In Timm’s biography of Karl Kraus, the most uncompromisingly shaved prophet in history, there is the following reflection about the political meaning of beards: “In the Vienna of 1848 the student revolutionaries had worn beards, which became symbols of their political fervour. And after the defeat of the revolution, it is reported that the authorities forcibly shaved them off. By the 1880s, those students had become pillar of the Austrian establishment. Their beards, now grey and venerable, symbolized for the iconoclasts of Kraus’ generation a pompous Victorianism that had to be swept away. A study of Wittgenstein puts the matter very clearly: “The rebellious young men who were seeking to achieve consistensy and integrity rejected facial hair along with all bourgeois superfluities. To them, moustaches and sideburns were mere ostentation, like velvet smoking jackets and fancy neckties.”
By these standards, Eugen von Philippovich, who taught economics at the University of Vienna in 1900, was on the side of the fathers. His photographs show a man as bearded as General Grant. Unlike Grant, however, his beard seems kempt, and his fashion style seems, even, modern. A photograph of him from 1910, put on line by the Austrian National library, describes him as follows: “Eugen Philippovich Freiherr von Philippsberg in a Jacket with a single row of buttons, a vest with a single row of buttons, striped pants and a white shirt with a folded collar and tie, with a Filz Trilby hat with a silk bank, a full beard and glasses.” Like Freud, whose fashion sense he shares, he is a man between the world that was formed after the failed 1848 revolution and the world being formed by the fast pace of techno-cultural and political changes at the turn of the century in Vienna. He is of the liberal generation that learned its economics from Carl Menger (von Philippovich literally did) and its duties from Kant (like Ulrich’s father in Robert Musil’s Man Without Qualities).
Philippovich is not adduced to today – but he did write an adducable book in the year that the photo was taken of him entitled “The development of economic-political ideas in the 19th century.” Perhaps economic-political, today, would be translated ideas of economic policy. The book’s melody is simple: it starts from the fact that the dominant economic tendency of the first part of the 19th century, in Europe, was “economic liberalism” – the overthrow of ancient impediments to free trade in domestic and world markets – while the economic tendencies of the second half of the nineteenth century were in reaction to liberalism – on the one hand, the conservative defense of an “organic order” that preserved aristocratic privilege, and on the other hand a socialist attack on behalf of the working class.
One might think, considering the tie between the contemporary image of “Austrian” economics and the hardcore advocacy of untrammeled capitalism, that Philoppovich would view the liberal dominance as the golden age and the attacks as the downfall of a beautiful idea. But Austrian economics in Austria, at this time, were not as simple as a latter generation of ideologues – notably Hayek and Mises – made it out to be. In fact, Philippovich was the center of the Austrian Fabians, who, like their English counterparts, wanted to use the power of the state to make a number of socialistic reforms in the economic arrangement of things in the Habsburg Empire. Philippovich, for instance, investigated working housing in Vienna and described the awful conditions of the tenements – inspiring the Socialist post war government’s effort to provide decent housing for the workers, according to Eva Blau’s The Architecture of Red Vienna. His work here was at the intersection of the liberal-left concerns of the Fabians and the modernity of architects like Loos, who despised the dishonesty of Vienna’s modern buildings, with their historicist facades – the borrowed ornamentation of earlier epochs – and horrid interiors.
Thus, Philippovich’s book is hard on the vices of liberalism and soft on the vices of socialism – or so it may appear to an orthodox economist.
The first chapter that describes the formation of the liberal economic policy set and its implementation takes as a sort of surveyor’s mark the phrase of the phrase of “Michel Chevalier, who in his report on the Paris World’s Fair of 1867 could write: To have helped Free trade to triumph will be one of the titles of fame given to the second half of the 19th century.” In fact, the basis of that triumph, as Philippovich shows, is based in reforms that occurred in the first half of the 19th century, which followed a certain theory.
“For this change in the postion of the state and the individual in the economic process of society the economic theory of liberalism delivered a foundation that was, in its simplicity, clarity and inner certainty extraordinarily captivating, understandable and through life experiences easily tested. When everyone can produce what he wants, and can trade with all other members of society in terms of free contracts, than the reasonable pursuit of one’s own interest must lead to the state that all economic goods will be produced in the most economic way and in regard to the need of the greatest possible munber which is allowed by the limits of the means of production at that time. Because in viewing his self interest the consumer will always be lead to the point that there will always be a demand for things which are necessary for society. The utility of society consists in the fact that the emergent needs of its members must be satisfied. This means that their enterprises must be satisfied. It will always be the case that things reflect such uses as are desired and that their producers are given occasion to sell them. These producers will be lead through their self-interest to produce these things at the lowest cost, because by complete freedom of trade the consumer will turn his custom to those that can most cheaply satisfy his demand. Where the costs are greater and thus the price required higher than the consumer’s sense of its value, the consumer will pull back. These producers will thus have to either limit their production or give it up, while others will extend it. Accordingly, the prospect of gain will invoke the striving of the producers to produce at the lowest cost. But not only will consumers and entrepreneurs with full freedom act so as to serve their interests best, but also workers will turn to those businesses, where their labor power is best recompensed, and that is naturally those in which there is the tendency to extend production, and thus in which there is a stronger social need. Accordingly, in such an economic system all will strive after his own advantage, but through this, at the same time, the socally best distribution of goods and labor power will be implemented. … Basically the whole of economic life is only a continual buying and selling. Rent, loans, pacts, in brief all contracts, in which claims to utilities are made and compensation is offered in return, were engaged in and dissolved according to the same principles. Against this free trade the state had nothing other to do than to guard the person and property of all from violence and deceit, and to compel the fullfillment of freely entered into agreements. In the interest of political freedom and on economic grounds, the state must avoid a positively public activity, or business affairs. If the government engages in such enterprises it will expand its power and influence by controlling a great number of places and can comand and injure the many interests of private parties and can use them for political ends. Economically purposive management will be obstructed by the wish of the government to curry favor with influential parts of the population: here the great land owners, there the great industrialists, no again certain regions against others, here the worker and their the small business. Or they will be forced under the influence of popular movements to make rules, which are uneconomic. Such management will also because of the difficulty of leading an economic enterprise through a bureaucratic apparatus work less efficiently, than a private one, while the leading personnel has only a weakened interest in success, and thus the energy of labor will suffer.”
Philippovich’s summary brings out the ideological necessity behind the sovereign consumer, upon which hinges a system that both needs the coercive powers of the state and needs to keep the state from interfering, in any way, with the accumulated inequalities that result from the process of free trade. Philippovich is interested not only in these inequalities, but in the “thinness” of the idea that all of social life is encoded in buying and selling. I’ll examine these two ideas in the next post.