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Is There Progress in Economics?

Knowledge, Truth and the History of Economic Thought

Edited by Stephan Boehm, Christian Gehrke, Heinz D. Kurz and Richard Sturn

This thought-provoking book discusses the concept of progress in economics and investigates whether any advance has been made in its different spheres of research. The authors look back at the history, successes and failures of their respective fields and thoroughly examine the notion of progress from an epistemological and methodological perspective.
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Chapter 12: The credit theory of Carl Knies

Knowledge, Truth and the History of Economic Thought

Hans-Peter Trautwein


Hans-Michael Trautwein* INTRODUCTION Because of his early treatise on the Ôhistorical methodÕ in political economy (1853), Carl Knies (1821Ð98) is nowadays ranked among the founding fathers of the (older) German historical school. His other opus magnum, a voluminous trilogy on money and credit (Geld und Credit, 1873Ð79), has received much less attention in the literature. The few references that one can find do not make the reading of the trilogy more attractive. One commentator stated that Knies, in his work on money and credit, did Ônot succeed in applying the historical method to the analysis of concrete economic problemsÕ (Schefold, 1987: 55).1 According to Schumpeter (1954: 809), that was not a serious failure, since KniesÕs Ômain performance was in the field of money and credit, where he made his mark as a theoristÕ. However, in the course of his History of Economic Analysis, Schumpeter keeps referring the reader to a later appraisal of that Ômain contributionÕ. After having raised high expectations, he finally deals very briefly with Knies, asserting that Geld und Credit Ôadded but little to the topics covered by its titleÕ (1954: 1081). Even more harshly, Wagner (1937: 55) accuses Knies of substituting classification for theory Ð a roundabout method of dodging the real issue. Another reason for the neglect of Knies may be found in his staunch defence of metallism, a doctrine that soon after the publication of the trilogy appeared outdated in theory and practice. According to Knies, money is always and everywhere...

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