Markets, Productivity, and Happiness in a Historical Perspective

Description and diagnosis – The Wirtschaftsdienst’s statistical business cycle reporting based on Arthur Spiethoff’s theory of economic fluctuations

Lücke Julia, Universität Hamburg

In 1926, the Hamburg based economic weekly "Wirtschaftsdienst. Weltwirtschaftliche Nachrichten" introduced a regular statistical reporting on the business cycle. This corresponded with contemporary developments in economics, since after WWI quantitative research on business cycles became significant for the discipline and fostered the development of more solid methods of statistics and econometrics. Several economic research institutes were founded during that time, in Germany the "Institut für Konjunkturforschung"(IfK)in Berlin in 1925 and the "Abteilung für Statistische Weltwirtschaftskunde und Internationale Konjunkturforschung"(Astwik)at the "Institute for World Economy" at Kiel University in 1926. The growing importance of quantitative analysis stemmed from the ambition to improve the discipline’s scientific methods as well as to align economics more strongly with the demands of private businesspeople. The Wirtschaftsdienst’s business cycle reports were based on the over-investment theory of the well-known German economist Arthur Spiethoff who argued that cyclical fluctuations originate in the sphere of producers’ goods. Accelerating dynamics of the production of raw materials and capital equipment inherent to the system of advanced capitalism foster an economic upswing, and cause production to inevitably exceed the capital devoted to investment at some point. Spiethoff infers two quantitative indicators from his theory that should allow a precise characterization of the economy’s current position along the cycle in order to provide guidance to entrepreneurs’ activities: the domestic consumption of iron and the amount of shares issued by German companies. Plotted within a diagram, the two series constituted the Wirtschaftsdienst’s “Wirtschaftsbarometer” (economic barometer). While the secondary literature mainly focusses on the economic barometer that the weekly published only a few times between 1926 and 1927, the paper extends the analysis of the Wirtschaftsdienst’s business cycle reporting to the monthly articles “On the current situation”. It shows that the weekly adopted Spiethoff’s indicators and theoretical arguments more comprehensively than a narrow look at the few publications of the economic barometer might suggest. The Wirtschaftsdienst’s statistical approach is then considered within a broader methodological argument. Kurt Singer, chief editor of the Wirtschaftsdienst from 1920 to 1927 and lecturer at Hamburg University, critically commented on both the work of the Berlin IfK and Adolph Lowe, head of the Astwik in Kiel. While the IfK, inspired by the method of the Harvard business barometer, conducted a predominantly empirical approach, Singer emphasized the importance of a theoretical framework in order to make sense of the quantitative data. In contrast to Lowe who elaborated on an abstract or pure theory, Singer promoted Spiethoff’s descriptive and historical theory of the cycle.


Keywords: business cycle statistics, business cycle theory, Wirtschaftsdienst