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The Historical Setting of the Austrian School of Economics
Ludwig von Mises

I.
Carl Menger and the Austrian
School of Economics

1. The Beginnings

What is known as the Austrian School of Economics started in 1871 when Carl Menger published a slender volume under the title Grunds?tze der Volkswirtschaftslehre.

It is customary to trace the influence that the milieu exerted upon the achievements of genius. People like to ascribe the exploits of a man of genius, at least to some extent, to the operation of his environment and to the climate of opinion of his age and his country. Whatever this method may accomplish in some cases, there is no doubt that it is inapplicable with regard to those Austrians whose thoughts, ideas and doctrines matter for mankind. Bernard Bolzano, Gregor Mendel and Sigmund Freud were not stimulated by their relatives, teachers, colleagues or friends. Their exertions did not meet with sympathy on the part of their contemporary countrymen and the government of their country. Bolzano and Mendel carried on their main work in surroundings which, as far as their special fields are concerned, could be called an intellectual desert, and they died long before people began to divine the worth of their contributions. Freud was laughed at when he first made public his doctrines in the Vienna Medical Association.

One may say that the theory of subjectivism and marginalism that Carl Menger developed was in the air. It had been foreshadowed by several forerunners. Besides, about the same time Menger wrote and published his book, William Stanley Jevons and L?on Walras also wrote and published books which expounded the concept of marginal utility. However this may be, it is certain that none of his teachers, friends, or colleagues took any interest in the problems that excited Menger. When, some time before the outbreak of the first World War, I told him about the informal, but regular meetings in which we younger Vienna economists used to discuss problems of economic theory, he pensively observed: "When I was your age, nobody in Vienna cared about these things." Until the end of the Seventies there was no "Austrian School." There was only Carl Menger.

Eugen von Böhm-Bawerk and Friedrich von Wieser never studied with Menger. They had finished their studies at the University of Vienna before Menger began to lecture as a Privat-Dozent. What they learned from Menger, they got from studying the Grunds?tze. When they returned to Austria after some time spent at German universities, especially in the seminar of Karl Knies in Heidelberg, and published their first books, they were appointed to teach economics at the Universities of Innsbruck and Prague respectively. Very soon some younger men who had gone through Menger's seminar, and had been exposed to his personal influence, enlarged the number of authors who contributed to economic inquiry. People abroad began to refer to these authors as "the Austrians." But the designation "Austrian School of Economics" was used only later, when their antagonism to the German Historical School came into the open after the publication, in 1883, of Menger's second book, Untersuchungen ?ber die Methode der Sozialwissenschaften und der Politischen Oekonomie insbesondere.

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