Post-classical political economy: Polity, society and economy in Weber, Mises and Hayek - Austrian School Perspectives - Max Weber, Ludwig Von Mises, Friedrich A. von Hayek

American Journal of Economics and Sociology, The, Jan, 2002 by Peter J. Boettke, Virgil Henry Storr

As noted earlier, the quest for meaning was always at the forefront of Weber's analysis. The "structural-functional" brand of social theory misses this fundamental aspect of Weber's approach, and even some of his strongest advocates miss the critical role that Weber's institutional individualism played in his analysis. (18) Weber's methodological individualism cannot simply be regarded as the curious and, for that matter, indirect method by which he arrived at his social theory. Indeed, it is our contention that it is precisely because Weber strictly adheres to the method of Versteben rather than because it occupies some minor place in his social theory as some have suggested (see Smelser and Swedberg 1994, p. 5) that Weber was able to construct a social theory that could conceive of the meaning that individuals attach to their actions and to social phenomena while avoiding atomism and naive holism. (19) Additionally, we contend, it is precisely because of his strict adherence to the method of Verstehen that Weber was able to develop a concept of embeddedness that is substantially richer than the "simple" conception traditionally expressed. Weber's Sozialokonomik and his adherence to the method of Verstehen should, therefore, be seen as a corrective to many of the theoretical shortcomings of the "new sociology of economic life."

Having provided some textual evidence in support of the first of our conjectures, that the "new economic sociology" could be enriched by a direct engagement with Weber, we are now in a position to argue for another claim we made but have not yet explored: that the Austrians, particularly Carl Menger, Ludwig von Mises and Fredrich von Hayek, are the intellectual heir apparents of Max Weber and thus represent economic sociology's natural allies within the disciplinary borders of economics. (20) Indeed, not only do the Austrians avoid many of the pitfalls of their economic brethren (atomism, determinism, ahistoricism, reductionism, etc.), like Weber, they avoid some of the problems that plague the "new economic sociology" (particularly the problem of a "single-level" versus a "multiple-levels" conception of embeddedness) while delivering a sophisticated analysis of money and markets. (21)

V

The Weberian Approach of Mises and Hayek (22)

WEBER AND THE AUSTRIANS have a deep and symbiotic relationship; they share many of the same intellectual forebears and a commitment to the same methodological approach. Not surprisingly, Weber was deeply influenced by the Austrian school of economics. Weber had read and appreciated Carl Menger's and Eugen Bohm-Bawerk's contributions to economic theory and methodology. He invited both Friedrich von Wieser and Joseph Schumpeter to contribute volumes to his encyclopedic project in social theory. (23) And, in his magnum opus, Economy and Society, Weber, at key junctures in the development of his own arguments concerning monetary calculation and economic calculation (1922, pp. 78, 93, 107), favorably references Ludwig von Mises's Theory of Money and Credit (1912) and Mises's (1920) essay on the problem of economic calculation under socialism. Mises, in turn, devoted considerable attention to the systematic, critical study of Weber, which is reflected in his Epistemological Problems of Economics (1933) and Human Ac tion (1949). As Ludwig Lachmann stated in his review of Mises's Human Action, "In reading this book we must never forget that it is the work of Max Weber that is being carried on here" (1977, p. 94).