On Menger’s “Principles of Economics”

Published: February 15th, 2011

Mises supposedly said that Carl Menger’s Principles was still (at the time) the best introduction to Austrian economics. This is certainly true, but I would go further than that. The Principles is not only an introduction to Austrian economics but a great introduction to sound economic thinking. Whether you agree with “Austrians” or not, and whether you have successfully finished a graduate degree in economics or not, you will still learn a lot about economic reasoning, the logic of social relations, and – especially – the economic way of thinking.

Menger’s treatise is a very easy read, is exclusively written in beautiful prose (no math), and focuses on understanding how the market functions through first understanding how and why individuals choose to act. But it is not simply an overview of concepts; it is a thorough analysis of the bases and starting points for economics as well as the understanding that necessarily follows. Menger provides an impeccable understanding for what is action, why individuals act, how to understand value from the individual actor’s point of view – and how these things beautifully provides a sufficient basis for understanding exchange, market pricing, and money.

Whereas this treatise is wonderful in every possible way, not to speak of the historical value of being one off the three simultaneous findings of the “marginalist revolution,” there is one problem with it: it was supposed to be the first volume in a multiple-volume treatise. But Menger never got to writing the second volume, and because of this the world is clearly at a loss.





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    • Giovanni Parra

      When I first read Menger’s “Principles of Economics” I had never heard about the “marginalist revolution”, I was just looking for some argument against the marxism I saw everywhere. And the thing I less noticed about the book was the diminishing marginal utility stuff. Instead I was amazed with the subjective value theory per se (not as an explanation to the diminishing returns) and even more so with Menger’s focus on cause. Cause as the most important information economics needed to look for. It is what is lacking the economics of today and all-time: the focus on causality.

    • http://www.PerBylund.com Per Bylund

      Yes, that is a very good point, Giovanni. It is at the very core of “Austrian” (or, as Menger called it, “causal-realist”) economics, but is nowhere to be seen in the neoclassical approach to studying the market. The latter is almost exclusively based on comparative statics and the simultaneous solution to equations that maximize (already known) outcome.