CHAPTER 7 Friedrich von Wieser: From Economist to Social Scientist

His tall, lean and slightly stooping appearance; his narrow, bearded face; his blue eyes, and his hair, whitened with age, always made a lasting impression on students and listeners. As a lecturer he spoke calmly and at a leisurely pace, without notes, and expressed himself in classical style (cf. Schams 1926, p. 446). His admirers classed him among the “greatest stylists of academic prose” (Menzel 1927, p. 2). In the culturally aware cities of Prague and Vienna, he was regarded as a connoisseur of art and good music—who would sometimes sit down at the piano himself to give society a sample of his ability.

Even in his lectures, Friedrich von Wieser, whose stature and demeanor signaled distance and aloofness, rarely tolerated questions and interruptions. A student who wished to have personal contact with him would have to pose some “interesting questions” (cf. Hayek 1926, p. 526). If this met with success, he “dominated the conversation in truly royal fashion” (Mayer 1929, p. 191). The “born thinker” (Schumpeter 1954, p. 848) avoided disputing other people’s writings and ideas directly. Managing without footnotes and bibliographies in his publications, Wieser spoke and wrote on the results of his own “intense observations” (cf. Wieser 1926, p. ii) above all. One would think—not infrequently—he was witnessing the escapist, inner monologue of a brooding mind. Come the end of his academic career, like a learned narcissist whose cognitive paths circled around his own ego (cf. Wieser 1907/1929, esp. pp. 335–339; Wieser 1914/1924, pp. vii–x; Wieser 1926, pp. ii–vii), Wieser’s reflections on his own intellectual development took up only slightly less space than all of his references to other authors put together.

Friedrich von Wieser was born in Vienna in 1851, the fourth of nine children.¹ His father, Leopold, was initially the director of supplies in the war ministry, and later vice president of the audit office. He was knighted in 1859. Friedrich attended the Viennese Schottengymnasium² at the same time as the young Eugen von Böhm-Bawerk. This would result in a lifelong bond between the two, and later Böhm-Bawerk would marry Friedrich von Wieser’s sister, Paula. Coming to grips with Roman law while studying law at the University of Vienna introduced him to the problems of economics; the writings of the English sociologist Herbert Spencer (1820–1903), directed his attention to the “great impersonal forces of human society” (Wieser 1907/1929, p. 4). But only upon reading Menger’s Principles did he find the perspective he was looking for, one he would perceive later in life as liberation from “cognitive distress” (Wieser 1923, p. 88).

After finishing his doctorate in 1875, Wieser was able, as a result of Carl Menger’s mediation, to gain a scholarship and hone his expertise under the “great minds” of economics in Heidelberg, Leipzig, and Jena. Thereafter he spent a number of years in the state Finance Authority of Lower Austria—until he presented his Habilitation thesis, Über den Ursprung und die Hauptgesetze des wirthschaftlichen Werthes (1884) (“On the Origin and Main Laws of Economic Value”). Going further than Carl Menger and William Stanley Jevons, he interpreted costs as “forgone use” or as “opportunity costs,” and introduced the term Grenznutzen (“marginal utility”) to economics (cf. Wieser 1884, p. 128).

Wieser’s first publication met with little response outside Vienna. Nevertheless, in 1884 he received, as Emil Sax had before him, a non-tenured professorship in Prague. Due to national disputes, the local university had just been split into a German and a Czech university. But Wieser was able to quickly settle into the small-scale structures of the Deutsche Universität, which only had twelve university lecturers and 572 students (cf. Pliwa 1908, nos. 9, 45). In 1886 he married the daughter of a Prague architect; the marriage would remain childless. Wieser finally earned a tenured professorship with the publication of Der natürliche Werth (1889) (Natural Value). In this work he applied the marginal utility theory not only horizontally, i.e., to trading and exchange, but also vertically, i.e., to production processes. He defined the value of higher order goods (productive goods) in light of the value of the consumer goods produced alongside them, thus developing his imputation theory. Wieser, who possessed a certain “obsession with compulsive computability” is recognized as one of the first economists to realize the information value of prices (cf. Streissler 1986, p. 77).

His analysis of economic processes was soon considered a kind of standard model of the Austrian School. It was presented comprehensively for the first time in Theorie der gesellschaftlichen Wirtschaft (1914) (Social Economics, 1924/1927). Wieser’s notion of an “economic equilibrium,” which he conceived as an image of reality, ran distinctly counter to the principal ideas of Menger and Böhm-Bawerk. Looking back to Wieser, Ludwig von Mises would later explain that without market activities, the subjective valuations of the market participants could not be transformed into prices.

In the 1890s, Wieser revealed a measured German nationalist position (cf. Hayek 1926, p. 521; Schams 1926, p. 447) when he published several economic-historical and statistical analyses of the crown lands, Bohemia and Moravia. As president of the Deutsche Gesellschaft für Kunst und Literatur (“German Society for Art and Literature”) he played an important role in the cultural life of Prague. He was even elected president of the Deutsche Universität Prag in 1901. Despite all of this, Wieser seized the “longed for” chance of “returning to the beloved homeland” (Mayer 1929, p. 187) after Menger’s withdrawal from his Viennese professorship. He participated actively in cultural life in Vienna, too. His house in Döbling³ became a treasured meeting place for artists, politicians, and academics. Even early on he had given composers like Hugo Wolf and Anton Bruckner considerable encouragement in their work (cf. Mahr 1929, p. 189).

After the turn of the century, having written quite a few works on monetary theory, Wieser turned more and more to sociological questions. In his Theorie der gesellschaftlichen Wirtschaft (1914), although remaining formally within the boundaries of methodological individualism, he nevertheless created an image of the individual which was more like a feeble caricature than a self-determining and rebellious actor, as described by Carl Menger. Wieser saw people as thoroughly “tamed” creatures: “Even the sense of self… is bred by the forces of society and is thus oriented in a way which is no longer purely personal.” Egoism is thus nothing more than a “selfishness of powerlessness” (cf. Wieser 1914/1924, pp. 240–241).

World War I erupted only a few weeks after his Theorie was published. He was one of very few “Austrians” to write several pieces that were moderate in tone but nevertheless decidedly in favor of war (cf. listing by Hayek 1926, p. 529). At the height of the “war and transition economy,” old Austria’s experiment with central planning, the convinced statist Friedrich von Wieser became a Member of the Herrenhaus. In the three last governments of 1917–1918, he held the office of minister of trade, and for a while also the office of minister of “public works.” The disintegration of the monarchy hit this staunch German-Austrian particularly hard (cf. Schams 1926, p. 447; Mayer 1929, p. 193).

After retiring from his lecturing duties in 1922, Wieser lived partly in seclusion in Vienna, and partly in his summer residence in Brunnwinkel by the Wolfgangsee.⁴ He put together his work on sociology and political science in his magnum opus, Gesetz der Macht (1926) (“The Law of Power”). In a rather disjointed manner (according to Menzel 1927, p. 4; appraised differently by Morgenstern 1927, p. 674), he presented a medley of comments, clever observations, and sociological and historical analyses. On the other hand, Wieser here showed too many character traits of a “nebulous mind” (cf. Streissler 1986, p. 60): Anti-Semitic statements and an abstract Führerkult⁵ can also be found in the book (ibid., esp. pp. 63–65) as well as sources indicating the contrary (cf. Wieser 1926, pp. 17, 69, 90, 201, 274; also Wilmes 1985, p. 10) Wieser was later labeled a “fascist” for this reason (cf. Streissler 1986, p. 81).

Wieser died in July of 1926 at his summer residence after contracting pneumonia. During his time in Vienna alone, the sophisticated, cultivated teacher had educated an estimated 15,000 male law graduates and, starting in 1919, female law graduates as well, in economics. Apart from this he left no mark worth mentioning, either as a minister or as a sociologist. As doyen of the Austrian School he paved the way for his replacement, Hans Mayer, who was, however, not capable of following in the steps of his great predecessor. As an economist, Wieser built upon a strongly qualified subjectivism. His “value calculation” failed due to his notion of imputation. The following generations of the Austrian School would largely consider him not a part of their camp, but rather as belonging to the Lausanne School, which can be traced back to Léon Walras (cf. Mises 1978/2009, p. 28; Schumpeter 1954, p. 848; Hoppe and Salerno 1999, p. 117).

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¹On the biography of Friedrich von Wieser, see especially Hayek 1926, Mayer 1929, Streissler 1986, Hoppe and Salerno 1999, Hennecke 2000, and Hülsmann 2007a, pp. 150–162.

²Ed.: the Schottengymnasium, an institute for secondary education at the Benedictine Monestary (Schottenkloster), was founded by imperial decree in 1807.

³A former suburb of Vienna, incorporated into the town in 1982.

⁴Today Brunnwinkel is a part of St. Gilgen at the lake, Wolfgangsee, in Salzburg, Austria.

⁵Ed.: Roughly translates as “leader worship,” or literally, “leader cult.”