Public Economy (“Gemeinwirtschaft”) as a Concept of Social Development Policy—Examples of German Authors of the Late 19th Century

In Central Europe, especially in Germany, economic and social activities of state-authorities and non-profit organizations are based on long-term traditions in practice and economic thought. During the 19th century state-authorities, private market-institutions, non-profit-organizations and related institutions demonstrated the “three-sector-structure” of the market-economy. The term “Gemeinwirtschaft” was introduced (von Hermann 1924) to designate cooperative behavior of actors and institutions. In spite of long-term debates about the definition and effects of “Gemeinwirtschaft” the “floor is open” for further discussion—also in relation to religious documents and declarations by the Churches, including encyclicals by the Pope. Based on this background the paper refers to the long-term development of “Gemeinwirtschaft” and to examples of social development studies during the late 19th century. The examples point out different “driving forces” of social development—firstly individual persons, secondly clubs, unions, cooperatives etc. Schools of economic thought are emphasized demanding new measures of social policy or of a new economic and social system. “Three stars” of development of “public economy” including “Gemeinwirtschaft”—Adolph Wagner, Albert Schäffle and Emil Sax—are considered. Furthermore attempts by the Pope Leo XIII (1878–1903) to solve the conflict between the Catholic Church and the modern State are emphasized. Especially the importance of the encyclical “Rerum Novarum” (1891) is demonstrated. To consider the socio-economic environment the paper also turns to specific authors on social development and “public economy” (F. Hitze and K. Frh. v. Vogelsang on the Catholic side, J. H. v. Wichern and V.A. Huber on the Protestant side). The conclusions refer to the “driving forces” and to the selected authors. The relations between the Churches and the State at the end of the 19th century become apparent as background of social documents and of practical policy but also as attempt to promote a “third way” of economic and social development.