The Germination of German Economics: A Bounded School through European Integration, Which Theorized Without Theory

Abstract

Some scholarly works do not consider the German School, often called the German Historical School, as its own school of economics. Contrary to this view, this paper answers this question, and argues, through comparisons and contrasts with other schools of thought, that it was, and is, its own bounded school with lasting influences, but was derived from timely culture. Unique for economics, which usually prefers mathematical techniques, it placed less methodological stress upon theory and more upon historical analysis. It struggled between deduction and induction, but viewed society biologically like an organism, with concern for the development of societies and societal issues, popular in today’s economics. Through the works of such brilliant minds as Friedrich List, Gustav von Schmoller, and Wilhelm Roscher, this paper traces the German School’s influence from its origins in the mercantilist period up to the Freiburg School and ordo-liberals. Relying on qualitative foundations, it shows that these economists were their own bounded school, theorizing not with mathematical theory but qualitatively. They have had lasting influences, including through the development of neoclassical economics, modern sociology, and economic changes brought on by German unification, the two world wars, and particularly the development of the European integration process.