Carl Menger on Societal 'Transformation'

By Kyle-Anne Shiver and Lee Cary

Austrian economist Carl Menger (1840-1921), founder of the Austrian School of economics, gave us a definition of the “transformation” underway in today’s America.

“It may well appear deplorable to a lover of mankind that possessions of capital or a piece of land often provides the owner of a higher income for a given period of time than the income received by a laborer for the most strenuous activity during the same period. Yet the cause of this is not immoral, but simply that the satisfaction of more important human needs depends upon the services of the given amount of capital or piece of land than upon the services of the laborer. The agitation of those who would like to see society allot a larger share of the available consumption goods to laborers than at present really constitutes, therefore, a demand for nothing else than paying labor above its value. For if the demand for higher wages is not coupled with a program for the more thorough training of workers, or if it is not confined to advocacy of freer competition, it requires that workers be paid not in accordance with the value of their services to society, but rather with a view to providing them with a more comfortable standard of living, and achieving a more equal distribution of consumption goods and of the burdens of life. A solution of the problem on this basis, however, would undoubtedly require a complete transformation of our social order.” Principles of Economics, © 1976, Institute for Humane Studies, p. 174 (translated by James Dingwall and Bert F. Hoselitz, Introduction by F.A. Hayek.

About a century ago, Menger articulate the basic transformational notion that drove the Obama administration to provide the UAW a “more comfortable standard of living” by transferring significant ownership of two vehicle manufacturing companies to them so as to facilitate a “more equal distribution of consumption goods and of the burdens of life.”

Though this redistribution is “not coupled with a program for the more thorough training of workers” nor “confined to advocacy of freer competition,” it does represent “that workers be paid not in accordance with the value of their services to society” but in accordance with the value of their support for Obama’s election to office. When GM and Chrysler inevitably re-enter bankruptcy, that debt will have already been paid, and the reckoning will come due to the UAW. Their short-term gain will yield long-term pain.

All as the “complete transformation of our social order” is underway in America.