ABSTRACT
The purpose of this chapter is to reassess some fundamental principles in Carl Menger’s chapter on price theory in the Principles of Economics (chapter 5)—a chapter Hayek ([1934] 1976:20) described as Menger’s ‘crowning achievement’. In the literature on the history of economic theory, Austrian (including Menger’s) price theories are invariably interpreted and assessed from the vantage-point of putatively more advanced or robust species of neoclassical price-theory: either Walrasian approaches to price adjustment in a multi-market economy or Marshallian partial equilibrium analysis. The former interpretations were originally propagated by Stigler (1937), Schumpeter (1954:913) and Samuelson (1952:61). However, consistent with Jaffé’s (1976) de-homogenization of the economics of Menger and Walras, Alter (1990b:343) has recently asserted that Menger’s general economic theorizing and his vision of the price system in particular, were opposed to ‘the Walrasian approach’ conceived exceedingly broadly. The Marshallian interpretative benchmark was evident in Moss (1978:28), and, in a magisterial treatment of the origins of Menger’s work, Streissler (1990b:55) located Menger’s price theory in a long tradition of German contributions, dating from 1825, which were ‘partial equilibrium’ analyses ‘par excellence’.
