“To this author it is an alluring idea that the significance of history may lie in the historical process as such, in that eternal flowering, maturing, decaying, and dying of human institutions. Thus mankind remains always young; it must always struggle with new difficulties and new problems, and death and destruction have meaning because they serve a valuable end. As a result of this constant building, destroying, and rebuilding of human civilizations, sub specie aeternitatis, the almost inexhaustible cultural possibilities, of which the human race has been made capable by its creator, may come into flower and bear fruit during thousands of years of human history.”
∼Fritz Redlich, Essays in American Economic History: Eric Bollmann and Studies in BankingFritz Redlich (1892–1978) was a German scholar who migrated to the United States in 1936 to avoid persecution.Footnote 1 In time, he became one of the most enthusiastic and committed researchers at the Harvard University Research Center in Entrepreneurial History (RCEH). Through his contribution, the RCEH became unique in its study of the entrepreneur as a pivotal actor in economic development. Alfred D. Chandler, Jr., thanked Redlich “for dragooning me into his campaign against empiricism in the writing of business history and his invaluable assistance in developing useful concepts.”Footnote 2 Edgar Salin, a German historian of economic thought and Redlich’s lifelong friend, also underlined his role in transitioning American economic history from mere descriptivism toward conceptualization and theorization by introducing the thought of the German Historical School, specifically that of Arthur Spiethoff.Footnote 3
The road toward this achievement, though, was difficult and at times tinged with tragedy.
Redlich himself was not shy of recounting his intellectual journey.Footnote 4 He believed that all ideas and institutions—culture in short—were historical constructs resulting from human agency. Biographies, then, were an invaluable source for historical analysis. How could the historian otherwise understand which problems had shaped the thought and action of each generation, how each generation had reshaped the institutions it had been born into, or how ideas evolved from one generation to another? In consequence, Redlich considered it worthwhile to recollect and share his own past, emigration, and struggle between two cultures as an exercise in comparative cultural history.Footnote 5
Where to start then?
“I,” stated Redlich when a newly declared Doktor in 1914, “Fritz Leonhard Redlich, Evangelical Christian, was born the 7th of April 1892 in Berlin, son of the international merchant Moritz Silvius Redlich and his wife Emma, born Mühsam.”Footnote 6 In his later biographical writing, he recalled his education in a family of the haute bourgeoisie but failed to mention his mother’s identity. She was of Jewish origin and died, victim of the Holocaust, at the beginning of 1943.Footnote 7 There is no doubt that Redlich had to leave Germany in 1936 for fear of deportation.Footnote 8 How much the experience of persecution influenced his bumpy career road, even in the United States, cannot be underestimated.Footnote 9 Graver consequences on the personal level can only be imagined.Footnote 10
The varied and cosmopolitan cultural environment in which Redlich grew up, in his words, “opened my life to many opportunities but also set some limits.”Footnote 11 Of foremost importance in his intellectual journey was the circle of Ignaz Jastrow, the only professor at the University of Berlin who made a lasting impression on him and became a lifelong supporter and friend.Footnote 12 It would be his presentation letter that Redlich brought with him in exile.Footnote 13 Ignaz Jastrow taught Staatswissenschaften, a blend of economics, sociology, and law, with the object of the organization of the state. Jastrow was also instrumental in establishing Berlin’s business school, a feat that Redlich would later praise highly.Footnote 14 Among the friends of the Redlich family and part of the Jastrow circle was Franz Boese, the last assistant to Gustav Schmoller.Footnote 15 With him, Redlich extensively discussed the merits and demerits of the German Historical School in his own formation as an economist and historian.Footnote 16
Among the few other names of personal friends, quoted by Redlich in his biographical sketch, are Wilhelm Gehlhoff, student of Jastrow’s seminar and later professor of economics at the T. H. Braunschweig, and Albano Milani, technical consultant in Italy’s industry, who studied in Berlin.Footnote 17 Both cases confirm how Redlich moved in cosmopolitan Jewish circles that extended across borders.Footnote 18 While among friends and family, Jewish origin was common, so was integration in local contexts, including conversion to Catholicism or Protestantism, as in the case of the Redlichs.Footnote 19
Clearly, Redlich’s family connections gave him an entrée into the leading academic circles at the University of Berlin. What about the limits then?
“The born historian was transformed by his father into a chemist,” Redlich lamented in his memoir.Footnote 20 The father’s wish was, indeed, that he would take over the family business. After completing his Gymnasium Fritz thus had to attend chemistry classes in Munich and Berlin for four semesters and would finally pass the Verbandsexamen as a professional chemist in the technical superior school of Charlottenburg. Only then would his father allow him to choose a university course closer to his liking. Jastrow, in his presentation letter, underlined the peculiarity of a curriculum in which technical school training was accompanied by a university degree. In Germany these two career paths are usually mutually exclusive. For his university degree, bending to his father’s wishes again, Redlich chose economics (Nationalökonomie) over his beloved art history. He completed his courses in just two years but was far from being satisfied with the training received.Footnote 21 He remembered in later years: “Between 1912 and 1914 economics in Berlin was in the process of withering (…) and the younger historical school was at the beginning of decay.”Footnote 22
The German Historical School of economics emerged in the mid-nineteenth century as a reaction against the classical theory of David Ricardo and John Stuart Mill. Main representatives were Wilhelm Roscher, Karl Knies, and Bruno Hildebrand.Footnote 23 That the functioning of the economy could be represented by natural, immutable laws was anathema to these thinkers. They believed, instead, in the contingency of economic and social phenomena. Laws could still be derived by embedding economic behavior into a precise institutional and socio-political setting. Results could not be universalized, though, even if similarities between stages of development might become apparent. By the 1870s, a younger historical school had emerged in German academia, dominated by Gustav Schmoller. The research agenda did not change, but the scope of economic analysis became increasingly normative. Through the foundation of the Verein für Socialpolitik in 1873, German economists proposed a set of policies to the government to help modernize the economy of the newly unified state. The acolytes of the school had a firm grip on all academic positions in Germany and other German-speaking countries. Its influence also reached the United States.Footnote 24 From the 1870s onward, a select few went from America to Germany to get a degree, a Doktor title, or simply attend courses in economics. Upon their return, they occupied prominent positions in academia and founded the American Economic Association.Footnote 25 Even if they didn’t embrace historicism fully, their research interest in statistics, public finance, economic history, and history of economic thought can well be ascribed to their German residency.Footnote 26 Nonetheless, even in the 1890s, American students attending German universities returned disillusioned, judging the teaching of economics as provincial and backward.Footnote 27 By then, American universities had separate departments for economics and history, and the former field of study had embraced marginalism and its ahistorical methodology.Footnote 28
In Germany, instead, the political ties of the younger historical school allowed it to continue dominating the field longer. Only the downfall of the Reich after World War I would end its influence. On the eve of this Götterdämmerung, Redlich shared the harsh judgment of the American students. Adolph Wagner was geriatric, Heinrich Herkner lacked the capability to teach, Ladislaus von Bortkiewicz was boring, and Friedrich von Gottl-Ottlilienfeld was unpleasant when crossed and later completely blinded by Nazism. The entire historical school seemed blocked by a dead-end isolationism, and “the names of mighty contemporaries like Marshall, Edgeworth, Walras and Pareto were unheard of.”Footnote 29 Franz Boese, as in the letter dated January 6, 1937, had a hard time defending Gustav Schmoller’s achievements to the young scholar.Footnote 30
Nonetheless, Redlich had to admit that, even if his studies hadn’t made an economist out of him, they had allowed him to become a competent economic historian, capable of processing huge amounts of data and synthesizing them into conceptual frameworks. In Berlin, Redlich also learned to be skeptical of the teachings of the Austrian school, “that believed to be truth what was simply a model.”Footnote 31 This, in time, would be the incitement to research and study “the personal element in the economy”: entrepreneurship, perhaps the most important teaching of all for the young student.Footnote 32
All in all, Redlich could only conclude the evaluation of his education by hoping that Edgar Salin, as an historian of economic thought, would care to describe him as “a late member of the youngest historical school.”Footnote 33
Such a school didn’t exist in reality, neither in a clear methodological sense nor in an academic one. The denomination was due to Joseph Schumpeter, and that is where Redlich took it from.Footnote 34 Schumpeter coalesced under this spurious banner three very different scholars: Werner Sombart, Arthur Spiethoff, and Max Weber. Spiethoff had been, among them, a recognized economist, specifically for his business cycle theory. Weber had become a founding father of sociology, while Sombart had brought the art of verstehen in history to new heights. What all of them had in common, according to Schumpeter, was the origin of their then unique thought: German historicist economics. By claiming a place among these thinkers, Redlich vindicated his own individual path into “understanding” an economic phenomenon, the entrepreneur, through accurate historical analysis, with the aim of testing existing theories or resulting in a new one.Footnote 35
Besides family and studies, Redlich considered a third element foundational to his formation: the generation he was born into. By describing this influence, Redlich accepted to some degree the generational theory of cultural transformation that had been formulated in multiple versions at the end of the 1920s and in the 1930s.Footnote 36 In the last of his essays, published in 1976, he would return to the concept of generations as one he had researched and studied for over forty years, and that had informed much of his work from the 1930s onward.Footnote 37
Recounting his intellectual journey, Redlich identified himself with the generation of 1912 that “was the last to grow up in an undestroyed Europe and to receive its mark by the influence of Impressionism.”Footnote 38 Impressionism, in Redlich’s meaning, was not a simple pictorial style, but a style related to all aspects of life.Footnote 39 In fact, during the Wilhelmine period, “the debate concerning it escalated from art to ideology,” becoming the discriminating criterion among an older generation, still tied to neoclassicism, and the younger one to which Redlich adhered.Footnote 40 Impressionism—Reizsamkeit in the definition of the historian Karl Lamprecht—identified in the subjective, immediate, and pre-conceptualized perception the way an entire generation experienced life.Footnote 41 From Impressionism also came a philosophical background that identified the personal factor as a primum movens of the historical process. “From Impressionism,” admitted Redlich, “comes my bias for aristocracy,” a later topic of intense studies, as with his lifelong research on entrepreneurs and business leaders.Footnote 42
Impressionism also meant, for Redlich, being influenced by the natural environment in which he grew up: a typical trait of German national identity.Footnote 43 The identification with the German nation went so far that Redlich was prepared “to defend the inherited cultural patrimony and the ravines of the Reich” with his life.Footnote 44 He volunteered to participate in World War I and, after his return to Berlin at the end of 1918, also participated in the fight against the revolutionaries, until the radicalization of the reaction in the Kapp-Putsch made him retreat from any active involvement. He later joined the Volkspartei and became a member of the Reichsklub.Footnote 45 Again, it was “knowledge and representativeness of the German culture,” what Redlich liked in Gustav Stresemann, whom he met at various times and appreciated as a politician and passionate speaker.Footnote 46
As apparent from his own recount, Redlich never regretted his involvement in nationalist movements, even if his background and education saved him from extremism.Footnote 47 What he deeply regretted about the interwar years was abandoning the pursuit of a teaching qualification and an academic career and stepping, instead, into the family business: “a crime against the spirit and a mistake that I could never amend my life long.”Footnote 48 Ironically, in 1927, after a decade of dedicated work, he nevertheless decided to leave the family firm, just one year after becoming a partner. After 45 years of operation, the Berlin import-export firm Hugo Fürst & Co., which traded internationally in chemical products and synthetic drugs, ceased to exist. Redlich’s decision proved wise, as the new venture founded by his former associates was soon to be liquidated because of the Great Depression. His pessimism about future prospects, in this case, had saved his family’s patrimony, as it would later save his life, driving him to migrate.
Leaving the family firm allowed Redlich to resume his studies. While serving as director of the German cooperative of fur farmers, Redlich had the time and tranquility needed to follow the ambition to get a teaching qualification.Footnote 49 His first attempt, a ground-breaking work on drugs, their production, trade, and markets, stemming from his working experience in his father’s business, was rejected due to the opposition of one member of the faculty, even though it was immediately published and even praised by reviewers.Footnote 50 The faculty, though, did not dismiss Redlich’s request of qualification entirely and asked him to present another essay. To this end, Redlich wrote a history of advertising. As soon as the work was completed German universities were subjected to political control and expelled Jewish faculty members. As a consequence, Redlich renounced presenting and discussing his thesis and could not obtain the much desired teaching qualification. The fate of universities was shared by the Deutsche Landwirtschafts-Gesellschaft of which Redlich’s fur cooperative was a derivation. “In the end,” wrote Redlich, “I made the sad experience of witnessing the Gleichstellung in the DLG. I will not easily forget the brown-clothed rascals that firstly invaded the office and then overtook the whole organisation.”Footnote 51
A short while after, being deprived of work and future prospects, Redlich left Germany to steep in a completely different culture. On March 26, 1936, he landed in New York with $54 in his pocket and no academic title to recommend him.Footnote 52 What he had was a research project.
Redlich’s familiar and academic connections led him to Frank W. Taussig.Footnote 53 Taussig, who had studied in Berlin, had just handed over his professorship in economics at Harvard University to Joseph Schumpeter. His monumental work on American business leaders was very popular and currently used as a textbook.Footnote 54 What better entry into American academia?
In a letter dated October 6, 1936, Redlich described to Taussig how he intended to verify the Schumpeterian theory of business leaders and Dilthey’s theory on generations, doing extensive empirical research on American entrepreneurs.Footnote 55 He would then compare the results with the German caseFootnote 56 . While reassured both by Taussig and Schumpeter on the value of his research program, he couldn’t obtain any long lasting support from private foundations.Footnote 57 His chosen field of study, entrepreneurship, was apparently third class, while his use of secondary sources found no appreciation.Footnote 58
The influence of the German Historical School on the establishment of economics as a field in the United States was, as seen, long past. The contemporary methodological discussion concentrated on the difference between static and dynamic analysis and between short term equilibrium and long term economic development. While marginalism explained the first, the latter was deemed a field of inquiry for historical economists or economic historians.Footnote 59 Not a secondary one. American scholars showed a keen interest in the thinkers that Schumpeter later elected as members of the youngest German Historical School.Footnote 60 Sombart’s work had been published in English in the 1910s, Weber’s in the 1920s.Footnote 61 Redlich himself would translate Arthur Spiethoff’s last unpublished work in the 1950s.Footnote 62
The influence of German scholarship had thus shifted from pure economics to economic history. What kind of history, though? A history that answered the questions of long-term economic dynamics by analyzing diverse institutional settings or looked at sociological theories as a guide. A history that increasingly used statistics as a tool of analysis and did not shy from social engineering. Not a history that was particularly interested in Redlich’s research project, notwithstanding the respect and reverence for the German historical tradition in economics.Footnote 63
Redlich did not qualify for acceptance as an economist, and the field of study that could accommodate his research interests had yet to be founded. He thus had to find an alternative source of income while waiting for his immigration papers and the much-desired American citizenship. He obtained acceptance and a teaching position in the Economics Department at Mercer University thanks to his status as a refugee.Footnote 64 On September 24, 1937, The Mercer Cluster heralded: “Dr. Redlich, a graduate of the University of Berlin, has studied at Munich and written numerous articles on German industry. Coming to America as a German expatriate and anti-hitlerite, he has been engaged in research work in American business. Recently he has written on various phases of market problems and is now working on a history of American business leaders. Dr. Redlich, who has taught at Michigan State College and has given a series of lectures at Columbia University, will teach at Mercer in the economics department, replacing Dr. W. E. Fort, who has accepted a position at Winthrop College.” The university newspaper attests, over the years, to Redlich’s activities at Mercer. He readily held presentations on the war in Europe and the situation in Germany for the local International Relations Club, organized a series of lectures for the democracy class, and even promoted a botanical experiment to counter land erosion on campus.Footnote 65 He became quite popular among students. In 1937, in his first semester at Mercer, his course in Advertising and Salesmanship already ranked second in attendance, with 44 enrolled students, while Redlich himself held the third place among fellow professors, with 103 students following his various teachings.Footnote 66
Apparently, Redlich had successfully started integrating into American society. Nonetheless, according to his own recollection of this period, he still felt isolated.Footnote 67 During World War II, he enrolled for employment in the public administration to fill vacant posts.Footnote 68 In 1943, he was finally hired as an economic analyst by the Federal Public Housing Authority in Boston, where he devised a statistical model to calculate rent levels in public housing, and later directed, from June 1948 to April 1950, the research and statistics office of the public housing program for the Massachusetts State Housing Board.Footnote 69 At this point came the call of Arthur H. Cole to collaborate at the Research Center in Entrepreneurial History at Harvard University, where Redlich worked as a researcher from 1952 until his retirement.Footnote 70
The years preceding the appointment at Harvard were not unfruitful in terms of research, as proven by the number of essays Redlich published. In his own opinion the main achievement of this period in his life, though, was stepping from the culture of his upbringing into the American one.
Among the things learned was the awareness of the parochiality of a European society still based on national states. “In the struggle and confrontation with Americanism,” Redlich recollected, “I finally became a European.”Footnote 71 The nationalism that had fueled Redlich’s participation in World War I and the repression of Berlin’s revolution all but vanished, and he came to see the common traits among Europeans as more relevant than the differences. At the same time, Redlich was able to pinpoint the foundation on which the cultural difference between the US and Germany lay, the reason for all the difficulties in fitting into American academia. Romanticism had had the greatest influence on the education of Redlich’s generation, while in the US, eighteenth-century rationalism was still the philosophy of reference: “hence the inability to understand each other.”Footnote 72 While Redlich never accepted the positivist and empirical foundations of the American social sciences, being confronted with such studies cured him of the historicism he had learned in Berlin, compelling him to build a bridge between historical writing and theoretical abstraction. He recalled, “I came to America believing in the epistemology of Rickert and Windelband with its focus on the uniqueness of the object of human and cultural sciences. Today I consider it completely wrong. I can see common ground between natural and human sciences and many connections between their methodologies.”Footnote 73 Being a scholar steeped into two cultures was also the origin of Redlich’s own and personal approach to historical analysis, a blend of German historicism and American pragmatism: “my solution is to retrieve the formulation of the question from the social science theories, while looking for answers with the traditional historical method.”Footnote 74 The social sciences would be the origin of the conceptualization in the historian’s work, while research, done with the methods of historicism, would provide material for the theorizations of social scientists, leading to a continuing evolution and change of the object of research and of theoretical constructions.Footnote 75 “With these goals in mind,” concluded Redlich, “I became, almost without being aware of it, an analytical economic and social historian.”Footnote 76
The Methodenstreit in American Business History
“Of course men make history: who else could do so? But in entering the stage of history they have been formed by the institutional set-up of their time, which in turn has been created by men who in their turn had been shaped by the institutional set-up in which they grew.”Footnote 77
∼Frit Redlich, Essays in American Economic History: Eric Bollmann and Studies in Banking, 197.While Redlich’s methodological reference scheme was developed during the long research years in American libraries, the interest in entrepreneurialism dated back to his German days.
Redlich himself would not have considered his early works on the German coal-tar dye industry and the market for drugs to be business history studies, as they might well be classified today.Footnote 78 In this, he remained a disciple of the German historical tradition: “It is for me a question of Weltanschauung and so axiomatic that man should have a minimum of power of choice among alternatives. I believe in the role of Droysen’s ‘X’ in the history of mankind.”Footnote 79 In economics, this meant looking for the entrepreneur or those business leaders who, as Schumpeter’s innovators, changed the pace of economic development.Footnote 80 The spark to this kind of research came from Ignaz Jastrow who favored Redlich’s participation to the Staatswissenschaftliche Vereinigung active in Berlin in the interwar years.Footnote 81 After the meetings of this scholarly circle, during which research and theories were presented and debated, attendees would continue the discussions at a café on the Kurfürstendamm. During one such occasion, after midnight, Redlich heard Gottl-Ottlilienfeld speak about an award offered by a Berlin banker to the best history of German entrepreneurship. “Then and there, if I may say so, I received my call,” he remembered, “it hit me: this would be a great endeavour.”Footnote 82
While doing research for his book on the history of advertising, Redlich had already started looking for data to represent the phenomenon of economic development from an individual point of view.Footnote 83 He also studied the concept of the entrepreneur, its definition and history, in search of a theoretical framework for his research. He obviously referred to Schumpeter’s theory, toward which he would later be more critical, but also pursued the possibility of integrating Wechssler’s generational theory into the picture.Footnote 84 The manuscript of the first chapters of this work on German entrepreneurship were brought to America in Redlich’s suitcase and served, as seen, as a presentation to Schumpeter and Taussig. The pioneer work, though, would remain unpublished for almost a decade.Footnote 85 As apparent from the publications scattered in the years 1936-1952, his main attention then was rather dedicated to American entrepreneurship and its role in the economic development of the United States. Thanks to the sponsorship of Frank Taussig and Joseph Schumpeter, Redlich’s research could be financed by the Social Science Research Council for the years 1938-39, but what about academic recognition?Footnote 86
As Redlich immediately grasped: “When I arrived in America I thought to be an economist. I soon discovered that given my education and my disposition, according to American standards, I wasn’t an economist who could aspire to any recognition. Where I studied economics—in Berlin—the field was taught with the methodology of American institutionalism, a research program of German origin that today has no future. The distance was unbridgeable.”Footnote 87 “Given these circumstances,” he continued, “it was fortunate that in 1940 the economic historians who were scattered all over the country decided to join the American Economic History Association.”Footnote 88 Here at last was an organisation in which I fitted in and followingly I became one of its first members.”Footnote 89 Moreover, the Committee on Research in Economic History agreed that among the fields of research would be the history of American entrepreneurship and of American banking.Footnote 90 Following this lead, between 1940 and 1951, Redlich published a series of volumes on American business leaders, the first dedicated to the iron and steel business, the following two to banking.Footnote 91
The method of Redlich’s research was completely different from that of his American contemporaries, so much so that Arthur H. Cole asked him to detail it in an appendix to the volume on the eighteenth-century German entrepreneur Eric Bollmann that was published in 1944 thanks to his counsel and intervention.Footnote 92
Under the influence of the German historical tradition, Redlich considered the historical process undetermined and even, in accordance with Leo Frobenius and Alfred Weber, circular.Footnote 93 While the study of the recurrence of phenomena was the task of the sociologist of history, the historian, instead, breached the subject by considering every event unique.Footnote 94 Redlich, in fact, believed in multi-causal explanations of historical events, rejecting mono-causal determinism. While the latter approach could have heuristic value, its oversimplification, even if appealing, might distort the historical reconstruction into a myth, politically exploitable. Nonetheless, the first approach also had its drawbacks. Even if the historian attempted an explanation by describing multiple factors of causation, she/he inevitably would have to choose among a much greater number of events than the human mind could encompass, giving in, through this selection process, to value judgments. Another peril was the influence of the scientific method on the minds of historical researchers. Causation had not the same significance in nature and society: “in nature and science the cause-effect relationship is irreversible; ceteris paribus, a certain cause can have only one effect. Irreversibility of cause and effect, however, is not a characteristic feature of social causation. On the contrary, in the social world as opposed to nature, cause and effect look in both directions, and consequently these terms should be replaced in social research by that of interaction.”Footnote 95 When reverse causation comes into play and everything is connected through chains of causes and effects, “the traditional linear way of presenting social and historical research may be misleading,” while a “circular presentation” would be more useful.Footnote 96 History should so be understood as a dialectical process between men’s will, construing new institutions and shaping the future environment of men’s action, and the environment they lived in, determined by past generations, “and so forward and backward ad infinitum.”Footnote 97 The “true problem in history” became “the explanation of actions of free men in a determined universe” through “the category of interaction rather than that of cause and effect.”Footnote 98
What particularly thrilled Redlich about this methodological approach was the potential it held in regard to “that problem nearest the author’s heart, namely, the problem of the personal element in historical development.”Footnote 99 “Since history is the work of men,” concluded Redlich, “understandable as the work of men, and since there is no social causation except through the agency of the human mind, history which omits the human element and disregards the men who were its agents cannot result (…) in a correct picture of the historical process.”Footnote 100 How such epistemological foundations translated into an in-depth research, Redlich tried to demonstrate with his analysis of American business leaders, a “denial of determinism in history and development.”Footnote 101
To the history of the concept of the business leader, Redlich dedicated the first chapter of the first volume and the introduction of the second.Footnote 102 Here we find a first clear-cut definition of the entrepreneur as “the man who (alone or in conjunction with others) shapes and reshapes his enterprise, establishes its relations with other enterprises and fits it into the market and the national economy; as the man who directs it and determines its spirit and its strategy by making the major decisions.”Footnote 103 Business leaders, instead, were those, among entrepreneurs, “who determined the course of economic history.” Alternative formulation named them “creative entrepreneurs,” “innovators,” or simply “entrepreneurs” as in Schumpeter’s work. While this definition of business leaders could be satisfying in regard to entrepreneurs in the iron and steel industry of the eighteenth and nineteenth century, the analysis of the banking sector obliged Redlich to rethink the definition and broaden it. He wrote: “Banking has been so much under the influence of state governments and, in certain periods, under that of the national government, and, on the other hand, was so intensively intertwined with social life as a whole, that no history of the personal element in banking could be complete without including all the men who have influenced the development of banking, regardless of whether or not they were business leaders.”Footnote 104 As a consequence, the volume encompassed also statesmen, politicians, government officials, and “originators of ideas” every time they had an active influence on the development of the banking sector.Footnote 105 Not always, or rarely, were the new ideas or innovations developed by the men of action, such as business leaders or statesmen, who implemented them. Ideas “appear and reappear like the pieces of coloured glass in a Kaleidoscope (…) what actually makes the great business leader and statesman is the instinct for choosing the idea suited to the day or the ability to effect a new combination of ideas, a combination in which an older thought can suddenly become a propelling one.”Footnote 106 All of this, then, happened within society, so that: “men shape the development of society and, in turn, are moulded by that society” in a continuous circular process of determination.Footnote 107
Generations played an important role in understanding this development process. The same generational cohort confronted the institutional setting left by the older generation. The business leaders and politicians of that cohort would then change the institutions they inherited, introducing new ideas and so creating the institutional set-up for the subsequent generation, “and so on ad infinitum.”Footnote 108 “Understanding” this complex process meant for Redlich firstly “seeing with the eyes and speaking in the language of the contemporaries of an event,” secondly “putting an event in its right place, in its true perspective, and giving it the right weight.”Footnote 109
Where and how his approach could fit in the American business history narrative, Redlich himself underlined in an essay published in 1949 in the Vierteljahrschrift für Sozial- und Wirtschaftsgeschichte.Footnote 110 The article, aimed at German readers, related the academic dispute that, in the 1940s, had involved the best students of Harvard Business School’s first dean, Edwin Francis Gay.Footnote 111 Gay, who had studied in Berlin under Gustav Schmoller, had brought the interest in business history back to the United States, launching it as a discipline (Figure 1).Footnote 112 When Redlich came in contact with the Harvard Business School, though, the Great Depression had reduced financial sources and a Methodenstreit had erupted that mimicked old German disputes.Footnote 113 Redlich clearly identified the two resulting strands of American business history research. The first school was established by Norman Gras, who had been called by Gay to be the first professor of Business History at Harvard University, and practiced business history as the study of business administration in its three functions: the formulation of policies, control, and management.Footnote 114 Publications were hosted in a book series and a journal: Harvard Studies in Business History and the Bulletin of the Business Historical Society. As Redlich underlined and he himself freely admitted in several private interviews, Gras had an intellectual debt toward the German Historical School and the German tradition of business history as represented by Richard Ehrenberg (Figure 1).Footnote 115
A flowchart of the evolution of business history through the intellectual connections of scholars over a century (Source: Correspondence of Fritz Redlich with Bernhard vom Brocke, Box 1, F13, Fritz Redlich Papers, HBS).
Figure 1. Long description
A flowchart illustrating the connections between various scholars in the field of business history and related disciplines. The chart includes names such as Roscher, Marx, Engels, Schmolier, Ehrenberg, Bücher, Sombart, Max Weber, Fritz Redlich, T. Parsons, Schumpeter, Gay, Gras, Cole, Williamson, Chandler, Cochran, H. Kellenbenz, W. Zorn,, , Hans Jaeger, Jim Baughman, Arthur Johnson, Larson, and Japanese Bus. Hist. The flowchart shows how these scholars influence and connect with each other, highlighting the development and interrelationships within the field of business history.
Redlich himself collaborated prolifically with the Bulletin of the Business Historical Society and was personally acquainted with Gras.Footnote 116 In 1942, Arthur Cole even identified him with Gras’ methodological approach.Footnote 117 Nonetheless, Redlich believed that a potentially more fruitful approach to the same documentary sources existed. “In principle,” he wrote, “the enterprise in itself is devoid of sense. Only in relation, in competition and in alliance, with other enterprises, in the connection with consumers and suppliers, only in the functional positioning in the national and international economy, only in respect to the community at large the enterprise acquires its sense.”Footnote 118 After decades in which an inordinate number of monographies on individual firms had been written, the time had come for more general and synthetizing works.Footnote 119 As Gustav Schmoller in his time, though, Gras and his followers still thought that not enough material had been gathered to answer more comprehensive questions. A step forward had been announced, by Gras himself, but only towards the sectorial analysis of the New England textile machine industry. Redlich saw no future in the extension of Gras’ method from individual firms to industrial sectors. In 1963 he wrote to Arthur M. Johnson: “At one point you are close to fall [sic] into the Grasian trap. If it is true that business history pivots around the administration of and the policy determination for enterprises, then there cannot be any business history of industries. Only in Russia are whole industries centrally administered and their policies centrally determined. The only way to come from the ‘business history’ of enterprises to industries is comparative company history.”Footnote 120
According to Redlich, research should so compare, across firms and in the same time-span, the organization, the business strategy, and all other characters identified by Gras.Footnote 121 The field of research of business history could so be narrowed down to individual topics—facilitating also the use of incomplete series of business documents—allowing the extrapolation of a useful periodization. Loosening the, till then, indissoluble bond between business history research and the availability of almost intact business archives would also have favored the independence of scholars, reducing the influence of firms on the writing of their history.Footnote 122 Similar to the methodology championed by Redlich was the research done by the newly founded Research Center in Entrepreneurial History at Harvard, directed by Arthur Cole, another student of Gay, and whose publication of reference was the journal Explorations in Entrepreneurial History.Footnote 123 The German influence on Cole derived more from the youngest historical school, specifically Weber and Sombart through Schumpeter, than from Schmoller (Figure 1). At the Research Center the object of study was not so much the firm as its functions, defined as entrepreneurial. The person or the persons who accomplished those tasks were called entrepreneurs and their history entrepreneurial history. The general framework of analysis was economic development and the pivotal role of the entrepreneur in igniting it.Footnote 124 Redlich remembered: “The historical interest, though, was wider than the mere entrepreneur and encompassed questions as the recruiting of elites in the economy; the role of the entrepreneur in the firm, in the national economy and in society; the incentives and sanctions that influenced entrepreneurs; and the entrepreneurs’ intellectual world.” Redlich could not have been more enthusiastic: “the adherents to this group of research are anything like positivists. They want to break new ground, they want to analyse, they want to ‘understand’ and to create synthetical and encompassing representations. They want to use theory and contribute to theory. They see business history as a mere part of a greater whole that cannot be grasped by doing business history in a narrower way.”Footnote 125
From the Research Center’s early years, even before joining as a researcher in 1952, Redlich actively collaborated with its initiatives.Footnote 126 Besides contributing to the first publications, Redlich also animated its first meetings, often lively debating with Schumpeter. On these occasions, Redlich claimed that an entrepreneurial function like innovation could be accomplished at times by a public employee or the state, a fact that Schumpeter would deny. Furthermore, Redlich discussed about the social and political opposition that could otherwise thwart innovation even when entrepreneurship was present and active.Footnote 127
His major contribution to the first activities of the Research Center was a thorough critique of the concept of entrepreneur, based on an attentive historical study of its origin and past and present significance, published in Explorations.Footnote 128 A polemical verve regarding Schumpeter is undeniable. Nothing personal, just a vital part of the German academic tradition. Redlich had to prove himself worthy of a research grant and did so by sparring with a giant. Schumpeter, at the time, occupied the chair in economics at Harvard that had been held by Frank Taussig and had already published his most important works.Footnote 129
Redlich identified two different strands of thought that had evolved over time. In the eighteenth century Richard Cantillon had defined and named the entrepreneur or undertaker as the organizer of the means of production, the capitalist, and risk bearer. The creative entrepreneur derived its significance, instead, from the term “projector” as used by Thomas Sprat and Daniel Defoe a century earlier. Following a suggestion by Raymond de Roover, Redlich had also found in the writings of Malachy Postlethwayt and Jeremy Bentham on the projector the connection between the theory of interest and the theory of entrepreneurship and many characteristics of Schumpeter’s innovative entrepreneur.Footnote 130
Redlich’s critique of Schumpeter’s definition was not limited to its lack of originality.Footnote 131 If adopted, it would impede any meaningful advancement in research because it left the organizing entrepreneur without a denomination or interpretative category.Footnote 132 The difficulties, though, in adhering to Schumpeter’s theory were not just terminological. The discussions held at the Research Center in Entrepreneurial History in the first years had proven the impossibility of distinguishing, inside businesses, innovative activities from routine or subjective from objective innovations: a fact admitted by Schumpeter himself. The definition of Schumpeter’s innovative entrepreneur or Redlich’s own creative entrepreneur were de facto ideal-types with no corresponding real-types and as such useless in historical or empirical research. The worst consequence of this confusion was that the studies conducted in the Center found no real appreciation for lack of clarity in concept and terminology.Footnote 133 Redlich hoped that this was just a consequence of the infancy of the discipline and he certainly put much effort, from then on, in establishing a methodology and a conceptual framework that could give more credibility to business history studies.
As for the Methodenstreit that divided Harvard’s Research Center from the Grasian school, Redlich concluded that there was no point in debating over the philosophical foundations of the social sciences, because no definite proof could be presented in favor of one or the other methodology. “Where the pragmatic historian ends,” he commented, “there the ‘understanding’ historian begins. Their aims are mutually exclusive.”Footnote 134 After all there was space, fruitfulness, and significance for both approaches to business history, and all scholars involved were friends.
Ralph Hidy, in a letter to Redlich dated January 6, 1960, aptly described a pacific coexistence that was not perturbed by permanent disagreement.Footnote 135 “As far as our approaches to the writing of histories are concerned,” he wrote, “you and I are indeed taking opposing positions. You are a Kantian. You insist that every book be put in its world setting. I am convinced that our facts about the world setting are limited and that our views have been based upon suppositions and unsubstantiated generalizations. I believe that we need, as far as the history of business is concerned, to learn what business actually is and has actually done before we generalize about it, as Muriel suggested when I read your comments aloud to her, while I as an architect have confined myself to building a house, you criticize me for not being a city planner.”Footnote 136
Redlich, though, had little doubt about the final outcome of the Methodenstreit in America’s business history.Footnote 137 If the German historians’ Methodenstreit had anything to teach, a real understanding of the role of entrepreneurs in history could be achieved only through the kind of research conducted at Harvard’s Research Center.Footnote 138
Redlich at the Research Center in Entrepreneurial History: Contributions and Influence
“What the businessman has experienced in the last few decades is the nemesis of creativity. Another act of creation is necessary if he is to have a new lease of life, that is to say, if he wants to be permitted to contribute what he actually has to offer.”
∼Fritz Redlich, “The Business Leader as a ‘Daimonic’ Figure II,” The American Journal of Economics and Sociology 12, no. 3 (1953): 299Critical appraisals of Redlich’s intellectual achievements all agree that the years spent at the Research Center in Entrepreneurial History were the most productive for the German scholar. There, Redlich completed many studies he had started or had only devised before. He also found access to an intellectually stimulating environment and to young researchers who could profit from his knowledge and advice.Footnote 139
The Research Center was also organized in the fashion of a German “circle,” and Redlich couldn’t help but appreciate it. Meetings were held on Fridays at 6.30 p.m. at the Harvard Faculty Club, followed by a cocktail in the library of the Club.Footnote 140 Sixty-four people were invited regularly, with more-or-less twenty to twenty-five attending, usually consisting of scholars from Harvard, M.I.T., and visiting professors and researchers.Footnote 141 Theses would be presented in the form of a speech, accompanied or not by sketchy memoranda, and then discussed. How fruitful such an approach to research could be, especially in a new field of study that needed methodological and terminological refining, can be proven by the flourishing of publications that resulted from such gatherings.Footnote 142
The first activities of the Research Center were dedicated to addressing the long list of interrogations that Arthur Cole had hurled at fellow scholars in his address at the second annual meeting of the economic history society in 1942. There and then, Cole had kick-started the field of entrepreneurial research by boldly asking: “What is meant by the terms ‘entrepreneur’ and ‘entrepreneurship?’ If there were once such elements as the ‘entrepreneur’ and ‘entrepreneurship’ in the American economic system, what has happened to them as a result of the rise of the corporation, of large-scale enterprise, or of high income taxation? What functions have, in the past, been essential in entrepreneurship and what changes, if any, have come in these functions over time? What activities may be considered merely incidental to entrepreneurship? What method or methods may best be invoked for ascertaining the facts relative to the experience over time of American entrepreneurial activities?”Footnote 143 A main topic, according to Cole, was the role of entrepreneurs in the process of economic and institutional change, a topic that could be analyzed only by taking into account non-economic variables, such as institutions and law.Footnote 144 An interdisciplinary approach, between business administration, economics, and sociology was needed.
As an answer to the provocations of Cole, Thomas Cochran, professor of economic history at N.Y.U., wrote a memorandum titled “An approach to dynamic theory in entrepreneurship.”Footnote 145 Herewith another building block was set for the future research program at Harvard. Cochran wanted to salvage the lost nucleus of cultural history that was business thinking: an essential part of the history of the United States that had been neglected in favor of studies on political or religious thought.Footnote 146 To do so, he aimed at studying “the intellectual nature of business men’s activities” and “the psychology of the business leader as a special social type.”Footnote 147 Methodologically, Cochran intended to set up categories taken from relevant theory: “a systematic theoretical approach for the analysis of such historical material.”Footnote 148
As Cole himself admitted, at that time scholars—economists, historians, or sociologists—couldn’t have answered any of the questions posed by Cochran or himself without disputes and disagreements. In fact, almost a decade of discussions was needed to get together a research program sound enough to obtain sufficient funding to open the Research Center, and then another decade of meetings, conferences, and publications by and at the Research Center to generate a widely accepted conceptual framework of entrepreneurial research, a canon that could then be adopted all over the world.
Fritz Redlich thrived in all this intellectual turmoil. In fact, all of Redlich’s rich production at Harvard is to be understood in continuous dialogue with the other scholars gravitating around the Research Center.Footnote 149 One first example of this fruitful interaction was the speech that Redlich gave on “The ‘Daimonic’ entrepreneur” during a meeting on May 13, 1949.Footnote 150 The work was then published in the first collected volume of the Research Center, titled: Change and the Entrepreneur: Postulates and Patterns for Entrepreneurial History.Footnote 151 Redlich’s contribution was a direct answer to Cole’s and Cochran’s suggestions, showing how the framework of reference for entrepreneurial studies could be fruitfully applied to reread the economic development of the United States in the second half of the nineteenth century.
By baptizing his creative entrepreneur as daimonic, in Paul Tillich’s sense, Redlich synthesized much of his thought on the role of innovative entrepreneurs and their influence on the economy and society.Footnote 152 Daimonic entrepreneurs, though, were not a ubiquitous presence in the history of mankind, but were closely linked to the emergence of capitalism, in Sombart’s definition, and to the diffusion of the industrial revolution.Footnote 153 In the US, the existence of daimonic entrepreneurs had for the first time captured the attention of a wider public in the period of the so-called robber barons, a generational cohort fated to introduce a drastic change into the American economy, creating wealth but unleashing at the same time a fearful destructive power. While destructiveness was implicit in the technological and organizational changes these entrepreneurs introduced into their businesses, the might of this same destructiveness had been affected in no minor measure by their beliefs, especially by the waning influence of the Church and the contemporary spreading of liberalism. While technology demanded that perfect competition be abandoned, the state’s intervention in the new imperfectly competitive markets was considered anathema by the new unscrupulous business leaders, causing a level of destructiveness that could, instead, have been mitigated by regulatory policies. “That group of coevals,” concluded Redlich, “could not see how government could have any important function in economic life, unless business called on it, and its members could never understand that their own irresponsible and destructive actions called it onto the scene.”Footnote 154 In this way, the robber barons had caused their own downfall.
The realm of the daimonic did not just encompass entrepreneurial activities but included also ideas and their implementation as institutions. “Each institution,” wrote Redlich, “is, of course, daimonic in the sense of Tillich and its destruction will originate automatically from inner disharmonies and contradictions. Therefore, when a given period is characterized by the rise of an institution, the significance of the next will be its decline and downfall.”Footnote 155 The same held for behaviors that, in a specific institutional set-up, were helpful for businessmen, but became detrimental when the environment changed. Redlich described this phenomenon—with Toynbee—as the “nemesis of creativity”: “once certain behavior patterns have led to success it is almost impossible for those originally benefited thereby to abandon them until it is too late.”Footnote 156 In the case of the robber barons, one such character trait had been their irresponsibility and unaccountability toward the nation and toward society, rooted in their laissez faire belief but also influenced, toward the end of the nineteenth century, by social Darwinism. Daimonic destructiveness had so become daimonic self-destructiveness.Footnote 157
The origin of such ominous malady was the detachment of the ideas and ideals of entrepreneurs from the leading thought of their time. When liberalism had been abandoned in practice, the persistence of the belief that by pursuing self-interest the wealth of the nation would naturally follow caused more damage than good. Irresponsibility had therefore become “the scourge of American entrepreneurship.”Footnote 158 “A tremendous job could be done in this respect by the graduate schools of business administration,” pleaded Redlich, “but they have not even seen their obligation. Instead of educating business leaders by removing blinkers from young businessmen’s eyes so that the latter are able to understand their time, they drill technicians. Thus, they contribute to that ‘idolization of an ephemeral technique’ which had been characterized as dangerous.”Footnote 159
While this first aspect of the daimonism of entrepreneurs derived from their errors and weaknesses, another, much more powerful one, was a consequence of their very success and efficiency.Footnote 160 The accumulation of power in the hands of the robber barons had caused social unrest and the disruption of the loyalty of the people to the established system. Governments, first, and later, various forms of professional and economic associations, as well as trade unions, farmers organizations, and corporations, strived for an equal measure of power, giving rise to influential groups defending their own special interests. What had once been a free society governed by healthy competition had become a society dominated by the competition of power aggregations, wiping out the stimuli that had led to efficiency and economic development in the first place. A classic case of daimonic self-destruction: the transformation of competition driven firms into large-scale enterprises—a success story seen from the point of view of entrepreneurs—had caused the concentration of power into the hands of interest groups, eroding the power conquered by entrepreneurs, and the vanishing of the incentives to efficiency that were implicit in a competitive environment, weakening the process of economic growth.Footnote 161 The self-destruction even went further: the administratively flexible enterprise guided by an independent or quasi-independent business leader had become a gigantic bureaucratic structure where the leadership wasn’t in the hands of the entrepreneur anymore, at least not completely, and the process of innovation could be severely hampered by the lack of motivation of managers and collaborators. As an extreme consequence, the innovative activity of US business leaders had created the conditions for their businesses to be efficiently run by the state through public employees.Footnote 162
Notwithstanding all this daimonic destruction and self-destruction, innovation would not cease, as predicted by Schumpeter. Redlich firmly believed that innovation would go on as ever and that only its enactor would have to change: from creative entrepreneur, owner of his own business, to, perhaps, public employee or middle manager. Redlich concluded:
What is now needed is a creative achievement of first magnitude, but one of a character entirely different from the business leaders’ creative achievements of the past: the type “businessman” must be reshaped so as to fit into a coming economic order (style) which will be as different from that prevailing in the nineteenth century as it should be (…). But in order to make room for that achievement the leading businessmen must reorient their thinking. They had better forget Adam Smith, John Stuart Mill, invisible hand, and natural law, and look at the world without out of date theorizing.Footnote 163
Here again business schools had an important task to fulfil.
As was apparent with his analysis of the daimonic entrepreneur, Redlich answered many of the questions posed by the Research Center’s founders in the memoranda they circulated to prepare its research program. He interpreted the economic development of the United States in terms of a specific actor of change: the creative entrepreneur. He included in his analysis not just economic but also cultural and social factors. He underlined the importance of the social origin and education of entrepreneurs in orienting history and even suggested the potential role of academic curricula in educating future cohorts of American business leaders.
Was this it?
After all, Redlich had answered the question that had obsessed Max Weber, Werner Sombart and Joseph Schumpeter.Footnote 164 He had successfully hunted down the spirit—the daimon—of capitalism, at least for the United States, and by so doing, he had salvaged human agency from Marxian determinism.Footnote 165 Was the scope of his studies, then, at an end?
In a summa of the research done at Harvard, published in 1957 on the Weltwirtschaftliches Archiv to introduce entrepreneurial history in Germany, Redlich summed up how much more could be done in a field that was still in its infancy.Footnote 166 “Entrepreneurial research, as carried on in the Research Center,” stated Redlich, “defines the entrepreneur as the decision-maker in enterprise, a definition which has become crystalized after two hundred years of economic theorizing and is now accepted as a starting point by the majority of present-day scholar.”Footnote 167 While there was little dispute, at last, on this point, Redlich underlined how the analysis of the entrepreneurs’ decisions could be done by looking at their actions or alternatively at the entrepreneurs themselves. The latter could be studied with three different levels of abstraction: the ideal type entrepreneur who was the subject of theoretical reflection, the real type enterpriser who was the subject of analytical economic history studies, and the historical businessman, subject of descriptive historiography. Put this way, research on the entrepreneur could accommodate both the Grasian school and the Research Center’s, overcoming the futile Methodenstreit. Even mere biographies, autobiographies, and celebratory material would be acceptable, constituting research material for further abstraction.Footnote 168 In fact, during his residence at Harvard, Redlich continuously worked to enrich the Kress collection at Baker Library with such writings, trying to salvage entire archives from Germany, asking heirs of relevant economic personalities to share autobiographical material, and maintaining relationships with curators of libraries worldwide.
Entrepreneurs’ actions, instead, could be studied inside the firm, at the national level or in society at large. For Redlich, the firm as the locus of entrepreneurial action could be analyzed as an action system, as done by the Grasian school, but also as a complex of meaning or as a complex of significance. By considering the firm a complex of meaning, where meaning, in Weber’s sense, comprehended the subjective evaluation of actors on a certain fact or circumstance, the analysis should have included the entrepreneurs’ goals and values. By considering the firm a complex of significance, instead, where significance, in Dilthey’s sense, meant that a fact acquired meaning only in relation to its context, the analysis should have included the interaction of entrepreneurs with all other factors and actors also across time.Footnote 169
Entrepreneurial activities, though, could also take place at the national economy level or in the community. In both cases, these activities could affect or be meant to affect just the entrepreneur’s business, the general wealth, the societal construction, or some combination of the three. In effect, all studies concerning the entrepreneur and its relation to economic growth, to capital accumulation, or to some kind of social and cultural change, all fit in this field of research.Footnote 170
Extending the analysis to reactions, entrepreneurial history could also include studies on social “sanctions,” as had been done by a research group at the Center, under the supervision of Leland Jenks and Thomas Cochran.Footnote 171 Redlich himself had written a review article on this topic.Footnote 172 He suggested using this analytical tool to compare two cultures of the same period or the same culture in two different historical moments “for explaining otherwise inexplicable differences in the rate of capitalistic development.”Footnote 173 In fact, it was David S. Landes, a former researcher at the Center, who went down this road by applying this methodology to the case of French development.Footnote 174
Changing the unit of analysis from the action to the actor, Redlich identified four other fields of research available to the entrepreneurial historian. The first was the already mentioned study of entrepreneurial thinking pursued by Thomas Cochran. In 1953 his cited generic research plan, written in 1947, had become a complete study of the “business mind” in the railroad sector in the second half of the nineteenth century.Footnote 175 Notwithstanding the high level of that research, it had remained unique, leaving the field still largely unexplored. The same held for what people at large, in various times and places, had thought about entrepreneurs. Here again, only one study, stemming out of the activities of the Research Center, Sigmund Diamond’s “The Reputation of the American Businessman,” stood alone in a virgin area of potentially fruitful research.Footnote 176 The topic of businessmen’s education and careers, instead, had been extensively analyzed by Frank Taussig and his school. Redlich himself had studied the history of business schools in Germany and the US, comparing their evolution and the meaning that the resulting differences had had on local development.Footnote 177
All that had been learned by the preceding research, Redlich concluded, even if still patchy and insufficient for synthetic works, could still be used to infer entrepreneurial typologies.Footnote 178 Entrepreneurial types could be defined on the basis of differences in entrepreneurial actions or in the social origin, behaviors, and psychology of entrepreneurs. In this field, what specifically interested Redlich was the sociological typologization that had been first attempted by Werner Sombart. “But as yet we do not know,” Redlich had to admit, “whether the social origin of enterprisers had any influence on their ‘actions’”:
After devoting much time to this subject under the auspices of the Center, I am inclined to assume such an influence for the past, but not for the present. Sombart saw the merchant, the craftsman, and the aristocrat in their capacity as enterprisers whenever they entered business on a larger scale; but one can and must add to these categories the peasant, the laborer, and perhaps for medieval and early modern times the Catholic cleric also. Study of entrepreneurial types of this character is somewhat advanced, but far from complete.Footnote 179
Despite the apparently dismal conclusions about his own research on social typologies, it had been through these studies that Redlich had obtained success and recognition inside the Research Center and at the international level. In fact, it was thanks to a project he had presented on aristocratic entrepreneurship that Redlich had obtained a position as researcher at the Center in June 1952. The project itself went on for one and a half years under his supervision. Among the young researchers involved were Goran Ohlin, a Ph.D. candidate in economics at Harvard, who spent the summer of 1952 researching the topic of Swedish aristocratic entrepreneurship, Hermann Kellenbenz, who worked on German aristocratic entrepreneurship, and David Landes, who was entrusted to analyze the French case. The results of the research were presented by Redlich himself in December 1953 in a Center meeting and then published in a monographic issue of Explorations in Entrepreneurial History.Footnote 180 Other works related to this international comparative research effort were published in subsequent issues of the journal.Footnote 181 How much these results were stunning—granting Redlich’s permanence in the Center after the end of the project—can be understood by looking at the list of successful and unsuccessful projects of the Research Center compiled by Ruth Crandall after its closure.Footnote 182 Redlich’s had far more participants than any other project and had led to an unsurpassed number of publications.Footnote 183
A by-product of the studies on aristocratic entrepreneurship was the interest of Redlich in military entrepreneurs in Germany in the period ranging from 1350 to 1800.Footnote 184 This research occupied him for ten years, between 1954 and the publication of “De Praeda militari. Looting and booty 1500-1815,” as a supplement to the Vierteljahrschrift f. Sozial- und Wirtschaftsgeschichte. This work definitively established his scholarly reputation in Germany as a social and economic historian.Footnote 185
Redlich closed his recount of the field of entrepreneurial history in the Weltwirtschaftliches Archiv, and it couldn’t be otherwise, with a call for a third approach to entrepreneurial studies that would unite the analyses of entrepreneurial actions and of entrepreneurs in one synthesizing approach.Footnote 186 He concluded:
It is not easy to describe the specific value of the ultimate synthesis in our field since it rests on the application of the methodological category of interaction. Everyone would probably agree that interaction rather than cause and effect is decisive in social and historical life. Consequently interaction, developed into a methodological schema, should guide our treatment of pertinent subjects. But we are so accustomed to the cause- and-effect presentation, and the “circular” presentation (corresponding to and called for by that interaction which determines social and historical reality) is so difficult, that we still wait for the genius who will show us how to do what we know should be done.Footnote 187
Reception and Conclusions
“Now Chandler and Redlich have explicitly recognized that the large firm may also be the result of the development of new techniques of policy formulation and administration. The result has been the growth of multi-product, multi-function firms of ever-increasing size and complexity”
∼Hugh G. Aitken, Arthur H. Cole, Muriel E. Hidy, Ralph W. Hidy, John G. Hutchins, Leland H. Jenks, Arthur M. Johnson, Harold F. Williamson, Alfred D. Chandler, Jr., and Fritz Redlich, “Recent Developments in American Business Administration and Their Conceptualization: A Discussion of the Chandler-Redlich Article,” The Business History Review 35, no. 3 (1961): 436.The Research Center in Entrepreneurial History ceased its activities in 1958. The reason was a lack of funding, not a lack of success.Footnote 188 The field of entrepreneurial studies, conventionally called business history, was gaining ground and the innovative research done at Harvard became standard reference for historians all over the world. A proof is the wide circulation achieved by the journal Explorations in Entrepreneurial History.Footnote 189 Redlich was no stranger to this last success, having worked at the journal from its beginning, contributing pieces in almost every issue but also reading, selecting, and editing the articles of other authors.Footnote 190 According to a letter dated August 3, 1962, by Ralph Andreano, Redlich was in the same way involved in the second series of the journal, published by the Harvard University Graduate School of Business Administration from 1963 to 1969. He was also a member of the advisory board of the Business History Review, which was founded in 1954 as the continuation of the Bulletin of the Business Historical Society.
His own writings and the quiet work of the reviewer were not the only ways in which Redlich directed the field of business history. “He probably did not realize,” testified Alfred Chandler, “how influential he was in helping to make analytical history take hold. (…) One of the prime movers in the new institutional history that combined entrepreneurial, business history, and sociology surely was Fritz Redlich.”Footnote 191 Chandler was, among many, the most spectacular case of the determinative influence that Redlich could have on future scholars. Chandler himself recollected:
It was in the stacks at Baker Library where I was trying to find information on the shadowy figure, James F. D. Lanier, a major but little known investment banker of the 1850’s with whom Henry Poor, the subject of my dissertation, was closely associated. Fritz immediately produced a mass of information culled from the most obscure sources and even pointed me to Lanier’s autobiography which, because of an odd title, had been miscatalogued. As the dissertation moved on, Fritz continued to share his knowledge and to discuss the implications of my limited, though to me exciting, findings. Always he pushed me to address the larger questions of the role of business and businessmen in the world in which Poor lived and wrote about. These discussions in turn led to even more lengthy ones on the role of the entrepreneur in enterprises such as the railroads and the large producing and distributing firms that were operated through extended managerial hierarchies. Our question was, what relevance did existing entrepreneurial theory, which assumed that decisions were made by individuals, have to businesses where decisions were made by teams or groups of managers?Footnote 192
Chandler’s Ph.D. work would be published under the auspices of the Research Center, while Redlich organized the publication of a joint article, based on the topic of their discussions, in the Weltwirtschaftliches Archiv.Footnote 193 Looking for the vanishing entrepreneur in American businesses, Chandler and Redlich constructed the analytical tool of the one-product/one-function, one-product/multiple functions, and multiple products/multiple functions firm: ideal-types through which all the history of American business could be reread according to the changes in their internal structure and the related strategies. The article was considered seminal and was immediately republished in the Business History Review.Footnote 194 The editor of BHR, considering the importance of the theses presented in the essay, invited comments from the most important American business historians of the time.Footnote 195
In the middle of the 1960s Redlich was at the height of his fame in the US. The same held for Germany. From the very beginning of his research, Redlich had actively worked to spread his methodology in his home country.Footnote 196 The essays in the Vierteljahrschrift für Sozial- und Wirtschaftsgeschichte and in the Weltwirtschaftliches Archiv, have already been mentioned. When the latter was published, entrepreneurial history finally enjoyed a renewed academic interest. Redlich was asked to write the entries on “Unternehmer” and “Unternehmungs- und Unternehmergeschichte” in the 1959 edition of the Hanwörterbuch der Sozialwissenschaften.Footnote 197 He also collaborated with the journal, founded in 1956, Tradition, Zeitschrift für Firmengeschichte und Unternehmerbiographie (Tradition, Journal of Company History and Entrepreneurial Biography), contributing to the establishment of German business history.Footnote 198 Among the journal’s authors was Hermann Kellenbenz, one of the young scholars who had obtained a grant from the Research Center and had worked with Redlich on the project on aristocratic entrepreneurship. Many others, though, had visited Harvard after the closing of the Center, but had anyway enjoyed the hospitality of Redlich, retired but regularly working at the Kress and Baker libraries, and had received precious advice or critic.Footnote 199 Redlich so became “a sort of ‘liaison officer’ for two generations of visiting German historians, generously offering them invaluable practical services and discussing their projects with them in his modest home or in a quiet corner of the Kress Library.”Footnote 200 Their appreciation was no less enthusiastic than that of Redlich’s American friends and pupils. In a letter dated January 22, 1965, Hermann Freudenberger, inviting Redlich to Germany, wrote: “I am convinced that you would enjoy yourself here and also make further contribution to the Redlich legend, which is well nurtured here. For example K.[Kellenbenz]’s Assistant Prohl took me to task for saying that I am using a combination of Schumpeterian and Max Weber approach with the question of entrepreneurial function. He said why not simply say Redlichan approach. This is how the innocent gets into trouble. It won’t happen again!”Footnote 201
A detailed study of the reception of Redlich’s thought on both sides of the Atlantic is still to be made. Such a study would have to reconstruct all the silent work that Redlich dedicated to manifold journals and the counseling of entire generations of scholars passing through Harvard from the 1950s to the 1970s. Many of them paid tribute to Redlich in their writings, many more imbibed their research with his methodology, the conceptual sharpness, the constant striving to “understand” and to see the whole emerging out of the actions of individuals.Footnote 202 The interest of such a study was not lost on Redlich himself. In 1977, in a letter to Wolfram Fisher, Redlich stated that, in collaboration with Bernhard vom Brocke, he wanted to represent business history as a branch of the history of thought (Geistesgeschichte).Footnote 203 Death, one year later, robbed him of the possibility of completing this research project. What remains is a pen-drafted chart he discussed over with vom Brocke (Figure 1). This intellectual map tentatively shows the influences that shaped the major historians and schools of thought in business history in the US, Germany, and Japan.
All started with Marx, apparently. Ab negativo. And it is undeniable that in different ways both the younger historical school, here represented by Schmoller, and the youngest, with Weber and Sombart were reactions to Marxian theory. Edwin Gay—on the left side of the map –was, then, the first American scholar to be influenced by German historicism. He in turn introduced Arthur Cole, Norman Gras and Ralph Hidy to the field of business history. Gras himself was also indebted for his methodology to Richard Ehrenberg and Karl Bücher.Footnote 204 On the other side of the map, Max Weber influenced the research of Talcott Parsons.
This is the situation that Schumpeter and Redlich found when they arrived in the United States, Schumpeter with his own reaction to Marx and debts to Schmoller and Sombart, while Redlich was part of Jastrow’s circle and had a relation to Sombart’s thought. They were decisive in driving some American scholars toward a different methodology, closer to the youngest historical school than to Schmoller. Schumpeter is represented as having influenced Arthur Cole, who in turn inspired Cochran and Williamson. Redlich, instead, is depicted as having had an impact on Ralph Hidy, Arthur Johnson, Alfred Chandler, and all young German researchers, down to Hans Jaeger.Footnote 205
Redlich commented on this chart in a letter to vom Brocke dated April 2, 1974 and here published in an online supplement.Footnote 206 He wished for a line to be added that united Talcott Parsons with Chandler, because “there is a lot of Weber in Chandler” and that influence went through Parsons. “My influence,” he wrote further, “has been to distract Chandler from the typical American Empiricism and direct him toward an analytical business history completely opposite to the one by Gras and the Hidys.” Also a line was missing from Max Weber and Joseph Schumpeter to Redlich himself. Redlich would humbly conclude: “As I said to you, I played the role of the bridge. What I can do is explain further the American achievements in relation with my German background (…).” In reality, without his and Schumpeter’s influence, an entire fruitful line of research in entrepreneurial history would have been lost in the US and in Germany.
Despite all of this, Redlich dedicated the last decade of his life to social history, the question of migrations, the value of biographies as a source of social history, the concept of generations, and, as said, the history of business history. Why? Why give up a field of study that celebrated him as one of its founding fathers?
In 1977, Redlich himself candidly admitted to Wolfram Fisher: “The only great man in the field of business history is Chandler. He left me so far behind that I gave up.”Footnote 207 An excuse more than an explanation.
The reason behind his disenchantment with economic history to which he had dedicated a lifetime, is more credibly to be sought in another Methodenstreit that threatened American academia exactly in 1965. Cliometrics had appeared in the realm of economic historians and was rapidly conquering the field. In February 1965, Ralph Andreano asked Redlich to critically discuss the method of this new economic history in a panel at a conference at Yale organized by the Economic History Association.Footnote 208 Redlich wanted to explain the differences between the old and the new economic history in terms of diverse Weltanschauungen and generational change: the usual circular historical process.Footnote 209 Empirical positivism, abandoned in favor of an understanding historicism by his generation, devoted to romantic impressionism, was having its comeback.Footnote 210 The two methodological positions were, as such, irreconcilable.
In a letter dated November 2, 1965, addressed to Harold Williamson, and here published in an online supplement, Redlich recounts that the solution he proposed—offering to the new economic historians their own special section and a vice-presidency inside the Economic History Association—had been rejected by both Frederic C. Lane and Arthur Cole in fear of a schism.Footnote 211 What about, then, emphasizing the complementarity of the two approaches and finding so a way to coexist?Footnote 212 After all this had been the solution to the first Methodenstreit between the Grasian school and the Research Center.
In the end, Redlich’s intervention was canceled with little ceremony. No one really wanted to acknowledge or discuss a potential methodological rift among economic historians. The address given by Herbert Heaton to celebrate the silver jubilee of the Association is strikingly silent on the topic.Footnote 213 Only in the final lines Heaton spent a few words to encourage young researchers to follow their own interests, discarding “old truths,” Max Weber’s thesis among them. A clear signal to the practitioners of “the economic history of yesteryear” that the time to retire had come.Footnote 214
The offense was heavily felt by Redlich and no attempts at reconciliation could effectively heal it. Arthur Cole wrote to him on February 7, 1966.Footnote 215 He acknowledged that the essay originally written by Redlich for Yale and offered for publication to the Journal of Economic History was brilliant, nonetheless he downplayed the differences between the old and new historians and asked Redlich, again, to lower his critical tones.Footnote 216 But doing so meant that Redlich renounced all his painstaking efforts to define a method for his business history, abandoning human agency in the face of determinism. The question at stake was not some “old truths,” by which Heaton intended received interpretations of past economic events, but how to obtain new ones, how to do meaningful research.
In the “new” economic history, there simply was no space left for Redlich’s entrepreneur. He wrote:
To the extent that traditional economic history stresses institutions, noneconomic factors, and imponderables, it might draw for theoretical support on sociology and anthropology rather than on economics; whereas the “new” economic historians rely exclusively on the latter. T. C. Cochran’s interest in the cultural element in economic development, or mine in the personal element therein, simply does not interest the exponents of the new approaches.Footnote 217
Redlich decided thus to publish in volume a collection of his essays, so as to make available to readers a summa of his thought.Footnote 218 Then he abandoned the field and retired into social history.Footnote 219
Despite the subsequent dismal evaluation of his achievements on the occasion of his 80th birthday, Redlich surely had no reason to complain about the reception of his thoughts.Footnote 220 His career had been full of disappointments, and his life full of hardships, but his commitment to scientific inquiry and his capacity to orient the research of others towards a true “understanding” of history had left their mark on many future scholars.Footnote 221 As much as he defined his creative entrepreneur as an actor of change in the process of industrialization, he himself proved to be an actor of change in the American tradition of economic studies, establishing business history as an analytical field of research and paving the way for a renewed institutional history.
Supplementary material
The supplementary material for this article can be found at https://doi.org/10.1017/S0007680526101779
Author biography
Monika Poettinger teaches economics, economic history, and business strategy at Polimoda (Florence). Her research in economic history encompasses foreign entrepreneurship in Milan in the nineteenth century, international merchant networks and their role in industrialization, the history of the Ginori porcelain manufacture, and the history of winemaking in Tuscany. In the history of economic thought, she has researched Tuscan liberalism in the 19th century, Italian economic thought under the fascist regime, and heterodox thinkers such as Otto Neurath and Amintore Fanfani.
