Menger, Carl (1840–1921)

Carl Menger, brother of the lawyer Anton Menger (1841–1906), through his teaching and writing at the University of Vienna in the late nineteenth century, inspired the formation of a distinctive, Austrian approach to economics. Where neoclassical economics had been centrally concerned with equilibrium states and conditions, Menger's Austrian approach treated economies as processes of continual experimentation and motion. Equilibrium might sometimes be a useful mental tool, but it was not a feature of reality.

Menger treated competition as an active process that generates a continual flow of new knowledge, new products, and new forms of economic organization. The primary task of economic theorizing for Menger was to explain how generally orderly patterns of economic activity emerge through interaction among people even though there is no person or office that directs or oversees that emergence. In this task, Menger pursued the research program of spontaneous order, articulated by such philosophers of the Scottish Enlightenment as Adam Smith (1723–1790) and David Hume (1711–1776).

This research program sought to explain how socially beneficial practices and institutions emerge through human interaction without being the product of deliberate choice. Some of the examples that Menger gave of this spontaneous process of emergence were language, law, and money, with money being the example that Menger developed most fully. Money is a hugely valuable social artifact, for it serves as a form of language without which modern commerce would be impossible. Money, however, was not initiated by some act of legislation, but emerged and evolved through usage and commercial interaction.

In the first part of the twentieth century, some remarkable students who studied at the University of Vienna carried Menger's central insights forward. Joseph Schumpeter's (1883–1950) scholarly oeuvre centered on experimentation and change, and scholars now regard him as one of the primary sources of inspiration for the rapidly growing interest in economic sociology and evolutionary approaches to economics. Oskar Morgenstern (1902–1977) sought to locate economics as the study of complex interactions whereby novelty is continually injected into society and, in the process, was a founder of game theory. Ludwig von Mises (1881–1973) and Friedrich von Hayek (1899–1992) emphasized similar themes and became the main sources of inspiration behind the revival of interest in Austrian economics that began late in the twentieth century.

Since the mid-1990s, there has been growing interest in pursuing emergence-based theorizing in economics and the social sciences, a good deal of it inspired by advances in such computational techniques as agentbased modeling. These new ideas and methods will surely continue to gain acceptance at the expense of the concern with equilibrium states and conditions, and as [Page 1015]they do, the prescience of Carl Menger will surely become increasingly recognized.