Carl Menger: A Revival that Austrians Need?

2021 is a special Carl Menger year. 150 years ago, his magnum opus – and starting point of the Austrian School of Economics – Principles of Economics was first published, laying out many of the most fundamental points of the Austrians ever since. 100 years ago, he died in Vienna. Two anniversaries which should be enough to make us look at this essential yet oft-forgotten figure of economic history – and of the social sciences in general.

Much has been written about Carl Menger, the economist, and, indeed, his perhaps most significant advances came in this realm. It can be easy to forget how substantial Menger’s contributions in regard to subjective theory of value, the ‘marginal revolution,’ methodological individualism, the role of uncertainty, monetary theory, and many other areas were, if only because many of his ideas have been incorporated in mainstream economics ever since. What greater achievement could there be for an obscure economist from the University of Vienna to influence an entire discipline like this?

And yet, I want to focus here on Menger, the political thinker. Whereas much has been written about his economics by people much brighter than I am, his political views have often been neglected. However, I would venture to say that we can learn many things from his ideas in this realm, and as we take a look at them, may lead us to reevaluate Menger, the thinker, as well as the way we ourselves should approach politics, society, and culture.

Carl Menger’s work in politics, as well as economics, is often clouded by those who came after him. Little is known about what Menger himself wrote. Instead, he is often depicted as a sort of pre-Mises or pre-Hayek. This is understandable, for it is just natural that one would look at the founding figure of a school through the lens of what the school has become since – even more so if the leading thinkers of that school became so much more influential than the founder himself. Nonetheless, Menger was his own person and is worth studying as his own.

This is especially the case in non-economic areas. Whereas one may say that in economics, the ideas and concepts of his successors built on Menger – perhaps even let Menger’s own ideas fully come to fruition, we can clearly see differences in the political arena. It would be fallacious, if not even deceiving, to consider Menger simply as an earlier, somewhat lesser version of Ludwig von Mises. I would rather put forward the proposition that Menger was a much more interesting and more complete political thinker than the latter.

What we see in Menger’s political philosophy – as far as we can call it a whole philosophy – is a very different kind of perspective than the classical liberalism, night watchman state vision of Mises, and many others in the Austrian tradition. Menger’s starting point wasn’t human action and the individual’s interests as such; he started with the question of what is most conducive to civilizational progress. How can we together further advance, not only in material terms, but as a society overall? How can we further the “common interest,” the common good? And how can the virtuous and self-responsible citizen thrive in that world? How can the individual develop into this virtuous and self-responsible citizen in the first place? While Menger regularly doesn’t fully draw out his own conclusions, these are essential questions that we ought to ask.

Menger, in contrast to Mises and others, does think very clearly that something like an objective good exists, as my colleague Scott Nelson and I lay out for Law & Liberty. There are actions, there are ends that we can very well deem as simply ‘good’ or ‘bad.’ We as individuals ought to strive for those ‘goods’ instead of that which we imagine to be good but which really isn’t. Only by increasingly choosing actual ‘goods’ rather than ‘imaginary’ ones will we advance and will our civilization further develop. And boy, do people often choose actions or ways of life that are not ‘good.’ Indeed, adding a thought to Menger myself, one might say that we as free individuals ought to choose the ‘good’ (and try to increasingly do that) – the opportunity and attempt to do so is what freedom is all about.

In our own development, institutions, norms, and mores will naturally help us. These develop organically, that is, bottom-up, through the interactions of individuals and groups with one another over time. It is true that this puts him squarely in the tradition around ‘spontaneous orders’ and ‘invisible hand’ approaches as the late Steve Horwitz greatly expounded in his From Smith to Menger to Hayek and as I have attempted – quite possibly unsuccessfully – last year in my own rumblings on spontaneous order.

It is clear that our world, which is so enamored by top-down social engineering, is dearly in need of a revival of spontaneous order ideas today. We need to again understand how institutions – from traditions, social mores to market mechanisms to civil institutions like families, associations, clubs, voluntary organizations, and the social fabric overall – are created not through top-down policymaking, but through voluntary and peaceful human interactions. This is not only important for the role we want to give politics, which should be limited if we realize the superiority of organic processes. It is also important for our individual lives, when we realize that it is us – not politicians or business leaders – who can make a change, and through interactions with others can (re-)build the social fabric that so many of us yearn for in this age of political, social, and economic alienation.

Menger’s theory of organic institutions could well be one of the strongest versions in its millennia-long tradition, and Austrians could learn from it. I will only focus on three points here: first, Menger considers the state, at least in theory, to be part of the organic order, equally coming into being bottom-up when a community bands together and develops collective decision-making mechanisms. He does not consider the state to be an external intruder only making life worse for everyone. Sometimes (and in COVID times much more often) governments may become this way, but states can be part of the order if they are tightly intertwined with the community (one might add that this is more likely to happen in local, decentralized polities). This is a very different vision than one prominent strand of Austro-libertarianism which deems all government interventions as necessarily evil and argues for a liberty without politics, since, according to this thinking, the state is an unnatural, only coercive part of our world. Even if we don’t go this far, reading Menger should still make us pause in constructing a strict state-society or state-economy dichotomy which is always in conflict.

Second, when a community organically develops through interactions of its members, Menger argues that the community itself develops a kind of ‘soul’ of its own, which we may call the ‘common good.’ This may take a while, but a common good may arise in a polity or community which trumps the individual interests of its members. As a community, which considers itself one, an individual may renounce his own self-interest through love or “the idea of a closer solidarity.” The “individual despotism” will be held in check by the common bond within a family, an association, a local community, a country, or even the whole human community (though, naturally, having a common good will be increasingly difficult to nurture the more people are part of this community). This means: we are not just individuals accidentally living with one another. A community exists, having come into being through history, through peace and war, through crises, and through mutual interests which leads the members of this community to, indeed, call themselves one where the ‘We’ frequently replaces the ‘I.’ For us, this consideration of a ‘common good’ could lead us to new approaches on how we analyze human interaction within groups and what groups overall may strive for – and what is needed to attain these goods.

None of the things described so far, by the way, require any government interventions as such – at least not necessarily. A ‘common good’ could come into being and be furthered without a statesman intervening in any way. A local community wouldn’t necessarily have to develop governing mechanisms which resemble a government. It is just a possibility.

Menger, nonetheless, believed that government interventionism would be necessary to keep the organic order going. How much government action? We don’t know – and Menger wouldn’t either. While Menger advocated for a long list of government policies in his own lifetime – shockingly many, indeed, and several which make me uncomfortable – he did not have a ready-made list of what the tasks of a government should be.

Whereas most thinkers of our time – and of the last centuries – have tried everything to find a perfect type of governmental form which works for all areas and times of the world, Menger had no such illusions. For him, it was clear that the specific circumstances on the ground would matter a great deal in what politicians ought to do and what not. For instance, if the organic institutions do a wonderful job at ordering the economy and society, then government may have to do very little. But sometimes, organic institutions may simply fail – or be failures in their essence, “noxious organisms,” as Menger calls them, and then a government would have to interfere to fix the problem.

Many observers may find Menger’s flexibility in policymaking to be annoying and wishy-washy. But for Menger it is clear: while there is an objective good we should strive for, the ways to get there may change through space and time. Something which may lead us closer to the ‘good’ in second-century Rome may be different than in twenty-first century America. Thus, we should be realistic – and ready to change our approach. Or, said differently: realism rather than ideology, prudence rather than worldviews set in stone.

It is then, unsurprisingly, difficult to nail Menger down into a specific political camp. One might say that he was too conservative to be a libertarian, that he was too (classical) liberal to be a conservative, and that he advocated too much for the market economy to be a social democrat despite always having considered himself pro-worker. Hayek said that he “tended to conservatism or liberalism of the old type,” and there is much truth to put Menger, a big admirer of Edmund Burke, in this area. However, being non-ideological, an advocate for civilization, virtue, and truth, even this would be wrong. Instead, Menger can’t be labeled: he stands above all labels, above all ideologies, above all grand schemes and utopian visions. And so should we.