Methodenstreit

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.

History

Background

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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.^[1]

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 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, 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 obscurantism of Habsburg Austria compared to the more modern Prussians.

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 Meinecke, 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.

See also

• Economic methodology
• Unreasonable ineffectiveness of mathematics
• Philosophy of mathematics
• Philosophy of science
• Positive economics

References

1. ^ Mises, Ludwig von: "The Historical Setting of the Austrian School of Economics"

External links

• Epistemological Problems of Economics by Ludwig von Mises
• The Historical Setting of the Austrian School of Economics by Ludwig von Mises