Carl Menger Biography Economics

Carl Menger (1840-1921) Life and Methodenstreit

Carl Menger Biography

The fundamental details of Menger's life can be set forth simply. He was born in 1840 in Galicia, then part of Austria, and he came from a family of Austrian civil servants and army officers. Menger studied law at the universities of Prague and Vi­enna, and in 1867 he turned to economics, perhaps because of an interest in stock market prices (he covered the stock market for a time as a writer for the Vienna Zeitung). Menger published his carefully written Grundsatze (translated as Princi­ples of Economics) in 1871, and his fame soon began to spread. He received an ap­pointment to the University of Vienna, where he stayed until his retirement in 1903, and between 1876 and 1878 he served as tutor to Crown Prince Rudolf.

At first blush, Menger appears to have been the epitome of the devoted and un­complicated academic. But in fact he was the leader of a veritable theoretical revo­lution, the founder of a school of thought, and a verbal scrapper par excellence against what he regarded as the excesses of German historicism.

In his latter role, Menger was a major protagonist in the methodenstreit (method struggle) with historicist Gustav Schmoller. Menger achieved a cer­tain fame by attacking Schmoller in 1883 (Untersuchungen iiber die Methode des Sozialwissenschaften) and by defending the Austrian approach of concentrating upon the subjective, atomistic nature of economics. Emphasizing all-important sub­jective factors, Menger defended self-interest, utility maximization, and complete knowledge as the grounds upon which economics must be built. Aggregative, col­lective ideas could not have adequate foundation unless they rested upon individual components.


Schmoller defended the historical method as the only method relevant for ana­lyzing the social organism. In Schmoller's view, the Austrians, by focusing upon the individual's behavior under constraints, were leaving out the most important things— dynamic institutions. In the end, the debate became personal and, in consequence, pointless. Schmoller and his followers (effectively, it would seem) boycotted Aus­trian professors at German universities, and it was a long while before Germany pro­duced theorists of the first rank. In the end, however, the steady influence of Menger's Principles2 and the work of the disciples he attracted began to overcome historicist criticism, and the controversy ended with the Austrians winning. Austrian econom­ics picked up adherents in England (William Smart and James Bonar), and the day was eventually won by subjective utility analysis. We now turn to the hub of Aus­trian theory, Menger's Principles.