Carl Menger’s newspaper article, signed “M.” and published in two instalments, interprets the split among German economists as a dispute over economic welfare and the efficacy of state intervention. Its first part reconstructs the methodological ancestry of the conflict; its second compares the competing social programmes crystallized at the Danzig and Eisenach congresses of 1872. Menger’s central move is to replace partisan accusations with a question about available knowledge: can government alleviate social distress, and are effective means of doing so sufficiently understood?
The historical account begins with two inheritances from Adam Smith. Say tests and revises Smith’s theories against experience, seeking intelligibility and empirical conformity; Ricardo constructs a coherent system by pursuing selected principles to their ultimate consequences. Their German followers reproduce the tension between eclectic accommodation to economic life and rigorous deduction that sometimes contradicts it. Menger treats neither tendency as a completed science:
Beide diese Richtungen documentirten und documentiren in gleicher Weise die Jugend der Nationalökonomik, sie sind in gleicher Weise Symptome ihres unfertigen Zustandes, dem gegenüber die Einen mehr dem Bedürfnisse der strengen Systematik, die Anderen jenem der Conformität der Theoreme mit der Erfahrung Rechnung zu tragen suchen.
English translation: Both these tendencies documented and continue to document equally the youth of economics; they are equally symptoms of its unfinished condition, in response to which some seek more to meet the need for rigorous systematics, others that for conformity of theorems with experience.
This diagnosis explains the division without simply endorsing either method. In trade policy, the eclectic tendency absorbed Friedrich List’s arguments for gradual liberalization attentive to industrial development, whereas uncompromising free traders demanded immediate application of their principles. The disagreement then widened from the timing of reform to its ultimate purpose. Against the claim that voluntary exchange benefits both participants, the ethical economists argued that private gains need not benefit society as a whole. Grain exports from poor countries after failed harvests supply Menger’s concrete illustration. The decisive distinction is between accumulating wealth and securing broadly shared material and intellectual welfare.
The second instalment shows how organizational exclusion and personal polemic hardened these differences into rival camps. Free traders controlled the Danzig congress; the invitation-only Eisenach meeting gave the ethical economists corresponding predominance. Menger then juxtaposes their programmes. His formulation of the free-trade position begins:
Es besteht eine volle Harmonie der Interessen in der heutigen Gesellschaft. Im freien Marktverkehr kann keiner seinen Nutzen fördern, ohne auch den Nutzen des Anderen mitzufördern.
English translation: There is a complete harmony of interests in present-day society. In free market exchange, no one can advance his own benefit without also advancing the benefit of the other.
From this premise follow a state restricted to legal security, reliance on individual and cooperative self-help, and an explanation of inequality through accumulated capital and differences in ancestral provision. Menger distinguishes this programme from indifference to workers: its proponents regard intervention as incapable of permanently removing inequality and liable to worsen hardship.
The ethical programme disputes both the asserted harmony and the sufficiency of formal economic freedom. Yet it accepts economic liberalization and existing social foundations. Its reformism is expressly bounded:
Nicht eine Nivellirung in socialistischem Sinne ist unser Gesellschaftsideal. Wir protestiren gegen alle socialistischen Experimente. Wir verlangen auch nicht, daß der Staat den untern Classen Geld zu verfehlten Experimenten gebe.
English translation: Levelling in the socialist sense is not our social ideal. We protest against all socialist experiments. Nor do we demand that the state give the lower classes money for misguided experiments.
Menger therefore refuses to equate the ethical economists with the socialism invoked by their opponents’ polemical label, Katheder-Socialisten. Their practical demands include factory legislation and inspection, banking and insurance oversight, social inquiries, and improvements in workers’ education and living conditions. Particularly significant is their claim that regulation can make labour contracts genuinely free: freedom here requires enabling conditions, not merely the removal of legal restrictions.
The conclusion recasts the conflict as an inquiry into whether intervention can remedy existing evils without aggravating them. Menger also recognizes interests behind the theories: one camp defends economic liberties already achieved, while the other advocates active government directed toward social ends. His qualified optimism rests on the research the controversy is generating, documented by a concluding guide to recent publications. The article’s relevance lies in this conjunction of methodological criticism, institutional explanation, and disciplined policy comparison: neither benevolent intentions nor an abstract principle of nonintervention settles what economic action can accomplish.
This work was divided into 2 sections when it entered the library's research corpus—an apparatus for search and citation, not necessarily the author's own table of contents. Each title opens its summary.
Put a question to this work; the Librarian answers from its 2 sections and cites the passage.
Ask the Librarian