THE MARGINAL REVOLUTIONARIES
How Austrian economists fought the war of ideas
354pp. Yale University Press. 18.99 [pounds sterling] (US $35).
THE ECONOMISTS' HOUR
How the false prophets of free markets fractured our society
438pp. Picador. 20 [pounds sterling].
AMONG THE COFFEE HOUSES that sprang up in the newly constructed Ringstrasse of late nineteenth-century Vienna, a young economist could frequently be found. Carl Menger was a revolutionary who repudiated the accepted tenets of political economy. In so doing, he helped to lay the foundations of what became known as the Austrian school of economics.
Menger's Principles of Economics (1871) made little impact at first but by the early 1890s his ideas had united a diverse group of Viennese economists. The guiding philosophy of this group derived from principles of freedom and individualism, and from notions of subjective utility--an individual's personal judgement of worth--as the motivation for economic behaviour. The policy prescriptions arising from these concepts advocated market exchange and small government as pathways to creating the ideal society. In the century that followed, Austrian economics became a touchstone for free market ideology and economic libertarianism, its precepts co-opted in defence of policies for privatization and fiscal conservatism around the world. Its ideas underpinned the postwar establishment of the great international monetary and trading institutions, such as the World Bank and the General Agreement on Tariffs and Trade. It spawned a number of conservative think tanks on both sides of the Atlantic. And in contemporary times its banner has been seized on by ever more extreme right-wing social and political movements in the US, Europe and elsewhere--not least in Austria itself.
In Marginal Revolutionaries: How Austrian economists fought the war of ideas Janek Wasserman charts the fractured history, influence and legacy of the Austrian school, questioning whether it can really be called Austrian, or a school, or indeed whether it can be seen as a valid field of economics at all. The author begins his account in fin-de-siecle Vienna and the years before the First World War, when the zeitgeist for the revolutionary economists fostered the emergence of anti-Marxist and libertarian ideals in their debates about capitalism versus socialism. The story continues through the...