Joseph A. Schumpeter, “Deutschland” (1927)

This file is a single-author survey chapter for a collective volume. Schumpeter surveys German-language economic theory—Germany, Austria, German Switzerland, and related scholarly regions—while denying that either “Germany” or “the state of science” is an organic unity. His thesis is diagnostic and programmatic: modern economics must join analytic theory, statistics, and realistic detail inquiry; German economics has had major individual achievements, but too little shared technical tradition to make them cumulative.

Das ist die Situation und das die Aufgabe in allen Ländern — weniger als je gibt es da Raum für nationale Eigenarten.

English translation: That is the situation and that is the task in all countries — less than ever is there room here for national peculiarities.

The opening turns a national report into an anti-nationalist account of method. Schumpeter accepts Marshall’s claim that nineteenth-century economics built “qualitative” analysis and that the next task is quantitative, numerical, and—where numbers fail—institutional determination. Theory is narrowed to an apparatus, not elevated into a worldview.

Diese Wirtschaftstheorie ist vor allem keine Theorie der Wirtschaft: Sie ist keine Synthese der wirtschaftlichen Theorien der ersten der drei von uns unterschiedenen Bedeutungen des Wortes mit Hilfe tunlichst allgemeiner Grundprinzipien.

English translation: This economic theory is above all not a theory of the economy: it is not a synthesis of the economic theories in the first of the three meanings of the word that we distinguished, by means of the most general possible fundamental principles.

This is the essay’s main conceptual move: theory is autonomous only as a tool, and is useless when detached from factual, historical, statistical, and institutional work. Schumpeter therefore praises German social science broadly—ethnology, economic history, cultural sociology, statistics, business economics, and the institutional syntheses of Schmoller, Sombart, and Max Weber—because these fields show how “facts” already contain theory. Yet he also sees the weakness: Germany lacks an agreed technical language and a trained theoretical public.

Section III explains why German theory feels unsatisfactory despite abundant talent and interest. Journals and handbooks, he argues, show no absence of theory; the problem is the missing “tragende Tradition,” which makes each theorist begin again and encourages epistemology, Weltanschauung, and school labels. Schumpeter values the Methodenstreit and Weber’s defense of value-freedom, but attacks the conversion of scholarly tools into sectarian “isms.”

Mit keinem dieser „ismen“ ist die Theorie auf Gedeih und Verderb verbunden, mit jedem kompatibel — hören wir doch auf, während ringsum die Probleme locken und drängen, diesen Sand zu pflügen und uns damit zu bewerfen!

English translation: With none of these "isms" is the theory bound for better or worse; with each it is compatible — let us therefore cease, while problems all around are beckoning and pressing, to plow this sand and to pelt one another with it!

Section IV tests this diagnosis in special fields. Population theory is represented by Mombert; crisis and business-cycle theory by Spiethoff, whose work best fuses theory and empirical inquiry; monetary theory by a painful contrast between German achievement and German failure. Knapp and Bendixen show how brilliant but inadequately disciplined innovation can mislead a field, while Knies, Menger, Wieser, Mises, Schlesinger, Hahn, and Plenge had already supplied much of what Germans later learned from Wicksell, Keynes, Fisher, and Cassel.

An grundlegenden Leistungen hat es also nicht gefehlt — nur haben wir sie selbst nicht verstanden.

English translation: Fundamental achievements have therefore not been lacking — only we ourselves have not understood them.

The final section defends the analytic apparatus centered on price theory and marginal utility. Schumpeter contrasts unconventional system-builders, classical survivals, Marxian theory, and the German marginalist line from Menger, Wieser, and Böhm-Bawerk. His claim is deliberately anti-sectarian: marginal utility is not a party doctrine but the common international instrument of contemporary theory, shared in different forms by Walras, Jevons, Marshall, Pareto, Clark, Wicksell, and others.

In diesem Sinne ist die Grenznutzentheorie nicht eine von vielen konkurrierenden Doktrinen, sondern einfach die momentan einzige Theorie überhaupt.

English translation: In this sense the marginal utility theory is not one of many competing doctrines, but simply the only theory that exists at the moment.

Schumpeter does not say that all problems are solved. Interest theory remains divided, and Böhm-Bawerk matters because he clarified its difficulty. Nor does Schumpeter reduce marginalism to utility psychology. What unifies modern theory is marginal analysis as a way to handle mutual determination, imputation, distribution, monopoly, taxation, and intervention. Its decisive proposition is the value character of cost:

Die Kosten sind eine Werterscheinung.

English translation: Costs are a phenomenon of value.

The essay’s relevance lies in this double portrait: historically, it is a self-diagnosis of German economics after the Methodenstreit, inflation, and international marginalism; conceptually, it anticipates Schumpeter’s mature view that economics advances through tools, trained communities, and cumulative problem solving—not national spirits, philosophical labels, or isolated genius.