economists-from-austria

"The necessity -from a technical point of view - for control and, consequently, for domination, can be overcome without too much difficulty in small and medium-sized enterprises; it cannot be overcome in large enterprises except by effecting changes which are all the more difficult to implement since they affect both the enterprise's hierarchical structure and its technical (and spatial) organization. William F. Whyte provides a number of examples to show that organizations can be modified so that workers enjoy their work, espouse the aims of the enterprise and mobilize the reserves of productivity and skill they usually keep to themselves. The success of this kind of reorganization necessarily presupposes, first, a relationship of between and organized labour, second, recognition of the workers' ability to organize themselves, take the initiative and participate in , and third, financial involvement of the workers in the results of their labour. Sooner or later, however, this policy of 'participation' or co-management - of which the Scanlon Plan was one of the best example; and one in advance of the 'quality circles' of thirty years later -meets with the following difficulty: for job security to be guaranteed, the volume of sales must increase at the same rate as the productivity of labour. A duly motivated , however, can achieve staggering increases in: productivity (increases of 20 per cent per annum over a period of several years in the examples cited by Whyte). The volume of sales, however, cannot continue to increase at such a rate. The point inevitably comes when management decides to reduce the workforce in order to reduce costs, thus regaining sole ownership of the enterprise's decision-making power. The 'partnership' of labour and capital is thus destroyed at one fell swoop; the workers realize their co-operation with the management has been a swindle; and antagonistic class relations are re-established."

"When the production process demands less work and distributes less and less wages, it gradually becomes obvious that the right to an income can no longer be reserved for those who have a job; nor, most importantly, can the level of incomes be made to depend on the quantity of work furnished by each person. Hence the idea of guaranteeing an income to every citizen which is not linked to work, or the quantity of work done."

"At the very point when a privileged fraction of the working class seems to be in a position to acquire multiple skills, to achieve workplace autonomy and continually widen their capacities for action - all of which are things that were ideals of the worker self-management currents within the labour movement - the meaning of this ideal is thus radically altered by the conditions in which it seems destined to be fulfilled. It is not the working class which is achieving these possibilities of self-organization and increasing technological power; it is a small core of privileged workers who are integrated into new-style enterprises at the expense of a mass of people who are marginalized and whose job security is destroyed -people shunted from one form of occasional, unrewarding and uninteresting employment to another, who are often reduced to competing for the privilege of selling personal services (including shoe-shining and house-cleaning) to those who retain a secure income."

"The ideology of work and the ethics of effort therefore become cover for ultra-competitive egoism and careerism: the best succeed, the others have only themselves to blame; hard work should be encouraged and rewarded, which therefore means we should not subsidize the unemployed, the poor and all the other 'layabouts'. This ideology (which in Europe finds its most overt expression in Thatcherism) is strictly rational, as far as capitalism is concerned: the aim to motivate a workforce which cannot easily be replaced (for the moment, at least) and control it ideologically for want of a means of controlling it physically. In order to do this, it must preserve the work-force's adherence to the work ethic, destroy the relations of solidarity that could bind it to the less fortunate, and persuade it that by doing as much work as possible it will best serve the collective interest as well as its own private interests. It will thus be necessary to conceal the fact that. there is an increasing structural glut of workers and an increasing structural shortage of secure, full-time jobs; in short, that the economy no longer needs everyone to work - and will do so less and less. And that; as a consequence, the 'society of work' is obsolete: work can no longer serve as the basis for social integration. But, to conceal these facts it is necessary to find alternative explanations for the rise in unemployment" and the decrease in job security. It will thus be asserted that casual labourers and the unemployed are not serious about looking for work; do not possess adequate skills, are encouraged to be idle by over~ generous dole payments and so on. And, it will be added, these people are all paid far too much for the little they are able to do, with the result that the economy, which is groaning under the weight of these excessive burdens, is no longer buoyant enough to create a growing number of jobs. And the conclusion will be reached that, 'To end unemployment, we have to work more.'"

"This revaluation of the image of the worker rests, on the part of the employers, on a rational calculation: it is not only a question of winning. the loyalty of an elite of workers they cannot do without and integrating them into the enterprise; it also means cutting this elite off from its class of origin and from class organizations, by giving it a different social identity and a different sense of social worth. In a society cut in two ('dualized'), this elite necessarily belongs to the world of 'the fighters and winners' who deserve a different status from the work-shy masses. The members of this elite of workers will therefore be encouraged to form their own independent trade unions and their own forms of social insurance, co-financed by the enterprises in which they work. At the same time, the employers will have limited the ability of this elite to bargain or fight trade-union struggles, by isolating it and stressing its privileges: its members have been chosen from among a very large number of applicants; they enjoy job security, a steady income and the kind of work and possibilities of promotion that are envied by all. And above all they owe their status to the fact that they are, professionally, the most capable; economically, the most productive; and, individually, the most hard-working. Insofar as it corresponds in large part to the ideal of the sovereign, multi-skilled worker of the utopia of work, the employers' discourse and the strategy concealed within it, have brought about the most serious crisis in the history of the trade-union movement. If, as is the case in West Germany, trade-union organization derives its strength from its roots in the ranks of the skilled workers, the threat exists that it will rapidly degenerate into neo-corporatism. If, on the other hand, trade unionism is particularly strong among semi-skilled workers - as is the case in Italy where until recently there was practically no foreign workforce and where semi-skilled workers owe their job security to their trade-union organization -then the unions find themselves in the dangerous position of having strong support among a declining category of workers and weak backing from the two categories which are in rapid expansion: the mass of temporary workers, which is expanding but difficult to organize, the unemployed and 'odd jobbers'; and the new elite of 'reprofessionalized' workers, characterized by a marked tendency to defend their own specific interests by forming company unions or small craft unions."

"Enterprises are adopting a strategy of flexible response on two levels simultaneously: the firm's stable core of employees must be functionally flexible; the peripheral workforce, for its part, must be numerically flexible. In other words, 'around a core of stable workers with a wide range of skills, there is a fluctuating, peripheral workforce with a more restricted range of more basic skills, who are dependent on the chance play of economic forces. The stable core must accept occupational mobility, both in the short term (changing their positions and acquiring new skills) and in the long term (retraining and modifyi~g their career plans), in exchange for job security. Their skills are essentially company skills provided, enhanced and perfected by the firm by means of a process of continuous in-house training. The firm therefore relies heavily on the employees it has trained, and vice versa."

"The image of the enterprise as a place where employees can achieve personal fulfilment is therefore an essentially ideological invention. It conceals the real transformations that have taken place, namely that enterprises are replacing labour by machines, producing more and better with a decreasing percentage of the workforce previously employed, and offering privileges to a chosen elite of workers, which are accompanied by unemployment, precarious employment, de-skilling and lack of job security for the majority. The advance of technology has thus resulted in the segmentation and disintegration of the working class. An elite has been won over to collaboration with capital in the name of work ethic; the great mass of workers have become marginalized or lost their job security and serve as a reserve army for industry which wishes to be able to adjust its workforce rapidly according to fluctuations in demand."

"A system of co-operation between workers and management cannot survive, therefore, unless management effectively guarantees its employees job security, by which I mean employment for life. It is on this condition alone that there can be social integration on the Japanese model within the enterprise. Yet large Japanese firms are only able to guarantee their employees jobs for life by out the manufacturing and services which they, as , have no vital interest in undertaking themselves, to a vast network of satellite companies. These subcontracting enterprises cushion the parent company from fluctuations in economic conditions: they employ and dismiss their workers according to changes in demand, and the fact that their employees often have no union or whatsoever means this can be accomplished with great speed. Job security in the parent companies is matched by unstable employment and social insecurity throughout the rest of the economy. Employment for life and are privileges reserved for an elite (about 25 per cent of Japanese employees in 1987, a figure which is decreasing markedly as older workers are encouraged to retire early and are not replaced). They are only compatible with economic rationality within the framework of a dual society. This social division (or 'dualization') has been the dominant characteristic of all the industrialized societies since the mid seventies."

"Wieser is usually credited with the idea that the cost of any economic decision is the next best alternative foregone in making that decision. In addition, Wieser – following Menger – saw the production process as unfolding through time where value flows up from lower-order goods to the higher-order goods used in producing them, and a stream of goods and services flows down from high-order goods to the lower-order goods we consume. The process of deriving the value of producer goods from the value of the resulting consumer goods is referred to as imputation. Hayek’s early work in technical economics was precisely on this issue and it is through studying this process of imputation that he became sensitised to the misleading influence of equilibrium theorising with regard to the complexity of this economic adjustment process through time."

"The universal jargon, in the sense explained above, is the same for the child and for the adult. It is the same for a Robinson Crusoe as for a human society. If Robinson wants to join what is in a protocol of yesterday with what is in his protocol today, that is, if he wants to make use of language at all, he must make use of the ‘intersubjective’ language. The Robinson of yesterday and the Robinson of today stand precisely in the same relation in which Robinson stands to Friday."

"The fiction of an ideal language composed of pure atomic statements is as metaphysical as the fiction of Laplace's 'spirit'. Scientific language, with its ever growing equipment of systematic symbol formations, can by no means be regarded as an approximation to such an ideal language."

"In the interest of scientific work, more and more formulations in the unified language of unified science are becoming increasingly precise. No term of unified science, however, is free from imprecision, since all terms are based on terms that are essential for protocol statements, whose imprecision must be immediately obvious to everyone."

"Only one language comes into question from the start, and that is the physicalist. One can learn the physicalist language from earliest childhood. If someone makes predictions and wants to check them himself, he must count on changes in the system of his senses, he must use clocks and rulers, in short, the person supposedly in isolation already makes use of the ‘intersensual’ and ‘intersubjective’ language. The forecaster of yesterday and the controller of today are, so to speak, two persons."

"Carnap, who has so far probably advanced the work of the Vienna Circle the most towards empiricism, made an attempt to create a constitutive constructive system; in this he distinguished two languages: a ‘monologizing’ (phenomenalist) one and an ‘intersubjective’ (physicalist) one. He tries to deduce the physical one from the phenomenalist."

"At first the Vienna Circle analysed ‘physics’ in a narrower sense almost exclusively; now psychology, biology,sociology. The task of this movement is unified science and nothing less."

"The members of the Vienna Circle (Moritz Schlick, Rudolf Carnap, , Hans Hahn, , Fritz Waismann, Kurt Godel, Otto Neurath and others) are working out a ‘Logical Empiricism’. Following Ernst Mach and Poincaré, but above all Russell and Wittgenstein, all the sciences are treated uniformly. Carnap’s Logischer Aufbau der Welt (1928) shows in which direction future systematic work will move. Wittgenstein’s Tractatus Logico-Philosophicus (1921) clarified, among other things, the position of logic and mathematics; besides the statements that make additions to what is meaningful, there are the ‘tautologies’ that show us which transformations are possible within language. By its syntax the language of science excludes anything that is meaningless from the very beginning."

"When devotion to men with an urge for new social organization replaces devotion to men with theological illumination and a way of life pleasing to God, then the actions of the innovator and his formulations are often gauged by their significance for human happiness. Behaviour is examined through the happiness it produces, which is an empirical matter; transcendence is overcome."

"Overcoming magic often takes the form of theology. From animals and ancestors the path leads to all kinds of spirits. The hypothesis (which already appeared in the magical age) of the little man alongside man, the “soul', and of the special being, 'God', more and more often seeks a parallel process 'behind' processes. Whereas in the magical age, empirically given facts were linked with each other on the basis of primitive theories without the introduction of uncontrollable elements, now their introduction becomes essential."

"What we have of systematic and orderly action and speech ... seems to go back to primeval systematic orderliness as found in magic. The scientific tendency to link everything with everything else, to regard nothing as indifferent, clearly already belonged to the age of magic. If we reach the dependence of human fate on empirical describable conditions, we are much closer in our way of thinking to the men of the magical times that we are commonly apt to suspect."

"The primordial forms of all sciences, taken back beyond the rise of writing, lie ultimately in the magic of prehistory. Just as modern man wants to indicate what consequences his actions will have, so also a man who grows up in the magical way of life seeks to find a ground for everything and to find consequences of his action. Magic as a more or less clearly formulated system of tenets shot through with emotional elements, can become independent only when magicians, acting as specialists, proclaim the consequences of certain customs, either esoterically,. e.g. at certain rituals, or exoterically as popular education. The magicians tell what cases are to count as 'equal', and when certain measures shall be used (if we think them ineffective, we call them ceremonies)."

"‘History’ and ‘Political Economy’ have not been differentiated on the basis of systematic reflection; rather, they have been quite different in origin and conceptual structure. Only on further development of both disciplines are they set closer together and merged into a single science, namely ‘Sociology’, which for about a hundred years past has been assimilating other fields of science."

"Quite a few political economists advocate the thesis that a Robinson Crusoe — or what amounts to the same thing, a controlled economy — calculates in terms of profits and losses."

"All content of science, and also their protocol statements that are used for verification, are selected on the basis of decisions and can be altered in principle."

"Finally it should be noted that the picture education, especially the pictorial statistics, are of international importance. Words carry more emotional elements than set pictures, which can be observed by people of different countries, different parties without any protest; Words divide, pictures unite."

"Science as a system of statements is always an object of discussion. Statements are to be compared with statements, and not with 'experience', or with 'the world', or with something else. All that meaningless doubling belongs to more or less subtle metaphysics and as such must be rejected. Every new statement is to be confronted with existing ones, already brought to a state of harmony between themselves. A statement will be considered correct if it can be joined to them."

"Although what is called ‘philosophical speculation’ is undoubtedly on the decline, many of the practically minded have not yet freed themselves from a method of reasoning, which, in the last analysis, has its roots in theology and metaphysics. No science which pretends to be exact can accept an untested theory or doctrine; yet even in an exact science there is often an admixture of magic, theology, and philosophy. It is one of the tasks of our time to aid scientific reasoning to attain its goal without hindrance. Whoever undertakes this is concerned not so much with ‘philosophy,’ properly speaking, as with ‘anti-philosophy.’ For him there is but one science with subdivisions — a unified science of sciences. We have a science that deals with rocks, another that deals with plants, a third that deals with animals, but we need a science that unites them all."

"We are like sailors who on the open sea must reconstruct their ship but are never able to start afresh from the bottom. Where a beam is taken away a new one must at once be put there, and for this the rest of the ship is used as support. In this way, by using the old beams and driftwood the ship can be shaped entirely anew, but only by gradual reconstruction."

"If one could only fly over the Earth and show everybody, Chinese gardeners live side by side in old fashion. Next to them a capitalist germ cell which puts its feelers out into the country! See the factory chimney smoking! Ships come and go. And in the North, nomads and tribes of hunters who don’t know anything of a capitalist order even though they sell furs to entrepreneurs. A sharpened eye would be able to grasp this. All of this can be grasped and represented in pictures!"

"Many innovations of current history and philosophy of science were, in fact, anticipated in Neurath’s oeuvre. The rediscovery of Neurath was therefore not merely a phenomenon of academic nostalgia, but itself constitutes research into the conditions and possibilities of changing a paradigm in the philosophy of science."

"Towards the end of his life Neurath referred to the ‘mosaic of the sciences’. In the spirit of this formulation we can arrive at an understanding of his life’s work by means of a kind of collage, employing the regulative idea of the unity of science and society."

"The i was dotted and t crossed by Neurath, the chief promoter of physicalism and of other radical neo-positivist theories. He combined physicalism with the theory of coherence and thereby imparted to the latter a purely linguistic form."

"The case of Otto Neurath, first author of the Vienna Circle's manifesto, is a revealing one. In the years before the First World War, the young Austrian economist became interested in eugenics, translating (with his wife, Anna Schapire-Neurath) Francis Galton's Hereditary Genius for the first time into German. His most important early work, however, was his analysis of the war economy. War economics, in his view, was a science with well-defined laws and principles which, like ballistics, are "independent of whether one is for or against the use of guns.""

"True science consists in systematically examining all possible cases. Exact political economy has not achieved this until now. It does not even encompass all actual cases. This is one of the reason why exact theory finds itself in opposition to the historical school and why it does not have an awful lot to say to those economists who occupy themselves with issues of practical interest, theories of crisis, cartels and trusts."

"The motivationless theory of goods [transfers] can bridge the gulf between history and exact research by securing the important continuity of the research, being linked to both."

"The attempt to construct a fundamental taxonomy of the sciences encounters great difficulties. For instance, logicians and mathematicians disagree among themselves about the objects of their respective research; there is no agreement on the relation of theoretical physics to empirical knowledge and to mathematics. The so-called social sciences are particularly difficult to classify. They have not been demarcated by systematic considerations. In Duhem and Poincarè, general considerations are not only exemplified, but the origins of the concepts and of the problems are traced right from the initial observation of facts if at all possible."

"I do not think the line of division runs between people with secular and those with transcendental creeds, but rather between people with a centralized and dominating zeal which may possibly lead to self-sacrifice and the sacrifice of others, without tolerance in principle, and people who are tolerant on principle, having perhaps some transcendental creed, or because they, as empiricists, see the multiplicity of all arguing."

"Assuming... that all available goods of higher order are employed in the most economic fashion, the value of a concrete quantity of a good of higher order is equal to the difference in importance between the satisfactions that can be attained when we have command of the given quantity of the good of higher order whose value we wish to determine and the satisfactions that would be attained if we did not have this quantity at our command."

"There is no better means of reducing a fallacious variety of thought to absurdity than to let it live itself out completely."

"The time period lying between command of goods of a higher order and possession of the corresponding goods of lower order can never be eliminated."

"Not only in the realm of the ethical world, and of economy, but also in that of natural phenomena, the realistic orientation of theoretical research can lead only to "real types" and "empirical laws." And in the above point of view, at any rate, no essential difference between the ethical and the natural sciences exists, but at most only one of degree. The realistic orientation of theoretical research excludes in principle, rather, in all realms of the world of phenomena the possibility of arriving at strict (exact) theoretical knowledge."

"How can it be that institutions which serve the common welfare and are extremely significant for its development come into being without a common will directed toward establishing them?"

"The solution of the most important problems of the theoretical social sciences in general and of theoretical economics in particular is thus, closely connected with the question of theoretically understanding the origin and change of 'organically' created social structures."

"Almost everything that makes the Austrian school of economics distinctive was found in Menger—marginal utility, subjective value, emphasis on knowledge and foreknowledge, the importance of prices, spontaneous generation of societal institutions, and economic activity as a process occurring over time. From a more practical perspective, during the 1890s and early 1900s, he was the informal leader of a group of civil servants and academics who regularly met for coffee at Vienna’s famous coffeehouses to discuss the issues of the day."

"Carl Menger was a civil servant in the prime minister's office at Vienna when at the age of thirty-one he published his first and decisive work, Principles of Economics. It was the first part of an intended treatise, the rest of which never appeared. It dealt with the general conditions that create economic activity, value, exchange, price, and money. What made it so effective was that the explanation of value it offered arose from an analysis of the conditions determining the distribution of scarce goods among competing uses and of the way in which different goods competed or cooperated for the satisfaction of different needs—in short, what has been called above the 'means-ends structure'. It is this analysis that precedes the theory of value proper. Friedrich von Wieser was to develop this systematically into a vorwerttheoretische part of economic theory that made the Austrian form of marginal utility analysis so suitable as a basis of further development. From this analysis springs most of what is known today as the logic of choice, or the 'economic calculus'. Menger's exposition is generally characterised more by painstaking detail and relentless pursuit of the important points than by elegance or the use of graphic terms to express his conclusions. Though always clear, it is laboured, and it is doubtful whether his doctrines would ever have had wide appeal in the form in which he stated them. However, he had the good fortune of finding at once avid and gifted readers in two young men who had left the University of Vienna some time before Menger became a professor there. They decided to make the fulfillment of his teaching their lifework. It was mainly through the work of Eugen von Böhm-Bawerk and Friedrich von Wieser, classmates and later brothers-in-law, that Menger's ideas were developed and spread. Gradually during the 1880s, when their most influential works appeared, they were joined by others working in the universities or elsewhere in Austria. Of these, Emil Sax (1845–1927), Robert Zuckerkandl (1856–1926), Johann von Komorzynski (1843–1912), Viktor Mataja (1857–1933), and Robert Meyer (1855–1914) particularly deserve mention. Somewhat later came Hermann von Schullern zu Schrattenhofen (1861–1931) and Richard Schüller (1871–1972). The year 1889, in which the greatest number of important publications of the group were concentrated, also saw the appearance of an important theoretical treatise by two Viennese businessmen, Rudolf Auspitz and Richard Lieben, Untersuchungen über die Theorie des Preises. This can, however, only with qualifications be included in the works of the Austrian school. It moved on parallel but wholly independent lines and with its highly mathematical exposition was too difficult for most contemporary economists, so that its importance was recognised only much later. Of great importance for spreading the teachings of the school, especially in Germany, was the fact that another Viennese professor, Eugen von Philippovich von Philippsberg (1858–1917), though not himself an active theoretician, incorporated the marginal utility doctrine into a very successful textbook, Grundriß der politischen Okonomie. For some twenty years after publication this remained the most widely used textbook in Germany and almost the only channel through which the marginal utility doctrine became known there. In other foreign countries, especially England, the United States, Italy, the Netherlands, and the Scandinavian countries, the basic economic publications of the Austrians became known sooner, partly in English translations. Probably the most important foreign adherent was an exact contemporary of Böhm-Bawerk and Wieser, the Swede Knut Wicksell. Although he was also greatly indebted to Walras, Wicksell could write in 1921 that "since Ricardo's Principles there has been no other book—not even excepting Jevons's brilliant but somewhat aphoristic and Walras's unfortunately difficult work—which has had such a great influence on the development of economics as Menger's Grundsätze"."

"The development of economics as a science which is always based on human beings, the creative actors and protagonists in all social processes and events (the subjectivist conception), is undoubtedly the most significant and characteristic contribution made by the Austrian School of economics, founded by Carl Menger. In fact Menger felt it vital to abandon the sterile objectivism of the classical (Anglo-Saxon) school whose members were obsessed with the supposed existence of external objective entities (social classes, aggregates, material factors of production, etc.). Menger held that economists should instead always adopt the subjectivist view of human beings who act, and that this perspective should invariably exert a decisive influence on the way all economic theories are formulated, in terms of their scientific content and their practical conclusions and results."

"Gentlemen, you are worried about the depression[sic]. You should not be. For capitalism, a depression is a good, cold douche."

"This civilization is rapidly passing away, however. Let us rejoice or else lament the fact as much as everyone of us likes; but do not let us shut our eyes to it."

"The first thing a man will do for his ideals is lie."

"Economists have never allowed their analysis to be influenced by psychologists of their time, but have always framed for themselves such assumptions about psychical processes as they have thought it desirable to make."

"Schumpeter emphasizes a “demand-side” explanation for such clustering of innovation. One might also consider a complemen tary “supply-side” explanation: since innovators are, in many cases, working with the same components, it is not surprising to see simultaneous innovation, with several innovators coming up with essentially the same invention at almost the same time. There are many well-known examples, including the electric light, the airplane, the automobile, and the telephone."