Julius Friedrich Gans von Ludassy, Untersuchungen über das Capital, seine Natur und Function [Rezension] (1892)

Julius Friedrich Gans von Ludassy’s 1892 review of Otto Wittelshöfer’s 1890 book examines the relationship between practical economic knowledge and scientific explanation. Moving from methodological reflection through reconstruction to conceptual criticism, Ludassy credits the banker’s empirical competence without treating professional experience as a guarantee of theoretical clarity.

Der Praktiker steht in fortwährender Berührung mit der vollen Realität seines Gegenstandes; er sitzt an der reinsten Quelle der Erkenntnis, der unmittelbaren Erfahrung, er schafft aus dem Vollen; was er weiss, kommt ihm nicht aus zweiter Hand.

English translation: The practitioner stands in continual contact with the full reality of his subject; he sits at the purest source of knowledge, immediate experience; he creates out of abundance; what he knows does not come to him at second hand.

Such access also presents a danger: familiarity with economic processes can encourage practitioners to mistake encountered reality for its explanation. Ludassy therefore defends reflection as a distinct intellectual activity:

Hieraus eben leitet der Philosoph die Nothwendigkeit und die Berechtigung seiner Thätigkeit ab, welche darin besteht, dass er über das nachdenkt, was Andere vollbringen.

English translation: It is precisely from this that the philosopher derives the necessity and the justification of his activity, which consists in his reflecting upon what others accomplish.

Wittelshöfer’s occupation warrants neither automatic confidence nor distrust. The question is whether his concepts explain the processes he knows.

Ludassy reconstructs Wittelshöfer’s progression from material needs and economic coordination through labour, production, consumption, and value to capital. Anticipatory production supplies the central mechanism:

Capital wird gebildet, wenn Vorproducte hergestellt werden, welche einen grösseren Bedarf zu decken im Stande sind als die mit gleichem Kraftaufwand in successiven Einzelprocessen zu gleichem Zwecke hergestellten Producte.

English translation: Capital is formed when intermediate products are produced which are capable of covering a greater need than the products manufactured for the same purpose with an equal expenditure of effort in successive individual processes.

Capital formation depends on the productive advantage of preliminary products over successive separate operations requiring equivalent effort. Increasing knowledge reduces necessary labour and consequently tends to diminish the future valuation of existing capital. Wittelshöfer distinguishes objective capital, understood through goods produced in advance, from subjective capital, understood through privately owned, monetarily valued wealth and claims.

This distinction supports his account of distribution and economic disorder. Objective capital follows productive conditions and human requirements; subjective capital develops through ownership, legal transactions, power, and differential gains. In Ludassy’s reconstruction, power relations shape wages and prices, enabling entrepreneurs to appropriate disproportionate shares of production. Misery alongside luxury, excessive capitalization at consumption’s expense, and investment governed by mistaken valuations become connected disturbances. Private fortunes may flourish through speculative promotion while the aggregate economy deteriorates.

Ludassy’s objections begin with the restriction of economics to material needs. A parent’s provision for children’s future welfare satisfies an emotional need through command over resources, rather than immediate material consumption. He similarly argues that economic activity requires order without being identical to order. These objections expose confusion between a phenomenon and its attributes. Rights and duties also require discrimination: they enter theoretical economics through their economic value, whereas their normative treatment belongs to social policy grounded in economic theory.

The definition of labour illustrates the consequences of restrictive concepts:

Die concrete Form für die Production ist die Arbeit; das ist jene menschliche Kraftaufwendung, welche bestimmt ist, ein consumirbares Gut zu erzeugen.

English translation: The concrete form of production is labour; that is, that expenditure of human effort which is destined to produce a consumable good.

Ludassy argues that requiring a physical product inadequately accommodates lawyers’, teachers’, and judges’ services. Restricting intellectual labour to calculating the effects of force upon matter compounds the problem. He also distinguishes value from utility: the capacity to satisfy demand is utility, while value is something measured, not itself the measure of that capacity. Defining value exclusively through products leaves merely appropriated goods insufficiently explained.

His decisive criticism concerns objective and subjective capital. A valid classification requires a distinguishing feature present in one class and absent from another. Wittelshöfer instead describes the same capital from two perspectives, as social wealth and individually owned property. For Ludassy, capital cannot be understood apart from economic agents; distribution is a condition of capital, not an additional species of it. The distinction turns aspects of one phenomenon into supposedly separate categories. Even a sound classification would only prepare, rather than complete, an explanation.

The review connects these weaknesses to the discipline’s inadequate methodology while respecting Wittelshöfer’s factual and literary knowledge. Its governing concern is the gap between informed observation and scientific explanation: practical insight and diagnoses of economic disorder acquire theoretical force only through concepts that distinguish attributes from phenomena, utility from value, and classification from explanation.