Abstract
With the publication of the Grundsätze, Carl Menger founded the Austrian School and made economics a real science. Menger was a revolutionary discoverer of both macroeconomics (through his time structure of production) and microeconomics (subjective demand and marginal analysis). Therefore, in honor of the 150th anniversary of the publication of his magnum opus (1871), I am pleased to declare Carl Menger as the greatest theoretical economist who ever lived. In my paper, I illustrate three ways in which I use Mengerian economics: first, using the quantity, quality, and variety of goods and services as a better measure than wages or income as the standard of living and economic growth; second, to show how prices are determined by the marginal number of buyers and sellers; and third, introducing a Mengerian 4-stage model of the economy and gross output (GO) as a new way to output in a modern economy.
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Notes
- 1.
A full biography of Carl Menger is soon to be published the Austrian Center in Vienna, Austria. For a summary of his life, see Hayek’s Introduction to Menger’s Principles of Economics (Hayek, 1976), and chapter 7, “Out of the Blue Danube: Menger and the Austrians Reverse the Tide,” in Skousen (2016, pp. 171–196).
- 2.
For more information, go to www.grossoutput.com. I issue a quarterly press release on GO and B2B spending. The website also includes many of my lectures on GO.
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It is a privilege and honor to participate in this Festschrift for Jesús Huerta de Soto. I admire him as a scholar and a gentleman, his indefatigable promotion of the Austrian and Spanish Scholastics schools of economics, and his willingness to engage in dialogue and debate even among dissenting colleagues (not all members of the Austrian School are so inclined).
A classic example is Jesús’s magnum opus, his 885-page tome, Money, Bank Credit, and Economic Cycles, published by the Mises Institute in 2006. He goes out of his way to credit the works of other scholars, including Mises, Hayek, Rothbard and Kirzner. I was pleased to see that my own works were cited repeatedly on gross output, the business cycle and the gold standard, even when we disagreed on certain topics and policies. (One thing we do agree on—defending the euro as a form of the gold standard.)
Given his strict Misesian views, and a skeptical view of Adam Smith, I was surprised that he arranged in 2010 for Unión Editorial, the prestigious Spanish publisher, to translate my Making of Modern Economics into a handsome Spanish edition entitled La Formacion de la Teoria Economica Moderna. In my history of the great economic thinkers, I make Adam Smith and his system of natural liberty the heroic figure in economics. Jesús prefers to give the Austrians top billing, and the Spanish scholastics before them. However, I think it helped that I devote three chapters in my book to the Austrians, who are typically given short shrift in other histories of economic thought.
A year later, in March, 2011, Jesús and his wife Soles hosted me and my wife Jo Ann in Madrid. He invited me to give a lecture on the Austrian vs the Chicago schools of economics, base my latest book, Vienna and Chicago, Friends or Foes?
Before the lecture, they showed us their beautiful apartment and private library, which contains many rare books, including all the editions and translations of Human Action. He has a special section in his library of his favorite books in economics, which he has bound in black leather, such as books by Mises, Hayek, Rothbard, Menger, Kirzner, and other great Austrians, and he has two of mine in black leather: The Structure of Production and Economics of a Pure Gold Standard.
I was also impressed to hear that Jesús is not just an academic economist, but a successful businessman. He runs an insurance company in Madrid, and picked us up in a Bentley. After my lecture, we went out to the most expensive restaurant in Madrid. His ancestors include a famous bull fighter and discoverer Hernando de Soto. He’s also a devote husband. He and his wife have six children, all living in the Madrid area. He’s built a huge following in Austrian economics in Spain and throughout Europe, and his books are being translated rapidly. He was the Hayek Lecturer at the London School of Economics in 2010, and has received several honorary degrees, including one in Moscow.
My lecture was before 100 students and professors, and after my presentation, we had a spirited debate on the differences between the Austrian and Chicago schools, and the financial crisis in Spain. I found myself defending Milton Friedman, but there was no rancor or ill-feelings.
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Skousen, M. (2023). The Greatest Economist Who Ever Lived. In: Howden, D., Bagus, P. (eds) The Emergence of a Tradition: Essays in Honor of Jesús Huerta de Soto, Volume I. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-17414-8_26
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