The Foundations of Economics: History and Theory in the Analysis of Economic Reality

Walter Eucken` s "The Foundations of Economics" (Grundlagen der National|konomie) is the classic work of German econo- mic literature in thepast 60 years. In particular, the book was of great importance for the economic order that developed in the Federal Republic of Germany after the Second World War and made Germany the leading economic power in Europe. Eucken places great emphasis on economic reality in his work. Taking everyday observations as his starting point, he attempts to infer complex connections. Eucken provides the reader not only with a comprehensive criticism of classical economics, but also in particular with an analysis of economic systems, economic order, and the course of economic events. As a consequence of the dramatic changes that have taken place in Eastern Europe, many states now find themselves facing problems similar to those faced by West Germany in its earliest days. Eucken`s considerations can be of assistance in the search for the correct concepts. This reprint of the English translation of Eucken`s book thus not only gives a broad readership renewed access to a classical work, but can be instrumental in supporting the transition to a market economy in many countries and in facilitating the search for good concepts.

THE FIRST GERMAN edition of this book appeared in 1940. Since then the book has gone through five more editions and has been translated into Spanish and Italian. The present English translation is based on the sixth German edition. The author was Professor of Economics at the University of Freiburg, Germany. Professor Eucken was a student at a time when the Historical School dominated the teaching of econo- mics at the German universities. Although, at the beginning of his career, he did some work along the lines of the Historical School, neither the ims nor the methods of historical research the field of economics as practised by the representatives in of the Historical School satisfied him; and the fact that the members of this school were unable to explain the causes of economic events such as the German inflation after World War I was an added reason for him to turn to economic theory. He became, among German economists, the foremost opponent of the Historical School, which he criticised in several publica- tions. Through his wrItings and his teaching he contributed his share to the revival of interest in economic theory which was noticeable in the 'twenties. And he was one of the few economists left in Germany who helped to keep this interest alive during the 'thirties and during World War II. During this time he published Kapitaltheoretische Untersuchungen (1936), and the present volume, which immediately gave rise to an extensive discussion in German economic journals.

This is the classic work of German economic literature in the past 60 years. Eucken places great emphasis on economic reality in his work. He provides the reader not only with a comprehensive criticism of classical economics, but also with an analysis of economic systems, economic order, and the course of economic events.