Private property and capitalist industrialization

Neoclassical economists fetishize certain institutions—especially the sanctity of private property—as the necessary conditions for economic development.

However, recent research suggests that Germany achieved capitalist industrialization not on the basis of private property but because of its absence.

Specifically, economic historian Eckhard Höffner argues that Germany caught up with England because it did not institute copyright law.

Höffner has researched that early heyday of printed material in Germany and reached a surprising conclusion — unlike neighboring England and France, Germany experienced an unparalleled explosion of knowledge in the 19th century.

German authors during this period wrote ceaselessly. Around 14,000 new publications appeared in a single year in 1843. Measured against population numbers at the time, this reaches nearly today’s level. And although novels were published as well, the majority of the works were academic papers.

The situation in England was very different. “For the period of the Enlightenment and bourgeois emancipation, we see deplorable progress in Great Britain,” Höffner states.

Indeed, only 1,000 new works appeared annually in England at that time — 10 times fewer than in Germany — and this was not without consequences. Höffner believes it was the chronically weak book market that caused England, the colonial power, to fritter away its head start within the span of a century, while the underdeveloped agrarian state of Germany caught up rapidly, becoming an equally developed industrial nation by 1900.

Even more startling is the factor Höffner believes caused this development — in his view, it was none other than copyright law, which was established early in Great Britain, in 1710, that crippled the world of knowledge in the United Kingdom.

Germany, on the other hand, didn’t bother with the concept of copyright for a long time. Prussia, then by far Germany’s biggest state, introduced a copyright law in 1837, but Germany’s continued division into small states meant that it was hardly possible to enforce the law throughout the empire.

One by one, the cherished myths of neoclassical economics—of private property, free markets, and so on—are being dismantled by the reality of economic history and of the current crises.

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