19
for the American sport, who are in Haiti, make 30 US cent per hour. They are the world’s most
efficient producers in an industry that all the capital of the United States has not managed to
mechanise. Baseballs are sown by hand everywhere. The world’s most efficient producers of
golf balls – made by machines – have a nominal wage which is about 30 times higher. The un-
even advance of mechanisation produces huge inequities in world income, and locks many poor
nations into a comparative advantage
[206] of being poor and ignorant. This fact was not lost on
US economists and politicians of the 19th Century, but today its absence forms the most impor-
tant blind spot on the cornea of mainstream economic theory. Until we include knowledge –
Man’s ‘wit and will’ – as a factor into economic theory, we shall continue, in vain, to throw
money at the symptoms of poverty, rather than address its causes.
5. Bücher’s Four Techno-Geographic Economic Stages
Karl Bücher’s Die Entstehung der Volkswirtscbaft studies the geographical dimension of
techno-economic stages. Changing technologies carry with them qualitative changes in many
aspects. Technologies and technological systems create particular spheres of gravity. They have
their own geographical ‘footprints’: each different technology creates its own geographical
sphere much like each fluvial basin has its unique area of precipitation. This geographical di-
mension is the subject of Bucher’s study.
Techno-economic stages develop according to Adam Smith’s fundamental insight that the di-
vision of labour is dependent on the size of the market. Underlying this statement from Smith is
an understanding that the division of labour is influenced by scale. The size of the market cannot
be of importance for any other reason than scale: the division of labour is concomitant with in-
creasing fixed cost and consequently with increasing returns to scale. Neo-classical economics,
based on constant or diminishing returns to scale, has never been able to incorporate Adam
Smith’s basic insight about the extent of the market in it’s theory – no theory of the division of
labour exists in modern economics. As George Stigler says: ‘Almost no one used or now uses
the theory of division of labour, for the excellent reason that there is scarcely such a theory...
There is no standard, operable theory to describe what Smith argued to be the mainstream of
economic progress.’
52
The constant-return assumptions of standard economics have erected a
barrier preventing standard economic theory
[207] from absorbing what Adam Smith – as well
as William Petty 100 years earlier – saw as the fundamental source of progress. Karl Bücher’s
framework, however, is able to trace the geographical dimension of increased division of labour
over time.
5.1 Family Economy (Hauswirtschaft)
In Bücher’s system, the first geographical sphere of human development is the family economy,
or Hauswirtschaft. In the Hauswirtschaft the whole cycle from production to consumption takes
place in the closed circle of family and kin. In this stage it is not possible to distinguish produc-
52
Stigler quoted in McCraw, Thomas, ‘The Trouble with Adam Smith’, in The American Scholar, Vol. 61, Summer
1992, p. 362.
20
tion from consumption, they ‘fliessen in einander über’. Exchange is by gegenseitige Hilfeleis-
tung – what modern anthropologists call
reciprocity. The income distribution systems in such a
society – described by Karl Polanyi – who was clearly much inspired by Bücher:
c
In nonmarket
economies these two forms of integration — reciprocity and redistribution – occur in effect usu-
ally together.’
53
Bücher’s view on primitive society was clearly much influenced by his meeting with a Bel-
gian scholar, Emile de Lavelene from Liege, at the 1875 meeting of the
Verein für Sozialpolitik
in Eisenach. Lavele-nes’s De la proprieté et de ses formes primitives was first published in 1874.
Bücher translated this book into German as Das Ureigentum, published in Leipzig in 1879. In
his memoirs Bücher emphasises the importance of his connections with Lavelene, although he
later found that his work ‘needed both to be broadened and revised in many places.’
54
At this stage society is very dependent on the soil
55
, and collective labour (Arbeitsgemein-
schaft)
is important, rather than division of labour (
Arbeitsteilung)
. This
Arbeitsgemeinschaft is a
subject of an-
[208]other of Bücher’s books
Arbeit und Rytkmus
56
. The basic political units are
clans (Sippen), where property is collective (Gesamteigen-tum). Houses are common (Gemein-
schaftshäuser). Bücher here refers to Africa at the time of his writing. The lack of individualism
is very clear, in some societies even death penalty can be taken over by another member of the
tribe. Specialised labour – like a village shepherd – works for everybody and is fed by every-
body (as is still the case today in the Alps).
Within the same tribe, food is almost common property
57
(The term used is Gütergemein-
schaft).
Some long distance trade exists, e.g. in salt. As Polanyi has shown with the long-
distance traders in pre-Colombian Mexico, the little trade that existed was to a large extent done
on behalf of the clan. There is no industry outside the household at this stage in Bücher’s sys-
tem, artisans are household slaves (Handwerkssklaven). Bücher emphasises that this system
opens up for a large amount of division of labour – he names a lot of professions within the
same Roman household – but this division of labour is not accompanied by trade.
5.2 Town Economy (Stadtwirtschaft)
The next evolutionary stage is the town economy. This stage is characterised by trade without
intermediaries between specialised artisans and the public at town markets. The towns were often
built around castles which provided refuge for the townspeople and people from the surrounding
countryside in times of war. A person enjoying this privilege was a Burger (Burgensis). The
need arose for economic institutions, for codifying laws and regulations for exchange, which
were not needed in earlier types of societies. Town markets required standards for weight and
measure. In Mediaeval Europe the towns had different standards of measurements, and an impor-
tant part of early economic manuals was to list these weights and measures and to give their
53
Polanyi,
Karl, The Economy as an Instituted Process’, Polanyi, Arensberg and Pearson (eds.),
Trade and Markets
in the Early Empires, Chicago, Gateway, 1971, p. 253.
54
Erinnerungen, p. 197-198.
55
P. 94.
56
Sixth edition, Leipzig, Emmanuel Reinicke, 1924. First edition 1896.
57
P. 62.