came to be known as marginal utility analysis."
    The life and times of F.A. Hayek, who explained why political liberty is impossible without economic liberty, by Jim Powell
    Lengthy biographical essay, with extensive quotes both from Hayek and others (including Keynes)
    "Hayek was drafted into the Austrian army in March 1917 ... He contracted malaria but passed time reading about the Austrian School of economics which maintained that market prices are driven by the subjective valuations of customers. 'I really got hooked,' he recalled, 'when I found [Carl] Menger's Grundsatze [Principles of Economics] such a fascinating book, so satisfying.' Hayek was especially interested in Menger's "conception of the spontaneous generation of institutions.'"

    Books

    Carl Menger and His Legacy in Economics
        by Bruce Caldwell, 1991
    Annual supplement to History of Political Economy, volume 22

    Books Authored

    Investigations into the Method of the Social Sciences, 1883
    Principles of Economics [PDF], 1871
    Text available online at the Ludwig von Mises Institute, based on the 1976 New York University edition
    Related Topic: Austrian Economics

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