Oskar Morgenstern, [Diskussionsbemerkungen] (1933)

Oskar Morgenstern’s contribution to a published scientific discussion defends psychologically grounded economic theory against proposals to dispense with subjective value and reconstruct economics through observable or statistically elicited relations. The reproduced contribution dates from 1933; the digital republication year is undocumented. Its structure is argumentative and dialogical: an opening challenge to the novelty of the proposed alternatives leads into an exchange with Dr. Mackenroth, followed by a sustained criticism of Cassel’s price theory. Morgenstern’s central criterion is theoretical fruitfulness: can an approach explain significant economic problems and provide instruments for further inquiry?

Morgenstern begins by contesting the suggestion that interventions from Vienna have obstructed discussion of new problems occupying younger German economists. The objections presented by Mackenroth recall, for him, familiar arguments associated with Veblen, Davenport, and American institutionalism. Their repetition has not, he maintains, produced a substantial reconstruction of theory. Irving Fisher supplies his principal counterexample to the attempted exclusion of psychological foundations: Fisher’s valuable contributions to interest theory depend precisely on psychological discounting and psychic income. Morgenstern distinguishes these constitutive facts from an indiscriminate appeal to psychology:

Es handelt sich gar nicht um Psychologie, die wir zu diskutieren haben, sondern man versucht psychische Grundtatbestände, die diesen Sachzusammenhang statuieren, durch die eine Tür hinauszujagen und holt sie unter einem etwas neueren Mantel zu einer anderen Tür herein.

English translation: It is not psychology at all that we have to discuss; rather, people try to drive out through one door the basic psychic facts that establish this substantive interconnection and bring them back in through another door in a somewhat newer guise.

The objection is therefore not simply that rival approaches neglect an established vocabulary. They covertly reintroduce the conditions they profess to eliminate. This also explains Morgenstern’s response to Amonn’s suggestion that utility measurement need not be discussed. Because Fisher and others attempt statistical measurements of utility, the issue remains live; the grounds for criticizing those attempts come, he argues, from theory built on basic psychological facts. Merely asking individuals for their demand curves has not yielded a coherent body of results.

Mackenroth’s interruptions make the burden of proof explicit: what has subjective value theory actually achieved? Morgenstern names demand elasticity, while Mackenroth immediately disputes that the concept requires subjective value theory. Morgenstern insists on its specific theoretical meaning, then makes a broader distinction between an instrument’s role in discovery and its continuing indispensability:

Zweitens kommt es natürlich in jeder Wissenschaft zu der Möglichkeit, daß man später einmal irgendein Hilfsmittel wegfallen lassen kann, weil man inzwischen mit diesem Hilfsmittel ein neues gefunden hat, mit dem man dann direkt arbeiten kann.

English translation: Secondly, in every science it is of course possible that one may later dispense with some auxiliary instrument because, in the meantime, one has used that instrument to discover a new one with which one can then work directly.

This concession makes his defense more flexible than a claim that every inherited theoretical device must remain permanently necessary. An instrument can generate successors that permit its abandonment without thereby losing its scientific significance. Yet the exchange does not settle Mackenroth’s demand for substantive explanatory results. Morgenstern protests against the allegation that theoretical instruments have become ends in themselves, rejects the bulk of writings on marginal productivity as an objection, and turns to the explanatory limitations of theories that reject value theory.

Cassel becomes the principal test case. Morgenstern treats the refutation of Cassel’s equation system by Wicksell and Schams as settled, then asks what the approach contributes to contemporary research. His inventory covers monopoly pricing, elasticity, statistical analysis of supply and demand, costs, and time. These are problems made pressing partly by changes in social structure, so the defense of established theory is also a claim about its capacity to address new economic circumstances. Researchers working on supply and demand, he contends, must pass beyond Cassel to Walras or Pareto. Cost principles likewise remain external additions:

Ein paar supplementäre Prinzipien sind seiner Preistheorie als Anhang eingefügt worden.

English translation: A few supplementary principles have been appended to his price theory.

The decisive defect is lack of integration: mentioning costs does not mean incorporating them organically into price explanation. Morgenstern reserves his strongest claim for time, where he sees both the necessity of Austrian theoretical resources and their superiority to the Lausanne approach:

Die Erörterung des Zeitelements in der modernen Theorie würde bei Verwendung Casselscher Gedankengänge auf unüberwindliche Schwierigkeiten stoßen.

English translation: The discussion of the time element in modern theory would encounter insurmountable difficulties if Cassel’s lines of thought were employed.

The conclusion brings methodological criticism back to psychological foundations. Logic supplies important objections to attempts at statistical treatment, but an exhaustive examination also requires the psychic facts constituting the economic situation. Morgenstern accordingly regards contemporary behaviorism as a new label for old, unproductive arguments. The contribution’s significance lies in this connection between foundations and explanatory reach: subjective theory is defended through its claimed usefulness for monopoly, costs, demand, and time. As a brief intervention, it asserts rather than demonstrates several of these advantages; the recorded interruptions preserve the unresolved challenge of showing exactly what explanatory content those foundations deliver.