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

Carl Menger and the Austrian
School of Economics

The Austrian School in the
Intellectual Life of Austria

The more distinguished among the French and German universities were, in the great age of liberalism, not merely institutions of learning that provided the rising generations of professional people with the instruction required for the satisfactory practice of their professions. They were centers of culture. Some of their teachers were known and admired all over the world. Their courses were attended not only by the regular students who planned to take academic degrees but by many mature men and women who were active in the professions, in business, or in politics and expected from the lectures nothing but intellectual gratification. Such outsiders, who were not students in a technical sense, thronged, for instance, in Paris the courses of Renan, Fustel de Coulanges, and Bergson, and in Berlin those of Hegel, Helmholtz, Mommsen, and Treitschke. The educated public was seriously interested in the work of the academic circles. The elite read the books and the magazines published by the professors, joined their scholastic societies and eagerly followed the discussions of the meetings.

Some of these amateurs who devoted only leisure hours to their studies rose high above the level of dilettantism. The history of modern science records the names of many such glorious "outsiders." It is, for instance, a characteristic fact that the only remarkable, although not epoch-making, contribution to economics that originated in the Germany of the second Reich came from a busy corporation counsel, Heinrich Oswalt from Frankfurt, a city that at the time his book was written had no university. [2]

In Vienna, also, close association of the university teachers with the cultured public of the city prevailed in the last decades of the nineteenth century and in the beginning of our century. It began to vanish when the old masters died or retired and men of smaller stature got their chairs. This was the period in which the rank of the Vienna University, as well as the cultural eminence of the city, was upheld and enlarged by a few of the Privat-Dozents. The outstanding case is that of psychoanalysis. It never got any encouragement from any official institution; it grew and thrived outside the university and its only connection with the bureaucratic hierarchy of learning was the fact that Freud was a Privat-Dozent with the meaningless title of professor.

There was in Vienna, as a heritage of the years in which the founders of the Austrian school had finally earned recognition, a lively interest in problems of economics. This interest enabled the present writer to organize a PrivatSeminar in the Twenties, to start the Economic Association, and to set up the Austrian Institute for Trade Cycle Research, that later changed its name to the Austrian Institute for Economic Research.

The Privat-Seminar had no connection whatever with the University or any other institution. Twice a month a croup of scholars, among them several Privat-Dozents, met in the present writer's office in the Austrian Chamber of Commerce. Most of the participants belonged to the age group that had begun academic studies after the end of the first World War. Some were older. They were united by a burning interest in the whole field of the sciences of human action. In the debates problems of philosophy, of epistemology, of economic theory, and of the various branches of historical research were treated. The Privat-Seminar was discontinued when, in 1934, the present writer was appointed to the chair of international economic relations at the Graduate Institute of International Studies in Geneva, Switzerland.

With the exception of Richard von Strigl, whose early death put an untimely end to a brilliant scientific career, and Ludwig Bettelheim-Gabillon, about whom we will have more to say, all the members of the Privat-Seminar found a proper field for the continuation of their work as scholars, authors, and teachers outside of Austria.

In the realm of the spirit, Vienna played an eminent role in the years between the establishment of the Parliament in the early Sixties and the invasion of the Nazis in 1938. The flowering came suddenly after centuries of sterility and apathy. The decay had already begun many years before the Nazis intruded.

In all nations and in all periods of history, intellectual exploits were the work of a few men and were appreciated only by a small elite. The many looked upon these feats with hatred and disdain; at best with indifference. In Austria and in Vienna the elite was especially small; and the hatred of the masses and their leaders especially vitriolic.

[2] Cf. H. Oswalt, Vortr?ge ?ber wirtschaftliche Grundbegriffe, 3rd ed. (Jena, 1920).

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