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Famous scholars from Kiel:

Erich Schneider

Economist, important economic theorist, Professor of Theoretical Political Economics in Kiel from 1946 to 1969 and President of the Institute for the World Economy from 1961 to 1969.

Erich Schneider (14th December 1900 - 5th December 1970) occupied the chair for Political Economics from 1946 until 1969 and was Director of the Department of Political Economics at the Faculty of Law and Economic Sciences of Kiel University. From 1961 until his retirement, as the successor of Fritz Baade and predecessor of Herbert Giersch, he was at the same time also Director of the Institute for the World Economy. In the 1959/60 academic year he was Rector of Kiel University. From 1963 until 1966 he occupied the post of President of the renowned association of German-speaking economists Verein für Socialpolitik. He received a large number of academic and non-academic awards, including an honorary doctorate of the Free University of Berlin (1957), the Commercial Higher Education Institute of Helsinki (1961), the University of Louvain (1963), the University of Rennes (1966), the University of Madrid (posthum 1970). He was awarded the Cross of the Order of Merit of the Federal Republic of Germany in 1968.

During his time in Kiel Erich Schneider was probably the most influential economic theorist in Germany. From 1946 until 1952 he wrote his life's work "Einführung in die Wirtschaftstheorie" (Introduction to Economic Theory), initially published in three volumes and then expanded to include a fourth volume in 1962. His legacy is that this "Introduction" starting in Kiel initiated a general redefining of economic studies at German higher education establishments. With this work German Economic Sciences caught up with the international level, leaving the time of Hitler and the Second World War behind. Schneider was predestined to do this to the extent that since 1936 he had occupied a chair for Managerial Economics at the University of Århus in Denmark, which made it possible for him to receive economic research independently outside Germany during the time of National Socialism and the war. Entire generations of students were taught political economics using "the Schneider" as the main text book after the war in Germany, which was translated into seven languages. The fruitfulness of the Danish years as a basis, combined with later intensive research, the preciseness of his train of thought, the application of formal methods and last but not least excellent didactics made Schneider's "Introduction" the standard work at German universities. Some contemporaries placed it at the same level as Alfred Marshall's "Principles" and Paul Samuelson's "Economics".

The "Introduction", which reflected Schneider's vision of the modern national economy, was a break with the Historical School, it was a synthesis of the interpretation at that time of Keynesian and Scandinavian - in particular Wicksellian - economic theory, paired with Walrasian ideas about total equilibrium and the basic approaches of Paretian categories of thinking. This mixture of macro and micro explains why Schneider pleaded throughout his life for combining political and business economic teaching. Although he was a pupil of Schumpeter, with whom he qualified as a professor in 1932 with a work about the "Reine Theorie monopolistischer Wirtschaftsformen" (Pure Theory of Monopolistic Economic Forms) and whom he admired immensely, there is actually no evidence of the Austrian School in the economic theoretical thinking of Schneider.

The explanation might lie in the methodological position, which dominated Schneider's academic understanding. He had initially studied mathematics and physics before turning to economic sciences. His view of the world was correspondingly permeated by the natural sciences, in particular by mechanical physics with its strict deductive derivations and exact "laws" which he transferred as an analogy to an assumed mechanics of market processes. In this context it is then appropriate to discover basic regularities, which "homo oeconomicus" with his use-maximising behaviour is subject to and which can be used in the natural sciences in a form similar to laws for analysis and forecasts. For Schneider economic predictions became mathematical theories, which had to be considered correct or incorrect by anyone who could think logically. In Schneider's opinion there was no fundamental difference between an economic theorem and Pythagoras' theorem. Such an opinion was in principle unknown to the Austrian School, which was geared less to the natural sciences and more to the special features of social sciences with their evolutionary spontaneous and therefore less precisely foreseeable results. Schneider's general idea of a type of goods-like physics of the market processes and the deterministic, formal theoretical stringency of its analysis then contrasted vehemently with the evolutionary theoretical position of one Friedrich A. von Hayek, whom Schneider invited in 1968 to one of the "Kiel lectures" at the Institute for the World Economy, which he had established, and who presented his thoughts on "Wettbewerb als Entdeckungsverfahren" (Competition as a Discovery Procedure), which became famous at a later date. In this Hayek outlined the search process of the market participants for something new, which was systematically arranged in competition, with an unforeseeable outcome ex ante, in other words one which could not be planned at the drawing board. The lecture ended in a real dispute between two great economists with opposing points of view and it is well known that the guest speaker later received the Nobel Prize for Economics. This fundamental dispute could be cloaked in the question: can one incorporate the spontaneous aspects of Hayek in the formulae of a deterministic thinking Schneider?

Schneider admired those who acted as entrepreneurs in practice and to that extent he was a true pupil of Schumpeter. However, he maintained a pronounced distance to practical politics, because he felt a complete academic, who like Max Weber had to differentiate where the thinking researcher stopped and the willing person started to speak and act. The real academic was the academic from passion, who was doomed to fail in the practical world. That is why his colleagues, who went from academia to practice, were never true academics for him. He was a stranger to scientific theoretical questions and methodological digressions. He considered them to be a waste of time. With this view of things, with his clarity in written works and his persuasiveness with the spoken word, he was so - some say: dangerously - convincing that he understood how to make his students and assistants into a type of religious scholar; he held and disseminated a firm belief in the controllability of the economy and an unshakeable optimism in firmly controlling the balancing act between inflation and recession. The problem of unemployment was solved once and for all and in this belief he was certainly not alone at that time, which can be described as the peak of Keynesianism.

Erich Schneider was a convinced Keynesian and with his third volume of the Introduction: "Geld, Kredit, Volkseinkommen und Beschäftigung" (Money, Credit, National Income and Employment) he enforced the general adoption of Keynes in Germany. To the very end he defended Keynesianism against his critics, in particular from the monetary camp. But Schneider was not a fundamentalist; he was certainly never a dogmatist. Probably the most accurate description of Schneider would be as a reductionist Keynesian, who embodied the interpretation of the Keynesian system, as exemplified by his contemporary John Hicks. It might have some hydraulic aspects if one considers state expenditure and income in terms of a "Keynes machine" able to be operated mechanically up and down in order to control the economic cycle and employment exactly. The term hydraulics, which was only adopted by Keynes later, would probably not have been rejected by Schneider, because he always compared the role of the economist with that of an engineer, who had to discover and apply the laws of economics almost with a stringency associated with the natural sciences.

As an academic, Schneider was an unshakeable optimist, which contrasted with his otherwise more pessimistic outlook on life. He took over the idea from Schumpeter that the "sea of facts" was silent and that the connections with an effect behind the facts only become evident if one approached the sea of facts with sensible questions arising from a theory. It was probably from this outlook that Schneider's idea about the progress of knowledge as an asymptotic process originated, which increasingly encroaches on the field of ignorance: the more one knows, the more one does not know. This idea of an almost constant quantity of facts about the world, which should be continuously investigated with the main purpose of the academic being an involvement in this search process, might explain the limitless academic optimism of Erich Schneider, based on a cumulative belief in progress. It was his wish to become one of the members of an academic line of ancestors, who add building blocks to the constantly expanding theoretical progress of knowledge. However, he never wanted to set up a school, not even a Schneider school. Nevertheless every two years Erich Schneider pupils, who are scattered around the globe, meet for academic symposia under the spiritual roof of their academic teacher.

In his academic endeavours Schneider, who otherwise absolutely dominated the economic field of activity of the Kiel faculty as well as the publishing committee of the Review of World Economics - the publication of the Institute for the World Economy - was remarkably modest. He repeatedly requested humility towards those who are our spiritual forefathers. "We are nothing and become nothing through ourselves, we all stand on the shoulders of our ancestors". It was probably from this point of view that Schneider wrote his fourth volume of the "Introduction", in which he is able to continue to enthuse readers with selected chapters of the history of economic theory and his own fascination for this history. Perhaps this volume is the most genial work of Erich Schneider. He put a large amount of this onto a gramophone record, which documented his farewell lecture in December 1968. Even at that time, in other words almost forty years ago, he complained about the state of German universities, which were increasingly losing their academic soundness through constant politically initiated reforms. With his dominating personality and superb ready wit, he had no problems with the student unrest of 1968.

Erich Schneider was a deeply religious person. The poverty in the world preoccupied and concerned him, although he - in contrast to many of his students - never became deeply involved with the theory of distribution. Because the world is unjust, one had to intervene for justice. However, this had to be done sensibly because justice was fundamentally absurd. At the same time Schneider pleaded passionately for private ownership as a guarantor of individual freedom: without private ownership one could not be independent, no one would be free. Schneider was well-read and fascinated by the great figures in history. He died shortly before his 70th birthday during a lecture at the Kiel German-Nordic student hostel - in other words on the stage which he loved so much.

Although Erich Schneider wanted nothing to do with the Ordoliberals of the Freiburg School, such as with Walter Eucken and Wilhelm Röpke, who laid the regulative foundations for the economic system in Germany described as a social market economy, he was also a passionate champion of the market economy and complained about its intellectual dismantling: "Our will", he wrote, "placed under the supervision of the state, would see all our skills wither away." This is the opinion of a great academic, a charismatic lecturer at higher education establishments and a fascinating character of Kiel University.

Prof. Wolf Schäfer
Institut für Theoretische Volkswirtschaftslehre

First published in: Christiana Albertina, Forschungen und Berichte aus der Christian-Albrechts-Universität zu Kiel, Issue 59

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