Heinrich Dietzel, 1857-1935.

Heinrich Dietzel was a German economist at Bonn, one of the last generation of the German Historical School.

Born in Leipzig, Saxony, Gottlob Heinrich Andreas Dietzel (no relation to Carl Dietzel) was raised in neighboring Altenburg.  In 1876, he enrolled to study jurisprudence and political science at the University of Heidelberg, and subsequently Berlin.  Heinrich Dietzel obtained his doctorate in law from Gotttingen in 1879.  After a short stint in the courts of Naumburg, Dietzel resumed his studies in Berlin in late 1880, studying economics under Adolph Wagner, and obtaining his philosophy doctorate in 1882.  He subsequently spent some time in Italy, researching agrarian policy. 

While a privat-dozent in Berlin, Heinrich Dietzel reviewed Menger's methodological tract in a series of articles in 1884 for Conrad's Jahrbuch .  

In 1885, Heinrich Dietzel became extraordinary (associate) professor in political economy at the German-speaking University of Dorpat (Russian Estonia),  He researched and wrote his work on German socialist Carl Rodbertus while in Dorpat. Dietzel was raised to ordinary (full) professor in 1887. 

In 1890, Heinrich Dietzel was called back to Germany, to take up the chair in political science (Staatswissenschaft) at the University of Bonn, left vacant by the death to Erwin Nasse. Dietzel would hold the chair in Bonn until the end of his career.

Heinrich Dietzel can be considered a member of the youngest German Historical School, but he was also quite distinct from them in several ways.  Although he was generally a historicist in his own approach, he was not a dogmatic soldier of the school.  Indeed, he held classical economic theory in high regard, and even defended the individualist methodology of the Austrian school during the methodenstreit,  On the other hand, he famously entered into polemics with Böhm-Bawerk over the marginalist revolution, believing classical and marginalist theories to be reconcilable.   In economic policy,  like many historicists, Heinrich Dietzel was an advocate of State-led economic development.  On the other hand, unlike many of them, Dietzel also disavowed protectionism and was an ardent defender of free trade , seeing it as an important tool for German development.   Dietzel was sympathetic to state socialism, and his biography of Rodbertus was near-hagiographic, but he had little patience for more militant socialists (notably Marxians).  As such Dietzel can be said to occupy a peculiar solitary position, a middle ground between the various German and Austrian schools of the time.

Dietzel's most influential work is arguably his truncated 1895 treatise Theoretische Socialökonomik (only the first volume appeared). He tries to cut through the mess of political debates over economic organization and policy, by reducing it to two simple poles - the "individualistic" principle (Individualprincip) and the "collective" principle (Sozialprincip) – which provide the underlying ethical justification for social action. He recognized that both had the same goal of increasing welfare. The individualistic principle puts the welfare of the single being at the centre, the collective principle is concerned with the welfare of a larger community of people beyond the immediate concerns of the individuals within it. Importantly, the collective principle is not a "State" principle as the State cannot be an end in itself but promotes policies in the pursuit of either principle. Both principles are axiomatic in the sense that they are not 'provable' and either one can be used as the basis for social action. Although favoring the individual principle, Dietzel acknowledges it must sometimes give way to the collective principle, thus allowing room for State intervention. Curiously, he assigns communism to the individualistic camp, which takes to the logical conclusion some key liberal principles (for example, the abolition of inheritance because it is non-earned income) but without sharing liberalism’s scepticism of the State. Dietzel eschewed common terms like "capitalism" and "socialism", believing them to be vague and ideological. He also sought to remove the romanticist terms Volk and Nation out of the German terms for economics ("Volkswirtschaft" and "Nationalökonomie"), promoting instead the more neutral and ambivalent term "Socialökonomie".

Heinrich Dietzel's pragmatic mix of liberalism and state intervention was influential on his students, and embraced by the wider public in Germany, particularly after WWI.  His student, Walter Eucken, and the future Ordo-liberals, would often cite Heinrich Dietzel as a predecessor.

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