The development of economic theories in Germany: From Karl Heinrich Rau to Wilhelm Roscher

Yukihiro Ikeda 4.1 INTRODUCTION Karl Heinrich Rau (1792-1870) and Wilhelm Roscher (1817-94) were leading German economists of the mid-nineteenth century, both of whom drew on English classical economics, but at different times in its development. Rau’s three-volume textbook - Grundsätzte der Volkswirtschaftslehre (1826 [1997]), Grundsätze der Volkswirtschaftspflege (1828 [1997]), Grundsätze der Finanzwissenschaft (1837 [1997]) - was widely read, and among its readers was Carl Menger, the founder of the Austrian School of Economics.1 Menger eagerly read and re-read Rau’s Grundsätze der Volkswirtschaftslehre during the 1860s while preparing his own Grundsätze as a Habilitationsschrift, which he would later submit to Vienna University in support of his application for a lectureship. During this period he also studied Roscher’s Grundlagen, which also exerted a powerful influence upon his thinking.2 Rau’s work represents the earlier phase of the introduction of the English Classical School into German economic theory, before the work of John Stuart Mill was translated. Roscher’s work was by contrast published after the introduction of Mill’s economic doctrines into Germany. Both Rau and Roscher were to some extent lexicographic writers, gathering together whatever materials they thought to be important for their readers; making it difficult to identify their own positions. Nonetheless, Grundsätze and Die Grundlagen deserve scrutiny, as they represent an important phase within the development of economic thought in German, when the English Classical School became popular throughout Germanspeaking areas. First, let us take a brief look at how Rau divided his work.3 Rau begins….