Book Review: 'Germany's Sick Economy and Its Recovery' by Dr Gustav Seibt

Seibt, Dr Gustav: Privy Councillor, Professor of Statistics at the University of Bonn: Deutschlands kranke Wirtschaft und ihre Wiederherstellung. Bonn 1923. A. Marcus & Webers Verlag (Dr jur. Albert Ahn). Octavo. 76 pp.

Along the wrong and devious paths down which German economic policy has lately wandered, the publicists strode ahead of it as guides. Not a single blunder was committed that had not long beforehand been recommended in the economic literature with the greatest expenditure of eloquence. Bismarck once made the proposal — not seriously meant, of course — to introduce socialism by way of trial in a few districts, in order to demonstrate its inadequacy through the experiment. The policy of his successors placed the whole German Reich at the disposal of doctrines whose defects ought to have been recognised even without the cruel experiment. That the false doctrines were allowed to dominate public opinion for so long will always remain the darkest point in the history of German social science.

The great merit of Seibt's small treatise lies in the fact that it tackles all the current false doctrines in a resolute manner. Its starting point is formed by considerations of monetary theory; with good reason Seibt opens his treatise with the words: 'The key to understanding our present economic development is to be sought in the theory of money.' He then develops, in a simple and clear manner, the fundamentals of the quantity theory and demonstrates the untenability of the balance-of-payments theory of foreign-exchange rates. With this he has gained a firm foundation upon which his discussion of the prevailing views concerning the sell-off, the consumption of capital, underproduction, tenant protection, tax policy and reparations can be built. At the close there follows a programme of reform that culminates in two demands: 'the shutting down of the note-printing press' and 'back to the free economy'.

Seibt's little book is dated 1 December 1922. In the preface the author remarks that, if it should not prove possible to set currency and economy in order, then by his estimate it would 'not be a year more before Germany collapses'. We know today that he was proved right in his estimate; the catastrophe of the German monetary system came soon enough. Seibt was heeded just as little as others who voiced similar views; nor was his advice followed to make use of the experiences of other states, above all of Austria. And it will presumably be a long time yet before people cease to follow the quacks and to disregard serious warnings.

Seibt's work is an occasional piece; some of the data he uses are by now out of date. Yet, like every good occasional piece, his work will not grow obsolete any time soon. One would do it a great injustice to push it carelessly aside merely because it says nothing about a few questions of recent origin, such as the occupation of the Ruhr, the Rentenmark and the like. The false doctrines that he demolishes unfortunately still dominate people's minds today, and the correct theories that he sets in their place are still correct today and will always remain correct. There is scarcely a clearer or more logically structured introduction to the theoretical problems of German economic policy; and withal the manner of writing is quite extraordinarily plain, so that anyone can understand it. The little book, together with a few other writings — for instance, Dietzel's Die Nationalisierung der Kriegsmilliarden — will always bear witness that German economists too foresaw the consequences which inflationist and étatist policy was bound to entail, and gave warning in good time. Why these voices were not heeded, but rather the far more numerous voices of those who proclaimed the opposite — to set this forth is not the place here.