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Notes
In 1976, William Jaffé argued that the “widely disseminated practice of lumping Menger, Jevons and Walras together” had “grossly distorted the history of their contributions.” Lachman (1978) provides support for this position. Peart (1998) assessed similarities between Menger and Jevons (but not Walras); while Peart (forthcoming a) examined significant policy differences between Jevons and Menger.
In his 1870 “Opening Address” to the British Association for the Advancement of Science, Jevons examined morality rates and he reported on an important Irish influence: “I am surprised that more attention has not been drawn to the probable influence of a poor Irish population in raising the death-rate. It occurred to me that the great towns which are most unhealthy agree in containing a large proportion of Irish, and agree in nothing else which I can discover.” (Jevons 1883, p. 208).
See his essay, “Married Women in Factories” in the posthumously published collection, Methods of Social Reform, pp. 156–179, and Jevons (1882a, p. 71): “Those who know not how to spend well are often injured rather than bettered by higher earnings; and when these earnings are acquired at the cost of neglecting a young family and destroying the home, the evils may become such as to demand the attention of the Legislature.” Peart 2000, 2021 and forthcoming presents additional evidence.
The importance of the ends-means relation in Menger is stressed by Yagi (1993) although the 1872 review by F. Hack suggests an even older tradition of cause and effect.
The role of social needs in the second edition is discussed by Becchio (2014).
The translators of the first edition explained their silence on the second: “… it was the first edition only that influenced the development of economic doctrine … and because the numerous differences between the two editions make a variorum translation impractical.” In Menger (1950, p. 39).
Becchio (2014, p. 248) reports that Menger refused requests to translate the Principles.
Stigler (1937, p. 249) points to an interesting change in the second edition: “Menger finds two limitations to increasing produce by extending the period of production: (1) the necessity for maintaining life (in a broad sense) in the immediate future and (2) an irrational preference for present over future satisfactions (pp. 126 − 28). This second factor, it may be noted, was deleted by Menger from the second edition, lest it be construed as supporting Böhm-Bawerk’s theory of interest.”
In the second edition of Theory of Political Economy, Jevons explained in considerable detail how he was hampered by his lack of German language competence. However, as he pointed out, even German language authorities were unaware of the work of H. H. Gossen (1877, pp. xxxi-xxxvi). Menger’s Grundsätze was included in the bibliography of the third edition, prepared by Harriet Jevons, but she noted it as one of the books that Stanley Jevons did not know (1888, p. 283).
Menger’s lectures to the Crown Prince (Menger, 1994) reveal a deep appreciation for Adam Smith’s work which, as Menger noted, also contained insight into the classical literature. Although the lectures focus onWealth of Nations, Menger’s Problems reveals that he also studied Smith’s History of Astronomy with care (1963, pp. 49, 138). Menger’s passage on Theory of Moral Sentiments links Smith with the classics: “With this point of view [shared with Plato and Aristotle], finally, the great founder of our science also wrote his work on the wealth of nations, but along with it a theory of moral sentiments, in which he made public spirit as well as self-interest a pivotal point in his work, which was so epoch-making for political economy.” (1963, p. 87).
Some ancient Greek writing about choice can be described in an “ends-means” framework in which intertemporal issues are linked to non-convex optimization problems in a folk wisdom manner, i.e., to go up one must first go down. (Levy 1988) F. Hack (1872) countered that Menger’s distinction was an Aristotlean one of cause and effect and not ends and means.
Frank Knight followed Menger in this emphasis on the family.
Smith (1984, p. 40) discussed why gold was assayed to prevent fraud before coins were minted, even though assaying is a difficult chemical test, “unless a part of the metal is fairly melted in the crucible, with proper dissolvents, any conclusion that can be drawn from it, is extremely uncertain. Before the institution of coined money, however, unless they went through this tedious and difficult operation, people must always have been liable to the grossest frauds and impositions, and instead of a pound weight of pure silver, or pure copper, might receive in exchange for their goods, an adulterated composition of the coarsest and cheapest materials, which had, however, in their outward appearance, been made to resemble those metals.”
The attitude was famously found in Augustus de Morgan (1847, p. 232): “A modal proposition was one in which the affirmation or negation was expressed as more or less probable: including all that is technically under probability … from necessity to impossibility. The theory of probabilities I take to be the unknown God which the schoolmen ignorantly worshipped when they so dealt with this species of enunciation, that it was said to be beyond human determination whether they most tortured the modals, or the modals them. Their gradations were necessary, contingent, possible, impossible; contingent meaning more likely than hot, possible less likely than not.” George Boole on the other hand directly addressed what was reported about Chrysippus’s work on temporal logic (Boole 1854, p. 180). Chrysippus’s work, and that of his associates, was foundational to the “schoolmen.” (Lemmon 1977, p. 5)
Given Stigler’s knowledge of Menger, it might be of interest to note that he contributed a question where the axiom of extensionality fails to a Ph.D. prelim at Chicago in the early 1960s. “’Never a charge for credit’ is the same as ‘Never a discount for cash’. How does economics explain the choice of consumers who do not know these are equivalent?” When asked about this many years later, Stigler replied that he had no answer to the question (Levy and Peart 2021).
In this passage Jevons referred to individual variations in character; he is more likely, however, to rely on group (racial or ethnic as well as socioeconomic) differences, as in the passage quoted next.
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We thank Giandomenica Becchio for helpful comments, Hans Eicholz for sharing his translation of F. Hack’s review of Menger’s Principles, an anonymous referee, and the editors for suggestions for improvement. We are solely responsible for our errors.
Appendix: subjective value theory
We acknowledge the helpful comments we received from Georg Vanberg at the 2021 Public Conference at a session on our Natural Equals. Vanberg worried that we had paid insufficient attention to James Buchanan’s subjectivism.
Appendix: subjective value theory
“Subjective value theory” has been a term that seems to us to merge two separate issues. Thus, an economist attempting to model choice, who supposing that the individual being modeled has distinct preferences over things, might well accept that these preferences are “subjective” and describe the analysis as “subjectivism.” This has been an important point of view in the history of economics, perhaps the dominant one since from this point of view there are no important differences between the concepts employed by Jevons or Menger that help launch the “marginalist revolution.” (Sweezy, 1934, p. 178; Samuelson 1938, p. 344).
From another point of view, however, the issue is whether the economist’s analysis concerns things or beliefs. We could have written that “objectively” the Evening Star and the Morning Star are names for the same thing but “subjectively” they might well differ. At foundation there is a logical issue: can the economist, as outside observer, substitute equals for equals in the concerns of those being studied? For things, yes; the substitution principle embodied in the axiom of extensionality holds. For beliefs, perhaps not; we need consider an intentional logic (Lemmon 1979) If the latter is what we mean by “subjectivism,” we need to take into account the often-limited information commanded by those we study. By taking this into consideration we can answer an objection that Menger’s worries about mistakes empties his theory of empirical content. (Sweezy, 1934, p. 178)
Where might empirical content enter? Consider the problem of the public debt. Physical resources (things) are expended today. Once these physical resources are forgone does it matter whether they are financed now or in the form of debt to be paid by taxes in the future? Buchanan (1958) an avowed “subjectivist” invariably said yes, it matters. The great challenge Buchanan faced was a “Ricardian equivalence” between current taxes and debt. Here’s the issue: suppose that current taxes are also things. Public debt requires future taxes to finance the expenditure and by David Ricardo’s logic are passed down the generations as a negative bequest. The issue here is that all claims about the future are beliefs and beliefs are intensional. It is then coherent that Ricardo himself did not believe in “Ricardian equivalence.” (O’Driscoll 1977) Nor is it a coincidence that a great moment in 20th century intensional logic came with an examination of the logic of time. (Prior 1957)
The answer to Sweezy’s worry about an unfalsifiable theory is that Ricardian equivalence would predict that the public would be indifferent to debt and tax financing but both Ricardo’s and Buchanan’s would suggest otherwise. This difference allows for an empirical testing.
An alternative view of belief is that some beliefs are “necessarily” true, something that was widespread when Euclid’s axioms were unquestioned, a view that we see in both Menger and Jevons. Lachmann (1978) who considers this view that subjectivism requires necessarily true beliefs, judges Menger to have offered an “incomplete revolution of subjectivism.” This is clearly consistent with our emphasis on the role of limited knowledge in Menger’s account of economics.
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Peart, S.J., Levy, D.M. Menger and Jevons: beliefs and things. Rev Austrian Econ 36, 271–287 (2023). https://doi.org/10.1007/s11138-022-00601-z
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DOI: https://doi.org/10.1007/s11138-022-00601-z