Wilhelm Roscher - Historicism

Historicism

Wilhelm Roscher


It is unfortunate that time and a dubious reputation have cast a shadow over the mass of historicist literature. Most historians of thought pass over it in si­lence, while others pause to make jest over the famous (and pointless) methodenstreit, literally "battle of methods," between Schmoller and the leader of the Austrian school, Carl Menger. This neglect is particularly regrettable in the case of the representative and founder of the older school, Wilhelm Roscher.

Roscher was born at Hanover in 1817, and from 1835 to 1839 he studied jurisprudence and philosophy at the universities of Gottingen and Berlin. As head of the historical school, he taught at the University of Leipzig (from 1848), where he was professor of political economy. Although Roscher began his work on economic history and the historical method as early as 1838, his magnum opus was the Principles of Political Economy (System des Volkswirtschaft), first published in 1854.
The Principles reveals Roscher as a scholar of the first magnitude. In addi­tion to writing an encyclopedic work, which encompasses all of the topics of, say, J.S. Mill's classical treatise, Roscher showed an ability as a historian of economic thought without peer in the nineteenth century. Not the least of the book's singular features is the fact that it was written as an elucidation of the historical method in economics.

As has been suggested above, the historical method attempts to combine organic, biological analysis and statistics of all kinds in order to discover the laws of the phenomenon at issue. These laws, at least in Roscher's formula­tion, were always relative to an ever-changing set of institutions. Unlike Schmoller and the more extreme historicists, Roscher did not wish to totally abandon Ricardian economics but rather to supplement and complete it. In a brilliant discussion of the Ricardian method, Roscher noted:

That which is general in Political Economy has, it must be acknowledged, much that is analagous to the mathematical sciences. Like the latter, it swarms with abstractions___It also, always supposes the parties to the contract to be guided only by a sense of their own best interest, and not to be influenced by secondary consid­erations. It is not, therefore, to be wondered at, that many authors have endeavored to clothe the laws of Political Economy in algebraic formulae. [But]...the advan­tages of the mathematical model of expression diminish as the facts to which it is applied become more complicated. This is true even in the ordinary psychology of the individual. How much more, therefore, in the portraying of national life!... The abstraction according to which all men are by nature the same, different only in con­sequence, is one which, as Ricardo and von Thiinen have shown, must pass as an indispensable stage in the preparatory labors of political economists. It would be es­pecially well, when an economic fact is produced by the cooperation of many dif­ferent factors, for the investigator to mentally isolate the factor of which, for the time being, he wishes to examine the peculiar nature. All other factors should, for a time, be considered as not operating, and as unchangeable, and then the questions asked, What would be the effect of a change in the factor to be examined, whether the change be occasioned by enlarging or diminishing it? But it never should be lost sight of, that such a one is only an abstraction after all, for which, not only in the transition to practice, but even in finished theory, we must turn to the infinite vari­ety of real life (Principles, pp. 104-105). Roscher's warnings about the abstract method have been repeated in our own time (see Leontieff, pp. 1-7). But Roscher was not willing to embrace econom­ics as simply a set of normative, value-loaded prescriptions. Rather, in distinguishing between studies of "what is" and "what should be," Roscher clearly eschewed normative analysis and studies of ideal systems in his study of eco­nomics, alleging that such systems are transitory and conflicting, taking as their base different natures and social configurations.

Roscher sought to describe "what has been" and how national or social life "came to be so." As he put the matter:
Our aim is simply to describe man's economic nature and economic wants, to in­vestigate the laws and the character of the institutions which are adapted to the sat­isfaction of these wants, and the greater or less amount of success by which they have been attended. Our task is, therefore, so to speak, the anatomy and physiology of social or national economy (Principles, p. 111).

Within this scenario, Roscher expected to discover broad laws of historical de­velopment of which, as already noted, the Ricardian theory was only a small part. He wished, in short, to discover nothing less than the laws of socioeco­nomic development with which he could compare existing stages within and between nation-states.
The advantages of Roscher's method, if achieved, are obvious. He argued that "once the natural laws of Political Economy are sufficiently known and recognized, all that is needed, in any given instance, is more exact and reliable statistics of the facts involved to reconcile all party controversies on questions of the politics of public economy."

Further, the historical method would ideally secure, amid an ocean of ephemeral opinions, "a firm island of scientific truth, as universally recog­nized as truth as are the principles of mathematical physics by physicians of the most various schools."
To these ends Roscher (together with Knies and Hildebrand) devoted his lifework. In a prolific stream of publications, which included the 1,000-page Principles, Roscher set out to discern the nonseparability of economics from other phenomena. But the plain truth is that in treating the theory of most of the traditional topics selected—money, values, wages, etc.—Roscher pre­sented analyses that would compare favorably with those in Mill's Principles (he incorporated Jevons's contributions to utility and statistics in the later edi­tion). What was different about Roscher's work was an incredible display of historico-statistical virtuosity aimed at enlarging upon and elucidating the re­ceived economic theory.

Thus Roscher took side excursions into the construction of price indexes and, with the history of prices, into economic institutions and topics including slavery, the church, money (paper and specie), luxury, profits, insurance, pop­ulation, international trade, and protection. Many of these accounts still repay careful reading, but despite Roscher's best efforts, not to mention his obvi­ously considerable mental talent, he (and this also holds true for Knies and Hildebrand) was unable to establish any laws of historical development. He was, in short, unable to reorient the method of economics.