Carl Menger, 1840–1921: the Importance of Marginal Utility and the Economics of Scarcity

Abstract

Carl Menger was born in February 1840 in Neu-Sandetz in Galicia, then part of the Austro-Hungarian Empire. His father was an attorney, his mother a landowner in Galicia. Menger studied law in Vienna and Prague. He gained his doctor’s degree from the University of Cracow. He was therefore more or less self taught in economics, characteristic of many of the first generation of marginalist economists. He worked initially as a journalist, then entered the Press Department of the Prime Minister’s office where he reported on economic matters. His demand-oriented outlook was argued to have been influenced by his stock exchange analysis since share prices follow demand rather than cost factors. In 1872 he passed his Habilitation in Economics at the University of Vienna with his Principles of Economics, published in 1871. He became Associate Professor in 1873 and full Professor in 1879. In 1893 he published Investigations into the Method of the Social Sciences with Special Reference to Economics, followed two years later by Irrthumer des Historismus in der Deutschen Nationalokonomie. These were followed by a Kritik der politischen Okonomie, and lengthy encyclopaedia articles on capital, money and the principles of classification in economic science, as well as a number of biographical articles on List, von Stein, Roscher, Mill and Böhm-Bawerk. His collected works were published by Hayek in 1935–36. He was actively involved in the Commission on Monetary Reform which prepared Austria for the gold standard in the early 1890s. In 1900, he became Life Peer in the Austrian Upper House. In 1903 he had to retire prematurely from his chair. He died in 1921.