Economic History Of Germany

Method, Economic History Of Germany and Austria

On the score of method, there was great variety and difference of opinion. One great difference lay between the advocates of induction and those who favored deduction — the historical and the anti-historical economists. Schmoller, as already observed, would have excluded purely abstract deductions, and he favored induction from history and statistics, together with deduction from the known properties of human nature. The few remaining adherents to the historical school took a more or less similar position. On the other hand, the followers of Menger believed that only through abstraction and deduction can exact laws, the goal of science, be reached. Such were Wieser, Bohm-Bawerk, Sax, Zuckerkandl, and, to a less extent, Philippovich and Schumpeter.

A tendency to get together, however, soon developed, and this may be seen in the positions of Biicher and Wagner. The latter, while not strictly a member of the Historical School, favored a considerable use of induction from history and statistics; but, dealing largely with recent phenomena, he used deduction more and history less than did Schmoller. Biicher (1893) concluded that historical methods give the laws of the evolution of peoples, but that abstract deduction is necessary in dealing with the complicated exchange economy of today. Statistics, he believed, offer some scope for induction as a complementary and controlling process.

By the turn of the century, the famous quarrel over method had almost subsided. Hasbach, an historical economist, adopted an abstract deductive procedure in treating of human wants, and Sombart's Modern Capitalism (1919-1927) showed a similar trend. Meanwhile, Wieser, Bohm-Bawerk, and Schumpeter showed a greater recognition of the value of history. The tendency of the deductive economists was to recognize "social control" as a sort of secondary factor in economic life, thus becoming less abstract. To this end, the thought of Windel-band, Rickert, and M. Weber concerning the epistemological difference between history and theory contributed.
Various minor methodological categories existed: the mathematical (deductive), the statistical (inductive), and the juristic, the last-named method being most frequently associated with the Historical School's tendencies.

The most prominent German exponents of the mathematical method were Launhardt, whose Mathematische Begrundung der Volkswirtschaftslehre appeared in 1885, and Auspitz and Lieben (Untersuchungen uber die Theorie des Preises, 1889), who worked out price curves. The Swede, Cassel, had much influence. These men followed in the footsteps of Jevons or Walras. Schumpeter made large use of mathematics.

German economists were foremost in realizing the importance of statistics as a means of verifying theory and putting it on a more "positive" basis. Rnapp, Lexis (d. 1914), Inama-Sternegg, G. v. Mayr (1841-1925), Stieda, and Van der Borght are writers who combined economics and statistical knowledge, not to mention Wagner, who applied the statistical method to banking problems. Meitzen (Geschichte, Theorie, und Technik der Sta-tistik, 1886) will always be mentioned in connection with statistics.

Jurisprudence, with its minute logical classifications and definitions, furnishes an example by which the economic thinkers of Germany have profited. So Knapp (1842-1926) treated money as a creation of the law, Neumann (Grundlagen, 1889) applied the method to practical problems of taxation, and many others — like Wagner and Diehl, in their several ways — showed the same influence. In fact, it was a not uncommon tendency of German writers to go to extremes in this direction, making definitions and distinctions which are perhaps useless and are certainly not used.