Lost cause

I want to quote something from the chapter on the “Austrian School” from Mises’ “Memoirs”; some paragraphs on Mises from the introduction by Friedrich Hayek first-

Apart from the small circle of young theoreticians who met at his office, and some highly gifted friends in the business world who were similarly concerned about the future and who are mentioned in the following, he only encountered genuine understanding among occasional foreign visitors like the Frankfurt banker Albert Hahn, whose work in monetary theory he smiled at, however, as a vain sin of youth.

Yet he did not always make it easy for them. The arguments by which he supported his unpopular views were not always completely conclusive, even though some reflection could have shown that he was right. But when he was convinced of his conclusions and had presented them in clear and plain language—a gift that he possessed to a high degree—he believed that this would also have to convince others and only prejudice and stubbornness prevented them from understanding. For too long he had lacked the opportunity of discussing problems with intellectual equals who shared his basic moral convictions in order to see how even small differences in one’s implicit assumptions can lead to different results. This manifested itself in a certain impatience that was easily suspected of being an unwillingness to understand, whereas an honest misunderstanding of his arguments was the case.

I must admit that I myself often initially did not think his arguments to be completely convincing and only slowly learned that he was mostly right and that, after some reflection, a justification could be found that he had not made explicit. And today, considering the kind of battle that he had to lead, I also understand that he was driven to certain exaggerations, like that of the a priori character of economic theory, where I could not follow him.

For Mises’s friends of his later years, after his marriage and the success of his American activity had softened him, the sharp outbursts in the following memoirs, written at the time of his greatest bitterness and hopelessness, might come as a shock. But the Mises who speaks from the following pages is without question the Mises we knew from the Vienna of the twenties; of course without the tactful reservation that he invariably displayed in oral expression; but the honest and open expression of what he felt and thought. To a certain extent this may explain his neglect, even though it does not excuse it. We, who knew him better, were at times outraged, of course, that he did not get a chair, yet we were not really surprised. He had too much to criticize about the representatives of the profession into which he was seeking entrance to appear acceptable to them. And he fought against an intellectual wave which is now subsiding, not least because of his efforts, but which was much too powerful then for one individual to successfully resist.

That they had one of the great thinkers of our time in their midst, the Viennese have never understood.

What follows is a major part of chapter 4-

When I first came to the university, Carl Menger was nearing the end of his teaching career. There was little attention paid the Austrian School of economics at the university, and I had no interest in it at the time.

Around Christmas, 1903, I read Menger’s Grundsätze der Volkswirtschaftslehre [Principles of Economics] for the first time. It was through this book that I became an economist.

Many years passed before I encountered Carl Menger in person. When I met him he was already over seventy years old, hard of hearing, and plagued by an eye disorder. His mind, however, was young and vigorous. I have asked myself again and again why this man did not make better use of his last decades. That he could still do brilliant work was evidenced by his essay, “Geld,” [“Money”] which he contributed to the Handwörterbuch der Staatswissenschaften [Encyclopedia of State Sciences].

I believe I know the cause of Menger’s discouragement and premature silence. His keen intellect had recognized in which direction Austria, Europe, and the world were pointed; he saw this greatest and highest of all civilizations rushing toward the abyss. He had anticipated the atrocities with which we are faced today; he knew the consequences of the world’s turning away from liberalism and capitalism, and had done what he could to battle these trends. His book, Untersuchungen über die Methode der Sozialwissenschaften [Investigations into the Method of the
Social Sciences…
], was intended as a polemic effort to counter the destructive intellectual currents with which Prussian universities were poisoning the world. He realized that his fight was futile and hopeless, and became filled with a dark pessimism that exhausted his strength. He passed this pessimism on to his student and friend, Rudolf, successor to the throne. The crown prince took his own life because of despair over the future of his empire and that of European civilization, not because of a woman. The young girl had had a death wish of her own and he took her into death with him; he did not commit suicide on her account.

My grandfather had a brother who died many years before I was born. This brother, Dr. Joachim Landau, was a liberal member of the Austrian Parliament and a close friend of his party colleague, Dr. Max Menger, brother of Carl Menger. One day he told my grandfather about a conversation he had had with Carl Menger.

According to my grandfather, as told to me around 1910, Carl Menger had made the following remarks:
The policies being pursued by the European powers will lead to a terrible war ending with gruesome revolutions, the extinction of European culture and destruction of prosperity for people of all nations. In anticipation of these inevitable events, all that can be recommended are investments in gold hoards and the securities of the two Scandinavian countries.

Menger’s savings, in fact, were invested in Swedish securities.

One who so clearly foresees disaster and the destruction of everything he deems valuable before his fortieth year cannot avoid pessimism and depression. Ancient rhetoricians were careful to consider the kind of life King Priam would have had, had he at the age of twenty already foreseen the fall of Ilium! Carl Menger barely had the first half of his life behind him when he recognized the inevitability of the demise of his own Troy.

This same pessimism consumed all sharp-sighted Austrians. The tragic privilege attached to being Austrian was the opportunity it afforded to recognize fate. Grillparzer’s melancholy and peevishness arose from this source. The feeling of being powerless in the face of impending disaster drove the purist and most able of patriots, Adolf Fischof, into isolation.

It is understandable that I discussed Knapp’s Staatliche Theorie des Geldes [The State Theory of Money] with Menger frequently.

“It is,” said Menger,

the logical development of Prussian police science. What should one make of a nation whose elite, after two hundred years of economics, admire such nonsense and perceive it as an epiphany, when in fact it isn’t even new? What can one expect of such a people?


It is necessary to correct the misunderstandings that can be called forth by using the expression “Austrian School.” Neither Menger nor Böhm-Bawerk wanted to found a school in the sense customarily used in university circles. They never attempted to turn young students into blind disciples, nor did they, in turn, provide these same students with professorships. They knew that through books and an academic course of instruction they could promote an understanding suited to dealing with economic problems, thus rendering an important service to society. They understood, however, that they could not rear economists. As pioneers and creative thinkers, they recognized that one cannot arrange for scientific progress, nor breed innovation according to plan. They never attempted to propagandize their theories. Truth would prevail of its own accord when man possessed the faculties necessary to perceive it. Using impertinent means to cause people to pay lip service to a teaching was of no use if they lacked the ability to grasp its substance and significance.

Menger made no efforts to extend favors to colleagues that would be reciprocated with recommendations for appointments. As minister and then ex-minister of finance, Böhm-Bawerk could have used his influence; he always spurned such behavior….

Menger’s position on such questions is best illustrated by a note discovered by Hayek while perusing Menger’s scientific papers. It reads, “In science, there is only one sure method for the ultimate triumph of an idea: one should allow any contrary notion to run its course completely.” Schmoller, Bücher, and Lujo Brentano thought differently. They denied the opportunity to teach at German universities to those who did not follow them blindly.

Faculty positions at Austrian universities thus fell into the hands of the heirs of German historicism….In the German Empire they did not teach economics, but Marxism or Nazism. The same was true in Czarist Russia, where “legal” Marxism or economic history was taught in place of economics. The fact that professors and lecturers in Austria were allowed to teach economics was incompatible with the totalitarian claim of German “economic state sciences.”

The Austrian School of economics was Austrian in the sense that it emerged from the soil of an Austrian culture that National Socialism would trample down. In this soil, Franz Brentano’s philosophy could take root. In this soil, Bolzano’s epistemology, Mach’s empiricism, Husserl’s phenomenology, and Breuer’s and Freud’s psychoanalysis reached maturity. The air in Austria was free of the specter of Hegelian dialectics. In Austria, one did not feel it was his national duty to “overcome” the ideas of Western Europe. In Austria, eudaemonism, hedonism, and utilitarianism were not precluded, but studied.

It would be a mistake to assume that the Austrian government promoted all of these great movements. On the contrary, it withdrew the teaching assignments of Bolzano and Brentano; it isolated Mach, and did not bother at all with Husserl, Breuer, and Freud. It valued the competent official in Böhm-Bawerk, not the economist.


The lifework of Böhm-Bawerk lies before us in splendid proximity. His masterful critique of old economics and his own theories have become our prized possessions. And yet, one can assert that Böhm could have produced even more had the circumstances allowed for it. He developed thoughts in seminar lectures and personal conversations that far exceeded those contained in his writings. But his physical constitution could not withstand the planning of grand and new undertakings. His nerves were no longer suited to hard work. Even the two-hour seminar had its effects. It was only through the greatest ordering of daily habits that he could muster the strength he needed for science. His entire endeavor belonged to economics; relaxation and enjoyment were found in symphony concerts.

Worries over Austria’s future and its culture darkened the evening of Böhm-Bawerk’s life. He suffered a heart attack a few weeks after the outbreak of the war. My unit was stationed at the vanguard, east of Trampol. I was handed a newspaper carrying his obituary upon returning from patrol duty one evening early in September.

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