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The Historical Setting of the Austrian School of Economics
Ludwig von Mises

The Conflict with the German
Historical School

2. The Sterility of Germany in the Field of Economics

The German universities were owned and operated by the various kingdoms and grand duchies that formed the Reich.[3] The professors were civil servants and, as such, had to obey strictly the orders and regulations issued by their superiors, the bureaucrats of the ministries of public instruction. This total and unconditional subordination of the universities and their teachings to the supremacy of the governments was challenged?in vain?by German liberal public opinion, when in 1837 the King of Hanover fired seven professors of the University of G?ttingen who protested against the King's breach of the constitution. The governments did not heed the public's reaction. They went on discharging professors with whose political or religious doctrines they did not agree. But after some time they resorted to more subtle and more efficacious methods to make the professors loyal supporters of the official policy. They scrupulously sifted the candidates before appointing them. Only reliable men got the chairs. Thus the question of academic freedom receded into the background. The professors of their own accord taught only what the government permitted them to teach.

The war of 1866 had ended the Prussian constitutional conflict. The King's party?the Conservative party of the Junkers, led by Bismarck?triumphed over the Prussian Progressive party that stood for parliamentary government, and likewise over the democratic groups of Southern Germany. In the new political setting, first of the Norddeutscher Bund and, after 1871, of the Deutsches Reich, there was no room left for the "alien" doctrines of Manchesterism and laissez faire. The victors of K?niggr?tz and Sedan thought they had nothing to learn from the "nation of shopkeepers"?the British?or from the defeated French.

At the outbreak of the war of 1870, one of the most eminent German scientists, Emil du Bois-Reymond, boasted that the University of Berlin was "the intellectual bodyguard of the House of Hohenzollern." This did not mean very much for the natural sciences. But it had a very clear and precise meaning for the sciences of human action. The incumbents of the chairs of history and of Staatswissenschaften (i.e., political science, including all things referring to economics and finance) knew what their sovereign expected of them. And they delivered the goods.

From 1882 to 1907 Friedrich Althoff was in the Prussian ministry of instruction in charge of university affairs. He ruled the Prussian universities as a dictator. As Prussia had the greatest number of lucrative professorships, and therefore offered the most favorable field for ambitious scholars, the professors in the other German states, nay, even those of Austria and Switzerland, aspired to secure positions in Prussia. Thus Althoff could as a rule make them, too, virtually accept his principles and opinions. In all matters pertaining to the social sciences and the historical disciplines, Althoff entirely relied upon the advice of his friend Gustav von Schmoller. Schmoller had an unerring flair for separating the sheep from the goats.

In the second and third quarter of the nineteenth century some German professors wrote valuable contributions to economic theory. It is true that the most remarkable contributions of this period, those of Th?nen and of Gossen, were not the work of professors but of men who did not hold teaching jobs. However, the books of Professors Hermann, Mangoldt, and Knies will be remembered in the history of economic thought. But after 1866, the men who came into the academic career had only contempt for "bloodless abstractions." They published historical studies, preferably such as dealt with labor conditions of the recent past. Many of them were firmly convinced that the foremost task of economists was to aid the "people" in the war of liberation they were waging against the "exploiters," and that the Godgiven leaders of the people were the dynasties, especially the Hohenzollern.

[3] The Reich itself owned and operated only the University of Strassburg. The three German city-republics did not at that period have any university.

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