ECONOMIC SCIENCE IN THE NINETEENTH CENTURY 43 



product. Indications, however, have not been wanting in the 

 writings of Biicher, Knapp, Sombart, and others, that history was 

 not to be the last word of the school, but the pathway to construc- 

 tion. Above all, the work of these gave substantial promise that 

 the theory at which they aimed would not rest with empirical, his- 

 torical generalizations, but would lead to laws of causal sequence. 

 It is this latter aspect that makes German economics, as seen through 

 Schmoller's Grundriss or Sombart 's Moderne Capitalisms s, of such 

 significance for economic theory. The function of economic theory, 

 as these men appear to understand it, is very different from the con- 

 ventional view. Professor Schmoller made it clear some years ago, 

 in a review of the Austrian doctrines, that he could not regard the 

 problem of value as the main preoccupation of economic theory. 

 For him, the economic process includes much more, and much of 

 more significance than the process of valuation. What he aspires 

 to offer is a theory of institutions, more specifically a theory of the 

 factors that have shaped the successive phases that make up the 

 life-history of these institutions, and the outcome, as we have it, 

 in the existing situation. The economic situation, as Professor 

 Schmoller views it, has nothing definitive about it. Institutions 

 are regarded as a part of the conventional apparatus of life. They 

 are still in the making, therefore, and always will be; and they are 

 not accounted for by representing them as functions in an orderly 

 and rationalized eternal scheme of things. They represent the 

 accumulated influence of a complex of forces whose shifting play is 

 to be ascertained by a careful scrutiny of the exigencies under the 

 stress of which the process of institutional adaptation has taken 

 place. The interest centers, therefore, much more in the origin, 

 variation, and survival of institutions and habits, so far as these 

 determine or are the economic situation than in their present working 

 or efficiency as rated by some conventional standard. The result 

 is, therefore, to be described as a genetic rather than an historical 

 account of institutions, a natural history of institutions in their 

 economic aspects, the chronological sequence always giving way to 

 the causal sequence. The point of view is that of evolution rather 

 than of " historical development," the discussion habitually follow- 

 ing the lines that evolutionary science has made familiar. Elaborate 

 notice is taken of such features and circumstances of environment 

 as have an appreciable bearing upon the economic life-process, 

 and a no less careful regard is paid to the changing makeup of human 

 nature, for it is the complex interaction of man and his environment 

 that issues in institutions. Neither environment nor human nature 

 is treated as a given fact invested with stability. They each change, 

 both as cause and effect, and their interplay is therefore to be con- 

 ceived and described in terms of process and not of fixed condition. 



