The 80/20 Rule:
Vilfredo Pareto, the influential Italian economist, while giving a talk in the early 1900s at an economics conference in Geneva, was repeatedly and noisily interrupted by his powerful colleague Gustav von Schmoller. Von Schmoller, who from his throne at the University of Berlin ruled the German academic world, apparently kept shouting in patronizing tone, “But are there laws in economics?”Despite his aristocratic upbringing Pareto had little respect for appearances, reportedly having written his monumental work Trattato di Sociologia Generale while owning a single pair of shoes and one suit. It was therefore easy for him to transform himself into a beggar the next day and approach von Schmoller on the street. “Please, sir, ” Pareto said, “can you tell me where I can find a restaurant where you can eat for nothing?” “My dear man,” replied van Schmoller, “there are no such restaurants, but there is a place around the corner where you can have a good meal very cheaply.” “Ah,” said Pareto, laughing triumphantly, “so there are laws in economics!”
This passage was from “Linked: How Everything Is Connected to Everything Else and What It Means for Business, Science, and Everyday Life.” An associate of mine recommended it to me, and so far I have been impressed with the homework the author put into connecting the dots between numerous, seemingly unrelated phenomenon (though, I should note I haven’t been sold on the statistical approach used in some of the cases).
Nevertheless, I thought the above passage was interesting, seeing as the lay audience is now introduced to monsieur Schmoller.
I was first formally introduced to von Schmoller through an Austrian Economics Newsletter interview with Murray Rothbard:
AEN: What were your thoughts on Mises’s review of MES when it appeared in the New Individualist Review?
MNR: I liked it, but he didn’t say much about the book. I would have preferred him to go into more depth.
AEN: Was he bothered by some of your corrections and of his theories?
MNR: I don’t know because he never said. Mises and I had only two friendly arguments. One was on monopoly theory where he wound up calling me a Schmollerite. Although nobody else in the seminar realized it, that was the ultimate insult for an Austrian. The other argument was on his utilitarian refutation of government intervention. I argued that government officials can maximize their own well-being through economic interventionism, if not those of the public. He in turn argued that those kind of politicians wouldn’t survive popular vote, thus changing the terms of debate.
While I can’t say I truly have a real archnemesis (although John Sabotta probably thinks so), I do have a token one listed on the Blogroll, for mere entertainment purposes: Mathias Bolton, a graduate student at Rutgers studying labor economics (yea, he’s a socialist).
Must one own a throne in order to be a legit hell raiser?