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Revision as of 15:06, 3 July 2006

Werner Sombart

Werner Sombart (January 19, 1863-May 18, 1941) was a German economist and sociologist, the head of the "Youngest Historical School" and one of the leading Continental European social scientists during the first quarter of the 20th century.

Life and Work

Early Career and “The modern Capitalism

He was born in Ermsleben, Harz, Germany, as the son of a wealthy liberal politician, industrialist, and estate-owner, Anton Ludwig Sombart, and studied at the universities of Pisa, Berlin, and Rome, both law and economics.

As an economist and especially social activist, Sombart was then seen as radically left-wing, and so only received - after some practical work as head lawyer of the Bremen Chamber of Commerce - a junior professorship at the out-of-the-way University of Breslau. Although faculties at such eminent universities as Heidelberg and Freiburg called him on chairs, the respective governments always vetoed this. 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 was Sombart’s unique and almost successful try to theoretically homologate Marx’s vol I. and III. of Das Kapital; in which the two completely controversial theories of “value” appeared. Sombart claims that the 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 regulatory principle ( Masaryk 1899/I, p. 336 ).


In 1902, his "magnum opus", Der moderne Kapitalismus ( The modern Capitalism ), appeared in six volumes. The 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 1989]. Deficiencies in fiscal administration, the financial system and the organisation of trade and commerce, and improvements in efficiency, therefore, are clearly regarded as a goal of economic policy by Sombart. Sombart is also said to coin the word "Capitalism" - which Marx did not apparently used - it, however, appeared in the title of Karl Jentsch’s opus Weder Kommunismus noch Kapitalismus in 1893.


Improvements in efficiency are, hence, clearly regarded as a goal of economic policy by Sombart. Sombart is also said to coin the word "Capitalism" - which Marx did not apparently used - The term, however, appeared in the title of Karl Jentsch’s opus “ Weder Kommunismus noch Kapitalismus” earlier on, in 1893.


He became, just as most economists all through the centuries, interested in the business cycle or , as he termed it, in “expansions” ( or “upswings” ) and the “crises” ( both, sales and expansion ones ). The following excerpts should make his interests clearer :


“...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 ).

Disproportionality theory

Sombart develops a disproportionality theory in which 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 for why pure "sales crises" become "capital" or "expansion crises" under high capitalism. The reason is that 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 ).


This ability will be uneven across sectors since some of these, play still greater or smaller role in Sombart’s view of the economic cycle. Schumpeter criticized this "concession to Marxist and other disproportionality theories..." ( Schumpeter 1927, p. 361 and Hageman 1996 ).


Although later much disparaged by neo-classical economists, and much criticized in specific points, it is still today a standard work with important ramifications for, e.g., the Annales school (Fernand Braudel). The book has been translated into many languages, but not into English, as Princeton University Press obtained and holds the English copyright but did and does not publish the work.

Capitalism and hedonism

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" than Breslau. Here, he companion volumes to Modern Capitalism dealing with luxury, fashion, and war as economic paradigms appeared; especially the former two are the key works on the subject until today. "...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 ).


In 1906 also appeared his Why is there no Socialism in the United States?, which, while naturally having been questioned since then, is 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...."

Middle career and sociology

His book, Die Juden und das Wirtschaftsleben (1911), is a pendant to Max Weber's study on the connection between Protestantism (especially Calvinism) and Capitalism, only that Sombart puts 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 argues 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 the acquisitive instinct and money lending arts. The book directly contradicted Weber's famous thesis relating it to Protestantism and his argument on Jews earned him no friends; Jews and liberals found it crudely anti-Semitic, while anti-Semites and conservatives considered it too pro-Semitic.


To show the problem with rating Sombart, we read: “... 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, p. 221).


Finally, in 1917, Sombart became professor at the University of Berlin, then the preeminent university in Europe if not in the world. He remained on the chair until 1931 but continued teaching until 1940. During that period, he was also one of the leading sociologists around, much more prominent than his friend Max Weber, who later eclipsed him. Sombart's insistence on Sociology as a part of the Humanities (Geisteswissenschaften), stemming from the fact that it necessarily dealt with human beings and therefore required inside, empathic "Verstehen" rather than the outside, objectivizing "Begreifen" ( both German words translate as "understanding" into English ), became unpopular already 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 is coming back in some sociological and even philosophical circles. Sombart's key sociological essays are collected in his posthumous 1956 work, Noo-Soziologie.

Late career and the ( mis-) use his work by National Socialists

During the Weimar Republic, Sombart moved to the political right; his relation to the Nazis is heavily debated until today. 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, he is often likened to Martin Heidegger and his friend and colleague Carl Schmitt, but it is clear that, while the latter two tried to be the vanguard thinkers for the Third Reich in their field and only became critical when they were too individualistic and elbowed out from their power positions, Sombart was always much more ambivalent. Sombart had many, indeed more than proportional, Jewish students, most of which felt after the war moderately positive about him, although he clearly was no hero nor resistance fighter.

Sombart’s legacy

As has been stated, in economic history, his "Modern Capitalism" is regarded as a milestone and inspiration, although many details have been questioned. Key insights from his economic work concern the - recently again validated - discovery of the emergence of double-entry accounting as a key precondition for Capitalism. 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]. A central tenet of the analysis is that fundamental institutional changes operate across political boundaries and a consequent emphasis is placed on the modes and institutions of economic action.

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 ).


He also coined the term and concept of creative destruction which is a key ingredient of Joseph Schumpeter's theory of innovation (NOTE: Schumpeter actually borrowed much from Sombart, not always with proper reference). In sociology, mainstream proponents still regard him as a 'minor figure' and his sociological theory an oddity, which is clearly contradicted by the fact that today, there are still more philosophical sociologists and culturologists who, together with heterodox economists, use his work.

Sombart has always been very popular in Japan; one of the reasons of a lack of reception in the United States is that most of his works were for a long time not translated into English - in spite of, and excluding as far as the reception is concerned, the classic study on Why there is no Socialism in America.

Bibliography

Works by Sombart

  • Sombart, Werner, Zur Kritik des Oekonomische Systems von K. Marx, in: Braun’s Archiv fur sociale Gesetzgebunk and Statistik, 1894, VII, p.576
  • Werner Sombart,Der Moderne Kapitalismus [Il capitalismo moderno], Utet, Torino, 1902
  • Sombart, Werner, Das Proletariat; Bilder und Studien, Die Gesellschaft, vol. 1, Rütten & Loening, Berlin 1906
  • Sombart, Werner, Warum gibt es in den Vereinigten Staaten keinen Sozialismus?, Mohr,Tübingen 1906; Several English translations , Why is there No Socialism in the United States?, Sharpe, New York, 1976
  • Sombart, Werner, Die Juden und das Wirtschaftsleben, Duncker & Humblot, Leipzig 1911; several English translations, incl. (1951): The Jews and Modern Capitalism, Free Press, Glencoe,IL
  • Sombart, Werner, Luxus und Kapitalismus, Duncker & Humblot, München 1922; English translation: Luxury and capitalism, University of Michigan Press, Ann Arbor 1921
  • Sombart, Werner, Deutscher Sozialismus, Buchholz & Weisswange, Charlottenburg 1937; English translation ( 1969): A New Social Philosophy, Greenwood, New York 1934
  • Sombart, Werner, Vom Menschen Versuch einer geisteswissenschaftlichen Anthropologie, Duncker & Humblot, Berlin, 1938
  • Sombart, Werner, The Jews and Modern Capitalism, ( translated by M. Epstein ), The Free Press, Glencoe, Illinois 1951
  • Sombart, Werner, Noo-Soziologie, Duncker & Humblot, Berlin 1956
  • Sombart, Werner, Economic Life in the Modern Age, Nico Stehr and Reiner Grundmann, eds. ), New Brunswick 2001

References
ISBN links support NWE through referral fees

  • Appel, Michael, Werner Sombart: Historiker und Theoretiker des modernen Kapitalismus, Metropolis, Marburg 1992
  • Backhaus, Jürgen G. (ed.), Werner Sombart (1863-1941): Social Scientist, 3 vols. Metropolis, Marburg 1996
  • Hagemann H. - Landesmann M., Sombart and Economic Dynamics, in: J.G. Backhaus (ed.), Werner Sombart (1863-1941): Social Scientist, II. His Theoretical Approach Reconsidered, Metropolis, Marburg 1996, pp. 179-204.
  • Hagemann H. - Landesmann M., Lowe and Structural Theories of the Business Cycle, in: H. Hagemann and H.D. Kurz (eds.), Political Economics in Retrospect: Essays in Memory of Adolph Lowe, Edward Elgar, Cheltenham 1998, pp. 95-130.
  • Lenger, Friedrich, Werner Sombart, 1863-1941; Eine Biographie, Beck, München 1994
  • Masaryk, T.G., Die philosophischen und sociologischen Grundlagen des Marxism, Verlag von Carl Konegen, Wien, 1899 ( Czech translation )
  • Osten, M. von, Thesis about the Calida Story: Fashion, Capitalism, Femininity <text/calida.htm>
  • The 'Journal of Classical Sociology' 'Why Is Werner Sombart Not Part of the Core of Classical Sociology?'.

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