Economists From Germany

"The welfare state may thus face a wave of hostile public opinion and as a result may well pass through a difficult phase, with the need for consolidation and even retrenchment. However, if the reasons suggested here for the change in the climate of opinion are correct, the trouble could be temporary."

"A taste is almost defined as a preference about which you do not argue — de gustibus non est disputandum. A taste about which you argue, with others or yourself, ceases ipso facto being a taste – it turns into a value."

"Exit and voice, that is, market and non­ market forces, that is, economic and political mechanisms, have been introduced as two principal actors of strictly equal rank and importance."

"At this point, then, a junction is effected between the previously developed train of thought on countervailing passions and the doctrine of interest. Both doctrines originated in Machiavelli; yet the final outcome—the promotion of avarice to the position of the privileged passion given the job of taming the wild ones and of making in this fashion a crucial contribution to statecraft—would have greatly surprised and outraged him."

"The Passions and the Interests does not have the policy urgency that a contribution to public decisions may enjoy (as Hirschman's The Strategy of Economic Development eminently does), nor the compulsive immediacy that the exigencies of practical reason generate (as Exit, Voice, and Loyalty superbly portrayed). What then is so special about this book? […] The answer lies not only in the recognition that Hirschman makes us see the ideological foundations of capitalism in a fresh way, but also in the remarkable fact that this freshness is derived from ideas that are more than two-hundred-years old. The basic hypothesis— the articulation and development of which Hirschman investigates—makes the case for capitalism rest on the belief that "it would activate some benign human proclivities at the expense of some malignant ones.""

"By the end of the war the new game theoretic methods that had been developed by von Neumann and Morgenstern were added to the toolkit and mathematical techniques that operations research scientists deployed. These proved very valuable, and game theoretic approaches took on great importance after the war."

"My first contact with game theory was a popular article in Fortune Magazine which I read in my last high school year. I was immediately attracted to the subject matter and when I studied mathematics I found the fundamental book by von Neumann and Morgenstern in the library and studied it."

"Wherever mathematics has entered it has never again been pushed out by other developments. The mathematization of an area of human endeavor is not a passing fad; it is the prime mover of scientific and technological progress."

"All economic decisions, whether private or business, as well as those involving economic policy, have the characteristic that quantitative and non-quantitative information must be combined into one act of decision. It would be desirable to understand how these two classes of information can best be combined."

"Had it merely called to our attention the existence and exact nature of certain fundamental gaps in economic theory, the Theory of Economic Behavior by von Neumann and Morgenstern would have been a book of outstanding importance. But it does more than that. It is essentially constructive: where existing theory is considered to be inadequate, the authors put in its place a highly novel analytical apparatus designed to cope with the problem. It would be doing the authors an injustice to say that theirs is a contribution to economics only. The scope of the book is much broader. The techniques applied by the authors in tackling economic problems are of sufficient generality to be valid in political science, sociology, or even military strategy. The applicability to games proper (chess and poker) is obvious from the title. Moreover, the book is of considerable interest from a purely mathematical point of view."

"As far as the use of mathematics in economics is concerned, there is an abundance of formulas where such are not needed. They are frequently introduced, one fears, in order to show off. The more difficult the mathematical theorem, the more esoteric the name of the mathematician quoted, the better."

"Alliances are always weaker in peacetime; alliances tend to become hard and fast and strong when things are going badly... but when things are going well, cooperation is hard to achieve."

"The theory of games was first formalised by Von Neumann & Morgenstern (1953) in reference to human economic behaviour. Since that time, the theory has undergone extensive development... Sensibly enough, a central assumption of classical game theory is that the players will behave rationally, and according to some criterion of self-interest. Such an assumption would clearly be out of place in an evolutionary context. Instead, the criterion of rationality is replaced by that of population dynamics and stability, and the criterion of self-interest by Darwinian fitness."

"Recovery is therefore something much more elemental. It aims at continuation of life, on a simple and primitive basis. From mere survival, in view of perhaps a hundred million people killed within a few days, to the construction of a society which adheres to the lofty ideas we cherish today is a long way. And the survivors may develop ideals so different from ours that we may not recognize the country— should we live to make the comparison, or, living, should we care to make it even if we could."

"In 1965, I was invited to a game theory workshop at Jerusalem which lasted for three weeks and had only 17 participants, but among them all the important researchers in game theory, with few exceptions. Game theory was still a small field. We had heated discussions about Harsanyi's new theory of games with incomplete information. This was the beginning of my long cooperation with John C. Harsanyi."

"Reinhard Selten shared the 1994 Nobel Prize in economics with John Nash and john harsanyi “for their pioneering analysis of equilibria in the theory of non-cooperative games.” One problem with various Nash equilibria is that they are not always unique. Selten applied stronger conditions to reduce the number of possible equilibria and to eliminate equilibria that are unreasonable economically. In 1965 he introduced the concept of “subgame perfection,” his term for this winnowing down of possible equilibria. “At that time I did not suspect that it often would be quoted, almost exclusively for the definition of subgame perfectness,” Selten wrote in his Nobel autobiography."

"My master's thesis and later my Ph.D. thesis had the aim of axiomatizing a value for e-person games in extensive form. This work made me familiar with the extensive form, in a time when very little work on extensive games was done. This enabled me to see the perfectness problem earlier than others and to write the contributions for which I am now honored by the prize in memory of Alfred Nobel."

"My first contact with game theory was a popular article in Fortune Magazine which I read in my last high school year. I was immediately attracted to the subject matter and when I studied mathematics I found the fundamental book by von Neumann and Morgenstern in the library and studied it."

"Around 1958, I became aware of H.A. Simon's seminal papers on bounded rationality and was immediately convinced by his arguments. I tried to construct a theory of boundedly rational multigoal decision making. Together with Heinz Sauermann, I worked out an "aspiration adaptation theory of the firm" which was published as a journal article in 1962... More and more I came to the conclusion that purely speculative approaches like that of our paper of 1962 are of limited value. The structure of boundedly rational economic behavior cannot be invented in the armchair, it must be explored experimentally."

"Models of bounded rationality describe how a judgement or decision is reached (that is, the heuristic processes or proximal mechanisms) rather than merely the outcome of the decision, and they describe the class of environments in which these heuristics will succeed or fail."

"I was always skeptical about authority, about things which were told by authorities, because I was living in a country and in a time where the authority was utterly wrong, in my view. And therefore I distrusted, I feared authority, I also fear it today. I am in a very, very fearful, I mean maybe more than other people, but I distrust authority. That makes me more independent and also some part of rebellious,... I’m a maverick."

"More people should read the works of Friedrich List. If they do, they may wonder why this turgid, confused writer—whose theory led him to predict that Holland and Denmark would be condemned to permanent economic backwardness unless they sought political union with Germany—has suddenly become a favorite of Fallows, Prestowitz and others. The new cult of List bears an uncanny resemblance to the right-wing supply-siders' canonization of the classical French economist Jean-Baptiste Say, who claimed that the economy as a whole could never suffer from the falls in aggregate demand that produce recessions."

"The world has not been hindered in its progress, but immensely aided in it, by England."

"It is no more than fair that England, now that she has attained the culminating point of her industrial growth and progress, should restore again to the nations of a portion of those productive forces which she originally derived from them."

"For the more rapid the growth of a spirit of industrial invention and improvement, of social and political reform, the wider becomes the gap between stationary and progressive nations, and the more dangerous it is to remain on the further side."

"But politics demands, in the interests of each separate nation, guarantees for its independence and continued existence, special regulations to help its progress in culture, prosperity, and power, to build its society into a perfectly complete and harmoniously developed body politic, self-contained and independent."

"… every nation which makes no forward progress sinks lower and lower, and must ultimately fall"

"The nation … must sacrifice some present advantages in order to insure to itself future ones."

"The economic betterment of a nation which is at a low level of intelligence and culture, or in which the population is small in relation to the extent and productivity of its territory, is best accomplished through free trade with highly cultivated, rich, and industrious nations. In the case of such a country every restriction of trade, intended to plant manufacturing industry within its borders, is premature and injurious, not only to the welfare of mankind in general, but to the progress of the nation itself. Only when the intellectual, political, and economic education of the nation has so far advanced as a result of free trade that its further progress would be checked and hindered by the import of foreign manufactures and the lack of a sufficient market for its own goods, can protective measures be justified."

"From the nation they draw all the benefits of civilisation, enlightenment, progress, and social and political institutions, as well as advances in the arts and sciences."

"We have already observed that the fortunes or misfortunes of individuals are dependent upon the maintenance of the independence and progress of the whole nation."

"Finally, a nation should not regard the progress of industries from a purely economic point of view. Manufactures become a very important part of the nation‘s political and cultural heritage."

"… the Union can grow powerful only by fostering the manufacturing interest. This, Sir, I think the true American political economy."

"It is indeed strange to see at the same time the present Ministry of England … jealously watch to prevent every progress of other rival nations, particularly of the United States."

"… Following these examples every responsible government should strive to remove those obstacles that hinder the progress of civilisation and should stimulate the growth of those economic forces that a nation carries in its bosom."

"… I believe it to be a duty of the General Convention of Harrisburg, not only to support the wool growers and wool manufacturers, but to lay the root at the axe of the tree, by declaring the system of Adam Smith to be erroneous – by declaring war against it on the part of the American System – ..."

"Educational facilities will be extended and better standards of morality will be established. Political institutions, too, will be improved. In this way a backward nation can develop into a progressive state."

"Helmut Schmidt continues to speak of a sense of duty, predictability, feasibility, firmness [...] These are secondary virtues. Simply put precise:.. So you can also run a concentration camp with them."

"Did it have to come to this? The paradox is that when Europe was less united, it was in many ways more independent. The leaders who ruled in the early stages of integration had all been formed in a world before the global hegemony of the United States, when the major European states were themselves imperial powers, whose foreign policies were self-determined. These were people who had lived through the disasters of the Second World War, but were not crushed by them. This was true not just of a figure like De Gaulle, but of Adenauer and Mollet, of Eden and Heath, all of whom were quite prepared to ignore or defy America if their ambitions demanded it. Monnet, who did not accept their national assumptions, and never clashed with the US, still shared their sense of a future in which Europeans could settle their own affairs, in another fashion. Down into the 1970s, something of this spirit lived on even in Giscard and Schmidt, as Carter discovered. But with the neo-liberal turn of the 1980s, and the arrival in power in the 1990s of a postwar generation, it faded. The new economic doctrines cast doubt on the state as a political agent, and the new leaders had never known anything except the Pax Americana. The traditional springs of autonomy were gone."

"The more direct decisions by all the people, all the more ungovernable is the country!"

"Whoever has visions should go to the doctor."

"Had Brandt not taken the lead in ‘normalisation’, other powers would probably have done so. At the same time, West German governmental and, to some degree, public complicity in the East German regime increased alongside engagement with it. This complicity was displayed both by Brandt’s SPD successor, Helmut Schmidt, the Chancellor from 1974 to 1982, and by the latter’s CDU replacement from 1982, Helmut Kohl. Complicity, however, may be an inappropriate as well as harsh judgment, as little would have been achieved by upholding the Hallstein Doctrine and continuing to refuse to enter into dialogue with East Germany. Moreover, the change in policy brought real relief in the form of visiting rights and family reunifications, not to mention buying ‘regime opponents’ out of jail."

"In the basic questions, one have to be naive. And I think that the problems of the world and of humanity cannot be solved without idealism. However, I also believe that one should be realistic and pragmatic at the same time."

"Do we want also to be world champion in moaning?"

"Today, the most important is to learn to understand other people. And not only their music, but also their philosophy, their attitude, their behavior. Only then will nations can get along with each other."

"I think that the idea that a modern society would be able to establish itself as a multicultural society, with as many cultural groups as possible is absurd. One cannot make out of Germany with at least a thousand years of history since Otto I subsequently make a crucible."

"It seems to me that the German people can - pointedly - tolerate 5 percent price increase better than 5 percent unemployment."

"Science and future, that is a contradiction."

"The multicultural society is an illusion of intellectuals."

"The snail's pace is the normal pace of any democracy."