Johann Heinrich Gottlob von Justi (1717-1771): The Life and Times of an Economist Adventurer.
Erik S. Reinert
The Other Canon Foundation
Table of Contents:
Johann Heinrich Gottlob von Justi (1717-1771): The Life and Times of an Economist Adventurer. 1
Table of Contents: 1
Introduction: ‘State Adventurers’ in English and German Economic History. 3
1. Justi’s Life. 5
2. Justi’s Influence in Denmark-Norway. 12
3. Systematizing Justi’s Writings. 16
4. Justi as the Continuity of the Continental Renaissance Filiation of Economics. 19
5. Economics at the Time of Justi: ‘Laissez-faire with the Nonsense Left out’. 22
6. What Justi knew, but Adam Smith and David Ricardo later left out of Economics. 26
7. Conclusion: Lost Relevance that Could be Regained. 32
Introduction: ‘State Adventurers’ in English and German Economic History.
The term merchant adventurer was applied to the earliest medieval English merchants who made their wealth and fame in new and hazardous markets (Carus-Wilson, 1967). A similar spirit of hazardous economic adventure cum economic career characterized the life of economist and social scientist Johann Heinrich Gottlob von Justi (1717-1771) as well as several of his cameralist contemporaries in Germany and Austria. Justi epitomizes the heyday of the German brand of mercantilist writing, cameralism. These traditions represent the reasoning on economics and state sciences that laid the necessary groundwork for the creation of all European nation-states and for the Industrial Revolution, but was later excluded from the more narrow and barter-based economics of the English tradition. Justi was both a synthesizer and a modernizer of this tradition, absorbing the important novelties of the 1700’s into the already existing consensus of the late 1600’s. Justi was, as far as we can judge, probably also the most prolific writer of all economists in any language, publishing a total of 67 books of which 8 works were translated into five languages (See Reinert & Reinert: ‘A Bibliography of J.H.G. von Justi’ in this volume).
As a profession, these early German-speaking economists stand out as being of a very different class and type than their English contemporaries. This is emphasized by Keith Tribe, the English-speaking author who in a very thorough work has devoted more time and space to Justi than anyone else in the English language (Tribe 1988). However, when comparing Justi’s writings with the economics traditions in the rest of the European continent – from Spain to Sweden and Finland – rather than with England, it is in fact the English tradition that stands out as being ‘different’. Whereas most early English economists were themselves merchants, the professional career of the typical German economist at the time tended to be tied to the administration of the many small German states. The activities of these German-speaking economists tended to cover a very broad spectrum. Their careers include both theory and Praxis – teaching, administration and entrepreneurship – and also activities on very different levels of abstraction: from theoretical philosophy to government administration and practical matters of production and staring new enterprises.
Justi and his contemporary economist adventurers Georg Heinrich Zincke (1692-1769, from Saxony) and Johann Friedrich Pfeiffer (1718-1787, from Berlin) all suffered similar tragic fates towards the end of an active life of teaching, writing, public administration and public entrepreneurship. They had all been soldiers as a preface to their eventful lives as economist adventurers or gelehrte Abenteurer (‘scholarly adventurers’). Both Justi, Zincke and Pfeiffer rose to fame as accomplished writers of economics and Staatswissenschaften (political science) and trusted administrators; but all of them ended their careers in varying degrees of disgrace, all accused of embezzlement. Some of the important works of Zincke and Pfeiffer are listed in the bibliography of this paper, for the works of Justi see our separate bibliography in this volume. Johann Joachim Becher (1635-1682), arguably the first German mercantilist (see Becher 1668), also suffered a similar fate. Forced into exile in Holland and England by his creditors in Vienna, Becher dies in London in deepest poverty. These economist adventurers – Justi himself calls them ‘State Adventurers’ (Staatsabenteuerer) – were active in fields far beyond the work of their English contemporaries. Their Praxisnähe led them to alternate between the need for a better theoretical understanding of the world and the need for carrying their theories into practice.
From the point of view of today’s society, Justi’s career covered the functions of a university professor of economics and political science, an economic advisor to governments, a publisher and organizer of translations (Übersetzungsunternehmer), a personal national research council in several fields, a manager of government investments, a prospector of mines, and an entrepreneur of last resort on behalf of the State. As we shall see, his many books covered an unusually wide range of subjects, although not all with the same skill. In addition, for most part of his nomadic life, he edited his own journals.
Like the founders of German economics – Gottfried Wilhelm von Leibniz (1646-1716) and Christian Wolff (1697-1754) – the cameralists tended to be men both of theory and of action, of Praxis. Theory was there only as a basis for human action, an action in which they themselves wished to take part. Typically Johann Joachim Becher complains that ‘he could have used his time better through inventions, practicing and traveling’ (quoted in Klaus & Starbatty 1990: 14). No doubt, their inclination for practical action rather than theory alone, their shared enthusiasm for new inventions and their aspiration and efforts aimed at converting these inventions into practical innovations, led so many German cameralists into high-risk ventures and eventually into precarious financial situations, dependent as they were on the changing favours of rulers and noblemen.
The uneventful life of Adam Smith as a theoretical university professor and customs inspector – as far as possible removed from any practical problems of production and inventions – provides a stark contrast to the Cameralist drive to combine theory with Praxis, philosophy with entrepreneurship, and invention with practical innovations. Their respective theories of economic development reflect their respective lives: Adam Smith built an economic theory based on barter and trade, where the conditions of production, knowledge, technology and inventions were exogenised. To the Cameralists nothing was exogenous, their criterion was whether a factor was relevant or not. Their theories represented a Praxisnahe and Faustian-holistic attempt to capture all relevant factors: zuerst war die Ganzheit. From Adam Smith’s system, based on trade, economics developed as a Harmonielehre1 where ‘passivity as a national strategy’ would create automatic harmony, and where structural change and novelty was exogenised. The cameralist system was one of production and of nations in competition, where economic development meant radical structural change, and where learning, new knowledge, new technology, and new institutions to handle them, had to be continuously created. In this setting the nation-state – like any big corporation today – needed a well-established strategic vision of where it was headed in order to maximise the welfare of its citizens. As Tribe (1988) perceptively points out, at the core of German economic theory was ‘Man and his needs’, der Mensch und seine Bedürfnisse.
Werner Sombart divided the science of economics into two categories, the Renaissance economics tradition which he calls activistic-idealistic, and the economics from Adam Smith onwards which he calls passivistic-materialistic (Sombart 1928: 919). This article focuses on Johann Heinrich Gottlob von Justi and his contemporaries in the period of 30-40 years before the publication of Adam Smith’s Wealth of Nations (1776). We shall argue that Justi and his contemporaries, while still working in the activistic-idealistic Renaissance tradition that we call The Other Canon of economics2, had already absorbed the most important contribution from the passivistic-materialist tradition started by Dutchman Bernhard Mandeville (Mandeville 1714/1724): the role of self-interest as an important propellant of economic growth. We claim that this was a type of economics that represented, quoting Schumpeter’s characterization of Justi’s economics, ‘laissez-faire with the nonsense left out’ (Schumpeter 1954: 172).