ANTON TAUTSCHER SPEAKS ON THE TURNING POINT IN ECONOMIC DEVELOPMENT

Anton Tautscher became a Professor of Po l i t i ca l Economy at the

University of Graz, Austria, in 1948. However, he already made himself

known in 1939 by discovering Ernst Ludwig Carl 's work "On the Wealth

of Princes and the States" published in Paris in 1722. Tautscher

called Car I the founder of economic science. In the past 30 years he

contributed to socio-economics over 30 books and studies and more

than 500 ar t i c les . Recently, the Volkswirtschafl iche Schriften

(Heft 222),* devoted the complete issue to Tautscher and published his

farewell lecture to his assistants, candidates, and students. Here,

once more, a highly respected, widely known scholar shows and explains

the current economic problems in an impressive address on "The Turning

Point in Economic Development." He points out that:

The human being and the qual i ty of l i f e sh i f t in the foreground of

economics and push the t rad i t iona l and quant i tat ive problems into the

background. Instead of " p ro f i t maximization" we find now a concept of

"acceptable and j u s t i f i e d p r o f i t " ; instead of "price-covered costs" we

hear of "cost-covering prices": and instead of "freedom gives security"

we hear "security makes free." Tautscher compares the turning points

in the economic orders of the past with the present. He finds the

organized economy of the Middle Ages bu i l t on the exist ing social order,

accepted as the expression of the w i l l of God, as is the status of l i f e

and the related rights and duties. I t is the way to eternal happiness.

Not wealth nor high positions and ranks could bring this happiness.

F u l f i l l i n g the duties, rendering services and goods to others through

work, that is the way. Not much is needed to survive and l i ve .

*Duncker and Humblot, Berl in, 1975.

Surplus production creates only disharmony and disturbs the peace of

mind and soul. Wel l done work gives inner sat is fact ion, qual i ty of

l i f e , personality. The social order considers economic va|ues and

the economy is value-bound.

With the Renaissance, these ideas change: The goal becomes "the

joyfu l l i f e " depending on wealth and power. The powerful control

and regulate the economy, secure the "vergnugte Leben" (von Just i)

and determine values. Newer ideas follow and develop the "homo

economicus" and make man himself master of the economic order. The

classical economists become representatives of the time of Rationalism.

Economic movements and ac t i v i t i es are carefu l ly analyzed, divided into

elements, then recombined into models.

However, something disastrous happens. In the dividing of

structural units, functional parts are also separated and taken as

parts of equal values. Fit into quantitc:~ive models or mathematical

equations they remain abstract and do not show the real l i f e . I t is

always necessary to say "other things remaining unchanged" or "presuming

that . "

Such an abstraction is also the theory of free-market-economy based

on the undefeated strength of the personal interests of the indiv idual .

I t pushes the economy from one success to the next. The maximization

of p ro f i t appears as the pr incip le motive for economic ac t i v i t i es

together with the pr incip le of demand and supply and the equalizing

factor of competition. An " inv is ib le hand" (A. Smith) or "the f inger

of God" (Bastiat) directs self ish motivated actions to serve the

benefit of a l l . The price regulated market mechanism leads to the best

form ind largest quantity of production and to the d is t r ibu t ion of

income. Thus "blind forces" (v. Thunen) produce the desired happiness

for mankind, not man himself.

n

In 1909, the prestigious Verein fur Sozialpol i t ik postulated

under the leadership cf Max Weber and Werner Sombart that the science

of economics is value-free, free of ethical considerations, or, as

Sombart expressed i t : no moral or aesthetical categories may influence

economic studies - usefulness alone is the purpose. Thus, pro f i t

maximization is liberated from moral and ethical restrainls. Only

competition remains as a regulating factor together with success as

the demonstrator of dynamics of the enterprise, and innovations as

means to reach the goal.

Competition, however, l imi ts prof i ts . I t forces the entrepreneur

to reduce costs or to sh i f t costs for payments by others, especially

governments (social costs, environmental costs, cultural services).

As long as economic decisions take the relationship between

individual and society into consideratiop, pro f i t is limited and f irmly

bound. When pro f i t maximization becomes the dominating urge, this

relationship, as l imi t ing factor, is removed and costs are shifted

to the public. I t follows that governments are forced to change their

tax policies, which in the f inal end also reduces the prof i t chances, and

establishes a dual ist ic system: market economy - public economy.

Consequently, i f the sh i f t of costs requires actions by the state i t

endangers the proper function of the private enterprises. In fact, an

aggressive tax system makes pro f i t maximization senseless. Instead

of relying on cost-saving the entrepreneur turns to cost-expansion to

reduce taxable prof i ts and wil l be satisfied with "acceptable prof i ts" and

n~w investments. This, however, creates the problem: which is the

correct and suitable size of prof i t?

An evaluation becomes necessary. But, values are influenced by

many needs and wants; some of them are cul tural , and require great

prudence. Prudence refers to ethics. The complete economy again

becomes value-bound.

The teaching of the t rad i t i ona l , l ibera l economists centers on

p r o f i t maximization and economic growth, and in the interest of the

"welfare for a l l " , governments accept an economic growth pol icy.

However, the effects show that too great an investment expansion

produces overproduction and overcapi ta l izat ion. To ease these

consequences, better sales and marketing tactics are needed, more

advert ising, more "sales t r i cks" . The consumer is made a "tactic-consumer"

This too has l im i t s and f i n a l l y the hectic growth policy can not

survive. The overheated economy produces the value-reducing i n f l a t i on .

Incomes - even in the af f luent society - loose purchasing power. The

run for pleasure - not the desire for true joy - ends in perversion and

crime. For a short time the "consumer society" t r ies to escape from

boredom and believes "who buys more has more to l ive on" or "the more

the better" or "the latest is the best".

But salvation does not come from economic growth. Wi th the l i m i t -

ation of needed raw material to support the growth rate i t becomes clear

that the growth pol icy has to be changed to give su f f i c ien t time to

find replacement materials.

I t also becomes clear that the concept of growing Gross National

Product (greater production, increased sales, higher income, assured

employment) as a measure of economic development does not work under

permanent i n f l a t i on (when increases in real income become f i c t i ous , are

exposed to progressive taxation, and when savings earn negative interest

only - i n f l a t i on rate less interest rate).

~nflation is the consequence of bad economic pol icy: f a i l i ng to do

what keeps money stable, forcing a r t i f i c a l economic growth, forcing

the entrepreneur to cover in f la t ionary capital losses.

Stabi l izat ion of currency is p o l i t i c a l l y and economically

necessary. I t requires a reduction of expenditures. I t allows only

a j u s t i f i e d growth rate. I t is a slow and painful process.

"No growth" brings disaster - economically and p o l i t i c a l l y . An

acceptable growth rate is based on the pr inc ip le of moderation.

A raduction of consumption seems to be unavoidable. I t requires

greater care in selecting goods, needed and wanted, and makes i t

necessary to be sat is f ied with lesser quant i t ies. I t cal ls for a

change in concepts and tastes.

We may learn from Boethius: In your hand l ies how to form the

true happiness of l i f e . *

Ludwig H. Mai

*Boethius: The Cansolations of Philosop~.y

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