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New organicism: a sketch of the development of organismic thought in economics
American Journal of Economics and Sociology, The, April, 1993 by Jacob J. Krabbe
I
Roscher's Organismic Approach
WILHELM ROSCHER maintained that the economic system evolves in accordance with "laws of development." A century before, Montesquieu (1748, 1979) had posited that laws of nature were manifested in society. The Physiocrats related this way of thinking not just to inanimate nature, as many philosophers of the Enlightenment did, but also to "living" nature (Thurlings, 1978, 143-44). Roscher did so too, significantly more than his colleagues in the school of David Ricardo. His approach, however, is also reminiscent of Herder's. The organismic ideas of his somewhat older contemporary Friedrich Carl von Savigny, founder of the Historical School of Law, should also be mentioned. Roscher characterized his reflection of an evolving society as a historico-physiological approach (Krabbe, 1987, 107-8, adapted).
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According to Roscher, in any culture a natural development characterized by a causal pattern manifests itself. This development, he naively posited, always has three stages: youth, maturity and old age. Roscher believed that this was analogous to the evolution of the individual man, as well as to mankind in general. He held that, in these three successive Stufen (stages) of a developing society, dominant parts are played by the production factors, nature, labor and capital, respectively.
Carl Menger was also conscious of the development of the institutional structure of the economy. Moreover, he acknowledged the rationale of an "organismic" approach of this phenomenon. Yet he criticized Roscher for mingling economics with economic history and, implicitely, for aprioristic thinking on the pattern of socio-economic development. Causality in economic development is also found in Menger's approach. However, he did not apply the idea of "laws of development." Although he adopted some principles of Roscher's thinking in organismic terms, he drastically transformed Roscher's approach, laying the foundation for the way of thought I call New Organicism.
The term New Organicism reminds us of Francis Bacon's Novum Organum, with its empiricism and "inductive" logic. Yet this should cause no problems as Menger referred to this work in an approving way (Menger, 1871, viii). Moreover, I realize that the evolution of organismic thought could be characterized in various ways. This essay sketches the development of organicism in economic thought. The picture is subject to supplementation. Therefore, this article is an invitation to further study.
II
Menger's Vision
CARL MENGER used the expression "physiology and anatomy of wants," a term which he took from Wilhelm Roscher. However, he made clear that he assigned a specific meaning to the expression. He believed that a philosophy of analogy between natural organisms and social complexes can, to a certain extent, be fruitful if components of the social structure serve the functioning and the development of the social whole in a significant way. He gave, as examples, the institutional determinants of prices of goods, interest, land rents and profits. Yet, he pointed out that such phenomena, as far as they are subject to a holistic approach, should not be studied by using a biological method, but by applying a specific social science method.
Menger rejected Roscher's idea that "laws of nature" would determine the process of socio-economic development. One of the restrictions Menger attached to the organic metaphor is that, outside the institutional sphere, the idea of an organismically-based "common will" does not make sense. (Menger, 1871, viii; 1983, 140-1, 146, 164, 169, 224.) (Krabbe, 1988, 58, adapted).
Methodological Dualism. Menger distinguished clearly between mechanismic and organismic systems. In contrast to the first, the latter is characterized as being a "higher whole" (Menger, 1883, 144n). This might be interpreted as meaning that only in organic systems has the "whole" also properties that are not derived from properties of elements of the system. In Menger's vision, organismic wholes are subject to an autonomous development, according to the purposes of the system as such. Menger's economic methodology is stamped by the distinction between a mechanismic and an organismic approach.
According to Menger, in economics the "mechanismic" or "atomistic" approach takes a central place. He assigned an "exact" nature to this theory, which is considered to be primarily a price theory. On the other hand, focusing on institutional problems, he distinguished an "organismic" approach, calling it "realistic economics" and assigning an "empirical" nature to it. This "organismic" approach stresses cultural evolution and the development of wants. It is supposed to be mainly descriptive. Menger put the word organismic between inverted commas in order to indicate its limited significance. Thus, to Menger, this approach to the world of economic phenomena in no way conflicts with an atomistic analysis in terms of exact economic theory. (Menger, 1871, 38-39; 1883, 78-81.) (Krabbe, 1988, 58, adapted).
