Methodological Controversy Model Theory

Methodological Controversy, Methodological Theory Model

Even before Menger, Jevons, Walras, and Marshall had begun to apply marginal analysis to the theory of value and distribution, orthodox classical theory was being criticized by certain nonsocialist German writers. Although there were some notable differences among the views of these writers, they had enough in common to be referred to collectively as the German historical school. The influence of this school began in Germany during the 1840s and extended into the twentieth century. Many historians divide it into an older and a younger historical school, noting differences of opinion—largely resulting from changing problems in Germany and reactions to orthodox theory—between the earlier and the later writers.

Criticism of orthodox classical theory and advocacy of the so-called historical method also appeared in England in the 1870s independently of the German historical school. These English advocates of the historical method, however, formed no cohesive group, so it would be improper to speak of an English historical school. These German and English writers deserve our attention because of the influence they had on certain neoclassical economists, particularly Alfred Marshall. The Germans also influenced economic theory and policy in the United States because of the number of American economists who received graduate education in Germany.