The 1920s and 1930s were a glorious era in the history of the Austrian School of economics. In those days, the city of Vienna saw the first genuine culture of scholars working in the tradition established by Carl Menger, and this culture radiated throughout the rest of the German-speaking world and into other countries.
Many important works of this period have been translated into English, in particular, the books by Ludwig von Mises and F. A. Hayek, and also the works of other scholars like Fritz Machlup, Gottfried von Haberler, Oskar Morgenstern, Franz Cuhel, Hans Mayer, Paul Rosenstein-Rodan, and Leo Schonfeld-Illy.
Among the pioneering works of this time that have hitherto not have been accessible to the anglophone public is that by Richard von Strigl. Like many other luminaries of pre-World War II Austrian intellectual and artistic life, Richard Ritter von Strigl was a native of former Moravia (which is today a part of the Czech Republic) where he was born February 7, 1891. He studied at the University of Vienna and was admitted as a very young man to the famous private seminar of Eugen von Bohm-Bawerk, which had produced a whole generation of promising economists, such as Otto Bauer, Nicolai Bukharin, Ludwig von Mises, Otto Neurath, and Joseph Schumpeter.
After World War I, Strigl continued his research and wrote an important book on economic theory for which, in 1923, he received his Habilitation-the traditional professors’ diploma of the universities of Central Europe. Five years later he acceded to the rank of titular extraordinary professor. However, like Mises, Machlup, Haberler, and other great Viennese economists of the time, he had to earn his living largely outside of academia eventually becoming a high official at the Austrian Unemployment Insurance Board.
Strigl was a modest, humane, cultured, and very bright man who impressed both his students and impartial colleagues. As one of his pupils, Joseph Steindl stated after his death, “There were few of his pupils or of the foreign economists who would visit Vienna and sojourn in his circle of those days who did not very much like him.” He also had extraordinary gifts for systematic exposition and step-by-step argument, which made for great success in the classroom. Due to these personal and intellectual talents, Strigl had a considerable influence on the generation of young economists graduating from the University of Vienna after World War I. More than any other teacher he shaped the minds of Hayek, Haberler, Machlup, Morgenstern, and other future great Viennese economists.
Strigl convinced his students that economic theory could be studied in its own right, that is, without engaging in previous empirical field studies. And this theory could be used to both explain economic phenomena and to direct political action. Today these views are fairly widespread if not yet part of mainstream economics. However, in the interwar period, matters were very different.
Despite the flourishing of Austrian economics in the 1920s and 1930s, the dominating intellectual force in the economics departments of Germany and Austria was the so-called Historical School. The representatives of this school of thought despised economic theory for its advocacy of universally valid economic laws. They argued that laws could only be as universal as the conditions to which they referred. Since history was a process of constant transformation of the conditions of human existence, there could be no such thing as general economic law. At best, there could only be “laws” describing the economy of a more or less unique period and, at any rate, all insights about this economy had to be derived from studies of concrete households, firms, administrations, towns, etc.
Moreover, Strigl’s department at the University of Vienna was a stronghold of antirationalist “organic” economics. This contrasted sharply with the approach of the Austrian economists who sought to explain economic phenomena as resulting from individual action and from the social interaction of individuals (the principle of methodological individualist). Single-handedly, Strigl made an effective case for economic theory and methodological individualism in this intellectually hostile environment. Strigl was primarily interested in the scientific foundation of policy proposals, an interest he shared with Ludwig von Mises. This concern for practical questions incited him to take particular care of methodological problems, and he was very effective in integrating methodological studies into his research. All in all, Bohm-Bawerk had the most lasting impact on Strigl, but the ideas of Walras, Wieser, Schumpeter, and Mises also found their way into his writings.
Strigl was the author of pioneering studies on economic theory, applied economics, capital theory, and the relationship between theoretical and historical research. His work Kapital und Produktion was as a key contribution to technical economic theory. It was first published in 1934 by the former Austrian Institute for Business Cycle Research in its series “Contributions to Business Cycle Research.” In Capital and Production, Strigl seeks to come to grips with the causes and possible cures for the Great Depression that Plagued the Western world in the aftermath of 1929. Although many other Austrian economists of the time were engaged in similar projects, Strigl’s work stands out for its analysis of time-consuming roundabout production processes and their relevance for the Great Depression.
Strigl combined Jevon’s and Bohm-Bawerk’s theory of capital into genuinely Austrian theory of the economy as a whole; and he carefully analyzed the impact of credit expansion on the workings of this macroeconomy. His treatment of these issues in even more systematic, rigorous, and clear than the well-known works by Hayek which covered the same ground. In fact, Hayek hailed Strigl’s work “for the simplicity and clarity of exposition of a notoriously difficult subject.”
Unfortunately, Strigl’s works fell into almost complete oblivion. To a strong degree, this was the fate of the entire Austrian School in the Germanic countries. Their bastion had always been Vienna and it was from this center that their ideas spread to the rest of Austrian and to Germany, Holland, Scandinaviam all of Eastern Europe, and the northern cantons of Switzerland. Yet, beginning with the early 1930s, Vienna’s Austrian-School culture died by exodus. Mises left for Switzerland where he found a prestigious position that would allow him to write his magnum opus. Heyek, Machlup, and Haberler departed for the United Kingdom or the United States, where they could obtain academic positions foreclosed to them back home. And after the 1939 Anschluß, many others left because Nazi Austrian made life unbearable for Jews like Morgenstern and for all non-Jews who could not find or accept any modus vivendi with the National Socialist German Workers’ Party.
Although Strigl had remained as the last member of this group at the original home of the School, for him too life and work had become unbearable. His health was gravely affected and he was disgusted by the opportunistic behavior of many of his countrymen. Joseph Steindl wrote at the time: “Since the invasion of Austria he has been silent; we have not heard of any further publication of his. This is not surprising to those who knew him, and it is probably not only due to an illness which befell him in 1930. The spectacle of the conversion overnight of so many to a new creed was not congenial to him who had so conspicuously lacked the talents of a careerist in all his professional life.”
His early death November 11, 1942 prevented him from making the post-World War II University of Vienna safe for the Austrian School. In an obituary for Strigl, F. A. Hayek mourned: “with his death disappears the figure on whom one’s hope for a preservation of the tradition of Vienna as a centre of economic teaching and a future revival of the `Austrian School’ had largely rested.” With Strigl’s death the Austrian School of economics ceased to exist as an independent force in post-World War II Austrian and Germany. It became a closed chapter in the intellectual history of these countries and continued to thrive only in the United States, where Strigl’s ideas are now finally beginning to receive the attention they deserve.
