ECONOMIC SCIENCE IN THE NINETEENTH CENTURY 41 



had an ethical as well as an historical import. Its self-appointed 

 mission was to control, as well as to explain, development. It was 

 an historisch-ethische Richtung. As Held stated it, the new school 

 "demands a conception of the science, which includes social policy; " 

 and since, according to the German view, the state is the appro- 

 priate organ of social control, the new economics was a theory 

 of the state and its functions quite as much as it was a theory of 

 economy and its changes. 



Whether the reaction thus described is to be regarded as a far- 

 reaching and salutary reaction in the field of economic study is not 

 here in question except so far as it has a bearing upon the trans- 

 formation of the theoretic constitution of the science. Every 

 economist, no matter of what school, knows how much his attitude 

 has been modified and tempered by the criticisms of the " Histori- 

 ker." The "abstractor economics' 1 has been shown its proper 

 place, its spiritual pride has been reduced, and it has been put, as 

 it were, on its good behavior. Every historian as well as economist 

 knows, too, how much history owes to the activity of the new school. 

 If it has turned out much lumber, of which nothing better can be 

 said than that it is scholarship, it has also given some noteworthy 

 and vital researches of the highest value. But all this and more 

 that might be said to the same effect is beside the mark of our 

 present interest. What has this school done, in a positive way, to 

 give a new formulation of theory? Its earlier champions promised 

 a rapid and radical transformation of economic science. Has that 

 promise been fulfilled? 



It may be said at once that so far as the activities of the historical 

 school have moved in the orbit described for it by its founders, it 

 has failed to make good. Economic theory has not experienced at 

 the hands of the exponents of the new method the reorganization 

 of which it stood in need. Institutional history is not economic 

 science. A narrative and descriptive account of things is not a 

 scientific relation. The theory of institutions requires that these 

 should be accounted for in terms of determinable cause and effect. 

 A causal sequence implies very much more than historical succession. 

 So far as the work of the historical school has been a search after 

 the laws of social development, it has seldom eventuated in any 

 more definite articles of theory than such loose and sweeping his- 

 torical generalizations, as, for example, Wagner's law of the increas- 

 ing extension of state activity, or Held's law of the evolution of 

 industry through the successive stages of family system, guild 

 system, domestic system, and factory system. Such and similar 

 guesses at "the curve of economic evolution" may be useful for 

 the purposes of the economists who use them, but they do not make 

 good the claim of their inventors that they " see things as they 



