Epistemological Problems of Economics

If one conceives of “nature” as Kant did, as “the existence of things as far as it is determined according to universal laws,”91  and if one says, in agreement with Rickert, “Empirical reality becomes nature when we view it with respect to the universal; it becomes history when we view it with respect to the particular and the individual,”92  then one must necessarily arrive at the conclusion that sociology—supposing such a discipline at all feasible—is to be regarded as a natural science, that is, as one making use of the methods of the sciences of nature. On the other hand, one must, in that case, deny the possibility of historical laws. Of course, in many instances the idea that natural science and nomothetic science are identical concepts lay at the root of the contention that history had only to adopt the methods of the sciences of nature in order to become a nomothetic science of human action. Terminological misunderstandings of all kinds have enveloped discussion of these questions in the greatest confusion.

Kant’s and Rickert’s terminology is no doubt to be accounted for by the fact that sociology remained unknown to both and even the very possibility of a theoretical science of social phenomena never seriously became a problem for them. As regards Kant, this requires no further proof.93  As for Rickert, one need only note the sparse and altogether inadequate comments he devoted ‘to sociology. Though Rickert must admit that there can be no objection to “a natural science or a generalized presentation of social reality,”94  it does not occur to him to become familiar with sociology itself in order to find some way toward the solution of its logical problems. He disregards the principle that “occupation with the philosophy of science presupposes knowledge of the sciences themselves.”95  It would be a mistake to reproach Rickert for this, especially as his own contributions to the logic of history are not to be disputed. Nevertheless, it must be pointed out with regret that Rickert remains far behind Menger as regards the recognition of the distinction—set forth at the very beginning of the latter’s work—which appears within the social sciences themselves, between the historical sciences, directed toward the comprehension of phenomena in their particularity, and the theoretical sciences, which are directed toward the comprehension of the universal characteristics of phenomena.96

The last position still held in the dogged battle against the recognition of sociology is that of those who would limit the validity of sociological laws to a definite historical period. It was Marxism that first fell back upon this expedient. In the view of interventionism, whose triumph in the sphere of practical politics the adherents of the Historical School wanted to aid in achieving, every attempt to demonstrate a regularity in the sequence of social phenomena had to appear as a dangerous challenge to the dogma of the omnipotence of government interference. Interventionism simply rejected every theory. The case was different with Marxism, at least in the province of theory. In practical politics, of course, the attitude of Marxism gradually underwent a change: step by step the Marxist parties proceeded to adopt the slogans of interventionism. But it did not occur to the Marxist theoreticians to call into question the demonstration by classical economics that all forms of government interference with the market are senseless because the goals aimed at cannot be attained by means of them. The Marxists adopted this view all the more readily because it enabled them to point out the futility of every attempt to reform the existing social order and to refer all the discontented to the coming regime of socialism.

What Marxism needed was a theory that enabled it to quash the extremely embarrassing economic discussion of the possibility of realizing the socialist community?a discussion to which it was unable to contribute any relevant arguments. The theory of economic systems offered it this opportunity. According to this theory, in the course of history one economic system succeeds another, and in this succession—as is the case in all theories of historical stages—the later system is to be regarded as the “higher” system. The basic metaphysical and teleological orientation, which the scientific theories of historical stages presented by List, Hildebrand, Schmoller, and Bücher seek to disguise, is quite naively adopted by Marxism, although it insistently claims for itself the title of “scientific” socialism. The end and goal of all history is the socialist Kingdom of Promise. However, inasmuch as socialism is a new economic system and has not yet been achieved, it would be “utopian”—and, in the language of Marxism, this means unscientific—to attempt today to discover the laws by which the economy and society of this future system will be governed. The only function of science, on this view, is to investigate the laws of present and past economic systems. In Kapital Marx wanted to undertake this task in regard to the present, capitalist economic system. Later, attempts were made to distinguish within the era of capitalism several subsidiary periods, each with its peculiar economic system (early capitalism, high capitalism, late capitalism, and the transition period) and to delineate the economy of each.

We can disregard here the inadequacy of the efforts that Sombart, Rosa Luxemburg, Hilferding, Bucharin, and others devoted to these tasks.97  The only question that concerns us here is: Would a theory valid for only one historical era still be a theory in the sense in which we differentiate theory from history? If we recall what we have said above concerning the logical character of laws of historical stages, the answer cannot be difficult to find. The division of the entire course of history into periods can be undertaken only on the basis of ideal types. Consequently, the idea of an individual economic period lacks universal validity from the very outset, since the characteristics that define it need not be exhibited in every individual case comprised by it. Thus, a “theoretical” proposition that is supposed to be valid only for the conditions of that economic period can likewise be conceived only in ideal-typical terms.

If one assumes, for example, the predominance of the “capitalist spirit” as the criterion of the capitalist era of history, one, of course, does not assert that this spirit, no matter how narrowly circumscribed, straightway seized all men living in that era. The idea that still other “spirits” were operative as well is quite compatible with the ideal type; for it is certainly never maintained that the capitalist spirit prevailed without exception, but only that it predominated, in the era of capitalism. However, if one then formulates, let us say, laws of price determination in the capitalist economy, these laws can surely not be intended as having no exception. At least where different mentalities are to be found alongside the otherwise predominant capitalist spirit, other laws of price determination can, and indeed must, be valid. For this reason, whoever is willing to grant recognition solely to theories that are dependent on history disputes in fact the legitimacy of every universally valid theory. The only science he accepts in the sphere of human action is history, with the logical structure of the ideal type peculiar to it.

However, for this school, as well as for all other proponents of historicism, the rejection of the possibility of a universally valid theory is of merely academic significance. In effect, it is programmatic and nothing more. In actual practice, use is unhesitatingly made of concepts and propositions that, from the logical point of view, can be understood only as having universal validity. Every particular “spirit” that is supposed to be peculiar to each of the individual periods reveals itself on closer examination as an ideal dominating the majority of individuals in a given period, and the particular form of the economy proves to be a technique of social cooperation imposed by the distinctiveness of this ideal and by the prevailing views about the best way of realizing it.

The objection may be made that the species homo sapiens is but a temporal phenomenon and that, accordingly, a science of human action pure and simple could differ merely in degree, but not in logical character, from a science of human action valid within a limited historical period. However, this objection misunderstands the sole meaning that can be attached to the concept of universal validity in the realm of the science of human action, viz., valid wherever the assumed conditions, which are to be strictly defined, are given. The determination of the subject matter of the science of human action is not based on the empirical distinction between man and his prehuman ancestors, but on the conceptual difference between action and the merely reactive behavior of cells.

• 91Kant, Prolegomena zu einer jeden künftigen Metaphysik, ed. by Insel, IV, 417, §14.
• 92Heinrich Rickert, Die Grenzen der naturwissenschaftlichen Begriffsbildung (2nd ed.; Tübingen, 1913), p. 224; Rickert, Kulturwissenschaft und Naturwissenschaft, p. 60.
• 93Concerning Kant’s fundamental social views, cf. my Socialism, pp. 298, 434.
• 94Rickert, Die Grenzen der naturwissenschaftlichen Begriffsbildung, pp. 196 f.; similarly, p. 174. The conclusion at which Rickert finally arrives—that sociology can never take the place of history—is, of course, to be concurred with.
• 95Hermann Weyl, “Philosophie der Mathematik und Naturwissenschaft,” Handbuch der Philosophie (Munich and Berlin, 1927), p. 3. Wundt has endeavored to base his investigations on a more thoroughgoing study of the social sciences. Cf. Wundt, Logik (3rd ed.; Stuttgart, 1908), III, 458 ff. The period and milieu in which he worked explain the fact that he misunderstood modern subjectivist economics in his study. He could not be made aware of this deficiency even, as we have already seen, by Menger’s book on methodology.
• 96Cf. Carl Menger, Untersuchungen über die Methode der Sozialwissenschaften und der politischen Ökonomie insbesondere (Leipzig, 1883), pp. 3 ff.
• 97One could not arrive at such a theory by any of the procedures of thought available to us. Cf. above pp. 9 ff., 26 ff.