The Historical School: From Friedrich List to the Social Market Economy. Zemfira Nazarova
noticed and little appreciated by his contemporaries.
In his non-existent state, which is essentially a hypothesis, Thünen, considers all economic phenomena in their purest form. The state or city, which is located in the center of the plain, which has a rounded territory and everywhere equally fertile soil for various agricultural activities. The distances from the center of distribution along all the boundaries of the area are the same, and the city is the only outlet for all the goods produced around it. Thünen notes: «Imagine a very large city situated in the middle of a fertile plain, not cut through by any navigable rivers or canals. Let this plain have perfectly uniform soil, everywhere equally convenient for cultivation, and let it pass at a great distance from the city into virgin spaces which separate the whole state from the rest of the world. There are no other towns on the plain except the said single large city, upon which falls the duty of supplying the whole country with the products of industrial production, which in turn receives its foodstuffs exclusively from the surrounding plain. The mines and saltworks, which satisfy all the needs of the state for metals and salt, we imagine,» says Thünen, «lie also in the vicinity of this central city, which we shall hereafter call simply a city, since it is the only one16. Thünen poses the question: what forms will agriculture take under these conditions, and how will it be affected by a greater or lesser distance from the city, if this agriculture is conducted quite rationally?
Under the conditions of such an «isolated state», Thünen considers the formation of different kinds of income. He points out that for the application of labor in farming, the application of capital is also necessary, and the level of profit is determined by the profitability of the last part of capital and this determines the profit on capital in its «natural» state in the «isolated state». Thünen believes that capital invested in production not only increases wealth and income in the hands of capitalists, but is also beneficial to the workers themselves, as it increases the influence of one of the elements that increase their wages. It should be noted that Thünen lives in the era of the industrial revolution and the emergence of unemployment as a social phenomenon, which exacerbated the contradictions between workers and capitalists. Workers began to see the capitalists as their enemies, believing that the interests of the workers are opposite to those of the capitalists, and that profits grow at the expense of wages. According to Thünen, if workers’ wages were raised and their children received a free education sufficient for the entrepreneurial endeavor, the barrier that existed between the estates would disappear. In the matter of restricting free trade, Thünen argues that «the prohibitionist system has nowhere created such new sources by which the worker’s earnings could be increased and he would be able to pay a more expensive price for bread. On the contrary, by increasing the price of necessities, the welfare of all, and especially of the laborers, is diminished; … by inflicting an inevitably deep wound on the poorest state by restricting free trade, the rich state at the same time wounds itself no less deeply»17
Mark Blaug, in his essay on Thünen in his book One Hundred Great Economists Before Keynes, calls Thünen’s work The Isolated State a grand masterpiece. He notes «Thünen is two, perhaps even three economists in one: for geographical economists he is the ’father’ of the theory of the location of economic activity, the branch of economic science that studies the role of distance and territory in economic life; for theoretical economists he is one of the independent pioneers of the so-called ’marginal productivity theory of distribution’; and for mathematical economists and econometricians he is a major innovator in the use of computation to find solutions to maximization problems.18 It should also be noted that contemporaries perceived Thünen’s work as an exemplary guide to agriculture. Until the end of the XVIII century, many branches of natural science, which formed the basis of agriculture, were at the stage of formation. Social and economic life in the countries of Central Europe was gradually being freed from medieval vestiges, commodity-money relations were developing, the reorganization of subsistence economy under the influence of the developing market, and the problems of interaction between agriculture and the market had not been considered by anyone before Thünen. Only many decades later, at the beginning of XX century, Thünen was recognized as one of the predecessors of marginalism.
The three works cited here are all by brilliant Germans who left a mark on the history of German economic thought and are dedicated to the goal of better organizing the state. The ruler, the philosopher and the landowner were trying to create a model of well-being for their state. One preached absolutism, the other freedom of the individual, the third freedom of trade. Who is right? Where is the truth?
Philosophy of Romanticism – Georg Wilhelm Friedrich Hegel
The spiritual environment that developed in most European countries in the second half of the 18th century, labeled by historians as the Age of Enlightenment, in fragmented Germany also had a specificity, which consisted in the fact that among many representatives of the German Enlightenment the idea of national unity was very popular. In the 70s of the XVIII century, the literary movement «Storm and onslaught» emerged, which contributed to the awakening of national feelings. The Stürmer movement had a noticeable influence on the early work of Goethe, Schiller, Hölderlin and other German poets and writers who created in their works a gallery of images of rebels.
The end of XVIII – beginning of XIX century – is the time of the Great French Revolution, the Napoleonic Wars, the time of industrial revolution in England and the development of capitalism, it is a time of political humiliation of many peoples of Europe (Germans, Hungarians, Poles, Italians, Czechs) and the rise of their national consciousness. Europe was on the threshold of the greatest upheavals and changes. The French Revolution shook the foundations of the old order and for a quarter of a century plunged the countries of the Old World into the abyss of social and political instability. It should be recognized that Napoleon, who tried to redraw the map of Europe, which was languishing under the burden of feudalism and outdated territorial division, first drew under French influence almost all the leading personalities of the time, who, however, soon became disillusioned with him (the great Beethoven changed the dedication in his «Heroic» symphony).
Hegel, a prominent representative of the German classical school, did not stand aloof from these changes. Like many young people of the time, as a student, he marveled at the French Revolution, and then abruptly changed his beliefs and began to praise the extremely conservative Prussian state. His philosophy absorbed the contradictions of the epoch, becoming the creator of a system that tried on the absolute idea with the Prussian class monarchy, he surprisingly combined revolutionary ideas and conservative elements in his doctrine
Georg Wilhelm Friedrich Hegel (1770—1831) was born in Stuttgart, the capital of the principality of Württemberg. The philosopher’s father was a secretary of the treasury and was a member of the highest bureaucracy. His parents prepared him for a career as a pastor; 1788—1793 he studied at the Theological University of Tübingen and earned a Ph. D. in theology. Together with fellow student Schelling and mutual friend Hölderlin, who soon became a famous German Romantic poet, Hegel read the works of Plato and Kant; disillusioned with his career as a pastor, he concentrated on philosophy. From 1793 to 1800, Hegel labored as a home teacher and educator. After the death of his father, he receives his share of the inheritance, which gives him the opportunity to engage in philosophical activities. In early 1801 he comes to Jena, where after defending two dissertations, he receives the right to teach at the local university as a private associate professor of philosophy. In 1802—1803, together with Schelling, he published the «Critical Philosophical Journal», in which he printed a number of his works. After leaving Jena, Hegel moved first to Bamberg and then to Nuremberg, where he worked as director of the gymnasium (1808—1816); it was during this period that he wrote The Science of Logic. From 1816—1818 he held a professorship at the University of Heidelberg, and from 1818 until his death at the University of Berlin, where he was rector of the
World economic thought. Through the prism of centuries. In 5 vol. / VOL. II. Rising capitalism / Reply. Ed. M.G.Pokidchesko. – Moscow: Mysl, 2005. – Pg. 64.
Ibid., pp.69—70.
Blaug, M. 100 Great Economists before Keynes. / Translated from English. Edited by A. A. Fofanov. – St. Petersburg: 2005. – p.299