Some of the most popular German economist are as follows:- 1. Rodbertus, Johann Karl 2. Nebenius, Friedrich 3. List, Georg Friedrich 4. Hornick, Philipp W. Von 5. Marx, Heinrich Karl 6. Thunen, J. H. Von 7. Muller, Adam 8. Wagner, Adolph Heinrich G. 9. Bortkiewicz, Ladislaus Von.
1. Rodbertus, Johann Karl (1805 – 75):
Son of a German academician and with specialized study in law at the universities of Gottingen and Berlin, Rodbertus devoted himself to intellectual study and exercises with occasional ventures into politics.
He was elected to the Prussian National Assembly after the “1848 Revolution” but resigned his membership in protest against the discrimination among the various categories of voters, adopting a non-.partisan role.
His economic ideas could be traced to Smith, Saint Simon, Ricardo and other Classicists, but none could suppress his leaving behind an “originality” of his own. He was a socialist and an influential precursor of “state socialism” with a distinctive significance. Whereas English economists were, in general, “non-interventionists’, Continental economists, German in particular, imbibed a wider view and surmised that the Ricardian “Labour is the source of value” was first explained by Rodbertus, and was worked out by Marx as his theory of “surplus value” and also given “weight” in the “Communist Manifesto.” Rodbertus’ ‘state socialism’ might have been the seed of Marx’s ‘scientific socialism.’
Rodbertus singled out the income distribution among production factors and protested against the Classicists’ idea of “automatic functioning” of the economic system and called for everyone to obtain the product of his own labour.
He held that even if land was the root of production, value creation was the result of labour, and that such being the case, charge and appropriation of value by landlords and capitalists were unjust for which he blamed the society. He did, in fact, concern himself not as much with the goal as with the manner of its achievement, namely, equitable distribution.
In the context of trade cycles, he explained that crisis was interlinked with inappropriate income distribution, landlords and capitalists appropriating the lion’s share in the form of unearned income for no effective contribution to production and resulting in an inevitable disparity in the sphere of distribution and imbalance between supply and demand.
He was an advocate of the economic principle of socialism, but was sceptical about the socialists’ political programme, and felt, in the circumstance, that a strong “socialistically minded” monarch would be ideal for establishing a socialist state, ensuring need-based production and equitable distribution of income.
He was against poor distribution of income, private property and unearned income, and claimed labour-wise distribution of income, since labour, he asserted, was the only source of production of economic goods.
Rodbertus had considerable reserves about the Academic Socialists. His ‘state socialism’ was based on the socialistic principles of historical consequence. He called for state ownership of land and property and suggested supply of “labour value exchangeable coupons by the state, corresponding to productivity, quantity-and time-wise.
Our Economic Condition, 1842 ; Social Letters, 1856-61; Light upon the Social Question, 1875 ; and The Normal Labour Day, 1871, are his principal works.
2. Nebenius, Friedrich (1784 – 1857):
Nebenius was a distinguished German economist and was one who, prior to the rise of the German Historical School, “followed, but criticized or supplemented Smithian economics in important ways.” He discussed in his masterly work ‘Public Credit’ the “nature and function of capital, money and credit, together with foreign exchange and public debts; and his contributions appear noteworthy.”
Although he held Smith’s ideas on “productive labour,” his exposition on the “relative” and the “absolute” amounts of wages, profits and rent appeared to be “confusing,” and furthermore, he differed from Smith in his “belief in the expediency of more state intervention.” Nebenius was active in promoting the German Zollverein (customs union), favouring thereby a protective tariff. (History of Economic Thought: Haney).
3. List, Georg Friedrich (1789 – 1846):
List was born at Reutlinngen, Germany, and began his career as a government office clerk, becoming, later, Secretary to the Ministry of Local Affairs, and the Chief Examiner of Accounts. It was in 1817 that he became Professor of Economics at Tubingen, but had to resign in 1819 because of his agitation for “constitutional monarchy,” leading to his expulsion from the country.
He emigrated to America, working there as a journalist or otherwise and coming in contact with the then prominent politicians and economists. He also became a participant in the American Protectionist Movement. On his return to Germany, he took up the causes of railway development and of the Zollverein, but owing to ill-health and financial embarrassment, he fell victim to a premature and tragic end.
His experience as a teacher, as an administrator and as a political reformer on the line of Muller’s thought with a refined approach and style, owing to his attraction to romanticism and Hegelian philosophy, earned him distinction and popularity.
List was inclined to the concept of historism and was one of the forerunners of the German Historical School. He was opposed to the English classical economics because of its cosmopolitanism, dry materialism, individualism and self-interest, and was critical of the its free trade argument and of its approach to economic problems in general.
He explained in his major work “Das national System der Politischen Oekonomie'(The National System of Political Economy) the various stage-wise evolutionary process of a national economy from the primitive occupational activities to manufacturing and world trade, and suggested measures for national economic development.
He argued that ‘deductive economics’ ignored the community’s activity carried on “through its positive institutions as an organized political body or state” and the “social environment with which it compasses every man and woman within it from the cradle to the grave.”
Furthermore, he considered the Ricardians’ assumptions of relative advantages of occupations, equalization of wages and profit through competition, determination of price by cost etc. as erroneous in as much as they ignored the “growing complexity of the economic universe.”
List held that in view of the stage-to-stage development, society ought to take a long-term view of the development process, for example, productive potentiality should be given more importance than the present production in the context of prospective stage-wise development.
He was critical of Smith’s free-trade policy which, he argued, was based upon England’s ‘far better’ position than other countries, and called for protection from the ‘infant industry’ point of view to enable other countries to explore their productive potentialities competently enough to pursue a free trade policy.
As against Smith’s stress upon exchange value, he gave preference to the productive factors underlying such value, since national well-being depended not upon accumulation of wealth in terms of exchange value but upon the development of productive factors of the entire national life.
He believed in the distinction between individual and national wealth and highlighted manufacturing, agriculture and world trade with appropriate controlling measures adapted to stand against competitive forces, and preferred a world of strong and equally competitive nations under the assurance of a universal association or federation of all nations.
His principal work is:
‘National System of Political Economy’.
4. Hornick, Philipp W. Von (1638 – 1712):
German by birth and a lawyer at Vienna, and also, later, in the service of the Cardinal of Passion, Hornick was a staunch advocate of Mercantilism favouring export of surplus goods, possession of gold and silver, and some other essential and indispensable goods, and opposing imports in general, luxuries and fashionable goods in particular, for the cause of national self-sufficiency.
He argued that the “might and eminence of a country consist in its surplus of gold and silver, and all other things necessary or convenient for its subsistence derived, as far as possible, from its own resources without dependence upon other countries …,” for which he prescribed a set of ‘rules’ calling for assessment of natural resources, utilization thereof after necessary processing, encouraging people by “all possible means” to take to “remunerative professions” and in all kinds of “inventions and trades,” exporting of ‘surplus goods,’ restraining imports of non-essential goods (which might be made available internally) and strengthening national supremacy and self-sufficiency— both politically and economically.
He was convinced of his ‘rules’ which, he said, were ‘fundamental,’ and stated that they were not the “inventions of a speculative mind,” and that they followed from the “nature of things,” reasons confirming them, and that in every place where “riches flourish all or part of them” could be applied.
His ‘rules’ included in particular that the ‘inhabitants’ of a country should make every “effort to get along with their domestic products, to confine their luxury to those goods alone and to do without foreign products as far as possible,” and that “… except for important considerations, no importation should be allowed under any circumstances, of commodities of which there is a sufficient supply of suitable quality at home, and further that this “holds good, even if the domestic commodities are of poor quality, or even higher priced.”
Hornick was too conservative to allow any compromise, for example, his curt reply to the question of dress with particular reference to ‘Dame Fashion’ suggesting that “one must dress like other nations” was:
It would be a good thing if we sent Dame Fashion to the Devil, her father. There are incomparably more nations in the world that keep to one kind of clothing, than vary it. Why should we, then, imitate a few and not the many? Or if we cannot do without that foolish variety, we should be free, anyway, to be as foolish as the French…
‘Oesterreih Uber Alles, Wann Es Nur Will’ (Austria above All, if She Will) is his principal book.
5. Marx, Heinrich Karl (1818 – 83):
A man in a million, Karl Marx had undoubtedly influenced the political, economic, social and cultural thought all over the world. Born in a prosperous Jewish family in Germany, converted to Christianity, and son of a successful lawyer, Marx, after completing his studies at Bonn and Berlin and obtaining a Doctorate in Philosophy from the University of Jena, took to journalism and active politics, but had to flee Germany for France for his radical and revolutionary views and publications.
A ‘Young Hegelian’, he gave Hegel’s ‘idealistic’ dialectics a ‘materialistic’ interpretation, calling it a ‘history of class struggle,’ and inspiring a spirit of revolution, which again made him flee France for Brussels (1845). His inherent interest in political economy and deep acquaintance with Engels who had a thorough study of English political economy, influenced his critique of Hegelian philosophy of ‘dialectics’ as a rule of life.
Marx returned to Germany in 1848, but his non-ceasing involvement in revolutionary politics caused him this time a permanent exile to England where he passed the remaining part of his life, making use of the British Museum, and enriching the science of economics with his unique contributions.
Marx interpreted Hegel’s dialectics of idealism, perfection of mental consciousness through the process of “thesis, antithesis and synthesis,” in terms of materialism meaning realities of life, past and their reactions to the present. He had no faith in the earlier thinkers’ Utopian concept of ‘idealism’, and held that man had always been a victim of his environment and the ‘realities of life.’
He discovered this through a system of analysis resulting from a “scientific and procedural” study of history, which came to be known as “historical materialism,” “materialistic interpretation of history,” “dialectical materialism” or “dialectics” examined in the context of past and present “causal” framework.
Marx was not a follower of the Classicists’ deduction and abstraction through “rationalistic speculation,” explaining “how production goes on within the given framework,” presuming the conditions of “bourgeois production as eternal,” but without explaining “how those conditions are themselves produced,” or, in other words, the “historical movement” causing their emergence.
He was a master of historicism, insisting on induction and comparison through observation of historical process. History, to him, was not simply a story of evolution following a “sociological discipline” but a product of, and determined by, economic factors, and was in fact a “record of class struggle, one coming and the other going, on a continuous process, and it was this “materialistic conception” of history and class struggle between the “haves” and the “have-not’s” that constituted the Marxian sociological system and became international and cosmopolitan in scope and application.
As regards value determination, Marx took over Ricardo’s labour theory of value, but whereas Ricardo saw it in the “quantity of labour,” he saw it more exactly in the “socially necessary quantity of labour” meaning the labour time necessary to produce social use value with given normal conditions of social production and the social average degree of skill and intensity of labour.
He did, in fact, bring the “theory of value” to the limelight, coining as the “theory of surplus value” since the larger slice of the produced value of a commodity (equivalent to the labour used for its production) after payment of a small part to labour by way of wages was appropriated by the capitalists to create an “industrial reserve army,” with repercussion in the society in the form of miseries of poverty to many and concentration of wealth in the hands of a few, creating an atmosphere of “conflicts” and precipitating a struggle for dominance of the former over the latter.
If, according to the Classicists, the “cause of profit is that labour produces more than is required for support,” then Marx’s doctrine of surplus value (value created by labour in excess of his means of subsistence and appropriated by the capitalists in the form of profit) was a logical development of the classical doctrine of value and an exposure of ‘exploitation.’
Income inequality, an inevitable feature of capitalism (which was a product of exhausted feudalism), resulting from mal-distribution and reflected in consumption deficiency and market limitation, would lead to a tendency to save since further investment (adding to the means of consumption goods production) would be without corresponding increase in consumption, and the capitalist section of the society would, in the circumstance, be looking for new markets and new opportunities abroad, giving rise to supremacy resulting in imperialism and, ultimately, wars.
Marx considered ‘conventional socialism’ as ‘conceptual and philosophical,’ and denounced religion as the “anguished creature’s sigh, the soul of a heartless world, just as it is the spirit and mind of mindless conditions,” and the “opium of the people” keeping them immobile and inactive. He differed with the then socialists’ solution of the problem between the ‘haves’ and the ‘have-not’s through mutual understanding and co-operation as unconvincing and a ‘patch-work’ with no desirable result.
An important figure in the world of socio-cum-economic ideas, Marx was the founder of ‘scientific socialism’ and the ‘socialist movement’ in action, and the Communist Manifesto (1848), a joint product in collaboration with Engels and a unique piece of literature, summarized the entire process of the ‘history of class struggle.’
His idea of uniting and organizing the working class and intensifying the ‘class struggle’ to do away with the capitalist set-up was radical and his method was neither pacifying nor evolutionary but revolutionary, not necessarily but if inevitable, by use of force in bringing about a state of affairs free from capitalist domination, the force, if necessary and used, being the ‘birth pangs of society.’
Class struggle in Marxian literature was the inevitable resultant of antagonism between the workers (have-not’s) and the capitalists (haves) and became a distinct contribution to the success of Marxism and an unforgettable formula to all the working class whether or not they understand the theory at all.
His concept of ‘materialism’, even if vulgarized by some critics, was not simply a ‘mere question of belly,’ but did include the concept of idealism, pinpointing hopes of the working men for a fruitful end through revolution, as a conscious effort.
Summarily speaking, Marx based his “dialectical materialism” on Hegel’s “abstruse philosophy” of “dialectics,” making it account for a process of social evolution based on man’s concern with material things. His economic theory was a weapon to attack capitalism, and although he took over Ricardian labour theory of value, he stressed upon the condition that labour must be “socially necessary,” or, in other words, its product must be of social use.
His “surplus value”, the surplus over what the employer pays to his employee for his subsistence (‘Iron Law of Wages’) was a unique contribution. He called “capital goods” a necessary part of any social system,— “stored-up labour”, resulting from accumulated surplus value — appropriated and owned by the employer.
His view on economic crises, although preceded by Rodbertus, was that as a result of capitalists’ tendency to overproduction, not absorbable by the market owing to labour not being paid full value of its product, surplus goods accumulate in the hands of the capitalists, causing unemployment and miseries to the workers. His theory of depression was admittedly one of the first theories to emphasize an obvious defect in the capitalist system of operation.
Marx’s scientific approach to deal with the whole economic system paved the way for a macroeconomic analysis by others, say, Keynes, but with a basic difference. Whereas, for example, Marx considered his analysis as “organistic” since it concerned the organism as a whole, Keynes’s analysis was in terms of a “mechanistic equilibrium.” Keynes wanted to apologize and preserve while Marx wanted to criticize and destroy to build anew.
Introduction to a Critique of Hegelian Philosophy of Rights, 1843; The Poverty of Philosophy — A Criticism of Proudhon, 1847; The Communist Manifesto, 1848 (jointly with Engels); Discourse Upon the Question of Free Exchange, 1849; A Contribution to the Critique of Political Economy, 1859; and Das Kapital, Vol. I, 1867, Vols. II & III published in 1885 and 1894 by Engels after Marx’s death.
6. Thunen, J. H. Von (1783 – 1850):
Thunen was an eminent German economist and a pioneer in the use of “marginal analysis” technique in every aspect of economics. It was Marshall who wrote that he derived the substance of his thought not so much from Cournot as from Thunen, and furthermore J. B. Clark said that only Thunen and none else could claim distinction of discovering that value and valuation were based upon productivity and that the ‘marginal valuation’ principle was applicable to labour and capital.
Born in Ollenberg and the son of a landowning Prussian, Thunen, after his education at Gottingen, bought an estate in Mecklenburg and spent his life as a “scientific farmer” developing economic theories applicable to agriculture in particular.
He evolved the principles governing the observed facts by a logical-analytical method, and although his setting was ‘artificial’, the facts and figures analysed were real enough since they were drawn from the practical management of his own estate.
He furnished proof of the law of diminishing returns, extended his speculation to ‘location theory’, and consistently applied the marginal principle, and even indicated the basic problem of ‘ imputation theory’ concerning the distribution of the sale proceeds of finished goods among the factors of production.
Thunen was a follower of English classicism and was regarded as ‘German Ricardo’ but his theory of rent, assuming for the most part equal productivity, showed that, at a given price for grain, the cost of transportation would make production unprofitable beyond a certain distance from the place of demand.
He held that after deduction of interest on capital expended on farm land and other costs of production and transportation, the remainder of the earnings was rent, and so, the price of grain was an important element in rent which must cover the costs of production wherever the land might be situated, and since the price paid for grain to the nearest and the farthest producers would be the same, the surplus going to the nearest producer was rent.
He extended his analysis to cover not only the disadvantages of distance but of fertility as well, and concluded that rent arose from the advantages which a piece of land possessed over the worst farm. His interpretation of value in terms of marginal qualities was, accordingly, apparent in his discussion of interest and wages as well as rent.
His reasoning was “abstract and deductive”, full of ‘mathematical formulae and suggestive techniques” with emphasis on the “supply-demand” influence on value determination.
As regards wages, he held that “In reality … wages of labour … regulated by the competition of the labourers, for … as experience teaches, the propagation of the workers is in the end checked only by the deficiency of the means of subsistence.” (The History of Economics: W. Stark). Starting with the basic definition of capital as “stored-up” value, he viewed, in conformity with his concept of diminishing productivity, that interest rate would be similarly determined by the productivity of the marginal unit of capital.
He also held that his “location theory”— although primarily agricultural covering the location of various crops, types of techniques to be used, the scale and distance from the market — would not be different from the cases of industrial location in relation to market and its character. His line of investigation showing the important aspects of economic life had considerable bearing upon trade, domestic as well as overseas.
Thunen’s method of approach had little difference with that of the Austrian School. His marginal approach as regards determination of rent, wages, interest and profit and his indication to ‘imputation’ theory concerning income distribution were usefully significant.
His principal work is:
Der lsolierte Statt (The Isolated State), 1926.
7. Muller, Adam (1779 – 1829):
Adam Muller pioneered the German Romanticist School of Economic Thought and was one of the first Continental critics of the ‘inflexible’ doctrines of the English Classical School headed by Adam Smith. He was opposed to the individualistic and free trade doctrines, and advocated, instead, a ‘national economic order’ allowing protection to home industries by imposing restrictive measures on foreign trade, whenever and wherever considered necessary, for stimulating national feeling.
He was a tutor to a German prince, became an Administrative Officer and then a Councilor in the Austrian State Chancellery, which ‘official position’ helped him enforce his views with an ‘air of practicality.’ He stressed upon the ‘organic character’ of the State as “the totality of human affairs, their union into a larger whole,” and said that the “State is not only the union of many families living side by side, but also of many families following one another; this union should not only be infinite, great and intimate in space, but also immortal in time,” and it was this concept of the State “as a larger entity with power and spirit of its own,” which made him make a dynamic interpretation of economic life and prescribe ways and means accordingly.
Consumption, not abstinence, he believed, was the means to increase wealth, for which his proposals included the State’s active attention with necessary adjustment in the areas of value consideration, production, conservation and maintenance of wealth.
Muller’s disagreement with Smith’s doctrine as a collection of “universally valid laws” found expression in his comment that “… the political economy of Great Britain, however solid its basis maybe, and however applicable it may be to the nature of that island, cannot serve as a scheme and model of political economy in general, because of different time and place conditions, for example, Germany having been still half feudal whereas England turning to capitalism…” (Elemente der Staatskunst)
He was for use of paper money, protection to home industries, State’s active attention to economic matters, and last but not the least, promotion of feelings and welfare of the nation. It was with Muller and Sismondi (end of eighteenth and beginning of nineteenth centuries) that economic thought showed a tendency to be blended with history.
Muller left behind a number of works, for example:
The Elements of Politics, 1809-10; The Theory of State Finances, 1812; Essay of New Theory of Money, 1816; and On the Necessity of a Theological Foundation of all the Political Sciences, 1819.
8. Wagner, Adolph Heinrich G. (1835 – 1917):
Wagner had a brilliant academic career; he was Professor of Economics at the Berlin University, and a specialist in statistics and finance. He belonged to the Historical School of economics, defining and correlating the basic economic motives by a process of induction from history and statistics, and was, like Schmoller and others, a critic of the Classicists’ concept of “natural rights,” advocating, inter alia, that any “increase in land value ought to go to the State,” and insisted upon the need for “social reform.”
He called himself a ‘state socialist’ because the “system of free economic competition, the play of individuals’ free economic forces left to their own devices, serves the stronger, the more quick-witted and the more cunning and ethically unscrupulous elements, and also serves the triumph of the big firm and of private and associated capitalism to a considerably greater extent than is technically and economically necessary”, and he believed that only through “decisive intervention by the State … in the workings of the system … can the modern economy be put on a healthy foundation, theoretically, practically and ethically.”
He differed from Rodbertus’s “Academic Socialism,” a non-revolutionary pre-Marxian “Scientific Socialism,” and also from Schmoller’s “socially committed liberalism within Academic Socialism,” and stood for “State Socialism,” functioning through intervention for “more complete justice in the distribution of goods.”
He said, “Only a strong, historically founded state authority, upheld by national consciousness and standing above disputing political parties … can in practice adopt and implement the programme for state socialism … what seems to be theoretically tenable, ethically, economically, socially and politically desirable and practically realizable.”
He was critical of the “one-sided” psychology of economic liberalism and found fault with the lack of correspondence between the “economic man of theory” and the “concrete individual man.” (A History of Economic Doctrines: Gide and Rist; History of Economic Thought: Haney, and The Social Movement in the 19th century Germany: Karl Josef Rivinius).
Wagner’s principal works are:
The Foundations of Political Economy; and the Science of Finance.
9. Bortkiewicz, Ladislaus Von (1868 – 1931):
Although not a German by descent, Bortkiewicz was an eminent German statistician. He came from a Polish family, born and brought up in Germany, and educated at St. Petersburg University. He prolonged his stay in Germany which helped him obtain a teaching job at Strassburg University, and later professorship.
He used to keep himself ‘aloof in dignified reserve, enjoying the respect with which everyone looked upon him ….,’and was not an economist as such, but it was his ‘critical faculty’ which stood out in his work as an ‘economist.’
He professed the ‘Marshallian creed’ and was critical of Pareto’s ‘marginal utility school’ as being ‘ultra-liberal’. His important achievement was his ‘analysis of the theoretical framework of the Marxian system’, followed by a ‘master piece’ paper on the ‘theories of rent of Rodbertus and Marx.’
His monetary theory and policy covering gold standard, bank credit, circulation velocity, and, particularly, his work on ‘index numbers’, and, his ‘masterly review of Irving Fisher’s work’ ranked high among German authors, as being an ‘original contribution’.
A statistician of international repute, his use of ‘statistical method in clearing up the measures of inequality of incomes’ and his papers on a number of basic findings in the field of statistics, not irrelevant in economic analysis, and his papers on ‘mortality and insurance’ were ‘treasures of their kind.’
His works, mostly papers, include ‘Die Iterationen’ on probability, 1917.