The Schmoller Renaissance

Among schools of economic thought none has a worse reputation, especially in the English-speaking world, than the German historical school. “The problem with the Historical School and many other of the early Institutionalists is that they wanted an economics with institutions but without theory” (Langlois 1986, 5).¹ This verdict—that the historical school placed little or no value on theory—is shared by new and even some old institutionalists.² It could be argued that this is a half-informed judgment due at least in part to the language barrier. Of Gustav Schmoller (1838–1917), the most important representative and heir of the younger historical school, only three articles, a booklet on mercantilism, and a condensed translation of the Grundriss have ever been translated into English.³

Neoclassical economics was and still is dominant in Germany. Thus, even in his home country, Schmoller, who was early dubbed a “socialist of the chair” (Oppenheim 1872), was considered a “dead dog” (Kempski 1964, 200), his Grundriss an “unassailable mountain” (Salin 1944, 171), a “torso” (Kloten 1989, 10).⁴ Until recently it was said that “Schmoller is forever condemned and castigated” (Recktenwald 1965, 342).⁵ Even today, his posthumous works have not been analyzed, and no critical edition of his major works exists. The most complete bibliography can only be found in a book on Schmoller by a Greek political scientist (Giouras 1994, 139–71).

In this light, the more astonishing fact is that in the last ten years a positive rediscovery of Schmoller has been happening.⁶ In 1988, two congresses on Schmoller were held to mark his 150th birthday—although the Verein für Socialpolitik, cofounded by Schmoller in 1872 and renamed Gesellschaft für Wirtschafts- und Sozialwissenschaften-VfS, and the journal, once Schmollers Jahrbuch für Gesetzgebung, Verwaltung, und Volkswirtschaft im Deutschen Reiche but renamed Zeitschrift für Wirtschafts- und Sozialwissenschaften, went conspicuously unmentioned. One congress was held partly in Trient, Italy (see Bock, Homann, and Schiera 1989), followed by a second part in Heidelberg, Germany, organized by Pierangelo Schiera and Friedrich H. Tenbruck (see Schiera and Tenbruck 1989). The other conference took place at Schmoller’s birthplace, Heilbronn, organized by Jürgen Backhaus (Erfurt University), perhaps the most important scholar and conference and publishing manager within the Schmoller revival.⁷

Only three of the papers presented at the Heilbronn conference have been published in their original versions. Ten papers from the conference were revised and are available in a book in German edited by Backhaus (Backhaus 1993c); the English version (Backhaus 1989a), although identical in title, contains different articles. A further nine articles from the Heilbronn conference were also revised and were published in 1989 in issues 9 through 11 of the International Journal of Social Economics, edited by the American scholar John C. O’Brien. Besides Nicholas Balabkins, an American who studied in Göttingen for some time after his flight from Latvia and who wrote Not by Theory Alone … The Economics of Gustav Schmoller and Its Legacy to America (1988a), O’Brien has shown the greatest interest in making Schmoller better known across the ocean. Still more Heilbronn articles have seen publication, as an additional eighteen were revised and published in the History of Economic Ideas. Six of the articles are slightly modified versions of the aforementioned articles published in the books edited by Backhaus.⁸ In all, no less than forty papers from the Heilbronn conference have seen publication.

In addition, six papers on Schmoller were published in the Journal of Institutional and Theoretical Economics in 1988 (no. 3). The results of three recent conferences on taxation and social security—two issues important to Schmoller, as the conference papers attest—are published in the volume Essays on Social Security and Taxation (Backhaus 1997a). Besides still other articles and books, the 1994 Studies in Economic Ethics and Philosophy (SEEP) conference on the theory of ethical economy in the historical school, organized by Peter Koslowski, should be mentioned.⁹ A less...