Gustav von Schmoller

Gustav von Schmoller

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Gustav von Schmoller was the leader of the "younger" German
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

 historical school of economics
Historical school of economics
The Historical school of economics was an approach to academic economics and to public administration that emerged in 19th century in Germany, and held sway there until well into the 20th century....



Schmoller was born in Heilbronn
Heilbronn is a city in northern Baden-Württemberg, Germany. It is completely surrounded by Heilbronn County and with approximately 123.000 residents, it is the sixth-largest city in the state....

. His father was a Württemberg
Württemberg , formerly known as Wirtemberg or Wurtemberg, is an area and a former state in southwestern Germany, including parts of the regions Swabia and Franconia....

 civil servant. Young Schmoller studied Staatswissenschaften (a combination of economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

, law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...

, history
History is the discovery, collection, organization, and presentation of information about past events. History can also mean the period of time after writing was invented. Scholars who write about history are called historians...

 and civil administration) at the University of Tübingen (1857–61). In 1861, he obtained an appointment at the Württemberg Statistical Department. During his academic career he held appointments as a professor at the universities of Halle (1864–72), Strasbourg
University of Strasbourg
The University of Strasbourg in Strasbourg, Alsace, France, is the largest university in France, with about 43,000 students and over 4,000 researchers....

 (1872–82), and Berlin
Humboldt University of Berlin
The Humboldt University of Berlin is Berlin's oldest university, founded in 1810 as the University of Berlin by the liberal Prussian educational reformer and linguist Wilhelm von Humboldt, whose university model has strongly influenced other European and Western universities...

 (1882–1913). After 1899 he represented the University of Berlin in the Prussian House of Lords
Prussian House of Lords
The Prussian House of Lords was the first chamber of the Parliament of the Kingdom of Prussia from 1850-1918. The second chamber was the Prussian House of Representatives . The House of Lords was created on January 31, 1850 with the adoption of the Constitution of the Kingdom of Prussia...

. He was a leading Sozialpolitiker (more derisively, Kathedersozialist – "Socialist of the Chair"), and a founder and long-time chairman of the Verein für Socialpolitik
Verein für Socialpolitik
The Verein für Socialpolitik is an important society of economists in the German-speaking area. The Society, which covers all branches of economics was founded in 1873. Among its members were eminent economists like Gustav von Schmoller and Adolph Wagner.It annually awards the Gossen Prize to...

, the German Economic Association, which continues to exist. Schmoller's influence on academic policy, economic, social and fiscal reform, and economics as an academic discipline for the time between 1875 and 1910 can hardly be overrated. He was also an outspoken proponent of the assertion of German naval power and the expansion of German overseas empire.


As an outspoken leader of the "younger" historical school, Schmoller opposed what he saw as the axiomatic-deductive approach of classical economics
Classical economics
Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill....

 and, later, the Austrian school
Austrian School
The Austrian School of economics is a heterodox school of economic thought. It advocates methodological individualism in interpreting economic developments , the theory that money is non-neutral, the theory that the capital structure of economies consists of heterogeneous goods that have...

 – indeed, Schmoller coined the term to suggest provincialism in an unfavorable review of the 1883 book Investigations into the Method of the Social Sciences with Special Reference to Economics (Untersuchungen über die Methode der Socialwissenschaften und der politischen Oekonomie insbesondere) by Carl Menger
Carl Menger
Carl Menger was the founder of the Austrian School of economics, famous for contributing to the development of the theory of marginal utility, which contested the cost-of-production theories of value, developed by the classical economists such as Adam Smith and David Ricardo.- Biography :Menger...

, which attacked the methods of the historical school. This led to the controversy known as the Methodenstreit
Methodenstreit is a German term referring to an intellectual controversy or debate over epistemology, research methodology, or the way in which academic inquiry is framed or pursued...

, which today often appears as a waste of energies and one of the main reasons for the later demise of the whole historical school, although – as Joseph Schumpeter
Joseph Schumpeter
Joseph Alois Schumpeter was an Austrian-Hungarian-American economist and political scientist. He popularized the term "creative destruction" in economics.-Life:...

 once pointed out – this was really a quarrel within that school. Schmoller's primarily inductive
Inductive reasoning
Inductive reasoning, also known as induction or inductive logic, is a kind of reasoning that constructs or evaluates propositions that are abstractions of observations. It is commonly construed as a form of reasoning that makes generalizations based on individual instances...

 approach, requesting careful study, comparative in time and space, of economic performance and phenomena generally, his focus on the evolution of economic processes and institutions, and his insistence on the cultural specificity of economics and the centrality of values in shaping economic exchanges stand in stark contrast to some classical
Classical economics
Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill....

 and most neoclassical economists
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...

, so that he and his school fell out of the mainstream of economics by the 1930s, being replaced in Germany by the successor Freiburg school
Freiburg School
The Freiburg School is a school of economic thought founded in the 1930s at the University of Freiburg.It builds somewhat on the earlier Historical school of economics but stresses that only some forms of competition are good, while others may require oversight. This is considered a lawful and...


However, it is often overlooked that Schmoller's primary preoccupation in his lifetime was not with economic method but with economic and social policy to address the challenges posed by rapid industrialization and urbanization. That is, Schmoller was first and foremost a social reformer. As such, Schmoller's influence extended throughout Europe, to the Progressive movement in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

, and to social reformers in Meiji Japan. His most prominent non-German students and followers included William J. Ashley, W.E.B. Du Bois
W.E.B. Du Bois
William Edward Burghardt Du Bois was an American sociologist, historian, civil rights activist, Pan-Africanist, author, and editor. Born in Massachusetts, Du Bois attended Harvard, where he was the first African American to earn a doctorate...

, Richard T. Ely
Richard T. Ely
Richard Theodore Ely was an American economist, author, and leader of the Progressive movement who called for more government intervention in order to reform what they perceived as the injustices of capitalism, especially regarding factory conditions, compulsory education, child labor, and labor...

, Noburu Kanai, Albion W. Small, and E.R.A. Seligman.

Since the 1980s Schmoller's work has been reevaluated and found relevant to some branches of heterodox economics, especially development economics
Development economics
Development Economics is a branch of economics which deals with economic aspects of the development process in low-income countries. Its focus is not only on methods of promoting economic growth and structural change but also on improving the potential for the mass of the population, for example,...

, behavioral economics, evolutionary economics
Evolutionary economics
Evolutionary economics is part of mainstream economics as well as heterodox school of economic thought that is inspired by evolutionary biology...

 and neo-institutional economics
Neo-institutional economics
Neo-Institutionalist Economics is a school of developmental thinking that purports to explain the history, existence, and functions of a wide range of institutions according to the assumptions of the neo-liberal economic theory...

. He has long had an influence within the subfield of economic history
Economic history
Economic history is the study of economies or economic phenomena in the past. Analysis in economic history is undertaken using a combination of historical methods, statistical methods and by applying economic theory to historical situations and institutions...

 and the discipline of sociology
Sociology is the study of society. It is a social science—a term with which it is sometimes synonymous—which uses various methods of empirical investigation and critical analysis to develop a body of knowledge about human social activity...


Works by Schmoller

His works, the majority of which deal with economic history and policy, include:
  • Der französiche Handelsvertrag und seine Gegner (The French trade treaty and its opponents, 1862)
  • Zur geschichte der deutschen Kleingewerbe (1870)
  • Strassburg zur Zeit der Zunftkämpfe (1875)
  • Zur Litteraturgeschichte der Staats- und Sozialwissenschaften (1888)
  • Umrisse und Untersuchungen zur Verfassungs-, Verwaltungs-, und Wirtschaftsgeschichte (1898)
  • Grundriss der allgemeinen Volkswirthschaftslehre (1900–1904)
  • Ueber einige Grundfragen der Sozialpolitik (1904)

After 1881 Schmoller was editor of the Jahrbuch für Gesetzebung, Verwaltung, und Volkswirthschaft im deutschen Reich. From 1878 to 1903 he edited a series of monographs entitled Staats- und sozialwissenschaftliche Forschungen. He was also an editor and major contributor to Acta Borussica, an extensive collection of Prussian historical sources undertaken by the Berlin Academy of Science upon Schmoller's and Sybel
Heinrich von Sybel
Heinrich Karl Ludolf von Sybel , German historian, came from a Protestant family which had long been established at Soest, in Westphalia....

's instigation.

One of the reasons why Schmoller is not more widely known today is that most of his books and articles were not translated, as during his time Anglo-American economists generally read German, which was the dominant scholarly language of the time. German having fallen out of favor, the untranslated texts are now inaccessible to readers without knowledge of German. Two exceptions are:
  • The Mercantile System and Its Historical Significance, New York: Macmillan, 2nd ed. 1910. This is a chapter from Schmoller's much larger work Studien über die wirtschaftliche Politik Friedrichs des Grossen which was published in 1884. The chapter was translated by William J. Ashley and published in 1897 under the English title above.
  • "The Idea of Justice in Political Economy." Annals of the American Academy of Political and Social Science 4 (1894): 697–737.

His magnum opus
Magnum opus
Magnum opus , from the Latin meaning "great work", refers to the largest, and perhaps the best, greatest, most popular, or most renowned achievement of a writer, artist, or composer.-Related terms:Sometimes the term magnum opus is used to refer to simply "a great work" rather than "the...

  • Grundriss der allgemeinen Volkswirtschaftslehre, Leipzig: Duncker & Humblot, 1900–1904.

Important recent books on Schmoller in English

  • Backhaus, Jürgen G. (1994), ed. Gustav Schmoller and the Problems of Today. History of Economic Ideas, vol.s I/1993/3, II/1994/1.
  • Backhaus, Jürgen G. (1997), ed. Essays in Social Security and Taxation. Gustav von Schmoller and Adolph Wagner Reconsidered. Marburg: Metropolis.
  • Balabkins, Nicholas W. (1988). Not by theory alone...: The Economics of Gustav von Schmoller and Its Legacy to America. Berlin: Duncker u. Humblot.
  • Grimmer-Solem, Erik (2003). The Rise of Historical Economics and Social Reform in Germany, 1864–1894. Oxford: Oxford University Press.
  • Koslowski, Peter, ed. The Theory of Ethical Economy in the Historical School. Wilhelm Roscher, Lorenz v. Stein, Gustav Schmoller, Wilhelm Dilthey and Contemporary Thought. Berlin etc.: Springer.
  • Shionoya, Yuichi (2001), ed. The German Historical School: The Historical and Ethical Approach to Economics. London etc.: Routledge.

External links