Germany - Austria Economic Thought

General Characteristics, Germany and Austria Economic Thought

Some of the chief characteristics of German economics may be stated as follows. It has stood for much nationalism as opposed to individualism and cosmopolitanism. A careful analysis of the functions of the state is a service for which we must thank German thinkers.

To be associated with this fact, no doubt, is their progress in scientific criticism along th
e line of social reform. They have seen that history evidences that private property rights are neither so comprehensive nor so absolute as at first appears: the social side of property has been illuminated. Alfred Marshall well said it is true, "as German writers have well urged, that economics has a great and an increasing concern in motives connected with the collective ownership of property and the collective pursuit of important aims."1 In general, it is true that, in Germany, socio-political questions seem to have been the dominant ones, and most of the younger men were critical as to the shortcomings of capitalism.

The foregoing facts are associated with some tendency to subordinate economics to the political ends of the state, in a way which might lead to a defense of such tendencies as "Fascism."
A broad analysis of economic motives is characteristic of German economic thought. National, moral, and ethical factors have been more often allowed for than in English economics.
The German tendency to distinguish sharply between "price" and "value" represents an important difference for the lack of which English-speaking economists have suffered. This no doubt facilitates an understanding of the difference between subjective and objective values, and it suggests the difference between "value economics" and "price economics."

These various characteristics were accompanied by the prevalence of comparative and historical studies. Under the widespread influence of the Historical School, monographs dealing with such subjects abounded. The German economist tends to take the biological or organic point of view regarding the evolution of institutions, thus avoiding the particular form of absolutism so common in English and French economics. Some, however, have shown a certain narrowness in interpreting the view of the Classical economists, reading into the works of the latter a belief in unlimited competition, freedom of trade, etc. which is not to be found there.