Economics and Philosophy

Economics and Philosophy, Germany and Austria

Dating from Wilhelm Windel-band's History and Natural Science (1894), which dealt with the problem of knowledge and truth, and Rudolf Stammler's Economy and Law (1896), which applied some of Kant's ideas to jurisprudence, there developed a notable tendency to inquire into the philosophical presumptions and relations of economics, and especially the epistemology.
This discussion may be thought of as growing out of the battle over the Historical School, in the sense that that -school, in standing for relativity, and what is as opposed to what ought to be, raised the fundamental epistemological questions as to (1) the validity of economic laws, and (2) whether economic laws are to be positive or normative. But, while not unrelated to the old methodological controversy, since both involve the nature of economic laws, this tendency involves more fundamental problems. Perhaps the problems are: first, what is the general nature and scope of economics, and its relation to other sciences? Second, is economics a science, or what is the nature and validity of "economic laws" ? The first question involves broad philosophical questions, such as the relation between subject and object, and that between individual and society. The second centers in epistemology — the origin and significance of worth judgments — and leads to questions concerning normative or qualitative values and "goals" as opposed to quantitative values and "means."

The rich German literature in this general field is a contribution not to be forgotten.
Fritz Berolzheimer (1869-1920) in his System der Rechts und Wirtschaftsphilosophie (1904-1907) develops the idea of an interrelation between economics, ethics, and law, considered as elements in cultural development. In a somewhat similar vein, R. Stolzman in his Grundzilge einer Philosophie der Volkswirt-schaft (1920) seeks unity between subject and object, and between individual and society, thus attempting a synthesis between subjectivism and objectivism, as well as between individualism and socialism. Both Berolzheimer and Stolzman show the influence of Stammler.

K. Muhs argues that neither subjectivism nor objectivism is possible alone, and that economic truth is an understanding of the relation between subject and object. Spann, from a broad sociological standpoint, considers the social aggregate as an "articulated" whole, to which the "functions" of individual parts are subordinate.

Heinrich Rickert's The Bounds of Scientific Concepts (1902), distinguishing value from truth, carried on Windelband's work and influenced Max Weber. The work of Max Weber (1844-1920) On the Objectivity of Sociological and Socio-Political Knowledge (1904) did much to start the epistemological discussion. Weber stands for a "critical objectivity." He rejects the merely subjective, such as ethical and social ideals, as a basis for economic science — such concepts must be individual, and thus lack general validity. He recognizes, however, the existence both of "ideal types" arrived at by historical evolution, and also of "supra-individual ends" or values. These may have sufficiently general recognition to become objective enough to serve as scientific data. But he appears to hold that merely pragmatic (survival) values are really subjective. R. Wilbrandt shows Weber's influence, but he bases economics on activity required to avoid suffering, and, while he sees no possibility of general norms unless derived from the nature of man (which leads him toward anarchism), he says that the economist can arrive at rules for particular cases. Sombart and Voigt are others who accept much of Weber's thought. Nickel, while criticizing Weber's epistemology, would derive norms from the necessities of economic behavior.

Weber's thought has been attacked by such economists as G. Cohn, Schmoller, and Philippovich, who defend the idea of norms based either upon the reality of general culture, or the value of acts which are "useful" both to the individual and to society.

Suranyi-Unger has contributed judiciously to this discussion, as well as to that concerning the nature and place of economics.

This sketch may conclude with a brief reference to Alfred Amonn (b. 1883), who has worked out a system which indicates one possible outcome of so many divergent tendencies. Amonn is notable not only as a critic, but for a sustained attempt to harmonize different theories by distinguishing different orders of economic activity.2 (He has, accordingly, been accused by Liefmann of eclecticism.) He distinguishes (1) individual economics, which deals with exchange and value, both subjective and objective, thus retaining much of the Classical theory; (2) Political Economy, or the theory of social welfare, in which socio-legal arrangements predominate, and price supersedes value; (3) Applied Political Economy, dealing with methods of reform, etc. The second branch of his system of thought includes a differentiation between statics and dynamics.
Amonn's thought received wide recognition in Germany following World War I, since it makes place for different theories, while limiting the field for each. (For example, Spann liked his rejection of Classical theory in the field of national economy, but disliked his acceptance of it in the field of private economy. Diehl charged him with neglecting legal conditions.) A more fundamental difficulty lies in the mixing of qualitative values, (subjective ends) with quantitative values (objective means) which is apt to be connected with any attempt to segregate individual and social economics. Perhaps, too, Amonn's distinction between dynamics and statics is too much concerned with mere quantitative differences.