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The aim of this paper is to describe Sudha Shenoy’s use of Menger, Mises, and Hayek (she explicitly called them ‘the older Austrians’) to explain development and growth. Her aim was to show that the application of Austrian economics, based on the notions of capital structure and division of labor, embedded in a specific legal framework (common law), historically promoted development and growth (as in early modern England); and can promote development and growth in underdeveloped countries (her specific focus was India). Shenoy also claimed that any policymaking as well as government’s intervention are either useless or dangerous, having two main dysfunctional effects, which are often interrelated; namely, make development slower (or even stop it), and increase corruption.

Purpose – The aim of this note is to explain what Hayek meant when in The Sensory Order he claimed that Mach was one of his fundamental readings in psychology while he was writing The Sensory Order. Methodology/approach – A historical approach to show the different role Mach played in Hayek and Neurath/Carnap. Findings•A parallelism between Mach–Kant and Hayek–Mach in psychology.•Hayek's rejection of Mach's final philosophical approach as well as his aversion against the Vienna Circle's positivism as forms of metaphysics, based on an awkward definition of isomorphism. Research limitations/implications•The human sciences cannot be reduced to the natural sciences.•Any form of knowledge is knowledge of “how” rather than of “what”. Originality/value of the paper•To show Mach's role in Hayek's psychology.•To consider The Sensory Order as a relevant part of Hayek's struggle against reductionism in psychology.

[In Menger's Reminiscences this part is Chapter Five (‘Vignettes of the members of the Circle in 1927’), where Moritz Schlick is described as ‘an extremely refined, somewhat introverted man’; Hans Hahn, ‘a strong, extroverted, highly articulate person who always spoke with a loud voice’; Olga Hahn Neurath, ‘always smoking a big cigar’; Otto Neurath, ‘a man of immense energy and curiosity, very fast in grasping new ideas, through an often distorting lens of socialist philosophy’; Rudolf Carnap, ‘systematic, sometimes to the point of pedantry…a truly liberal and completely tolerant man’; Victor Kraft ‘[who] like Schlick, Feigl and myself, by no means shared all the political ideas and ideals of Neurath’; Friedrich Waissman, ‘a very clear expositor [who] unfortunately dragged out his studies [of mathematics and philosophy] at the University’; Herbert Feigl, ‘[who] did probably more than anyone else to make some of the Viennese ideas known in America’; Theodor Radakovic, ‘a student of Hahn's…too shy to take part in the discussion of the Circle, although he attended the meetings regularly’; Edgar Zilsel, ‘a militant leftist [who] wanted to be considered only as close to, and not as a member of, the Circle’; and Felix Kaufmann, ‘a philosopher of law, an ardent phenomenologist, the only participant with a true sense of humour’ (Menger, 1994, pp. 55–68). These following parts are those unpublished].

For better understanding the connections between the Viennese circles in which Menger was involved, it is necessary to make some remarks on the Viennese context where they developed. Since the end of the 19th century up to the interwar period, Vienna was a very lively city from a cultural point of view, the birthplace of modernism (Janik & Toulmin, 1973). In the age of the late Habsburg monarchy as well as in the post-First War ‘Red Vienna’, the intellectual, scientific and artistic life of the Austrian capital was so fervent that those years are recalled by historians as the Viennese Enlightenment, the gay apocalypse and the golden autumn: ‘two generations were enough to cover the whole period. The economist Carl Menger (1841–1920) shaped the beginning, and his son, the mathematician Karl Menger (1902–1985), witnessed the end’ (Golland & Sigmund, 2000, p. 34). After the First World War, from an economic point of view, a high inflation overwhelmed the country; while from a political point of view, ‘the new Austria was fragmented and labyrinthine’ (Leonard, 1998, p. 6): the Christian socialists were the conservative part of the society, but one third of citizens supported the new social-democratic party, which had the majority in Vienna.

§ 1. My presentation to the Circle. When I presented my theory to the Circle, I found a mixed reception. Schlick, however, slightly shook his head, the mock-smile appeared on his face, and he tried to exchange glances. Only Waismann responded. Kaufmann was too loyal a friend to openly go against me even though he strongly felt that I was wrong. And Carnap was in deep thought.

§ 1. The first piece of news about Vienna that reached me in September 1931, after arriving in Genoa, was quite charming; I mention it and since many later recollections about Vienna that I shall have to record are quite the opposite of charming, Austrians have always been fond of swallows. There was a superstition, especially among peasants, that a house was safe from fire if they had built a nest under its roof. Every year, the Viennese smiled when the first swallows returned from the South – an event always recorded in the newspaper because it heralded the advent of summer, and when the swallows were leaving, everyone was a bit sad, because another summer was gone. In September 1931, however, something unprecedented happened. A sudden, premature frost caught the poor birds on their flight to the South. By the hundreds they fell exhausted to the ground, unable to continue their journey. But, as the newspapers reported, the Austrians chartered airplanes to take their little friends to Italy.