Investigations into the Method of the Social Sciences

The Pseudo-Historical Orientations of Research in Theoretical Economics

The historical orientation in theoretical economics does not consist in historical accessories which are added superficially to the results of the theoretical orientation of research in the field of economy.—Just as little in literary-historical studies in general and in dogmatic-historical accessories in particular.—Nor is it to be sought in the fact that only history is acknowledged as the empirical basis for theoretical research in the field of economy.—Error of specific overestimation of historical development in theoretical economics.—The desire to determine “parallelisms in economic history” is only a special orientation of theoretical research in the field of economy.—Theoretical economics is not a science of the “laws of development of economy.”—Just as little a “philosophy of history.”—Contradiction between the definitions of theoretical economics and the presentations of it in the historical school of German economists.

We have already seen that those who make the most noise emphasizing the significance of the historical point of view for the theory of economy are not infrequently the ones who fail most fundamentally to recognize its true nature, in pointing to the methodological errors of those who think they are retaining the historical point of view in theoretical economics. Actually, they are not concerned with the historical point of view in theoretical economics at all, but consider the phenomena of economy from a specifically historical standpoint, or from the standpoint of practical economies. Now, while we have presented the nature of the historical point of view, or rather, the significance of the fact which we call the development of economic phenomena, it still remains for us to mention certain methodological mistakes. They are made by those who, to be sure, retain the concept of theoretical economics, but recognize the nature of the “historical” point of view in it in postulates of research which deviate essentially from those presented above, which, indeed, are usually superficial and irrelevant for theoretical economics.

There are those who think they retain the historical point of view in theoretical economics when they embroider with all kinds of historical accessories the old theories gained from the so-called ‘“unhistorical” point of view. If one compares the representations of theoretical economics of this kind with those of an earlier, so-called “unhistorical” epoch, it is not hard to recognize that the theoretical knowledge which the two sorts of representations afford are essentially the same. The difference consists often enough only in the fact that the systematic presentation of the well-known theories of the old “unhistorical” schools is interrupted by historical digressions or is embroidered quite superficially with historical additions. Thus a composite results which is neither theory nor historical writing, and least of all a theoretical economics from the point of view of historical consideration.

But those people fall into a similar error about the nature of the historical point of view in economic theory who find it in literary-historical studies in the field of our science, or else in some special orientation of the science.

“In contrast to the absolutism of theory,” says Knies,1 “the historical conception of political economy is based on the following principle. The theory of political economy is also a result of historical development just as economic conditions of life are. It grows, in living connection with the total organism of a human and ethno-historical period, with and out of the conditions of time, of space, of nationality. It exists together with them and continues preparing for progressive development. It has its line of argument in the historical life of the nations, and must attribute to its results the character of historical solutions. Too, it can present general laws in the general part of economics in no other way than as historical explication and progressive manifestation of the truth. It can at every stage present itself only as the generalization of the truths recognized up to this definite point of development, and cannot be declared absolutely self-contained according to sum or formulation. Furthermore, the absolutism of the theory, where it has obtained validity at one stage of historical development presents itself only as a child of this time and designates a definite stage in the historical development of political economy.”

The error which is the basis of the above conception of the nature of the historical orientation of research in the field of theoretical economics is clear. The individual phases of development of our science can be understood historically, to be sure, only in connection with the spatial and temporal conditions from which they have emerged. Or in other words: a literary history of our science with a correct comprehension of its (historical!) task must not overlook the connection between the individual phases of its development and spatial and temporal conditions. This is, however, a postulate of every literary history, even one of the exact natural sciences, of chemistry and physics, indeed, of any writing of history in general. However, it has no immediate relationship at all to those postulates of research which we have called the historical point of view in theoretical economics (i.e., retaining the fact of the development of economic phenomena in the investigation of the general nature and the general connection of the laws of economy).

Those who think that they retain the historical point of view in theoretical economics are the victims of thoroughly analogous error when they add histories of dogmatic economic theories to the results of a theoretical research which, moreover, is not infrequently quite ‘“unhistorical.” Presentations of histories of dogmatic theories of this type are literary history, and, to be sure, history of single theories of political economy, but not results of theoretical research from the “historical” point of view. They are thus neither per se, nor can they change an “unhistorical” theory into a “historical” one. However useful they may be for the study of theoretical economics, they signify the historical point of view in this science just as little as literary-historical studies of any other kind.

No less in error are those who try to make the historical point of view in theoretical economics valid by trying to base the theory of economy not on experience in general, but exclusively on the history of economy. That is, they recognize in the latter the solely justified empirical basis of theoretical research in the realm of human economy.

The falseness of the above opinion, which has really become prevalent among German economists (one-sided overestimation of historical development in theoretical economics!) is, however, obvious to anyone not completely inexperienced in methodological matters. In contrast to the theoretical sciences which have to make us aware of the general nature and the general connection of phenomena, history has the task of investigating and presenting the individual nature and the individual connection of phenomena in general and of human phenomena in particular. It cannot solve its problem by investigating and cataloging the vast quantity of singular phenomena of human life. Rather, it can do justice to it only by bringing together what is individual in the real world from the point of view of collective phenomena and making us aware of the nature and the connection of the above phenomena to those large collective phenomena which we call nation, state, society. The fates of single individuals, their acts per se, are not the subject matter of history, but only the fates and acts of nations. The former are proper subject matter only insofar as they are at the same time significant for the development of the whole, i.e., of the collective phenomena as such.

As is obvious, the same thing is also true of the history of human economy. Here, too, it is not the singular economic phenomena which form the subject matter of historical presentation. It is not all the innumerable efforts and successes of single individuals aimed at meeting their material needs, nor the vast myriads of single acts of production, exchange, and the economic employment of goods. What brings authentic history home to us is, rather, the concrete nature and the development of those large collective phenomena which we call economy. Only those who completely fail to recognize the nature of the historical sciences can thus yield to the illusion that, from the study of history in general and of economy in particular, insight may be gained into the general nature and the general connection of the phenomena of human economy in general.2

Those who recognize in the history of economy the only justified empirical basis for theoretical research in the realm of human economy err fundamentally. For along with the historical, surely very valuable empirical basis for theoretical research, the experience of everyday life is indispensable. Or what is the same thing, the observation of the singular phenomena of human economy, indeed, as must be added here, the most comprehensive possible observation of that economy, is indispensable. It is so indispensable that we cannot imagine a highly developed theory of economic phenomena without the study of the history of economy. Without the observation of the singular phenomena of human economy we cannot imagine a theory of them at all. The error of those who acknowledge the history of economy exclusively as the empirical basis for theoretical economics seems no smaller to us than that of a physicist or chemist who would like to build up the laws of physics or chemistry on the basis of universal representations of nature, even if they were as excellent as A. von Humboldt’s. It seems no smaller than that of a physiologist who would like to build up a physiology of the human body exclusively on the basis of ethnographic descriptions.3

Finally they are also mistaken who recognize the nature of the historical orientation of the theoretical political and social sciences in general in the investigation of parallelisms in the historical development of various nations, in what was occasionally but perhaps not quite aptly called “the philosophy of history.” They are mistaken if in particular they recognize the nature of the historical orientation of theoretical economics in the investigation of these parallelisms in the economic history of nations. Indeed, they are mistaken if they simply identify the results of this orientation of research with theoretical economics.

It is self-evident that the adherents of this conception of the nature of theoretical economics likewise succumb to the previously characterized error of one-sided overestimation of historical development. However, a much cruder error underlies the conception.

Only the most extreme scientific one-sidedness could assert that the parallelisms in national and state life in general and in the development of economy in particular are absolute regularities, or, in other words, that the development of the phenomena under discussion here exhibits a strict conformity to law.4 But even if rationally laws of nature in the development of ethical phenomena in general and of economy in particular are out of the question, there still exists no doubt in the mind of anyone at home in history that regularities are actually to be observed in the development of those phenomena, even if not with the presumed strictness. Their determination—whether they are called laws of development or mere parallelisms, mere regularities of development—is a by no means unjustified task of theoretical research in the realm of human phenomena and in that of economy in particular.

There is a lack of clarity among a number of the German scholars in the field of economics about general methodological questions and especially about the problems of the theoretical sciences. Only this could lead them into the opinion that the parallelisms under discussion here in the historical development of economy form the exclusive, or even only the main content of theoretical economics; or in other words, that theoretical economics is “the theory of the law of development in economy” in the above suggested sense. Theoretical economics is the science of the general nature (the empirical forms) and the general connection (the laws) of economy. In contrast to this comprehensive and significant task of our science the establishment of “laws of development” in economy in the above sense of the word must appear as one that is per se by no means unjustified, but still quite secondary. It must appear as one which must by no means be neglected in theoretical research in the realm of the phenomena of human economy. But its results constitute only the least part of the content of theoretical economics, as we are taught by just a single glance at the contents of all presentations of the latter which have to some extent come into favor. Parallelisms, as we can observe them in the development of prices, of ground rent, of interest on capital with various nations, are doubtless an object of theoretical research which is as justified as it is interesting. But what a methodological error it is to confuse these with the laws which teach us how supply and demand or the quantity of means of circulation influence the price of goods, how the distance of pieces of land from the market and their differential fertility influence ground rent, how the greater or lesser thriftiness or the more or less active business spirit of the inhabitants of a land influence the rate of interest in it! These are laws which after all cannot reasonably be designated in toto as parallelisms of the historical development of economy!

The error discussed here is not less a one than if a school of natural scientists wanted to confuse the effort to establish laws of development of the organic world or even Darwin’s theory in particular with theoretical research in the realm of the organic world (physiology, etc.), even with natural research in general. It is no less an error than if they wanted to designate as “unmethodological” and “sterile” every research effort not included in the developmental orientation, or wanted to measure the results of all other orientations of natural research by this one-sided standard.5

It is obvious that in scientific practice the above misunderstanding does not attain full prevalence even with the most zealous representatives of the “historical-philosophical” orientation. The above conception of the task of the theoretical social sciences is too one-sided ever to have been consistently carried out in the practice of research or in the presentations of these sciences. In methodological writings and at the apex of the presentations of theoretical sciences it may still find a place. But there can be no suggestion of realizing the idea in the theory of the social sciences. After all, even those who at the apex of their presentations of economics designate it as the “philosophy of economic history” or as the science of the “parallelisms of economic history” borrow a large part of the contents of their works from the results of exact research. They really do not present parallelisms of economic history exclusively, but, and even in the main, they also present results of exact research and those results of empirical research which are not “parallelisms of economic history.” In this case the practice of research corrects its theory.

The error and one-sidedness of the here characterized conception of the nature of political economy is not at all exhausted by the above remarks. Anyone to any extent familiar with the efforts in the field of the philosophy of history knows that the above-indicated orientation of research means only one of the numerous forms of investigation in the philosophy of history.6 He knows that the determination of “parallelisms of economic history” or of so-called “laws of the development of economy” is thus not even identical with the historical-philosophical orientation of research in the field of economy.

Thus the conception of theoretical economics, or even of political economy, as a science of the “parallelisms of economic history,” of the “laws of development in economy,” and other such things, is a one-sided monstrosity. It can only be explained by the circumstance that the historical school of German economists has developed up to now without serious contact with the other orientations of research in the field of political economy. It is a living proof of the aberrations of which a scholarly group is capable when it does not have the good fortune to find serious opponents.

 

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7 Knies, Politische Oekonomie nach geschichtlicher Methode (1853), p. 19 and (1882), p. 24.

8 Cf. especially Roscher, Leben, Werke und Zeitalter des Thukydides (Göttingen, 1842), p. vii.

9 Economics has to investigate not only the general nature of those phenomena of human economy which are of “economic” nature, as for example, market price, rates of exchange and stock market quotations, currency, bank notes, commercial crises, etc. It also has to investigate the nature of the singular phenomena of human economy, e.g., the nature of the needs of the individual, the nature of goods, the nature of barter, indeed, even the nature of those phenomena which, being of purely subjective nature, simply appear in the individual, e.g., use value in its subjective form. How could economics draw exclusively on history? To conceive of history as an exclusive empirical basis of the social sciences is a glaring error. Saint-Simon and his followers have already succumbed to a similar error. A. Comte also considers social science to be essentially a result of generalizations from history. Yet he at least feels the need to verify these by deriving them from the laws of human nature. J. St. Mill acknowledges Comte’s method only for some of the problems of social science, while for others he admits the justification of the exact method (according to Mill, the concrete-deductive method). “Political economy especially owes its origin and development to the latter.” The feature of Mill’s investigations that seems one-sided and defective is his failure also to understand the necessity in all questions of methodology of separating theoretical from practical economics and the exact orientation of theoretical research from the realistic. This is a circumstance which often causes him to apply the methodological postulates of the practical and the realistic orientation to the results of exact research in the field of the social sciences. Also, Mill does not distinguish sufficiently the single branches of realistic research in the field of the theoretical social sciences (Mill, Logic, Book IV, Chap. IX, §3). Among the German methodologists who have expertly treated the pertinent questions Rümelin is to be mentioned among the first. But he, too, is misled by his too narrow conception of the nature of social laws and his lack of understanding for the exact orientation of theoretical research in the realm of the social sciences. He is misled into applying the standard of exact natural research to the results of specific-empirical orientations of theoretical social research (Reden und Aufsätze, I, p. 1 ff. and II, p. 118 ff.).

10 It is one of the most one-sided features of the historical-philosophical orientation in political economy that its representatives deny on the one hand “laws of nature” in economy, and indeed partly deny “laws of economy” in general, but on the other hand acknowledge not only laws of development in economy in general but occasionally even seek to vindicate for the latter the character of “laws of nature.” The study of history teaches any unprejudiced person that absolute regularities are by no means to be observed in the development of historical facts in general and of economic phenomena in particular. And every more mature theory of knowledge places beyond any doubt the impossibility of a rigorously typical development of phenomena of such complicated nature as the facts of “economy.” The so-called laws of development in economy accordingly can certainly claim no greater strictness than other empirical laws in this sphere of the world of phenomena (cf. in this connection especially Rümelin , Reden und Aufsätze, II, p. 113 ff.; J. St. Mill, Logic, Book VI, Chap. IX, §5 conclusion and §6).

11 It really seems odd that an erudite school which calls itself “historical” seeks its main task in determining the above “laws.” What an unhistorical idea it is to compare the economic history of all nations and times—not to state, for instance, the particularity of individual developments, but their often extremely imperfect parallelisms! What an “unhistorical” notion, especially, to abstract from the particularity and the inner connection of concrete economic developments and institutions in order to determine external parallelisms of development!

12 Other orientations of research, rather different from the above, are not infrequently designated with the ambiguous expression “philosophy of history.” The proof of a constant advance of the human race in its historical development (Perrault, Turgot, Leroux); the proof that the development of the human race takes place in definite epochs (Condorcet); the proof that history is the progressive realization of the idea of freedom (Michelet), an education of the human race (Lessing), a progress toward the realization of the idea of humanity (Herder); the proof that the history of individual nations shows a rising line, a peak, and a falling line of development (Bodin, Vico); the proof that the ultimate goal of all history is the formation of a state in which freedom and necessity attain harmonious union (Schelling); indeed, even the proof that French civilization is the type of human civilization in general (Guizot)—these have all been designated already as philosophy of history. These and numerous other orientations of research in the philosophy of history could also be applied in some form or other to economy. Thus, along with that science of the “parallelisms of economic history,” which our German economists of the historical orientation characterize exclusively as “philosophy of economic history,” we would get numerous other “philosophies of economic history.” It is, however, clear that even all the above orientations of research taken together would not be equivalent to theoretical research in the realm of economic phenomena. Even when the philosophy of economic history is understood in the broadest sense of the word, the identification of it with theoretical economics still appears as a monstrous one-sidedness.

• 1Knies, Politische Oekonomie nach geschichtlicher Methode (1853), p. 19 and (1882), p. 24.
• 2Cf. especially Roscher, Leben, Werke und Zeitalter des Thukydides (Göttingen, 1842), p. vii.
• 3Economics has to investigate not only the general nature of those phenomena of human economy which are of “economic” nature, as for example, market price, rates of exchange and stock market quotations, currency, bank notes, commercial crises, etc. It also has to investigate the nature of the singular phenomena of human economy, e.g., the nature of the needs of the individual, the nature of goods, the nature of barter, indeed, even the nature of those phenomena which, being of purely subjective nature, simply appear in the individual, e.g., use value in its subjective form. How could economics draw exclusively on history? To conceive of history as an exclusive empirical basis of the social sciences is a glaring error. Saint-Simon and his followers have already succumbed to a similar error. A. Comte also considers social science to be essentially a result of generalizations from history. Yet he at least feels the need to verify these by deriving them from the laws of human nature. J. St. Mill acknowledges Comte’s method only for some of the problems of social science, while for others he admits the justification of the exact method (according to Mill, the concrete-deductive method). “Political economy especially owes its origin and development to the latter.” The feature of Mill’s investigations that seems one-sided and defective is his failure also to understand the necessity in all questions of methodology of separating theoretical from practical economics and the exact orientation of theoretical research from the realistic. This is a circumstance which often causes him to apply the methodological postulates of the practical and the realistic orientation to the results of exact research in the field of the social sciences. Also, Mill does not distinguish sufficiently the single branches of realistic research in the field of the theoretical social sciences (Mill, Logic, Book IV, Chap. IX, §3). Among the German methodologists who have expertly treated the pertinent questions Rümelin is to be mentioned among the first. But he, too, is misled by his too narrow conception of the nature of social laws and his lack of understanding for the exact orientation of theoretical research in the realm of the social sciences. He is misled into applying the standard of exact natural research to the results of specific-empirical orientations of theoretical social research (Reden und Aufsätze, I, p. 1 ff. and II, p. 118 ff.).
• 4It is one of the most one-sided features of the historical-philosophical orientation in political economy that its representatives deny on the one hand “laws of nature” in economy, and indeed partly deny “laws of economy” in general, but on the other hand acknowledge not only laws of development in economy in general but occasionally even seek to vindicate for the latter the character of “laws of nature.” The study of history teaches any unprejudiced person that absolute regularities are by no means to be observed in the development of historical facts in general and of economic phenomena in particular. And every more mature theory of knowledge places beyond any doubt the impossibility of a rigorously typical development of phenomena of such complicated nature as the facts of “economy.” The so-called laws of development in economy accordingly can certainly claim no greater strictness than other empirical laws in this sphere of the world of phenomena (cf. in this connection especially Rümelin , Reden und Aufsätze, II, p. 113 ff.; J. St. Mill, Logic, Book VI, Chap. IX, §5 conclusion and §6).
• 5It really seems odd that an erudite school which calls itself “historical” seeks its main task in determining the above “laws.” What an unhistorical idea it is to compare the economic history of all nations and times—not to state, for instance, the particularity of individual developments, but their often extremely imperfect parallelisms! What an “unhistorical” notion, especially, to abstract from the particularity and the inner connection of concrete economic developments and institutions in order to determine external parallelisms of development!
• 6Other orientations of research, rather different from the above, are not infrequently designated with the ambiguous expression “philosophy of history.” The proof of a constant advance of the human race in its historical development (Perrault, Turgot, Leroux); the proof that the development of the human race takes place in definite epochs (Condorcet); the proof that history is the progressive realization of the idea of freedom (Michelet), an education of the human race (Lessing), a progress toward the realization of the idea of humanity (Herder); the proof that the history of individual nations shows a rising line, a peak, and a falling line of development (Bodin, Vico); the proof that the ultimate goal of all history is the formation of a state in which freedom and necessity attain harmonious union (Schelling); indeed, even the proof that French civilization is the type of human civilization in general (Guizot)—these have all been designated already as philosophy of history. These and numerous other orientations of research in the philosophy of history could also be applied in some form or other to economy. Thus, along with that science of the “parallelisms of economic history,” which our German economists of the historical orientation characterize exclusively as “philosophy of economic history,” we would get numerous other “philosophies of economic history.” It is, however, clear that even all the above orientations of research taken together would not be equivalent to theoretical research in the realm of economic phenomena. Even when the philosophy of economic history is understood in the broadest sense of the word, the identification of it with theoretical economics still appears as a monstrous one-sidedness.
• 7“In contrast to the absolutism of theory,” says Knies, “the historical conception of political economy is based on the following principle. The theory of political economy is also a result of historical development just as economic conditions of life are. It grows, in living connection with the total organism of a human and ethno-historical period, with and out of the conditions of time, of space, of nationality. It exists together with them and continues preparing for progressive development. It has its line of argument in the historical life of the nations, and must attribute to its results the character of historical solutions. Too, it can present general laws in the general part of economics in no other way than as historical explication and progressive manifestation of the truth. It can at every stage present itself only as the generalization of the truths recognized up to this definite point of development, and cannot be declared absolutely self-contained according to sum or formulation. Furthermore, the absolutism of the theory, where it has obtained validity at one stage of historical development presents itself only as a child of this time and designates a definite stage in the historical development of political economy.”
• 8As is obvious, the same thing is also true of the history of human economy. Here, too, it is not the singular economic phenomena which form the subject matter of historical presentation. It is not all the innumerable efforts and successes of single individuals aimed at meeting their material needs, nor the vast myriads of single acts of production, exchange, and the economic employment of goods. What brings authentic history home to us is, rather, the concrete nature and the development of those large collective phenomena which we call economy. Only those who completely fail to recognize the nature of the historical sciences can thus yield to the illusion that, from the study of history in general and of economy in particular, insight may be gained into the general nature and the general connection of the phenomena of human economy in general.
• 9Those who recognize in the history of economy the only justified empirical basis for theoretical research in the realm of human economy err fundamentally. For along with the historical, surely very valuable empirical basis for theoretical research, the experience of everyday life is indispensable. Or what is the same thing, the observation of the singular phenomena of human economy, indeed, as must be added here, the most comprehensive possible observation of that economy, is indispensable. It is so indispensable that we cannot imagine a highly developed theory of economic phenomena without the study of the history of economy. Without the observation of the singular phenomena of human economy we cannot imagine a theory of them at all. The error of those who acknowledge the history of economy exclusively as the empirical basis for theoretical economics seems no smaller to us than that of a physicist or chemist who would like to build up the laws of physics or chemistry on the basis of universal representations of nature, even if they were as excellent as A. von Humboldt’s. It seems no smaller than that of a physiologist who would like to build up a physiology of the human body exclusively on the basis of ethnographic descriptions.
• 10Only the most extreme scientific one-sidedness could assert that the parallelisms in national and state life in general and in the development of economy in particular are absolute regularities, or, in other words, that the development of the phenomena under discussion here exhibits a strict conformity to law. But even if rationally laws of nature in the development of ethical phenomena in general and of economy in particular are out of the question, there still exists no doubt in the mind of anyone at home in history that regularities are actually to be observed in the development of those phenomena, even if not with the presumed strictness. Their determination—whether they are called laws of development or mere parallelisms, mere regularities of development—is a by no means unjustified task of theoretical research in the realm of human phenomena and in that of economy in particular.
• 11The error discussed here is not less a one than if a school of natural scientists wanted to confuse the effort to establish laws of development of the organic world or even Darwin’s theory in particular with theoretical research in the realm of the organic world (physiology, etc.), even with natural research in general. It is no less an error than if they wanted to designate as “unmethodological” and “sterile” every research effort not included in the developmental orientation, or wanted to measure the results of all other orientations of natural research by this one-sided standard.
• 12The error and one-sidedness of the here characterized conception of the nature of political economy is not at all exhausted by the above remarks. Anyone to any extent familiar with the efforts in the field of the philosophy of history knows that the above-indicated orientation of research means only one of the numerous forms of investigation in the philosophy of history. He knows that the determination of “parallelisms of economic history” or of so-called “laws of the development of economy” is thus not even identical with the historical-philosophical orientation of research in the field of economy.