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Essays on Gustav Schmoller - economist

American Journal of Economics and Sociology, The, July, 1995 by Charles H. Powers

The "Essays on Gustav Schmoller" is a collection of papers constituting two special issues released under a single cover by the new international journal, History of Economic Ideas (V1, 3 and V2, 1 - Fall 1993 and Spring 1994, published in Italy under the general editorship of Professor Riccardo Faucci of the University of Pisa). "Essays on Gustav Schmoller" is a work of the most extraordinary kind and is well worth reading. It consists of a range of essays written by Schmoller experts from eight different countries. The collection, edited by Professor Jurgen Backhaus of the University of Limburg in Maastricht. The Netherlands, does a superb job of introducing Schmoller (1838-1917) to a contemporary audience and exploring the continued relevance of his ideas.

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Gustav Schmoller was the recognized leader of the German school of historical economics at the turn of the century, but few economists in the English speaking world still read his work. His writings, mostly untranslated and encyclopedic in detail, describe the German economy of his time. Since Schmoller was almost relegated to the dust-bin of economic history after losing influence to Carl Menger and others who advocated the use of comparatively simple deductive models based on a few mathematically conveyed principles, we might reasonably ask, why read about Schmoller in the 1990s?

There are two major reasons to read the Backhaus collection. The most important is that Schmoller offers clues for constructing a more informative economic science. A secondary reason is that doing so gives important insights about the development of economics as a discipline. Moreover, this particular volume is an outgrowth of the first (1988) Heilbronn Symposium on Economics and the Social Sciences - part of a noteworthy scholarly development now taking shape in Europe. There is the useful thought that economists might take less for granted and approach their inquiries differently if they knew more about the history of the discipline.

This annual conference (conceived a decade ago by Jurgen Backhaus) is aimed at making contributions of the rich German language economics tradition accessible to non-German speakers, and is dedicated to exploring the continued relevance of works produced in that tradition. The Heilbronn Symposium is in itself noteworthy, and is doing something tangible to revitalize a discipline of economics which has become moribund by overly simplistic models.

Does Schmoller still have something to offer? Yes! The mathematical principles and parsimonious models of mainstream economics are not without merit. But they fail to tell us enough about the development of economic institutions in all their variety, or about the ways in which those institutions combine with a variety of other social forces to affect the economy. In contrast, Schmoller recognized that economic analysis would have to devote serious attention to the social and institutional contexts in which economic activity occurs, in order to be truly revealing and policy relevant.

Any study of the economy which pays serious attention to social and institutional factors will pose very difficult conceptual challenges which Schmoller can help its authors meet. Although space constraints prevent a detailed review of all that contemporary economists can gain from reading these essays about Schmoller, the relevant subject areas are easy to identify. Schmoller stresses government action and his work is suggestive about the ways in which social values and social and economic institutions, in part channeled by the state, also shape an economy. Schmoller offers us many clues about what a more informative (and more interdisciplinary) approach to the study of the economy might look like.

The collection also contains a good deal about the history of economics as a discipline. Schmoller started one of the first organizations devoted to serious public policy analysis, Verein fur Socialpolitik, and he was an early advocate of many of the programs which would eventually become the bulwark of welfare capitalism. These include the income tax, unemployment compensation, and job training and re-training programs. Schmoller also had far reaching influence on economic and sociological theory through people like Thorstein Veblen, and Bruno Hildebrand and the Jesuit priest, Heinrich Pesch, who articulated the solidarist view that economic classes need to work together to promote general economic well-being. He also influenced Max Weber and Werner Sombart, who examined the historical transformation of values and their impact on economic development. This collection helps capture a disciplinary history too often ignored by or unknown to economists; a disciplinary history which suggests that the study of economy must be informed by a rather broad social scientific analysis.

Charles H. Powers, PhD. is associate professor and chairman of the department of anthropology and sociology, Santa Clara University, Santa Clara, CA 95053

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Essays on Gustav Schmoller - economist

American Journal of Economics and Sociology, The, July, 1995 by Charles H. Powers

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