Carl menger on economic policy: "Exact laws," institutional prerequisites, and economic liberalism.

Carl Menger's Grundsätze der Volkswirtschaftslehre was published 150 years ago, in 1871, marking the beginning of the Austrian School. Menger's contribution was not only part of the beginning of the "marginalist" turn in economics, but to the unique "subjectivist," market process-oriented aspects of the "Austrian" tradition, that also includes a focus on unintended institutional evolution. Menger was concerned with developing what he called the "exact laws" of economics that were most general and universal in their quality and presence. But, contrary to some of his Historical School critics, Menger also emphasized the "empirical-realistic," or historical and institutional, contexts within which the laws of economics play themselves out. Menger, as well, highlighted the importance of value-freedom in theoretical and applied economic analysis. But in spite of this, Menger believed that human nature and historical experience suggested a wide variety of economic policy purposes and the means to them. This comes out most clearly in the lectures on political economy that he delivered to Austrian Crown Prince Rudolf in 1876, and in an "anonymous" monograph on the Austrian aristocracy that Menger co-authored with Prince Rudolf in 1878. Menger's lectures show him to be a strong advocate of economic individualism and fairly unregulated free markets, with warnings against the dangers from political "paternalism." But Menger was not an extreme advocate of laissez-faire, and his proposals for fiscal and bureaucratic management of the Austrian state were, surprisingly, rather "un-Austrian." Yet, his contributions still resonate with great significance a century and a half after the appearance of the Grundsätze. [ABSTRACT FROM AUTHOR]