Epistemological Problems of Economics

In Weber’s eyes,

the real configuration (i.e., the configuration in the concrete case) of the sociocultural life which surrounds us, in its universal, but for that reason no less individually framed, context and in its connection with other sociocultural conditions, likewise individually constituted, out of which it has come into existence

appears as the “starting point of the social sciences.”11  But wherever

the causal explanation of a “cultural phenomenon?an “historical individual”?comes into question, knowledge of laws of causation cannot be the end, but only the means of investigation. It facilitates and makes possible for us the imputation of the culturally significant components of the phenomena, in their individuality, to their concrete causes. As far and only as far as it accomplishes this is it valuable for the cognition of individual concatenations. And the more “general,” i.e., the more abstract, the laws, the less they accomplish for the requirements of the causal imputation of individual phenomena and thereby, indirectly, for the understanding of the meaning of cultural events.12

Weber places “historian and sociologist” in the same category: the task of both is “cognition of cultural reality.”13  Therefore, for him the logical and methodological problem is the same in sociology and history, viz.,

What is the logical function and structure of the concepts with which our science, like every science, deals? Or, more particularly, formulated with regard to the crucial problem: what importance do theory and the formation of theoretical concepts have for the cognition of cultural reality?15

Max Weber’s answer to this question is, in effect, that “abstract economic theory” is but a “special case of a way of forming concepts which is peculiar to the sciences of human culture and, in a certain sphere, indispensable for them”; here we have “before us an example of those syntheses which are generally termed ‘ideas’ of historical phenomena.”15  It is the production of a “conceptual representation” which coordinates “definite references and events of historical life into a cosmos of interrelationships immanently free of contradiction.” We make the characteristic features of this interrelationship clear to ourselves pragmatically by constructing an “ideal type.”16  The ideal type

is arrived at through the one-sided intensification of one or several aspects and through integration into an immanently consistent conceptual representation of a multiplicity of scattered and discrete individual phenomena, present here in greater number, there in less, and occasionally not at all, which are in congruity with these one-sidedly intensified aspects.17

Consequently, “abstract economic theory,” which, in Weber’s view, presents “an ideal representation of proceedings on the commodity market in the social organization of an exchange economy, free competition, and strictly rational action,”18  I has the same logical character as the “idea of the ‘town economy’ of the Middle Ages” or as the “idea of handicraft”19  or as ideas “like individualism, imperialism, mercantilism, and innumerable conventional ideas formed in a similar way by means of which we seek to grasp reality in thought and understanding.”20  These concepts cannot be defined “according to their content through a ‘presuppositionless’ description of any one concrete phenomenon or through an abstracting and lumping together of that which is common to several concrete phenomena.”21  They are specimens, says Weber, of the “ideal type,” a concept peculiar to history and sociology?in short, to all cultural sciences.

Yet even for Weber sociology and history are not identical. “Sociology constructs type concepts and seeks the general principles of events,” while history

strives for causal analysis and imputation of individual culturally important actions, institutions, and personalities . . . As is the case with every generalizing science, the character of its abstractions postulates that its concepts must be relatively free of content. What it offers instead is increased clarity of concepts. This increased clarity is obtained through the greatest possible adequacy to meaning [Sinnadäquanz], which is what sociology strives to attain in forming its concepts.22

Hence, the difference between sociology and history is considered as only one of degree. In both, the object of cognition is identical. Both make use of the same logical method of forming concepts. They are different merely in the extent of their proximity to reality, their fullness of content, and the purity of their ideal-typical constructions. Thus Max Weber has implicitly answered the question that had once constituted the substance of the Methodenstreit entirely in the sense of those who denied the logical legitimacy of a theoretical science of social phenomena. According to him, social science is logically conceivable only as a special, qualified kind of historical investigation.

However, the theory with which he is acquainted and which he rejects is not the theory that Walter Bagehot and Carl Menger had in mind when they attacked the epistemology of the Historical School. What Max Weber is thinking of is something entirely different. He wants to prove to us

the senselessness of the idea, which at times even dominates the historians of our subject, that the goal of cultural science, even if a long way off, should be to construct a logically complete system of concepts in which reality would be comprehended in an arrangement in some sense definitive and from which it could again be deduced.23

Nothing appears to him more hazardous than

the intermingling of history and theory arising from “naturalistic” prejudices, whether one believes that the “real” substance, the “essence,” of historical reality has been fixed in those theoretical, conceptual representations,24  or one uses them as a Procrustean bed into which history is to be squeezed, or one hypostatizes the “concepts” as a “genuine” reality standing behind the flux of phenomena as real “forces” which work themselves out in history.25

As far as Max Weber seeks to define the logical character of historical investigation, as far as he rejects the endeavors to construct “historical laws,” and as far as he demonstrates, following in the footsteps of Windelband and Rickert, the inapplicability to history of the methods used by the natural sciences in forming their concepts, one can agree with him without hesitation. In all these respects he continues and perfects the work of his predecessors, and his contributions to epistemology are imperishable.26  But where he went beyond this and attempted to determine the character of sociological investigation, he failed and had to fail because by sociology he understood something entirely different from the nomothetic science of human action, the possibility of which had constituted the subject of the Methodenstreit. The reason why Weber fell into this misconception can be easily understood and explained from his personal history and from the state in which the knowledge of the findings of sociological investigation existed in his day in the German Reich, and especially at the universities. Historians of the subject may concern themselves with this aspect of the question. All that is of importance to us here is the rectification of the misunderstandings which, while they certainly do not owe their origin to Max Weber, received wide dissemination through his having made them the foundation of his epistemology.27

The basis of Weber’s misconceptions can be exposed only by consideration of the question whether the concepts of economic theory do in fact have the logical character of the “ideal type.” This question is plainly to be answered in the negative. It is quite true also of the concepts of economics that they are “never empirically identifiable in reality” in their “conceptual purity.”28  Concepts are never and nowhere to be found in reality; they belong rather to the province of thought. They are the intellectual means by which we seek to grasp reality in thought. Yet it cannot be contended that these concepts of economic theory are obtained through “one-sided intensification of one or several aspects and through integration into an immanently consistent conceptual representation of a multiplicity of scattered and discrete individual phenomena, present here in greater number, there in less, and occasionally not at all, which are in congruity with these onesidedly intensified aspects.” On the contrary, they are obtained through reflections having in view the comprehension of what is contained in each of the individual phenomena taken into consideration. To determine whether the construction of this or that concept or proposition really succeeds in this intention in a way that is logically unobjectionable and correctly grasps reality is one of the tasks of the science whose logical character is the subject of dispute. What interests us here is not the question of the material truth of individual concepts and propositions and of the theoretical structure connecting them into a system, but the logical permissibility and expedience of formulating such propositions, not to mention their necessity for the attainment of the goals set for that science.

Human action, which constitutes the subject matter of all investigation in the social sciences, both historical and theoretical, presupposes a state of affairs that we shall express in Gottl’s formulation, since Max Weber opposed it with what we regard as defective reasoning. Gottl considers “privation” (by which he understands the fact that “an aspiration can never be realized without in some way impairing the fulfillment of other aspirations”) as one of the two “fundamental conditions” that govern our action.29  Now Weber maintains that there are exceptions to this fundamental situation in which man finds himself. It is not true that “the conflict of several ends, and therefore the necessity of choosing among them, is a state of affairs which holds absolutely.”30  However, this objection of Weber’s is correct only insofar as there are also “free goods”; but as far as it is correct, “action” does not take place. If all goods were “free goods,” man would economize only with his personal activity, i.e., with the application of his personal powers and his passing life. He would disregard the things of the external world.31  Only in a Cockaigne populated by men who were immortal and indifferent to the passage of time, in which every man is always and everywhere perfectly satisfied and fully sated, or in a world in which an improvement in satisfaction and further satiation cannot be attained, would the state of affairs that Gottl calls “privation” not exist. Only as far as it does exist does action take place; as far as it is lacking, action is also lacking.

Once one has realized this, one also implicitly realizes that every action involves choice among various possibilities. All action is economizing with the means available for the realization of attainable ends. The fundamental law of action is the economic principle. Every action is under its sway. He who wants to deny the possibility of economic science must begin by calling into question the universal validity of the economic principle, i.e., that the necessity to economize is characteristic of all action by its very nature. But only one who has completely misunderstood the principle can do this.

The most common misunderstanding consists in seeing in the economic principle a statement about the material and the content of action. One reaches into psychology, constructs the concept of want, and then searches for the bridge between want, the presentation of a feeling of uneasiness, and the concrete decision in action. Thus the want becomes a judge over action: it is thought that the correct action, the one corresponding to the want, can be contrasted to the incorrect action. However, we can never identify the want otherwise than in the action.32  The action is always in accord with the want because we can infer the want only from the action. Whatever anyone says about his own wants is always only discussion and criticism of past and future behavior; the want first becomes manifest in action and only in action. It is, of course, clear to everyone that with regard to what we say about the wants of other—not to mention all—men, there can be only two possibilities: either we state how they have acted or presumably will act, or we state how they should have acted or how they should act in the future.

For this reason no misunderstanding can be more fundamental than that of historicism when it sees in the “desire for economy a part of a later development” and adds that the “man in the state of nature does not act with the fullest purposiveness”;33  or when it explains the economic principle as a specific feature of production in a money economy.34  Max Scheler correctly refuted this idea, although he himself was prevented, by his desire to find an absolute determination of the Tank of values, from drawing the conclusions from his answer that are crucial for ethics.

That the pleasant is, ceteris paribus, preferred to the unpleasant is not a proposition based on observation and induction; it lies in the nature of these values and in the nature of sentient feeling. If, for example, a traveler, an historian, or a zoologist were to describe a type of man or animal to us in which the opposite were the case, we would “a priori” neither believe him nor need to believe him. We would say: This is out of the question.
At most these beings feel different things to be pleasant and unpleasant from what we do; or else, it is not that they prefer the unpleasant to the pleasant, but that for them there must exist a value (perhaps unknown to us) of a modality which is “higher” than the modality of this stage and that they can bear the unpleasant only because they “prefer” this value. Or we are confronted by a case of perversion of desires, in consequence of which they experience things injurious to life as “pleasant.” Like all these relations, what our proposition expresses is also at the same time a law of insight into alien expressions of life and concrete historical valuations (indeed, even into one’s own remembered valuations). Therefore, it is already presupposed in all observations and inductions. For example, it is “a priori” as concerns all ethnological experience. Not even the adoption of the point of view of the theory of evolution can further “explain” this proposition and the facts it denotes.35

What Scheler says here about the pleasant and the unpleasant is the fundamental law of action, which is valid independently of place, time, race, and the like, If we substitute in Scheler’s remarks “subjectively considered more important” for “pleasant,” and “subjectively considered less important” for “unpleasant,” this becomes even clearer.

Historicism does not take its task seriously enough in being satisfied with the simple statement that the quality of human action is not supertemporal and has changed in the course of evolution. In undertaking to defend such statements, one at least has the obligation to point out in what respects the action of the allegedly prerational era differed from that of the rational era; how, for example, action other than rational could take place or would have been able to take place. Max Weber alone felt this obligation. We owe to him the only attempt ever made to raise this basic thesis of historicism from the level of a journalistic aperçu to that of scientific investigation.

Within the realm of “meaningful action” Weber distinguishes four types. Action can

be (1) purposive-rational, i.e., guided by anticipations of the behavior of the objects of the external world and of other men, and using these anticipations as “conditions” or as “means” for the attainment of the ends rationally considered and sought by the actor himself;
(2) valuational, i.e., guided by conscious belief in the unqualified intrinsic value of a definite mode of conduct?ethical, aesthetic, religious, or any other?purely for its own sake and independently of its consequences;
(3) affective, especially emotional, when it is guided by burning passions and moods; and
(4) traditional, when it is guided by the familiarity of custom.36

Beyond every kind of meaningful action there is “a merely reactive mode of behavior which is not attendant on a subjectively intended meaning.” The boundaries between meaningful and merely reactive action are in a state Of flux.37

First, let us consider what Max Weber calls “merely reactive” behavior. Biology and the natural sciences in general are able to approach the behavior of the objects of their examination only from without. For that reason they can establish no more than the existence of a relationship of stimulus and response. Beyond this they must say: ignorabimus. The natural scientist may dimly suspect that somehow the behavior of the object stimulated has to be explained in a way similar to that of rational human action, but it is not given for him to see more deeply into these matters. With regard to human behavior, however, our position is entirely different. Here we grasp meaning, i.e., as Max Weber says, “the meaning subjectively intended by the actor,” which is “not an objectively ‘correct’ or a metaphysically determined ‘real’ meaning.”38  Where we observe among animals, which we are unable to credit with human reason, a mode of behavior that we would be in a position to grasp if he had observed it in a human being, we speak of instinctive behavior.

The response of a human being to stimuli can be either reactive or meaningful, or both reactive and meaningful at the same time. The body responds reactively to poisons, but, in addition, action can also respond meaningfully by taking an antidote. Only meaningful action, on the other hand, responds to an increase in market prices. From the point of view of psychology, the boundary between meaningful and reactive behavior is indeterminate, as is the boundary between consciousness and unconsciousness. However, it may be that only the imperfection of our thinking prevents us from discovering that action and reaction to stimuli are essentially alike and that the difference between them is merely one of degree.

When we say that an instance of human behavior is merely reactive, instinctive, or conative, we mean that it takes place unconsciously. It must be noted, however, that where we deem it inexpedient to conduct ourselves in such a way, we meaningfully set about to eliminate merely reactive, instinctive, or conative behavior. If my hand is touched by a sharp knife, I instinctively draw it back; but if, for example, a surgical operation is intended, I will endeavor to overcome reactive behavior through conscious action. Conscious volition controls all spheres of our behavior that are at all accessible to it by tolerating only that reactive, instinctive, or conative conduct which it sanctions as expedient and would itself have carried out. Consequently, from the point of view of the investigation proper to the science of human action, which aims at something quite different from that proper to psychology, the boundary between meaningful and merely reactive behavior is not at all indeterminate. As far as the will has the power to become efficacious, there is only meaningful action,

This leads us to an examination of the types of behavior that Weber contrasts with rational behavior. To begin with, it is quite clear that what Weber calls “valuational” behavior cannot be fundamentally distinguished from “rational” behavior. The results that rational conduct aims at are also values and, as such, they are beyond rationality. To use Weber’s expression, they have “unqualified intrinsic value.” Rational action is “ ‘rational’ only in its means.”39  What Weber calls “valuational” conduct differs from rational conduct only in that it regards a definite mode of behavior also as a value and accordingly arranges it in the rank order of values. If someone not only wants to earn his livelihood in general, but also in a way which is “respectable” and “in accordance with his station in life”?let us say as a Prussian Junker of the older stamp, who preferred a government career to the bar?or if someone forgoes the advantages that a Civil Service career offers because he does not want to renounce his political convictions, this is in no way an action that could be termed nonrational. Adherence to received views of life or to political convictions is an end like any other, and like any other it enters into the rank order of values.

Weber here falls into the old misunderstanding which the basic idea of utilitarianism repeatedly encounters, namely, that of regarding as an “end” only values that are material and can be expressed in money. When Weber holds that “whoever acts, without consideration of the consequences to be anticipated, in the service of his conviction of what duty, honor, beauty, religious instruction, filial love, or the importance of an ‘issue,’ no matter of what kind, seem to dictate to him” acts “in a purely valuational manner,”40  he employs an inappropriate mode of expression to describe this state of affairs. It would be more accurate to say that there are men who place the value of duty, honor, beauty, and the like so high that they set aside other goals and ends for their sake. Then one sees rather easily that what is involved here are ends, different, to be sure, from those at which the masses aim, but ends nevertheless, and that therefore an action directed at their realization must likewise be termed rational.

The situation is no different with regard to traditional behavior. A farmer replies to an agricultural chemist who recommends to him the use of artificial fertilizers that he does not allow any city man to interfere in his farming. He wants to continue to proceed in the same way that has been customary in his village for generations, as his father and grandfather, all able farmers, have taught him, a way that has up to now always proved itself successful. This attitude on his part merely signifies that the farmer wants to keep to the received method because he regards it as the better method. When an aristocratic landowner rejects the proposal of his steward to use his name, title, and coat of arms as a trade mark on the packages of butter going to the retail market from his estate, basing his refusal on the argument that such a practice does not conform to aristocratic tradition, he means: I will forgo an increase in my income that I could attain only by the sacrifice of a part of my dignity. In the one case, the custom of the family is retained because—whether it is warranted or not is of no importance for us—it is considered more “rational”; in the other case, because a value is attached to it which is placed above the value that could be realized through its sacrifice.

Finally, there remains “affective” action. Under the impulse of passion, the rank order of ends shifts, and one more easily yields to an emotional impulse that demands immediate satisfaction. Later, on cooler consideration, one judges matters differently. He who endangers his own life in rushing to the aid of a drowning man is able to do so because he yields to the momentary impulse to help, or because he feels the duty to prove himself a hero under such circumstances, or because he wants to earn a reward for saving the man’s life. In each case, his action is contingent upon the fact that he momentarily places the value of coming to the man’s aid so high that other considerations—his own life, the fate of his own family—fall into the background. It may be that subsequent reconsideration will lead him to a different judgment. But at the moment—and this is the only thing that matters—even this action was “rational.”

Consequently, the distinction Max Weber draws within the sphere of meaningful action when he seeks to contrast rational and nonrational action cannot be maintained. Everything that we can regard as human action, because it goes beyond the merely reactive behavior of the organs of the human body, is rational: it chooses between given possibilities in order to attain the most ardently desired goal. No other view is needed for a science that wants to consider action as such, aside from the character of its goals.

Weber’s basic error lies in his misunderstanding of the claim to universal validity made by the propositions of sociology. The economic principle, the fundamental law of the formation of exchange ratios, the law of returns, the law of population, and all other like propositions are valid always and everywhere if the conditions assumed by them are given.

Max Weber repeatedly cites Gresham’s law as an example of a proposition of economics. However, he does not neglect to place the word “law” in quotation marks in order to show that in this case, as well as in the case of the other propositions of sociology, understood as a discipline involving the method of historical understanding, all that is at issue is a question of “typical chances, confirmed by observation, of a course of social action to be expected in the presence of certain states of affairs which can be understood from the typical motives and typical meaning intended by the actors.”41  This “so-called ‘Gresham’s law,’” is, he says,

a rationally evident anticipation of human action under given conditions and under the ideal-typical assumption of purely rational action. Only experience (which ultimately can in some way be expressed “statistically”) concerning the actual disappearance from circulation of specie undervalued in the official statutes can teach us how far action really does take place in accordance with it. This experience does in fact demonstrate that the proposition has a very far-reaching validity.42

Gresham’s law—which, incidentally, was referred to by Aristophanes in the Frogs, and clearly enunciated by Nicolaus Oresmius (1364), and not until 1858 named after Sir Thomas Gresham by Macleod—is a special application of the general theory of price controls to monetary relations.43  The essential element here is not the “disappearance” of “good” money, but the fact that payments that can be made with the same legal effect in “good” or in “bad” money, as suits the debtor, are made in money undervalued by the authorities. It will not do to assert that this is always the case “under the ideal-typical assumption of purely rational action,” not even when one uses the word “rational” as a synonym for “aiming at the greatest monetary gain,” which is apparently what Max Weber has in mind.

A short while ago a case was reported in which Gresham’s law was “set aside.” A number of Austrian entrepreneurs visited Moscow and were made acquainted by the Russian rulers (who wanted to induce them to grant long-term commodity credits to the Soviet Union) with the situation of Russia by means of the old method that Prince Potemkin employed in dealing with his sovereign. The gentlemen were led into a department store where they made use of the opportunity to purchase small mementos of their trip and presents for their friends back in Austria. When one of the travelers paid with a large banknote, he received a gold piece in his change. Amazed, he remarked that he had not known gold coins effectively circulated in Russia. To this the cashier replied that customers occasionally paid in gold and that in such a case he treated the gold pieces like every other kind of money and likewise gave them out again in change. The Austrian, who was apparently not one to believe in “miracles,” was not satisfied with this reply and looked into the matter further. Finally, he succeeded in learning that an hour before the visit of his party a government official had appeared in the department store, handed over a gold piece to the cashier, and ordered him to conspicuously hand this one gold piece al pari to one of the foreigners in giving him his change. If the incident really took place in this way, the “pure purposive-rationality” (in Weber’s sense) of the behavior of the Soviet authorities can certainly not be denied. The costs arising for them from it?which are determined by the premium on gold—appeared warranted in their eyes by the end—obtaining long-term commodity credits. If such conduct is not “rational,” I wonder what else would be.

If the conditions that Gresham’s law assumes are not given, then action such as the law describes does not take place. If the actor does not know the market value differing from the legally controlled value, or if he does not know that he may make his payments in money that is valued lower by the market, or if he has another reason for giving the creditor more than is due him—for example, because he wants to give him a present, or because he fears violent acts on the part of the creditor—then the assumptions of the law do not apply. Experience teaches that for the mass of debtor-creditor relationships these assumptions do apply. But even if experience were to show that the assumed conditions are not given in the majority of cases, this could in no way weaken the chain of reasoning that has led to the construction of the law or deprive the law of the importance that is its due. However, whether or not the conditions assumed by the law are given, and whether or not action such as the law describes takes place, “purely purposive-rational” action occurs in any case. Even one who gives the creditor a present or who avoids the threat of an extortionist acts rationally and purposively, as does one who acts differently, out of ignorance, from the way he would act if he were better informed.

Gresham’s law represents the application to a particular case of laws of catallactics that are valid without exception always and everywhere, provided acts of exchange are assumed. If they are conceived imperfectly and inexactly as referring only to direct and immediate monetary gain—if, for example, they are interpreted to mean that one seeks to purchase and to pay one’s debts as cheaply as possible and to sell as dearly as possible-then, of course, they must still be supplemented by a series of further propositions if one wants to explain, let us say, the particularly cheap prices of advertised articles offered by department stores in order to attract customers. No one, however, can deny that in this case too the department stores proceed “purely rationally” and purposively on the basis of cool consideration.

If I simply want to buy soap, I will inquire about the price in many stores and then buy in the cheapest one. If I consider the trouble and loss of time which such shopping requires so bothersome that I would rather pay a few cents more, then I will go into the nearest store without making any further inquiries. If I also want to combine the support of a poor disabled veteran with the purchase of soap, then I will buy from the invalid peddler, though this may be more expensive. In these cases, if I wanted to enter my expenditures accurately in my household account book, I should have to set down the cost of the soap at its common selling price and make a separate entry of the overpayment, in the one instance as “for my convenience,” and in the other as “for charity.”44

The laws of catallactics are not inexact, as the formulation that many authors have given them would lead us to believe. When we ascribe the character of universal validity and objectivity to the propositions of catallactics, objectivity is not only to be understood in the usual and literal epistemological sense, but also in the sense of freedom from the taint of value judgment, in accordance with the demand made?with, of course, complete justification?for the social sciences in the most recent dispute over this question. Only the subjective theory of value, which treats every value judgment, i.e., every subjective valuation, in the same way in order to explain the formation of exchange ratios and which makes no attempt whatever to separate “normal” action from “abnormal” action, lives up to this demand. The discussion of value judgments would have been more fruitful if those who took part in it had been familiar with modern economics and had understood how it solves the problem of objectivity.

The refusal to admit that the theorems of economics have the character of scientific laws and the proposal to speak rather of “tendencies” can be explained only by the unfamiliarity with which the Historical-Realist School combats modern economics. Whenever economics is spoken of, it thinks only of classical economics. Thus, Karl Muhs, to cite the most recent representative of this school, maintains that

chains of causal connection, pure and self-contained, of such a kind that a given fact everlastingly and unconditionally has another as a consequence, appear at no time in economic life. In reality, every causal connection is usually combined with other facts, likewise operating with a certain intensity as causes. The latter as a rule influence to some extent the effects of the former. The result, therefore, comes into being as the effect of a causal complex. Reduction of the entire process to a simple formula, in which one effect is attributed to one cause, is impossible because it is incompatible with the multifarious causal complexity of the process. Where definite facts do causally govern an occurrence to a great extent . . . it is more suitable to speak of regularities or conformities to law or tendencies, but always with the reservation that the operation of such tendencies can be hampered or modified by other causal factors.

This is the realization of the conditional and relative nature of all regularity in the phenomena of the economic and social spheres, which has long since established itself in economics.45

One can understand the wide dissemination of these and related views when one considers, on the one hand, how obvious they must seem to everyone who has in mind the distinction between economic and noneconomic principles of price determination that has come down to us from classical economics and was at first retained in the terminology—though it is certainly not in accordance with the purport—even of the founders of the Austrian School;46 and when one considers, on the other hand, that we are confronted here with the basic error of the Historical-Realist School.

Every law of causation?no matter in what science?gives us information about a relationship of cause and effect. This information, in its theoretical value for our knowledge as well as in its practical importance for the understanding of concrete events and for the orientation of our action, is in no way influenced by the fact that at the same time another causal relationship can lead to the opposite result, so that the effect of one is entirely or in part counterbalanced by the effect of the other. Occasionally one endeavors to take this into account by qualifying the law with the addition ceteris paribus, but this, after all, is self-evident. The law of returns does not lose its character as a law because changes in technology, for example, take place that compensate for its effects. The appeal to the multiplicity and complexity of “life” is logically untenable. The human body also lives, and its processes are subject to a “multifarious causal complexity.” Yet surely no one would want to deny the character of a law to the proposition that eating protein, carbohydrates, and fat is beneficial to the functions of the body simply because eating cyanide at the same time must prove fatal.47

To summarize: The laws of sociology are neither ideal types nor average types. Rather, they are the expression of what is to be singled out of the fullness and diversity of phenomena from the point of view of the science that aims at the cognition of what is essential and necessary in every instance of human action. Sociological concepts are not derived “through one-sided intensification of one or several aspects and through integration into an immanently consistent conceptual representation of a multiplicity of scattered and discrete individual phenomena, present here in greater number, there in less, and occasionally not at all, which are in congruity with these one-sidedly intensified aspects.” They are rather a generalization of the features to be found in the same way in every single instance to which they refer. The causal propositions of sociology are not expressions of what happens as a rule, but by no means must always happen. They express that which necessarily must always happen as far as the conditions they assume are given.

• 11Max Weber, Gesammelte Aufsätze zur Wissenschaftslehre (Tübingen, 1922), pp. 172 f.
• 12Ibid., p. 178.
• 13Ibid., p. 181.
• 15Ibid., p. 185.
• 15Ibid., p. 189 f.
• 16Ibid., p. 190.
• 17Ibid., p. 191.
• 18Ibid., p. 190.
• 19Ibid., p. 191.
• 20Ibid., p. 193.
• 21Ibid., p. 193.
• 22Ibid., pp. 520 f.
• 23Ibid., p. 184.
• 24Namely, in the ideal types.
• 25Weber, Gesammelte Aufsätze zur Wissenschaftslehre, p. 195.
• 26Schelting aptly says: “With the concept of the ‘ideal type’ Max Weber for the first time clearly and plainly recognized a specific mode of forming concepts. The ‘ideal type’ is a logical discovery. It is not an ‘invention.’ In no way did Max Weber want to urge anything upon science that it had not already accomplished. He wanted to clarify a logical state of affairs already existing because it is of the essence of cognition in the cultural sciences.” Cf. Alexander von Schelting, “Die logische Theorie der historischen Kulturwissenschaft von Max Weber und im besonderen sein Begriff des Idealtypus,” Archiv für Sozialwissenschaft, XLIX, 174. Cf. further Marcus Pfister, Die Entwicklung zum Idealtypus (Tübingen, 1928), pp. 131ff.
• 2727Max Weber’s epistemology has been continued and revised by Alfred Schütz (Der sinnhafte Aufbau der sozialen Welt (Vienna, 1932) in a way which also seeks to dispose of the judgment of the logical character of economic propositions to which I objected. (Cf. pp. 277 ff. especially). Schütz’s penetrating investigations, based on Husserl’s system, lead to findings whose importance and fruitfulness, both for epistemology and historical science itself, must be valued very highly. However, an evaluation of the concept of the ideal type, as it is newly conceived by Schütz, would exceed the scope of this treatise. I must reserve dealing with his ideas for another work.
• 28Weber, Wissenschaftslehre, p. 191.
• 29Friedrich von Gottl-Ottlilienfeld, Die Herrschaft des Wortes (1901), now in Wirtschaft als Leben (Jena, 1925), pp. 165 f.
• 30Weber, Wissenschaftslehre, p. 117, n. 2. Compare with this Weber’s paraphrase: “the fundamental state of affairs to which are connected all those phenomena which we term ‘socioeconomic’ in the broadest sense.” Ibid., p. 161.
• 3131Cf. my Socialism, trans. by J. Kahane (New Haven, Conn.: Yale University Press, 1951). Cf. further Eli F. Heckscher, “A Plea for Theory in Economic History,” Economic History, I, 527.
• 32Concerning the hypostatization involved in the concept of “want,” cf. Felix Kaufmann, “Logik und Wirtschaftswissenschaft,” Archiv für Sozialwissenschaft, LIV, 620 ff.
• 33Halberstädter, Die Problematik des wirtschaftlichen Prinzips (Berlin and Leipzig, 1925), p. 61.
• 34Cf. Wilhelm Lexis, Allgemeine Volkswirtschaftslehre (3rd ed.; Berlin and Leipzig, 1926), p. 14.
• 35Max Scheler, Der Formalismus in der Ethik und die formale Wertethik (2nd ed.; Halle, 1921), p. 104.
• 36Max Weber, “Wirtschaft und Gesellschaft,” Grundriss der Sozialökonomik (Tübingen, 1922), Part III, p. 12.
• 37Ibid., p. 2.
• 38Ibid., p. 1.
• 39Ibid., p. 13.
• 40Ibid., p. 12.
• 41Ibid., p. 9.
• 42Ibid., p. 5.
• 43Cf. my Kritik des Interventionismus, pp. 123 ff.
• 44Cf. further below pp. 177 f.
• 45Karl Muhs, “Die ‘wertlose’ Nationalökonomie,” Jahrbücher für Nationalökonomie und Statistik, CXXIX, 808.
• 46On this point cf. below pp. 174 ff.
• 47I have intentionally not chosen as an example here a proposition of a natural science involving mathematics, but a statement of biology. The statement is imprecise in the form in which I present it and cannot assume the strict character of a law in any conceivable form. I have done this because it was incumbent upon me to show that, with the argument of the joint operation of a multiplicity of causal factors, the character of the strictest conformity to law cannot be denied even to a statement of this kind.