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Review of “Economic Theory in the Twentieth Century, An Intellectual History. Volume II, 1919–1945: Economic Theory in an Age of Crisis and Uncertainty” by Roberto Marchionatti

Behavioral economics may be considered as neoclassical behavioral economics (or ‘as-if’ behavioral economics), which adopts a neoclassical normative model of rationality and explains bias and mista...

Being the major figure within the school of economics, which has been developed in Torino between the end of XIX century and World War II, Luigi Einaudi was a master amongst intellectuals and economists in the history of Italian classical liberalism. The aim of this paper is to highlight the peculiar feature of his political liberalism, to be intended as the most important consequence of economic liberalism, as it has been emphasized by the well- known querelle Einaudi-Croce as well as by the influence Pareto and neoclassical economics had on him., Philosophy Kitchen - Rivista di filosofia contemporanea, N. 8 (2018): Liberalismi eretici. La "civile filosofia" dei liberali italiani

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.

This article deals with the contents of the second edition of Carl Menger’s Principles of Economics (1923), which was neither reprinted in German by Hayek in 1934 nor translated into English by Knight in 1950. My aim is to show that a new Mengerian economic agent can be found in the contents of chapter 1, where Menger dealt with social needs and social goods. I consider this specific contribution of Menger a natural development of his methodological research on the nature of institutions. Finally, I contextualize the story of the missed reprint and translation in the debate about the meaning of economics involving Hayek and Robbins at the LSE and Knight in Chicago.

This paper is focused on the relation between economics and mathematics in the Wiener Kreis and in the Mathematische Kolloquium. In the 1930s, the economic theory became a part of Otto Neurath’s project of Unified Science, but in Menger’s Kolloquium, the reformulation of the model of general economic equilibrium (GEE) distanced it greatly from the Kreis’s neopositivist point of view. The role of Karl Menger is fundamental to understand the methodological and epistemological cleavage that arose in Mathematische Kolloquium. His role was very important also for understand the relation between the economic theory of the Austrian school and mathematical economics.

The article is dedicated to the work of a group of economists that was an important expression of a fertile season of Italian economics, in the period from the mid-1890s to the end of 1930s, which developed around the figure of Luigi Einaudi, and earlier, around that of his master Cognetti de Martiis. This School expressed a range of thought of high value in the political and economic sphere. In the economic field, the School established a fertile relation between historical–empirical work and economic theory; in the political field it investigated the relation between freedom and economic order.

The International Encyclopaedia of Unified Science, 1938-1969 (promoted, above all, by Otto Neurath in Vienna and Charles Morris in the United States) was based on the feasibility of building a "unified science" and it was carried on through the publication of a special "encyclopaedia" to show the meaning of this philosophical project. The purpose of this paper is to reconstruct, mainly from a historical point of view, the development of economic theory within this project: from the role of economics inside the Vienna Circle in the 1930s (more specifically in Neurath’s perspective) to the meaning of economics in Tintner’s volume, published in 1968. The role of economics inside the International Encyclopaedia is a part of the story of "the building of the economic "mainstream" (a quantitative and formalist approach to economic issues) during the 1950s and the 1960s in the USA.

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.

Before talking about the Vienna Circle, I wish to sketch the earlier history of philosophy in Austria insofar as it is connected with ideas of the circle – by contrast or by similarity – but without any claim as to completeness of the list of authors considered or the work described.1

[Chapter Thirteen of Menger's Reminiscences deals with Menger's visit to the United States in the academic year1930/31, but it is restricted to Menger's stay at Harvard, where he spent the fall semester and lectured on dimension theory and metric geometry. At Cambridge, Menger met, among others, ‘the outstanding mathematician’ G.D. Birkhoff; the philosopher H. M. Sheffer, who ‘had discovered in 1913 that all particles of the calculus of propositions can be expressed in terms of a single one’, ‘extensive[ly] used’ in Wittgenstein's Tractatus ‘without mentioning its author’; P. Weiss, N. Wiener and J. Schumpeter, the latter being a visiting scholar as well. But the person who most impressed Menger was P. Bridgman, who ‘appeared to him as a modern reincarnation of Mach’(Menger, 1994, pp. 158–173). The ‘Harvard sections’ of Menger's Reminiscences are comprised between paragraphs 14 and 15 of the present publication and are not reprinted].

[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].

In 1923, an issue entered the discussion between Schreier2 and myself, though hardly anyone else in Vienna was interested in it at that time. Historically, the topic was connected with the question of intuition or Wesensschau, but substantially, in my opinion, the two were quite distinct. Elaborating on ideas of the 19th century algebraist L. Kronecker and eloquently supported by Weyl,3 the Dutch mathematician L. E. J. Brouwer developed what he called intuitionistic mathematics, the mathematical controversy centred on existential propositions. But those who closely associated intuitionism in mathematics with the intuition in Husserl's pure phenomenology or Bergson's metaphysics were misled by the similarity of the two words. Whatever, if anything, Brouwer's reconstruction of mathematics and the phenomenology in Husserl's Ideas had in common, they certainly had opposite effects: Husserl claimed for his Wesensschau (and Bergson for his intuition) insights that empiricists such as Schilck denied or regarded as empty words. Brouwer, to the contrary, rejected statements that everyone else claimed to be solid parts of mathematics, and he denied or regarded as empty words theorems proved by men such as Hilbert.

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.

The Vienna Circle and the work of Brentano, Meinong and Husserl were only indirectly related and mainly by opposition. The present chapter is devoted to Mach, Boltzmann and Mauthner, three precursors of the Circle, though quite unequally treated by the group. Mach was extolled, while the other two were practically ignored.

§ 1. In conclusion, I comment on two features of my mental make-up of which I have been aware since my earliest youth. They concern my memory. Compared to most people of my acquaintance, I have a memory that normally is at most average in breadth and intensity – probably less than average. But during an experience that I feel may be potentially useful to me I resolve to remember what I am seeing or hearing or understanding and then this experience remains engraved in my mind with complete accuracy for decades, perhaps to the end of my life. I don't know how far I could extend this faculty, which I have never tried to abuse in the sense of trying to remember too much. Even so, occasionally trivia pop up with perfect clarity which, however, for some long forgotten reason, may at one time well have seemed to me worth remembering. But all in all I am well satisfied with my past selections. Most of what I resolved to remember I later actually found useful. This usefulness is enhanced by the second feature of my memory. Interesting reminiscences tend to return spontaneously at the very moment when they are relevant, that is, when they are connected with a current experience or the subject of my momentary thinking. ‘Connected’ here is meant in the broadest sense: in space and/or time, by similarity contrast, by analogy or by any of various other relationships. My memory thus is, on the one hand, strongly regulated as to its content and, on the other hand, largely spontaneous as to its reproductions. I don’t know how common these features are, but I suspect that the second is rarer than the first.

§ 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.

Menger disagreed with this view for various reasons. Also, the subjective expectation is infinite. There are many cases where man's behaviour fails to conform to mathematical expectations: games in which a player can win only one very large amount with a very small probability or games offering a single moderate amount with a very high probability. Furthermore, we can always find a sequence of payoffs x1, x2, x3,…, which yield infinite expected value, and then propose, say, that u(xn)=2n, so that expected utility is also infinite. Menger therefore proposed that utility must also be bounded above for paradoxes of this type to be resolved.

Karl Menger (1902-1985) was the mathematician son of the famous economist Carl Menger. He was professor of geometry at the University of Vienna from 1927 to 1938. During that period, which was crucial from an historical and philosophical point of view, he joined the Vienna Circle and founded his Mathematical Colloquium. The present volume of "Advances in Austrian Economics" offers the transcription of those unpublished parts of Menger's notes written between 1923-1938. It is hoped that these notes, together with the editor's contextual explanations, provide a subtext to Menger's biography during this influential period.