The historical school of economics was an approach to academic

economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...

and to

public administration Public Administration (a form of governance) or Public Policy and Administration (an academic discipline) is the implementation of public policy, administration of government establishment ( public governance), management of non-profit es ...

that emerged in the 19th century in Germany, and held sway there until well into the 20th century. The professors involved compiled massive economic histories of Germany and Europe. Numerous Americans were their students. The school was opposed by theoretical economists. Prominent leaders included Gustav von Schmoller (1838–1917), and

Max Weber Maximilian Karl Emil Weber (; ; 21 April 186414 June 1920) was a German sociologist, historian, jurist and political economist, who is regarded as among the most important theorists of the development of modern Western society. His ideas p ...

(1864–1920) in Germany, and Joseph Schumpeter (1883–1950) in Austria and the United States.

Tenets

The historical school held that

history History (derived ) is the systematic study and the documentation of the human activity. The time period of event before the invention of writing systems is considered prehistory. "History" is an umbrella term comprising past events as well ...

was the key source of knowledge about human actions and economic matters, since economics was culture-specific, and hence not generalizable over space and time. The school rejected the universal validity of economic

theorem In mathematics, a theorem is a statement that has been proved, or can be proved. The ''proof'' of a theorem is a logical argument that uses the inference rules of a deductive system to establish that the theorem is a logical consequence of t ...

s. They saw economics as resulting from careful empirical and historical analysis instead of from logic and mathematics. The school also preferred

reality Reality is the sum or aggregate of all that is real or existent within a system, as opposed to that which is only imaginary. The term is also used to refer to the ontological status of things, indicating their existence. In physical terms, re ...

, historical, political, and social, as well as economic, to

mathematical model A mathematical model is a description of a system using mathematical concepts and language. The process of developing a mathematical model is termed mathematical modeling. Mathematical models are used in the natural sciences (such as physics, ...

ling. Most members of the school were also ''Sozialpolitiker'' (social policy advocates), i.e. concerned with social reform and improved conditions for the common man during a period of heavy

industrialization Industrialisation ( alternatively spelled industrialization) is the period of social and economic change that transforms a human group from an agrarian society into an industrial society. This involves an extensive re-organisation of an econo ...

. They were more disparagingly referred to as ''Kathedersozialisten,'' rendered in English as "socialists of the chair" (compare armchair revolutionary), due to their positions as professors. The historical school can be divided into three tendencies: * the Older, led by Wilhelm Roscher, Karl Knies, and Bruno Hildebrand; * the Younger, led by Gustav von Schmoller, and also including Etienne Laspeyres, Karl Bücher, Adolph Wagner, Georg Friedrich Knapp and to some extent Lujo Brentano; * the Youngest, led by Werner Sombart and including, to a very large extent,

. Predecessors included Friedrich List. The historical school largely controlled appointments to chairs of economics in German universities, as many of the advisors of Friedrich Althoff, head of the university department in the

Prussia Prussia, , Old Prussian: ''Prūsa'' or ''Prūsija'' was a German state on the southeast coast of the Baltic Sea. It formed the German Empire under Prussian rule when it united the German states in 1871. It was ''de facto'' dissolved by an e ...

n Ministry of Education 1882–1907, had studied under members of the school. Moreover, Prussia was the intellectual powerhouse of Germany, so dominated academia, not only in central Europe, but also in the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

until about 1900, because the American economics profession was led by holders of German PhDs. The historical school was involved in the '' Methodenstreit'' ("strife over method") with the

Austrian school The Austrian School is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motivations and actions of individuals. Austrian scho ...

, whose orientation was more theoretical and aprioristic.

Influence in Britain and the United States

The historical school had a significant impact on Britain, 1860s–1930s. Thorold Rogers (1823–1890) was the Tooke Professor of Statistics and Economic Science at King's College London, from 1859 until his death. He is best known for compiling the monumental ''A History of Agriculture and Prices in England from 1259 to 1793'' (7 vol. 1866–1902), which is still useful to scholars. William Ashley (1860–1927) introduced British scholars to the historical school as developed in Germany. In the United States the school influenced the institutional economists, such as Thorstein Veblen (1857–1929) and especially the Wisconsin school of labor history led by John R. Commons (1862–1945). More importantly, numerous aspiring economists undertook graduate studies at German universities, including

John Bates Clark John Bates Clark (January 26, 1847 – March 21, 1938) was an American neoclassical economist. He was one of the pioneers of the marginalist revolution and opponent to the Institutionalist school of economics, and spent most of his career as ...

, Richard T. Ely, Jeremiah Jenks, Simon Patten, and Frank William Taussig. Canadian scholars influenced by the school were led by Harold Innis (1894–1952) at Toronto. His

staples thesis In economic development, the staples thesis is a theory of export-led growth. The theory "has its origins in research into Canadian social, political, and economic history carried out in Canadian universities...by members of what were then known as ...

holds that Canada's culture, political history and economy have been decisively influenced by the exploitation and export of a series of "staples" such as fur, fishing, lumber, wheat, mined metals and coal. The staple thesis dominated economic history in Canada 1930s–1960s, and is still used by some. After 1930 the historical school declined or disappeared in most economics departments. It lingered in history departments and business schools. The major influence in the 1930s and 1940s was Joseph Schumpeter with his dynamic, change-oriented, and innovation-based economics. Although his writings could be critical of the school, Schumpeter's work on the role of innovation and entrepreneurship can be seen as a continuation of ideas originated by the historical school, especially the work of von Schmoller and Sombart. Alfred D. Chandler, Jr. (1918–2007), had a major impact on approaching business issues through historical studies.

Members of the school

* Karl Bücher * Bruno Hildebrand * Georg Friedrich Knapp * Karl Knies *

Étienne Laspeyres Ernst Louis Étienne Laspeyres (; 28 November 1834 – 4 August 1913) was a German economist. He was ''Professor ordinarius'' of economics and statistics or '' State Sciences'' and cameralistics (public finance and administration) in Basel, Riga, ...

* Wilhelm Roscher *

Friedrich Wilhelm Joseph Schelling Friedrich Wilhelm Joseph Schelling (; 27 January 1775 – 20 August 1854), later (after 1812) von Schelling, was a German philosopher. Standard histories of philosophy make him the midpoint in the development of German idealism, situating him b ...

* Gustav von Schmoller * Werner Sombart * Adolph Wagner *

* Karl Polanyi * Joseph SchumpeterManfred Prisching, "Understanding inescapable modernization: Werner Sombart and Joseph Schumpeter." ''Journal of Evolutionary Economics'' 25.1 (2015): 185+

English school

Although not nearly as famous as its German counterpart, there was also an English historical school, whose figures included

Francis Bacon Francis Bacon, 1st Viscount St Alban (; 22 January 1561 – 9 April 1626), also known as Lord Verulam, was an English philosopher and statesman who served as Attorney General and Lord Chancellor of England. Bacon led the advancement of both ...

and

Herbert Spencer Herbert Spencer (27 April 1820 – 8 December 1903) was an English philosopher, psychologist, biologist, anthropologist, and sociologist famous for his hypothesis of social Darwinism. Spencer originated the expression " survival of the f ...

. This school heavily critiqued the deductive approach of the classical economists, especially the writings of

David Ricardo David Ricardo (18 April 1772 – 11 September 1823) was a British political economist. He was one of the most influential of the classical economists along with Thomas Malthus, Adam Smith and James Mill. Ricardo was also a politician, and a ...

. This school revered the inductive process and called for the merging of historical fact with those of the present period. Included in this school are:

William Whewell William Whewell ( ; 24 May 17946 March 1866) was an English polymath, scientist, Anglican priest, philosopher, theologian, and historian of science. He was Master of Trinity College, Cambridge. In his time as a student there, he achieved ...

, Richard Jones,

Walter Bagehot Walter Bagehot ( ; 3 February 1826 – 24 March 1877) was an English journalist, businessman, and essayist, who wrote extensively about government, economics, literature and race. He is known for co-founding the '' National Review'' in 185 ...

, Thorold Rogers, Arnold Toynbee, and William Cunningham, to name a few.

References

* Avtonomov, Vladimir, and Georgy Gloveli. (2015) "The influence of the German Historical School on economic theory and economic thought in Russia." ''The German Historical School and European Economic Thought'': 185+. * . * Bücher, Karl (1927). ''Industrial Evolution.'' 6th ed. New York, NY: Holt. * Backhaus, Jürgen G. (1994), ed. "Gustav Schmoller and the Problems of Today". ''History of Economic Ideas'', vols. I/1993/3, II/1994/1. * Backhaus, Jürgen G. (1997), ed. ''Essays in Social Security and Taxation. Gustav von Schmoller and Adolph Wagner Reconsidered.'' Marburg: Metropolis. * Backhaus, Jürgen G. (2000), ed. ''Karl Bücher: Theory – History – Anthropology – Non Market Economies.'' Marburg: Metropolis. * Balabkins, Nicholas W. (1988). ''Not by theory alone...: The Economics of Gustav von Schmoller and Its Legacy to America.'' (Berlin: Duncker & Humblot). * Campagnolo, Gilles, and Christel Vivel. "Before Schumpeter: forerunners of the theory of the entrepreneur in 1900s German political economy – Werner Sombart, Friedrich von Wieser." ''European Journal of the History of Economic Thought'' 19.6 (2012): 908–43. * Chang, Ha-Joon (2002). ''Kicking Away the Ladder. Development Strategy in Historical Perspective.'' London: Anthem. * Dorfman, Joseph. "The role of the German historical school in American economic thought." ''American Economic Review'' (1955): 17–28
in JSTOR
* Grimmer-Solem, Erik (2003). ''The Rise of Historical Economics and Social Reform in Germany, 1864–1894.'' (Oxford University Press). * Grimmer-Solem, Erik, and Roberto Romani. "The historical school, 1870–1900: A cross-national reassessment." ''History of European Ideas'' 24.4–5 (1998): 267–99. * Hauk, A. M. (2012) ''Methodology of the Social Sciences, Ethics, and Economics in the Newer Historical School: From Max Weber and Rickert to Sombart and Rothacker'' Ed. Peter Koslowski. Springer Science & Business Media. * Hodgson, Geoffrey M. (2001). ''How economics forgot history. The problem of historical specificity in social science.'' London – New York: Routledge. * Kadish, Alon (2012). ''Historians, Economists, and Economic History'' pp. 3–3
excerpt
* Koslowski, Peter, ed. (2013). ''The Theory of Capitalism in the German Economic Tradition: Historism, Ordo-Liberalism, Critical Theory, Solidarism''. Springer Science & Business Media. * Lindenfeld, David F. (1993). "The Myth of the Older Historical School of Economics." ''Central European History'' 26#4: 405–16. * Pearson, Heath. "Was there really a German historical school of economics?." ''History of Political Economy'' 31.3 (1999): 547–62. * Reinert, Erik (2007). ''How Rich Countries Got Rich ... and Why Poor Countries Stay Poor''. New York: Carroll & Graf Publishers. * Roscher, Wilhelm. ''Principles of Political Economy.'' 2 vols. From the 13th (1877) German edition. Chicago: Callaghan. * Schumpeter, J. A. (1984). "History of Economic Analysis". London: Routledge. * Seligman, Edwin A. (1925). ''Essays in Economics.'' New York: Macmillan. * Shionoya, Yuichi (2001), ed. ''The German Historical School: The Historical and Ethical Approach to Economics.'' (Routledge). * Shionoya, Yuichi (2005), ''The Soul of the German Historical School''. Springer. * Tribe, Keith (1988) ''Governing Economy. The Reformation of German Economic Discourse'' (Cambridge University Press). * Tribe, Keith (1995) ''Strategies of Economic Order. German Economic Discourse 1750–1950'' (Cambridge University Press) (Republished 2006)

External links

New School for Social Research
{{Authority control 19th-century economic history