Differentiation, integration, and the great variety of organisms: biological origins of Werner Sombart's business cycle theory (original) (raw)

Metaphors in the History of Economic Thought: Crises, Business Cycles and Equilibrium (Routledge Studies in the History of Economics), 2022

Abstract

This chapter investigates how the German economist Werner Sombart (1863–1941) built his business cycle theory based on insights gained from a biological metaphor. Searching for a new classification of economic organization, Sombart put to work the biological principle of differentiation and integration with which he became familiar from his reading of the biologist Ernst Haeckel. Using the principle, Sombart was able to separately address what had been only considered jointly before: the development of economic organization and technological progress. For Sombart, the economy became more ‘interconnected’ (gebunden) over time, because individuals increasingly specialized within a great variety of economic organizations and therefore became more dependent on each other. Technology, in contrast, freed humans from the organic barriers of nature. This emancipation from nature unlocked the energy and speed that distinguished industrial production from earlier manufacture. Sombart linked this insight to two different types of industries. Inorganic industries could make full use of the emancipation, while organic industries were still hampered by organic barriers. The result of this uneven development was the phenomenon of the business cycle. Previous research has argued that Sombart derived his cycle theory from Marx or, alternatively, that Sombart fitted his theory to his conservative political convictions. I argue, however, that the biological principle of differentiation and integration played a significant heuristic role in establishing Sombart’s business cycle theory.

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