Investigations into the Method of the Social Sciences

The formal nature of political economy and its subdivisions.—It is not a historical science.—Its “historical method” cannot consist in giving up the formal nature characteristic of it or its subdivisions, but only in retaining the historical point of view when it offers orientations of research adequate for political economy.—Nature of the “historical method” in theoretical economics on the one hand, and in the practical sciences of economy on the other.—It is by no means the same in both cases.—Just as little in the exact and realistic orientations of theoretical research in the field of economy.—Exaggerated significance which is attributed to the historical point of view in political economy on the part of the historical school of German economists.—Its relative importance for the present.

In the preceding book we have set forth the essential difference between the historical, the theoretical, and the practical sciences of economy. We have particularly pointed out the errors of those who see a “historical” science in political economy. Political economy (in its meaning which comprises theoretical economics, economic policy, and the science of finance) is a theoretical-practical science. The treatment of it, therefore, as a historical discipline is just as wide of the mark as if one wanted to subordinate the history or the statistics of economy to the methodological points of view of the theoretical or practical sciences.

If there is to be any question at all of a historical orientation in political economy this cannot mean the change of political economy into a “historical” science. It can, rather, designate only such a theoretical or practical orientation in research as keeps firm hold on the development of social phenomena—and without meanwhile relinquishing the character of political economy as a theoretical-practical science.

However, before we go on to the solution of the problems pertinent here, it is necessary to reject a tacit presupposition of those who have concerned themselves with these problems. It is an error in principle, the elucidation of which is necessary for a complete conception of the nature of the historical point of view in our science. We mean the error that the historical point of view is identical in theoretical economics and in the practical sciences of economy; furthermore that what is true of the historical orientation of research in the former therefore can be applied simply to the treatment of the latter from the historical point of view.

The sciences in question here are, to be sure, concerned with the same realm of human life; they are all sciences of economy. But, as we saw in the preceding book, their goals are so thoroughly different that we cannot properly speak of an identity of the cognitive methods for reaching them. The method of economic policy must not be confused with that of theoretical economics any more than the method of the latter is to be confused with that of history or statistics.

But if this is certain, then it is at the same time clear that the development of economic phenomena, as we will present it later, by no means has of necessity the same influence on the practical sciences of economy as on theoretical economics. Accordingly, the postulates of the historical point of view in the latter simply must not be applied to the former, and vice versa. Rather, it scarcely needs to be stressed that the influence of the above fact on theoretical economics on the one hand, and on the practical sciences of economy on the other, can only be established by way of a separate investigation which considers the problems of the above sciences from the historical point of view.

In theoretical economics the historical point of view is made valid when the development of economic phenomena is noted in its influence on the determination of empirical forms and the laws of economic phenomena. In economic policy the same point of view is acknowledged when the various stages of the development of economy are presented in their influence on the institutions and measures of public authority calculated to further this economy. The theoretician in economics validly adopts the historical point of view when he keeps his eye on the development of economic phenomena in his research on the general nature and the laws of economy. The individual concerned with economic policy does this similarly in his research on measures for advancing economy. The difference between the above two problems is so obvious that confusing them really should seem quite inconceivable. If it is nonetheless so frequently missed, the cause lies partly in the erroneous conception of political economy as a formally homogeneous science and in the resultant effort to determine the method of this science and not, on the contrary, in the methods of the formally quite different parts of which it consists. To no slight extent, however, it lies in a misunderstanding to which we will briefly refer here.

The common element in the above two methodological problems is to be found in the circumstance that both practical and theoretical economics are concerned with the question of whether economic laws which correspond to a definite developmental stage of economy are also adequate for developmental phases of it differing from this stage. What is not infrequently overlooked here is the decisive circumstance that in the one case it is a matter of normative laws (of rules for human action established by the state or through custom). In the other, however, it is a matter of laws of phenomena (of regularities in the coexistence and the succession of the phenomena of economy). That is, it is a matter of two completely different things and concepts which are just by chance designated by the same expression (law!).

Accordingly, one can still be of the opinion that various normative laws and institutions of economy correspond to various stages of the development of state and society in general, and of economy in particular, without having to be of the opinion, or even having a suspicion, that state and social phenomena in general, and the phenomena of economy in particular, develop in the course of time, and that this circumstance touches on the laws of the succession and coexistence of these phenomena. It is, in fact, a matter here of two different scientific questions which both have their full justification. Of these, however, only the latter refers to theoretical economics and the problem of keeping the “historical point of view” in it, while the former is a matter of keeping the historical point of view in economic policy.

A long series of writers on economics conceive of political economy at one moment as a formally homogeneous science, and as a consequence of this circumstance strive for the method of this science. At another moment they apply the methodological points of view and postulates of theoretical economics to the practical sciences of economy, and conversely those of the latter to the former. In particular, they conceive of keeping the historical point of view in the two kinds of sciences as an identical methodological problem. All this has become no less injurious to theoretical investigations in our science than the confusion of the history and the theory of economy, whose consequences for political economy we have presented in the preceding book.

Accordingly our problem cannot first and foremost consist in determining in general the nature of the historical point of view in that totality of theoretical and practical sciences which we call political economy. Rather, we will have to deal separately with the above thoroughly different methodological problems: the determination of the historical point of view in theoretical economics on the one hand, and in the practical sciences of economy on the other.

But in the treatment of the pertinent theoretical problems we will have to keep in mind a second no less important point of view. Theoretical research in the field of economy is not strictly homogeneous, either. It, too, as we have seen above, breaks down into two special orientations which show essential differences both in respect to their aims and to their ways of cognition, despite the fact that both try to solve the theoretical problem of research in the field of economy. We speak here of the realistic and the exact orientation of theoretical research, and with this it is clear that the determination of the historical point of view in each one of the above two orientations also must lead to different theoretical problems. We will have to distinguish on the one hand the historical point of view in the exact orientation of theoretical research, and on the other in the realistic one.

To be sure, the question could arise whether the problem of keeping the “historical point of view” in political economy is of such significance for our society as to assure a sufficient interest of the scholarly world for such complicated and difficult methodological investigations as those indicated above. But this question must especially suggest itself to us in a work which might destroy many illusions of the historical school of economics and at least reduce its significance to a more modest level. Nevertheless, even if it should develop from the following investigations that the historical point of view is far from showing that significance for our theoretical-practical science which a series of scholarly economists will ascribe to it, one thing must still not be overlooked. This is that in this work, which aims at the reform of the present state of political economy in Germany, it is obvious that things must not be judged exclusively according to their innate worth, but at the same time according to the significance which they have gained in the judgment of contemporaries. And what idea could have gained greater importance in this sense than that of a historical orientation of our science?

Thus the fault does not lie with us if we treat issues by no means without significance, yet of relatively small significance, in a fashion similar to that in which we treat the most important ones. The fault lies with those who have set scientific problems of secondary significance as the pivotal point of research in the field of economy and who have made the sharing of their limitations the sole criterion of the value or lack of value of scientific accomplishments. In pointing out the one-sided features, the exaggerations, and the errors of the historical school of German economists, we believe, considering the present state of political economy in Germany, that we are indeed dealing with the most important concern of our science.