Die andere Ökonomie (The Other Approach to Economics)

Citation

Backhaus, J. (1999), "Die andere Ökonomie (The Other Approach to Economics)", International Journal of Social Economics, Vol. 26 No. 12, pp. 1505-1516. https://doi.org/10.1108/ijse.1999.26.12.1505.4

This is volume II in a series now comprising more than half a dozen titles devoted to the history of German language‐based economics. In his editorial preface, the editor states the two purposes of the series; it aims to show that:

1. 1.

   (1) The reconstruction of contributions to German economics tries to bring about a revaluation of German theoretical development, which parallels and is equally important as English political economy.

2. 2.

   (2) The older German economists reveal very modern ways of posing questions. The answers to those latter questions have become part of history, but the questions have an air of freshness about them (from the preface, p. 5).

The purpose of this book is to reconstruct and revaluate the work of Gustav (von, 1908) Schmoller, who was born in Heilbronn on the Neckar River in 1838 and died while on vacation in Bad Harzburg in 1917. At his time, he was the foremost figure in German language economics. Schmoller had studied political economy at the University of Tübingen and finished these studies with a dissertation on the political views at the time of the Reformation, a prize‐winning study that put his name instantly on the map. The practical side of economics Schmoller had actually learned from his father, who was head of the Royal Württemberg Revenue Office in the city of Heilbronn. He thus learned to look at the economy from the point of view of the state.

The book has a straightforward structure, seven chapters are preceded by an introduction and followed by a bibliography of 35 pages. Chapter 1 gives a biographical introduction, discussing Schmoller the person, his method, and his approach to social reform which can be considered the centre‐piece of his work. Schmoller did take Marx and notably LaSalle seriously, and he strove to create institutions which would render class struggle a meaningless alternative. Chapter 2 provides the context of the work tracing the development of the “intellectual style” in German nineteenth century economics before Schmoller entered the scene. In Schmoller’s theory, next to social institutions, social norms play an important role, as does the development and further refinement of these norms in which economic activity is embedded. In this sense, Schmoller’s theory has an ethical aspect. Schmoller fits well into a broader tradition in German economics in which ethics and social norms play an important role. This is the topic of a long appendix to chapter 2. Chapter 3 then discusses Schmoller’s economics, with its emphasis on history and ethics.

Chapter 4, entitled “Athens and Berlin”, offers a very original (but also somewhat controversial) interpretation of Schmoller’s approach – here in contra‐position to the criticism by Heinrich von Treitschke – pointing to Aristotelian roots of Schmoller’s social economics. Chapter 5 is devoted to the project of a social insurance, covering the three (at the time) uninsurable risks (retirement and loss of health, loss of the major breadwinner and, the last to be covered, loss of work); these were to become those major reforms pushed through parliament by Prince Bismarck. Chapter 6 looks at the specific and very active role state organisations play in the market economy, as Schmoller foresaw for state enterprises the higher pioneering role in social reform. Finally, chapter 7 provides an assessment of the legacy of Schmoller’s work.

The book is part of an emerging literature reassessing the legacy of the so‐called historical school in (German language) economics. It is based on a wealth of primary and secondary sources, written in a carefully crafted language that contains many hints only discernible to the initiated. It is to be hoped that Professor Priddat should find a translator or co‐operator who would help putting at least part of his message into English.