Werner Sombart (January 19, 1863 – May 18, 1941) was a German economist and sociologist, the head of the "Youngest Historical school of economics" and one of the leading continental European social scientists during the first quarter of the twentieth century. Initially influenced by Marxism, Sombart's early writings on capitalism reflect his understanding and acceptance of many of Marx's ideas. His sociological work countered Max Weber's thesis that the "spirit of capitalism" was linked to Protestantism, as Sombart claimed that Jews embodied such a spirit and were the driving economic force in the growth of capitalism. Sombart was accused of anti-Semitism, although his initial thesis was positive towards Jews. His later writings showed the influence of Nazism, although again his position in relation to that ideology was ambiguous. Largely ignored in the United States, Sombart nevertheless contributed several key insights, which have been used in both economics and sociology.
Werner Sombart was born in Ermsleben, Harz, Germany, the son of a wealthy liberal politician, industrialist, and estate-owner, Anton Ludwig Sombart. He studied at the universities of Pisa, Berlin, and Rome, a student of both law and economics.
As an economist and especially a social activist, Sombart was seen as radically left wing, and after some practical work as head lawyer of the Bremen Chamber of Commerce, finally received only a junior professorship at the out-of-the-way University of Breslau. Although other professors at such eminent universities as Heidelberg and Freiburg extended invitations to him for chairs at their schools, the respective university governments always vetoed them.
Sombart, at that time, was an important "Marxian," not a Marxist, but someone who used and interpreted Karl Marx to the point that Friedrich Engels called him the only German professor who understood Das Kapital. The reason for Engels' comment was Sombart’s unique and almost successful try to theoretically homologate Marx’s volumes one and three of Das Kapital, in which the two controversial theories of "value" appeared. Sombart claimed that Marx’s “value” of goods is not an “average,” and neither plays any role in exchange (of goods) as a condition of economic activity, but it is only a sort of “natural law” with a regulatory function (Masaryk 1899/I, p. 336).
In 1902 Sombart's magnum opus, Der moderne Kapitalismus (Modern Capitalism), appeared in six volumes. This work is a systematic history of economics and economic development through the centuries, and very much a work of the historical school. In it, he defined capitalism as:
...an economic organization of exchanges, in which basically two different groups of people, the owners of the means of production and the workers with no property, cooperate in a rational process of production, joined by the market... (Sombart 1902)
Sombart is also said to have coined the word "capitalism"—which Marx did not apparently use—although it appeared in the title of Karl Jentsch’s 1893 publication, Weder Kommunismus noch Kapitalismus.
Sombart became, like most economists, interested in the business cycle—or, as he termed it, in “expansions” or “upswings,” and the “crises” (both in sales and expansion). The following excerpts reveal his interests clearly:
The key figure of Sombart’s theory of the capitalist business cycle is the entrepreneur who is stimulated in his activities by favourable conditions of production like low interest rates, low prices for raw materials, and low wages. Entrepreneurs will form positive expectations for an increase in sales in connection with the opening up of new markets, the restructuring of an economy’s capital stock in connection with major innovations or a higher rate of growth of population. The general increase in prices during an upswing and the lag in wages is a further stimulus for the boom. Prices may rise because purchasing power has increased, either due to monetary factors like an additional influx of gold or an extension of credit, or due to an increase in effective demand caused by a sectoral increase in production. (Marx, III, pp. 572-273; in Hageman 1998)
An interesting element in Sombart’s view of the function of the economic cycle in capitalist development is that he believes that both the upswing and the crisis are beneficial from an evolutionary perspective of high capitalism. The pronounced upswing allows an "extensive" development of capitalist attitudes and enterprise, while the downswing forces capitalists to improve their organization and introduce new technologies to survive. Furthermore, he emphasizes the selective role of economic crises which only the fittest entrepreneurs will master. The recession periods therefore play an important role in rationalizing the production process and in influencing the long-run trend, not so much in terms of growth rates but in terms of the evolution of the whole economic system. (Hageman 1998)
Deficiencies in fiscal administration, the financial system, the organization of trade and commerce, and improvements in efficiency, therefore, were clearly regarded by Sombart as the goal of economic policy. Although later much disparaged by neo-classical economists, and much criticized in specific points, Der moderne Kapitalismus remains a standard work with important ramifications. The book has been translated into many languages, but not into English— Princeton University Press obtained the English copyright but did not publish the work.
Sombart developed the "disproportionality theory," which stated that the downswing of the economy is explained by the growing disproportionality between the organic and the anorganic sector of the economy. The growth of the anorganic sector is the important structural difference between the sectoral composition of the economy in the early capitalist period and in high capitalism. It is the main reason why pure "sales crises" become "capital" or "expansion crises" under high capitalism. Under the conditions of early capitalism, in which the dependence upon organic materials was great, a rapid expansion of the supply side of the economy was not possible. A discrepancy between supply and demand thus had to come, according to Sombart, from exogenous shocks largely affecting the demand side.
In high capitalist conditions, the economy is able from a purely production technological point of view to expand rapidly its production capacities. This is further reinforced by the importance of credit institutions financing such an expansion. (Sombart 1902)
Sombart noted that this expansion ability would be uneven across the economic sectors, since some of these play greater or smaller roles in the economic cycle. This model, however, has been criticized as a "concession to Marxist and other disproportionality theories" (Schumpeter 1927, 361 and Hageman 1996).
In 1906 Sombart accepted a call to a full professorship at the Berlin School of Commerce, an inferior institution to Breslau, but closer to political "action." There, he produced companion volumes to Modern Capitalism dealing with luxury, fashion, and war as economic paradigms. These volumes have been considered key works on the subject, linking capitalism and hedonism:
In his opinion, capitalism emerged from the demand for new consumer goods by a young bourgeoisie, who had an urge to resemble nobility. Sombart sets the origin of capitalism in a context of hedonism, which is interpreted as the bourgeoisie's desperate mimicry of the feudal aristocracy. The then emerging accumulative and profit-oriented system was, according to Sombart, not triggered by protestant ideologies or the introduction of an interest-based economy, as in Marx and Weber, but by extravagance, by taking pleasure in non-functional things, by trinkets and knick-knacks, which promoted a desire to have more money. This desire for more 'money' is therefore equivalent to striving for similarity with something (with nobility), but also to simultaneously depreciating and desiring something else (women), and to gaining economic power. (Marion von Osten)
Taking Sombart's theory on “capitalism-cum-hedonism” further: "it can be seen that capitalist society, in order to exist and blossom needs the nouveaux riches, yuppies and social climbers, who strive to be different by acquiring luxury goods and to become more similar to the upper classes” (von Osten 2000).
In 1906 his Why is there no Socialism in the United States? appeared, which, while having been questioned since then, remains the classical work on "American exceptionalism" in this respect. The most famous quote from the book is "all the socialist utopias have foundered upon roast beef and apple pie" (Sombart 1906).
His book, Die Juden und das Wirtschaftsleben (1911) (translated as The Jews and Modern Capitalism (1951), is a pendant to Max Weber's study of the connection between Protestantism (especially Calvinism) and capitalism, except that Sombart put the Jews at the core of the development. Sombart argued that while it is true that capitalism embodied a definite spirit that had not existed previously, it was not solely a Protestant phenomenon. Indeed, Sombart argued that the "spirit of capitalism" is better found among Catholics and Jews. The Catholics embodied a belief system which centered on abstinence, rationalism, and discipline. The Jews, he argued, had been outcasts of society and had developed an acquisitive tendency and money-lending arts. The book directly contradicted Weber's famous thesis relating it to Protestantism, and his argument about Jews earned him no friends: Jews and liberals found it crudely anti-Semitic, while anti-Semites and conservatives considered it too pro-Semitic. The following quote illustrates Sombart's problem:
Judaism even in times of great affliction was always optimistic. In this the Jews differ from the Christians, whose religion has tried to rob them all it could of earthly joys. As often as riches are lauded in the Old Testament they are damned in the New, wherein poverty is praised. (Sombart 1951, 221)
Finally, in 1917, Sombart became professor at the University of Berlin, then the preeminent university in Europe if not in the world. He held the chair until 1931, and continued teaching there until 1940. During that period, he was also considered one of the leading sociologists, much more prominent than his friend, Max Weber, who later eclipsed him.
Sombart insisted on sociology being considered a part of the Humanities (Geisteswissenschaften), stemming from the fact that it necessarily dealt with human beings and therefore he claimed it required inside, empathic Verstehen rather than the outside, objectivizing Begreifen (both German words translate as "understanding" into English). This view already became unpopular during his lifetime, because it was the opposite of the "scientification" of the social sciences in the tradition of Auguste Comte and Émile Durkheim. However, Sombart's Verstehen-based approach to understanding the world did regain popularity in some sociological and even philosophical circles. Sombart's key sociological essays are collected in his posthumous 1956 work, Noo-Soziologie.
During the Weimar Republic, Sombart moved to the political right, and his true relationship to the Nazis has continued to be heavily debated. His 1938 anthropology book, Vom Menschen, is clearly anti-Nazi, and was indeed hindered in publication and distribution by the Nazis.
In his attitude towards the Nazis, Sombart has often been likened to Martin Heidegger and his friend and colleague, Carl Schmitt. However, it is clear that, while the latter two remained members of the Nazi party and initially tried to be the vanguard thinkers for the Third Reich in their field, Sombart was always much more ambivalent. Sombart had many Jewish students, most of whom felt moderately positive about him after the war, although he clearly was no hero nor resistance fighter.
As has been stated, Sombart's Modern Capitalism is regarded as a milestone and inspiration, although many details have been questioned. Insights from his economic work concern the (later validated again) discovery of the emergence of double-entry accounting as a key precondition for capitalism.
Sombart also coined the term and concept, "creative destruction," which is a significant ingredient of Joseph Schumpeter's theory of "innovation." In fact, Schumpeter's work actually borrowed much from Sombart.
In sociology, mainstream proponents still regard him as a "minor figure" and his sociological theory an oddity. Nevertheless, there are many philosophical sociologists and culturologists who, together with heterodox economists, have made good use of his work.
One of the reasons for his lack of reception in the United States is that most of his works were not translated into English for a long time, in spite of, and excluding as far as the reception is concerned, his classic study on Why there is no Socialism in America? Another reason, which also led to his fall from favor in Europe, was the question of his relationship to the Nazis and the debate over the anti-Semitic nature of some of his writings. Finally, after Weber's work became well-known in the U.S., Sombart's theories were overshadowed, and given the controversy of possible anti-Semitism, largely ignored. Nevetheless, as noted above, a number of theorists, both in economics and sociology, have used aspects of his theories in their work.
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