2011 Spengler Prize

24 June 2011 at 8:34 am 5 comments

| Peter Klein |

Congratulations to Robert Leonard for winning the 2011 Joseph J. Spengler Prize for the best book in the history of economics for Von Neumann, Morgenstern and the Creation of Game Theory: From Chess to Social Science 1900-1960 (Cambridge University Press, 2010). I’ve only skimmed the book but it looks exceptionally well done. Required reading for O&Mers interested in intellectual history, methodology, Austrian economics, strategy, and/or game theory. . . .  (That’s pretty much all of you.)

Entry filed under: - Klein -, Austrian Economics, Business/Economic History, History of Economic and Management Thought, People, Recommended Reading.

Decentralization and the Walmart Decision New Issue of Business History Review

5 Comments Add your own

  • 1. Richard Ebeling  |  25 June 2011 at 8:42 am

    I’ve read the book, and a number of things stuck out for me.

    First, game theory was virtually all the creation of von Neumann, something he had been working on since the early 1920s. Indeed, Morgenstern’s primary contribution was the early chapter in “The Theory of Games and Economic Behavior” on the application of game theory to economic problems.

    Second, Morgenstern had a terrrible inferiority complex. Having been trained in the tradition of the Austrian School, and heavily influenced by the ideas of Hans Mayer on the limits and unrealism of mathematical and general equilibrium economics, and having devoted time to philosophical issues relating to the methods of the social sciences, he came to regret that he had not devoted more time to mathematics, instead. His diary entries show had he constantly was working hard on keeping up with things that von Neumann was trying to explain to him.

    Third, Morgenstern had an underlying anti-Semitic streak. This comes through some of his diary entries that Robert Leonard quotes (usually in footnotes in the book). “Jews” seem to be everywhere and dominating many of the intellectual circles in which Morgenstern moved, and it clearly irritated him.

    Fourth, after Hayek moved to the LSE in the autumn of 1931, Morgenstern became the director of the Austrian Institute for Busines Cycle Research that Mises and Hayek had set up in 1926-1927. Especially after Fritz Machlup had moved to the U.S. in 1933, and Mises had moved to Geneva in 1934, Morgenstern increasingly saw himself as a new “leader” and “voice” of economic thinking in Vienna. He rejected many of the basic tenets of the Austrian School on methodology, capital theory, and especially away from a general liberal market view on economic policy issues.

    Fifth, this last aspect took the form of Morgenstern positioning himself as a leading policy analyst and policy advocate for the new authoritarian and corporativist government that had come to power in Austria in 1934. (A good supplement to Leonard’s book on this aspect of Morgenstern’s activities in Vienna at this time is Hansjorg Klausinger’s article ‘From Mises to Morgenstern: Austrian Economcis During the Standstaat,’ “Quarterly Journal of Austrian Economics” [Fall, 2008] pp. 25-43.) Morgenstern became impatient with the “limits” of democratic government. This was stated clearly in his 1934 book, “The Limits of Economic Policy,” but the wording was toned down when the book appeared in English in 1937 under the title, “The Limits of Economics.” (Morgenstern is especially harsh in his criticism of Mises’ methodological and policy views in this book.)

    Anyway, these are some recollections from when I read the book last year.

    Richard Ebeling

  • 2. Peter Klein  |  25 June 2011 at 3:22 pm

    Thanks Richard. Apparently Schumpeter struggled with the same inferiority complex, working on his math skills throughout his career and greatly regretting his inability to do any serious mathematical analysis, which he regarded as the highest form of economic theory.

  • 3. Richard Ebeling  |  26 June 2011 at 10:39 am

    Peter, I remember reading a piece that Paul Samuelson wrote about his memories of and reflections on Joseph Schumpeter. As I recall, Samuelson rather snidely referred to Schumpeter “working on his math” everyday. Samuelson’s tone was that of the teacher who looks down on the “poor student’s” inability to “master” the substance of the subject-matter.

    If I may add one more thing about Oskar Morgenstern. I had the good fortune to take the last course that Morgenstern taught at New York University before he died of bone-marrow cancer — a course on the history of economic thought (which Israel Kirzner had to finish during the last few weeks of the semester when Morgenstern could not teach anymore due to his illness).

    I found Morgenstern a very approachable and friendly man. He generously gave of his time in his office to talk about Austrian Economics and the “old Vienna days” with me, even when it was clear that he was feeling physically uncomfortable.

    And in the American context of the 1970s, he most certainly was pro-free market and extremely critical of a wide variety of government interventions, regulations, and controls. He also considered much of macroeconomics to be highly dubious — from the pseudo-scientific precision of national income accounting and GNP measurements, to being a harsh critic of the general macro approach of ignoring the “Cantillon effect,” that is, money’s non-neutral impact on the structure of relative prices, wages, and production during a period of monetary expansion (or contraction).

    And I suppose that is what made reading Robert Leonard’s book somewhat of a “shock.” Because it showed a side of Morgenstern’s life, career, and attitudes from the European part of his life that would have been difficult to image for anyone who had the chance to know him during the American period of his life.

    Since Morgenstern had been so closely intimate with many of the Austrians in those Vienna days who were Jewish — Ludwig von Mises, Fritz Machlup, Paul N. Rosenstein-Rodan, Alfred Schutz, Ilse Mintz, , to name just a few — I found Leonard’s quotes and references to Morgenstern’s “attitudes” toward Jews especially disturbing.

    And it made me remember once, when I was talking to him in his office at NYU, that I had asked him about the “problems” that Jewish members of the Austrian School had in the Vienna of the 1920s and 1930s. His response was startling. He made a point of emphasizing that HE was NOT Jewish, in spite of the fact that it was not uncommon for “Morgenstern” to be a Jewish last name. And he said that he never noticed any particular difficulties that Jews had in the Austria between the two World Wars.

    Clearly, decades after the Second World War, Morgenstern was still touchy about being identified with “them.”

    Richard Ebeling

  • 4. Peter Klein  |  29 June 2011 at 4:53 pm

    By coincidence, the June 2011 JEL arrived today, containing Martin Shubik’s review of the book. Writes Shubik:

    “In Princeton, given Oskar’s lifestyle, he struck me as the epitome of WASP, living in one of the areas of Princeton loaded with the establishment and being highly concerned with being accepted by both the Institute [for Advanced Study and the social establishment. He had little use for most of the Economics Department and the feelings appeared to me to be mutual.”

  • 5. srp  |  29 June 2011 at 5:34 pm

    As an undergrad, I looked up a volume of Morgenstern’s econ papers. He had an original but somewhat cranky turn of mind, castigating others for their ignorance when he himself seemed confused. (For example, he wrote one paper about demand functions where he didn’t realize that the points on the curve are to be thought of as alternative possible outcomes at a point in time. Instead, he seemed to believe that economists supposed that purchases occurred sequentially moving down or up the curve. Given that misapprehension, he then went into a somewhat clumsy analysis of what today we would call residual demand curves.)

    He definitely wanted to associate himself with science and innovation and sought to break away from the ossified and primitive economics he came to see through von Neumann’s eyes. Sometimes this led him to a kind of Austrian skepticism about conventional economics, other times it seemed to take him in a perhaps “scientistic” direction. He was hard to pigeonhole.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


Nicolai J. Foss | home | posts
Peter G. Klein | home | posts
Richard Langlois | home | posts
Lasse B. Lien | home | posts


Former Guests | posts


Recent Posts



Our Recent Books

Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).

%d bloggers like this: