General Nature Of The Historical School

General Nature and Main Branches of the Historical School

The thinkers of the new school saw that economic life is not isolated from political and social life, but has close connections with all civilization; that it is not the same with all men, but varies in different societies and nations under different cir­cumstances and at different times. They revolted against the one-sided and rationalistic doctrines of their predecessors, and proceeded to formulate an "historical method" for political economy.

It is essential to an understanding of the historical movement in Germany, to distinguish between the older group which originated that movement, and the younger group which carried the tendency further, even going to extremes.

The older group was largely, though not entirely, negative in its thought, in so far as method was concerned. Its members were attacking and tearing down the faulty abstract-deductive methods which they found predominant, and, while they formu­lated a method of their own, and their spirit of free investiga­tion had most valuable positive results, still the negative aspect of their work was very large. They did not deny the existence of laws in economics, but they attacked absolutism and abstract deduction from ideal postulates.

The younger group sought to develop and apply the historical method further, and in so doing they took a positive stand that the older group would not have sanctioned. They, too, carried on a negative work; but this had been largely done for them, and in their several ways they took it as their task to get more positive results from a pretty exclusive application of their method. They differed from the older group in that they went so far as to deny the existence of non-empirical laws in eco­nomics. As will appear, they finally underwent a modification of spirit in the direction of greater breadth.

When, therefore, the "Historical School" is referred to in a general way, we should mean a very broad movement embracing all those economists who emphasize the relativity of laws and institutions, the inductive method of reasoning from concrete historical data, and the interrelations among human motives and among the social sciences.