Essay YAGI Kiichiro

The Subjective Turn of Carl Menger in His Personal Copies of Grundsätze : the Significance of Hitotsubashi/Duke Menger Materials

YAGI Kiichiro
(Professor of Setsunan University)

More than thirty years ago, I began my research on the economists of the Austrian school¹ with an investigation on the Carl Menger Library at the Hitotsubashi University. During those years, I was involved in the Japanese translation of the posthumous second edition of Menger’s Grundsätze der Volkswirtschaftslehre.² This 1923 edition was finalised by Menger’s son Karl Menger Jr., based on the manuscripts his father had left behind and it contained several elements that had not appeared in the first edition of 1871. While the first edition³ was generally appreciated as one of the founding works for modern economic analysis, reception of the second edition was mixed. Karl Polanyi⁴ regarded it as a herald of general economics that covered substantial economic activity beyond the market economy. Other reviewers, however, were rather sceptical about the integrity of the edition as a whole.⁵ Thus, the investigation into Menger’s efforts in revising his Grundsätze became the first task of my study on Menger.

The Carl Menger Library contains a copy of the Grundsätze in which Menger added corrections and annotations with an intention to prepare for its revised edition. It was a specially arranged author copy bound with sheets of white paper inserted in between pages. The University Library at the Hitotsubashi University, published the annotations in this copy in 1961⁶ based on the transcription made by Prof. Emile Kauder, the author of A History of Marginal Utility Theory (1965). I acquired and reviewed the microfilm of the annotated copy of Grundsätze and found that Menger had modified his methodological position in response to the criticism from his reviewers. One critical review in particular, by the name Hack in Zeitschrift für die gesamte Staatswissenschaft, Bd. 48 (1872), S. 183f, led him to reconsider the relation between goods and the satisfaction of wants from the teleological consciousness of individuals, which had been causally linked in 1871. In the Hitotsubashi copy, Menger not only deleted the methodological sentence in the preface that Hack had objected in this author copy, but also changed the title of the second section of the first chapter from ‘On causal connections of goods’ (Über den Causal-Zusammenhang der Güter) to ‘Considerations on the connections of goods in the end consciousness of man’(Betrachtungen über den Zusammenhang der Güter).

In my view, Menger realized his subjectivist position by receiving Hack’s criticism on ‘causal relations’ and consciously deepened his subjectivism further over time. Since this subjective turn had started soon after the publication of Grundsätze, we have to assume that Menger’s understanding of his methodological position during his debate on method against G. Schmoller (1883-84) differed from the original position stated in the 1871 version of Grundsätze. Still in Untersuchungen (1883), Menger maintained the determination of economic action of individuals under ideal conditions. He asserted that in such conditions the principle of ‘laws of economicity’ (Gesetze der Wirtschaftlichkeit)⁷ could guide the actions of individuals based on teleological recognition.

However, in the 1923 edition, Menger introduced the notion of ‘disjunctive determination’ that does not guarantee the unique determination of actions, while recognising varieties in individual needs as well as in the sorts and quantities of available goods. In this case, Menger’s subjectivism contains indeterminateness and allows room for the working of institutions.

After 1890, Menger began to reflect the basic categories of economic action as well as their various manifestations. In the Menger Library, I found several books that stimulated his reflection on basic categories such as ‘subject’, ‘wants’ and ‘value’. They include Rudolf von Ihering’s philosophical reflections on law as well as works on psychological philosophy by Oska Klaus, Alexius Meinong and Christian Ehrenfels. He also collected many ethnological monographs and travel records to launch a general sociological study.⁸

All of the above-stated had remained speculation before my visit to Duke University, Durham NC, in 1990. A few years before my arrival, the Perkins Library at Duke received Carl Menger’s manuscript and other personal papers that his son Karl Menger Jr. had preserved until his death. Fortunately, I could stay in Durham for two months to examine this material. There I found many materials, such as Menger’s notebooks dated 1867 to 1868, containing original ideas that later evolved into Grundsätze,⁹ a huge amount of almost illegible writings from around 1900 and two annotated copies of Grundsätze of the same special arrangement. The cover page had No. 1 and 2 written with a crayon. I at once understood that the crayon scribble on the cover page of the Hitotsubashi copy, which I (apparently as well as Kauder) could not read was precisely ‘No. 3’. Since the Center for Historical Social Science Literature had all of Menger’s papers in microfilm, it provides Menger researchers with a complete set of research materials the author had left behind.

In the following part, I will demonstrate how the materials at Hitotsubashi and Duke substantiate my reading of the subjective turn spurred by Hack’s criticism.¹⁰

In the Preface of Grundsätze, Menger maintained the validity of the law of economic theory despite the admittance of the free will of men. However, Hack criticized Menger’s view: ‘We think that the so-called causal connections between wants and goods are not as the connections of cause and effect but as those of means and ends to consider’. He added further: ‘the well-known controversial question of how the law of economic actions can be compatible with free will cannot be solved by the remark that economic theory is concerned not with practical rules for economic activity, but with the conditions under which men engage in provident activity directed to the satisfaction of their needs.’

In this criticism Hack reproduced Menger’s sentence in the second paragraph of page IX in the Preface, which Menger had eliminated from the Hitotsubashi copy. The reason for this elimination is not explained in the Hitotsubashi copy. However, the annotation on the margin of that page in the No. 1 Duke copy reads: ‘Hack thinks that the question seems never to be solved by these remarks.’. This explanation is missing in the No. 3 Hitotsubashi copy. Thus, we can see how the annotations of the Duke and Hitotsubashi copies complement each other.

The next related item is the concept of ‘causality’ in economics. The second section in the first chapter on goods (On the Nature of Goods) in the first edition of Grundsätze maintained the notion of causality as the title ‘On the Causal Connections between Goods’ revealed. However, in the second edition, this section is rearranged as the third section of the second chapter, ‘General Theory of Good’ under the modified heading, ‘On the Connection of Goods in the End Consciousness of Men’ (Über den Zusammenhang der Güter in dem Zweckbewußtsein der Menschen). What can we infer from this shift in the annotations found in the Hitotsubashi/Duke copies?

The paragraph concerned is the English translation by J. Dingwall and B. F. Hoselitz:

2. THE CAUSAL CONNECTIONS BETWEEN GOODS

Before proceeding to other topics, it appears to me to be of preëminent importance to our science that we should be　clear about the causal connections between goods. In our own, as in all other sciences, true and　lasting progress will be made only when we no longer regarded the objects of our scientific observations merely as unrelated occurrences, but attempt to discover their causal connections and the laws to which they are subject. The bread we eat, the flour from which we bake the bread, the grain that we mill into flour and the field on which the grain is grown － all these things are goods. But knowledge of this fact is not sufficient for our purposes. On the contrary, it is necessary in the manner of all other empirical sciences, to attempt to clarify the various goods according to their inherent characteristics, to learn the place that each good occupies in the causal nexus of goods and finally, to discover the economic laws to which they are subject.

On the headline, in the Hitotsubashi copy, the words ‘On Laws’ (Über die Gesetze) are added and the title of the section is modified as ‘a) Considerations on the Connection of Goods’. From the first paragraph of the section, the word ‘causal’ (causal or ursächlich) is eliminated. Such redirection from ‘causal connection’ had the repercussion of dropping ‘empirical’ (Erfharungs) from the model of economic science. We can relate this change to the methodological footnote in the second edition, in which Menger stressed the distinction between economic sciences and natural sciences that strive to establish causal laws. further, Menger revised his concept of connections by adding: ‘A connection can be dual; a mechanical connection and a teleological connection. The former must be the grounds for the latter’.

Although the No. 1 copy has no corrections, it has three notes on the term ‘causal connection’ in the title as well as in the first paragraph, one of which is, however, illegible to me. I cite the two that are legible:

Hack thinks in his criticism of my book that between wants and goods lie not the connection of cause and effect but that of end and means.

As Hack correctly remarks, goods are to the human wants in the relation of means to ends. However, it is important that the same goods by themselves deny their causal connections. For the teleological connection has the causal connection as its necessary condition and ground. Except that a thing can be the cause of a phenomenon, it cannot be the mean for the relevant end. Teleology and causality in the strict sense are two different forms of the more general law of causality. [Three faint illegible lines continue.]

The corrections in the No. 2 Duke copy are simple. Menger deleted the word ‘causal’ (Causal or ursächlich in four places in the heading and in the first paragraph of the section.

The table below lists the corrections/annotations originally made in German in this part in three author copies.

Corrections in page 7 of the Duke [1 and 2]/Hitotsubashi [3] Auhor Copies

Now we can read the relevant text of the second edition as a result of Menger’s reflections that began soon after the publication of the first edition of Grundsätze. I will cite it in my English translation and the German original. I hope readers of this essay will understand the value of the author copies preserved at Hitotsubashi and at Duke.

3. On the Connection of Goods in the End Consciousness of Man

Now it seems to me very important that men in our science have clear views on the connections of goods, since as in all other sciences the true and successive progress begins first when we make efforts to observe the objects of our science not in isolation but in connections with other goods that exist side by side.¹⁾

The bread we eat, the flour from which we make the bread, the grain that we mill into flour and the field on which the grain is grown — all these things are goods, i.e. things that are recognized to be effective for the end of satisfying our wants and that are available to us. The position that such goods occupies in our purposeful consciousness is, however, not the same. In relation to the final satisfaction of our wants, it is after the bread somewhat more or somewhat less intervened.

Such tasks are solved by natural sciences including psychology. On the contrary, we have to regard goods as the means for human ends to study them in their connections with the purposeful consciousness of the economic man (their teleological connections) and establish their laws.

§ 3.
Über den Zusammenhang der Güter in dem Zweckbewußtsein der Menschen

Es scheint mir nun vor allem von der größten Wichtigkeit zu sein, daß man in unserer Wissenschaft sich klar werde über den Zusammenhang der Güter; denn wie in allen anderen Wissenschaften wird der wahre und dauernd Fortschritt erst dann beginnen, wenn wir bemuht sein werden, die Objekte unserer wissenschaftlichen Beobachtung nicht lediglich vereinzelt zu betrachten, sondern den Zusammenhang der Güter, unter welchen sie stehen.²⁾

Das Brot, das wir genießen, das Mehl, aus welchem wir das Brot bereiten, das Getreide, das wir zu Mehl verarbeiten, der Acker, auf welchem das Getreide wächst, alle diese Dinge sind Güter, d. i. für den Zwecke der Befriedigung eines unserer Bedürfnisse als tauglich erkannte und uns verfügbare Dinge. Die Stelle, welche die obigen Güter in unseren Zweckbewußtsein einnehmen, ist aber nicht die gleiche; sie ist vielmehr in Rücksicht auf die endliche Befriedigung unseres Bedürfisses nach Brot ein zum Theile mehr, zum Teile minder vermittelte.

1) Those who see causal connections between goods and strive to establish their causal laws misunderstand the task of economic theory.

2) Diejenigen verkennen die Aufgaben der Wirtschaftstheorie, welche den Kausalzusammenhang der Güter ins Auge fassen und die Feststellung der Kausalgesetze derselben anstreben. Diese Aufgabe losen die Naturwissenschaften einschließlich der Psychologie. Wir dagegen haben die Güter als Mittel für menschliche Zwecke zu erfassen, ihren Zusammenhang im Zweckbewußtsein der wirtschaftenden Menschen (ihren teleologischen Zusammenhang) zu erforschen und die Gesetze derselben festzustellen.

(Menger 1923, SS. 20-21)