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Opinions - débats : Institutions, régulation et développement

Putting development economics into historical perspective: A view from Germany
An interview with
Bertram Schefold

Bertram Schefold et Agnès Labrousse

Notes de l’auteur

A. Labrousse wishes to thank Véronique Janod and Thomas Lamarche for suggesting her interesting questions.

Texte intégral

1Bertram Schefold (born 1943 in Basel, Switzerland) has been Professor of Economic Theory at the Goethe-University Frankfurt am Main since 1974. He holds a Diploma in mathematics, a Ph.D. in economics and honorary doctorates of the Universities of Tübingen and Macerata. He has held visiting appointments at Harvard, Yale, Cambridge (GB), the New School for Social Research in New York, Rome, Paris, St. Petersburg, Tokyo, Rio de Janeiro, New Delhi, among others. His main interests are capital theory, environmental economics and history of economic thought. Among his numerous publications, one could mention: Mr. Sraffa on Joint Production and other Essays, London: Unwin & Hyman [now: Andover: Routledge] 1989; Wirtschaftsstile Bd. 1: Studien zum Verhältnis von Ökonomie und Kultur & Wirtschaftsstile, Bd. 2: Studien zur ökonomischen Theorie und zur Zukunft der Technik, Frankfurt am Main: Fischer Taschenbuch Verlag 1994 & 1995 (Fischer Wissenschaft 12243 & 12505); Normal Prices, Technical Change and Accumulation. London: Macmillan 1997 (Studies in Political Economy) and Beiträge zur ökonomischen Dogmengeschichte, Ausgewählt und herausgegeben von Volker Caspari, Stuttgart: Schäffer-Poeschel Verlag and Darmstadt: Wissenschaftliche Buchgesellschaft 2004. For further bio- and bibliographical information, please visit the following website:​professoren/​schefold/​schefold.html

  • 1 Schefold B. (2009), « Préface », in : Alcouffe A. & Diebolt C. (eds), La pensée économique allemand (...)

2RR: In your preface to the recent book La pensée économique allemande1 you emphasize that – from the cameralists to Schumpeter – development is at the heart of the German economic thought. Could you elaborate on this idea?

3Bertram Schefold: World development was unique in the 1960s for a number of reasons. The prosperous and fast growing capitalist western world was challenged by the planned economies of the East (pretending to overtake the West in accordance with Soviet ideology, but falling behind in reality) and there was a large underdeveloped world (differentiated according to the history of the individual countries, but almost all suffering from the fate of not being able to take off). Development economists tried to grasp this reality by means of economic theory, using neoclassical and Keynesian ideas; there was less emphasis on historical and institutional accounts. It is true that the resulting blend of economics represented a novel combination, but the main aim was to show that development, sustained by an organised effort and by some foreign aid, could lead to qualitative change in the transformation of pre-modern economies, based on remnants of feudal or even more archaic institutions, into modern efficient market economies.

4Old development economics, as represented by authors of the German historical school, do not present each of these special traits, but all adherents of the school were concerned with the qualitative change of economies over time. Today, such change seems to be best understood by looking at different economies of different levels of development in the same period. The older economists had to concentrate on the European evolution, since comparative ethnography was still in its infancy. The main challenge was to understand why the high level of the development of the productive forces in antiquity had not led to modern capitalism. One wanted to understand what economic modernity meant, even if the word was not necessarily used, whether all economies were destined eventually to be transformed into the same state or whether relevant differences would remain.

5One was on the whole confident that progress would prevail, but even the conception of progress had not been there from the beginning. Different economic forms had been recognised by authors in antiquity. There were different modes of making a living. The Athenian philosopher could learn both about nomads and agriculturalists from talking to merchants who had travelled in the Black Sea or from remembering mythology. Such qualitative change was first analysed by means of the concept of stages. This became a linear evolution in the development from primitive to modern forms in the eyes of early modern economists. However, the historical regression in the Middle Ages and the persistence of “backwardness” led to growing doubts regarding the linear model. The historical school attempted to develop theories for pre-modern and non-modern forms of economic life; it was less technocratic than modern development economics, more oriented towards the description of the phenomena and towards the understanding of the transformation and less quick in using results in order to implement policies and to achieve goals within a prescribed planning horizon. But institutional change mattered, and it was the task of the economist to facilitate the transition to a more advanced economy by helping to create the necessary social institutions, the protection of workers, the educational system etc.

6The primary difference between the historical school and present forms of development economics results from the relatively free, perhaps not always sufficiently controlled, but very productive use of holistic cultural concepts which helped to formulate broad historical characterisations, to speculate about possible trends and directions of development and to nurture political views as to how change could be achieved on the basis of moral, not only technical progress, hence to actively counteract the differentiation of modern society through the formation of communitarian structures and ideas. In this, the historical school was politically closer to the Left and Right than to the liberal Middle, and methodologically closer to the humanities than to the natural sciences.

7Such concepts of development seem to me to be surprisingly old, in that they seem to be present not only in 18th century cameralism, but, in a nascent form, already in 17th century “old cameralism”. The historical school continued a tradition, and when Roscher claimed to found the historical school, he did not really introduce a new subject matter, but only a new awareness of what one was doing, by focussing on the contrast with classical theory.

  • 2 To quote Dosi G. & Metcalfe S. (1991), « Approches de l’irréversibilité en théorie économique » in  (...)

8RR: It is somewhat clear that in focusing on equilibrium, neoclassical economics is rather badly equipped to understand development dynamics, but aren’t Adam Smith or John Stuart Mill “masters of history”2? What is the differencia specifica of the German thought on development?

9Bertram Schefold: The political difference with respect to Adam Smith and also Mill is obvious; they were led to a clear and specific historical perspective. They saw the liberal economy with a liberal form of government as the necessary outcome of the historical process, and the new liberal world, even if not yet completed, was already there. The ambiguity of the historical school was that one always had, on the one hand, to catch up in terms of economic power, hence one had somehow to come to terms with the liberal order, while, on the other, one was critical of liberalism because of the dissolution of the social bonds, the ugly consequences of the factory system, the tension in the world market. The idea of the historical school was not, as in Marx, to let capitalism run its course and then to switch to a different mode of production, but institutions from the beginning had to compensate for the damages arising from industrialisation. One believed to be able to develop a vision of a good communal life, and the cultural element of the conception transcended the interplay of the market forces. The aim thus was to overcome Smithianism and Ricardo. Neoclassical theory was not a rival for the older historical school, even if it became one for the younger. On the contrary, neoclassical ideas were developed by economists close to the older historical school, in the attempt to complement the classical theory of value on the demand side, and even Schmoller would refer to neoclassical theory, when he was asked as to how one should describe demand more formally. The problem was less to deny classical or neoclassical theories; it was rather to go beyond them. This perspective of fostering development in accordance with a national perspective and a national spirit was perhaps closer to the older Scottish economists and social thinkers like Ferguson and Steuart than to Adam Smith. Steuart still dreamt of a separate development of Scotland. Ten years later, in Adam Smith, there is really only Great Britain leading a world economy in a universalist perspective, the idea of a Scottish “Sonderweg” has disappeared, and the development of all backward nations must ultimately converge to that of the most advanced.

10RR: According to the vast majority of textbooks, development economics only started after the Second World War. Why is this extensive German tradition thoroughly neglected?

11Bertram Schefold: Textbooks rarely provide a serious analysis of the origins of the ideas contained in them, and most authors overestimate the novel character of their contributions. As stated above, theoretical tools of post-war development economics, like those derived from Keynesian analyses, were new, and there was something specific in the technocratic orientation. But major development economists like Hans Singer or Gerschenkron were deeply influenced by the traditions of the historical school, although, in their years of formation in the 1920s, the economists even in Germany were turning more and more towards theory. Explicit reference to the historical school did not seem to be necessary or useful; business went on. A broader historical perspective might have saved some development economists from naïve optimism, and a better knowledge of anthropology would often have been helpful, but excess confidence was a characteristic of the time, to be shattered only in the crises engendered by a number of shocks: the Sputnik shock which showed that the Western system of education was deficient, the oil price shock which showed that ecological problems might lead to actual damages, not only to aesthetic losses, and the shock of the stagflation which showed that the West had difficulties even to control its own economies, at a time, when the failure of developing the Third World already had become obvious. I remember that it was discussed occasionally that one should differentiate much more according to the levels of culture previously attained by the countries under consideration. It now seems obvious that the difference between the East Asian economic miracle and the stagnation, indeed regression in Africa has something to do with the cultural differences which existed in pre-capitalist times, but which economist would take this up in a serious manner in the period of decolonisation? More continuity in the tradition of the historical school could have done most to change that.

12It has been recognised recently that the German historical school was not an isolated phenomenon, but that the historicity of economics was widely recognised by most European economists in the 19th century, and the representatives of the various historical schools in Europe knew each other well, travelled to meet and to exchange ideas, and they also sent their students abroad, as Heath Pearson has shown. An important historical economist in England was Richard Jones who preceded Roscher, (his main book was contemporaneous with that of Gustav von Gülich who could with some right be regarded as the true founder of the German historical school). But the Germans would later claim their special methodology. This was taken up and discussed by John Neville Keynes, the father of John Maynard Keynes, and it is clear from his excellent book that the historicity of economics and the problems of development were foremost in the mind of British economists in the late 19th century. This became visible also in the writings of the late Marshall. But Marshall’s pupils would not be interested in his “Industry and Trade”.

13RR: Let us begin the examination of individual authors by Schumpeter. He is celebrated as an economist but rarely as a development economist, although he wrote his Theorie der wirtschaftlichen Entwicklung (translated in French in “economic evolution” and not “development” by the way). What characterizes his contribution to development thinking?

14Bertram Schefold: Schumpeter’s greatest contribution to the idea of development consists in his modification of the neoclassical theory so as to give room for a sociology of the entrepreneur as the leading actor who introduces innovations in such a way that the economy undergoes qualitative change. Schumpeter played this game of combining disciplines extremely skilfully, almost like a double-agent who appeared as a neoclassical economist, but he maintained clandestine connections with the historical school. He wrote a historical and sociological book about imperialism, but it was known that his ambition remained to be seen as one of the great representatives of pure theory. Specific forms of development come in his work through the gradual insight that the entrepreneur of the middle of the 20th century is not the same figure as in the beginning. Schumpeter’s recognition that socialism would take over and his fear that capitalism would end as “labourism” are proofs that he ultimately wanted to understand the direction of historical change. The same end was served by his analysis of historical forms of technology, characteristic for specific phases in the business cycle, and for specific cycles in the sequence of Kontratiev’s waves. It may also be recalled that the first German edition of his theory of capitalist development contained much more historical material than the shortened English translation. Finally, readers not familiar with the German language miss Schumpeter’s exchanges with the historical school, his appreciation of Schmoller in the middle of the 1920s (published to the dismay of the young theorists who had hoped for something else from Schumpeter) and also his respect and friendship for Max Weber. I do not see him in the tradition of the historical school – not so much because he was the ablest theorist around, but because there is so little in his writings about pre-capitalist forms of production. As a matter of fact, one does not really know whether he was of Menger’s opinion and thought that the basic forms of economic intercourse are perennial or whether he had his own theory of pre-capitalist formations.

15RR: Schumpeter collaborated occasionally with Max Weber who is also an original figure of the German youngest historical school. Which aspects of Weber’s work regarding economic development would you recall?

16Bertram Schefold: To go into details about Max Weber in this context clearly would require a book. I am at present concerned with the edition of Max Weber’s “Economic History” as part of the Max Weber Gesamtausgabe, the definitive edition of his collected works by the Bavarian Academy. Max Weber’s central historical question is how modern capitalism formed. He believed that early forms of capitalism had existed from times immemorial, in that a capitalistic spirit is a necessary characteristic of the trader and hence an aspect of a somewhat developed division of labour. Weber showed why this capitalistic spirit did not explain the cohesion of economies prior to the modern era. He was much more cautious than members of the historical school when it was a matter of stating in positive terms what the specific economic “laws” of earlier economic formations had been. He used his theory of ideal types to describe specific aspects like the organisation of labour in agriculture, plantation systems, handicrafts and guilds in towns etc., and he often proceeded to, as it were, negative proofs that capitalism could not really develop because of institutional constraints, the limitations of the natural environment and political structures. Thus he would show that slavery in antiquity was an obstacle to the capitalist development of the latifundia, the great agricultural enterprises in Roman times. It was difficult to allocate slave labour over the year evenly. It was difficult to reproduce the slaves. Most slaves were prisoners of war; hence their prices fluctuated widely. In consequence, a rational “account” of their economic activities could not be given, a sustained process of investment was not possible, and the great fortunes were made in a different fashion anyway, for vast economic enterprises always depended on political action from the state and hence on the connections the Roman tradesmen had with the aristocracy and the emperor.

17The rationality of modern capitalism, by contrast, was fostered by a number of factors. The one examined most closely by Weber himself was the genesis of the Protestant ethic. Worldly asceticism was favourable for capitalist accumulation. In the end, when modern capitalism had developed, the professional attitude had become a necessity, but in the beginning, it stood in contrast to the cultural traditions and could therefore develop well especially in the Calvinist environment. Weber explicitly argued against explanations of the origin of capitalism in terms of only one cause. Protestantism therefore was only one factor which contributed to the change from what he sometimes called adventure capitalism (at the time of the discoveries) into modern capitalism, where the economic institutions – at least according to Weber – preceded industrialisation. The differences between older forms of capitalism and modern capitalism in Weber are therefore not based on technology alone and he did not regard technical progress as the primary engine of change even if industrialisation lead to the most visible transformation connected with modern capitalism.

18This certainly was a theory of development. It could even be said that Max Weber was a development economist, in that he was politically active and undertook empirical research in order to support such work, in collaboration with members of the historical school. Especially in the beginning, he acted on behalf of the Verein für Socialpolitik, the principal association of the historical school, of which Schmoller was the almost undisputed head. In particular, Max Weber’s investigation into the conditions of the labourers on eastern German estates can be seen in this light.

19Weber and Schumpeter would discuss occasionally. Famous is their encounter in a coffeehouse in Vienna, where they met in the presence of the banker Somary and argued about the consequences of the Russian revolution. Schumpeter, always detached and somewhat cynical, thought that the Russian revolution was an interesting social experiment. Weber got up and left, angry, for he was aware of the dreadful, murderous social consequences.

  • 3 Sombart W. (1927), Der moderne Kapitalismus: Das Wirtschaftsleben im Zeitalter des Hochkapitalismus(...)

20RR: And what about Werner Sombart and his theory of modern capitalism3?

21Bertram Schefold: Sombart is perhaps today as much known, but not as well respected, as he deserves. His versatility and his journalistic style of writing made him popular when his ideas were à la mode; today, they seem to reflect a lack of depth and concentration. And there is the problematic of the shift in his political attitude. I should like to take up two points to defend him.

22Sombart’s realism caused him to abandon his early illusions about Marxism. He had to reconcile contrasting gifts and ambitions. On the one hand, his writings were animated by a splendid historical phantasy which permitted him to breathe life into barren economic facts and to write books rapidly which were read by many. On the other hand, he wished to be an objective, serious analyst who refrained from value judgements in accordance with the methodological rigor which has become associated with the name of Max Weber. The 1920s were a period of extremely stimulating and manifold intellectual debates in Germany. Every economist, as it were, wanted to be the Einstein of the social sciences. We are still searching for the jewels in the mass of books they produced. When the Nazis made their revolution, many projected their hopes onto this new government, almost all miscalculating the stability of the gang which had risen to power. Sombart wrote his book on German socialism, trying to appeal to them. It can be read as a critique of modernity and as an attempt to discipline late capitalism by such means as a control of technical progress and the creation of institutions to protect the environment. The Nazis, who were really aggressive technocrats pretending to act for the people, did not welcome Professor Sombart’s contribution and concentrated on modern technology as a basis for armament. Sombart had tainted his name with his attempt to associate with them.

23The tension between Sombart’s pleasure to illustrate historical phenomena and his endeavour to be theoretically rigorous and objective shows best in his major work on modern capitalism; it has been aptly characterised by Edgar Salin as “Anschauliche Theorie”, a concept, for which there is no equivalent in English. Translations which each capture an aspect of the matter are “intuitive theory”, “visual theory” and “theory of economic gestalt”. Salin thought that some of the greatest economists characteristically embedded the rational core of their theory in more comprehensive phenomenological descriptions of the economic process in a historical evolution which was a stylised representation of some specific historical phase, such as the transition from feudalism to capitalism in Adam Smith, as exemplified by the example of Scotland. The main intention was to help the reader to understand a broader economic logic which transcended a process driven by pure economic forces (such as the maximisation of profit) by making it necessary to take cultural factors, possibly, as in Max Weber, even religious factors into account. Edgar Salin regarded Adam Smith, Karl Marx, and Keynes in some of his contributions as masters of intuitive theorising, and David Ricardo or Edgeworth as masters of rational theory. He developed this concept in a review article on Sombart. Economic historians had accused Sombart of a misrepresentation of facts of economic history. Salin objected that these mistakes did not really matter for the substance of the argument, which was to be regarded as theoretical. But the theory clearly was not rational in the sense of rational model building, although arguments of pure theory do appear in Sombart’s book. As a matter of fact, one finds chapters devoted to theoretical analyses of monetary systems, mixed with chapters of a more historical and descriptive nature, and only both taken together convey Sombart’s ideas about the logic of capitalist development. Economic history has recently moved in the direction of Sombart’s methodology, using more advanced theoretical tools, of course, but without reaching the full breadth of his methodological outlook and without having produced an up-to-date equivalent of his analysis of the influence of the cultural forces.

24RR: What about Gustav Schmoller?

25Bertram Schefold: Gustav Schmoller is another character whom everybody knows and whom most underestimate. He also was a prolific writer of whom little is available in English. However, his historical importance as a social reformer and as an organiser of a form of empirical work which can serve as a basis for reforms is recognised, and at least one of his central ideas has been taken up in the international literature: that of interpreting the period of Mercantilism as the period of State building. Schmoller was motivated by his studies of the German principalities between the late middle ages and cameralism, passing through the period of the reformation. France achieved national unity and obtained an effective central administration, while Germany fell more and more apart, suffered from the Thirty-years-war and was in the end under the threat of being divided like Poland was later. Schmoller was convinced that this fate could be avoided only by virtue of the institutions created by the cameralists. They worked on more effective and equitable systems of taxation, convinced the princes to separate their private from their public activities and to orient the latter towards the provision of infrastructure, defence, and education at all levels. They suggested schemes to attract business to the principality, they called for the reform of the legal framework and for effective administration. Schmoller thought that the younger historical school was now helping to complete this task at the national level, primarily by extending the scope of the reforms to the support and education of the industrial proletariat which had arisen in the cities. This is why progress had to be not only technical, but also moral and intellectual.

26RR: Friedrich List is famous for his theory of infant industries, which is still part of the debate on industrialization. Yet aren’t there many other aspects in his thought – like for instance the role of institutions in economic development or his theory of intellectual capital (as opposed to the Beckerian theory of human capital) that could still be relevant for development thinking?

27Bertram Schefold: List’s idea that early industrialisation of latecomers in development requires some protection or direct support does not have to be repeated. He thought that the Smithian and Ricardian recipes of international free trade, liberalisation of the national markets, promotion of infrastructure and even education largely on the basis of private initiative were inadequate in a divided country such as Germany where private initiative and especially industrial investment required more state support. So we have the paradox that the German liberals of the first half of the 19th century, especially in the Southwest of Germany, argued for some measure of protection, for schooling by the state, for universities financed by the state and for some intervention of the state in order to get the railway companies to build a network which would later serve the nation as a whole and not only local interests. List ultimately wanted a free intercourse of free nations as Adam Smith did, but the path to get there had to be different in central Europe. He accused Smith of erroneously concentrating on the effects of productive labour, that is labour oriented toward the production of material commodities, while, what really mattered in the long run, was to foster the productive forces, hence to produce the inner goods of which the German Storch had spoken in his lectures to the sons of the tsar in St. Petersburg (published in 1815).

28Adam Smith had believed that the transmission of knowledge in schools and universities should be based on private incentives. His ideal was the philosopher school of classical antiquity where the young Greeks and Romans had to pay for their courses. He therefore thought that the system of education of women in his own time was the relatively best, because it took place in the families and prepared the young women for their later lives in the same environment: again a family. List, by contrast, had a vision of a structured educational system with universities, technical schools, schools providing specific skills for the work forces of specific sectors like mining, agriculture or commerce. List’s ideas were influential in the 20th century in Germany. A society baring his name was created in the 1920s and produced a huge edition of his collected works. This venture was not understood and not seen with sympathy in England. I wonder whether Keynes’ suggestion to let the Royal Economic Society produce an edition of Ricardo’s work and to entrust Piero Sraffa with this task was not provoked by the List edition; it seems to me that it constituted a kind of response.

29RR: You edited recently De aerario by Kaspar Klock, an early cameralist. Could you say some words on his original contribution to development thinking, especially on the relationships between law and economics?

  • 4 Alain Alcouffe & Claude Diebolt (eds), op. cit.

30Bertram Schefold: To work through the 800 or so folio Latin pages of Klock’s book of 1651 – the book is even longer in the Peller edition of 1671 with its many annotations – was for me a unique experience: sometimes tiring, but often beautiful because Klock is such a sympathetic humanist who visualises the economic life in Germany, in Europe, and in many other parts of the world, in that distant and difficult period, by means of wonderful, occasionally poetic, illustrations taken from contemporary authors and from antiquity. He is sometimes naive in his reproduction of traditional beliefs, sometimes cunning. I have described the contents and his anticipation of the description of economic styles in my introduction to La pensée économique allemande4. This book is, in Schmoller’s perspective, a cameralist contribution to the building of the modern state. The prince cannot finance the necessary expenditure by relying on the agricultural domains and the income from some monopolies alone, but he must introduce a number of excise taxes and customs which, however, result in a complicated and cumbersome apparatus, a burden on the economy. It needs to be replaced by more efficient forms of taxation, and Klock gropes his way towards a regular taxation of the income of persons; that is, persons should not be taxed only at times of war, the tax should not be just a per capita tax, but reflect the economic potential of the person, and this cannot be assessed only by looking at property, for the income from property differs, depending on how it is invested, and there is also income from work. Klock does not succeed in formulating the concept of income tax, because he lacks the concept of income in the first place, but he gets close to it, using the Aristotelian concept of distributive justice. Klock is more successful at criticizing existing schemes of taxation and of generating revenues for the prince. He always tries to strike the balance between the respect for general legal principles which he accepts, with their possibly metaphysical roots, and the adaption of the existing laws to economic requirements. Thus it would seem to be advantageous for a protestant prince to confiscate the property of the monastic orders, but even the protestant has to recognize that the riches of the monasteries are results of the gifts of devoted Christians. Such riches can therefore not be converted to the satisfaction of arbitrary needs of the adherents of the “purer religion”, but they should serve a goal which the original benefactors would approve of. Hence the conversion of such a monastery to a high school for descendents of poor people might be a good thing. The example strikingly illustrates that the creation of the institutions follows a logic which is in part dictated by economic, but in part also by cultural concerns. Klock could therefore not be used to defend a theory of institution building which reduced the emergence of institutions to considerations of efficiency. Efficiency is recognised as important, however. Klock wishes for instance to associate specific levies to the fulfillment of specific tasks, say taxes on housing for the improvement of the streets, so that there is a direct relationship between means and ends which everybody can see; everybody then can control whether the administration functions well. But morals matter as well, as an end in themselves and because good morals are conducive to good administration. It is a problem that cartels of sellers lead to higher prices, but the core of the problem, for Klock, are not the higher prices as such, but the secret conspiracy of these sellers and their betrayal of the public.

31RR: What do you think of the newly flourishing neo-classical production on institutions and institutional performance, which ignores on the whole the earlier achievements of old institutionalism in this field?

32Bertram Schefold: As already stated, old institutionalism had a richer view of economic development. Schmoller distinguishes about a dozen different theories of development, and a Darwinian selection is only one of the possibilities. Competitive processes in markets may be Darwinian, but how far economic evolution can sometimes be away from such forms of economic determination was shown by Max Weber, when he pointed out that even religion could influence the path of economic development. Protestantism could promote modern capitalism, Confucianism could hinder it, and after bloody events which have removed obstacles, we now have the success of Chinese family firms, where Confucian traditions play the opposite role of supporting a new kind of capitalism. The neoclassical logic of the emergence of institutions, it seems to me, is not irrelevant, but much too simple to be accepted as an all-embracing hypothesis. Modern economic history, by the way, often does not do full justice to the older historians. Some of the more recent products of economic history are not much more than reformulations, dressed up with some impressive terminology of recent theoretical discussions, of older research which took a very long time and extensive archival studies to be carried out.

33RR: We spoke of authors like Klock that are almost forgotten today. Are they of interest for the antiquarian only? What is and what could be the role of the history of economic thought in theory building?

34Bertram Schefold: I am often quite happy to be only an “antiquarian”. But economic history can actually be useful: as a source of analogies. To each modern economic crisis, there are many analogues of the past. The theorist will object that, in order to show that a certain crisis of the past is analogous to an actual crisis, I need to have a theory, for certain theoretical connections must be the basis for the analogy. This, as a rule, is true, but the analogy often cannot be reduced to one theoretical factor alone, but consists in a superposition of many, accompanied by psychological, sociological, even cultural analogies. Hence the ability of experienced people to judge an economic situation with more foresight than whole armies of economic model builders. It is difficult for the public to determine on whom they should rely: on the prophet with his white beard, who claims to have seen it all, or on the smooth young technocrats who assert that their predictions are based on excellent models and many data.

35We have no general rule to decide who is going to be right, but we can ask both sides to be modest. This means in the present situation that we can ask for more teaching of economic history and history of economic thought as necessary prerequisites to understand and use historical analogies and to value experience. Authors like Klock, of course, are very distant from our time, so we expect that he can teach us only rather broad lessons. I feel that I have learned a great deal from him regarding the logics of taxation and the government of economic affairs, but to learn public finance from Latin Folio editions is perhaps not something that appeals to everybody. I found it striking how many national characteristics which he described still constitute pertinent observations today. He very clearly sees the advantages which France derives from the possession of a large and prosperous territory with a strong population and an effective government, the problem of Spain (united with Portugal at the time) with the overextension of its colonies, the relatively democratic nature of the Swedish monarchy, the implications of state trade of the Duke of Moscow for the despotic form of government, the temptation to corruption inherent in the unity of state and church in “modern” Rome, and even non-European countries like China and Japan are described with characteristics which still seem topical in some ways – the latter despite the fact that the island was almost inaccessible for Europeans at the time.

36RR: In France, history of economic thought is less and less taught at universities and this kind of specialization is now regarded as a kind of dead end for younger scholars. You were visiting scholar in many foreign universities and President of the European Society for the History of Economic Thought. Would you say that there is a similar trend in Germany and in other countries? Which differences do you observe?

37Bertram Schefold: The history of economic thought seems to be taught most extensively in Japan, were there are several professors teaching the subject, with different specialisations, in some universities. Only a few courses are being taught in the United States. The tradition of teaching it is being weakened also on the continent. Special chairs still exist in Italy, and France abandoned the system of having the history of economic thought as a central examination in the process of the Agrégation only some years ago. Germany is in a special situation, because every Professor felt the obligation to teach the history of economic thought at least of his special discipline at the time of the historical school, but when this receded and theory took over, the opportunity was missed to establish special chairs for the subject. It is still mainly the concern of amateurs like myself, for I have a chair for economic theory. I confess that I feel like an amateur, when I am doing research or teaching on historical matters: an amateur in the best sense of the word, in that I love the subject and do not think that much good is done if it is treated as a duty. We have our standards of rigor, but they are simple. We should quote accurately, we should do archival research, we should take pleasure in the discovery of interesting, but neglected authors and we should do our best to demonstrate the cultural riches and the value of theoretical insights in the comparison of the authors. But we have to be aware that what we write is secondary. What matters are the primary sources, we should guide our students to understand them and should not bore them excessively with textbooks. These are needed to help to create a synthesis and to visualize the evolution of ideas. They are indispensable in order to understand original propositions in their context. The history of economic thought is not just there for its own sake; it provides an orientation without which an economist is in danger of remaining a technocrat. The interest in the history of economic thought in different countries and among different sub-disciplines of economics seems by and large to vary with the general interest in history – with historical awareness. However, the historical consciousness of Britons has not prevented their academic economists from eliminating the history of economic thought from the curricula in most places.

38RR: The history of economic thought is only one of your manifold research fields. For instance, you worked on energy policy. How do you combine these different fields and styles of research? How do they enrich each other?

39Bertram Schefold: Shall I tell this story again? With due apologies I have to say that all the males in the generation of my parents were in the humanities – my father was an archaeologist, two uncles were medievalists, one was sinologist, there was anthropology, classical philology, and if they did not get their chairs, their wives would earn the living and they would continue with their researches. I had the luck of visiting an excellent classical gymnasium, with teachers, especially in ancient languages, who intellectually were equals of university professors, who, despite their obligation for the school, managed to publish occasionally, and I learned more there than at any university afterwards. Feeling that I had some insight into the humanities, I chose mathematics and physics, but, after my diploma, I switched to economics, partly because of an interest in politics, partly because I felt, like so many others, that our subject allows to combine approaches of the sciences and of the humanities, analysis and description. My early career was based on mathematical economics, but the environment became a concern, and environmental economics again a possibility to combine the approaches. The largest project in which I got involved concerned different energy scenarios for Germany. I observed the controversy which seemed to be a dispute about the relative merits and drawbacks of nuclear and solar energy, but which clearly implied more, a contrast of life styles and the economic outlook. There also was the discussion about economic systems. I had studied Marx with his more or less linear scheme of economic evolution and social emancipation. I now decided that the controversy concerned less than the choice of an economic system, but more than the choice of an energy technology, and the concept I found was that of the economic style, as developed by members of the German historical school. The economic style, in a given country, in a given era, is determined by the “economic spirit”, the “natural and technical conditions”, the economic and social conditions, and perhaps other factors such as economic dynamics (this was emphasised by Spiethoff, who ordered the list of criteria for judging economic styles). The economic style thus combined mentalities and intentions with natural givens, systemic and institutional arrangements and a certain economic dynamism. The concept proved useful for the characterisation of what the advocates of this or that energy scenario really wanted. The book on the subject, written with K. M. Meyer-Abich, became a bestseller, and we were asked to give countless lectures on television, the radio, in academies, schools and universities, but then the debate subsided, and my interest turned to the history of economic thought, where I had found the decisive idea.

40RR: Some scholars adopt textual analysis and history of economic thought ‘by default’ because they are not well acquainted with other techniques like econometrics for instance. That is not your case at all. It seems that you deliberately chose not to specialize in econometrics. Is it true? Why?

41Bertram Schefold: It is our fate to live in the almost global capitalist system, in the process of creative destruction. History helps us to understand that older cultural forms remain powerful, they are a challenge for our valuations. Historical statistics – a kind of modern “political arithmetick” applied to the past – can contribute to such understanding. There is the controversy about the efficiency of slave labour. Fogel and Engerman were able to provide quantitative arguments, showing that the efficiency of slaves was not significantly inferior to that of wage earners in the ante bellum American south. But does this argument really convince us that Max Weber and all the historical sociologists who had argued the contrary were completely mistaken? Goldsmith undertook a vast research project to estimate the average standard of living in various pre-modern empires, like those of Athens, Rome, Charles the Great, Moghul India, America at the time of the Revolution, and he found for instance that riches per capita in Athens were almost as high in classical Athens as in Jefferson’s Virginia, but that the Atheneans held a surprisingly large percentage of their wealth in the form of common property like the treasurers on the Acropolis and their fleet, while wealth was unequally distributed among persons in the US. One is grateful for such information, but it does not add very much to what one can know from the texts. The broad developments of political capitalism in antiquity, of adventure capitalism at the time of the discoveries, of modern capitalism have to be understood in qualitative terms, and this is what I am interested in. Of course, I am also curious to know what the growth rate of important countries is going to be next year, but I have never been very interested in the econometric techniques required to make such estimates; I leave that to others. I did study some large econometric models which we needed quantitative foundations for energy scenarios, and I testified as an expert on that for the German parliament, but, on the whole, I have chosen to pursue a different orientation in the division of intellectual labour among economists. I sometimes wish I had worked more on econometrics and acquired a thorough grasp of the subject, but there are limits to diversification. If one extends it too far, one rapidly looses the competence in one’s special field.

42RR: You began to study mathematics, theoretical physics and philosophy, before specializing in mathematical economics and the theory of capital (under the supervision of Piero Sraffa). You master an impressive spectrum not only of social sciences but also of “hard” sciences. How does it influence your perspective on social sciences?

43Bertram Schefold: The heroes of my student days were mathematicians like Gauß and Riemann – I wrote an early never-to-be-published paper on Gauß and non-Euclidean geometry – and I have always felt special admiration for Einstein. In consequence, it seemed to me that economic theory could never be as sophisticated and as rigorous as one of the hard sciences, and economic theory would not fit the data anyway. I spent a lot of time on finding mathematical mistakes in textbooks on mathematical economics which I had better spent on trying to understand the economic concepts. Why should a rigorous theory exist for an object, the nature of which changes over time? One could learn from Marx and Weber that the economy was composed of rational and irrational elements. Did the irrational not exclude full rigor? The argument is dangerous, as the example of Marx demonstrates. When he could not solve the transformation problem, he attributed his lack of rigor to the irrational, changing nature of the capitalist mode of production. We have learned from Sraffa that a more rigorous analysis of the problem is possible, and that the solution is not that which Marx had looked for. I thought for a long time that Sraffa had isolated one of the few – and perhaps the most relevant – problem in economics which was both capable of a rigorous treatment and theoretically significant – a problem area from which irrationality could be kept out, as it were. As it turned out, Sraffa was successful, as far as single product industries were concerned, but the tension between the rational and the irrational re-emerged in the area of joint production, if the golden rule condition was not fulfilled. The logic of the price theory, as developed by Sraffa, required that a standard commodity be used as a numéraire, but mathematical analysis proved that it did not necessarily exist. Sraffa, after years of conversations with Wittgenstein, was well aware of the irrational aspects of capitalism – ordinary language was inadequate for an ordered description of everyday life. But theory should be rigorous – no Hegelian dialectic – that was his attitude. I do not know how he would have defended this methodological stance which he did not explain in print. Perhaps he would have used the Socratic argument: if you want to reason, you cannot but reason rigorously. However, truth is adaequatio intellectuus ad rem, and if reality appears to contain contradictions, what do you do? If the contradiction consists in the opposition between forces of gravitation and forces of inertia in the case of a planet circling the sun, the solution is a movement. The same is true if we have contradictory influences on distribution in economics, such as the power of trade unions to raise real wages, given the rate of inflation, and the power of entrepreneurs to introduce labour saving equipment, thus reducing the upward pressure on wages. Some real movement of wages will result, but it will not even be easy to predict whether wages will go up or down, let alone to calculate the future movement for thousands of years ahead, as in the astronomical example. The indeterminacy results from a lack of data and from the freedom of the economic agents to react in different ways. Both can formally be eliminated by making assumptions so as to obtain a model with a determinate solution. But what can it be used for, if the assumptions are arbitrary? Hence the difficulty to combine rigor and relevance in economics; the subject appears to be trite and miserable, compared to the sciences, but it becomes grand and fascinating if we see it in its historical dimension, with its cultural connotations.

44RR: What do you think of the increasing specialization and compartmentalization within each discipline? How does it impact economics? Are we all becoming what the Germans sometimes call “Fachidioten”, i.e. specialized idiots?

45Bertram Schefold: The danger is obvious that economics will become a discipline dominated by specialists of narrow disciplines, each regulated by formal standards concerning the character of publications, the curricula to be followed and even the broad political orientation. Sombart once thought that the learning in the universities constituted the only aristocratic element of the bourgeois life culture. The freedom of teaching and research, old style, which – I confess – I have used extensively, is giving way to an academic meritocracy which claims to seek “excellence”, but which really establishes standards only for “normal science”. But niches for free forms of more independent research continue to exist and may even multiply, given the tendency to spend increased shares of government budgets on all forms of academic endeavours. It seems that economic history and history of economic thought are being taught less in faculties of economics and business administration. But these subjects are now studied more often by sociologists and historians. University professors perhaps have more teaching and administrative duties and get less support than a generation ago. But there are more independent research institutes, more sabbaticals are being provided, more opportunities are given to publish for a broad public which continues to be interested, for the economy will not cease to produce and reproduce problems. One needs some luck and some foresight and certainly the ability and disposition for hard work (but this is only just), if one wants to benefit from academic freedom. We should not forget what sacrifices were required for the great works of the past. Marx had a disgusting illness, was economically miserable and in exile, some of the best works of the 20th century were given birth by academics who were poor, had to write for newspapers in order to make a living and were not promoted, if at all, before they had turned 50. Ranke decided to write a world history when he was 80. And now some complain because they have to correct the nice papers written by their promising young students? May be I complain as well from time to time, but do not take me too seriously on such occasions.

46RR: We wish to thank you for participating in this interview in such an inspiring way.

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1 Schefold B. (2009), « Préface », in : Alcouffe A. & Diebolt C. (eds), La pensée économique allemande, Paris, Economica, pp. V-XXIV.

2 To quote Dosi G. & Metcalfe S. (1991), « Approches de l’irréversibilité en théorie économique » in : Boyer R., Chavance B. & Godard O. (1991), Les figures de l’irréversibilité en économie, Paris, éditions de l’EHESS, pp. 37-68.

3 Sombart W. (1927), Der moderne Kapitalismus: Das Wirtschaftsleben im Zeitalter des Hochkapitalismus, 3. Band, München & Leipzig, Duncker & Humblot.

4 Alain Alcouffe & Claude Diebolt (eds), op. cit.

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Bertram Schefold et Agnès Labrousse, « Putting development economics into historical perspective: A view from Germany
An interview with
Bertram Schefold
Revue de la régulation [En ligne], 7 | 1er semestre / Spring 2010, mis en ligne le 18 juin 2010, consulté le 18 avril 2024. URL : ; DOI :

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