Besides being credited with discovering the “subjective theory of value” and being the founder of the ‘Austrian School’ of economics, perhaps Carl Menger’s most profound contribution was his explanation for the emergence of money. Menger showed how the emergence of money was the result of human action but not the result of conscious human planning or design. Language too shares this trait. No proto-human or caveman ever “invented” language yet it “emerged” from human beings. How did Menger do this? He would use an evolutionary explanation leading to profound statements like:

“There exists a certain similarity between natural organisms and a series of structures of social life, both in respect to their function and their origin…Natural organisms almost without exception exhibit, when closely observed, a really admirable functionality of all parts with respect to the whole, a functionality which is not, however, the result of human calculation, but of a natural process. Similarly we can observe in numerous social institutions a strikingly apparent functionality with respect to the whole. But with closer consideration they still do not prove to be the result of an intention aimed at this purpose, i.e., the result of an agreement of members of society or of positive legislation. They, too, present themselves to us rather as “natural” products(in a certain sense), as unintended results of historical development. One needs, e.g., only to think of the phenomenon of money, an institution which to so great a measure serves the welfare of society, and yet in most nations, by far, is by no means the result of an agreement directed at its establishment as a social institution, or of positive legislation, but is the unintended product of historical development. One needs only to think of law, of language, of the origin of markets, the origin of communities and of states, etc.”

I will not be summarizing Menger’s thinking here, what I want to mention is that Menger’s evolutionary foundation would be expanded on by F.A. Hayek leading to his famous concept of “spontaneous order” and comprehensive evolutionary framework which he summarized with statements like:

“We understand now that all enduring structures above the level of the simplest atoms, and up to the brain and society, are the results of, and can be explained only in terms of, processes of selective evolution…”

Not surprisingly when Hayek reflected on his intellectual influences, although Mises’ influence was obviously profound, he would mention:

“I only met Mises really after I had taken my degree. But I now realize — I wouldn’t have known it at the time — the decisive influence was just reading Menger’s Principles. I probably derived more from not only the Principles but also the Investigations .”

Hayek found Menger’s Principles “such a fascinating book — so satisfying.”

So what does this have to do with Herbert Spencer? Let us first say a few things about the man. Herbert Spencer was “the single most famous European intellectual in the closing decades of the nineteenth century” and a personal acquaintance of Charles Darwin who in a correspondence to Spencer said to him “Every one with eyes to see and ears to hear (the number, I fear, are not many) ought to bow their knee to you, and I for one do” and in another occasion referred to Spencer as “twenty times my superior.” Mr. Libertarian himself, Murray N. Rothbard referred to Spencer’s “Social Statics” as “the greatest single work of libertarian political philosophy ever written”

Here are just a few great quotes from Spencer the libertarian and proto-Austrian:

“Officialism is habitually slow. When non-governmental agencies are dilatory, the public has its remedy: it ceases to employ them, and soon finds quicker ones. Under this discipline all private bodies are taught promptness. But for delays in State-departments there is no such easy cure.” “How invariably officialism becomes corrupt every one knows. Exposed to no such antiseptic as free competition — not dependent for existence, as private unendowed organizations are, upon the maintenance of a vigorous vitality; all law-made agencies fall into an inert, over-fed state, from which to disease is a short step. Salaries flow in irrespective of the activity with which duty is performed; continue after duty wholly ceases; becomes rich prizes for the idle well born; and prompt to perjury, to bribery, to simony.” “Consider first how immediately every private enterprise is dependent upon the need for it; and how impossible it is for it to continue if there be no need. Daily are new trades and new companies established. If they subserve some existing public want, they take root and grow. If they do not, they die of inanition. It needs no act of Parliament, to put them down. As with all natural organizations, if there is no function to them, no nutrient comes to them, and they dwindle away. Moreover, not only do the new agencies disappear if they are superfluous, but the old ones cease to be when they have done their work. Unlike law-made instrumentalities…these private instrumentalities dissolve when they become needless.” “Again, officialism is stupid. Under the natural course of things each citizen tends towards his fittest function. Those who are competent to the kind of work they undertake, succeed, and, in the average of cases, are advanced in proportion to their efficiency; while the incompetent, society soon finds out, ceases to employ, forces to try something easier, and eventually turns to use. But it is quite otherwise in State-organizations. Here, as everyone knows, birth, age, back-stairs intrigue, and sycophancy, determine the selections, rather than merit. The “fool of the family” readily finds a place in the Church, if “the family” have good connections. A youth, too ill-educated for any active profession, does very well for an officer in the Army. Gray hair or a title, is a far better guarantee of naval promotion than genius is. Nay, indeed, the man of capacity often finds that, in government offices, superiority is a hindrance — that his chiefs hate to be pestered with his proposed improvements, and are offended by his implied criticism. Not only, therefore, is legislative machinery complex, but it is made of inferior materials.”

Discussing society’s disastrous march towards Socialism:

“They listen with eager faith to all builders of political air-castles…and every additional tax-supported appliance for their welfare raises hopes of further ones. Indeed the more numerous public instrumentalities become, the more is there generated in citizens the notion that everything is to be done for them, and nothing by them. Each generation is made less familiar with the attainment of desired ends by individual actions or private combinations, and more familiar with the attainment of them by governmental agencies; until, eventually, governmental agencies come to be thought of as the only available agencies.”

Spencer was one of the first men to really believe and try to explain the workings of the entire world using an evolutionary process. Others had tried before, but it really wasn’t until the 1800s that enough progress in the natural sciences had been made for someone like Spencer to do a really good job at it. Intellectual historian Pat Shipman writes that:

“since well before the publication of The Origin of Species, the philosopher Herbert Spencer had been developing concepts of society and government that were closely congruent with Darwin’s evolutionary ideas as he eventually articulated them. Indeed, one phrase now almost wholly identified with evolutionary theory — ‘survival of the fittest’ — was Spencer’s, not Darwin’s…. There is no question but that Darwin was heavily influenced by Spencer”

Spencer’s superb understanding of all things science (biology/chemistry/physics/etc.) and the evolutionary processes that create the biological world shaped his mind to notice the same evolutionary processes acting on all natural phenomena including society and what he called the social organism. He clearly understood how the order which emerged out of the actions of free individuals in the private sector created a vastly more productive social order than the law-made one of government bureaucracies.

“Consider first how immediately every private enterprise is dependent upon the need for it; and how impossible it is for it to continue if there be no need. Daily are new trades and new companies established. If they subserve some existing public want, they take root and grow. If they do not, they die of inanition. It needs no act of Parliament, to put them down. As with all natural organizations, if there is no function to them, no nutrient comes to them, and they dwindle away. Moreover, not only do the new agencies disappear if they are superfluous, but the old ones cease to be when they have done their work. Unlike law-made instrumentalities…these private instrumentalities dissolve when they become needless.”

Spencer’s profound insights are on full display in the following page-and-a-half where he even foresees the development of the internet. This quote is the last two thirds of a small essay titled “Spontanenous Reform”[text between brackets mine] where Spencer writes about the great changes during the Industrial Revolution:

“What has produced the transformation which has since taken place? Not legislation, not stern repression, not coercion. The improvement has slowly arisen, along with other social improvements, from natural causes. The vis medicatrix naturce has been in operation. But this large fact and other large facts having like implications are ignored by our agitators[politicians]. They cannot be made to recognize the process of evolution resulting from men’s daily activities, though facts forced on them from morning till night show this in myriad fold ways. The houses they live in, their furniture, clothes, fuel, food — all are brought into existence by the spontaneous efforts of citizens supplying one another’s wants. The pastures and cornfields they travel through, cover areas originally moor and bog, which have been transformed by individual enterprise. The roads, the railways, the trains, the telegraphs, are products of combined exertions prompted by desires for profit and maintenance. The villages and towns they pass exhibit the accretions due to private actions. The districts devoted to one or other manufacture have been so devoted by men who were simply seeking incomes to live upon. The enormous distributing organization with its vast warehouses and retail shops lining the streets, carrying everywhere innumerable kinds of commodities, has arisen without the planning of any-one. Market towns, large and small, have without forethought become places of periodic exchanges; while exchanges of higher and larger kinds have established themselves in London, where, from hour to hour, you may feel the pulse of the world. So, too, by spontaneous co-operation has grown up that immense mercantile marine, sailing and steaming, which takes men everywhere and brings goods from all places.

And no less are we indebted to the united doings of private individuals for that network of submarine telegraphs by which there is now established some-thing like a universal consciousness. All these things are non-governmental. If we ask how arose the science which guided the development of them, we find its origin to have been non-governmental. If we ask whence came all the multitudinous implied inventions, the reply is that their origin, too, was non-governmental.[One should keep in mind that while England was overflowing with innovation and leading the way in the Industrial Revolution, the government had nothing to do with any sort of ‘Science’ education or the funding of scientific research like it does today] Of the Press, daily, weekly, monthly, we still have to say it is non-governmental. It is so with the great torrent of books continually issuing, as well as with the arts — music, painting, sculpture, in their various developments — and with the amusements, filling hours of relaxation. This vast social organization, the life of which we severally aid and which makes our lives possible by satisfying our wants, is just as much a naturally-developed product as is the language by which the wants are communicated. No State-authority, no king or council, made the one any more than the other. The ridiculous Carlylean theory of the Great Man and his achievements, absolutely ignores this genesis of social structures and functions which has been going on through the ages. The deeds of the ruler who modifies the actions of his generation, it confounds with the evolution of the great body-politic itself, of which those actions are but incidents. It is as though a child, seeing for the first time a tree from which a gardener is here cutting off a branch and there pruning away smaller parts, should regard the gardener, the only visible agent, as the creator of the whole structure: knowing nothing about the agency of sun and rain, air and soil. Undeveloped intelligences cannot recognize the results of slow, silent, invisible causes.

Education and culture as we now see them, do nothing to diminish this incapacity but tend rather to increase it. In so far as they are more than linguistic, the “Humanities,” to which the attention of the young is mainly given, are concerned with personalities. After the traditional doings of gods and heroes, of great leaders and their conquests, come the products of the poets, of the historians, of the philosophers. And when study of earlier ages is supplemented by study of later ages, we find the so-called history composed of kings’ biographies, the narratives of their conflicts, the squabbles and intrigues of their vassals and dependents. In the consciousness of one who has passed through the curriculum universally prevailing until recently, there is no place for natural causation. Instead, there exists only the thought of what, in a relative sense, is artificial causation — the causation by appointed agencies and through force directed by this or that individual will. Small changes wrought by officials are clearly conceived, but there is no conception of those vast changes which have been wrought through the daily process of things undirected by authority. And thus the notion that a society is a manufacture and not an evolution, vitiates political thinking at large; leading, as in the case which has served me for a text, to the belief that only by coercion can benefits be achieved. Is an evil shown? then it must be suppressed by law. Is a good thing suggested? then let it be compassed by an Act of Parliament.”

So we finally discuss the relationship between Spencer and Menger and thus the Austro-Libertarian revolution. I am guessing that it was at least in some way thanks to Spencer’s writings and tremendous influnce that Carl Menger stumbled upon his evolutionary explanation for the emergence of money/language/law/states.

Just looking at the titles of various sections of Menger’s “Investigations into the Method of the Social Sciences” is very revealing:

BOOK THREE The Organic Understanding of Social Phenomena . Chapter One: The Analogy Between Social Phenomena and Natural Organisms,: Its Limits, and the Methodological Points of View for Social Research Resulting Therefrom Appendix VIII: The “Organic” Origin of Law and the Exact Understanding Thereof

And when one looks at Menger’s writings he was obviously 100% grounded in an evolutionary framework.

Menger mentions Spencer on two footnotes:

1) “It is here, too, that the works by A. Comte, H. Spencer, Schaffle, and Lilienfeld, which are excellent in their way, have really contributed essentially to a deepening of the theoretical understanding of social phenomena. This is furthermore the case even if we do not consider the analogies between natural organisms and structures of social life placed in the foreground of presentation by some of these authors.” 2) “Herbert Spencer has undertaken an interesting venture in this regard in his Descriptive Sociology, or Groups of Sociological Facts (London, 1873). In the magnificently planned work which he is publishing together with a group of collaborators, Spencer intends to present in tabular form which facilitates comparison the social empirical forms of individual peoples (referred to political, religious, intellectual, economic life, etc.) at the various stages of their development. This is an undertaking which cannot, as Spencer thinks, offer the summation of all the empirical material necessary for theoretical research in the field of the social sciences. However, when completed it will prove to be of unquestioned value for this orientation of the striving for knowledge, especially for the different branches of the empiricalrealistic orientation of theoretical research in the field of the social sciences.”

I’m not aware of any more concrete intellectual links between the two but nonetheless I think Spencer should be recognized as a sort of proto-Austrian given his thoughts and influence. For more on Spencer/Menger/Hayek’s evolutionary perspective on how the world works and much more check out my book “Against Intellectual Error: An Introduction to the Market Process and Cultural Evolution”

Update on 7/20/2018 — Small intro to Spencer on visit to his grave: