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Epistemological Problems of Economics
Ludwig von Mises

2
Sociology and History

Conclusion

The battle of the proponents of historicism against the nomothetic science of human action was absurd and preposterous, and the rejection of the demand of naturalism that historical investigations, pursued with the methods of the natural sciences, should seek for "historical laws" was necessary and fully justified.

History cannot fulfill its task if it does not employ the most precise logic. At every step of the way it must make use of universally valid concepts and propositions; it must use reason?ratio?; it must, whether it wants to or not, theorize. If this is the case, then it is obvious that nothing but the best theory is good enough for it. The historian is not warranted in uncritically accepting any concept or proposition from the stock of naive popular habits of thought. He must first subject all concepts and propositions to a sharp, critical examination. He must think every idea through to its consequences, and again and again question and examine it. He must connect the individual ideas into a coherent system. In short, he must either practice theorizing himself or accept theory where it is developed in a scientific way with all the resources available to the human mind.

It is evident that the mere elaboration of a theory is not yet a contribution to history. Yet history can get on with the task proper to it only when the resources that theory provides are completely exhausted, Only there does the realm of history?the realm of the individual, of that which happens but once, of the historical whole?begin. It cannot cross the threshold of this realm until it has been brought there by the power of rational thinking.

Rothacker maintains that the specific "understanding" made use of in the moral sciences proceeds along the two paths of conception and explanation up to the point at which a leap "into an irrational relationship" paves the way for it.

If a work is conceived, no understanding in the strict sense is involved. If it is explained, there is likewise no understanding. But where we find ourselves compelled to look for something that is individually vital in a work, something that is not completely analyzable in conception nor completely explicable, we expect to encounter attempts at pure understanding, at understanding in the pregnant sense.

However, "rational measures" which have first been "exploited to the full" must precede this understanding.[98]

At the start of the Methodenstreit, Walter Bagehot, who, in 1876, was the first to object to the rejection of theory by the Historical School, declared that an historical presentation of economics is

no substitute for a preliminary theory. You might as well try to substitute a corollary for the proposition on which it depends. The history of . . . is the history of a confused conflict of many causes; and unless you know what sort of effect each cause is likely to produce, you cannot explain any part of what happens. It is like trying to explain the bursting of a boiler without knowing the theory of steam. Any history . . . could not be usefully told, unless there was a considerable accumulation of applicable doctrine before existing. You might as well try to write the "life" of a ship, making up as you went along the theory of naval construction. Clumsy dissertations would run over the narrative; and the result would be a perfect puzzle,[99]

The champions of historicism forgot this. They wanted to compile data "devoid of theory." This made the work of even the best of them fruitless. History can never really be history without the intellectual tools provided by the theory of human action. History must rest on theory, not to alienate itself from its proper tasks, but on the contrary, in order more than ever to discharge them in the true sense of history.

And Bagehot's words should never be forgotten:

Rightly conceived, the historical method is no rival to the abstract method rightly conceived.[100]

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[98] Rothacker, "Logik und Systematik der Geisteswissenschaften," Handbuch der Philosophie (Munich and Berlin, 1927), pp. 123 f.

[99] Bagehot, "The Postulates of English Political Economy," Works, edited by Russel Barrington (London, 1915), VII, pp. 103-104. The fact that Bagehot in the following pages of his treatise makes untenable concessions to the arguments of historicism and supports the idea of laws which are to be valid only for a definite period need not be considered here. On this point, cf. John Neville Keynes, The Scope and Method of Political Economy (London, 1891), pp. 289 ff.

[100] Bagehot, op. cit., p. 104.

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