The paper analyzes the political economy of capitalist transformation in nineteenth century Germany. The emergence of capitalism after 1806 gives an example that economic freedom can precede political freedom, leaving the political power of the “dominant coalition” intact. The paper argues that the German capitalist transformation was instigated by competition among the European states. Primarily it was conducive to the monopolization of the coercive power of the state. As a result competition among the states drove a wedge between the interests of the monarch and his supporting dominant coalition (landed gentry). The increasingly independent public administration in Prussia which was influenced by Adam Smith’s liberal ideas organized a political bargain which established economic freedom in various sectors but took the economic interests of the landed gentry into account. In various aspects the sweeping institutional change was Pareto-superior for groups, which made capitalism also acceptable for the elite group.

Capitalist transformation without political participation: German capitalism in the first half of the nineteenth century

With the beginning of the Napoleonic war at the turn of the 19th century, capitalist transformation in the German states and in the Habsburg Empire took different routes. The article analyses the political economy of both types of ‘defensive modernization’ from the viewpoint of institutional economics. We argue that initial reforms in German states gave way to a transformation process which drove a wedge between the interest of the monarchs and the landed nobility. Liberal reformers established a political bargain with the nobility which made capitalist institutions acceptable for the power holders. Later on, reformers established a ‘market preserving federalism’ which gave capitalism a further boost. By contrast, the dependence of the Austrian Emperor on the multiethnic nobility weakened the power of the central state. The transformation process in the Habsburg Empire remained dependent on the personal interests of the dominant coalition, which either delayed capitalism or sought to combine capitalism with protectionism on its own behalf. As a result, capitalist dynamics took up speed in Germany but were delayed in Austria.

Defensive modernization in Germany and in the Habsburg Empire – a historical study of capitalist transformation

Most taxonomies of economic systems are dualistic, such as distinguishing between ‘plan’ and ‘market’. Following A. Sen, I argue that these approaches fall into the trap of ‘transcendental institutionalism’. As an alternative, the paper develops principles of evolutionary taxonomy that closely mirror the standards applied in biological taxonomy. Taxonomical types are approached as trajectories of change demarcated in space and time, and which are ordered in terms of historical sequences and origins. In human institutions, a special phenomenon is the interaction between ideas and institutions, which implies that interpretive activities have to be considered as important forces of evolution. Based on these considerations, I develop a conception of ‘institutional trait’ as basic unit of taxonomic analysis. I illustrate these principles by means of a short case study on China, taking the example of land property rights in South China as an institutional trait.

Performativity, Performance and Politics: Towards an Evolutionary Taxonomy of Economic Systems

Empirische Institutionenökonomik : konzeptionelle Fragen und Anwendungen

Handle everyday research tasks with reliable, citation-backed results

Your personal Research Agent to handle research tasks with citation-backed results

Popular Tasks used by Researchers

How can I help with your research?

Meet SciSpace

Get more enhanced response by uploading the PDFs you want me to reference.

No relevant PDFs in your library

SciSpace is the AI research assistant for academics. Run systematic literature reviews on 280M+ papers, and write papers with cited sources. Trusted by 1M+ students, PhDs & researchers.

SciSpace | AI for Research

Analyze PDFs

Code & Manuscripts

Funding & Grants

Literature & Patents

Medical & Clinical Data

Systematic Review

Visualize & Present

Web & Data

Build a Google Scholar-like website for your research.

Build a website

Create charts and images for your research

Create a Chart

Write a paper for submission to a journal

Draft a manuscript

Patent Search

Design eye-catching scientific posters in minutes.

Scientific Poster Generation

Systematic Literature Review

One task is running at the moment. Your messages will be shown right after.

Drag and drop or click here to browse

Loved by <highlight>1 million+</highlight> researchers

Extract a list of specific topics and their sources from unstructured text

Topics

Compare and analyze relevant papers that matches with your search

Papers

Get insights from PDFs and bookmarked papers from your library

My library

Recent searches

Try searching for:

Catch AI-generated content in scholarly and non-scholarly content

{ai} Detector

Ai Writer

Get PDF Summaries, highlighted text explanations 

Chat with PDF

Effortlessly create in-text citations and bibliographies in APA and 2,500 other formats

Citation generator

Get explanations, summaries, and answers on academic papers

Ease up your research workflow with {scispace}'s cohort of exciting AI tools

Elevate your academic writing skills and convey your ideas the way you want

Paraphraser

Explore our range of reading and writing tools

Your file is being prepared and should be ready in a few minutes. If it's a large file, it might take a bit longer. You can close this window, and we'll email you the file when it's done.

You have reached a maximum limit of <strong>{limit}</strong> columns in the table. Remove at least <strong>1</strong> column to add or create another one.

Thomas Apolte

Author Tools

Chat about Author

Papers

Empirische Institutionenökonomik : konzeptionelle Fragen und Anwendungen