DIRECTORY 335
views on reform, and escaped to
France and then England. He
emigrated to the US, becoming
the US consul in Hamburg and
then Leipzig. In 1843, he founded
a newspaper to air his views on a
“National System,” whose expanded
customs union could unite all of
Germany. Ill health and financial
problems dogged his final years,
and he committed suicide in 1846.
See also: Comparative advantage
80–85
JOSEPH BERTRAND
1822–1900
The son of a French writer of
popular science, Joseph Bertrand
showed a precocious aptitude for
mathematics from an early age.
In 1856, he became a professor at
the École Polytechnique in Paris.
He made his name in the fields of
number theory and probability,
and opposed the theory of oligopoly
described by his compatriot
Antoine Augustin Cournot (p.91),
proposing instead an alternative
model of price competition.
See also: Effects of limited
competition 90–91
CARL MENGER
1840–1921
One of the founders of the Austrian
School of economics, Carl Menger
was born in Galicia, now in Poland.
His Principles of Economics (1871)
outlined his theory of marginality
(goods derive their value from the
worth of each additional unit), which
became key to the Austrian School’s
thinking. While professor of
economics at the University of
Vienna, he wrote the Method of the
Social Sciences, which marked the
final split from the German
Historical School, which was based
on 19th-century romantic ideals.
See also: Economic liberalism
172 –7 7LUJO BRENTANO
1844–1931Born in Bavaria, Germany, Lujo
Brentano earned doctorates in both
law and economics. In 1868, he
made a trip to Britain with the
statistician Ernst Engel (p.125) to
study trade unionism, and his ideas
were influenced by the experience.
A member of the German Historical
School, Brentano nonetheless
challenged many of its theories,
arguing for social reform, human
rights, and state responsibility for
public welfare. His influence was
particularly evident in the formation
of the social market economies.
See also: The social market
economy 222–23EUGEN VON BÖHM-BAWERK
1851–1914A founder of the Austrian School of
economics, Eugen von Böhm-
Bawerk was born in Brünn, Austria
(now in the Czech Republic). He
studied law at the University
of Vienna and had a successful
academic and political career,
twice serving as Minister of
Finance in the 1890s, during which
he was able to put his frugal
budget-balancing ideas into
practice. His critiques of Marxist
economics and theories of interest
and capital were highly influential,
especially on his students Joseph
Schumpeter (p.149) and Ludwig
von Mises (p.147).
See also: Central planning 142–47FRIEDRICH VON
WIESER
1851–1926Friedrich von Wieser was born in
Vienna. Like his brother-in-law
Eugen von Böhm-Bawerk, he
originally studied law but switched
to economics after reading Carl
Menger’s work. After working for
some years as a civil servant, in
1903 he succeeded Menger as
professor in Vienna. His first major
contribution was in value theory, in
which he was influenced by Léon
Walras (p.120) and Vilfredo Pareto
(p.131), and he is credited with
coining the term “marginal utility”
(the satisfaction gained from each
additional unit). He then turned his
attention to applying economic
theory to sociology, devising the
important theory of social economy
and its idea of opportunity cost.
See also: Opportunity cost 133THORSTEIN VEBLEN
1857–1929Famous as a maverick among US
economists, Thorstein Veblen was
the son of Norwegian immigrants
who lived on a farm in Minnesota.
His unconventional background
gave him an outsider’s view of US
society, which led him to reject the
conventional wisdom of his teachers.
He developed a new institutionalist
approach that combined sociology
and economics. In 1899, he published
The Theory of the Leisure Class,
which introduced the idea of
“conspicuous consumption”
and criticized the inefficiency and
corruption of the capitalist system
and its “parasitic” business class.
See also: Conspicuous
consumption 136