The German Gemeinwirtschaftslehre: Implications for modern nonprofit economics

Abstract

This article examines the way modern nonprofit economics can be informed by the Gemeinwirtschaftslehre, a strand of public and nonprofit economics that was popular in German-speaking countries until the 1980s. Despite its present decline, the Gemeinwirtschaftslehre yields a valuable implication that nonprofit firms address market failure by supplanting the pecuniary entrepreneurial motivation with a nonpecuniary one. In this article, this implication is used to reconsider two central and controversial issues in modern nonprofit economics: the rationale behind the nondistribution constraint in nonprofit firms, and the integration between the market failure and supply-side theories of the nonprofit sector. The article concludes by discussing the emerging prospects for empirical research. © 2009 Blackwell Publishing Asia Pty Ltd.