Front Page Titles (by Subject) The Economic Point of View: the Background of the Methodenstreit - The Economic Point of View
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The Economic Point of View: the Background of the “Methodenstreit” - Israel M. Kirzner, The Economic Point of View 
The Economic Point of View: An Essay in the History of Economic Thought, ed. with an Introduction by Laurence S. Moss (Kansas City: Sheed Andrews McMeel, 1976).
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The Economic Point of View: the Background of the “Methodenstreit”
After 1870, attempts to define the nature of the economic were definitely colored by the intellectual background of the period. In Germany, Austria, and England economists were paying a good deal of attention indeed to the necessity for reconstructing economics “from the ground up.” This necessity was proclaimed by both groups that were in reaction against the hitherto dominant classical economics. Those following Roscher, Hildebrand, and Knies in their revolt against the abstract reasoning of Ricardian–type economics, as well as those who with Menger and Jevons were dissatisfied with the objectivism of the classical economists—all were imbued with the desire to make over the entire discipline. Inevitably this desire was accompanied by a flourishing self–consciousness on the part of economists in regard to the status of their discipline as a science, its relation to kindred branches of learning, and, in general, its objectives and the kind of knowledge it might be expected to furnish. Together with their researches into economic problems proper, the leaders of both new schools of economic thought felt called upon to still both their own misgivings and those of the public at large concerning the nature and significance of a subject whose methods of approach, after a century of study, its own students were branding as unsound.
It is true, of course, that these discussions came to hinge on the narrower problem of method rather than on that of scope. Even definitions of economics were required, during this period, to embrace statements concerning the purpose and the method of the discipline as well as the character of its subject matter.25 But the methodological points that were at issue in the Methodenstreit did have a direct bearing on the conceptions that were formed of the character of economic phenomena. At the risk of some excusable simplification, the controversy over method could, indeed, be described quite clearly in terms of the different conceptions of the phenomena purportedly investigated by economics. According to the Historical School, economics seeks to describe the phenomena of the real, empirical economic world as it unfolds in its setting of time and space. According to the “theoretical,” “abstract” school of thought, on the other hand, the task of economics is not—or, rather, cannot be—to explain “individual” (or particular) economic phenomena, but only to discover the regularities, the “general” chains of cause and effect, that underlie the innumerably various forms that present themselves in economic history.26
Although this statement of the disagreement does not, of course, point to any simple parallel disagreement concerning the nature of the economic, it does throw light on the background against which discussions about the character of economic phenomena were carried on in the last quarter of the nineteenth century. During this period we find, especially in the German literature, a concern with the correct characterization of economic phenomena that went far beyond previous investigations. It may safely be said that almost all the numerous criteria that have, during the history of economics, been used to define the economic aspect of affairs were in some way mentioned already in the formidable German literature of these decades. Even some definitions that were clearly discussed only in the twentieth century were at least vaguely envisaged during these years. Dietzel and Neumann in particular demonstrated considerable insight in their work in this area. Under the influence of Menger and his followers, writers of this period devoted careful attention to the scarcity criterion and to the operation of the “economic principle.” On the other hand, economists of the Historical School tended to stress the social character of economic phenomena. Both groups still clung to the idea that wealth stands at the core of economic affairs, but frequently the retention of conventional phraseology merely concealed a far more advanced and sensitive grasp of the real nature of economic phenomena.
In England at this time, despite its own form of the Methodenstreit, far less advance was to be seen in formulations of the scope of the discipline. Jevons had kept his economics closely tied to hedonism, and he was followed in this by Edgeworth. Marshall devoted part of his inaugural Cambridge lecture in 1885 to the problem, with interesting results. Several of the methodological rebels were intent on denying economics a separate status apart from sociology. There was even a proposal put forward in the British Association for the Advancement of Science during the late seventies to abolish the very existence of a separate economic section of the association. J. N. Keynes contributed to the judicious resolution of the methodological issues, but did little to advance the conception of the character of the economic point of view. It was not until the appearance of Wicksteed’s brilliant work in this field in 1910 that we find a contribution comparable in exhaustiveness and refinement to several of the German discussions.
Meanwhile in other countries economists were giving the problem careful attention. In the United States literature a number of useful pronouncements are to be found concerning the importance of a correct definition, as well as several highly refined and well–reasoned substantive formulations.27 In France28 and Italy too, parallel advances are to be found in the literature. In 1883 Supino published the first book devoted to an account of the existing definitions of economics.29 Pantaleoni, Pareto, and Croce devoted considerable space to the question of definition, and the famous correspondence at the turn of the century between the two last–named writers contains considerable material that is of particular value for any history of this question.
[]Knies required of a definition of economics that it comprise a) “das Gebiet der Untersuchungen,” b) its “Aufgabe,” and c) its “Methode.” (K. Knies, Die politische Oekonomie vom geschichtliche Standpuncte [Braunschweig, 1883], p. 157.) Menger required a similar scope for a definition. (C. Menger, Untersuchungen über die Methode der Sozialwissenschaften und der politischen Oekonomie insbesondere [Leipzig, 1883], p. 238.)
[]The distinction between the “individual” (or concrete) and the “general” (or abstract) in economic phenomena was made famous by Menger in his Untersuchungen, pp. 3 f.
[]Prominent United States writers who applied themselves to the careful definition of the economic point of view during this period include in their ranks Ely, Patten, Davenport; Taussig, Hadley, Giddings, Hadley, and Ward.
[]Among French writers of the period who concentrated most directly on definition may be mentioned: R. Worms (La science et l'art en économie politique, Paris, 1896); E. Levasseur (De la methode dans les sciences économiques, Paris, 1898); A. Jourdan (Des rapports entre le droit et l'économie politique, Paris, 1884); G. Schmidt (“Rapports de l'économie politique avec la morale et le droit,” Revued'économie politique, 1900); G. Tarde (Psychologie économique, Paris, 1902).
[]Cammillo Supino, La definizione dell'economia politica (Milan, 1883).