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A History of German and Austrian Economic Thought on Health Issues RIJKSUNIVERSITEIT GRONINGEN A History of German and Austrian Economic Thought on Health Issues Proefschrift ter verkrijging van het doctoraat in de Rechtsgeleerdheid aan de Rijksuniversiteit Groningen op gezag van de Rector Magnificus, dr. F. Zwarts, in het openbaar te verdedigen op maandag 17 september 2007 om 13:15 uur door Ursula Margarete Backhaus geboren op 11 juni 1955 te Heilbronn-Sontheim, Duitsland 1 Promotor : Prof. dr. A. Nentjes Beoordelingscommissie : Prof. dr. O. Couwenberg Prof. dr. J. A. H. Maks Prof. dr. R. Zuidema ISSN: 0171-970X ISBN: 978-3-89846-490-1 2 Frankfurter Abhandlungen zu den gesamten Staatswissenschaften Band 6 Herausgegeben von Jürgen Backhaus, Erfurt, Stiftungsprofessur für Finanzwissenschaft und Finanzsoziologie Haag + Herchen Verlag GmbH, Fuchshohl 19a D-60431 Frankfurt am Main 3 4 5 Ursula Backhaus A History of German and Austrian Economic Thought on Health Issues 6 Samenvatting De ideeën van Paracelsus over gezondheid vanuit een sociaal-economische visie zijn al 500 jaar oud, maar werden eerst recent teruggevonden en toegankelijk gemaakt door een nieuwe editie van zijn sociaal-economisch werk. Ook de andere hier weergegeven inzichten over gezondheid en gezondheidszorg vanuit een economisch, sociaal en politiek perspectief zijn weinig bekend. In dit boek gaat het over de meest belangrijke ideeën van sociale wetenschappers en economen over gezondheid en gezondheidszorg, beginnend met Paracelsus en eindigend met Schumpeter. Behandeld worden grondleggende ideeën en concepten van Wolff, Justi, Roscher, Menger, Schmoller, Bücher, Oppenheimer en Althoff. De conclusie luidt dat hun bijdragen wel deels zijn te herkennen in de moderne gezondheidseconomie, maar dat wij toch ook belangrijke invalshoeken, die zouden voortvlooeien uit hun werk, vandaag missen. Daarom kan een geschiedenis van de theoretische ontwikkeling van de gezondheidseconomie ook geen Whig history zijn. Volgens deze richting is de huidige stand van de ontwikkeling het logische gevolg van werk dat vroeger al is gedaan. Om een aantal redenen hoeft dit niet per se zo te zijn. De nieuwe economie van de gezondheidszorg heeft andere wortels, met name de Engelse National Health Service. Verder staan de hier besproken bijdragen niet in het Engels, vandaag de lingua franca van de sociale wetenschappen, ter beschikking. In de dissertatie zijn, naast één voorbeeld van wetenschapspolitiek (Althoff), uitsluitend auteurs uit het Duitse taalgebied die klassieke bijdragen hebben geleverd voor een bespreking opgenomen. De hier gekozen auteurs zien gezondheid als onderdeel van menselijk handelen en gezondheidszorg als onderdeel van cultuur. De nadruk ligt op culturele ontwikkeling en gezondheid, op het subsidiariteitsbeginsel en op een minimale rol van de overheid in de gezondheidszorg. De weergave van de inzichten van de behandelnde auteurs geeft ook een antwoord op de vraag in hoeverre zij een bijdrage leveren over aspecten zoals vraag naar en aanbod van de gezondheidszorg, informatie, optimale contracten, de markt voor geneesmiddelen, verzekeringen, technologie, instituties zoals ziekenhuizen en bejaardenhuizen, waardering van levens en levenskansen, sociale verzekeringen, en beleid en vraagstukken in de toekomst. Aangegeven wordt dat hun voorstellen politieke relevant waren in hun eigen tijd. 7 Propositions 1. Economic thinking on health and health issues was present well before Kenneth Arrow’s seminal study of 1963. 2. Following Paracelsus, the cost-effective cure for a disease can generally be found in its immediate vicinity. (Chapter 2) 3. The health of the population is part and parcel of the wealth of the state. (Chapter 4) 4. The Austrian contributions with respect to perceptions of health in the economy can hardly be distinguished from those of (what they call) the members of the Historical School. In this respect, there is no dispute. (Chapter 7) 5. As Karl Bücher has shown, the role of music, rhymes, arts, crafts, and gifts is important in the production process of an economy not only at a lower cultural level. (Bücher: “Das Geschenk in der modernen Ökonomie), (Chapter 9) 6. The extreme shortage of transplantable organs could be overcome through gift relationships as suggested by Bücher. (Chapter 9) 7. With improved means of communication, Oppenheimer’s proposal for combining rural forms of healthy living and work has become even more plausible than in his own time. (Chapter 11) 8. Schumpeter omitted the Seventh Chapter of his Theory of Economic Development and with it his contributions to health and health issues. (Chapter 12) 9. Health is a prerequisite for enjoying wealth. 10. Today, health systems compete as evidenced by the phenomenon of health tourism. 11. It is better to light a candle than to curse the darkness. (Lao Tse, China, 5de eeuw v. Chr.) 8 Table of Contents 1. Introduction 2. Paracelsus, Theophrast von Hohenheim (1493-1541): a Holistic Approach to Health Including the Social Scientific Point of View 3. Christian Freiherr von Wolff (1679-1754): The House as the Relevant Context of Health Provision 4. Johann Heinrich Gottlob von Justi (1717 - 1771): Health as Part of a State's Capital Endowment 5. Wilhelm Roscher’s (1817-1894) Historic Method and Health Issues 6. Adolph Wagner (1835-1917): The Increasing Role of the State in Health Care 7. Carl Menger (1840-1921): Perceptions of Health in the Economy 8. Gustav von Schmoller (1838-1917): Health Issues as Part of the larger Social Question 9. Karl Bücher (1847-1930): The Role of Nonmarket Exchange in Health and Health Care 10. Friedrich Althoff’s (1839-1908) Entrepreneurial Approach to Health Related Sciences and Scholarship 11. Franz Oppenheimer’s (1864-1943) Social Economic Approach to Health 12. Joseph Schumpeter's (1883-1950) Broader Picture and Health Issues 13. Common Themes 14. The Old and the New Health Economics 15. Summary and Conclusions Appendix: Abstracts, Keywords, JEL Codes List of Illustrations Biography Acknowledgements 9 10 Chapter 1 Introduction This history of economic thought on health issues is a history of health economics before Arrow. The discipline of health economics conceived as a particular branch of economic science is defined as the “application of economic theory to phenomena and problems associated with health.” 1 Typically, Kenneth Arrow’s seminal study of 1963 marks the start of the discipline of health economics.2 Economists have, however, thought about health for centuries, even put the issue at center stage of their expositions (Justi). Since Paracelsus, the first social scientist systematically discussing the economics of health related institutions and services, lived 500 years ago, the focus of this book is not only broader, but primarily different from writing a history of health economics. The leading question of the study is: what are the early economic ideas on health in the German and Austrian thought? A history of the theoretical development of health economics cannot be a whig history written as if the current state of health economics were a necessary and logical outcome of work that had been done as far back as centuries ago. 3 To the contrary, the added value of a history of thought on the economics of health issues is to emphasize different points of view and departure, different approaches, different methods, and different results from what is currently available in the professional literature in health economics. In his presidential address before the meeting of the History of Economic Society in Riverside (1978), George Stigler said about the history of economic thought that it is either forgotten, because it has been integrated into the mainstream and need no longer be remembered, or it is not history of thought, because it is a classic, but looking at these rightfully forgotten authors is just something for economists, who have not mastered their trade. 4 In this book, I am looking at classical authors, which 1 Anthony J. Culyer. 2005. The Dictionary of Health Economics . Edward Elgar. Cheltenham, UK, p. 150. 2 Kenneth Arrow. 1963. "Uncertainty and the Welfare Economics of Medical Care." American Economic Review . December 1963, 53 (5), pp. 941-73. For the viewpoint that Arrow’s seminal paper has been the main impetus for health economics as a modern scientific discipline compare e. g. the contributions in the special issue edited by Mark A. Peterson, 2001. Kenneth Arrow and the Changing Economics of Health Care . Journal of Health Politics, Policy and Law . Vol. 26, No. 5, October 2001. 3 Nevertheless, this is the economic approach by Mark Blaug. 1985. (4) Economic Theory in Retrospect. Cambridge: Cambridge University Press. 4 George Stigler. 1969. ”Does Economics Have a Useful Past?” History of Political Economy . 1(2), pp. 217-230. There are some interpretations not realizing the irony in the argument that Stigler in his lecture meant to be 11 have been selected to make the point about the neglect of the history of economic thought in modern economics of health. No attempt has been made to cover all subjects of economic thought on health issues. I am in particular looking at those classical works that are not easily available, since they are locked into the German language. "English is the lingua franca of the academic world these days, and knowledge that is not transmitted in it becomes lost, certainly in economics and most other social sciences." 5 Primary sources are used and relevant health issues and quotes are selected and analyzed in context in order to make these classical works accessible to English
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