40 ECONOMICS 



The movement has been variously known as the inductive, his- 

 torical, or German school. It was in fact all three: historical and 

 inductive in its professed method, but German in its essential spirit. 

 The rise of this school is not a self-explanatory phenomenon, but it 

 is not enveloped in much mystery. Just as the classical political 

 economy was shaped by English utilitarianism, so the German 

 historical economics was an outgrowth of German philosophy. In 

 each case economics was building on the current metaphysics of the 

 home country. Each was a distinctive national product, and the 

 historical movement, though it has won adherents in other countries, 

 has preserved till this day a peculiarly German character. Roscher 

 started the movement. Reacting from the excessive a priorism of 

 English political economy, stimulated by the example of the new 

 historical jurisprudence, and inspired by the Hegelian notion of 

 development, he set out to reorganize economics on a broader basis. 

 The movement that he inaugurated soon found adherents. Bruno 

 Hildebrand followed in 1848 with his National Oekonomie der Gegen- 

 wart und Zukunft, and Karl Knies in 1853 with his epoch-making 

 Die Politische Oekonomie vom Standpunkte der geschichtlichen Methode. 

 Taken together, these works define the fundamental articles of the 

 constitution of the new historical economics. They were its con- 

 fession of faith. Knies emphasized the idea of the parallel develop- 

 ment of economic ideas and economic institutions, the idea of 

 historical relativity. But Roscher was more ambitious; he aspired 

 to make of economics a "philosophy of economic history" whose 

 special function should be to discover the laws of cultural develop- 

 ment in their economic aspects. Hegel had given to German thought 

 the conception of organic society. According to this, society has 

 a life-history of like kind with organic nature; therefore, the process 

 of organic life supplies the proper analogy for studying the cultural 

 sequence. It was a part of this conception which Roscher seized on, 

 -that the cultural sequence repeats itself in cycles of "youth," 

 "maturity," and "old age," each nation going through much the 

 same course. The history of the past, therefore, is prophetic of 

 the movement of the future; history repeats itself. The laws of his- 

 torical development are the only "natural laws " of society. It is 

 thus that history became the method of the new departure, his- 

 tory, that is to say, as officially interpreted by Hegel's formula. 

 Seen in the light of its derivation, therefore, the historical school 

 was as much metaphysical as historical. History was to be read 

 with a purpose. "He," says Hildebrand, "can have no right under- 

 standing of history to whom the conditions and needs of his own 

 time are unknown." It is the business of the economist "to discover 

 the link which the present generation is to add to the chain of social 

 development." The movement, therefore, from the beginning 



