The methodenstreit as destructive spontaneous evolution?
Perhaps the methodenstreit itself can serve as an illustration of the way social deformity can arise through spontaneous evolution. The course of the methodenstreit was clearly a product of spontaneous evolution, and was not the result of some deliberate design.
One significant consequence of the methodenstreit was the generation of the presumption that there is something that can meaningfully be called Austrian economics. Without the methodenstreit, there almost surely would never have arisen the sociological phenomenon of an Austrian school of economics, or of a German Historical school, for that matter - and particularly the notion that the one is the antithesis of the other.The methodenstreit, set in motion by Menger’s 1883 book, became a nasty and passionate battle that spanned the better part of two decades until its participants tired of the controversy. To be sure, there were significant differences between the thinkers and the approaches they represented, yet these were minor as compared with the differences between the commonalities shared by those participants and the growing neoclassical emphasis on economic theory as price and allocation theory outside of time. Carl Menger’s orientation towards economics and social science similarly characterized the Germanic tradition of economic scholarship in the nineteenth century, whose principal exemplar was Gustav von Schmoller, who was also nearly Menger’s exact contemporary. While Schmoller lacked Menger’s theoretical acuity and decisiveness, it is clear that Schmoller’s Grundriss der allgemeinen Volkswirtschaftslehre reflects an orientation similar to Menger’s in its animating spirit and its central concern with the evolution of institutional arrangements through time.
The methodenstreit would have to be classified as a family feud, though it should also be noted that most murders are committed among family or friends.
In this respect, Joseph Schumpeter (1954, p. 815) argues that the methodenstreit was primarily a clash of temperaments, and this surely has considerable plausibility. In terms of Isaiah Berlin’s distinction between the hedgehog and the fox in his famous essay by that name on Tolstoy, Menger was more the hedgehog who was seeking one unifying principle, a universal solvent of the social world, so to speak. In contrast, Schmoller was more the fox, who emphasized variability and singularity, so much so that general organizing principles conducive to conceptual clarity tended to be slighted. Such differences in temperament may in turn have been magnified against the background of Prussian and Austrian hostility that included a short war in 1866, and which helped a passionate family controversy to turn bloody.Family feuds can have enduring consequences, and the methodenstreit would seem to be no exception. While there ceased to be any identifiable Austrian-oriented approach to economics by the late-1930s, a resurgent interest in Austrian economics has emerged over the past two or three decades, particularly in the United States, an interest which has been chronicled crisply by Karen Vaughn (1994). While the main intellectual figures in this resurgence were Ludwig von Mises and Friedrich A. Hayek, Vaughn quite correctly locates Carl Menger as the central inspirational source behind these two figures.
Also published in 1994 was Nicolai Foss’s The Austrian School and Modern Economics. As with Vaughn, Mises and Hayek are the two central figures in Foss’s narrative. Only Foss does not write of a resurgence of Austrian economics; rather, he writes of it as a degenerating research programme, primarily because its practitioners offer more by way of critical commentary than by constructive example. Foss is writing for people who are interested in such currently robust research programmes as law and economics and the new institutional economics. He argues that Mises and Hayek still have many valuable insights to offer such scholars, and he counsels such scholars not to let the Austrian identification that is commonly attached to Mises and Hayek interfere with a recognition of the value of their insights.
Foss and Vaughn share an admiration for Mises and Hayek, as well as for Menger, only they differ sharply in their projection of the future of Austrian economics. That such an issue would even be discussed today is a product of the methodenstreit and the social formations that emerged in its aftermath. The methodenstreit surely aided the Walrasian ascendency in economic theory, and has also generated an inadequate appreciation of the intellectual heritage of that which has been displaced by that ascendency. Had the family controversy between Menger and Schmoller not erupted in the manner it did, it is arguable that we would find ourselves speaking today neither of an Austrian nor of a German historical school of economics, yet at the same time we would find before us a robust alternative to the Walrasian type of neoclassicism. That alternative would have been centrally concerned with the development of organizations and institutions through time rather than with a logic of prices and allocations outside of time, and it would have incorporated the progressive components of what now are fragmented under such rubrics as the new institutional economics, evolutionary economics, law and economics and Austrian economics. But the methodenstreit did happen, and as a result economics took on a different history in the twentieth century than it might have taken had cooler heads prevailed in Vienna and Berlin in the closing decades of the nineteenth century - and, moreover, a history that has made more difficult the articulation and implementation of an alternative to Walrasian neoclassicism, even though that alternative was already in place prior to the methodenstreit.
References
Foss, Nicolai Juul (1994), The Austrian School and Modern Economics, Copenhagen: Munksgaard International Publishers.
Menger, Carl (1871), Grunndsatze der Volkswirtschaftslehre, Vol. 1 of Gesammelte Werke. Menger, Carl (1883), Untersuchungen uber die Methode der Sozialwissenschaftern und der Politischen Okonomie insbesondere, Vol. 2 of Gesammelte Werke.
Menger, Carl (1950), Principles of'Economics, Glencoe, IL: Free Press.
Menger, Carl (1963), Problems of Economics and Sociology, Urbana, IL: University of Illinois Press.
Menger, Carl (1968-70), Gesammelte Werke, 4 vols, 2nd edn, Tubingen: J.C.B. Mohr.
Schumpeter, Joseph A. (1954), History of 'Economic Analysis, Oxford: Oxford University Press.
Tullock, Gordon (1967), ‘The welfare costs of tariffs, monopolies and theft’, Economic Inquiry, 5, 224-32.
Vaughn, Karen I. (1994), Austrian Economics in America: The Migration of a Tradition, Cambridge: Cambridge University Press.
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