Friedrich von Wieser
Friedrich Freiherr von Wieser[1] (German: [ˈviːzɐ]; 10 July 1851 – 22 July 1926) was an early (so-called "first generation") economist of the Austrian School of economics. Born in Vienna, the son of Privy Councillor Leopold von Wieser, a high official in the war ministry, he first trained in sociology and law. In 1872, the year he took his degree, he encountered Austrian-school founder Carl Menger's Grundsätze and switched his interest to economic theory.[2] Wieser held posts at the universities of Vienna and Prague until succeeding Menger in Vienna in 1903, where along with his brother-in-law Eugen von Böhm-Bawerk he shaped the next generation of Austrian economists including Ludwig von Mises, Friedrich Hayek and Joseph Schumpeter in the late 1890s and early 20th century. He was the Austrian Minister of Commerce from August 30, 1917, to November 11, 1918.
Friedrich von Wieser
Wieser is renowned for two main works, Natural Value,[3] which carefully details the alternative-cost doctrine and the theory of imputation; and his Social Economics (1914), an ambitious attempt to apply it to the real world. His explanation of marginal utility theory was decisive, at least terminologically. It was his term Grenznutzen (building on von Thünen's Grenzkosten) that developed into the standard term "marginal utility", not William Stanley Jevons's "final degree of utility" or Menger's "value". His use of the modifier "natural" indicates that he regarded value as a "natural category" that would pertain to any society, no matter what institutions of property had been established.[4]
The economic calculation debate started with his notion of the paramount importance of accurate calculation to economic efficiency. Above all, to him prices represented information about market conditions and are thus necessary for any sort of economic activity. Therefore, a socialist economy would require a price system in order to operate. He also stressed the importance of the entrepreneur to economic change, which he saw as being brought about by "the heroic intervention of individual men who appear as leaders toward new economic shores". This idea of leadership was later taken up by Joseph Schumpeter in his treatment of economic innovation.
Unlike most other Austrian School economists, Wieser rejected classical liberalism, writing that "freedom has to be superseded by a system of order". This vision and his general solution to the role of the individual in history is best expressed in his final book The Law of Power, a sociological examination of political order published in his last year of life.
In his later years, Wieser ventured into the study of Sociology, and this resulted in his 1914 publication, Theorie der gesellschaftlichen Wirtschaft (Theory of Social Economy), from which is derived his theory of alternative cost or opportunity. Das Gesetz der Macht (The Law of Power), published in 1926, was his latest publication, a great sociological study from which we draw the following conclusions.
Wieser tried to explain the relationships and social forces through the study of history, and he concluded that economic forces held a prominent role in social evolution. Despite his interest in collective goals, such as economic well-being, Wieser adopted an individual approach, explicitly rejecting collectivism, approaching a more liberal stance and establishing the essential difference between social economics in general and socialist economics.
Social economy (in the original German, Gesellschaftliche Wirtschaft) treats humanity as a whole as an ideal economic subject and contrasts it with nature, so that considerations of conflicting interests or economic justice become as irrelevant as they would to the economy of Robinson Crusoe:[15]
For Wieser, the individual is the root of all decisions.[10] Decisions are made in the face of certain restrictions. Institutions are what define the restrictions on individual decisions. The reflection of these findings in political economy is apparent in actions such as:[16]
These conditions, under which resources would be allocated to ensure the greatest value, describe his model of an ideal economy, which he calls social economics in the first part of his treatise entitled Theorie der gesellschaftlichen Wirtschaft (Theory of Social Economics). He made idealized assumptions using his model as the benchmark standard for evaluating the effectiveness of administrative intervention in the market economy.
Thus Wieser's Social Economics is, in effect, a socialist economy[10] in which, to achieve greater productivity, scarce resources are assigned by an omnipresent, benevolent planner with direct and accurate insight sufficient to know the intensities of satisfactions and needs experienced by individual members of society, which all have exactly the same tastes and the same scales of utility and receive the same incomes. Moreover, their directions are followed without question by a completely docile workforce.
Legacy[edit]
Joseph Schumpeter stressed Wieser's originality, saying: "There is hardly another author who owes as little to other authors as Wieser, fundamentally to none except Menger and to him only a suggestion – with the result that for a long time many fellow economists did not know what to do with Wieser's work. Of his edifice, everything is his intellectual property, even where what he says has already been said before him".[26]
"", in The Economic Journal, Volume 1, 1891 (in
Wikisource).
