Biography

Schmoller was born in 1838 in Heilbronn as the son of a Wurttemberg civil servant. His father, Ludwig Friedrich David Schmoller, was an administrator of the district treasury. In the business office of his father, the young Schmoller learned about the financial and administrative practices of the small kingdom and was exposed to the business world.

The economic flourishing of his hometown, Heilbronn, served Schmoller as a lively illustration for his future economic studies. After his mother’s passing in 1846, the young Schmoller spent his summer vacations in Calw, an industrial town close to Heilbronn, in the household of his grandfather and his great-grandfather, Carl Friedrich Gartner and Joseph Gartner. Both were famous natural scientists and biologists and belonged to a rich and well-known trading family. Their household was an intellectual centre of the city. His grandfather studied the reproduction of plants, had correspondence with Charles Darwin, and was honoured by the Dutch Academy of Science (Hansen 2012: 396-7). He set an example for Schmoller in conducting sound scientific research, not driven by personal gain or position (Schmoller 1918).

After Schmoller finished his school, he worked for a short time in the office of his father before enrolling at the University of Tubingen in 1857. He studied Staatswissenschaften, a discipline derived from cameral science combining economics, administrative science, history, statistics, and public finance in order to train future civil servants how to administrate the state. In order to gain a broader perspective, Schmoller also attended classes in natural science and philosophy. The economists of the university, Carl von Schutz and J.A.R. Helferich, did not leave a lasting impression on Schmoller. The practical and empirical knowledge Schmoller had accumulated in his father’s office allowed him to skip many classes (Schmoller 1918).

After he finished his dissertation on the economic opinions prevailing during the reformation period, for which he was also awarded a prize, Schmoller worked for a short period as a civil servant in the statistical department of the Wurttemberg civil service. His brother-in-law, Gustav Rumelin, with whom he shared the admiration of the Prussian state, directed the department. Here, Schmoller was assigned the task of evaluating the Wurttemberg state’s industrial craft census of 1861, published in 1862 in the Wurttembergische Jahrbucher. In 1862, Schmoller also anonymously published a work about the Prussian-French trade treaty of 1861. The treaty of 1861 had prevented the inclusion of Austria into the German tariff union; and Wurttemberg as one of the states in the south of Germany had been on the side of Austria. Because of his pro-Prussian views in the article, Schmoller had to quit his career as a civil servant in Wurttemberg.

Schmoller’s analysis and evaluation of the Wurttemberg state’s industrial craft census and the support of the Prussian trade minister Rudolf Delbruck gave Schmoller the opportunity to become a Professor of Economics in Halle. During his time in Halle, he wrote his famous article entitled “Die Arbeiterfrage” (“Problems of the labour force”) published in the Preuβische Jahrbucher in 1864 and 1865. In this article, he outlined the social problems caused by technical progress and the transition to an industrial society, which included the replacement of handicraft by machines and factories, the flight of the population from the rural regions to the cities, high unemployment, and missing accommodations for workers. In Halle, he married Lucie Rathgen, the daughter of a government official from Weimar, and became a city counsellor in 1864. In this position, he gained more practical experience in the administrative routines and economic policies of the city.

Schmoller was very critical towards the doctrine of laissez-faire. He conceded that Adam Smith and the classical economists had identified the positive effects of free markets on economic development.

However, in his monograph about the evolution of the German small-scale industry and crafts in the nineteenth century (1870), he critically reassessed the hopes in the effects of liberal trade reforms in Prussia. The empirical material, including field inquiries and statistical data, highlights the downside of the economic transformation processes: increasing inequality in the distribution of wealth and displacement of small crafts by the factory system. Like other members of the Historical School, such as Lujo Brentano, Schmoller did not consider the laissez-faire capitalism of the Manchester liberals as an adequate cure for the pressing social problems. He was sceptical whether social harmony was the outcome of unrestrained self-interest and warned that without legal restrictions and moral norms, the economic freedoms could change into pure egoism, fraud, and gambling. In a public lecture in 1874 in Berlin with Kaiser Wilhelm, the German emperor, in the audience, Schmoller went so far as to contend that one cannot make millions in contemporary Germany without one’s sleeves touching the walls of a jail (Stieda 1921: 223). At the same time, Schmoller feared the growing Marxist threat and a socialist revolution. He shared with other like-minded academics the conviction that the so-called “social question” could neither be solved by the “natural laws” of the economy alone nor by the abolishment of private ownership of the means of production. Instead, he was advocating moderate social reforms by the state and a humanistic education policy to improve the well-being of the working classes, and to prevent a revolution.

Schmoller wanted to preserve the prevailing social order in Germany, with private ownership of capital, with parliamentary democracy, and with the emperor as the head of the German nation. He felt that the Prussian state had the obligation to mediate between the working class and the other classes, and to integrate the working class into the institutions of the monarchy.

The enlightened and socially conscious sovereign (soziales Konigtum) was assigned the role to ensure the establishment of a unified economic territory and to improve the living standards of the working class by social legislation (1874). Schmoller expected scholars and civil servants to take a neutral position between the conflicting classes and egoistic interests and to serve the common good. He also wanted to complement economic and social policy with the idea of justice, which is based on conventional norms and values (see Schmoller 1893-94). In Schmoller’s view, income distribution was not only the outcome of market laws, but also a result of legal norms such as property rights, inheritance, and contract law.

Together with other German economists such as Adolph Wagner, Lujo Brentano, Wilhelm Roscher, Johannes Conrad, Ernst Engel, Georg Friedrich Knapp and Julius Eckhardt, Schmoller founded the Verein fur Socialpolitik in 1872 in order to discuss the pressing social and economic problems and to propose legislative measures within the institutions of the constitutional monarchy. The preliminary talks were held in his house in Halle. This new association was intended to pursue two goals: to allow academic debates on socio-economic issues and to find political agreement. It was open to academics, businessmen, journalists and politicians. In the opening speech at the inauguration of the first meeting of the Verein, Schmoller emphasized its practical orientation and the aim to influence public opinion. During the first meeting of the new association in Eisenach in 1872, the members prepared resolutions demanding factory legislation, a reform of stock corporations, and restrictions of working hours for women and children.

In 1872, shortly after the foundation of the Verein, Schmoller joined to the University of Strasbourg. After the Franco-Prussian war of 1870-71 and the foundation of the German nation, large parts of the provinces Alsace und Lorraine were re-annexed to Germany, and the University of Strasbourg became a German university.

During his time in Strasbourg, he wrote his work about the clothing and weaver guilds of Strasbourg (1879), in which he discussed the modernization and liberalization of crafts and industry. In 1874-75 he had a bitter controversy on the notion of social reform with the historian Heinrich von Treitschke, who considered him a “Gonner des Sozialismus” (“patron of socialism”). In 1881, Schmoller became the editor-in-chief of the Jahrbuch fur Gesetzgebung, Verwaltung und Volkswirtschaft im Deutschen Reich, which later came to be known as Schmollers Jahrbuch.

In 1882, Schmoller was appointed to a chair at the University of Berlin where he stayed until 1913. In his major work, the Grundriβ der allgemeinen Volkswirtschaftslehre, published in two volumes in 1900 and 1904 (Schmoller [1978]), he described technical and economic development in conjunction with other social, cultural and moral factors. Like the members of the older Historical School, such as Hildebrand and Bucher, he developed a theory of the stages of economic development; he distinguished them in terms of economic constitution and various other economic and cultural features.

In Berlin, Schmoller was granted many positions and honours: he had a seat in the Prussian state council (1884), became a member of the Prussian Academy of Sciences (1887), and represented the Berlin University in the Prussian Upper House (1899). He also became editor of the Acta Borussica, a large-scale collection of sources and reports on the history of Prussia. Finally, he was ennobled in 1908. Schmoller died in 1917 at the age of 79 while on vacation in Bad Harzburg, Germany.

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Source: Faccarello G., Kurz H.D.(eds.). Handbook on the History of Economic Analysis, Volume 1: Great Economists Since Petty and Boisguilbert. Cheltenham: Edward Elgar,2016. — 813 p.. 2016

Biography

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