Conclusion
The American economy was already experiencing the effects of industrialization in the last few decades of the 19th century, including the rapid accumulation of power and wealth by corporations that often engaged in destructive business practices, as well as the emergence of a large proletariat in the cities that endured deplorable working conditions and miserable lifestyles.
Young American men were acutely aware of the fact that they lacked the adequate economic knowledge and proper approaches, methods, and values required to resolve the pressing problems of their time. Moreover, they did not have academic institutions that could provide them with appropriate training in political economy. In response, they looked to further their education abroad, with many electing to obtain advanced training in Germany. These individuals were attracted by the progress and developments that were being achieved by theorists of the GHSE in areas like statistics, national economy, ethical economics, and public finance. By that time, the GHSE had already acquired an international reputation for leading the great historical movement that transpired in Germany during the last half of the 19th century.Studying political economy under the theorists of the GHSE opened up an entirely new world for Americans, as the boundaries of economics were expanded to unprecedented levels through the historical approach. They came to cherish the methods, ideas, values, reforms, approaches, and policies of the GHSE while blaming classical orthodoxy for many of the ills that plagued their time. In fact, they used historical ethical economics to formulate strong arguments against the laissez-faire system, the abstract deductive approach, and methodological individualism. When they returned home after completing their studies, these Americans, who came to be known as the New School, wanted to adapt what they learned during their time in Germany to the US.
Much like theorists of the GHSE, adherents of the New School believed that historical ethical economics would not allow self-oriented greedy people to use political economy for their own gain and to oppress the masses. Furthermore, they were also of the view that historical ethical economics would not support the laissez-faire approach, where a state does nothing while many people live in misery and abject poverty.The fact that the GHSE was a proponent of developing the national economy was appealing to many of the Americans that were studying in Germany, because they highly valued the national interests of their own country. The influence of the GHSE led members of the New School to believe that the government needed to play an important role in controlling monopolies and ensuring that competition was fair and ethical. The New School also supported an active state role in the provision of social services and programs. Furthermore, they advocated for labor protections, including the reduction of working hours, higher wages, the provision of unemployment insurance, compensation for work-related injuries, and the freedom to join trade unions in order to improve their working conditions. Without the efforts of the adherents of the New School, the US would not have become the type of welfare state that was witnessed in the 20th century.
There is no doubt that adherents of the New School managed to facilitate remarkable development in political economy, both as an academic discipline and a profession, and exert significant influence over state policies in the US. In fact, it could be argued that these German-trained American political economists revolutionized political economy in the US, in part by ingraining the principles, methods, and ideas of the GHSE in their own students. However, despite the immense influence that the New School exerted on American society from the end of the 19th century until the outbreak of WWI, only a few aspects of methods, ideas, and goals of the GHSE were ultimately retained in the long run.
Notes
1 University of Illinois System. ‘James 1904—1920.’ https://www.uillinois.edu/ president/history/about_the_presidents/james.
2 https://www.encyclopedia.com/people/social-sciences-and-law/economics- biographies/richmond-mayo-smith.
3 Johns Hopkins University. 1879. Annual Report of the Johns Hopkins University. Baltimore: John Murphy & Co.
4 The Harvard Graduates Magazine. December 1902. Vol. 11: 247—248.
5 Archives at Yale. ‘Arthur Twining Hadley, President ofYale University, Records.’ https://archives.yale.edu/repositories/12/resources/2590.
6 Ibid.
7 Illinois University Department of Economics. ‘Bogart, Ernest L.’ https:// economics.illinois.edu/spotlight/historical-faculty/bogart-ernest-l.
8 Ibid.
9 Archives at Yale. John Christopher Schwab family papers: Collection: John Christopher Schwab family papers ∣ Archives at Yale.
10 Ibid.
11 Online Archive of California. ‘Carl Copping Plehn, Economics: Berkeley.’ http://texts.cdlib.org/view?docId=hb696nb2rz&doc.view=frames&chunk.id=- div00047&toc.depth=1&toc.id=.
12 Ibid.
13 Ibid.