by Mario Rizzo
I have been doing research on the ideas of the first-generation Austrian economists (Menger, Wieser and Boehm-Bawerk) as they relate to contemporary developments in behavioral and experimental economics. I have come upon a number of interesting things. I expect to share some of them here as well as in a soon-forthcoming paper. Today I wish to share this quotation from Friedrich von Wieser. These sentences are the opening words of an article commissioned by the Economic Journal to explain the ideas of the Austrian school to English-speaking economists:
“The historical school of political economists in Germany, and the Austrian, or as it is frequently termed, the abstract school are more nearly related than is at first sight apparent. Both follow the spirit of the age in rejecting speculative theory and in seeking their highest laurels in the field of observation. In art, as in science, naturalism must be distinguished from truth to nature, and we Austrians, while we have certainly no wish to be disciples of naturalism, we are wholly set on being experimentalists.”
Friedrich von Wieser, “The Austrian School and the Theory of Value,” Economic Journal (March,1891).
Of course, we must pay careful attention to the meaning of his words (he wrote this in English) at the time. In the first place, he was keen to show that the idea of an “abstract” economics did not preclude concern with reality or with the facts. The abstraction involved was an idealization of everyday experience of purpose-driven behavior. In itself it does not teach us much about the complexities of historical phenomenon but it is a useful method — involving idealization and isolation of individual factors — to organize our thinking about complex realities. It is a (internal) fact-based framework for more specific theories.
Wieser is also careful to mention that this attitude does not imply “naturalism” by which he meant the application of the methods of natural science to all intellectual areas, including the human sciences. An important difference is that the human sciences start from the knowledge (“from within”) that we all have of purpose-driven behavior. Even the natural scientist must presuppose this in the reporting and discussion of his results!
What does Wieser mean by “being experimentalists”? He cannot possibly mean exactly what, say, Vernon Smith does because the methods and ideas were not invented yet. I think he means that Austrians must be interested in applying their framework, and in supplementing or modifying it, as they look around the world. F.A. Hayek mentions in his appreciation of Wieser* that Wieser was more interested in trying to understand the world than in pure intellectual consistency. So his work does not exhibit the kind of consistency we have learned to expect from Boehm-Bawerk, for example. Wieser was trying to extend a system of thought, rather than close it.
Wieser has long considered somewhat of an outcast by contemporary Austrian economists partly for reasons of economic theory and partly for ideological reasons. However, I do think that we would all benefit from looking at a different Austrian perspective — one that develops the ideas of Carl Menger in a way that sheds different light on their significance — and on a style of thought that eschews the rigidity that some have imparted to the Austrian School.
* F.A. Hayek, “Friedrich von Wieser (1851-1926),” in The Collected Works of F.A. Hayek, vol. IV: The Fortunes of Liberalism: Essays on Austrian Economics and the Ideal of Freedom. ed. Peter G. Klein (Routledge, 1992), 108-125. This essay was first published in 1926.