Sombart, Werner (1863–1941)

Born in Ermsleben, Prussia, Werner Sombart studied political economy at the universities of Berlin, Pisa, and Rome. In 1890, he became extraordinary professor at Breslau University and, in 1917, ordinary professor at the University of Berlin, from which he retired in 1933.

As a leading representative of the third and last generation of the German historical school of law, Sombart produced the most comprehensive synthesis of the school's enormous research work with his threevolume book, Der moderne Kapitalismus (Modern Capitalism)—his magnum opus and the foundation of his scientific reputation. He intended the book to be a paradigmatic representation of theoretical historicism, Sombart's ideal of a synthesis between historical empiricism and theoretical economics.

According to Sombart's own understanding, his greatest scientific-theoretical achievement was the introduction of the concept of economic system (Wirtschaftssystem). The basic elements of an economic system are its spirit (Geist), its pattern model or form (Form), and its technology. Any type of economic order can be defined meaningfully only in the context of an economic system. The three principal aspects of economic order are regulation, organization, and systematization. In the relationship between law and economics, regulation is the most important subject. Sombart analyzed a multitude of legal measures concerning the regulatory framework of the economy intended to promote the development of capitalism.

Sombart elaborated in detail the evolution of legal forms of enterprise and business transactions that became standard practices of business life during the nineteenth century. The capitalist organization of wealth and property evolved as businesses became entities of their own (Verselbständigung des Geschäfts). Sombart cited evidence that this process of entity creation (firma) began in Italian city-states of the fourteenth century. The development of a formal accounting system was an important step in the process of Verselbständigung, as was the development of trading companies; joint stock companies were the final step in the process toward limiting the owner's personal liability. Another example of legal forms constituting a basic precondition of capitalist development was the separation of obligations from personal relationships.

In dealing with questions about the legal forms of business and capitalist enterprise, Sombart drew on works of economic history and law. However, one could understand the meaning of an institution only in a socioeconomic context, which did not coincide with the logic of juridical argumentation. Sombart, therefore, implicitly rejected approaches put forward by some of his contemporaries, such as Rudolf Stammler (1856–1938), who viewed legal institutions as the determinant of economic evolution. Although Sombart did not deny that there is some logic inherent in the development of legal forms, in his work the “law” of the law and economics paradigm primarily lay in what he called the spirit of the system.