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LONG POST - Response to Rosser's query about Streissler's
theses.
If memory serves, Streissler offered 2 hypotheses for why both the
German and the Austrian writers tended to ignore or downplay the
importance of the "proto-neoclassical" writings of the earlier German
economists.
1. A corpus consisting solely of textbooks is both tedious to review
and difficult to investigate systematically. Because the textbook writers
did not follow standard ciation procedures, it would also be virtually
impossible without surveying the entire field to figure out who said
what first, who influenced whom, etc. Streissler hypothesizes that these
characteristics made it easier to "forget" this literature. (By the way,
Keith Tribe's excellent 1988 book, GOVERNING ECONOMY: THE
REFORMATION OF GERMAN ECONOMIC DISCOURSE, 1750-
1840, Cambridge: CUP, tells the story of the literature up to the
emergence of the Older German Historical School.)
2. As important, from about the turn of the century onwards, neither
Austrians nor Germans had much reason to keep knowledge of the
tradition alive. By the 1880s German economics fell under the sway of
Schmoller and his friend Friedrich Althoff (the latter a Minister of
Education responsible for recommending who should receive university
appointments). Though elements of subjectivist ideas remain in the
work of the Younger Historical School, their emphasis became the
collection of statistical data. For their part, third generation Austrians
like Schumpeter and Mises had come to associate Germany with
Prussian statism and German economics with historicism and anti-
liberalism. In such an atmosphere, it may have been difficult for
Austrian economists to credit Germans with any good ideas. If this was
true, the antagonism was somewhat misplaced. Some of the writers in
the earlier tradition were themselves Austrians, others were from the
southern German states and were themselves distrustful of Prussian
ambitions.
Schumpeter comes in for specific criticism because he panned the
contribution of virtually all the German economists (except for Rau and
Hermann) in his 1912 book on doctrinal history. As George Stigler
reminds us, once a mistake gets into a textbook it is nearly impossible
to get it out. He also made the following statement in his obituary for
Menger "Without external stimulation, and certainly without external
help, he attacked the half-ruined ediface of economic theory... Menger
is nobody's pupil, and what he created stands..."
Now, it should be added that what Schumpeter found most original in
Menger was not his subjectivism (which Streissler shows was there in
the earlier tradition) but his insight that "From a purely economic
standpoint, the system is merely a system of dependent prices,... and
all specific economic regularities are deduced from the laws of price
formation." (Also from the obit notice.) This _is_ a different idea from
what was found in the earlier textbook literature. And it also explains
why Schumpeter thought that Walras' formalization of the notion of
general interdependence to be such a signal contribution. Schumpeter's
ultimate assessment was that Walras was the greatest economist. And
that's one reason why very few "Austrian economists" claim
Schumpeter as an Austrian.
Bruce Caldwell
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