Contextual economics and its beginnings

In light of the profound shifts in the intertwined order of economy, politics, society, and ecology, economic science is under pressure from both policy-makers and the public, as rarely before, to find solutions to the complex societal problems of the present. Yet, in view of the new fragility of our time, modern economics often seems to be at a loss. A stronger consideration of the societal contexts (historical, cultural, social, ethical) in which the economy and economic action take place could be a remedy, but such “contextual approaches” have been largely marginalized or outsourced to the neighboring disciplines for some time. Against this backdrop, the dissertation at hand explores the question of how contemporary economics could benefit from contextual approaches, where the comparative advantages of contextual economics lie, and what its position and particular path of development in the history of economic thought is. The thesis focuses on the work and influence of Gustav Schmoller (1838–1917). It will be shown why the research program of the leading German economist of the late 19th century can be understood today in many respects as prototype of an explicitly contextual economics, why it marks the starting point of socio-economic research in the German-speaking world, and why his extensive oeuvre, despite the sometimes-scathing criticism it has been subjected to from the 1930s until today, is still a valuable resource for understanding the interplay between people, culture, economy, state, and society. The dissertation contributes to the reassessment of Schmoller’s economic doctrine by reconstructing it both historically (in the ideen- and zeitgeschichtlichen context of its emergence) and rationally (from the perspective of modern contextual economics). By so doing, relevant questions as well as answers are derived, which – especially in the context of accelerating transformation and institutional change in the interconnected orders of economy and society – reveal new relevance in the current discourse and usefully expand it. Continuities in the history of economic thought will be illuminated, that reveal, among other things, profound linkages between ordoliberalism and the ideas of Schmoller, and enhance the understanding of the genesis of the idea as well as of the ethical principles of a Social Market Economy.