Whether there is a “German School” and an “Austrian School” of economics has been disputed not least because of the frequently heated debates amongst members of these alleged “schools”.
The litmus test of whether there is a school, and which author belongs to it and which not, obviously cannot be decided in terms of any unite de doctrine unanimously shared by all members of the school, because typically there is no such thing.
A less rigid concept of school is needed. Here we use the term in the sense that the scholars we reckon to a school share a similar outlook on the economic world, subscribe to similar methods of the analysis, develop their argument around essentially the same corpus of ideas and elaborate their approach in a deliberate attempt to differentiate it from other approaches. Without too much of an effort, a German and an Austrian school can be identified along these lines and the latter can be said to have greatly benefited from certain developments of the former.Carl Menger (2007: 39) dedicated his Grundsatze der Volkswirthschaftslehre (1871), commonly seen as the foundational work of Austrian economics, “with respectful esteem” to Wilhelm Roscher, the leading German economics professor at the time and a towering figure of the older Historical School. Menger wrote:
It was a special pleasure to me that the field here treated, comprising the most general principles of our science, is in no small degree so truly the product of recent development in German political economy, and that the reform of the most important principles of our science here attempted is therefore built upon a foundation laid by previous work that was produced almost entirely by the industry of German scholars.
Let this work be regarded, therefore, as a friendly greeting from a collaborator in Austria, and as a faint echo of the scientific suggestions so abundantly lavished on us Austrians by Germany through the many outstanding scholars she has sent us and through her excellent publications. (Menger 1871,2007: 49)
Many readers of the book appear to have considered this dedication an expression of the notorious Austrian style of void courtesy.
This may contribute to explaining why for a long time the view was widespread that Menger’s work was largely original. However, things are a great deal more complex. First, while Menger held Roscher and other German authors in high esteem, there is reason to presume that he was also keen not to spoil the German economics market by extravagant claims to originality and by demarcating his theory too much from theirs. Close scrutiny shows that in important respects he distanced himself from the cameralist economic tradition that permeates the writings of German authors and the important role they typically attributed to the state. There is also the remarkable fact that the majority of German economists did not consider their contributions as marking a fundamental split with the received classical doctrine especially of Adam Smith, but rather a correction and elaboration of several of the ideas contained therein. Looking at German economics in the first half of the nineteenth century only from the vantage point of whether and to what extent it anticipated marginal utility theory is in danger of generating a distorted picture of the facts. It was only after marginalism had become fully established in economics that the German use valueschool appeared in new light. Therefore, while “the idea that Austrian economics arose armour-clad like Pallas Athena from Menger’s brain” is a myth, as Streissler (1997) rightly stressed, to call the German school “proto-neoclassical”, as he also did, is perhaps an exaggeration unduly emphasising one of the school’s features to the detriment of important others. Streissler’s (1990) rescue from oblivion of the fact that the German Nutzwertschule or “use value school” had anticipated marginal utility theory stimulated several other works. See Baloglou (1995), Priddat (1997) and, in particular, Chipman (2005, 2013), who scrutinised in great depth the respective German literature and related it to the Austrian and other traditions of economic thought. Yagi (2011) sees the German and especially the Austrian school as having prepared the ground for evolutionary economic thinking in the German language area.