ABSTRACT
This chapter covers the main areas to which representatives of the German Historical School (GHS) made important contributions concerningsocial policy, development policy, trade policy, fiscal policy, and monetary policy. Although only the younger HS around Schmoller met Schumpeter’s criteria of a school of thought, and not the older HS (Roscher, Knies, and Hildebrand) or the youngest HS (Weber and Sombart), there was always an emphasis on the role of a strong state since the era of Cameralism. This is already reflected in the work of List who attributed the task of promoting development to the nation-state. Emphasis on productive forces (including human capital) had a long tradition in German economics as well as an evolutionary perspective, expressed in stages theory of economic development, and an empirical-statistical approach. The term Staatswissenschaften (state sciences) expresses the typical German symbiosis of state and economy, in contrast to the more theoretical and abstract British classical political economics. Trade policy always was a controversial issue, most strongly when disputes between free traders and protectionists in 1879 led to the greatest crisis in the Verein für Sozialpolitik. The Verein had been founded in 1872/1873 in opposition to laissez-faire liberalism as well as to the revolutionary ideas of Marxism. Under the towering influence of Schmoller, an ethical-normative approach was taken, and social policy was attributed to the state. Wagner, who like Schmoller was a great admirer of Bismarck, believed in the implementation of distributive justice by the government. Politically a conservative, he nevertheless was an advocate of progressive income taxation and of taxes on wealth and inheritance.
