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• Foreword
• Introduction to the Second Edition
• Author’s Preface
• Acknowledgments
• 1: On Defining the Economic Point of View
• The Economic Point of View and the Scope of Economics
• The Multitude of Economic Points of View
• The Controversy Over the Utility of Definition
• An Interpretation of the Controversy
• The Economists and Their Definitions: the Classical Economists
• The Economic Point of View: the Background of the “methodenstreit”
• Twentieth–century Economic Points of View
• 2: The Science of Wealth and Welfare
• The Emergence of Political Economy As the Science of Wealth
• The Science of Material Wealth
• The Science of Subsistence
• The Science of Wealth Retained
• Man Against Nature
• From Wealth to Welfare
• The Science of the Lower Side of Human Nature
• 3: The Science of Avarice; Getting the Most For the Least
• The Science of Avarice
• The Economic Principle
• The “economic Impulse”
• Selfishness and “non-tuism”
• Economics and Mechanics
• 4: Economics, the Market, and Society
• Economics and Catallactics
• Exchange and the Propensity to Truck
• Exchange and the Division of Labor
• The “purely Formal” Concept of Exchange
• Exchange and the Economic System
• Economics, the Economy, and the “volkswirtschaft”
• Economy and Society
• 5: Economic Affairs, Money, and Measurement
• Money, Wealth, and Exchanges
• Money As the Measuring Rod
• Money As a Universal Measuring Rod
• Measurement and Economics
• Money and Price-economics
• Money As an Economic Institution
• 6: Economics and Economizing
• The Economics of Professor Robbins
• Scarcity and Economics
• Economizing and Maximization
• The Character of Robbins' Definition
• A. the “breadth” of Robbins' Definition
• B. the “formalism” of Robbins' Definition
• The Nature of Ends and Means
• “given” Ends and Means
• Single End and Multiple Ends
• Economics and Ethics: the Positive and the Normative
• The Nature of Economic Science and the Significance of Macroeconomics
• 7: Economics As a Science of Human Action
• I
• The Sciences of Human Action
• The Emergence of the Praxeological View of Economics
• Max Weber and Human Action
• Acting Man and Economizing Man: Mises and Robbins
• Ii
• Praxeology and Purpose
• Praxeology and Rationality
• The Assumption of Constant Wants—the Praxeological Context
• Praxeology, Apriorism, and Operationalism
• The Economic Point of View and Praxeology

Economics, the Economy, and the “Volkswirtschaft”

This line of thought leads directly to the role played in discussions of the scope of economic inquiry by the idea of the Volkswirtschaft. The word seems almost by philological accident to have given rise to features in German-language definitions that are absent in English-language discussions of the subject. Numerous disquisitions on the Wesen of the Volkswirtschaft evince conceptions ranging from the more holistic views of some of the economists of the Historical School and advocates of Sozialpolitik, in which the Volkswirtschaft is considered as an organic whole, to views that see it merely as an agglomeration of separately operating individual “economies.”33

It is significant that the existence in the German language of a single word to represent compactly so complex a conception has had considerable bearing on the direction taken by definitions of economic affairs. Many writers defined their subject directly in terms of the study of the Volkswirtschaft (hence Volkswirtschaftslehre). Thus, such a definition immediately places the accent on the social character of economic activity. The absence for a long time in English of a word corresponding to Volkswirtschaft meant that English definitions of the subject were not prone to be thus influenced.34 The current use of the term “the economy,” itself a reflection of the interest in macroeconomic “aggregates,” is too recent and too specialized to have had much influence on English definitions. When Schmoller used the term “political economy” as the equivalent of Volkswirtschaft, the grossen gesellschaftlichen Käorper, he was coining what must at that time have been a new meaning for “political economy.”35

Moreover the use of the term Volkswirtschaft seems to have had more than coincidental connection with a conception of economic phenomena in which temporal relationships, and historical significance generally, were stressed. The term carried with it, especially to the writers who stressed the organic unity of the whole, the same implications of continued identity over time as are asso- ciated with terms such as the State or the Nation (terms cited by Schmoller, for example, as analogous to the Volkswirtschaft).36 To the endowment of the economy with an only arbitrarily divisible extension along the time dimension is certainly in some degree to be ascribed the well-known description of economics by Mangoldt as the “philosophy of economic history” and the similar view of Roscher37 and other economists of the Historical School. Conceived as possessing in this way a kind of fluid unity in its extension over both space and time, the idea of the Volkswirtschaft could lay claim to a distinct entity (distinct, e.g., from the “body politic”) only by virtue of its more conspicuous and enduring function of providing for the material needs of the nation.

It was noticed in the previous chapter that German economists paid considerable attention to the maximization principle. This interest sometimes ran into sharp conflict with the notion of economics as the study of the Volkswirtschaft. One writer typically dismissed these discussions of the “economic principle” by declaring that the task of economics is not to investigate the effects of Wirtschaftlichkeit, but to understand the workings of the Volkswirtschaft.38 In the twentieth century Amonn, who stresses the social character of economic phenomena probably more than any other writer, has sharply criticized attempts to define the scope of economic science in terms of such concepts as individual acts of economizing. Attempts to build up the notion of a Volkswirtschaft from the elements of individual economic behavior are foredoomed to failure.39 It is from the social relationships involved in economic activity that such activity derives its distinctive character. This point gave rise to vigorous disagreement from those who attempted to construct the Volkswirtschaft out of the Wirtschaft.40

Also associated with the idea of the Volkswirtschaft are those definitions of economics that are couched exclusively in terms of national aggregates. To this class belong, for example, the views of economists from the time of the classical school who saw their subject as concerned with national, not individual, wealth.41 Discussion of “social goals” as something apart from individual motives, to which the economy as a whole is conceived as striving, are also related to the idea of the Volkswirtschaft. Both the writings of R. Stolzmann and Othmar Spann are relevant in this regard.42

[[33]]For samples of the literature on this point, see C. Menger's Untersuchungen (Appendix I, “Ueber das Wesen der Volkswirthschaft”); G. Schmoller, “Die Volkswirtschaft, die Volkswirtschaftslehre, und ihre Methode” (1893), reprinted in his Über einige Grundfragen der Sozialpolitik und der Volkswirtschaftslehre (Leipzig, 1898).

[[34]]For one example of German influence in this regard, see Ely's approving reference to the definition of economics as the “science of national housekeeping,” an idea which he relates to that of a “Volkswirthschaft” (Introduction to Political Economy [New York, 1889], p. 95).

[[35]]See G. Schmoller, Über einige Grundfragen, p. 217.

[[36]]See G. Schmoller, Grundriss der allgemeinen Volkswirtschaftslehre (11th and 12th ed.; 1919), I, 1.

[[37]]W. Roscher, System der Volkswirtschaft, I (Berlin, 1906), 42.

[[38]]F. Kleinwachter, “Wesen, Aufgabe und System der Nationalökonemie,” Conrads Jahrbucher (1889), p. 639.

[[39]]See especially A. Amonn, Objekt und Grundbegriffe (2nd ed.), pp. 153 f.

[[40]]See especially the article by Oppenheimer cited above, n. 32.

[[41]]See, e.g., D. Raymond, The Elements of Political Economy (2nd ed.; Baltimore, 1823), p. 35; Patrick Plough (pseud.), Letters on the Rudiments of ... Catallactics, p. 4; R. Whately, Introductory Lectures, pp. 16, 33 f.

[[42]]On this see T. Suranyi-Unger, Economics in the Twentieth Century (English ed., New York, 1931), p. 78. See also the next section in this chapter.