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

Carl Menger and the Austrian
School of Economics

Böhm-Bawerk and Wieser as Members
of the Austrian Cabinet

The unpopularity of economics is the result of its analysis of the effects of privileges. It is impossible to invalidate the economists' demonstration that all privileges hurt the interests of the rest of the nation or at least of a great part of it, that those victimized will tolerate the existence of such privileges only if privileges are granted to them too, and that then, when everybody is privileged, nobody wins but everybody loses on account of the resulting general drop in the productivity of labor. [3] However, the warnings of the economists are disregarded by the covetousness of people who are fully aware of their inability to succeed in a competitive market without the aid of special privileges. They are confident that they will get more valuable privileges than other groups or that they will be in a position to prevent, at least for some time, any granting of compensatory privileges to other groups. In their eyes the economist is simply a mischief-maker who wants to upset their plans.

When Menger, Böhm-Bawerk, and Wieser began their scientific careers, they were not concerned with the problems of economic policies and with the rejection of interventionism by Classical economics. They considered it as their vocation to put economic theory on a sound basis and they were ready to dedicate themselves entirely to this cause. Menger heartily disapproved of the interventionist policies that the Austrian Government?like almost all governments of the epoch?had adopted. But he did not believe that he could contribute to a return to good policies in any other way than by expounding good economics in his books and articles as well as in his university teaching.

Böhm-Bawerk joined the staff of the Austrian Ministry of Finance in 1890. Twice he served for a short time as Minister of Finance in a caretaker cabinet. From 1900 to 1904 he was Minister of Finance in the cabinet headed by Ernest von K?rber. B?hm's principles in the conduct of this office were: strict maintenance of the legally fixed gold parity of the currency, and a budget balanced without any aid from the central bank. An eminent scholar, Ludwig Bettelheim-Gabillon, planned to publish a comprehensive work analyzing Böhm-Bawerk's activity in the Ministry of Finance. Unfortunately the Nazis killed the author and destroyed his manuscript. [4]

Wieser was for some time during the first World War Minister of Commerce in the Austrian Cabinet. However, his activity was rather impeded by the far-reaching powers?already given before Wieser took office?to a functionary of the ministry, Richard Riedl. Virtually only matters of secondary importance were left to the jurisdiction of Wieser himself.

[3] Cf. Mises, Human Action. 3rd Edition(1966), pp. 716-861.

[4] Only two chapters, which the author had published before the Anschluss, are preserved: "Böhm-Bawerk und die Br?sseler Zuckerkonvention" and "Böhm-Bawerk und die Konvertierung von Obligationen der einheitlichen Staatsschuld" in Zeitschrift fur Nationalokonomie, Vol. VII and VIII (1936 and 1937).

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