Published by EH.Net (May 2022).

Janek Wasserman. The Marginal Revolutionaries: How Austrian Economists Fought the War of Ideas. New Haven and London: Yale University Press, 2019. xii + 354 pp. $35 (hardcover), ISBN 978-0-300-22822-9.

Reviewed for EH.Net by Nathan P. Goodman, Department of Economics, New York University.

Economists are social scientists, but we’re also human beings. We have families and friends. We learn and work in professional networks. We strive to influence the world around us. Some work in the history of economic thought focuses on economic ideas alone, offering a narrowly doctrinal history of our discipline. In The Marginal Revolutionaries, Janek Wasserman discusses not merely the ideas of Austrian school economists, but also their lives and relationships. The result is a rich and engaging history of the Austrian school of economics.

Austrian economists made vital contributions to economic theory, especially in relation to marginalism, subjectivism, opportunity cost, entrepreneurship, and spontaneous order. This book offers a history of how they made these contributions. Wasserman deftly weaves together both history of economic thought and engaging description of the social, political, and cultural context. This is especially compelling during the earlier chapters, which discuss how Austrian economics developed in Vienna.

At its height, Vienna was an incredible center of intellectual activity. The Austrian economists were a very important part of this intellectual culture, but they also interacted with other intellectual circles in Vienna. These included the logical positivists, famed psychologists such Sigmund Freud, and influential Marxists and socialists including Rudolf Hilferding, Otto Bauer, and Nikolai Bukharin. On the one hand, these types of interactions illustrate just how intellectually vibrant Vienna was. They also illustrate the crucial role that contestation and debate played in the development of Austrian economics. Austrian economists did not merely argue among themselves, they argued with other intellectuals who passionately disagreed with them. These disagreements were especially sharp in their debates with Marxists on questions such as the transformation problem, exploitation, the feasibility of rational economic calculation under socialism, and the relationship between capitalism and imperialism. Given my interest in defense economics, I found the discussion of their debates over imperialism especially fascinating.

But social science does not merely depend on arguments. The efforts of intellectual entrepreneurs who start seminars, colloquia, academic journals, research centers, professional organizations, and learned societies are just as crucial. Carl Menger founded the Austrian school, but Wasserman argues that the school formed a cohesive identity largely due to intellectual entrepreneurship by two scholars that Menger inspired: Eugen von Böhm-Bawerk and Friedrich von Wieser. By creating a professional association, the Gesellschaft Österreichischer Volkswirthe (Society of Austrian Economists, GÖV), and a corresponding journal, Die Zeitschrift für Volkswirtschaft, Socialpolitik und Verwaltung, they established forums for discussion of Austrian ideas. Throughout this period, they forged a vibrant community of Austrian scholars, including some I had not previously been familiar with, such as Emil Sax.

Later generations of Austrian economists continued to act as intellectual entrepreneurs. Throughout their time in Austria, they continued to establish discussion groups as well as more formal research centers such as the Institute for Business Cycle Research. During World War II, most of the Austrian economists fled from the Nazis. This emigration created an additional need for intellectual entrepreneurship. To help their friends and colleagues find refuge and secure employment outside of Austria, members of the Austrian school forged new relationships and drew on existing relationships with academics and donors. Once they had successfully fled, they engaged in intellectual entrepreneurship to make space for their work. The institutions they relied on in Austria had been destroyed, and they needed to forge new paths.

This took a variety of forms. Some, such as Ludwig von Mises’s seminar in New York and Friedrich Hayek’s role in founding the Mont Pelerin Society, were stories I knew well. Others, such as Gottfried Haberler’s influence on trade policy or Oskar Morgenstern’s influence within the American military-industrial complex, were new to me. Some of these lesser known paths illustrate the nuances of Austrian influence on global politics. The influence of Mises, Hayek, and Murray Rothbard on libertarian and free market political movements is well known. But Austrian influence within more technocratic circles is less widely known, and this book helped me better understand the diverse ways that Austrian economists influenced policy, both in Vienna and after their emigration.

While Wasserman spends a lot of time discussing how Austrian economists influenced politics, he also avoids a common pitfall that can occur in such discussions. Too often, people insinuate that Austrian economics is solely an ideological or political project. Wasserman makes sure to discuss Austrians’ technical scientific and methodological contributions, which are the true core of Austrian economics. While he discusses political activism by Austrian school economists, he also discusses deliberate efforts by Austrian economists to maintain the ideal of wertfreiheit, or value freedom. While Austrian economists had political views, many of them were clear about the difference between their prescriptive beliefs and their social scientific descriptions of the world.

Wasserman is a great storyteller. The relationships among Austrian economists are front and center in his account of the Austrian school. This makes the book a fun and engaging read and helps us appreciate the social element of scientific inquiry. If you care about Austrian economics, history of economic thought more generally, the history of 20^th century politics, or the sociology of scientific inquiry, then I think you’ll benefit from reading this book.

Nathan P. Goodman is a Postdoctoral Fellow in the Department of Economics at New York University, where he is affiliated with the Program on the Foundations of the Market Economy. His research focuses on political economy, public choice, defense and peace economics, border militarization, and Austrian economics.

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