Investigations into the Method of the Social Sciences

The Historical Point of View in the Practical Sciences of Economy

Economic institutions and normative laws have to be guided by the particular conditions of the nations which they serve.—Obviousness of this basic principle for all practical sciences—The acknowledgment of the above principle is not a special method of the practical sciences.—That the so-called “historical method” in the practical social sciences has contributed essentially to the confusion of opinions about the relativity of social institutions.

We pointed out above that the historical point of view in the practical sciences of economy must not be confused with that in theoretical economics. Now, after we have presented the nature of the latter, let us deal with the nature and significance of the historical point of view in the practical economic sciences. We will, however, be able to do this so much the more briefly as the differences of opinion among German economists on the question under discussion here are relatively slight. The question has to do with the relativity of social institutions and normative laws.

Now if any notion is fully valid, without doubt it is the notion that definite political regulations, laws, institutions, customs, etc., simply do not have the same justification for all times and nations, in brief, for heterogeneous conditions. It is obvious that a political or social institution can have been purposeful and therefore justified in the past, even if it does not have this justification today. Conversely, an institution can be justified in the present which in the past was rightfully designated as pernicious and in the future perhaps will be rightfully again so designated. The same holds true in respect to the same point of time for two countries which exhibit different political or social conditions. In general, various institutions, regulations, laws, etc., are as a rule adequate for various political and social conditions. All this is so obvious, it has been repeated so innumerably many times by writers on “politics” (and, as we will see in Book Four, has been repeated again and again for thousands of years) that only the failure of a few scholars in their remote ivory tower to recognize the validity of the above statements is the reason for the special emphasis on them.1

A practical science, a technology, of whatever type it may be, is not, just because of the general nature of the knowledge it is supposed to give us, one which could claim the same validity for all times and nations or without considering the difference of conditions in general. Rather, such a science is really an absurdity for anyone who has become at all clear about the nature of technologies, since rationally there can be no basic principles for human transactions without consideration of the peculiarity of conditions.

Economic policy constitutes no exception to this general character of the practical sciences. It is the science of the basic principles by which economy can be advanced. However, it is obviously just as little as any other technology a science of universal means, with special reference to the advancement of economy. A scholar in economic policy who takes no consideration of the conditions under which certain aims of economic policy are to be attained, who simply advises or rejects certain regulations, considers certain institutions, customs, etc., justified under all circumstances or condemns them, is comparable to a technologist who would simply set up certain mechanical operations without considering the material to be worked on. He resembles a therapist who would set up certain methods of healing without considering the pathological state of the patient; he would resemble a field marshal who would simply set up certain strategic and tactical measures as suitable, without further ado. Economic policy may thus be designated with entire justification as the science which teaches us maxims by which measures for advancing economy may be taken that correspond to particular economic conditions. Such a definition would not be incorrect. If economic policy, however, is designated simply as the science of the basic principles for advancing economy, then that is done because the above postulate of research is characteristic of all practical science and is therefore self-evident. For just as little as the directive to consider the peculiarity of conditions is necessary in the definition of technology, therapy, or strategy, just as little is this the case in “economic policy.”

Accordingly we are not able to recognize any special method (a special way to knowledge) of economic policy in the consideration of various conditions on the part of the scholars in economic policy. Not considering the variety of conditions is a crude error in any type of research in the realm of the practical sciences. Taking it into consideration is nothing which would give the character of a special method to the procedure of a scholar, unless the avoidance of any type whatever of methodological mistake had to be regarded as a special method of research.

The general statements made here about the variety of economic conditions and their influence on the basic principles of economic policy hold also for the variety which nations exhibit as a consequence of the varied development of their economy. There is scarcely need to remark that these differences in the economic conditions of nations also cannot remain without influence on their economic institutions. Different economic measures, normative laws, customs, and institutions are appropriate not only for different nations, but for the same nations at different stages of economic development. All this, however, is obvious in the light of the above general basic principle of the relativity of practical knowledge. It is so obvious that special emphasis on it must appear at least superfluous. This emphasis, however, really becomes an error when a special, “historical” method of research in the realm of economic policy is recognized in the mode of thinking characterized here. It does indeed become an error when putting this method into practice is confused with putting into practice the method of the general basic principle of the relativity of practical knowledge in the economic field.

A science of economic policy which properly considered the various stages of development of nations would adhere very strictly to the historical point of view in this sense of the word. But if at the same time it failed to take into consideration the diverse economic, geographic, and ethnographic conditions of nations at the same stage of development, it could not be acquitted, as scarcely needs to be remarked, of the charge of “absolutism of solutions.” It would be a historical science in the sense of many of our historical economists, but nonetheless one which would do only partial justice to the basic principle of the relativity of social institutions. The idea of the “historical method” in the practical social sciences put in place of the obvious basic principle of the general relativity of practical maxims is therefore not only superfluous, but really confusing.

A science of economic policy placed at the peak of methodological demands must fulfill the obvious task which is common to all practical sciences, in respect to the furthering of economy. It must teach us the basic principles by which economy can be advanced on the part of public authority, in consideration of all special conditions coming into account. This method is a historical one in the sense of our historical economists. At the same time it is one which could with equal justification be called geographic or ethnographic.

And yet, even with all these “methods,” the simple notion is still to the fore that every practical science has to do justice to the diversity of conditions, whether it refers to the formation of human conditions or of organic nature, even of inorganic nature.

The efforts of our historians in the field of economy to vindicate here, too, an exclusive significance for history has contributed nothing toward clarifying the methodological problem discussed, but it has contributed essentially to its obfuscation.

 

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2 At the same time it may remain undecided whether that absolutism of solutions in the field of economic policy which we meet in individual writers does not seem, rather, to be based in fact on their ignorance of the difference of conditions or on the circumstance that they thought they were writing only for their times and for certain economic conditions. But it is not anything in a practical science which reasonably could arouse objection if a writer in the field of economic policy has predominantly, or even exclusively, the conditions of his country and of his time before his eyes and from this point of view judges customs, laws, institutions, etc., and proposes regulations. Anyone who champions practical causes, e.g., the establishment or reform of institutions—and to this category belong most of the writers on the theory of economy—naturally feels called upon only to a slight extent to bring out the merely relative truth of his opinions.

• 1At the same time it may remain undecided whether that absolutism of solutions in the field of economic policy which we meet in individual writers does not seem, rather, to be based in fact on their ignorance of the difference of conditions or on the circumstance that they thought they were writing only for their times and for certain economic conditions. But it is not anything in a practical science which reasonably could arouse objection if a writer in the field of economic policy has predominantly, or even exclusively, the conditions of his country and of his time before his eyes and from this point of view judges customs, laws, institutions, etc., and proposes regulations. Anyone who champions practical causes, e.g., the establishment or reform of institutions—and to this category belong most of the writers on the theory of economy—naturally feels called upon only to a slight extent to bring out the merely relative truth of his opinions.
• 2Now if any notion is fully valid, without doubt it is the notion that definite political regulations, laws, institutions, customs, etc., simply do not have the same justification for all times and nations, in brief, for heterogeneous conditions. It is obvious that a political or social institution can have been purposeful and therefore justified in the past, even if it does not have this justification today. Conversely, an institution can be justified in the present which in the past was rightfully designated as pernicious and in the future perhaps will be rightfully again so designated. The same holds true in respect to the same point of time for two countries which exhibit different political or social conditions. In general, various institutions, regulations, laws, etc., are as a rule adequate for various political and social conditions. All this is so obvious, it has been repeated so innumerably many times by writers on “politics” (and, as we will see in Book Four, has been repeated again and again for thousands of years) that only the failure of a few scholars in their remote ivory tower to recognize the validity of the above statements is the reason for the special emphasis on them.