Eugen Peter Schwiedland, Industriepolitik

Eugen Peter Schwiedland’s Industriepolitik, a textbook chapter published in the documented version dated 1931 [i.e. 1930], explains industrial policy through the historical development, organizational advantages, and political consequences of large-scale production. Its nine sections move from the method and history of economic policy through industrial forms, economies of scale, entrepreneurship, corporations, and combinations, before concluding with state promotion of industrial capacity. The central problem is how governments can strengthen industry without confusing private profitability with public welfare. For postwar Europe, this is also a question of maintaining living standards as overseas industrialization undermines its earlier commercial predominance.

The opening establishes an empirical, historically situated approach. Economic policy must understand inherited institutions, contemporary forces, and the results of previous interventions before recommending change. Practical testimony is indispensable but requires scrutiny: businesspeople are interested parties whose experience can be partial and whose claims may turn class interests into purported national necessities. Schwiedland therefore rejects universally applicable prescriptions:

Wie die Aufgaben, so wechseln auch nach den Verhältnissen die tauglichen Mittel.

English translation: Just as the tasks change, so too do the suitable means according to circumstances.

This methodological restraint governs the chapter’s account of mercantilism, physiocracy, liberalism, and interventionism. Mercantilist regulation answered the fiscal and political needs of expanding states; liberalism subsequently removed privileges and restrictions that obstructed industrial enterprise. Yet concentrated companies, organized workers, and employers’ associations increasingly appealed to state power. Intervention thus reappeared under conditions substantially different from those of early modern regulation. Schwiedland asks whether contemporary enthusiasm for authoritative direction overestimates what governments can accomplish.

Sections III–VI explain industrial ascendancy without making technical progress an automatic sequence of institutional replacement. The putting-out system coordinates dispersed producers through control of sales, while transferring investment burdens and commercial downturns onto dependent workers. Manufactures concentrate labour and exploit cooperation and specialization; factories add machinery, natural power, scientific knowledge, and production for extensive markets. Schwiedland draws selectively on Marx’s account of cooperation, accepting important productive advantages while questioning whether collective work necessarily stimulates greater effort. Market access remains the essential condition of large-scale enterprise.

Die älteren Formen verschwanden aber nicht vollständig; wo sie den Umständen angemessen sind, bewährt sich ihre Lebenskraft nach wie vor; noch heut bestehen alle geschichtlichen Betriebsformen der gewerblichen Produktion nebeneinander.

English translation: The older forms did not disappear completely, however; wherever they are suited to the circumstances, their vitality continues to prove itself; even today all historical organizational forms of industrial production coexist.

Such coexistence qualifies the chapter’s strong emphasis on factory superiority. Crafts survive through suitability, specialization, economical supervision, and entrepreneurial ability; a factory can even revert to dispersed production when sales cannot sustain its fixed costs. Large plants benefit from capital, credit, favourable locations, coordination, and mechanization, but face bureaucratization, immobile investments, expensive modernization, and dependence on banks. Their most powerful advantage is the reduction of unit costs through mass output. Schwiedland distinguishes constant, proportional, and less-than-proportional expenses, while recognizing that administrative expansion or insufficient demand can terminate increasing returns. The drive toward greater output therefore also generates selling costs and overproduction crises.

Sections VII–VIII connect these productive mechanisms to leadership and corporate power. Entrepreneurship is creative judgment under changing circumstances, not merely routine administration—a distinction Schwiedland uses polemically against Bolshevik conceptions of industrial management. Joint-stock companies mobilize dispersed savings and sustain investment despite changes of ownership, but separate ownership from control. Holding structures allow relatively small controlling stakes to command enormous productive assets. The resulting opportunities for speculative exploitation make competent supervision essential; merely formal state oversight can create misleading public confidence.

The extended treatment of combinations distinguishes vertical integration, affiliated enterprises, shared ownership, profit-sharing arrangements, cartels, trusts, concerns, and investment or holding companies. Its conceptual pivot is the difference between improving productive organization and exercising power over customers:

Die bisher erörterten Ausgestaltungen und Beziehungen erhöhen die Leistungsfähigkeit großgewerblicher Unternehmungen und stellen der staatlichen Wirtschaftspolitik keine besonderen Aufgaben. Anders die Kartelle, die eine Abwehr des Wettbewerbs — seine Verringerung oder Aufhebung — bezwecken.

English translation: The organizational developments and relationships discussed thus far increase the productive capacity of large-scale industrial enterprises and present state economic policy with no special tasks. It is different with cartels, which aim to ward off competition—to reduce or eliminate it.

Cartels can stabilize distressed industries, economize distribution, and facilitate investment, but can also exploit tariff protection, burden downstream manufacturers, restrict durable products, and obstruct outsiders. Trusts coordinate production more deeply and may achieve substantial rationalization; nevertheless, secure market control can suppress invention and encourage coercion. Schwiedland consequently favours investigation, informed administrative supervision, and specialized adjudication over blanket prohibitions that might simply encourage mergers.

The final section turns this analysis into a programme of industrial support: transport, technical education, research, credit, export insurance, procurement, investment incentives, and international cooperation. Its urgency comes from Europe’s postwar fragmentation, multiplied tariff and currency boundaries, unemployment, and dependence on imported food and materials. Rationalization is necessary but cannot alone resolve restricted markets. Economic units extending beyond political borders offer a complementary response.

Hiedurch wird die Wirtschaftspflege mehr als je zu einer »politischen«, das ist zu einer die Gesamtheit berührenden Angelegenheit.

English translation: Through this, the fostering of economic activity becomes more than ever a “political” matter, that is, one affecting the community as a whole.

The chapter’s relevance lies in this tension between entrepreneurial autonomy and collective responsibility. Schwiedland values industrial leadership and national competitiveness, yet repeatedly shows that productive efficiency, financial control, and public benefit do not necessarily coincide. Industrial policy must preserve initiative while acquiring the knowledge and institutional capacity to restrain abuses and manage economic interdependence.