1 German Historical School & Socialism ECON 205W Summer 2006 Prof. Cunningham.
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Transcript of 1 German Historical School & Socialism ECON 205W Summer 2006 Prof. Cunningham.
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Major Tenets Society is dynamic, evolving. (Aggressive) positive role for
government. Inductive/Historical approach. Advocates of (socially)
conservative reform.
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Friedrich List (1789-1846)
Background 1841, National System of Political Economy Developed the first of the so-called stage
theories of economic development. Five stages: Primitive Pastorial Agricultural Agricultural-Manufacturing Agricultural-Manufacturing-Commercial
Claimed the scheme came to him from his observations of the U.S.
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Wilhelm Roscher (1817-1894)
“Older Historical School” 5-Volume Textbook called Economic
Science Volume 1 ran 13 editions and was translated
into English as Principles of Political Economy His Principles is comparable in scope to Mill. Focus on Method
“The method of science is of greater significance by far than any single discovery, however amazing the latter may be.”
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Roscher (2) Focus on history and the laws of
economic development that a study of history can reveal.
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Gustav von Schmoller(1838-1917)
“Younger Historical School” Background Founder and leader of the
Association for Social Policy. The AEA was modeled after this.
Quite hostile toward economic theory—rejected theory altogether.
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Schmoller (2) Pacify the labor class through social policy
—role for government. Methodenstreit: engaged in a controvery
with Menger about methods. Menger favored theory Menger was one of the discoverers of the
subjective theory of value and the marginal principle.
Menger defended theory and analysis.
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Max Weber (1864-1920)
Germany’s greatest social scientist of recent times.
Approach: Entzauberung (“breaking of magic spells”)
Interpreted history as a process of rationalization.
Close to the Schmoller group. Contributed enormously to sociology. Used “ideal types” (RAs) in analysis. Leads to American Institutionalism via John Bates
Clark et al.
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Socialism before Marx Classical School under attack.
Softening view of Classical Writers German Historical School Socialists (French)
Socialism—national patterns England Socialism
• Godwinian, Ricardian, Christian French Socialism German (State) Socialism
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Clarification: Socialism vs. Communism Socialism
Transitory phase between capitalism and communism
Features• Dictatorship of the proletariat• Bourgeoisie under control of the proletariat• Payment according to work performed
Communism Classless society in which all live by working
and not by owning State is nonexistent Wage system is abolished
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Robert Owen (1771-1858)
Man is essentially good and “perfectible” but is corrupted by the evil institutions of society Society corrupts the individual.
Background and community involvement. A New View of Society, 1813. Report to the County of Lanark, 1821. Especially concerned with the welfare of
children in the industrial society.
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Owen (2) People are formed by their environment. Businesspeople are not enough
concerned with their employees. Foresaw that technology would make
poverty and scarcity unnecessary. Distrusted Classical pursuit of self-
interest. Recommendations…
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Ricardian Socialists Hold Classical theory of value as central
issue From the labor theory of value, they
derived theories of exploitation Proposed cooperative organizations,
trade unions, monetary reform Like Owen, rejected revolution and
government action
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Ricardian Socialists (2) Charles Hall (c1740-c1820) William Thompson (1775-1833) Thomas Hodgskin (1787-1869) John Gray (1799-1883) John Bray (1809-97)
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Christian Socialists Most British socialism was based on
rationalism. Hostility toward religion. Christian socialists tried to forge a link
between socialism and religion. Frederick Denison Maurice (1805-72) Charles Kingsley (1819-75) John Ludlow (1821-1911)
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French Socialists Auguste Blanqui (1805-81)
Sought:• Free Education• Take over (nationalize) large estates• Guaranteed right to work• Social equality• Progressive income tax
Louis Blanc (1811-82) First stated “From each according to his
ability, to each according to his need.”
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French Socialists (2) Henri de Saint-Simon (1760-1825)
More interested in social reform than equality or abolition of private property
Sought a theory of history Collectivization instead of class struggle Upheld private property Advocate of industrial development Thought forces of competition lead society to anarchy A “rational” centrally planned economy would remove
the causes of social conflict and eventually eliminate the need for the state.
Power should move to the productive classes (businesspeople, bankers, engineers, workers)
People should be paid according to their value to society
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French Socialists (3) Fourier (1772-1837) Opposite of Saint-Simon
Decentralization instead of central planning Movement back to land instead of industrialization Felt that the entire industrialization movement was a
mistake. The only work that is good work is work that gratifies
innate propensities Propensities or passions: for variety, for
adventure, for socializing Phalanx
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French Socialists (4) Pierre-Joseph Proudhon (1809-65)
Anarchist No use for authority beyond family and
local community Rejected representative democracy in
favor of authoritative socialism/communism
Disapproved of revolution by radical schemers or violent upheaval.
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Karl Marx (1818-1883)
“Scientific Socialism” His co-author and sponsor was
Friedrich Engels (1820-1895) Background 1848, Communist Manifesto 1867, Vol. I of Das Kapital Posthumously, Engle published vols.
II and III.
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Inferiority of Capitalism Capitalism morally and spiritually
deforms people. Capitalism is based upon
exploitation and alienation. Capitalist economies undergo
unavoidable business cycle.
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Economic Determinism Result of Marx’s historical materialism as
a theory of history. Capitalism will ultimately be replaced by
socialism. Provides a framework for interpreting
history. Provides a theory of social change or
evolution. Marx’s interpretation of history.
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End of History Rejection of religion. Thorough-going empiricism and
pragmatism. A social and political arrangement
that allows all an equal voice and equal claim in society. (Communal democracy?)
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Marx’s Vision Economy coordinated by a central
planning agency. All production of goods under social
control. Labor supplied by “new men”,
motivated by “spirit of social cooperation”, not self-interest.
Communism elevates humankind.
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Theories and Work Communist Manifesto (1848), by Marx and
Engels Appeal for organized political action. Recognition of the advances made by the
bourgeoisie revolution. Points to forces currently undermining
capitalism. Lists a number of intermediate measure to
revolutionize production. Marx’s message has not been heeded in free,
economically advanced countries without foreign intervention.
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Theories and Work (2) Das Kapital: A Critique of Political
Economy Vol I published by Marx in 1867 Vols. II and III edited and published by
Engel (1885, 1894) Fragments exist of a Vol. IV, published
later as Theories of Surplus Value. Closely aligns with Hegel.
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Theory and Work (3)HEGEL MARX1. History is an unfolding of the spirit, manifesting in the rise of nations and their struggles.
1. Rise of classes, class struggle.
2. Wars between nations were result of historical necessity.
2. War between classes an historical necessity.
3. Prussian monarchy would fulfill mankind’s quest for liberty & justice.
3. Proletariat would fulfill mankind’s quest for liberty & justice.
4. Liberty is a conscious and willing submission to necessity.
4. Same
5. Power = moralityWhat is = what ought to beReality = reason
5. Same
6. These conclusions follow from philosophically based theory, not empirics, therefore defy validation.
6. Same