Principles of Economics: Menger's Foundational Work

Pareto (189d,1906)
J.#. de (IBM)
v t tish)
Cemmaa (19161934)
Mit»hen (1913,1927)
Aaow
Pigou (1920)
Sra&e (1960)
Robinson (193t)
Somi*axádn
Dsü4mn
Hicita (1937, 1939)
Samticíson (1947)
Pierce
knight, Viner, Stiglcr
Fríodman-

If.
s.
10.
I I.
The Institutefor Humane Studies Series
in Economic Theory
Dis‹rihutcdby New York University Pre•s
I . zlmrri‹n’.s f'Jrrzif fJrJ›rr.s.sion,aliy McirrayN. kr›thhard (1975)
/.r ‹›iir»iiir "I"li‹›uyhl l›y )rriitl M. Kirxftcr (lît70)
"l'lir f"‹›uHJnlii›iic ‹'›f M‹›detHA u.f/ri«n fl"cunotiiics cditcd with
:m iimrxlticiirm l›y fi.dwin Cî. f3olan (1975)
”fim t•:c*Humics ‹›fI udu/iy cii Afi4c¥: T'owacdo Critica/He•
n)›yrniseI ‹•dii‹xJ withan introdcictiunhy Laurcnc¢'S.Mou
(I07G)
5.
F.roH‹›iHic.s asa Coocditialioti l'ruhleiii:
k"ti«dricli A. Hayehby GemldP.
O’f3risco
!!•
J
r.
(l9t7)
fi. Gnpital, future.it, rind hem: fraysinthe Theory oJ Distcibu•
tionmy l'riink A. Peiiet, ediied withan introductionby Mur•
tayN. R‹itlilxird (1977}
7.
G•iiJiita 1, k:xJiertalioiis,mid the hlacket f'cocem• Essays on the
TlirocynJI for Ma zhrt £rotioiiiy l›y Ludwig iYt. Lachniann,
‹'‹Iit‹xI t•’itli :ui illtl’‹xllt‹'ti‹iti l›ț’ t '.tltt•r I•.. €îritt‹)c•r(I 977)
I’‹›ii›ez aii‹I 8ferAr/: ¢•ui›rriimriif nii4liu ficorioiity IJy Murray
hî. k‹›ilth:ti‹I (!îl77)
I ihrrnIi.ciii:A fi›oriu•rcoiioziiir 6.s/zo.si/io›tUy Ludwigvon
Mint’s u'iIl›a furc't 'r›rcl hț' LuuisM. 1țzadaro( 1078)
5/nit, f*fic‹moiity. ntjzf .îfnfr:J 7-rrnfi«ralt 6ronotrlir l'cinci-
/i/r.‹ l›ț' Miirr:iț' N. k‹›tlikard (lg78)
Nr.iu yJicrclioits iri Ausuiaii 6rcrioniicz cditc•d withan intro-
I2.
”T'lie I'Iliiiiate k"ouiidali‹maf £coitotiiic fi›cieuce: dri £îsoyali
5/rf/iadhr Lud vigvon Mises, witha foretvordby israelM.
fii iiirc (1378)
I.S. CayHnlmodIls fri‹r/«rrby LudwigM. Lacllmant› (1978)
l'ublisliedby New York University Press
L: yixtr. iiir›Jr›,șira? f'rob?rriuo/ £roitoiiiirzby L•udwigvon
M isc.i, irunsluiodby George Reisnian witha forewordby
1.iidivigM. 1 cliinaiin (1981}
PRINCIPLES
OF
E
CONOMIC
S
BY CARL MENGER
Translated
by James Dingwalland BertF.
Hoselitz
Withan Introductionby F.A. Hayek
H«w Y•rk unI•e••Ity he«•• be* •'+ •°**°^

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ePAce
HE IMPARTIAL obmrvercan haveno doubt aboutthe
reasonour generation pays generaland enthusiastic tributeto
progreciin the field of the naturnl miences, while economicmi•
ence receiver little attentionand its value ii seriously ques-
tionedby the verymen in societyto whom it should providea
guidefor practicnl action.
Neverwar thereanage that placed economic interests higher
thandotsour own. Neverwe the needofa scientific founda-
tion for economica airs felt more genernllyor more acutely.
And neverwas the ability of prnctical men to utilizn the
achievementsof Science,in all fieldiof human activity, grenter
thaninour dny.If prncticnl men, therefore, rely whollyon
their own experience,and dñregnrdour a:ience in in present

stateof development, it cannot
teres
tor
abilit
yon
theirpar t. Nor
flUlt of a liauglity rejection
of
wouÎd give into
ingthe outcome
indilferencc
due toa lackof ferionsin-
the decper
UIC CÏrCufnstance
sand
OÊ tlt€t£ âCCivity.The
mustnotbc sougfit
state of our science
itsclf, in the
to find its
em
piricnl
lounda
tions.
the
solutionofo problcm that
fare, to tcrvea publi
c
interest
insighta truc science
rclationships deccrmin-
CgUSgOÊ €U€Îi
rc
markable
£lscwhCr
c
thaninthe premnt
St*<'!'C}' of a!! past cndcavors
›• to dcvotc onc’• abi1iti•s to
d›reCtl2 FtlatCdto hue:ian wel-
of clic
to
enter
a path
wh
ere.even
error
it not
In
orderto avoidany
justifiable
highot importnnce
,and
entircly
without mcrit.
doubu
**IS› W¢ MUSt not,in sucfian cntc risc,
by
**o new *ttemptin this direction,
the
lion‹o past workin all che fic!d#
son,and
would
h8Ve
attempte
dto
achie
ve the
s*cond,wc would rcnouncc
fu
ndamcntal
rcformofche
dang
erscan
fromche
otir
own, though only after an
fry appcalingmd ty{zjg
t
g
ofmon
This
on the partofcx-
negle
ct to pay cnreful
oî our science thusfar
same end. Shouldwc fail in the
bC cx'âded
b
y
makin
fo
u
ndations
is the groundon whichI
cndcavoredco reducc
nomic accivic
jcccedco
mca9urc
any hopeofa
ofour rience. Thèse
8 che vicwzofour pred¢ccssors
unhcsitatzng «xazoination,and
experience, froj2t the thoughti
' stand.In what
followsI have
the complcx phcnomcnaof
accuracc
obse
rvation,
fundam•ntalsOfour science
01t l0rCd.Nor can wc abstain
from
indcpcndcn
cc of
judgmcnc,
to
****to tloctrinei untilnow
tainmen
uofouf
science. Werewc
abandon liglitly the whole
Ch€
many excellen
t
mind
sof
al!
7 to the simplet clcmcnts
corzmponding
measuzc,to
t. Menge
r
uscsan editoria!
usagc,
wehayc
convenea
pcrson plura!to ‹hc fizst
human cco-
to pp!7co chose clcæontsthe
to their nature,
pp!7in8 cricic*æ, with full
UC OÿÑMOA
fOÎ
sumof mperience collccttd
ptopleiand of all iimtiwho
t0
tÎtc
mannerin whichthe
"wg” thronghou67n
considercd définitive at-
to fail in the list taik, we
thatcon still bc sub-
and
con
stnntly
adhcr-
h
owever modestthe
âi¥tt Et tÎt0 di3œvczyof
more complex economic phenomena evolve from their element
This methodof research, attaining universal acceptnncein
the naturnl a:iences,led to very great results, and on the ac-
count came mistakenlytobe calledthe natutnl scientific method.
It ii, in reality,a method commonto all fieldi of empirical
knowledge,and ihould proptrlybc calledthe empiricnl method.
The distinction is important be&ur every methodof invtiti-
gation acquires its own specific ci›aracccr fromthe natureofthe
Ac)dof knowledgeto which it is applied.It wouldbe improper.
accordingly,to attempta naturnl scientific orientntionof our
science.
Part attemptsto carry overthe peculiaritiesof the natural-
anentific methodof investigation uncritically into economics
haveledto most serious methodological error,andto idle play
with externalanalogies betweenthe phenomenaof economics
and thoseofnature. Bnconaidof scholarsof thii description:
”Hagnacum vanitatcct desipientia inants similitudineict tym-
pathiu nrum dwcribunt atque etiam quandoque attingunt,” °•
a statement which, strangely enough, is still true todayof pre-
cisely thee writeson economic subjectwho continue -to cnll
thezosclvcs disciplesof Bacon while chcy comptctcly müundcr-
stand the spiritof I‘m aiethoâ.
If it ii stated, in juitiiicntionof there eiforti, thatthe taikof
our age is to estnbliahthe interconnections between all fieldsof
Scienceand to unify their most important principles,I should
like to question mrioudythe qualificntionsof our contcmpo•
rnriesto mlve thii problem.I believe thatscholarsin the vari-
or fields of :iencecnn never lore tightof this common goalof
their endeavors without damageto their research.But the a›lu-
tionof this problemcanbe takenup successfully only whenthe
several fields of knowledgehave been examinedmint carefully,
and whenthe laws peculiarto ench field have been discovered.
$. In Z'he Philoaofihloal fi P. or M of Pronczx bacon, tzanJatcdby E)lis end
Speddtnp «dJtedby }oIzn if. Robertson, London, tgog,pp. y$j•§. chis
pazzage reedsas /o)Iows: ”siasilitudes end zyaipathiesof risings thst
bav¢ao zsdity,... tbey d¢zczibeand sozaetim¢s invent with gmat

48
It is now the taskof the readerto jtidgcto what resultsthe
methodof investigationI haveadoptedhas led, and whetherI
li.we been .able to demonstrate sticcesifiilly thatthe phenomena
ot economicI tie, like thoseof nature,are ordered strictly iii ac-
cordance with definite laws. Before closing, however,I wishto
contestthe opinionof thouwho questionthe existenceof laws
of economic behaviorby referringto human free will, since
their argument would deny economics altogetherthe statusof
an exact Science.
Whetherand tinder what conditionsa thing is use/ufto me.
whether an‹l under what conditions it isa good, whetherand
un‹lcr what conditions it is an econorriic good, whetherand
under what conditions it ponces chicformeandhow large
the mtmureof this value is for me, whetherand under what
conditionsan economic exchangeot gpods will tnke placebe•
tweentwo economiiing individuals,and the limiti within
wliiClia
h••’••
•
a
ft be
established if an exchange docs occur-
iliese an‹l many other mattersare fully as indepen‹lentof my
will as any law of chemistry is ot the will of the prncticing
chemist.The view adoptedby these persons rcits, therefore, on
•iii easilyiliiccrnible error aliotit the }iropcr field of our science.
Ivor economic theory is concerned,not with practicnl rulesfor
economic nativity, but withthe conditions under whichmen
engagein provident activity directedtothe satisfactionof their
gpJ„
Economic theory is relatedto the prnctical activitiesof econo-
misingmen• in muchthe snmeway that chemistry is relatedto
the opcrntionsof the prncticnl chemist. Although referenceto
tree‹loiii of the human willmay wellbe legitimateasan objec•
tionto the complete predictabilityof economic activity, it can
never have forceasa denialofthe conformityto definite laws
ot phenomena that conditionthe outcomeofthe economicac-
tivity of men and are entirely independentofthe human will.
q. The ternu "micIschu]Ionder Staunch," “mictrchaJiondm lndiuiduum,*
and "wirfsc8o}trndr" Pszson’ aa:ac œntinua))y throughou‹‹hcwah
The adjmtivc "æirticha/tend" docsnot rcferto ihe propettlœor
livcs of individua!ebuc co che c«ivityin which th«yorg cngaged.
More ipeciticnlly, it doeinot tcter to "the pro$t motive"or to "the
puriuitof ttlI•intereit," but to the oct of emnomldtigmTR.
It is }›reciscly }illc *o***<**
J have deVotfld sQtCldl
£;aU$8Î
C
ORRflCtÎOll8
productsand
and placing all
etc.)
also betaustOÎdie
many other
economic p
roceuts hcretofore
stood. This is the vert
licnomena(
bnnch
ofour science,
moreover, ift
which
the eventsof cconomic
life
ftwu
portant
man po
built
u
pon
a
forthe purpoit
comprisingthc
a
special
pleasureto
pzinciplesof our
Foundation
duced
almœ
t
entirelyby
including
one unified pointof view.
but
eve thereby gain into
comjiletely nttso' d*T•
mort diitinctly appcarto Obt2
princip
thatthe £eld here treated.
science Iterc attcMgt€d'
laidbyp
devions iYofik thatwas pro-
the industr
yof
Let this workbe regnrded
,
th0fC
froma
c
ollaborn
many throughthe
les tgç ggience,f$lUTtO
recent development
Gcrman
scholari.
tor in
Austria,and asa
abundantly
lavishedon us
many
out
itnnd
ing
scholarss
ti› oughheu
••
ccllcntp
of
this
‹lemriptio
n, liowe
VClV, WÏ¥iCll
OUT
gCÎCRCC.
Attention to the
t
*
CStÎgatÎOft OÎ
tÎtP•
between
cconomic phenomcna
nding agenuot prodUCtÎOft,
invotving
not only
thcory basedup0
n reality
ot the most iin-
thcrefore
friendly grtttirig
faint echoof tl›e '**-
Auitriansby Ger•
he Iras
s
ent usand
ublicntiont.
Da. CnsL **>