Previously in this series: The Contribution of Menger
It has been curious phenomenon in the history of thought that a key discovery will often be simultaneously and independently made by two thinkers. In this way was calculus developed along different lines by Newton and Leibniz, and the principles of natural selection in evolution discovered by both Darwin and Wallace. Even stranger is the case of the "Marginal Revolution" in economics. The formulation of subjective marginal utility as the basis of value theory was independently discovered by three economists: Menger, William Stanley Jevons, and Léon Walras. Compounding the strangeness are the drastically different routes taken by Menger and his fellow marginalists to the same destination. Menger's analysis, as will be discussed in future posts, was logico-philosophical and deductive. Like most of political and economic theory up to that time, he started from clear, almost self-evident insights, and reasoned out their implications. Jevons and Walras, on the other hand tried to make economics a mathematical science. Instead of carefully revealing the causal chains that lie behind economic phenomena, Jevons and Walras tried to reduce the behavior of markets to functional equations. This would ultimately prove a tragedy for the science. Had Menger swept the field alone , all economics might have developed as Austrian economics. Instead, Jevons' and Walras' admittedly pivotal roles in the Marginal Revolution set the stage for the profession's fruitless obsession with mathematics (Rothbard calls it "quantiphrenia") and the aping of physics (Hayek calls it "scientism") that continues to this day. Ever since, economists have been dutifully mining data, pursuing the chimeric ambition of evaluating their precious equations. Why do economists continue down this path that has perpetually led them astray? I believe most of them cherish the exclusivity and mystique that mathematics lends to their profession.
A churlish mathematical economist might retort that Menger (and Austrians in general) simply aren't good at or don't care for math, and that their epistemological objections are just a fog to obscure their innumeracy. Regarding later Austrians, one need only point to Rothbard himself who held a degree in mathematics, and other quant-jocks like Robert Murphy to refute that point. In his introduction to the Principles, Hayek addressed Menger in particular regarding this question:
It is a curious fact that, so far as I am aware, he has nowhere commented on the value of mathematics as a tool of economic analysis. There is no reason to assume that he lacked either the technical equipment or the inclination. On the contrary, his interest in the natural sciences is beyond doubt, and a strong bias in favour of their methods is evident throughout his work. And the fact that his brothers, particularly Anton, are known to have been intensely interested in mathematics, and that his son Karl became a noted mathematician, may probably be taken as evidence of a definite mathematical strain in the family. But although he knew later not only the work of Jevons and Walras, but also that of his compatriots Auspitz and Lieben, he does not even refer to the mathematical method in any of his writings on methodology. Must we conclude that he felt rather sceptical about its usefulness?
In my next post, I'll cover Hayek's discussion of the life of Carl Menger.
Next in this series: The Methodenstreit