Carl Menger · 1891
This is a two-part political-economic newspaper essay. Menger uses the neglected German centenary of Adam Smith’s death to challenge the reigning German “social-political” interpretation of classical economics. His thesis is that Smith and the classical school were not anti-worker, atomistic, or doctrinaire defenders of laissez-faire; rather, German critics had confused classical political economy with Manchester liberalism and then built policy against a caricature.
Es ist nicht wahr, dass die neuere social-politische Schule Deutschlands in sachlichem Gegensatz zu der classischen National-Oekonomie steht.
English translation: It is not true that the newer socio-political school of Germany stands in substantive opposition to classical political economy.
The first part reconstructs Smith, Ricardo, Malthus, and Say as social theorists concerned with the poor, laborers, and the weak. Menger’s Smith is not the idol of capitalist privilege but a critic of laws that restrict labor mobility, protect monopolies, or strengthen masters against workers. The “negative” demand for liberty is, in this historical setting, a demand to remove class legislation injuring the poor.
A. Smith als einen Arbeiterfeind oder auch nur als einen dem Arbeiterstande gleichgültig gegenüberstehenden Doctrinär hinzustellen, ist eine Fälschung der Geschichte. Das gerade Gegenteil ist richtig.
English translation: To depict A. Smith as an enemy of the workers, or even only as a doctrinaire indifferent to the working class, is a falsification of history. The exact opposite is correct.
Menger then extends this rehabilitation across the classical canon: Ricardo links public welfare to the condition of labor; Malthus accepts relief, public works, and factory limits for children; Say defends worker coalitions and protective legislation where bargaining power is unequal. The target is not criticism as such—Menger admits classical theory erred in important respects—but historical falsification. He also denies that Smith’s system rests on a crude worship of unregulated self-interest.
Es ist nicht wahr, es ist eine Geschichtsfälschung, dass A. Smith ein Doctrinär des „laisser faire, laisser aller“ ist und ausschliesslich von dem völlig freien Spiele der individuellen Interessen das ökonomische Heil der Gesellschaft erwartet.
English translation: It is not true—it is a falsification of history—that A. Smith is a doctrinaire of "laisser faire, laisser aller" and expects the economic salvation of society exclusively from the entirely free play of individual interests.
The second part defines the real difference between classical economics and modern German social policy. For Menger it is not a difference of moral tendency: both recognize worker distress and both allow state aid. The difference is historical emphasis. Smith’s generation confronted privilege, guild restriction, arbitrary justice, monopolies, settlement laws, and class taxation; therefore its first task was emancipation. Modern reformers, after many such restrictions had been removed, emphasized positive state measures.
A. Smith und seine Schüler waren für ihre Zeit zum mindesten in dem nämlichen Masse „Social-Politiker“ als jene Volkswirthe, welche die Ehre dieses Namens im Gegensatz zu der Smith’schen Schule gegenwärtig für sich in Anspruch nehmen.
English translation: A. Smith and his pupils were, for their time, at least in the same measure "social-politicians" as those economists who at present claim the honour of this name in opposition to the Smithian school.
Menger’s deeper conceptual move is to join social concern with causal economics. He argues that worker welfare depends not only on redistribution or legislation but on capital accumulation, enterprise, saving, and productive intelligence. Modern social-policy writers, he thinks, often denounce capital while forgetting that employment and rising wages require it.
Die klassische National-Oekonomie steht der neueren social-politischen Schule in der arbeiterfreundlichen Tendenz jedenfalls nicht nach; rücksichtlich der richtigen Einsicht in die Ursachen des mehr oder minder befriedigenden Zustandes der besitzlosen Volksclassen ist sie der letzteren weit überlegen.
English translation: Classical political economy is in any case not inferior to the newer socio-political school in its worker-friendly tendency; with regard to correct insight into the causes of the more or less satisfactory condition of the propertyless classes of the people, it is far superior to the latter.
The essay ends by criticizing contemporary “positive” social policy when it creates protected coteries: closed rural inheritances, guild-like restraints, worker aristocracies, cartels, and privileges that help one group by excluding poorer outsiders. Against both Manchester doctrinairism and statist doctrinairism, Menger calls for an objective political economy that protects labor without undermining thrift, enterprise, and the common good.
Von der objectiven Wissenschaft, welche in der Besserung der Lage des Arbeiterstandes und in einer gerechten Einkommensvertheilung, indess nicht minder in der Förderung individueller Tüchtigkeit, des Sparsinnes und des Unternehmensgeistes gleich wichtige Aufgaben der Staatsgewalt erkennt, hat sich der Doctrinarismus der Einen wie jener der Andern gleich weit entfernt.
English translation: From objective science, which recognises the improvement of the condition of the working class and a just distribution of income, but no less the promotion of individual competence, of thrift, and of entrepreneurial spirit, as equally important tasks of the state authority, the doctrinairism of the one side has departed just as far as that of the other.
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