Perspectives on Modern German Economic History and Policy.

American economic historians should thank Cambridge University Press--and Harold James, who promoted the idea--for making this collection of important papers by the dean of German economic historians available in a competent English translation. Knut Borchardt of the University of Munich is well known as the writer of authoritative handbook articles and textbooks synthesizing research on German economic history from early industrialization, but American economic historians remain largely unfamiliar with his scholarly work.

Borchardt is one of the few German historical economists in intensive dialogue with both economists and historians and one who has stimulated members of both disciplines with his research.(1) To conference participants he is known as a scholar of noteworthy rhetorical skill who suffers no fools. Unfortunately, only a limited amount of the work and little of the intellectual flavor of Borchardt, who has now been forced into early retirement by illness, have been translated into English. The American Economic Association data-bank's (Econlist) listing of Borchardt's publications, for example, is almost useless as a guide to his lifetime research. Thus, the publication of Perspectives on Modern German Economic History and Policy provides a valuable service to Americans interested in German historical themes as reflected by the work of an outstanding scholar in the field. To my knowledge, Borchardt has never had a substantial review in American journals; this is, in part, the natural fate of scholars who express themselves in articles. Now it is possible and high time to fill this gap. For a balanced assessment of Borchardt's work, I shall also take the opportunity to discuss other relevant research that addresses his themes.

Even though the oldest of the essays in this volume was first published in 1961, and although this collection of papers was published in German almost a decade ago, they nevertheless continue to fascinate. By addressing central, established issues of German economic development in the nineteenth and twentieth centuries and by asking intriguing new methodological and historical questions, Borchardt has in effect generated a set of research agendas that have been at the core of German economic history in recent decades. As a consequence, he is probably the most frequently cited author among German economic historians today.

Because it is impossible to discuss all eleven papers in this volume in detail, I shall focus my remarks on three groups of essays. The first and oldest set illustrates the point that a treatment of a central historical question by Borchardt defines an issue, brings the relevant secondary literature to bear on it, and ushers in subsequent research. Later studies may provide more definitive answers than the initial treatment by Borchardt that started the debate, but they do not supersede it.

Borchardt's earliest paper considers the question of whether a capital shortage hindered Germany's early industrialization. This was also the topic of a lecture that he offered for his Habilitation (the German "second doctorate," which qualifies a scholar for a professorship) proceedings, and it therefore is a good indicator of the kind of questions he considered early in his career. Borchardt wanted to clarify an imprecise debate among economic historians on the nature and definition of a capital shortage--an issue that Robert Eisner has clarified for American economists in more recent times.(2) Although Eisner is more systematic in his analysis than Borchardt was in grappling with this central issue, the core notion that Eisner developed ("any argument that there is a capital shortage must either imply a literal failure of market clearing or some standard external to the economic system") has counterparts in Borchardt's paper. Borchardt criticizes the general application of theories of economic growth, which emphasize the role of aggregate savings and investment ratios, to a period when, in fact, there was no national German capital market. Capital market imperfections and regional …