Max Weber: precursor of economic sociology and heterodox economics?

American Journal of Economics and Sociology, The, Nov, 2004 by Helge Peukert

Book 5 of Part 1 analyzes the modern economy theoretically. Weber starts with production, the organizational forms in industry and agriculture, the institutions of transport, the organization of banks and credit, markets and forms of trade, distribution, consumption, and income. The literature in this long section comprises very different levels of analysis, most of which would not be labeled "theoretical" today. On the one hand, Weber cites descriptive-theoretical works such as Thunen's isolated state in the section on agriculture; on the other hand, it comprises historical works (e.g., Cannan's history and theory of production). In addition, he enumerates not only empirical and statistical work on modern industry, but also empirical-philosophical works such as Babbage's economy of machinery, and works on institutions and organizations, cartels and trusts, business cycles, and unemployment. In the chapter on money, he cites works on the history and statistics of prices, but also Knies, Marx, Menger, and Jevons on money. The short sixth book of Part 1 is on the analysis of economic and social ideals (with references to Stammler, Sombart, and Weber). So far, the text shows an impressive array of topics under the heading of theoretical or general economics. The brief theoretical nucleus is Austrian; the rest is historical, statistical, institutional. The quantitative importance between these two sections is opposite to today's curricula. Weber's students did not become lay mathematicians but got a concise overview of the practical functioning and structure of the economy. At least in the text (we have no information on his oral presentation), a combination of theory and institutions cannot be detected. If we compare the whole spectrum of Weber's and (for example) Wieser's or Menger's contributions on theoretical economics and references of the recommended literature, Weber is more in the camp of the historical school with his institutional, historical, and empirical focus.

In the second main part of this first text we are considering, Weber explains theoretical foundations and key notions, although he gives no references. He starts with the definition of economic action: systematic, goal-oriented behavior with the aim of provisioning for the future. He discusses next the preconditions of abstract economic theory. Systematic economic action is variable, depending on race, education, and so on. Accordingly, the importance of economic motives varies in history (1990, p. 29). Weber conveys a double message. On the one hand, systematic economic action depends on historical circumstances; on the other hand, his implicit message is also that there is only one real "systematic type of economic action." Implicitly, Weber assumes one transhistorical logic of economically rational action. He then continues, stating that abstract theory starts with the modern occidental type of man and his economy. It tries to understand the elementary phenomena of the "economically fully educated" man (1990, p. 29). Weber does not say here that abstract theory is only a heuristic advice. He underlines the idea of a single logic of economic action. This logic is most fully expressed in occidental societies. What Weber describes seems to be a real and not an ideal type of description. Weber is not historical, insofar as he does not assume different types of systematic economic action in different economic systems (cf. Sombart 1916).