Gustav von Schmoller and Adolph Wagner

191 Pages·2018·2.384 MB·English

by  Jürgen Backhaus, Günther Chaloupek, Hans A. Frambach

The European Heritage in Economics and the Social Sciences
Series Editors: J. G. Backhaus · G. Chaloupek · H.A. Frambach
Jürgen Backhaus
Günther Chaloupek
Hans A. Frambach Editors
Gustav von
Schmoller and
Adolph Wagner
Legacy and Lessons for
Civil Society and the State
The European Heritage in Economics
and the Social Sciences
Volume 21
Series editor
Jürgen Backhaus
Krupp Chair in Public Finance and Fiscal Sociology
University of Erfurt
Erfurt, Germany
Günther Chaloupek
Austrian Chamber of Labour
Wien, Austria
Hans A. Frambach
Department of Economics
University of Wuppertal
Wuppertal, Germany
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Jürgen Backhaus • Günther Chaloupek
Hans A. Frambach
Editors
Gustav von Schmoller
and Adolph Wagner
Legacy and Lessons for Civil Society
and the State
Editors
Jürgen Backhaus Günther Chaloupek (Retired)
Universität Erfurt Austrian Chamber of Labour
Staatswiss. Fakultät Vienna, Austria
Erfurt, Thüringen, Germany
Hans A. Frambach
Department of Economics
University of Wuppertal
Wuppertal, Germany
ISSN 1572-1744 ISSN 2197-5892 (electronic)
The European Heritage in Economics and the Social Sciences
ISBN 978-3-319-78992-7 ISBN 978-3-319-78993-4 (eBook)
https://doi.org/10.1007/978-3-319-78993-4
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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Ursula Backhaus, Günther Chaloupek, and Hans A. Frambach
Gustav Schmoller’s Program and Its Valuation Today and Tomorrow . . . 7
Karl-Heinz Schmidt
Gustav von Schmoller in the Netherlands 1870–1940.
A Forgotten Economist? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Robert W. J. Jansen
Schmoller Research in China and Its Potential . . . . . . . . . . . . . . . . . . . . . . 41
Gang Li
Gustav Schmoller and Adolph Wagner: The Idea
of Social Justice in Health Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Ursula Backhaus
Timely Lessons for the Post-9/11 World
from Schmoller and Wagner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Nicholas Wolfgang Balabkins
Wagner’s Law, Money and the Theory
of Financial Crisis: Adolph Wagner’s Early Viennese Publications . . . . . . 77
Günther Chaloupek
Similarities and Differences in Central Concepts
of Social Economy: Adolph Wagner’s State Socialism
and Heinrich Pesch’s Solidarism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Hans A. Frambach
Adolph Wagner Revisited: Is Redistribution of Income
and Wealth a Public Good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Andries Nentjes
v
vi Contents
Wagner’s Law, Government Size and Economic Growth:
An Empirical Test and Theoretical Explanations
for Italy 1861–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Francesco Forte and Cosimo Magazzino
Empirical Evidence for “Wagner’s Law of Increasing
Government Activity” for Austria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Reinhard Neck and Johannes Jaenicke
Meinecke’s Sonderweg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
F. L. van Holthoon
Introduction
Ursula Backhaus, Günther Chaloupek, and Hans A. Frambach
The contributions to this volume of The European Heritage in Economics and the
Social Sciences series are dedicated to Gustav Schmoller and Adolph Wagner, per-
haps the most eminent representatives of German economic thought in the second
half of the nineteenth century. There are important parallels in their lives and works.
Both came from Southern German states – Schmoller from Württemberg, Wagner
from Bavaria; both spent the major part of their academic career at the University of
Berlin, the academic centre of the Prussian dominated German Reich; as founders
of the Verein für Socialpolitik they were united in their efforts to promote the estab-
lishment of encompassing social policy schemes, what earned them the name of
Kathedersozialisten (“Socialists of the Chair”). In some points, Wagner’s concept of
state socialism went beyond what Schmoller had aimed at with his welfare state
model, but both economists held that in principle private ownership of the means of
production was essential for the performance of the economy and for raising
the standard of living of the working class.
Schmoller and Wagner were different from each other in their methodological
approach to economics as a social science. In Max Weber’s characterization,
Schmoller and his followers maintained “that the final goal of any science was to
bring order into its objects by a system of concepts which are derived from the
U. Backhaus (*)
The Institute of the Social Sciences and the State, Bonn, Germany
G. Chaloupek
Austrian Chamber of Labour (retired), Vienna, Austria
e-mail: [email protected]
H. A. Frambach
Department of Economics, University of Wuppertal,
Wuppertal, Germany
e-mail: [email protected]
© Springer International Publishing AG, part of Springer Nature 2018 1
J. Backhaus et al. (eds.), Gustav von Schmoller and Adolph Wagner,
The European Heritage in Economics and the Social Sciences 21,
https://doi.org/10.1007/978-3-319-78993-4_1
2 U. Backhaus et al.
observation of empirical regularities, hypotheses and verifications, and thereafter
gradually perfected towards a perfect and therefore deductive theory.” (Weber 1968,
p. 208) Hence, Schmoller laid great emphasis on empirical studies in the field of
economic and social history as a prerequisite for arriving at definite concepts and
models for the analysis of economic and social reality. In pursuit of this approach,
Schmoller and the Historical School became the dominant current of economic
thought in nineteenth century Germany, producing a wealth of detailed historical
studies on a great variety of subjects. Schmoller’s textbook Grundriß was an ambi-
tious attempt to draw a summary of the findings of historical research. Schmoller
also claimed objective validity for normative implications of the results of social
science, provided that the criteria of his methodology are fulfilled. Following this
concept of economic and social science, the “Schmoller program” (Backhaus
1993/94) extended far beyond the sphere of universities in its endeavour to influence
the political process by organizing support from its academic and non-academic
advocates for the promotion of social policy reforms.
If Adolph Wagner was in basic agreement with Schmoller with respect to the
possibility of deriving normative propositions from the results of social science
investigations, with respect to methodology he followed an orientation that was dif-
ferent from Schmoller’s. Therefore, in his writings he represents a current of eco-
nomic thinking in Germany in the second half of the nineteenth century that did not
follow the dominant trend of historicism. Like other nineteenth century economists,
e.g. Mangoldt or Dietzel, Wagner denied that theoretical propositions and explana-
tions could primarily be derived from detailed historical-empirical investigations.
“Wagner was a systematologist rather than a historical theorist”, whose primary
concern in his main field of research “was a theoretical analysis of the rules of
‘social’ finance and tax policy”. (Priddat 1997, p. 343).
Wagner shared with Schmoller the conviction about the significance of institu-
tions for the economic process, but for him the theoretical point of view was more
important than history. This can be seen from the “law of increasing state expendi-
ture” that still carries his name. As a hypothesis about a long term trend, Wagner
first derived it from theoretical rather than empirical considerations.
If Wagner still enjoys considerable reputation as one of the founders of public
finance, his important contributions to monetary theory have largely fallen into
oblivion – which is all the more regrettable as contributions from nineteenth century
Germany to this area of economic research are rather insignificant, if not infamous
(G.F. Knapp’s “state theory of money”). Much influenced by the writings of Thomas
Tooke, Wagner was a follower of the Banking School, contributing interesting argu-
ments to the debate about endogeneity of money. Even more importantly, his theory
of financial crisis, developed around 1860, is a remarkable anticipation of modern
crisis theories, though largely unnoticed by contemporary economists.
In the last decades, a certain revival of interest in the Historical School has
occurred, which arises from the uneasiness about the development of modern main-
stream economics. Especially after the financial crisis of 2008/09 there is an increas-
ing awareness among economists of the relevance of “historical and evolutionary
explanations of the workings of complex processes as economic meltdowns,
Introduction 3
economic policy making, the power of vested interests, the aims of political elites
and the formation of institutions and public opinion”. (Cardoso and Psalidopoulos
2016, p. 14) With many economists searching for a method of economic analysis
not restricted to abstract mathematical models, the writings of Schmoller and other
authors of the Historical School have gained a new topicality with their potential to
provide suggestions for a more comprehensive approach to economic reality.
In the same vein, Wagner’s emphasis on the role of the state as an integral part of
economic theory can contribute to correct the blindness of mainstream economics
towards institutions and power. Above all, “Wagner’s law” can still serve as a fruit-
ful hypothesis for empirical studies of state activities, as two contributions to this
volume convincingly demonstrate.
It has been part of the mission of the Heilbronn Symposia from their very begin-
ning to direct the attention of economists to these neglected currents of economic
thought. (Backhaus 1993, 1993/94, 1997) One hundred years after Schmoller’s and
Wagner’s death in 1917, the contributions to this book take the anniversary as occa-
sion to look into their approach; trace the influence of their ideas in Germany and in
other countries; and explore the relevance of their thought in a global economy.
In the second chapter, Karl-Heinz Schmidt highlights the interdisciplinary
approach by Gustav Schmoller. Schmidt comments on the “Schmoller program”
and Schmoller’s diverse activities at the university and in politics. The contribution
demonstrates that Schmoller’s career-curve which had steeply risen since the end of
the nineteenth century, declined rapidly after Schmoller’s death in 1917. It is a
rather recent phenomenon that a new interest in Schmoller and his program has
emerged, due to his interdisciplinary empirical approach, also under the aspect of
what is called “big data”.
In the third chapter, Robert Jansen investigates Schmoller’s influence during the
turbulent years of high capitalism which lasted from 1870 up to 1940 in the
Netherlands, when the country – like Germany – experienced class and labour con-
flicts. The essay examines the relevance of Schmoller’s views about labour relations
in Dutch parliamentary debates and economics.
The economist Gang Li (fourth chapter) sees value in the economic-d evelopmental
aspects of the work of Schmoller. By translating parts of the work of Gustav
Schmoller into the Chinese language, Li wants to make the tradition of German
economic and social thought available to the Chinese scholarly community. In this
chapter, Gang Li describes the current research on Schmoller in China, the obstacles
it is facing, and its potential for future development of the country.
Social justice is a major concern of both, Gustav Schmoller and Adolph Wagner.
The aim of the chapter “Gustav Schmoller and Adolph Wagner: The Idea of Social
Justice in Health Care”  by Ursula Backhaus is to show, how the idea of social jus-
tice relates to health care and its institutions at the time of early industrialization.
Schmoller designed and suggested market-based social institutions to address three
basic risks of life: health insurance, cooperative accident insurance, and provisions
in the case of the loss of the breadwinner. Wagner not only foresaw the growing
influence of the state in developed societies over time, but also formulated the con-
ditions under which the state should play a role in the provision and finance of, for
instance, health care.