Karl Theodor von Inama-Sternegg, Schmollers Volkswirtschaftslehre (1906)

In this five-section review essay, Inama-Sternegg assesses Gustav Schmoller’s Grundriß der allgemeinen Volkswirtschaftslehre as a major achievement of historical economics whose theoretical significance exceeds its own methodological caution. His admiration does not preclude substantial criticism: Schmoller overburdens economics with introductory sociology and psychology, while subordinating production too strongly to distribution. The essay’s central concern is how historically grounded knowledge can become economic theory without claiming timeless laws or reducing collective processes to individual behaviour.

The opening distinguishes the Grundriß’s wide circulation from its still-unproven influence on scholarship and public practice. Comparing its originality to the emergence of Renaissance architecture, Inama-Sternegg argues that a new intellectual style must demonstrate its fertility over time. His review therefore examines governing concepts rather than attempting an exhaustive assessment of the book’s detail.

Section 2 asks what general economic theory can legitimately explain. Historical research reveals differences between societies that undermine unrestricted economic laws, but it also identifies sufficiently stable conditions for qualified generalization. Inama-Sternegg partly defends classical economics: its propositions were abstracted from contemporary life, even if their formulation suggested universal validity. Theory’s proper field comprises societies sharing approximately comparable conditions of modern culture, law, ethics, and economic organization. Its historical boundaries vary with the phenomenon investigated. Statistics offers precision, but neither incomplete quantification nor the absence of demonstrable historical laws should disqualify descriptive evidence from theoretical use.

Section 3 gives this historically bounded theory a collective object:

Diese volkswirtschaftlichen Phänomene sind immer Kollektivtatsachen, Lebensäußerungen von kausal verknüpften Massen von Individuen, die sich selbständig als Massen betätigen und deshalb auch eine selbständige wissenschaftliche Behandlung erfordern.

English translation: These economic phenomena are always collective facts, manifestations of life by causally connected masses of individuals that act independently as masses and therefore also require independent scientific treatment.

Population ratios, property distribution, and commercial conditions describe collectivities, not properties transferable to each constituent individual. This distinction supports Inama-Sternegg’s criticism of Schmoller’s excursions into human nature and the psychological origins of valuation. Agreement with a social conception of economics does not require constructing a general sociology before investigating economic life. He praises much of Schmoller’s preliminary material while judging its breadth disproportionate and its disciplinary foundations insufficiently secure. Specialization protects explanatory competence rather than preventing intellectual cooperation.

Section 4 considers the Grundriß’s architecture: extensive preliminaries lead to economic organization, processes of circulation and distribution, and an evolutionary synthesis. Its treatment of technology partly compensates for the absence of a systematic theory of production. Schmoller’s analyses of machinery, industrial location, division of labour, and enterprise already contain theoretical achievements that his emphasis on social structure obscures.

Inama-Sternegg develops his strongest alternative through Raubbau, or destructive exploitation. Moving from agriculture through forestry and mining to industry and colonial commerce, he argues that depletion and the sacrifice of future productive capacity are general economic problems, not merely technical matters within separate occupations.

Das Volksvermögen, das Volkseinkommen entsteht ja doch nur durch Produktion; ihre Entstehung und Entwicklung sind das Zentralproblem der Lehre von der Produktion.

English translation: National wealth and national income, after all, arise only through production; their emergence and development are the central problem of the theory of production.

Production establishes both the quantity available for distribution and its sustainable renewal. Inama-Sternegg consequently distinguishes the nation’s productive power from the social question of how wealth should be allocated. His claim that distribution becomes an issue only once a people is wealthy makes this priority particularly emphatic.

The final section returns to praise, especially for Schmoller’s treatment of circulation and income distribution. Against accusations that historical economics accumulates antiquarian particulars without reaching general ideas, Inama-Sternegg insists:

Gerade die größten Wahrheiten sind durch die minutiöseste Kleinarbeit gewonnen worden.

English translation: Precisely the greatest truths have been gained through the most painstaking detailed work.

Schmoller’s achievement lies in synthesis controlled by history, statistics, comparison, and cautious generalization. The review thus matters as an internal argument over historical economics’ theoretical ambitions: empirical specificity need not obstruct theory, but productive synthesis requires disciplined boundaries and recognition of production alongside distribution.