Investigations into the Method of the Social Sciences

The Concepts of Theoretical Economics and the Nature of Its Laws

The definition of a science has to contain three elements: (1) the exact designation of the science to be defined; (2) the object that research is related to (e.g., the animal world or plant world, the state, national economy, etc., or specific realms of these); and (3) the formal point of view from which the object is to be examined (e.g., the historical, the theoretical, etc.). Thus a correct definition of theoretical economics not only has to designate this science and its object, national economy; it also has to determine the formal point of view from which the above science concerned with national economy has to investigate economic reality (as opposed to other sciences, which are concerned with the same objects, e.g., history, statistics of national economy, economic policy, etc.).

The definition of a science, and thus of theoretical economics, may accordingly suffer from three fundamental weaknesses. In the first place, it may not characterize clearly enough the science which is to be defined. This is the case with all those definitions of theoretical economics which do not expressly indicate what is to be included: whether political economy in general (theoretical economics, economic policy, and the science of finance in their entirety), or merely the first two subdivisions of political economy mentioned, or else, finally, only the theoretical portion. In fact, they even leave us in doubt occasionally whether it is not political or social sciences in general which are in question.

In the second place, the object to which the science concerned refers may not be designated precisely. This is the case with all those definitions of theoretical economics which leave us in the dark concerning the object of research in this science; or else designate as this object at one time social phenomena in general, at another only specific fields or aspects of national economy.1 Both the conception of theoretical economics in the sense of a general theoretical social science and also the conception of it in the sense of a mere catallactics, a philosophy of the history of national economy, etc., are errors of this kind.

In the third place—and here the chief weakness of most definitions of theoretical economics is to be looked for—the formal point of view from which economic science investigates the phenomena of national economy may not be precisely indicated. For the majority of definitions leave us in doubt whether economics investigates national economy from the historical, the theoretical, or the practical point of view. Or, in other words, we are in doubt whether it is a historical, a theoretical, or a practical science dealing with national economy. In fact, definitions usually jumble up inextricably these three absolutely different points of view in research.

However, even those who do not fundamentally fail to recognize the formal character of theoretical economics succumb almost without exception to certain errors concerning it. Theoretical economics has the task of presenting not merely the “laws” of economic phenomena to us, but also their “general nature.”2 A presentation of the above science, for example, which would, to be sure, enlighten us on the laws, but not the nature, of goods, of value and the various forms in which value appears, of economy, of price, of ground rent, of income on capital, of speculative gains, of money, etc., would at any rate have to be designated as incomplete. The definition of theoretical economics (not to mention that of political economy in general) as a “science of the laws of national economy” is thus in any case too restricted.

This definition seems even less suitable if the concept of “laws” is viewed in any arbitrarily chosen sense characterizing only a definite type of “law.” If by “laws” of phenomena we understand, as Rümelin does in his investigation of the concept of a social law, only the so-called “laws of nature” in contrast to so-called “empirical laws”3 then the definition of theoretical economics as a science of the “laws” of national economy proves to be so restricted that it really does not apply to the greater part of the knowledge which commonly is included in the presentations of theoretical economics. The same holds true of the definition of theoretical economics (or even of political economy!) as a “science of the laws of development of national economy,” as a “philosophy of economic history,” and other such things.

Here we append the views of a few modern German economists about the nature of our science.4 The criticism to be made of these views will be directly clear from what is said.

H. Rau, in the last edition of his Politische Oekonomie which he himself supervised (1868, I, §9), defines: “Economics 5 (the first theoretical main part of political economy) is the science which shows the nature of national economy or which shows how a nation is constantly provided with material goods through the economic efforts of its members.” L. v. Stein (Lehrbuch der Volkswirthschaft, 1858, p. 2): “The scientific presentation of national economy constitutes economics” (cf. in addition the 2nd ed., 1878, p. 564 ff.). W. Roscher characterizes (System, I, §16) economics as “the science of the laws of development of national economy, of the economic life of the nation.” So also does H. v. Mangoldt (Grundriss der Volkswirthschaft, 1871, p. 11). Br. Hildebrand (Jahrbücher für Nationalökonomie u. Statistik, 1863,1, 3) writes: “The science of the economy of nations . . . has the task of investigating the historical course of development of individual nations as well as of all humanity step by step, and in this way of recognizing the link which the work of the present generation is to add to the chain of social development.” With respect to Knies’ views, that were never brought together in one place, compare his Politische Oekonomie vom Standpunkte der geschichtlichen Methode, 1853, pp. 17 and 32 ff. and especially the 2nd ed., 1881, p. 1 ff. J. Kautz (Theorie und Geschichte der Nationalökonomie, 1858, I, 288) says: “Economics is the science of the bases, the means, and the laws of development of the welfare of the nation.” J. C. Glaser (Handbuch der Politischen Oekonomie, 1858, I, 10 ff.): “The science of economy is the presentation of the activity of man aimed at the acquisition and use of wealth, or, what is the same, aimed at the utilization of nature and its forces for the satisfaction of his needs.” After this he distinguishes three different ways of looking at economic conditions, “so to speak, three types of the theory of economy,” namely: the technical, the real, and the ethical (cf. on this op. cit., p. 12). K. Umpfenbach (Die Volkswirtschaftslehre, 1867, p. 12): “Economics is the systematic establishment of the laws by which the contingent nature of human populations is brought about by their means of livelihood in the struggle for existence.” Schäffle (System, 3rd ed., I, 46) defines economics “as the science of the phenomenon of the economic principle in human society,” while Ad. Wagner (Politische Oekonomie, 1876,1, 59) views “economics or political economy”6 as “the science of national economy, the organism of the individual economies of politically organized nations” and remarks in opposition to Schäffle that the problem of economics is in the presentation of the realization of the principle of economic reality in national economy. M. Wirth (Grundzüge der Nationalökonomie, 1861, I, 3) sees in “the science of economics or national economy the science of those laws of development of nature, under the influence of which the production and distribution of goods in human society take place; in the observation of which nations thrive, and in the violation of which they suffer and perish.”

G. Schönberg (Die Volkswirthschaft der Gegenwart, 1869, p. 38) says: “The subject of our science is the economic life of the nation, which, as a special phenomenon of the spirit of the nation and progressing step by step in closest causal connection with the cultural development, forms an increasingly higher organism. To recognize it as such in its appearance in the laws and regulations which emerge in it, and starting with this recognition, which also discovers the problems which the work of our generation has to solve, to engage in this work to bring economic life closer and closer to its high, ethical goal—this is, briefly, the problem of our science” (cf. also his Volkswirtschaftslehre 1873, p. 3 ff.). F. J. Neumann (Tübinger Zeitschrift für die gesammte Staatswissenschaft, 1872, p. 267) recognizes in our science “the science of the relation of the individual economies to each other and to the state unit,” while H. v. Scheel (in Schönberg’s Handbuch der Politischen Oekonomie, 1882, I, 57) designates as the problem of political economy “the presentation of the connection of private economies with each other and their connection with the larger economic communities (state, municipality, etc.) according to origin and quality, and the establishment of rules for the most suitable arrangement corresponding to the demands of the cultural stage that is attained and is to be attained.” G. Cohn (Ueber die Bedeutung der Nationalökonomie, 1869, p. 3) defines economics “as the science of the economic human, i.e., of that activity which is directed toward acquiring the external means which we need to reach our diverse life goals.”

The above definitions of our science reflect quite clearly the low status of theoretical investigations in the realm of political economy in Germany. We learn from them—needlessly7—for the most part the special views of the authors concerned on the nature of economy, of national economy, even of society. But no unprejudiced person will deny that these—quite aside from the question of their correctness—do not even satisfy the formal presuppositions of a suitable definition of a science.

In connection with a few pertinent questions about the nature of social laws broached by Rümelin for the social science literature in Germany, the following remarks may be in place here: The “laws of phenomena” (in contrast to normative laws!) can be classified according to the empirical realm to which they refer (according to objects!) or else according to their formal nature. In the first connection we distinguish laws of nature in general and of inorganic and organic nature in particular, laws of psychic life, laws of social phenomena in general and of economic phenomena in particular, etc. In the formal connection we distinguish laws of succession and coexistence, exact and empirical laws, and again within the above categories “laws of development,” “laws of great numbers,” etc. Accordingly, that not unusual means of expression is confusing and superfluous which refers to the laws of nature of social phenomena in general and of national economy in particular, whereas laws of nature can really refer only to natural phenomena. In the above case one should speak of exact laws of social phenomena and of national economy in contrast to the merely empirical laws.

The view of the so-called “‘laws of nature” of phenomena as the “expression for the elementary, constant mode of action recognizable as the basic form in all individual cases” can still, with J. St. Mill and Rümelin, be considered valid. For it characterizes the contrast between the “empirical” and the “exact” laws of phenomena and prevents the confusion of these two kinds of scientific knowledge. Rümelin has earned decided merit in connection with the methodology of the social sciences in Germany by trying to make the methodological achievements of modern English logic comprehensible to German scholars in the social sciences, and by trying to put an end to the thoughtless confusion of the exact laws of phenomena with theoretical knowledge obtained in a realistic-empirical way. For theoretical economics, however, his concept of “law” is much too narrow. For this science, according to the present-day conception of it, as already stressed elsewhere (p. 67), has to investigate and describe not only exact laws, but also the empirical ones; indeed, many kinds of the latter. And it has to investigate and describe not only the elementary regularities in the general connection of economic phenomena, but also the derived ones.

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8 Many present-day economists try less in the definitions of economics to define the latter than to define the concept of “national economy”; they try to define not the science but the object of research. They endeavor to incorporate their special views about the nature of the latter into the definition of the science, instead of first taking account of the object by a separate investigation and going on to the definition of economics after the solution of the pertinent preliminary question. This is a procedure which finds its explanation, moreover, in the immense vagueness about the true field (the object) of research which political economy has to deal with.

9 Herbert Spencer has undertaken an interesting venture in this regard in his Descriptive Sociology, or Groups of Sociological Facts (London, 1873). In the magnificently planned work which he is publishing together with a group of collaborators, Spencer intends to present in tabular form which facilitates comparison the social empirical forms of individual peoples (referred to political, religious, intellectual, economic life, etc.) at the various stages of their development. This is an undertaking which cannot, as Spencer thinks, offer the summation of all the empirical material necessary for theoretical research in the field of the social sciences. However, when completed it will prove to be of unquestioned value for this orientation of the striving for knowledge, especially for the different branches of the empirical-realistic orientation of theoretical research in the field of the social sciences.

10 Reden und Aufsätze (1875), I, p. 5 ff. (cf. also J. St. Mill, Logic, Book III, Chap. IV).

11 Some of the older literature in J. Kautz, Theorie und Geschichte der Nationalökonomie, I, p. 288 ff.

12 Rau uses Volkswirtschaftslehre oder Nationalökonomie. F.J.N.

13 Wagner here uses three terms: Volkswirthschaftlehre, Nationalökonomik, oder Politische Oekonomie. F.J.N.

14See note 131.

• 1Many present-day economists try less in the definitions of economics to define the latter than to define the concept of “national economy”; they try to define not the science but the object of research. They endeavor to incorporate their special views about the nature of the latter into the definition of the science, instead of first taking account of the object by a separate investigation and going on to the definition of economics after the solution of the pertinent preliminary question. This is a procedure which finds its explanation, moreover, in the immense vagueness about the true field (the object) of research which political economy has to deal with.
• 2Herbert Spencer has undertaken an interesting venture in this regard in his Descriptive Sociology, or Groups of Sociological Facts (London, 1873). In the magnificently planned work which he is publishing together with a group of collaborators, Spencer intends to present in tabular form which facilitates comparison the social empirical forms of individual peoples (referred to political, religious, intellectual, economic life, etc.) at the various stages of their development. This is an undertaking which cannot, as Spencer thinks, offer the summation of all the empirical material necessary for theoretical research in the field of the social sciences. However, when completed it will prove to be of unquestioned value for this orientation of the striving for knowledge, especially for the different branches of the empirical-realistic orientation of theoretical research in the field of the social sciences.
• 3Reden und Aufsätze (1875), I, p. 5 ff. (cf. also J. St. Mill, Logic, Book III, Chap. IV).
• 4Some of the older literature in J. Kautz, Theorie und Geschichte der Nationalökonomie, I, p. 288 ff.
• 5k Rau uses Volkswirtschaftslehre oder Nationalökonomie. F.J.N.
• 6l Wagner here uses three terms: Volkswirthschaftlehre, Nationalökonomik, oder Politische Oekonomie. F.J.N.
• 7See note 131.
• 8In the second place, the object to which the science concerned refers may not be designated precisely. This is the case with all those definitions of theoretical economics which leave us in the dark concerning the object of research in this science; or else designate as this object at one time social phenomena in general, at another only specific fields or aspects of national economy. Both the conception of theoretical economics in the sense of a general theoretical social science and also the conception of it in the sense of a mere catallactics, a philosophy of the history of national economy, etc., are errors of this kind.
• 9However, even those who do not fundamentally fail to recognize the formal character of theoretical economics succumb almost without exception to certain errors concerning it. Theoretical economics has the task of presenting not merely the “laws” of economic phenomena to us, but also their “general nature.” A presentation of the above science, for example, which would, to be sure, enlighten us on the laws, but not the nature, of goods, of value and the various forms in which value appears, of economy, of price, of ground rent, of income on capital, of speculative gains, of money, etc., would at any rate have to be designated as incomplete. The definition of theoretical economics (not to mention that of political economy in general) as a “science of the laws of national economy” is thus in any case too restricted.
• 10This definition seems even less suitable if the concept of “laws” is viewed in any arbitrarily chosen sense characterizing only a definite type of “law.” If by “laws” of phenomena we understand, as Rümelin does in his investigation of the concept of a social law, only the so-called “laws of nature” in contrast to so-called “empirical laws” then the definition of theoretical economics as a science of the “laws” of national economy proves to be so restricted that it really does not apply to the greater part of the knowledge which commonly is included in the presentations of theoretical economics. The same holds true of the definition of theoretical economics (or even of political economy!) as a “science of the laws of development of national economy,” as a “philosophy of economic history,” and other such things.
• 11Here we append the views of a few modern German economists about the nature of our science. The criticism to be made of these views will be directly clear from what is said.
• 12H. Rau, in the last edition of his Politische Oekonomie which he himself supervised (1868, I, §9), defines: “Economics k (the first theoretical main part of political economy) is the science which shows the nature of national economy or which shows how a nation is constantly provided with material goods through the economic efforts of its members.” L. v. Stein (Lehrbuch der Volkswirthschaft, 1858, p. 2): “The scientific presentation of national economy constitutes economics” (cf. in addition the 2nd ed., 1878, p. 564 ff.). W. Roscher characterizes (System, I, §16) economics as “the science of the laws of development of national economy, of the economic life of the nation.” So also does H. v. Mangoldt (Grundriss der Volkswirthschaft, 1871, p. 11). Br. Hildebrand (Jahrbücher für Nationalökonomie u. Statistik, 1863,1, 3) writes: “The science of the economy of nations . . . has the task of investigating the historical course of development of individual nations as well as of all humanity step by step, and in this way of recognizing the link which the work of the present generation is to add to the chain of social development.” With respect to Knies’ views, that were never brought together in one place, compare his Politische Oekonomie vom Standpunkte der geschichtlichen Methode, 1853, pp. 17 and 32 ff. and especially the 2nd ed., 1881, p. 1 ff. J. Kautz (Theorie und Geschichte der Nationalökonomie, 1858, I, 288) says: “Economics is the science of the bases, the means, and the laws of development of the welfare of the nation.” J. C. Glaser (Handbuch der Politischen Oekonomie, 1858, I, 10 ff.): “The science of economy is the presentation of the activity of man aimed at the acquisition and use of wealth, or, what is the same, aimed at the utilization of nature and its forces for the satisfaction of his needs.” After this he distinguishes three different ways of looking at economic conditions, “so to speak, three types of the theory of economy,” namely: the technical, the real, and the ethical (cf. on this op. cit., p. 12). K. Umpfenbach (Die Volkswirtschaftslehre, 1867, p. 12): “Economics is the systematic establishment of the laws by which the contingent nature of human populations is brought about by their means of livelihood in the struggle for existence.” Schäffle (System, 3rd ed., I, 46) defines economics “as the science of the phenomenon of the economic principle in human society,” while Ad. Wagner (Politische Oekonomie, 1876,1, 59) views “economics or political economy”l as “the science of national economy, the organism of the individual economies of politically organized nations” and remarks in opposition to Schäffle that the problem of economics is in the presentation of the realization of the principle of economic reality in national economy. M. Wirth (Grundzüge der Nationalökonomie, 1861, I, 3) sees in “the science of economics or national economy the science of those laws of development of nature, under the influence of which the production and distribution of goods in human society take place; in the observation of which nations thrive, and in the violation of which they suffer and perish.”
• 13H. Rau, in the last edition of his Politische Oekonomie which he himself supervised (1868, I, §9), defines: “Economics k (the first theoretical main part of political economy) is the science which shows the nature of national economy or which shows how a nation is constantly provided with material goods through the economic efforts of its members.” L. v. Stein (Lehrbuch der Volkswirthschaft, 1858, p. 2): “The scientific presentation of national economy constitutes economics” (cf. in addition the 2nd ed., 1878, p. 564 ff.). W. Roscher characterizes (System, I, §16) economics as “the science of the laws of development of national economy, of the economic life of the nation.” So also does H. v. Mangoldt (Grundriss der Volkswirthschaft, 1871, p. 11). Br. Hildebrand (Jahrbücher für Nationalökonomie u. Statistik, 1863,1, 3) writes: “The science of the economy of nations . . . has the task of investigating the historical course of development of individual nations as well as of all humanity step by step, and in this way of recognizing the link which the work of the present generation is to add to the chain of social development.” With respect to Knies’ views, that were never brought together in one place, compare his Politische Oekonomie vom Standpunkte der geschichtlichen Methode, 1853, pp. 17 and 32 ff. and especially the 2nd ed., 1881, p. 1 ff. J. Kautz (Theorie und Geschichte der Nationalökonomie, 1858, I, 288) says: “Economics is the science of the bases, the means, and the laws of development of the welfare of the nation.” J. C. Glaser (Handbuch der Politischen Oekonomie, 1858, I, 10 ff.): “The science of economy is the presentation of the activity of man aimed at the acquisition and use of wealth, or, what is the same, aimed at the utilization of nature and its forces for the satisfaction of his needs.” After this he distinguishes three different ways of looking at economic conditions, “so to speak, three types of the theory of economy,” namely: the technical, the real, and the ethical (cf. on this op. cit., p. 12). K. Umpfenbach (Die Volkswirtschaftslehre, 1867, p. 12): “Economics is the systematic establishment of the laws by which the contingent nature of human populations is brought about by their means of livelihood in the struggle for existence.” Schäffle (System, 3rd ed., I, 46) defines economics “as the science of the phenomenon of the economic principle in human society,” while Ad. Wagner (Politische Oekonomie, 1876,1, 59) views “economics or political economy”l as “the science of national economy, the organism of the individual economies of politically organized nations” and remarks in opposition to Schäffle that the problem of economics is in the presentation of the realization of the principle of economic reality in national economy. M. Wirth (Grundzüge der Nationalökonomie, 1861, I, 3) sees in “the science of economics or national economy the science of those laws of development of nature, under the influence of which the production and distribution of goods in human society take place; in the observation of which nations thrive, and in the violation of which they suffer and perish.”
• 14The above definitions of our science reflect quite clearly the low status of theoretical investigations in the realm of political economy in Germany. We learn from them—needlessly—for the most part the special views of the authors concerned on the nature of economy, of national economy, even of society. But no unprejudiced person will deny that these—quite aside from the question of their correctness—do not even satisfy the formal presuppositions of a suitable definition of a science.