UNIVERSITY , XI. THE HISTORY OF GERMAN POLITICAL ECONOMY. (Fortnightly Review, July 1, 1875.) Two different conceptions of political economy now divide economists throughout Europe; of which, looking to their origin, one may be called English, the other German, though neither meets with universal acceptance in either England or Germany. English writers in general have treated political economy as a body of universal truths or natural laws; or at least as a science whose fundamental principles are all fully ascertained and indisputable, and which has nearly reached perfection. The view, on the other hand, now almost unanimously received at the universities, and gaining ground among practical politicians, in Germany, is that it is a branch of philosophy which has received various forms in different times and places from antecedent and surrounding conditions of thought, and is still at a stage of very imperfect development. Each of these conceptions has its appropriate method; the first proceeding by deduction from certain postulates or assumptions, the second by investigation of the actual course of history, or the historical method. In England it is usual to speak of induction as the method opposed to à priori deduction, but the inductive and historical methods are identical. Both aim at discovering the laws of succession and co-existence which have produced the present economic structure and condition of society. A subsidiary branch of historical investigation traces the progress of thought and philosophical theory, but this branch has the closest relation to the main body of economic history, since one of the chief conditions determining the subjects and forms of thought at each period has been the actual state of society; and ideas and theories, again, have powerfully influenced the actual phenomena and movement of the economic world. Dr. Wilhelm Roscher's History of Political Economy in Germany (Geschichte Der National-Oekonomik in Deutschland) is by far the most considerable contribution that has yet been made to this subsidiary branch of enquiry. It would be impossible in a few pages to review a book which ranges over several centuries, and discusses the doctrines of several hundred authors, besides drawing from numerous unnamed works. What is sought here is to indicate some of the leading features in the history of this department of German thought, with some observations. suggested by Roscher's book, or by its subject. An English historian cited by Roscher, speaks as if the history of political economy had begun and almost ended with Adam Smith. Roscher himself begins with the Middle Ages, and ends with the conflicting doctrines of different schools and parties in Germany at the present day. The structure and phenomena of mediaval society in Germany as elsewhere were far from suggesting an economic theory based on individual interest and exchange. Common property in land, common rights over land held in severalty; scanty wealth of any kind, and no inconsiderable part of it in mortmain, or otherwise intransferable; labour almost as immovable as the soil; production mainly for home consumption, not for the market; the division of labour in its infancy, and little circulation of money; the family, the commune, the corporation, the class, not individuals, the component units of society; such are some of the leading features of mediaval economy. In the intellectual world, the division of labour was even less advanced than in material production; philosophy was in the hands of an ecclesiastical order, antagonistic to both the individual liberty and the engrossing pursuit of wealth which modern political economy assumes. Roscher points to the Canon Law as embodying the earliest economic theory, and it is deeply tinctured with both communism and asceticism; poverty is the state pleasing to God, superfluous wealth should be given to the church and the poor, interest on money is unlawful, to buy in the cheapest and sell in the dearest market is a twofold wrong. Nor did the secular law harmonize better with modern economic assumptions. Every system of positive law, as Roscher observes, has a corresponding economic system as its background; and the economic system at the back of the secular law was based on status, not on contract, on duty and loyalty, not on individual interest. Thus whether we look to the actual economy of mediaval Germany, to its moral philosophy, or to its positive law, we find a condition of things incompatible with the economic doctrines of modern times. A new era opened with the Reformation, and Roscher divides the history of modern political economy in Germany into three periods, the first of which he calls a theological and humanistic one (das theologisch-humanistische Zeitalter), on account of the influence of both the doctrines of the Reformers, and the literature of classical antiquity. But the economic movement. of society itself tended to awaken new ideas. The Reformation. not only created considerable economic changes of a material kind, but was in fact the result of general social progress, one aspect of the economic side of which shows itself in the discovery of the new world, and the consequent revolution in prices. In Germany too, though to a less extent than in England, something doubtless was visible of that change from status to contract, and from service for duty to service for personal gain, which struck the great English poet, who was himself among the productions of the new age. We may take Erasmus and Luther as representatives of the economic influences of the new theology and classical literature in Germany. The saying of the mendicant friars with respect to theology is true also, Roscher observes, in the region of economics, that Erasmus laid the egg which Luther hatched. 'Erasmus, going back to the best age of classical antiquity as well as to pure Christianity,. * *O good old man! how well in thee appears As You Like It, act ii., sc. 3. proclaimed that labour was honourable.' Luther preached the same doctrine, and moreover anticipated Adam Smith's proposition, that labour is the measure of value. Luther's enthusiasm for the increase of population illustrates the connexion of the economic ideas of the age with both its theology and its material condition, since it sprang on the one hand from antagonism to monastic celibacy, and on the other hand from the rapid increase in the means of subsistence. The chief economic influences of classical antiquity are classed by Roscher under five heads. Its literature, being that of a high state of civilization, furthered the rise of Germany to a higher social stage. The states from which this literature emanated were cities, whose example fostered the development of town life and economy. They were also highly centralized states, with the liveliest national spirit; and their history and ideas could not but promote the development of the modern State and of national unity, as opposed to the mediaval division of each nation into innumerable petty groups and governments. They were also either monarchical or democratic States, the study of which tended to accelerate the decline of the feudal aristocracy. Lastly, types of life and thought so unlike those which the medieval world had bequeathed, could not but nurture a critical and inquiring spirit, which made itself felt in the economic, as in other directions of the German mind. The only indications, however, of an independent economic literature in this period seem to have been the writings of Camerarius and Agricola on currency. Germany seems to have produced nothing so remarkable as the famous tract by W. S., once attributed to Shakespeare, which the revolution in prices and the contemporary economic changes gave birth to in England.* The period closes with the Thirty Years' War, in connexion with which Roscher adverts to the influence on Germany, both for good and for evil, of its geographical position; including among its beneficial effects a disposition to learn from all sides, which is visible in the subsequent history of its economic ideas and literature. The second period in the history of German political economy, See an Essay by the present writer on the Distribution of the Precious Metals in the Sixteenth and Nineteenth Centuries, reprinted in this volume. which covers more than a century from the Thirty Years' War to the period of Frederick the Great, is called by Roscher das polizeilichcameralistiche Zeitalter, as being one of State regulation and fiscal science. The term 'cameralistic,' which makes a great figure in early German economics, originated (as Roscher mentions in another work) in the office or chamber (cammer), which in each German state was charged with the supervision and administration of the Crown revenues. Hence the science called cameralistische wissenschaft, which is perhaps best explained by reference to one of the two objects which Adam Smith, at the beginning of his account of the Mercantile system, says political economy, 'considered as a branch of the science of the statesman or legislator,' has in view. It proposes, v he says, to provide a plentiful revenue both for the state and the people. Cameralistic science aimed at augmenting the revenue of the State or the sovereign, rather than the people. Roscher's second period might, more intelligibly to English readers, be distinguished as the Mercantile period, since one of its chief features was the Mercantile system, interwoven with the system of State regulation and finance. It is a modern error, which, as Roscher remarks, is not attributable to Adam Smith, to ascribe to the Mercantile school the notion that money is the only wealth. What that school really taught was that money, in Locke's words, was the most solid and substantial part of the movable wealth of a country; that it had more extensive utility than any other kind of wealth, on account of its universal exchangeability abroad as well as at home; and that a considerable stock of the precious metals in the treasury of the State, or within its reach, was requisite as a provision for foreign wars. Money had really acquired great additional usefulness and importance by the change from the medieval to the modern economy, with the substitution of payments in coin for payments in kind, and the great increase in the division of labour, and in trade both internal and foreign. And as the Mercantile system was thus connected on the economic side with the actual movement of society, so on the political side it was connected with the growth of monarchical states, increased activity and interference on the part of the central govern |