Handbook on the History of Economic Analysis Volume II

Handbook on the History of Economic Analysis Volume II

Schools of Thought in Economics

Edited by Gilbert Faccarello and Heinz D. Kurz

Volume II contains entries on the major schools of economic thought and analysis. These schools differ with regard to their 'vision' of the working of the economic system, the major forces and interactions that shape its path, and the policy recommendations proposed. At any moment of time, several such schools typically compete with one another, striving for dominance within the economic and political discourse. Each Handbook can be read individually and acts as a self-contained volume in its own right. It can be purchased separately or as part of a three-volume set.

Chapter 17: German and Austrian schools

Heinz D. Kurz

Subjects: economics and finance, history of economic thought


Whether there is a “German School” and an “Austrian School” of economics has been disputed not least because of the frequently heated debates amongst members of these alleged “schools”. The litmus test of whether there is a school, and which author belongs to it and which not, obviously cannot be decided in terms of any unité de doctrine unanimously shared by all members of the school, because typically there is no such thing. A less rigid concept of school is needed. Here we use the term in the sense that the scholars we reckon to a school share a similar outlook on the economic world, subscribe to similar methods of the analysis, develop their argument around essentially the same corpus of ideas and elaborate their approach in a deliberate attempt to differentiate it from other approaches. Without too much of an effort, a German and an Austrian school can be identified along these lines and the latter can be said to have greatly benefited from certain developments of the former. Carl Menger (2007: 39) dedicated his Grundsätze der Volkswirthschaftslehre (1871), commonly seen as the foundational work of Austrian economics, “with respectful esteem” to Wilhelm Roscher, the leading German economics professor at the time and a towering figure of the older Historical School. Menger wrote: It was a special pleasure to me that the field here treated, comprising the most general principles of our science, is in no small degree so truly the product of recent development in German political economy, and that the reform of the most important principles of our science here attempted is therefore built upon a foundation laid by previous work that was produced almost entirely by the industry of German scholars. Let this work be regarded, therefore, as a friendly greeting from a collaborator in Austria, and as a faint echo of the scientific suggestions so abundantly lavished on us Austrians by Germany through the many outstanding scholars she has sent us and through her excellent publications. (Menger 1871, 2007: 49) Many readers of the book appear to have considered this dedication an expression of the notorious Austrian style of void courtesy. This may contribute to explaining why for a long time the view was widespread that Menger’s work was largely original.

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