Geoscience Reference
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L¨sch's colleague and close friend Wolfgang Stolper, in his introduction to the
English edition (Stolper
1954
), classified L¨sch's contribution as an extension of
the Walrasian system to a spatial economy. Isard expresses the same idea, when he
interprets German “Raumwirtschaft” as an “almost inevitable” attempt to fuse
space, a primary concern of the Historical School, with the general equilibrium
analysis of the Lausanne school (Isard
1949
, p. 479). Though claimed by two great
minds of our discipline, both experts on L
¨
sch's work, I dare to disagree with this
interpretation. Actually L¨sch made an attempt to outline a general equilibrium
theory in his brief Chap. 8, which covers no more than eight pages of his topic of
more than 300 pages. The theory outlined is neither Walrasian nor general equili-
brium, and it simply does not succeed; it does not reach the standards of general
equilibrium theory of his time, set by Abraham Wald (
1936
), John von Neumann
(
1937
) and others in the 1930s. The theory is not Walrasian because firms are not
price-taking, it is not general equilibrium because there are no budget constraints,
and demand is exogenous. The loose ends are too many. My personal interpretation
is that L¨sch just gave up this line of research because he rightly foresaw that no
interesting and consistent conclusion on the spatial structure of the economy could
be attained this way.
L¨sch thus pursued a different line of reasoning, taking up the idea of a hierarchy
of central places from the German geographer Walter Christaller (
1933
) and turning
it from a descriptive to a deductive approach. Central places are the centres of
differently sized overlapping market areas. Each network of market areas is derived
as a partial equilibrium based on Chamberlin's monopolistic competition approach.
There are obvious objections against this method: superimposing partial
equilibria does not make a general equilibrium. Cost payments of firms go to
nowhere; demand comes from nowhere, no interdependence between markets of
different commodities, no budget constraints and so on. Moreover, L
¨
sch missed
the difficulties implied by a direct application of Chamberlin's symmetry assump-
tion to a spatial market (already noticed before by Kaldor
1935
). But this deficiency
could be corrected by later authors such as Beckmann and Thisse (
1986
), Eaton
(
1978
) and Lipsey (Eaton and Lipsey
1976
), Capozza and van Order (
1978
) and
others, without affecting the substance of Central Place Theory. It reappears in the
multi-industry continuous space version of New Economic Geography (Fujita
et al.
1999
).
These are the big stars of spatial economics in Germany until the end of World
War II. As mentioned in the introduction, two other names on the “Isard-list”,
Weigmann and Pred¨hl, would not deserve an equally extended treatment, had not
Isard devoted so much space to their respective works. This critical statement does
not at all mean, however, that I put Pred¨hl and Weigmann, both publishing at
roughly the same time and under the same political conditions, into one box.
Despite certain concessions to the Nazi regime, Prod¨hl kept is independence as
a scientist (Br¨cker
2014
), while Weigmann became an ardent adherent and
propagandist of Nazi ideology.
