Preface: Nietzsche and the late 19th Century Economic Agenda

From the viewpoint of modern mainstream economics, Nietzsche would hardly be considered as having made any contributions, directly or indirectly, to the economics profession. However, seen in the light of the German, and indeed Continental, tradition in economics – what we have labelled The Other Canon, core parts of Nietzsche's writing have immediate relevance to economics. Today's standard theory is in effect a continuation of what some 19th Century economists suggested calling catallectics, ‘the science of exchanges’, rather than of production. In contrast to this mainstream body of barter-focused economic theory, the German tradition since the Renaissance has emphasized production, and particularly the role of what Nietzsche fittingly calls Geistund Willens-Kapital (Nietzsche 2000:4722) – Man's wit and will – as a factor of production. Within a theory where man's wit and will – new knowledge, innovations and entrepreneurship – are considered a factor of production, Nietzsche has important things to say about economics. Indeed, as is argued in another paper in this volume (‘Creative Destruction in Economics: Nietzsche, Sombart, Schumpeter’), Joseph Schumpeter and the growing paradigm of evolutionary economics may be said to have their immediate roots in Nietzsche's thoughts and in the Zeitgeist so much influenced by his work.

One important dividing line in 19th Century economics was the origin of the division of labour. This was in effect the tip of the iceberg of a profound philosophical debate as to the very nature of human beings (Reinert & Daastøl 1997). Adam Smith emphasised barter as the origin of wealth, highlighting Man's ability to barter as a main difference between Men and dogs (Smith 1976: Book 1, p. 17). This emphasis on barter rather than production as being the core of the economic activities of Mankind was the object of constant rebuttal from German and US economists all through the 19th Century. In the German-American tradition, the division of labor was the necessary consequence of the scale and diversity of human innovations and inventiveness, not the other way around. In the United States, the work of John Rae (1834) may serve as an early example, whereas in the German language Carl Menger, the father of the Austrian School of Economics, in fact uses a whole section of his Grundsätze to refute Adam Smith on this point (Menger 1871/ 1923: 26– 29).