Richard von Strigl
The economic value of a good can only be understood as a subjective value, that is to say, it is always related to and depends upon the effective ends of a determinate economic agent (even though the agent may, of course, take into account the interests of several individuals when setting his ends, as is, for example, the case of a family father).
Richard von Strigl belonged to the intermediate generation (between 3rd and 4th) of the Austrian School of Economics. After WWI, Strigl joined L.v.Mises’ famous Private Seminar in Vienna and exerted a considerable influence on fellow seminarists among them v. Haberler, v. Hayek, St. Browne or F. Machlup. His magnum opus Kapital und Produktion (1934/ 2nd 1982, English 2000) is based on E. von Boehm-Bawerk’s production detours (Produktionsumwege) and L. v. Mises’ business cycle theory, and gives a pathbreaking account of the role of consumers’ goods within the structure of production. In 1928, he qualified as a professor in political economy at the University of Vienna long after his methodological study on The Economic Categories and the Organization of the Economy. Mostly due to the looming Nazi occupation of Austria, his book Einführung in die Grundlagen der Nationalökonomie (1937/2009), did not reach the audience it had deserved. He died in Vienna on Nov. 11, 1942.
I
Richard von Strigl was a born into a highly respected civil servant and military family on February 7, 1891 in Rokitzan, (Rokycan, CZ). Even though he was mainly interested in the theoretical and methodological problem of economics, he decided to study law and political science at the University of Vienna, where Eugen von Boehm-Bawerk admitted him as his youngest ever student. Boehm-Bawerk’s famous university seminar produced economists as diverse as Otto Bauer (Austro-Marxist), Nicolai Bukharin (Anarchist/Communist), Ludwig von Mises (leading Austrian), or Otto Neurath (philosopher) and Joseph A. Schumpeter (economist/politician). Less than a year after Strigl received his Ph.D. in 1914, he was drafted into the Austro-Hungarian army. Serving for almost 3 years, he survived the terminal blow delivered by the Italian army that lead to the armistice signed on November 3, 1918 near Udine. After a perilous march through hostile territories, he returned into a starving Vienna in November 1918 and witnessed the breakdown of the Austro-Hungarian Empire and the vanishing of his own social class. The new dismembered and landlocked state simply could not offer a field of action commensurate to the aspirations of young men grown to manhood in a social setting formed by citizens who had become accustomed to playing a leading role in the vast KuK Empire.
Without much prospect for a decently paying academic job, like Mises, Machlup, Haberler, Machlup and all other members of this group, Strigl too had to earn his living largely outside of academia. In the years of Austria’s hyperinflation with monthly inflation rates of up to 130% he landed a modest job as secretary in the Vienna Industrial District Commission, which later became the left leaning Chamber of Labor. In 1920, he joined the legendary Private Seminar, which Ludwig von Mises conducted in Vienna. Due to the fact that Richard von Strigl still had Friedrich von Wieser, Eugen von Boehm-Bawerk and Eugen von Philippovich among others as main teachers, he belonged to the small group of highly original scholars, which F.A. von Hayek aptly defined as the Intermediate Generation. In addition to Strigl, this Intermediate Generation included Leo Schoenfeldt-Illy (1888-1952), Ewald Schams (1889-1955), Franz X. Weiss (1885-1936) or Alfred Amonn (1881-1956) and others. With his remarkable gifts for systematic exposition, step-by-step argument and his intellectual talents, which made for great success in the classroom, Strigl had a considerable influence on the 4th generation of Austrians. Probably more than any other teachers, Richard von Strigl as lecturer at the University of Vienna and Ludwig von Mises in his Private Seminar shaped the minds of F.A. von Hayek, G.von Haberler, Fritz Machlup, Steffy Browne or Oskar Morgenstern. Hayek, portrayed him as a modest, humane, cultured and extraordinarily gifted man who impressed both his students and colleagues.
II
Richard von Strigl first book, The Economic Categories and the Organization of the Economy was published in 1923. This important methodological study anticipated some central points of Mises’ and Robbins’ methodology. In particular, he criticized the imprecise logical distinction between pure economic theory and the historical data that must be interpreted with it, and clarified the boundary between these two areas. About one year later Strigl was permitted to sit at the State Examination Commission for Political Science at the University of Vienna. When Mises and Hayek successfully founded the Austrian Institute for Business Cycle Research in 1927, Strigl immediately joined its academic advisory board and frequently published with them. Albeit its currently different political leaning, the research institute is still in operation in Vienna. In 1926 Strigl’s highly influential book, Applied Wage Theory was published in Vienna. And in 1928 he was finally promoted to Professor of Political Economics at Vienna’s University, but also lectured at the School of World Trade, a forerunner of Vienna’s Economic University.
However, Strigl’s opus magnus was published in 1934 as Capital and Production (reprinted 1982, English translation 2000). This volume appeared in the series of the Austrian Institute for Business Cycle Research as Contributions to Economic Research #7. In this seminal book he further advanced the Austrian monetary and business cycle theory and described how changes in the value of money, such as inflation, inevitably lead to misallocations. Here Strigl successfully combined the decisive concept of production detours (Produktionsumwege, a term coined by Boehm-Bawerk) with the classical theory of the wage fund. It is worth noting, that Strigl went his own way in this book: Not only did he adhere to Boehm-Bawerk’s version of the wage fund of the classics, and linked it to the concept of money capital as a representative of the means of subsistence. In his diagnosis of the crisis following the excessive expansion of Boehm-Bawerk’s detours of production, Strigl also differs from Hayek’s hypothesis as he viewed the consumption of capital in the sphere of consumer goods production and the expansion of detours as simultaneous events, whereas in Hayek’s theory, the latter precedes the former. And thirdly, Strigl is more skeptical than Hayek regarding the chance of an early revival of investment activity after the start of the crisis. Building on this, and using the concept of free capital, Strigl developed a theory of credit expansion and business cycles that differs in some respects from F.A. von Hayek’s presentation and surpasses it in terms of comprehensibility. The work was highly praised by his colleagues for its systematic structure. However, his substantive innovations, such as the emphasis on the role of free (and thus consumable) capital in malinvestments during the business cycle, were only partially adopted.
III
After the Anschluss, the Nazi annexation of Austria on March 12, 1938 he fell silent and no further publications are known by Richard von Strigl. The demonstration of an essential overnight conversion of so many of his compatriots to a new political creed offended him. Due to his ‘political unreliability’ and as a firm opponent of the new regime he lost his teaching position at the university and thus was demoted to a minor position in the Department of Statistics. However, in 1940 he was surprisingly reinstituted and even considered for a professorship at the University of Innsbruck. And yet, depressed, hopeless and ill, he remained in Vienna and died there in 1942 at the age of just 51.
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