Subtitle of this chapter: The Austrian School Triumvirate

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The still alive and well-founded master Karl Menger was too important for the Austrian School and neoclassical liberalism. Important to the point where neoclassical liberalism cannot be built without his theory of marginal utility.

In short, the individual, or individualism, is the foundation of liberalism. No, what freedom is there? So liberals are against all forms of collectivism.

For liberal economists, the question of whether human economic activity is determined individually or collectively is crucial. If economic activity is determined not by individuals but by collectives, liberalism is simply untenable in economics.

It's like if there were no God, then creationism would be a joke. I don't even have a foundation, and I'm still researching it.

Menger's theory of marginal utility uses individualism to provide an "organic" and "compositive" explanation of social and economic systems.

The explanation is that value is determined by the subjective preferences of individuals, supply and demand are also determined by individual decisions, and the decisions of economic activities are made by individuals rather than collectives.

Continuing the derivation, the Austrian school argues that the spirit of the individual entrepreneur is the dominant force in economic development, asserts that private property is indispensable for the efficient use of resources, and claims that government intervention in the market process will lead to undesirable consequences.

That is: entrepreneurs represent advanced productive forces, private property is sacrosanct, and small government has a big market.

LOOK, what a theory!

If it weren't for those damned economic crises, it would have been enough for the Austrian School of Political Economy, and what about Marxism and Keynesianism.

Eugen von Bombavik, another big man of the Austrian School, also died six years ago. In addition to being an economist, Bombavik was a long-time senior financial official in the Austrian government, serving as Austria's finance minister three times from 1895. Until he resigned from this position in 1904.

In the 1880s and 1890s, he wrote a large number of critical works on Marxist economics, and in 1896 he published Karl Marx and the End of His System...... Just look at the title of this book to see how perverse it is. He replaced Marx's labor theory of value with the marginal utility theory of value, and negated and replaced Marx's theory of surplus value with the theory of interest time difference.

Bombavik argues that capitalists do not exploit their laborers, but rather that they benefit their laborers while earning profits, since capitalists must pay a portion of their gross income to their employees as wages. The wages paid by the capitalist to the labourer are in fact higher than the value of the labour's labour in the production process.

His old man's theory of interest is really endless. To put it simply, he argues that Marxist economics ignores the factor of time.

The reason why interest is reasonable is time: if you lend money to someone else, it means that you give up the opportunity to use the money to meet your own needs or increase its value during the borrowing period, and it is reasonable to collect some interest. Then the capitalists invest capital to obtain profits, which can also be regarded as a special form of interest. In the same way, the rent charged by the landlord for renting out the house is actually the interest on durable items.

In fact, the Austrian School was the first school of economics to criticize Marx's economic theory. Nikolai Ivanovich Bukharin, who later became a big traitor, once confessed to it himself; The Austrian School was the most formidable enemy of Marx's economic theory. He also wrote a pamphlet dedicated to Bombavik, The Political Economy of the Rentiers.

Well, whoever says such a thing must be a great traitor. And as long as you have watched the movie "Lenin in 1918", you will remember the famous line: Quick, go and save Lenin, Bukharin is a traitor......

Well, our Master Yuan originally wanted to take over this glorious torch and continue to fight with Bukharin, Langela, Shifating, Kautsky, Bernstein, and so on. (Author's note: These are introduced in the next chapter.) ）

In this way, he will definitely be worshiped by the public knowledge of later generations. But this will produce a huge amount of S-value, so he has to give up stupidly.

The deceased has passed away, and Yuan Yanqian has a way. Fortunately, there was still an elder among the three giants of the Austrian School.

If nothing else, the seventy-year-old Friedrich Freiherr von ieser will live another six years. He was also a good friend and brother-in-law of Bombavik, and in 1917 he became Minister of Finance of the Austrian government.

Master Wiesel was the first economist to come up with the term "marginal utility" and further deepened the theory, extending marginal utility from production and transaction to capital and distribution. To put it simply, the wages received by laborers, the interest received by capitalists, and the rent received by landlords are the benefits of labor, capital, and the various factors of production of land, and these benefits are, in the final analysis, the result of subjective evaluation by human beings.

However, this master had a nickname in later generations, called "The Great Misguider". Because he is too much of a champion of the idea of "equilibrium".

What is "equilibrium"?

Let's take an analogy, there are two people, A and B: A has nine steamed buns, and B has only one steamed bun, and they eat five steamed buns with the same appetite. According to the marginal utility theory, the four extra steamed buns of A have only a small marginal utility for him, and vice versa, a large amount for B.

Therefore, the sum of the marginal utility of the same ten steamed buns, A, nine and B, and one steamed bread must be less than the sum of the marginal utility of five steamed buns per person A and B.

If you want to achieve the "equilibrium" of the maximum marginal utility of the two, of course, you are unwilling. So at this time, introduce a C with only two steamed buns, let the three of them implement democratic decision-making and voting, guess what the result is?

That's right, ABC will divide these twelve steamed buns equally, four for each person, so that the overall marginal utility is indeed maximized, and an "equilibrium" is achieved.

It is conceivable that in a society, there are always more poor people with less steamed buns and fewer rich people with more steamed buns. If economic policy is formulated according to the principle of "equilibrium" in the theory of marginal utility, then the "tyranny of the majority" will inevitably occur in a democratic society based on the principle of one person, one vote.

Therefore, Vesel's theory is very dangerous, and if you are not careful, you will slip into the quagmire of extreme egalitarianism. But no matter what, Yuan Yanqian still has to have a relationship with the only remaining master Lala among the Big Three.

Of course, our Master Yuan will definitely not miss Mises. And when the main owner reads "Socialism", he will find that the book is even more complete than the one he is conceiving, but it is also very "weird" in some places.

Anyway, Yuan Yan sent twenty copies to the University of Vienna in one go. Even Schumpeter, the "bat", and Hayek, who is only 22 years old, sent a copy.

Why, one asks, is he so concerned about the Austrian School, and why doesn't he have a school of his own?

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It's easy to write 10,000 words, but it's hard to shrink it into a chapter.

Of course, Murong's level is limited and his energy is limited, so please give advice to all patients.

I don't like to see this patient, rest assured, the next chapter is a hodgepodge of masters, and I won't go into more detail about their theories like this chapter, and patience will pass.