Money, Banks and Finance in Economic Thought

Economists are not physicians: economic crises and the problem of ‘normality’ in 19th century German economic thought

Kuster Marius, University of Lausanne

This paper investigates the criticism of the term ‘normality’ in German economic thought at the turn of the 20th century. I focus on three economists, Werner Sombart (1863-1941), Norbert Pinkus (1879-1938), and Franz Oppenheimer (1864-1943), who criticized what they considered a vague definition of ‘normality’ in the theory of crises. The three argued that 19th century economists only defined ‘normal’ in a negative way – what was not crisis was normal. Thus, they concluded that economists were “in a much worse state of knowledge than physicians”. This discourse on ‘normality’ was overshadowed by the ‘dispute over value judgments’ (Werturteilsstreit) and has so far drawn little to no attention. I argue that their criticism of the notion of ‘normality’ in 19th century crisis theory created a vivid exchange of arguments that did not result in a more rigorous definition of the term. Rather, the tendency was to discard terms like ‘normal’ and ‘crisis’ altogether, making room for new approaches – business cycle research and econometrics – to evaluate the state of the economy.

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Keywords: normality, crisis theory, 19th century, German Historical School