Sunday, March 27, 2011

Philip Mirowski on the Austrians

Mirowski advanced the thesis that the neo-classical revolution borrowed its ideas from nineteenth century physics, using the concept of "utility" in a way analogous to the way physics understood "energy," and that the assumption of "constrained maximization" was similar to the "conservation principle." The economists responsible for this "revolution" in economics were, according to Mirowski, people like Walras, Edgeworth, Pareto, and Jevons. But where does Menger fit into this?

Mainstream opinion seems to reluctantly classify Menger as one of the founders of the marginalist revolution, but are quick to add that since he was not mathematical, he was therefore not "scientific" like the others. According to Mirowski, however, "Menger cannot be considered a neoclassical economist because he rejected two basic pillars of that theory: the law of one price, ... and the concept that traded goods in some sense are related as equivalents in equilibrium."

Now most Austrians would agree with this assessment; they believe very strongly in a unique Austrian paradigm that is separate from mainstream equilibrium analysis. However, all Austrians, to my knowledge, still insist that Menger was one of the founders of the marginalist revolution. But for Mirowski, this is wrong. Here is Mirowski:

"Were it not for three historical accidents -- first the Grundsatze as first published in 1871; second, Menger's illustrious student Wieser promoted his claim to be a founder of neoclassical theory (and himself did adopt the new marginalist techniques from Laundhardt and Auspitz and Lieben); and third, Menger's works were largely unavailable outside the German-speaking world -- Menger would not today be considered as one of the marginalist revolutionaries."

I would add one more historical accident --- Menger's book went out of print shortly after it was published, and it consequently became very difficult for young students to secure a copy during the end of the nineteenth century, even in German speaking countries.

What does this mean for Austrians? If Menger did not publish in 1871, if his work was not promoted by Wieser, and if more students had access to his work, then perhaps Menger would not today be recognized as one of the three founders of the marginalist revolution.

I think this is right. Thoughts?

No comments:

Post a Comment