Methodenstreit
Encyclopedia
Methodenstreit is a German term (lit. 'debate over methods') referring to an intellectual controversy or debate over epistemology, research methodology, or the way in which academic inquiry is framed or pursued. More specifically, it also refers to a particular controversy over the method
and epistemological character of economics
carried on in the late 1880s and early 1890s between the supporters of the Austrian School
of Economics, led by Carl Menger
, and the proponents of the (German) Historical School
, led by Gustav von Schmoller
. To distinguish it from other similar disputes, German speakers sometimes specify it as the Methodenstreit der Nationalökonomie (Methodenstreit of economics), but outside of German speaking countries, the Germanism Methodenstreit mostly refers to this one.
On an intellectual level the Methodenstreit was a question of whether there could be a science, apart from history, which could explain the dynamics of human action. Politically there were overtones of a conflict between the minarchism
of the early Austrian School and the welfare state
advocated by the Historical School.
The Austrian School by contrast believed that economics was the work of philosophical logic and could only ever be about developing rules from first principles — seeing human motives and social interaction as far too complex to be amenable to statistical analysis — and purporting their theories of human action to be universally valid.
attacked Schmoller and the German Historical School, in his 1883 book Investigations into the Method of the Social Sciences with Special Reference to Economics (Untersuchungen über die Methode der Socialwissenschaften und der politischen Ökonomie insbesondere). Menger thought the best method of studying economics was through reason and finding general theories which applied to broad areas. Menger, as did the Austrians, concentrated upon the subjective, atomistic nature of economics. He emphasized the subjective factors. He said the grounds for economics were built upon self-interest, evaluation on the margin
, and incomplete knowledge. He said aggregative, collective ideas could not have adequate foundation unless they rested upon individual components.
Schmoller responded with an unfavourable review of Menger's book.
of Habsburg
Austria compared to the more modern Prussia
ns.
, over Lamprecht's use of social scientific and psychological methods in his research. The dispute resulted in Lamprecht and his work being widely discredited among academic German historians. As a consequence, German historians pursued more political and ideological historical questions, while Lamprecht's style of interdisciplinary
history was largely abandoned. Lamprecht's work remained influential elsewhere, however, particularly in the tradition of the French Annales School
.
Scientific method
Scientific method refers to a body of techniques for investigating phenomena, acquiring new knowledge, or correcting and integrating previous knowledge. To be termed scientific, a method of inquiry must be based on gathering empirical and measurable evidence subject to specific principles of...
and epistemological character of economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
carried on in the late 1880s and early 1890s between the supporters of the Austrian School
Austrian School
The Austrian School of economics is a heterodox school of economic thought. It advocates methodological individualism in interpreting economic developments , the theory that money is non-neutral, the theory that the capital structure of economies consists of heterogeneous goods that have...
of Economics, led by Carl Menger
Carl Menger
Carl Menger was the founder of the Austrian School of economics, famous for contributing to the development of the theory of marginal utility, which contested the cost-of-production theories of value, developed by the classical economists such as Adam Smith and David Ricardo.- Biography :Menger...
, and the proponents of the (German) Historical School
Historical school of economics
The Historical school of economics was an approach to academic economics and to public administration that emerged in 19th century in Germany, and held sway there until well into the 20th century....
, led by Gustav von Schmoller
Gustav von Schmoller
Gustav von Schmoller was the leader of the "younger" German historical school of economics.-Life:Schmoller was born in Heilbronn. His father was a Württemberg civil servant. Young Schmoller studied Staatswissenschaften at the University of Tübingen...
. To distinguish it from other similar disputes, German speakers sometimes specify it as the Methodenstreit der Nationalökonomie (Methodenstreit of economics), but outside of German speaking countries, the Germanism Methodenstreit mostly refers to this one.
On an intellectual level the Methodenstreit was a question of whether there could be a science, apart from history, which could explain the dynamics of human action. Politically there were overtones of a conflict between the minarchism
Minarchism
Minarchism has been variously defined by sources. It is a libertarian capitalist political philosophy. In the strictest sense, it maintains that the state is necessary and that its only legitimate function is the protection of individuals from aggression, theft, breach of contract, and fraud, and...
of the early Austrian School and the welfare state
Welfare state
A welfare state is a "concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those...
advocated by the Historical School.
Background
The Historical School contended that economists could develop new and better social laws from the collection and study of statistics and historical materials, and distrusted theories not derived from historical experience. Thus, the German Historical School focused on specific dynamic institutions as the largest variable in changes in political economy. The Historical School were themselves reacting against materialist determinism, the idea that human action could, and would (once science advanced enough), be explained as physical and chemical reactions.The Austrian School by contrast believed that economics was the work of philosophical logic and could only ever be about developing rules from first principles — seeing human motives and social interaction as far too complex to be amenable to statistical analysis — and purporting their theories of human action to be universally valid.
Menger and the German Historical School
The first move was when Carl MengerCarl Menger
Carl Menger was the founder of the Austrian School of economics, famous for contributing to the development of the theory of marginal utility, which contested the cost-of-production theories of value, developed by the classical economists such as Adam Smith and David Ricardo.- Biography :Menger...
attacked Schmoller and the German Historical School, in his 1883 book Investigations into the Method of the Social Sciences with Special Reference to Economics (Untersuchungen über die Methode der Socialwissenschaften und der politischen Ökonomie insbesondere). Menger thought the best method of studying economics was through reason and finding general theories which applied to broad areas. Menger, as did the Austrians, concentrated upon the subjective, atomistic nature of economics. He emphasized the subjective factors. He said the grounds for economics were built upon self-interest, evaluation on the margin
Marginalism
Marginalism refers to the use of marginal concepts in economic theory. Marginalism is associated with arguments concerning changes in the quantity used of a good or service, as opposed to some notion of the over-all significance of that class of good or service, or of some total quantity...
, and incomplete knowledge. He said aggregative, collective ideas could not have adequate foundation unless they rested upon individual components.
Schmoller responded with an unfavourable review of Menger's book.
Consequences
The term "Austrian school of economics" came into existence as a result of the Methodenstreit, when Schmoller used it in an unfavourable review of one of Menger's later books, intending to convey an impression of backwardness and obscurantismObscurantism
Obscurantism is the practice of deliberately preventing the facts or the full details of some matter from becoming known. There are two, common, historical and intellectual, denotations: 1) restricting knowledge—opposition to the spread of knowledge, a policy of withholding knowledge from the...
of Habsburg
Habsburg
The House of Habsburg , also found as Hapsburg, and also known as House of Austria is one of the most important royal houses of Europe and is best known for being an origin of all of the formally elected Holy Roman Emperors between 1438 and 1740, as well as rulers of the Austrian Empire and...
Austria compared to the more modern Prussia
Prussia
Prussia was a German kingdom and historic state originating out of the Duchy of Prussia and the Margraviate of Brandenburg. For centuries, the House of Hohenzollern ruled Prussia, successfully expanding its size by way of an unusually well-organized and effective army. Prussia shaped the history...
ns.
Related rivalry
Another famous — and somewhat related — Methodenstreit in the 1890s pitted the German social and economic historian Karl Lamprecht against several prominent political historians, particularly Friedrich MeineckeFriedrich Meinecke
Friedrich Meinecke was a liberal German historian, probably the most famous German historian of his generation. As a representative of an older tradition still writing after World War II, he was an important figure to the end of his life.-Life:Meinecke was born in Salzwedel in the Province of Saxony...
, over Lamprecht's use of social scientific and psychological methods in his research. The dispute resulted in Lamprecht and his work being widely discredited among academic German historians. As a consequence, German historians pursued more political and ideological historical questions, while Lamprecht's style of interdisciplinary
Interdisciplinarity
Interdisciplinarity involves the combining of two or more academic fields into one single discipline. An interdisciplinary field crosses traditional boundaries between academic disciplines or schools of thought, as new needs and professions have emerged....
history was largely abandoned. Lamprecht's work remained influential elsewhere, however, particularly in the tradition of the French Annales School
Annales School
The Annales School is a group of historians associated with a style of historiography developed by French historians in the 20th century. It is named after its scholarly journal Annales d'histoire économique et sociale, which remains the main source of scholarship, along with many books and...
.
See also
- Economic methodologyEconomic methodologyEconomic methodology is the study of methods, especially the scientific method, in relation to economics, including principles underlying economic reasoning...
- Unreasonable ineffectiveness of mathematicsUnreasonable ineffectiveness of mathematicsThe unreasonable ineffectiveness of mathematics is a catchphrase, alluding to the well-known article by physicist Eugene Wigner, "The Unreasonable Effectiveness of Mathematics in the Natural Sciences". This catchphrase is meant to suggest that mathematical analysis has not proved as valuable in...
- Philosophy of mathematicsPhilosophy of mathematicsThe philosophy of mathematics is the branch of philosophy that studies the philosophical assumptions, foundations, and implications of mathematics. The aim of the philosophy of mathematics is to provide an account of the nature and methodology of mathematics and to understand the place of...
- Philosophy of sciencePhilosophy of scienceThe philosophy of science is concerned with the assumptions, foundations, methods and implications of science. It is also concerned with the use and merit of science and sometimes overlaps metaphysics and epistemology by exploring whether scientific results are actually a study of truth...
- Positive economicsPositive economicsPositive economics is the branch of economics that concerns the description and explanation of economic phenomena. It focuses on facts and cause-and-effect behavioral relationships and includes the development and testing of economics theories...
External links
- Epistemological Problems of Economics by Ludwig von MisesLudwig von MisesLudwig Heinrich Edler von Mises was an Austrian economist, philosopher, and classical liberal who had a significant influence on the modern Libertarian movement and the "Austrian School" of economic thought.-Biography:-Early life:...
- The Historical Setting of the Austrian School of Economics by Ludwig von Mises