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The Marginal Revolutionaries: How Austrian Economists Fought the War of Ideas
A group history of the Austrian School of Economics, from the coffeehouses of imperial Vienna to the modern-day Tea Party
The Austrian School of Economics—a movement that has had a vast impact on economics, politics, and society, especially among the American right—is poorly understood by supporters and detractors alike. Defining themselves in opposition to the mainstream, economists such as Ludwig von Mises, Friedrich Hayek, and Joseph Schumpeter built the School's international reputation with their work on business cycles and monetary theory. Their focus on individualism—and deep antipathy toward socialism—ultimately won them a devoted audience among the upper echelons of business and government.
In this collective biography, Janek Wasserman brings these figures to life, showing that in order to make sense of the Austrians and their continued influence, one must understand the backdrop against which their philosophy was formed—notably, the collapse of the Austro‑Hungarian Empire and a half‑century of war and exile.
The Austrian School of Economics—a movement that has had a vast impact on economics, politics, and society, especially among the American right—is poorly understood by supporters and detractors alike. Defining themselves in opposition to the mainstream, economists such as Ludwig von Mises, Friedrich Hayek, and Joseph Schumpeter built the School's international reputation with their work on business cycles and monetary theory. Their focus on individualism—and deep antipathy toward socialism—ultimately won them a devoted audience among the upper echelons of business and government.
In this collective biography, Janek Wasserman brings these figures to life, showing that in order to make sense of the Austrians and their continued influence, one must understand the backdrop against which their philosophy was formed—notably, the collapse of the Austro‑Hungarian Empire and a half‑century of war and exile.
368 pages, Hardcover
First published September 24, 2019
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Displaying 1 - 21 of 21 reviews
November 8, 2019
An important and at times fascinating history of a very significant political movement that hid under the cover of economics. The Austrian school economics, which then led to the Chicago school economics have been the dominant social ideology over the last several decades. Call it neoliberalism, it all comes down to these men. The book itself is stronger in some parts than others. I thought the first half was sort of a slog and then the second half really resonates as it addresses the actual ideas of these scholars. I would have liked to see more analysis of why and how the Austrians became so influential and a bit more engagement with their theories. But the book is still worth reading for anyone interested in economics or political history.
June 16, 2021
This is really a fantastic book. I've been familiar with the work of Mises, Hayek, and Menger for decades, and thought that I knew a lot about the Austrian school. But I learned a ton from this book. The book really shines in its coverage of the early "first generation" Viennese Austrians such as Menger and Böhm-Bawerk. It provides a fairly thorough coverage of the main ideas and debates that occupied those theorists, but also gives the reader a vivid sense of the social and cultural life of the school. As the Austrians migrate to America, one learns not only about Mises and Hayek, but also about figures who are today less commonly associated with the Austrian school such asJoseph Schumpeter and Oskar Morgenstern. The book closes with a discussion of the contemporary state of Austrian economics, with attention to the split between the branches of the school associated with George Mason University and the Ludwig Von Mises Institute, and notes the connections between the latter and the alt-right.
Libertarian critics like Steve Horwitz and Richard Ebeling have argued in their reviews of the book that Wasserman's progressive political commitments distort his understanding of the Austrian school, leading him to focus too much, for instance, on the ways in which monied political interests have influenced the direction of its scholarship and activism. This didn't jump out at me as a problem when I was reading the book. From the Rockefeller Foundation to the Volker Fund to Charles Koch, the Austrian school (especially in its American incarnation) really *has* been intimately connected with the business community. And the interests of that community has certainly had an impact on the way in which Austrian ideas have developed and spread - Mises's intransigence always played better with businessmen than Hayek's subtler and more contingent defense of liberalism, and Hayek's shift toward more doctrinaire libertarian views toward the end of his career was surely influenced by the complex network of institutions funded and supported by the business community. All of that is important for historians of ideas to note, regardless of their ideological leanings. But, of course, all of it is irrelevant to the question of whether the ideas are true.
For a book of just over 300 pages, Wasserman's book presents an astonishing amount of historical content and analysis. It is engagingly written, and overall, I think, quite persuasive in its historical argument. Highly recommended.
Libertarian critics like Steve Horwitz and Richard Ebeling have argued in their reviews of the book that Wasserman's progressive political commitments distort his understanding of the Austrian school, leading him to focus too much, for instance, on the ways in which monied political interests have influenced the direction of its scholarship and activism. This didn't jump out at me as a problem when I was reading the book. From the Rockefeller Foundation to the Volker Fund to Charles Koch, the Austrian school (especially in its American incarnation) really *has* been intimately connected with the business community. And the interests of that community has certainly had an impact on the way in which Austrian ideas have developed and spread - Mises's intransigence always played better with businessmen than Hayek's subtler and more contingent defense of liberalism, and Hayek's shift toward more doctrinaire libertarian views toward the end of his career was surely influenced by the complex network of institutions funded and supported by the business community. All of that is important for historians of ideas to note, regardless of their ideological leanings. But, of course, all of it is irrelevant to the question of whether the ideas are true.
For a book of just over 300 pages, Wasserman's book presents an astonishing amount of historical content and analysis. It is engagingly written, and overall, I think, quite persuasive in its historical argument. Highly recommended.
April 14, 2021
Using previously unknown archival material, Wasserman offers an interesting historical account of the Austrian school of economics and its "marginal revolution." The "marginal revolution" refers to the profound change in economics that took place when economist Carl Menger and others in the Austrian school revolutionized the way value was understood. It marked a shift from classical economics (objective/labor theories of value) to modern economics (subjective/marginal theories of value). Menger, and those following in his footsteps, solved the "water-diamond paradox" by asserting that what determines the price of a good is not its total utility. Rather, it is the good's "marginal utility." In other words, the price of a good is not derived from a good's broad utility (e.g., water has extremely high utility because we need it to survive), but rather utility of a single unit of a good (e.g., a single gallon of water is not expensive because water is plentiful and there are myriad substitutes). This explains why a diamond is much more expensive than a gallon of water - despite water having greater overall utility than a diamond, a gallon of water is much more plentiful and easily obtainable than a diamond (or diamond substitutes).
From this starting point, Austrian economists developed a comprehensive theoretical network spanning issues from time-preference to theories of competition to boom-bust business cycles. The Austrian school was highly influential in its heydey and remains so in certain academic and political circles. As an adherent to the Austrian school myself, I found Wasserman's book highly interesting (though somewhat dry in some parts). His account details the development of the Austrian school as well as the many branching pathways its members took. While I enjoyed reading about many of my heroes such as Mises, Bawerk, and Hayek, I took particular pleasure in discovering lesser known Austrians of whom I had never heard. Wasserman discusses the conflicts and points of theoretical disagreement between members of the school as well as their continuing influence on "Austrian" thought. Overall, as a political history, The Marginal Revolutionaries shines.
I have two major complaints with the book. First, Wasserman struggled with some of the economic theory he discussed in the book. He doesn't seem to understand praxeology, time-preference/interest, or other important concepts within Austrian economics. Second, despite maintaining an objective, academic tone throughout most of the book, Wasserman turned his final chapter into a baseless hit-piece directed against American proponents of Austrian economics such as Murray Rothbard, Tom Woods, Ron Paul, Thomas DiLorenzo, George Selgin, etc. It felt like Wasserman was trying to mimic the controversy of Nancy McLean's ridiculous hit-piece, Democracy in Chains. Unfortunately, that decision left a sour taste in my mouth as I finished what was otherwise an interesting and engaging read.
From this starting point, Austrian economists developed a comprehensive theoretical network spanning issues from time-preference to theories of competition to boom-bust business cycles. The Austrian school was highly influential in its heydey and remains so in certain academic and political circles. As an adherent to the Austrian school myself, I found Wasserman's book highly interesting (though somewhat dry in some parts). His account details the development of the Austrian school as well as the many branching pathways its members took. While I enjoyed reading about many of my heroes such as Mises, Bawerk, and Hayek, I took particular pleasure in discovering lesser known Austrians of whom I had never heard. Wasserman discusses the conflicts and points of theoretical disagreement between members of the school as well as their continuing influence on "Austrian" thought. Overall, as a political history, The Marginal Revolutionaries shines.
I have two major complaints with the book. First, Wasserman struggled with some of the economic theory he discussed in the book. He doesn't seem to understand praxeology, time-preference/interest, or other important concepts within Austrian economics. Second, despite maintaining an objective, academic tone throughout most of the book, Wasserman turned his final chapter into a baseless hit-piece directed against American proponents of Austrian economics such as Murray Rothbard, Tom Woods, Ron Paul, Thomas DiLorenzo, George Selgin, etc. It felt like Wasserman was trying to mimic the controversy of Nancy McLean's ridiculous hit-piece, Democracy in Chains. Unfortunately, that decision left a sour taste in my mouth as I finished what was otherwise an interesting and engaging read.
May 9, 2020
The Austrian School of Economics has become a centerpiece of popular conservative thinking from the Koch brothers to Glenn Beck, from think tanks like the Rockefeller Foundation to the von Mises Institute. But what was it, and what did (does?) it contribute? That is the topic of Janek Wasserman's The Marginal Revolutionaries: How Austrian Economists Fought the War of Ideas.
A Thumbnail Sketch
The Austrian School was centered at the University of Vienna. Wasserman—an historian of intellectual thought at the University of Alabama—considers four stages in the Austrian School's development:
Prior to the marginal revolution of the latter 19th century, the relative prices of goods—the main actors on the stage of economic theory—were explained solely by supply-side factors. David Ricardo, introducing the notion of diminishing returns, attributed relative corn prices to the marginal labor content of corn—the labor contained in the last bushel of corn produced; Marx's theory of surplus value rejected capital costs (interest) as a cost of production and appealed to a labor theory of value, emphasizing the relative average labor contents in production.
Wasserman traces the School's origin to two seminal figures at the University of Vienna . The first was Carl Menger, who remained the leader throughout his career. In 1871 Menger's The Principles of Economics was published, a seminal act in the creation of the Austrian School. Menger introduced the notion of consumer demand as a factor in relative prices: a consumer will buy a good up to the point where the marginal cost of production is equated to the marginal utility of the good. Thus, both consumer demand and producer supply decisions combine to form the matrix of observed relative prices.
The notion of marginal utility, or more broadly, of thinking at the margin, was not born with Menger—marginal analysis had been introduced by Ricardo in the 1820s and marginal utility was introduced by William Stanley Jevons in the 1860s. Menger's exposition went beyond Jevons but it would be a decade before this new view would be embedded in price theory. In part the decade-long delay was because Menger's writing was Teutonically opaque; in part it was because the University of Vienna was considered an intellectual backwater in the 1870s, clearly secondary to the German universities.
Menger's colleague in forming the Austrian School was Friedrich von Weisser. Von Weisser's primary contributions were his emphasis on entrepreneurship and, in his 1889 Natural Value, his consideration of imputed costs (now called opportunity costs) as a factor in a firm's decision to alter its stock of capital (plant and equipment).
By 1880 Menger was the acknowledged leader of the Austrian School. He gathered around himself colleagues like von Weisser and a group of students who went on to solidify their identity as the second generation in the School. But before the School became an intellectual leader it had to fight a methodological battle with the German Historical School led by Gustav Schmoller at the University of Bonn. The Historical School advocated statistics and empirical observation as the foundation for economy analysis; the Austrian School saw pure theory as the way to progress. This Methodenstreit peaked in 1884 in a draw—the future of economics would be one of pure theory and empiricism. But the Austrian School survived.
Stage 2: The Golden Age—1900-1914
Among the Vienna students in the second generation of the school the leader was Eugen von Böhm-Bawerk. As Marxism rose on the continent, Marx's rejection of profit (or what we would call now the "cost of capital") as a necessary cost of production fell on deaf ears in Vienna. Böhm led the charge in his 1890 Capital and Interest, a book that established the place of the cost of capital in determining relative production costs.
In that book, Böhm argued that the foundation of a rate of interest (read "rate of profit") was in Time, the time required to produce goods; he called this the "round-aboutness" of production: in order to produce a wheat crop, investments had to be made long before the final product was sold—ore had to be dug from the ground and processed into metals to fashion tools, which then had to be applied to the land to plow and reap the crop, which then had to be distributed to processor who fashioned the wheat into products sold to final consumers. An entrepreneur's job was to create and to wait, and waiting had a cost.
That cost, the "cost of capital," derived from basic human behavior. Everyone, capitalists included, preferred reaping their rewards earlier rather than later: a "dollar" today is preferred to a "dollar" tomorrow. As a result, in order to make an investment a capitalist had to anticipate earning more the longer he waited for his reward, that is, he had to earn profit from an enterprise and the required profit increased with the waiting time.
Thus, Böhm the "surplus value" seen by Marx was really a proper cost of production arising from the time invested in capital goods and resulting in the cost of capital. If two goods require the same direct labor but one required twice the waiting period, the cost of capital would be doubled and the price of the second good would be correspondingly higher due to its longer waiting period good. But for both Marx and Böhm the relative prices of two goods would be related to the relative contents of an essential input—either indirect labor or time.
This all made sense but Böhm's theory of interest was untestable: nobody ever developed a compelling measure of the degree of roundaboutness that could be used to test the theory. This was not a particular problem for the Austrian School because it rejected empiricism and valued pure theory. So Böhm's theory was a pure theory that "made sense" but could never be confronted with data to determine its value.
Böhm would become the intellectual leader of the second-generation Austrian School by offering a famous seminar attended by the School's best students. He also would change the School's orientation toward the real world by introducing an economic journal (Zeitschrift) to spread the message, and by involving the School in public service: members of the School served as ministers of finance and on government commissions. In this capacity Böhm led a commission that successfully recommended conversion of the bimetallic silver-gold standard into a pure gold exchange standard, and at another time he worked on a major tax commission; Schumpeter would become Austria's last Finance Minister in 1918.
As time passed and the influence of Marx's Das Kapital grew on the streets, the Austrian School took on the intellectual battle against socialism by working on its many contradictions and error. By fin-de-siècle's Vienna Austrian School had become a major intellectual force in Europe, and an important intellectual opponent of Marxian socialism.
Stage 3: The Inter-War Diaspora: 1914-1940
Böhm's seminar on finance attracted a number of brilliant students who spread the Austrian School's thought. Among the most prominent of Böhm's students in his seminar were Joseph Schumpeter, Friedrich von Hayek, and Ludwig von Mises. Many of Böhm's students went off to teach at universities in Germany, the Ukraine and elsewhere. Böhm's death in 1914 marked the end of the Austrian School's Golden Age.
The early 1920a was a period of difficulty for Austria and the Austrian School. The collapse of the Habsburg Empire followed by the separation of Austria and Hungary and the rise of a multitude of Balkan states created political uncertainty and affected the financial security of the University of Vienna. Added to this, rampant inflation and high unemployment in Austria ravaged the economy and called for policies to remedy the catastrophe.
Ludwig von Mises became the School's voice on macroeconomic policy. In 1912 he had published The Theory of Money and Credit in which he argued that economic booms and busts were the result of cycles in bank credit that created imbalances within the economy. A period of easy credit led to high and unsustainable investment in tangible capital (plant and equipment). When this imbalance became evident business failures occurred and capital investment fell, loans would be defaulted, banks would fail, and the credit flow would shut down. Only after a protracted period would the economy find a trough and begin to revive.
Mises also believed that "interventionism" by the State was counter-productive: efforts by the State to modify the situation by budget or monetary policies would prolong the period until recovery began. His advice in the early post-war period was budget austerity and a return to the pre-war gold exchange standard. We know now that that is just the wrong advice: these "classical" prescriptions only exacerbated the underlying problems, a result that Europeans of the 2010s also experienced following the financial collapse of some of its members (particularly Greece) in the fixed-exchange rate context of the Euro.
In the early 1920s a seminar given by von Mises attracted a third generation of talented students like Oskar Morgenstern, Friedrich Hayek, Gottfried Haberler, Fritz Machlup, and Alexander Gerschenkron. All would eventually emigrate to the U. S. as German antisemitism increased—Mises to Switzerland in 1934, then on to New York University in 1940; Schumpeter to Harvard in 1932, Morgenstern to Princeton in 1938; Haberler to Harvard in 1936; Hayek to the London School of Economics in 1931, then to the University of Chicago in 1938; Machlup in 1933 to the U. S. where he held several academic positions, the last at New York University; and Gerschenkron to Switzerland in 1934, after which he emigrated to the U. S, where, in 1945, he joined Haberler and Schumpeter at Harvard.
The School reached out for new lines of support in the 1920s. In 1927 Hayek and von Mises started the Austrian Institute for Business Cycle Research, supported by the Rockefeller Foundation. The Institute followed Hayek to the London School of Economics in 1931, then on to the University of Chicago in 1938. (It has since been renamed the Austrian Institute for Economic Research.)
In 1944 von Mises published his hoped-to-be-masterpiece Nationalökonomie ("Economics") in which he attempted to provide a consistent interpretation of Austrian economics. In his review Hayek remarked
Hayek has survived with a more vigorous voice. He is best known for The Road to Serfdom and for being awarded, jointly with the Swedish sociologist Gunnar Myrdal, the 1974 Nobel Prize in Economics. The announced basis of this accolade was
A Thumbnail Sketch
The Austrian School was centered at the University of Vienna. Wasserman—an historian of intellectual thought at the University of Alabama—considers four stages in the Austrian School's development:
Stage One—from 1880 to fin-de-siècle Vienna, when the school was just coming together with its adherents focusing on economic theory and serving as advisors to the Habsburgs.The School's underlying theme was how best to organize economic society, and its most prominent thrust was the ongoing debate between capitalism and socialism, a debate that began with Marx and hasn't entirely ended. The primary tenets of the Austrian School were
Stage 2—the Golden Age from 1900 to 1918, when the School's influence spread to the international stage as its students populated universities throughout Europe.
Stage 3: the interwar years 1918-1939 following the collapse of Habsburg Empire, when the School's influence spread out from Europe with the emigration of its leading lights.
Stage Four—the post WWII era when turned its attention to social and political policy in a Cold War environment.
1. Pure Theory over Empiricism: Understanding of human society cannot be obtained from data and statistics; it is only from pure theory that we can understand social and economic relationships.Among the sub-tenets are:
2. Philosophical Liberalism: the individual is the source of energy and progress and the proper decision-maker for society; the State cannot replace the vitality of the individual.
4. Reliance on Natural Processes over Intervention: The State should not intervene to correct economic problems like the business cycle; only patience and individual actions can do this.
5. Socialism can never produce economic outcomes that match the benefits of Capitalism.
1. Business cycles are largely the result of imbalances within the economy arising from excessive extension of credit and overinvestment in tangible capital (plant and investment). [von Mises]Stage 1: The Early Days: 1880-1900
2. Capitalism advances economic welfare through the actions of the entrepreneur and the process of creative destruction, in which old businesses fail and are replaced by new businesses. [Schumpeter]
Prior to the marginal revolution of the latter 19th century, the relative prices of goods—the main actors on the stage of economic theory—were explained solely by supply-side factors. David Ricardo, introducing the notion of diminishing returns, attributed relative corn prices to the marginal labor content of corn—the labor contained in the last bushel of corn produced; Marx's theory of surplus value rejected capital costs (interest) as a cost of production and appealed to a labor theory of value, emphasizing the relative average labor contents in production.
Wasserman traces the School's origin to two seminal figures at the University of Vienna . The first was Carl Menger, who remained the leader throughout his career. In 1871 Menger's The Principles of Economics was published, a seminal act in the creation of the Austrian School. Menger introduced the notion of consumer demand as a factor in relative prices: a consumer will buy a good up to the point where the marginal cost of production is equated to the marginal utility of the good. Thus, both consumer demand and producer supply decisions combine to form the matrix of observed relative prices.
The notion of marginal utility, or more broadly, of thinking at the margin, was not born with Menger—marginal analysis had been introduced by Ricardo in the 1820s and marginal utility was introduced by William Stanley Jevons in the 1860s. Menger's exposition went beyond Jevons but it would be a decade before this new view would be embedded in price theory. In part the decade-long delay was because Menger's writing was Teutonically opaque; in part it was because the University of Vienna was considered an intellectual backwater in the 1870s, clearly secondary to the German universities.
Menger's colleague in forming the Austrian School was Friedrich von Weisser. Von Weisser's primary contributions were his emphasis on entrepreneurship and, in his 1889 Natural Value, his consideration of imputed costs (now called opportunity costs) as a factor in a firm's decision to alter its stock of capital (plant and equipment).
By 1880 Menger was the acknowledged leader of the Austrian School. He gathered around himself colleagues like von Weisser and a group of students who went on to solidify their identity as the second generation in the School. But before the School became an intellectual leader it had to fight a methodological battle with the German Historical School led by Gustav Schmoller at the University of Bonn. The Historical School advocated statistics and empirical observation as the foundation for economy analysis; the Austrian School saw pure theory as the way to progress. This Methodenstreit peaked in 1884 in a draw—the future of economics would be one of pure theory and empiricism. But the Austrian School survived.
Stage 2: The Golden Age—1900-1914
Among the Vienna students in the second generation of the school the leader was Eugen von Böhm-Bawerk. As Marxism rose on the continent, Marx's rejection of profit (or what we would call now the "cost of capital") as a necessary cost of production fell on deaf ears in Vienna. Böhm led the charge in his 1890 Capital and Interest, a book that established the place of the cost of capital in determining relative production costs.
In that book, Böhm argued that the foundation of a rate of interest (read "rate of profit") was in Time, the time required to produce goods; he called this the "round-aboutness" of production: in order to produce a wheat crop, investments had to be made long before the final product was sold—ore had to be dug from the ground and processed into metals to fashion tools, which then had to be applied to the land to plow and reap the crop, which then had to be distributed to processor who fashioned the wheat into products sold to final consumers. An entrepreneur's job was to create and to wait, and waiting had a cost.
That cost, the "cost of capital," derived from basic human behavior. Everyone, capitalists included, preferred reaping their rewards earlier rather than later: a "dollar" today is preferred to a "dollar" tomorrow. As a result, in order to make an investment a capitalist had to anticipate earning more the longer he waited for his reward, that is, he had to earn profit from an enterprise and the required profit increased with the waiting time.
Thus, Böhm the "surplus value" seen by Marx was really a proper cost of production arising from the time invested in capital goods and resulting in the cost of capital. If two goods require the same direct labor but one required twice the waiting period, the cost of capital would be doubled and the price of the second good would be correspondingly higher due to its longer waiting period good. But for both Marx and Böhm the relative prices of two goods would be related to the relative contents of an essential input—either indirect labor or time.
This all made sense but Böhm's theory of interest was untestable: nobody ever developed a compelling measure of the degree of roundaboutness that could be used to test the theory. This was not a particular problem for the Austrian School because it rejected empiricism and valued pure theory. So Böhm's theory was a pure theory that "made sense" but could never be confronted with data to determine its value.
Böhm would become the intellectual leader of the second-generation Austrian School by offering a famous seminar attended by the School's best students. He also would change the School's orientation toward the real world by introducing an economic journal (Zeitschrift) to spread the message, and by involving the School in public service: members of the School served as ministers of finance and on government commissions. In this capacity Böhm led a commission that successfully recommended conversion of the bimetallic silver-gold standard into a pure gold exchange standard, and at another time he worked on a major tax commission; Schumpeter would become Austria's last Finance Minister in 1918.
As time passed and the influence of Marx's Das Kapital grew on the streets, the Austrian School took on the intellectual battle against socialism by working on its many contradictions and error. By fin-de-siècle's Vienna Austrian School had become a major intellectual force in Europe, and an important intellectual opponent of Marxian socialism.
Stage 3: The Inter-War Diaspora: 1914-1940
Böhm's seminar on finance attracted a number of brilliant students who spread the Austrian School's thought. Among the most prominent of Böhm's students in his seminar were Joseph Schumpeter, Friedrich von Hayek, and Ludwig von Mises. Many of Böhm's students went off to teach at universities in Germany, the Ukraine and elsewhere. Böhm's death in 1914 marked the end of the Austrian School's Golden Age.
The early 1920a was a period of difficulty for Austria and the Austrian School. The collapse of the Habsburg Empire followed by the separation of Austria and Hungary and the rise of a multitude of Balkan states created political uncertainty and affected the financial security of the University of Vienna. Added to this, rampant inflation and high unemployment in Austria ravaged the economy and called for policies to remedy the catastrophe.
Ludwig von Mises became the School's voice on macroeconomic policy. In 1912 he had published The Theory of Money and Credit in which he argued that economic booms and busts were the result of cycles in bank credit that created imbalances within the economy. A period of easy credit led to high and unsustainable investment in tangible capital (plant and equipment). When this imbalance became evident business failures occurred and capital investment fell, loans would be defaulted, banks would fail, and the credit flow would shut down. Only after a protracted period would the economy find a trough and begin to revive.
Mises also believed that "interventionism" by the State was counter-productive: efforts by the State to modify the situation by budget or monetary policies would prolong the period until recovery began. His advice in the early post-war period was budget austerity and a return to the pre-war gold exchange standard. We know now that that is just the wrong advice: these "classical" prescriptions only exacerbated the underlying problems, a result that Europeans of the 2010s also experienced following the financial collapse of some of its members (particularly Greece) in the fixed-exchange rate context of the Euro.
In the early 1920s a seminar given by von Mises attracted a third generation of talented students like Oskar Morgenstern, Friedrich Hayek, Gottfried Haberler, Fritz Machlup, and Alexander Gerschenkron. All would eventually emigrate to the U. S. as German antisemitism increased—Mises to Switzerland in 1934, then on to New York University in 1940; Schumpeter to Harvard in 1932, Morgenstern to Princeton in 1938; Haberler to Harvard in 1936; Hayek to the London School of Economics in 1931, then to the University of Chicago in 1938; Machlup in 1933 to the U. S. where he held several academic positions, the last at New York University; and Gerschenkron to Switzerland in 1934, after which he emigrated to the U. S, where, in 1945, he joined Haberler and Schumpeter at Harvard.
The School reached out for new lines of support in the 1920s. In 1927 Hayek and von Mises started the Austrian Institute for Business Cycle Research, supported by the Rockefeller Foundation. The Institute followed Hayek to the London School of Economics in 1931, then on to the University of Chicago in 1938. (It has since been renamed the Austrian Institute for Economic Research.)
In 1944 von Mises published his hoped-to-be-masterpiece Nationalökonomie ("Economics") in which he attempted to provide a consistent interpretation of Austrian economics. In his review Hayek remarked
If one had studied the classics and Marshall in 1912, then one would have learned nothing more from MisesMises international reputation took a severe hit and when he emigrated he found a cold reception in U. S. and British universities, even in spite of efforts by those of his colleagues now firmly entrenched in U. S. and British universities.
Hayek has survived with a more vigorous voice. He is best known for The Road to Serfdom and for being awarded, jointly with the Swedish sociologist Gunnar Myrdal, the 1974 Nobel Prize in Economics. The announced basis of this accolade was
. . . for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena.Schumpeter's reputation has also survived. His 1944 Capitalism, Socialism, and Democracy ranks along with Hayek's The Road to Serfdom as one of the defining books of the Austrian School. Thomas McCraw's 2007 Prophet of Innovation: Joseph Schumpeter and Creative Destruction is an excellent biography of the man Gershenkron called "the last man who knew everything."
November 24, 2021
Unlike other books on History of Economic Thought I have read, which select a group of famous economists and dedicate a chapter to each at a time (https://www.goodreads.com/review/show... https://www.goodreads.com/review/show... https://www.goodreads.com/review/show...), “The Marginal Revolutionaries” tells the history of the “Austrian School of Economics” in chronological order.
The result is an impressive historical research on the School and its contribution to liberalism, with plenty of details on facts, characters, and intellectual production. One can notice the difficulty in trying to summarize a school of thought as complex as the Austrian one, especially when so many of its authors had different degrees of relevance in the public debate throughout time with some different lines of thought. At risk of being superficial, some main characteristics could be listed, though: superiority of capitalism over socialism, heterodoxy, utility maximization, business cycles, international free trade, and aversion to State intervention. The book has little to say on the authors’ personal lives. It rather exposes and explains the School’s authors’ main ideas, though in fact it gives much more space to events that marked the history of the School’s authors - i.e., author A wrote book B, founded group C, moved to country D, etc., which sometimes can be boring, especially for those more interested in the School’s intellectual production.
It is nevertheless a very good introductory piece for contextualization and guidance for those interested in reading further on the famous and still relevant intellectual movement, which should of course imply reading the original authors: Menger, Böhm-Bawerk, Wieser, Mises, Schumpeter, Hayek, Machlup, Haberler, Morgerstern, and so on. Another upside is the author’s relative impartiality; writing in an elegant style, he really does not seem to have fallen in love with his object of study, which might be surprising considering the amount of work he certainly dedicated to it, yet it gives him credibility since Austrian School is almost always linked with ideological infatuation and polarization.
The result is an impressive historical research on the School and its contribution to liberalism, with plenty of details on facts, characters, and intellectual production. One can notice the difficulty in trying to summarize a school of thought as complex as the Austrian one, especially when so many of its authors had different degrees of relevance in the public debate throughout time with some different lines of thought. At risk of being superficial, some main characteristics could be listed, though: superiority of capitalism over socialism, heterodoxy, utility maximization, business cycles, international free trade, and aversion to State intervention. The book has little to say on the authors’ personal lives. It rather exposes and explains the School’s authors’ main ideas, though in fact it gives much more space to events that marked the history of the School’s authors - i.e., author A wrote book B, founded group C, moved to country D, etc., which sometimes can be boring, especially for those more interested in the School’s intellectual production.
It is nevertheless a very good introductory piece for contextualization and guidance for those interested in reading further on the famous and still relevant intellectual movement, which should of course imply reading the original authors: Menger, Böhm-Bawerk, Wieser, Mises, Schumpeter, Hayek, Machlup, Haberler, Morgerstern, and so on. Another upside is the author’s relative impartiality; writing in an elegant style, he really does not seem to have fallen in love with his object of study, which might be surprising considering the amount of work he certainly dedicated to it, yet it gives him credibility since Austrian School is almost always linked with ideological infatuation and polarization.
November 24, 2019
This is a well researched, rich in scope, fair and balanced intellectual biography of the Austrian School. Its central characters are all the major thinkers of the school, from Menger and Böhm-Bawerk to Mises and Hayek, without forgetting figures like Morgenstern, Machlup, Haberler, etc. Impressively, the book brings to life dozens of thinkers, institutes, and societies spread across a century of history and several continents. It manages to cover a lot of ground without losing track of the overall narrative. Considering the controversial topic, it is surprising that the author neither fawns over nor sets out to destroy its subject matter.
The Austrian school deserves to be remembered for its rich intellectual legacy. The story is entertaining and educational in equal measure, and full of real world relevance. Although neutral in tone, the book is not entirely without its share of editorializing, especially towards the end. But for the most part the author wisely keeps editorial comments at a minimum and places them in parentheses and epilogues. And to the extent that the normative focus emerges, it is very commendable in its call for a progressive rediscovery of the Austrian school against reactionary appropriations and libertarian simplifications. This book does justice to the school's legacy while reminding the reader of the dangers of dogmatism and narrow sectarianism. In the end, the Marginal Revolutionaries celebrates the pluralistic and cosmopolitan intellectual spirit of Fin de siècle Vienna as the cradle of complex scientific and socioeconomic revolution(s). If we only remember that spirit, and capture some of its contentious intensity, Vienna will never die.
The Austrian school deserves to be remembered for its rich intellectual legacy. The story is entertaining and educational in equal measure, and full of real world relevance. Although neutral in tone, the book is not entirely without its share of editorializing, especially towards the end. But for the most part the author wisely keeps editorial comments at a minimum and places them in parentheses and epilogues. And to the extent that the normative focus emerges, it is very commendable in its call for a progressive rediscovery of the Austrian school against reactionary appropriations and libertarian simplifications. This book does justice to the school's legacy while reminding the reader of the dangers of dogmatism and narrow sectarianism. In the end, the Marginal Revolutionaries celebrates the pluralistic and cosmopolitan intellectual spirit of Fin de siècle Vienna as the cradle of complex scientific and socioeconomic revolution(s). If we only remember that spirit, and capture some of its contentious intensity, Vienna will never die.
July 12, 2020
The book is a thorough and interesting exploration of the milieu in which the Austrian school emerged, its prolonged influence and its relationship to other European intellectual movements.
The depth with which the actual ideas are explored unfortunately remains at times quite superficial. For example Morgenstern's and Von Neumann's work on game theory is mystified instead of being given a clear exposition: something which helps to unnecessarily obscure economics.
The breadth of the book is impressive and certainly fruitful for picking up sources for further reading. The author also deals well with internal squabbles of the movement and demystifies many of its aspects; a welcome contribution.
Another issue is the exaggeration of the school's influence, though this is perhaps mended by the considerations of chapter 7.
My biggest problem was the lack of exploration relating to the school's relationship to fascism and nazism, something which was merely transferred to the sphere of the obvious and not treated with analysis. Flirtations with authoritarian anti-communists and anti-socialists was an undisputable part of the school's journey, and would deserve more a greater share of a discussion in an intellectual history of the marginalists.
All in all it is one of the better pro-Austrian histories I've read of the movement and surely constitutes worthy reading for both those sympathetic and un-sympathetic to the movement.
The depth with which the actual ideas are explored unfortunately remains at times quite superficial. For example Morgenstern's and Von Neumann's work on game theory is mystified instead of being given a clear exposition: something which helps to unnecessarily obscure economics.
The breadth of the book is impressive and certainly fruitful for picking up sources for further reading. The author also deals well with internal squabbles of the movement and demystifies many of its aspects; a welcome contribution.
Another issue is the exaggeration of the school's influence, though this is perhaps mended by the considerations of chapter 7.
My biggest problem was the lack of exploration relating to the school's relationship to fascism and nazism, something which was merely transferred to the sphere of the obvious and not treated with analysis. Flirtations with authoritarian anti-communists and anti-socialists was an undisputable part of the school's journey, and would deserve more a greater share of a discussion in an intellectual history of the marginalists.
All in all it is one of the better pro-Austrian histories I've read of the movement and surely constitutes worthy reading for both those sympathetic and un-sympathetic to the movement.
December 9, 2019
This book is a history of the “Austrian School of Economics”. It cover about 150 years more or less and follows the progress of a relatively small group of economists and social theorists who came of age in Fin de Siecle Vienna and grew to positions of influence in the late Hapsburg empire and somewhat in the interwar period and then were scattered to England and America when the Nazis took power in Germany and then Austria. Their ranks in their initial generations included names recognizable to most people who follow economic writings: Von Mises, Hayek, Schumpeter, Von Morgenstern, to name only a few. This group of scholars and their associates proved to be highly effective intellectual entrepreneurs who relocated to major American and British universities during WW2 and ended up training generations of new scholars to build on their work.
The core content espoused by this “school” is harder to pin down and its members seemed to excel at vigorous arguing (and on occasion personal attacks on those who disagreed with them), such that the contentions style of the Austrian school members became a part of the trademark. The school has very much come to be associated with strong free market and non-statist even libertarian view on the nature of economic freedom and individual action. This is partly due to these scholars evolving in response to the prominence of socialism and Soviet Marxism in the interwar years. This group grew to define itself in part as opposed towards socialism in its many variants.
They also took highly visible positions as advisors to governments and firms. For a variety of reasons, this tended to be more on the right wing political spectrum than on the left. Indeed, the later visibility of this group has tended to be in this notion of policy entrepreneurship. Among their university affiliations, many were supported by money from private foundations, such as the Rockefeller Foundation or later from the Koch brothers. Perhaps the high point of the Austrian’s official influence was in the 1970s and 1980, towards the end of the careers of Hayek and Von Mises.
The idea of Austrian economics is still around and has taken on additional salience following the financial crash of 2008, the Great Recession that followed, and the rise of political reactions to these developments such as the Tea Party. Nominal devotees has also been apparent in the rise of right learning movements in Europe during the same period.
While the various versions of Austrian economics share a name and some phrases, Professor Wasserman makes it clear that the focal individuals and dynamics have changed substantially over 150 years such that the early members might not be thrilled with what later adherents have brought about in their name. That is the trouble, of course, with an intellectual school. It is hard to put ones arms around just what sort of social thing this is or what to make of it from one time to another. Hayek said that to be a good economist one must be more than an economist. Wasserman’s history is evidence that one should be careful what one wishes for. Put another way, Milton Friedman when asked about different types of economics answered that there are only two types - good economics and bad economics. It is not clear what knowing of a “school” identifier gets you.
Wasserman’s book is well done and fairly thorough. It also pushes one to read more and provides the directions for doing so. His success at chronicling the dual nature of the Austrians as economists and policy entrepreneurs/advocates brings up the fundamental tension of why this group is so interesting. For scholars so devoted to rational choices, individual freedoms, and the failures of socialism, they also appear to have been obsessed with linked to the powerful, with status, with accomplishing much through social connections, and with the dynamics of selling their positions through a proliferation of institutions and social alliances. Where does the lived behavior of networking and aggressive influence peddling and institution building - sometimes with authoritarian regimes - fit with the fundamental concepts of freedom and liberty that are core to their writings?
That is the continuing puzzle of these scholars and it remains of interest. Wasserman’s book is a well written and valuable discussion of that puzzle.
The core content espoused by this “school” is harder to pin down and its members seemed to excel at vigorous arguing (and on occasion personal attacks on those who disagreed with them), such that the contentions style of the Austrian school members became a part of the trademark. The school has very much come to be associated with strong free market and non-statist even libertarian view on the nature of economic freedom and individual action. This is partly due to these scholars evolving in response to the prominence of socialism and Soviet Marxism in the interwar years. This group grew to define itself in part as opposed towards socialism in its many variants.
They also took highly visible positions as advisors to governments and firms. For a variety of reasons, this tended to be more on the right wing political spectrum than on the left. Indeed, the later visibility of this group has tended to be in this notion of policy entrepreneurship. Among their university affiliations, many were supported by money from private foundations, such as the Rockefeller Foundation or later from the Koch brothers. Perhaps the high point of the Austrian’s official influence was in the 1970s and 1980, towards the end of the careers of Hayek and Von Mises.
The idea of Austrian economics is still around and has taken on additional salience following the financial crash of 2008, the Great Recession that followed, and the rise of political reactions to these developments such as the Tea Party. Nominal devotees has also been apparent in the rise of right learning movements in Europe during the same period.
While the various versions of Austrian economics share a name and some phrases, Professor Wasserman makes it clear that the focal individuals and dynamics have changed substantially over 150 years such that the early members might not be thrilled with what later adherents have brought about in their name. That is the trouble, of course, with an intellectual school. It is hard to put ones arms around just what sort of social thing this is or what to make of it from one time to another. Hayek said that to be a good economist one must be more than an economist. Wasserman’s history is evidence that one should be careful what one wishes for. Put another way, Milton Friedman when asked about different types of economics answered that there are only two types - good economics and bad economics. It is not clear what knowing of a “school” identifier gets you.
Wasserman’s book is well done and fairly thorough. It also pushes one to read more and provides the directions for doing so. His success at chronicling the dual nature of the Austrians as economists and policy entrepreneurs/advocates brings up the fundamental tension of why this group is so interesting. For scholars so devoted to rational choices, individual freedoms, and the failures of socialism, they also appear to have been obsessed with linked to the powerful, with status, with accomplishing much through social connections, and with the dynamics of selling their positions through a proliferation of institutions and social alliances. Where does the lived behavior of networking and aggressive influence peddling and institution building - sometimes with authoritarian regimes - fit with the fundamental concepts of freedom and liberty that are core to their writings?
That is the continuing puzzle of these scholars and it remains of interest. Wasserman’s book is a well written and valuable discussion of that puzzle.
December 6, 2021
This is a really interesting history book about the origins of the intellectual movement known as the Austrian School of Economics. Key concepts in the Austrian School led to the concept of neoliberalism and also libertarianism. This is not another book that purports to expose neoliberalism’s malignant effect on society. Rather, this is a very even-handed exploration of the Austrian economists who, in the 20th Century, argued that value should be measured according to subjective consumer preferences, and that capitalism was inherently superior to socialism for creating such value. This provides an outstanding background on the origins of neoliberalism, which became hugely influential if not totally dominant in the US in the late 20th Century.
Today, we understand neoliberalism as a political philosophy that places faith in free, unregulated markets over government programs. Neoliberalism is associated with Milton Friedman and Alan Greenspan, but their ideologies drew on the thinking of early 20th Century economists like Carl Menger and Friedrich von Weiser who argued that the value of a good should not be measured based on the labor and parts that went into producing it, but rather how consumers subjectively value it. Thus, value was determined on a more consumer-centric model and individual preferences were what determined value. The early Austrian economists were fierce critics of socialism which they believed could not work because state planning could not account for diverse and shifting consumer preferences, making it impossible for the socialist state to assign the proper value to goods. While the early Austrian economists supported a role for the state in performing services for people that businesses would not, many of them were vociferous opponents of socialism and claimed that even its stated good intentions were a slippery slope to authoritarianism. In their defense, the early 20th Century socialist revolutions were quite violent and did not seem to make societies better off.
The book does a great job of describing how early 20th Century Vienna led to the creation fo this school. The early Austrian school was created by men from a newly created urban middle class in the Austrian Empire. They were opposed to both the Catholic conservatism of the Old Regime and the radical socialist revolutionary ideas. It makes sense that they supported freedom to consume freely, but to avoid the social and economic chaos of a Marxist Revolution. To understand neoliberalism, I think it is helpful to realize that it was based on an idea of freedom that made perfect sense to middle class people in early 20th Century Europe. Perhaps this is why it seems to out of touch in 21st Century America.
The early theories of subjective assessments of value and capitalism’s role in facilitating those assessments led people like Joseph Schumpeter to develop theories of entrepreneurship and “creative destruction.” Ludwig von Mises developed theories on monetary policy and other various anti-statist positions. In fact, he equated almost any state intervention in the economy to a slide towards socialist authoritarianism. Mises generally amped up the Austrian School’s aversion to socialism. He believed it would lead to irrational assessments of value and an irrational society in decline. He talked about the fight against socialism as a battle for the soul of the West.
An important aspect of many Austrian economists but especially Mises is that they not only attacked socialism as a political and economic system, they refused to engage with the socialist critique of classical free market liberalism and the inequality that it created. This is probably where their philosophies turned more into dogmatic ideologies. At the same time the Austrians found ample support from US foundations like the Rockefeller Foundation, among others. While there was plenty of criticism of Austrian ideas in academia, wealthy donors ensured that their ideas received attention and credibility, particularly in the US.
The second half of the book is about Friedrich von Hakek and the publication of his book Road to Serfdom, but particularly about his view that any economic planning was collectivist and therefore authoritarian. Hakek believed that laissez faire liberalism was a bulwark against totalitarianism and the “left socialism” (the Soviets) and “right socialism” (the Nazis) occurs in societies that have not completely rejected socialism. Hayek’s ideas were incredibly narrow-minded but they appealed to certain government planners in the US defense sector and also to business elites who opposed the New Deal. Both Hayek and Mises believed that under certain circumstances, an authoritarian system was preferable to democracy if the democracy threatened capitalism.
Because the Austrian school, but particularly the iteration championed by Hayek and Mises, had no limitations on the idea of laissez faire economics, the next iteration of the school came from Murray Rothbard who combined laissez faire with a delimitation of states and an idiosyncratic concept of natural rights that relied on self regulating communities to protect property rights. The Rothbard branch forged links with reactionary and neo-confederate groups. By this time, the Austrian movement had moved on from being nostalgic for post monarchy liberalism in Austria to actually being nostalgic for pre-liberal society.
Today, we are contending with an intolerant and reactionary conservative movement that has been heavily influenced by its collaboration with the laissez faire ideology of the branch of the Austrian School that came to the US with the help of foundation money. The Marginal Revolutionaries is a fascinating exploration of how ideas about freedom and progress that were absolutely relevant 100 years ago in Central Europe were imported to the US and advanced by wealthy interests regardless of whether these ideas were relevant or helpful. Without being tied to clear visions of social good, neoliberal thinking became an apologia for the massive inequality in the US and from there it became a reactionary ideology against those who believed that neoliberal thinking was an outdated paradigm for thinking about freedom and progress. As Wasserman observes at the end of The Marginal Revolutionaries, it is critical to remember that today’s reactionary right did not emerge in opposition to neoliberalism, but from it.
Today, there's a new interest in the issue of economic and political inequality. As an American, I have to wonder if US elites adopted neoliberal dogmas in part due to an insufficient understanding of the nature and consequences of the inequality (including segregation) all around them. On the topic of inequality (and racism for that matter), the neoliberals had very little to say. We now live with the consequences of that.
Today, we understand neoliberalism as a political philosophy that places faith in free, unregulated markets over government programs. Neoliberalism is associated with Milton Friedman and Alan Greenspan, but their ideologies drew on the thinking of early 20th Century economists like Carl Menger and Friedrich von Weiser who argued that the value of a good should not be measured based on the labor and parts that went into producing it, but rather how consumers subjectively value it. Thus, value was determined on a more consumer-centric model and individual preferences were what determined value. The early Austrian economists were fierce critics of socialism which they believed could not work because state planning could not account for diverse and shifting consumer preferences, making it impossible for the socialist state to assign the proper value to goods. While the early Austrian economists supported a role for the state in performing services for people that businesses would not, many of them were vociferous opponents of socialism and claimed that even its stated good intentions were a slippery slope to authoritarianism. In their defense, the early 20th Century socialist revolutions were quite violent and did not seem to make societies better off.
The book does a great job of describing how early 20th Century Vienna led to the creation fo this school. The early Austrian school was created by men from a newly created urban middle class in the Austrian Empire. They were opposed to both the Catholic conservatism of the Old Regime and the radical socialist revolutionary ideas. It makes sense that they supported freedom to consume freely, but to avoid the social and economic chaos of a Marxist Revolution. To understand neoliberalism, I think it is helpful to realize that it was based on an idea of freedom that made perfect sense to middle class people in early 20th Century Europe. Perhaps this is why it seems to out of touch in 21st Century America.
The early theories of subjective assessments of value and capitalism’s role in facilitating those assessments led people like Joseph Schumpeter to develop theories of entrepreneurship and “creative destruction.” Ludwig von Mises developed theories on monetary policy and other various anti-statist positions. In fact, he equated almost any state intervention in the economy to a slide towards socialist authoritarianism. Mises generally amped up the Austrian School’s aversion to socialism. He believed it would lead to irrational assessments of value and an irrational society in decline. He talked about the fight against socialism as a battle for the soul of the West.
An important aspect of many Austrian economists but especially Mises is that they not only attacked socialism as a political and economic system, they refused to engage with the socialist critique of classical free market liberalism and the inequality that it created. This is probably where their philosophies turned more into dogmatic ideologies. At the same time the Austrians found ample support from US foundations like the Rockefeller Foundation, among others. While there was plenty of criticism of Austrian ideas in academia, wealthy donors ensured that their ideas received attention and credibility, particularly in the US.
The second half of the book is about Friedrich von Hakek and the publication of his book Road to Serfdom, but particularly about his view that any economic planning was collectivist and therefore authoritarian. Hakek believed that laissez faire liberalism was a bulwark against totalitarianism and the “left socialism” (the Soviets) and “right socialism” (the Nazis) occurs in societies that have not completely rejected socialism. Hayek’s ideas were incredibly narrow-minded but they appealed to certain government planners in the US defense sector and also to business elites who opposed the New Deal. Both Hayek and Mises believed that under certain circumstances, an authoritarian system was preferable to democracy if the democracy threatened capitalism.
Because the Austrian school, but particularly the iteration championed by Hayek and Mises, had no limitations on the idea of laissez faire economics, the next iteration of the school came from Murray Rothbard who combined laissez faire with a delimitation of states and an idiosyncratic concept of natural rights that relied on self regulating communities to protect property rights. The Rothbard branch forged links with reactionary and neo-confederate groups. By this time, the Austrian movement had moved on from being nostalgic for post monarchy liberalism in Austria to actually being nostalgic for pre-liberal society.
Today, we are contending with an intolerant and reactionary conservative movement that has been heavily influenced by its collaboration with the laissez faire ideology of the branch of the Austrian School that came to the US with the help of foundation money. The Marginal Revolutionaries is a fascinating exploration of how ideas about freedom and progress that were absolutely relevant 100 years ago in Central Europe were imported to the US and advanced by wealthy interests regardless of whether these ideas were relevant or helpful. Without being tied to clear visions of social good, neoliberal thinking became an apologia for the massive inequality in the US and from there it became a reactionary ideology against those who believed that neoliberal thinking was an outdated paradigm for thinking about freedom and progress. As Wasserman observes at the end of The Marginal Revolutionaries, it is critical to remember that today’s reactionary right did not emerge in opposition to neoliberalism, but from it.
Today, there's a new interest in the issue of economic and political inequality. As an American, I have to wonder if US elites adopted neoliberal dogmas in part due to an insufficient understanding of the nature and consequences of the inequality (including segregation) all around them. On the topic of inequality (and racism for that matter), the neoliberals had very little to say. We now live with the consequences of that.
December 1, 2021
An interesting view charting the development of Austrian economics through the 20th century.
October 25, 2020
Are you interested in the history of economic thought, in particular with the Austrian School? This book is a tour de force. Wasserman provides a fair and balanced account of the Austrian School. He completed the difficult task with a readable guide to the Austrian thinkers that originated in Fin-De-Siecle Vienna. The book introduces to the school's intellectual edifice and their evolution from Menger to present-day Non-Austrian Austrians. The book illustrates the similarities and differences between the individual members of the school and offers the reader insight into group dynamics. Looking at interpersonal conflicts between the members, but despite their differences, there is a shared esprit de corps.
Wasserman describes, as the subtitle suggests, the Austrians as a combative group engaging in debates of their time. These debates among Austrians still exist today. Here, Wasserman elaborated well on the tensions within the Austrian tradition. For me, this is important, since I am sympathetic to the ideas of the Austrians. I could learn new details, especially in terms of interpersonal relationships and the hardships of the Austrians after the collapse of the empire, the interwar period, and the reorientation after fleeing from Austria. This book is valuable in providing an evolutionary history of the Austrian School. Also, as a disclaimer, I should add that I am specifically sympathetic to the Austrian-inspired political economy research agenda by the Mercatus Center at George Mason University. There is a division within the modern Austrian economic thought. I will not mention the name here, but I prefer to distance myself, and I do not want to be associated with them at all. The reason is their political extremism, sectarianism, dogmatism, and distorting Austrian economic thought. Wasserman elaborates on that in the book. However, I think the book provides an important contribution to the history of economic thought. About the book itself, the title was selected to sell the book, I understand that. A more accurate title would be „Marginal Evolutionaries“. Also, I do not deny that the Austrian had their impact within the social sciences. The Austrians used to be mainstream when scientific progress centered in Europe, and after World War II, Austrian economic thought had a marginal impact within the economics profession. Despite this, some of the Austrians made academic contributions. One such example is Fritz Machlup. Here the narrative of the book is overstretched in this regard. The historical treatment of the school until the 1950s is excellent. But some historical facts are not precise. For instance, Mises did not have a full professorship. The reason was his individual preferences not to teach and focus on research. Back in the day, professors had to retire at the age of 65, and when Mises migrated to the US he was already 60. Hence, post-war details are not precise enough. But since I am sympathetic to these ideas, it offers me as a reader a slightly different picture. Wasserman is a fair idea trader, and his book deserves a four-star rating.
Wasserman describes, as the subtitle suggests, the Austrians as a combative group engaging in debates of their time. These debates among Austrians still exist today. Here, Wasserman elaborated well on the tensions within the Austrian tradition. For me, this is important, since I am sympathetic to the ideas of the Austrians. I could learn new details, especially in terms of interpersonal relationships and the hardships of the Austrians after the collapse of the empire, the interwar period, and the reorientation after fleeing from Austria. This book is valuable in providing an evolutionary history of the Austrian School. Also, as a disclaimer, I should add that I am specifically sympathetic to the Austrian-inspired political economy research agenda by the Mercatus Center at George Mason University. There is a division within the modern Austrian economic thought. I will not mention the name here, but I prefer to distance myself, and I do not want to be associated with them at all. The reason is their political extremism, sectarianism, dogmatism, and distorting Austrian economic thought. Wasserman elaborates on that in the book. However, I think the book provides an important contribution to the history of economic thought. About the book itself, the title was selected to sell the book, I understand that. A more accurate title would be „Marginal Evolutionaries“. Also, I do not deny that the Austrian had their impact within the social sciences. The Austrians used to be mainstream when scientific progress centered in Europe, and after World War II, Austrian economic thought had a marginal impact within the economics profession. Despite this, some of the Austrians made academic contributions. One such example is Fritz Machlup. Here the narrative of the book is overstretched in this regard. The historical treatment of the school until the 1950s is excellent. But some historical facts are not precise. For instance, Mises did not have a full professorship. The reason was his individual preferences not to teach and focus on research. Back in the day, professors had to retire at the age of 65, and when Mises migrated to the US he was already 60. Hence, post-war details are not precise enough. But since I am sympathetic to these ideas, it offers me as a reader a slightly different picture. Wasserman is a fair idea trader, and his book deserves a four-star rating.
January 24, 2022
Freunde der Ideengeschichte und der Geschichte des ökonomischen Denkens bekommen von Janet Wassermann ein Buch, das sie über eine der wichtigsten Theorieschulen der Ökonomie aufklärt und mit populären Irrtümern aufräumt.
Die Geschichte beginnt im fin-de-siècle Wien, dem Schmelztiegel der europäischen Geistesgrößen. In dieser Lebhaften Metropole startete Karl Menger etwas, ohne zu wissen, dass er es schuf: Die österreichische Tradition. In der Folge sollten bahnbrechende Theorien durch einige der größten Denker der Geschichte der Ökonomie aufgestellt werden: die subjektive Wertlehre, Opportunitätskosten, das Prinzip von abnehmenden Grenznutzen usw. Leute wie Menger, aber auch Böhm-Bawerk, Wieser, Morgenstern und natürlich auch Hayek, Schumpeter und Mises sollten Vertreter dieser Denktradition werden.
Doch mit den zwei Weltkriegen veränderte sich vieles, vor allem während der Herrschaft der Nazis im Nachbarland Deutschland. Viele mussten Österreich oder gleich Europa komplett verlassen, auf der Flucht vor den Nazis. In den USA und in Großbritannien entwickelte sich die österreichische Tradition dann weiter.
Und da beginnen auch die Probleme des Buches. Während der erste Teil noch sehr gut ist, wird der zweite Teil von einer zunehmenden persönlichen Färbung durch Wassermann ins Leiden gezogen. Besonders die Debatte der "Austrians", der neuen Österreicher, macht das deutlich.
Das sind jedoch nur kleine Schlaglöcher auf einer ansonsten eben asphaltierten Straße. Das Buch ist eine Empfehlung für jeden Interessierten wert.
Die Geschichte beginnt im fin-de-siècle Wien, dem Schmelztiegel der europäischen Geistesgrößen. In dieser Lebhaften Metropole startete Karl Menger etwas, ohne zu wissen, dass er es schuf: Die österreichische Tradition. In der Folge sollten bahnbrechende Theorien durch einige der größten Denker der Geschichte der Ökonomie aufgestellt werden: die subjektive Wertlehre, Opportunitätskosten, das Prinzip von abnehmenden Grenznutzen usw. Leute wie Menger, aber auch Böhm-Bawerk, Wieser, Morgenstern und natürlich auch Hayek, Schumpeter und Mises sollten Vertreter dieser Denktradition werden.
Doch mit den zwei Weltkriegen veränderte sich vieles, vor allem während der Herrschaft der Nazis im Nachbarland Deutschland. Viele mussten Österreich oder gleich Europa komplett verlassen, auf der Flucht vor den Nazis. In den USA und in Großbritannien entwickelte sich die österreichische Tradition dann weiter.
Und da beginnen auch die Probleme des Buches. Während der erste Teil noch sehr gut ist, wird der zweite Teil von einer zunehmenden persönlichen Färbung durch Wassermann ins Leiden gezogen. Besonders die Debatte der "Austrians", der neuen Österreicher, macht das deutlich.
Das sind jedoch nur kleine Schlaglöcher auf einer ansonsten eben asphaltierten Straße. Das Buch ist eine Empfehlung für jeden Interessierten wert.
February 16, 2022
I wish I could do half-stars, because I think this book deserves that extra half-star, but there you are. Wasserman provides an extensive and sweeping overview of the intellectual history of the Austrian school, conceived in a very broad way. There's not as much of the actual theory as I might like, though it outlines each thinker's basic commitments, sides in debates, and the context of their works. Honestly, though, at times, it was a bit of a pain to read - there's so much to cover that the prose often just feels like lists of people, their movements, academic placements, and living arrangements. There are some excellent and very amusing nuggets in here, though, and it provides a very measured critical assessment of their ideas and impact. If I find myself needing a refresher for background info on a particular figure, I will certainly return to this book.
If you don't care about the history of economics, this book is probably not for you.
If you don't care about the history of economics, this book is probably not for you.
June 10, 2024
Well written and really quite easy to understand, especially if one is somewhat familiar with the subject matter. Truly an accomplishment in scholarship.
Although it is clear that Wasserman is neither a devotee nor an advocate for the Austrian School of Economics, those who are sympathetic to the Austrians will not be disappointed. He is well-balanced and fair. The Marginal Revolutionaries is simply good social and intellectual history.
It has inspired me to go to primary sources: I really must read more thoughtfully the works of Hayek, Mises, and Schumpeter.
Although it is clear that Wasserman is neither a devotee nor an advocate for the Austrian School of Economics, those who are sympathetic to the Austrians will not be disappointed. He is well-balanced and fair. The Marginal Revolutionaries is simply good social and intellectual history.
It has inspired me to go to primary sources: I really must read more thoughtfully the works of Hayek, Mises, and Schumpeter.
March 1, 2021
Well written history of the personalities and ideas that animated the Austrian school of economics from its origins in late Hapsburg Austria-Hungary to 21st-century America. Better on the origins in Austria than on its metamorphosis in exile in America, and in fact makes a strong case that what is called Austrian increasingly refers to the heirs of just one or two thinkers in what had been a diverse school of thought.
May 4, 2020
This is a thoughtful and evenhanded look at how a handful of isolated economists in Vienna managed to reshape the modern world. While only giving periodic looks at their actual ideas, the focus of this book on social networks, institution-building, and influence are all important parts of intellectual history.
The book begins, of course, with Carl Menger and his 1871
The book begins, of course, with Carl Menger and his 1871
January 12, 2023
Superb. The history of ideas at its best. Impeccable scholarship. Insightful analysis, and a highly perceptive interpretation. Wasserman seeks to explain and understand, not just judge and polemicise, and he does a very good job of it. If you want to know how we ended up with forty years of neoliberal bullshit then this just has to be on your reading list.
December 31, 2020
This was not an easy listen due to some of the characters and philosophies being difficult to follow without a page to consult, but I thoroughly enjoyed learning more about the Austrian school and plan on dipping further into Mises, so a good start I believe.
January 30, 2021
Outstanding investigation of the Austrian school. Is not an apologetical inquiry for libertarian thought which is quite necessary if the intention of the reader is to fully understand the tensions, concepts, success, mistakes and misconceptions around this intelectual school.
December 28, 2019
At a time when U.S. government spending is in the trillions ($1.7 trillion budget passed recently), the national debt creeps near 23 trillion, and “socialism” is a word thrown around by young people in American with positive connotations, I hope the Federal Reserve Board of Governors will take the time to read this book.
December 22, 2019
I did find this book interesting in terms of the history of the Austrian School's emergences, the major figures, their travails, etc. From that perspective it's worth reading. I do believe author is out of his depth when it comes to some of the economic theories, and I'd encourage to read the review by David Gordon of the Mises Institute: https://mises.org/library/deeply-flaw...
The book did collaborate my understanding that the subjective theory of value was like a bolt of lightening in terms of our understanding, and how long it took to diffuse among the economics profession. In fact, in businesses today, it's still not well understood, as they still have a "time is money" and cost-plus pricing mentality. This is also not a breezy read but a bit dense, but if you are a student of Austrian Economics, you'll find some very interesting facts along the way.
The book did collaborate my understanding that the subjective theory of value was like a bolt of lightening in terms of our understanding, and how long it took to diffuse among the economics profession. In fact, in businesses today, it's still not well understood, as they still have a "time is money" and cost-plus pricing mentality. This is also not a breezy read but a bit dense, but if you are a student of Austrian Economics, you'll find some very interesting facts along the way.
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