Carl Menger, Zur Theorie der Staatwirtschaft (1887)

Carl Menger’s review of Emil Sax’s Grundlegung der theoretischen Staatswirthschaft assesses an ambitious attempt to establish theoretical foundations for economic policy and public finance. Published in 1887, the review moves from the difficulties of Sax’s exposition to his scientific programme, its applications, and the limits of its achievement. Menger’s judgment combines recognition of a major contribution with caution about the groundwork necessary for a definitive synthesis.

The opening places Sax’s book outside the immediate concerns of a general readership. Its abstraction and demanding language correspond to its theoretical purpose, but Menger does not confuse difficulty with scientific merit:

Es ist keine leichte Lectüre, dieses Buch, dem selbst jene Anmuth der Darstellung fehlt, welche auch in streng wissenschaftlichen Werken erreichbar und der raschen Aufnahme neuer scientifischer Ideen in so hohem Maße förderlich ist.

English translation: It is no easy reading, this book, which lacks even that grace of presentation which is attainable also in strictly scientific works and which is in so high a degree conducive to the rapid reception of new scientific ideas.

Clarity and elegance remain attainable even in rigorous scholarship and can assist the reception of new ideas. Nevertheless, Menger locates the book’s significance principally in its intellectual task rather than its literary execution:

Was dem Werke seine Bedeutung verleiht und dasselbe zu einer hervorragenden Leistung auf dem Gebiete der politischen Oekonomie macht, ist glücklicherweise von seiner Form nur zum geringen Theile abhängig.

English translation: What lends the work its significance and makes it an outstanding achievement in the field of political economy is fortunately dependent upon its form only to a small extent.

That task is to transform economic policy and public finance from bodies of practical prescriptions into disciplines grounded in explanatory theory. The distinction between a practical art and a theoretically founded science organizes Menger’s account:

Jede praktische Wissenschaft befindet sich gleichsam in einem vorwissenschaftlichen Zustande, so lange sie ihre theoretischen Grundlagen noch nicht gefunden hat, so lange sie eben nur eine Kunstlehre ist.

English translation: Every practical science finds itself, as it were, in a pre-scientific condition so long as it has not yet found its theoretical foundations, so long as it is merely an art of practice (Kunstlehre).

Medicine before anatomy and physiology, and technology before chemistry and mechanics, provide the relevant analogies. In Menger’s presentation of Sax’s argument, economic policy and public finance require comparable foundations. Explanation is therefore not merely an intellectual supplement to administration: it promises a firmer basis for practical judgment.

Sax justifies a distinct theory by differentiating private economic activity from that of enduring compulsory associations, including states, provinces, districts, and municipalities. Such associations have characteristics irreducible to those of their individual members. The state, in this account, embraces successive generations as well as contemporaries. A theory developed chiefly from private economic phenomena cannot adequately explain this collective activity without further investigation. Menger presents this as Sax’s programme, rather than unequivocally adopting every premise himself.

The review traces the programme through the book’s six-part structure. The first book establishes the task, and the second examines earlier interpretations of the economic character of the state and related associations. The third investigates elementary causes of economic action; the fourth studies their distinctive combination in public economic life. The final two books apply these foundations to economic policy and public finance. Sax’s ambition is an exact social science capable of explaining complex collective arrangements through their underlying determinants.

In economic policy, the relation between individualism and collectivism guides the analysis of administrative intervention and its limits. Public finance receives more extensive treatment, including public enterprises, fees, taxation, and the distribution and assessment of fiscal burdens. Menger particularly values Sax’s effort to give explanatory substance to citizens’ ability to pay, rather than simply invoking it as a fiscal principle. He also recognizes the originality of the method and principal results.

The closing reservation concerns the sequence of scientific inquiry. A persuasive synthesis normally depends on careful investigation of individual problems before their results can be integrated into a comprehensive system. Sax has attempted such integration before sufficient preparatory work exists. Menger thus distinguishes the importance of posing and advancing a scientific problem from the completeness of its solution. The review’s central tension is productive: public economics needs rigorous theoretical foundations, but systematic unity and accessible exposition must emerge from detailed research. Sax’s achievement is to establish new objectives and substantially advance their pursuit, even where his overall construction and particular conclusions remain open to criticism.