Diskussionspapier // Helmut-Schmidt-Universität Universität der Bundeswehr Hamburg, Fächergruppe Volkswirtschaftslehre 85
Starting from the secular fact of an increasing government´s share, a retrospective on Adolph Wagner´s writings seems worthwhile. A leading German economist of the Bismarck era, he first formulated the famous 'law of increasing state activity' for industrializing nations. After analyzing his way of making his case, a couple of flaws inherent to the theoretical interpretations and empirical verifications of his law are discussed. Basically, these flaws are attributable to the neglect of three important factors in Wagner's rationale, namely that his law was destined for industrializing rather than industrialized nations and the growing importance of public enterprises and of the prevention principle instead of repressive actions of the state in case of violation of rules. On the other hand, very modern interpretations of Wagner suggesting that he had the growing excess burden of taxation in mind when discussing the limits of government's share do not seem justified.
Wagner´s Law public expenditure government´s share