Max Weber as an Economist and as a Sociologist: Towards a Fuller Understanding of Weber's View of Economics - Critical Essay

American Journal of Economics and Sociology, The, Oct, 1999 by Richard Swedberg

The two sections of his course that Weber discusses in detail are entitled "The Economy (Wirtschaft) and Its Elementary Phenomena" and "The National Economy (Volkswirtschaft) and Its Elementary Phenomena." The former deals exclusively with abstract-theoretical economics, and the latter with the kind of economic theory that is needed to analyze empirical phenomena. For anyone who thinks that Weber the Economist was a faithful member of the German Historical School, what he has to say in "The Economy and Its Elementary Phenomena" will come as a shock. The basic thrust of this section is that abstract economic theory is a necessary point of departure for the analysis; that one starts out with the idea of ,homo economicus; and that price is to be determined through calculations based on the marginal utility principle. In brief, when it came to theorical economics, Weber took exactly the opposite position of Gustav Schmoller and his followers.

Weber defines the notion of an economy as a constellation of economic actions (Wirtschaften); an economic action is described as a goal-oriented type of action, which has as its purpose to satisfy the needs of the actor through outer means. The subjective nature of economics is emphasized ("the point of view of human beings is decisive"), and Weber states that "economics is not a science of nature and its qualities, but of people and their needs" (Weber [1898] 1900, p. 32).

In any theoretical analysis, the economist has to make use of the idea of homo economicus, Weber says. But he also points out that "abstract theory takes its point of departure from the modern Western type of people and their economic actions" (Weber [1898] 1990, p. 29). To Weber, the notion of economic man is consequently the product of Western history. Homo economicus, he specifies, should not be confused with a real life person. Abstract economic theory, he states:

1. ignores, treats as if not present all those motives which have an influence on real men which are specifically non-economic, i.e., all those motives not arising from the satisfaction of material means;

2. imputes as actually present in men particular qualities which are either not present or only incompletely, namely

a) complete insight into given situation--perfect economic knowledge;

b) exclusive selection of the most appropriate means for a given end --absolute "economic rationality;"

c) exclusive devotion of one's own powers to the attainment of economic goods--tireless economic endeavour. It therefore argues on the basis of unrealistic men, analogous to a mathematical ideal.

In this way it postulates an unrealistic person, analogous to a mathematical model. (Weber [1898] 1990, p. 29-30)

Was Weber then a neoclassical economist (as we would say today)? Yes--but only when it came to one part of economics, namely theoretical economics. That his overall position differed from, say, that of Menger immediately becomes clear when we look at his second handout to the students, which is entitled "The National Economy (Volkswirtschaft) and Its Elementary Phenomena." The reader may also recall that abstract economic theory only took up a relatively small part of Weber's course in introductory economics.