Monday, June 24, 2019

Wieser, Like Menger, Was Particularly Critical of the Walrasian System; Wieser Objected to the Use of Calculus in Economic Theory Because Economic Phenomena Are Necessarily Discontinuous and Discrete

The considered rejection of the mathematical method as sterile, i.e., as incapable of shedding light on the vital questions of economic processes, has been one of the continuing themes of the Austrian School. Böhm-Bawerk, in his monumental work on Capital and Interest, steers clear of any suggestion of functional interdependence between the elements of his theoretical system. He maintains a strictly cause-and-effect analysis. Wieser, like Menger, was particularly critical of the Walrasian system.

Wieser raised the objection to the use of calculus in economic theory that economic phenomena are necessarily discontinuous and discrete. The Austrians, with their focus on the way in which agents perceive and act in the real world, have always been careful to formulate their marginalism in terms of discrete units and discontinuous points rather than infinitesimal units and smooth curves. Menger emphasized discontinuities at many places in the Grundstätze. Wieser was especially explicit about the discreteness of changes in marginal utility scales, and in developing the theory of imputation assumed a discontinuity among inputs. Böhm-Bawerk analyzed supply and demand in terms of discontinuous schedule, and used for illustration a market for a particularly indivisible commodity, horses. The discreteness of changes in marginal utility scales in Wieser and Böhm-Bawerk is directly due to their subjectivist concern only with changes that could actually be felt by the valuing individual, Schumpeter thus missed the intent of the Austrian theorists again when he suggested that differential calculus is necessary in order to “formulate their reasoning correctly.”

--Lawrence H. White, The Methodology of the Austrian School Economists, online ed. (Auburn, AL: Ludwig von Mises Institute, 2003), 10.


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