Approaches of the Austrian School to the Soziale Frage before World War I – Wieser and Böhm‐Bawerk

Abstract

PurposeThe paper aims to provide an overview of the Austrian School's approaches to the social question before World War I.Design/methodology/approachThe paper takes the form of a comparative study.FindingsIn his contributions Friedrich von Wieser supported co‐operative associations as an organizational form of big enterprise to be used as instruments to ameliorate the social condition of workers; and who dealt with issues such as private ownership of the means of production and economic inequality, impact of collective bargaining on wage formation, and public economy, where he discussed the contribution of public sector production to social value. Further reports on Böhm‐Bawerk's essay on disadvantageous consequences of free competition where he came to the conclusion that free competition in reality does not maximize national economic welfare, without, however, drawing concrete policy consequences from his findings. As Austria's finance minister he introduced a modestly progressive income tax early in the twentieth century. Later, in his essay “Control or economic law” he took a more reserved position with respect to the possibilities of correcting ore modifying outcomes of the market process.Practical implicationsThe paper illustrates that redistribution can enhance economic welfare.Originality/valueCalls back to memory that opinions of the first generation of the Austrian School (Wieser, Böhm‐Bawerk) were different from Ludwig Mises' positions expressed in Die Gemeinwirtschaft that all measures of social policy are aimed at the destruction of the free market economy, which later came to be considered as the dominant position of the Austrian School towards the social question.