Emil Lederer’s Theory of Economic Fluctuations and the Role of Financial Institutions

Angelos Vouldis, Panayotis Michaelides and John Milios

MPRA Paper from University Library of Munich, Germany

Abstract: Emil Lederer was characterized as the “leading academic socialist of Germany in the 1920’s” by Joseph Schumpeter and was a highly respected economist of his time. However, most aspects of his work remain totally unexplored. This paper focuses on Emil Lederer’s theory of economic fluctuations. It defends the thesis that certain aspects of Lederer’s conceptualization of economic fluctuations underwent considerable modifications when his 1925 article Konjunktur und Krisen is compared with his 1938 book Technical Progress and Unemployment. In his first attempt to tackle the issue, in Konjunktur und Krisen (1925), Lederer had constructed an explanation consistent with the so-called "disproportionality theory" introduced by Tugan-Baranowsky and later adopted by Hilferding and others (codified as "early Lederer"). However, Lederer's conception of the business cycle in Technical Progress and Unemployment underwent considerable modifications. Lederer's (1938) analysis is, apparently, very 'Schumpeterian' (codified as "late Lederer"). In this version of his theory, the cycle is explained by supply-side factors, and more specifically by technical change. Additionally, Lederer’s view on the role of financial institutions (credit and banks) with regards to business cycles is analysed. Lederer avoided attributing a causative role to monetary factors. The interrelation between 'real' factors and financial institutions, combined with his consideration of psychological motives behind individual's behaviour constitute essential elements in his analysis of the business cycle.

Keywords: ederer; Schumpeter; Hilferding; Tugan-Baranowsky; economic fluctuations; credit. (search for similar items in EconPapers)
JEL-codes: B13 B15 (search for similar items in EconPapers)
Date: 2008
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Related works:
Journal Article: Emil Lederer’s Theory of Economic Fluctuations and the Role of Financial Institutions (2012)
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