Epistemological Problems of Economics

In German logic and philosophy the term “understanding” (Verstehen) has been adopted to signify the procedure of the sciences of human action, the essence of which lies in grasping the meaning of action.3 To take this term in the sense accepted by the majority of those who have employed it, one must, above all, bear in mind that in Germany the development and refinement of a theoretical science having in view the attainment of universally valid principles of human action had either not been considered at all or else had been vehemently opposed. Historicism did not want to admit that, in addition to the disciplines that make use of the methods of history and philology, there is still another, a science that aims at universally valid cognition. The champions of historicism wanted to approve only of history (in the broadest sense) and challenged the very possibility and legitimacy of sociology in general and of economic theory in particular. They did not see that without recourse to propositions accepted as universally valid, even history cannot be understood and that the theory of human action is logically prior to history. It is to the merit of historicism that it rejected the endeavors of naturalism, which—no less mistakenly than historicism, though in another regard—for its part condemned all historical disciplines and wanted to replace history with a science of the laws of human development that was to be modeled on the prototype of Newtonian mechanics or on that of the Darwinian theory of evolution. The concept of understanding as the specific methodological tool of the sciences of human action was developed by historicism to serve it no less in the struggle against naturalism than in that against the nomothetic science of human action.

Today, when understanding is discussed in German scientific literature, it is, as a rule, made clear that what is meant by the term is the method of the “moral sciences,” which comprehends meaning, in contrast to the method of cognition from without employed by the natural sciences. But since, as we have mentioned, this literature is almost completely lacking in any realization that a theoretical science of human action is also possible, it has generally sought to define understanding as the specific comprehension of the unique and the irrational, as the intuitive grasp of the historically nonrepeatable, in contrast to conception, which is attainable by rational methods of thought.4  In and of itself, it would have been possible to include in the definition of understanding every procedure that is directed toward the comprehension of meaning. However, as things stand today, we must accommodate ourselves to the prevailing usage. Therefore, within the procedures employed by the sciences of human action for the comprehension of meaning we shall differentiate between conception and understanding. Conception seeks to grasp the meaning of action through discursive reasoning. Understanding seeks the meaning of action in empathic intuition of a whole.

Where conception is at all applicable, it takes precedence over understanding in every respect. That which results from discursive reasoning can never be refuted or even affected by intuitive comprehension of a context of meaning. The province of understanding lies only where conception and the concept are unable to penetrate: in the apprehension of the quality of values. In the domain open to conception, strict logic rules: one is able to prove and disprove; there is a point to conversing with others about what is “true” and what is “false” and to posing problems and discussing their solution. What has been arrived at by means of conception must be acknowledged as established, or else must be shown to be either unproved or confuted. It cannot be avoided and it cannot be circumvented. On the other hand, where understanding enters, the realm of subjectivity begins. We are unable to impart to others any certain knowledge of what is intuitively foreknown and apprehended, of what has not been hardened in the forge of conceptual thought. The words in which we express it bid others to follow us and to re-experience the complex whole that we have experienced. But whether and how we are followed depends on the personality and the inclination of the one bidden. We cannot even determine with certainty whether we have been understood as we wanted to be understood, for only the sharp imprint of the concept ensures unequivocalness; it is to a concept alone that words can be made to fit precisely.

In this respect, understanding suffers from the same insufficiency as all other efforts—artistic, metaphysical, or mystical—to reproduce the intuition of a whole. What we are confronted with in these attempts are words that can be understood in different senses, from which a person takes out what he himself puts in. As far as the historian describes the political and military deeds of Caesar, no misunderstanding can arise between him and his readers. But where he speaks of Caesar’s greatness, his personality, his charisma, then the words of the historian can be understood in different ways. There can be no discussion concerning understanding because it is always subjectively conditioned. Conception is reasoning; understanding is beholding.

“Conception” of rational behavior does not set goals for itself as ambitious as those that “understanding” pursues. Nevertheless, in its own domain, it is able to accomplish all that it undertakes to do. For we grasp and conceive rational behavior by means of the immutable logical structure of our reason, which is the basis of all rationality. The a priori of reasoning is at the same time the a priori of rational action. Conception of human behavior is the γνωσις του ομοιου τω ομοιω of Empedocles.

• 3Joachim Wach undertakes far-reaching historical and exegetical investigations concerning the development of the theory of understanding in German science in his work, Das Verstehen, Grundzüge einer Geschichte der hermeneutischen Theorie im 19. Jahrhundert (3 vols., Tübingen, 1926–1933). If one also wanted to sketch the history of “conception” in the sense in which this term is used in the present text, one would have to go back, above all, to the literature of utilitarianism.
• 4Cf. Rothacker, Logik und Systematik der Geisteswissenschaften, pp. 119 ff.