Eugen von Philippovich, Ein neues Lehrbuch der theoretischen Nationalökonomie (1917)

Philippovich’s review assesses the introductory volume of Karl Diehl’s Theoretische Nationalökonomie, combining respect for its scholarship with criticism of its methodological programme and suitability for students. Its central question is whether recognition of the social and legal organization of economic life requires abandoning individual needs, economic interest, and abstraction as foundations of explanation.

Diehl’s division between disciplinary foundations and a survey of economic systems does not, Philippovich observes, keep methodological controversy out of the introductory discussion:

Wie schon die in der Anmerkung mitgeteilte äußerliche Trennung des ersten und zweiten Teiles dartut, muß der Verfasser sich mit seinen Vorgängern auf dem Gebiete der theoretischen Nationalökonomie schon im ersten Teil auseinandersetzen.

English translation: As the external separation of the first and second parts, communicated in the note, already shows, the author must come to terms with his predecessors in the field of theoretical economics already in the first part.

The first part addresses economics as a social science, its relations to law and technology, and its principal divisions. Philippovich welcomes the distinction between theoretical economics, practical economics, and public finance. He defends economics against displacement by technical or commercial training while endorsing the need for theorists to understand practical institutions. Banking, machinery, and world trade matter because they shape prices, incomes, wealth, and social stratification.

The discussion of law likewise establishes the importance of economic education for future jurists and administrators. Legal arrangements change with capitalism, international exchange, cartels, and social policy; they cannot be treated as an immutable framework. Philippovich’s reservation concerns Diehl’s presentation. Extensive controversy before the positive exposition risks obscuring its purpose:

Der Laie wird aber durch den vorausgehenden Aufbau leicht übersehen, daß er nur dazu dienen soll, die richtige Auffassung zu stützen.

English translation: The layman, however, will easily overlook, on account of the construction that precedes, that it is meant only to serve to support the correct conception.

This pedagogical concern recurs throughout the review. What rewards a reader familiar with theoretical disputes may confuse someone seeking an initial orientation.

Philippovich’s substantive disagreement becomes clearest in his defense of economic interest. Wartime experience demonstrates that individual economies depend on the wider economy, but this dependence does not refute individual incentives. Private interest also helps explain the effort involved in supplying armies and distributing scarce goods. Against Diehl’s rejection of the economic principle as a governing force, he invokes valuations produced by wartime isolation:

Ich glaube, die Absperrung, unter der wir mitteleuropäischen Völker auf allen Gebieten der Versorgung mit Bedarfsgegenständen leiden, hat zu Wertbildungen geführt, die dieses Prinzip doch als ein herrschendes aufzeigen.

English translation: I believe that the shutting-off under which we central European peoples suffer in all fields of the supply of articles of need has led to formations of value which do after all exhibit this principle as a governing one.

War thus supplies evidence for both social interdependence and the explanatory importance of scarcity and valuation. Philippovich resists treating these as alternatives: institutional organization does not eliminate the pressures acting upon individual economic conduct.

In discussing Diehl’s survey of systems and methods, Philippovich treats its account of changing economic reasoning as historical despite Diehl’s distinction between such a survey and a history. He finds the exposition substantial but insufficiently accessible. The treatment of the Physiocrats and Adam Smith gives too little attention to distribution and income, which he regards as central to their historical significance. Their opposition to mercantilist administration linked theories of production and distribution to practical changes such as peasant emancipation, land taxation, and the removal of guild restrictions. He also disputes the association of Manchester doctrine, especially Ricardo, with anarchism.

Diehl’s independence in judging the historical school receives praise. Yet its displacement of abstract theory by concrete historical investigation leads to a further disagreement over Menger and the Austrian school. Philippovich defends abstraction through the relation between expanding needs and limited resources; wartime disturbances in supply and demand make that relation especially visible. His defense is selective: he shares objections to Schumpeter’s distance from economic reality and to Liefmann’s inability to explain determinate prices through the opposition between enjoyment and costs.

The closing discussion considers Darwinist, materialist, religious, ethical, and social-legal approaches. Philippovich questions whether ethical economics forms a distinct school when social policy already incorporates ethical commitments. Diehl’s preferred grounding of economics in legal organization leaves their principal disagreement unresolved. Philippovich accepts social and institutional analysis while retaining scarcity, individual needs, and incentives as indispensable explanatory elements. His final assessment distinguishes scholarly interest from instructional limitations: the book’s critical richness serves experienced economists better than beginners.