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The Austrian School of Economics in Russia: from Criticism and Rejection to Absorption and Adoption✩ Vladimir Avtonomov A,B,*, Natalia Makasheva A,C

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The Austrian School of Economics in Russia: from Criticism and Rejection to Absorption and Adoption✩ Vladimir Avtonomov A,B,*, Natalia Makasheva A,C Russian Journal of Economics 4 (2018) 31–43 DOI 10.3897/j.ruje.4.26002 Publication date: 23 April 2018 www.rujec.org The Austrian school of economics in Russia: From criticism and rejection to absorption and adoption✩ Vladimir Avtonomov a,b,*, Natalia Makasheva a,c a National Research University Higher School of Economics, Moscow, Russia b Primakov National Research Institute of World Economy and International Relations, Moscow, Russia c Institute of Scientific Information for Social Sciences, RussianAcademy of Sciences, Moscow, Russia Abstract Dissemination and adoption of Western economic ideas in Russia have never been a sim- ple process, always bearing marks of the socio-political and ideological circumstances of the country and inner processes in economics, as well as marks of the national intel- lectual tradition in general. It is not surprising that the history of Austrian economics in Russia was akin to a long road with many windings and turns. We can distinguish three different periods, or waves, each of them rather complex: from the 1890s until the late 1920s (introduction and, to a certain degree, adoption and criticism), from the beginning of the 1930s until the mid-1980s (hostile attitude and ignorance), and from the mid-1980s onwards (rediscovery, dissemination, and adoption). Keywords: Austrian school of economics, Marginal Revolution, Marxism, Russian economic thought, marginal utility theory. JEL classification: A14, B10, B13, B14, B24, B40. 1. Introduction The main purpose of this study is to analyze peculiarities of perception of Austrian economics by Russian economists within the twentieth century, under- stand the reasons for its criticism by the majority of Russian economists, and study the specific character of the process of its adoption by those Russian econo- mists, albeit few in number, who considered it promising. ✩ The article is based on a paper presented at the Second World Congress of Comparative Economics (WCCE, St. Petersburg, Russia, June 2017). * E-mail address: [email protected] 2405-4739/© 2017 Non-profit partnership “Voprosy Ekonomiki”. This is an open access article distributed under the terms of the Attribution-NonCommercial-NoDerivatives 4.0 (CC BY-NC-ND 4.0). 32 V. Avtonomov, N. Makasheva / Russian Journal of Economics 4 (2018) 31−43 2. At the beginning of a complex and lengthy process of adoption Marginalism became visible in Russia in the period (1890s) that can qualify as a turning point in the history of economic theory worldwide. It was a crucial and successful decade for marginalism in the West, although we date the begin- ning of the Marginal revolution in the early 1870s. Let us recall the list of major publications over this period: Capital and Interest (1889) by E. Böhm-Bawerk, A. Marshall’s Principles of Economics (1890), and L. Walras’ Études d’économie politique appliquée (1898). In the same year, 1898, J. B. Clark published Distribution of Wealth; Value, Capital, and Rent (1893) by K. Wicksell, and lastly J. N. Keynes’ The Scope and the Method of Political Economy (1899) were also published, pro- viding a methodological framework for a new economics. Russian economists perceived the new direction in economic theory in gene- ral, and the Austrian school in particular, not so much as a new paradigm or an image of the future economic science but rather as a new theory of value. The latter is known as a subjective, psychological theory, or as a theory of mar- ginal utility. This new theory of value stood counter to the objective one, repre- sented by Marx’s labor-based theory of value. For most of the Russian econo- mists, Austrian economics became a symbol of the shifts taking place in the ap- proach to the problem of value and economic theory as a whole. We may say that the Marginal revolution came to Russia on the Austrians’ shoulders. Compared to other Marginalist traditions, the Austrian school aroused spe- cial interest in Russian economists because of several circumstances. Probably, the influence of German intellectual tradition and German economic science and the interest in the German-language literature played a certain role. Paradoxically, the standing of the adversaries of the Austrian school who were influential in Russia was rather high. First and foremost, the Austrian position was irreconcil- able with the Marxist political economy and its basis, that is, the labor theory of value. It is also probable that Menger’s methodological criticism of the historical school, the ideas of which were shared by many Russian economists, also at- tracted attention to Austrian economics. However, making visible does not mean making popular, as we will see shortly. However strange the following may seem, in the methodological dispute be- tween the Historical and the Austrian schools the Marxist political economists took the Austrian side. First, both of the groups supported the abstract deductive science and both considered regularities of economic life as the major object of science. Second, both claimed to have worked out an integral scientific system in the field of economics. Finally, the Marxists as well as the Austrians saw the key problem of economic theory to be the problem of value: its essence, nature, and source. They be- lieved that the resolution of this problem would predetermine the entire construction of economic science and the answers to all important questions. As Böhm-Bawerk wrote as early as 1886, “The theory of value stands, so to say, in the center of any po- litical and economic doctrine” (Böhm-Bawerk, 1886/1903, p. 13). Many years later, N. I. Bukharin, a Marxist theorist and Bolshevik, confirmed this view in his work on the Austrian school by saying: “The major issue of political economy, from its be- ginning and until now, has been and is the issue of value. All other issues — whether those of wages, capital and rent, capital accumulation, crises, etc. — are connected with this issue directly or indirectly” (Bukharin, 1919/1925, p. 60). V. Avtonomov, N. Makasheva / Russian Journal of Economics 4 (2018) 31−43 33 A noteworthy point is that the first step in the Methodenstreit — a work by the founding father of the Austrian school, published in Russia — the Untersuchungen über die Methode des Socialwissenschaften und der poli- tischen Őkonomie insbesondere by C. Menger (1883/1894) — did not arouse any tangible interest. The reason probably lies in the fact that the work represented first and foremost a methodological challenge to the historical approach, and un- like the earlier Principles of Economics (Menger, 1871/1903), did not explicitly address the problem of value and did not contain any criticism of either the classi- cal theory of value or Marx’s value theory. As for Zum Abschluss des Marxschen Systems and other works by Böhm-Bawerk (1886/1902, 1886/1903, 1884/1909), the situation was different. It would not be wrong to say that it was exactly Böhm- Bawerk who embodied the Austrian school in Russia and became the main intel- lectual opponent of Marx in the field of the theory of value. The methodological similarity, on the one hand, and the radically different approaches to a resolution of the problem of value, on the other, predetermined the depths of the confrontation between Marxists and the Austrians, who thus be- came antagonists of one another. As for the other schools of Marginalism, such as the Anglo-American and the Lausanne schools, the first objects of interest seen there by Russian economists were the theory of demand and supply and math- ematical tools, rather than the subjective theory of value, although the latter, too, was not disregarded. A quite indicative point is that Russian economists did not apply a term — “Lausanne School” — but rather referred to the mathematical school that also included some representatives of the Anglo-American school, among others1. In general, Russian economists devoted much less attention2 to these schools of Marginalism than to the Austrian school. In the view of some well-known authors, in the late nineteenth and early twentieth centuries, Russian economists in general were not very familiar with Marginalist schools of economics that already had won recognition in the West. For example, in his work on, nota bene, Marx’s theory of value, S. Frank wrote: “During the last 20–30 years the development of political economy has passed unnoticed in Russia because it did not fit into the Marxist scheme; doctrines of Knies, Menger, Böhm-Bawerk, Jevons, Marshall and many others are still Double Dutch for a huge part of our educated public, and if these names are mentioned in our literature, then it is only in order to sharply rebuke them for ‘backwardness’ and ‘bourgeoisness’” (Frank, 1900, pp. II–III). Later on, too, the first and the best known Russian mathematical economist, V. Dmitriev, complained that the Russian economists had ignored the new school in the economic science, which was well known in the West: “During a quarter of the century the Russian economic science did not ‘take notice’ of the most im- portant and influential stream in economic thought that had spread to all civilized 1 As they were led not so much by the contents of the works as by the analytical tools, the list of those associated with the mathematical school included not only Walras, but also R. Auspitz, R. Lieben, W. S. Jevons, J. B. Clark, Ph. Wicksteed, and F. Edgeworth. 2 It should be noted, however, that the first work by a representative of the Marginalist revolution (though not an economic but a philosophical one) published in Russia was W. S. Jevons’ (1874/1881) The Principles of Science. A Treatise on Logic and Scientific Method. Other works by Jevons, too, were published in Russia: in 1896, two small books on money (Jevons, 1875/1896a; 1875/1896b), and in 1905, The Theory of Political Economy (Jevons, 1871/1905).
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