chapter  6
14 Pages

German Historical School and the question of liberalism: Karl-Heinz Schmidt

ByKARL ­ HEINZ SCHMIDT

Introduction The problem of a study on liberalism and the “German Historical School” (GHS) of economics is how to identify the position of the GHS in relation to the conceptual opposition “liberalism of freedom versus liberalism of happiness” (LL/LH), which is concluded from publications by John Rawls and comments on his writings on Political Liberalism (Rawls 1993; see also Ege and Igersheim 2008). Though Rawls pointed out basic elements and ideas of political liberalism, he did not investigate the social and economic conditions of respective political programs. Also, the distinction of political, economic, social, cultural and further concepts of liberalism did not bring about sufficient knowledge about the conditions within which “liberalism of freedom” could be made effective in favor of the individual and society. If political liberalism needs specific conditions to be fulfilled – the conditions of minimum happiness – the decisive question will be: which institutions and measures of policies are needed to offer opportunities for individual happiness and for the happiness of society (Gall 1987)? The happiness of society will be even more important, because there will be no individual happiness if the society does not establish conditions of social happiness and consider conditions of individual happiness. These social conditions of effectiveness of political liberalism are valid also for the realization of liberalism of freedom (LL). Moreover, the relations between liberalism and the GHS of economics become obvious by consideration of the institutional framework and measures of adequate policies. The subsequent paragraphs refer to the development of related institutions and policies in the country which introduced a national system of social security earlier than other countries: Germany in the late nineteenth century. To point out the importance of this reform policy, the chapter exposes the establishment of innovative institutions and measures of social policy. It demonstrates that they were introduced on the grounds of a new legislation which was pushed forward by the central public power: the monarch, the chancellor and involved bureaucrats. Furthermore, the impact of “members” of the GHS or of other academic “experts” must be considered. The term “GHS” covers different groups of authors and tendencies of research in the German-speaking world during the nineteenth century (Pearson

1999: 547-62, esp. 547 f.): the Old, Younger and Youngest Historical Schools (Brinkmann 1956: 122; Schachtschabel 1971: 136-40; Rieter 2002: 142-54; Shionoya 2005: 1). Since the late twentieth century even a “New Historical School” has been proclaimed (Shionoya 2005: xiv; Kaufhold 1989: 89-116, esp. 115 f.). These groups of authors were established in Germany without close connection to historical schools in other countries. The forerunners of the GHS came from philosophy, jurisprudence, historical science, romanticism and former concepts of political economy. The GHS, yet, can be identified by certain uniform criteria. They may be summarized under two cornerstones: (1) common style of thinking, and (2) opposition to other research concepts, especially to the “classics of economics” (Schinzinger 1987; Streissler and Milford 1993). The following paragraphs mainly refer to the impact of the “Younger GHS” on the development of social security and social policy in Germany and – via later external effects – in other countries. The historical background of the intended “social reform” was designated by the “social question” and the “labor problem”.