210 HISTORY OF ECONOMIC INSTITUTIONS 



the two volumes of his Grundriss which have recently appeared 

 show that he has finally convinced himself how little his historical 

 studies alone sufficed and how indispensable is the deductive method 

 of the classical school of political economy, as indeed he has repeatedly 

 and emphatically stated. Without this method he could certainly 

 not have produced the important work which we are so fortunate 

 as to possess. Fully, however, as I recognize the impulse which he 

 has given our science, I cannot admit that upon the foundation of 

 economic history he has erected any new edifice; rather he has 

 extended the original structure, given it an enlarged and firmer 

 foundation, and has improved and adorned its interior. He cannot 

 conceal from himself that his historical investigations have done 

 less to advance theory than its practical application, for even in his 

 more theoretical work (it is indeed only the allgemeine Teil), theoretical 

 examination of the inner nature of economic activity takes a very 

 minor place. But it cannot be denied that upon the road already 

 entered much more can be, and we confidently hope will be, reached. 



Menger 1 holds that in political economy progress can be made 

 only by isolation of the single phenomenon, by abstraction of actual 

 processes, that is to say, psychologically, and that only in this 

 manner, not through experience and historical observation, may 

 exact results and economic laws be found. That by his method the 

 so-called classical school laid the foundation of our science, and 

 that to the notable work of men like Heinrich von Thiinen, Jevons, 

 and recently, beside Menger, Bohm-Bawerk, Wieser, Patten, we are 

 enduringly indebted, there can be no doubt. But it is equally certain 

 that what they have accomplished has been only within narrow limits 

 and that their methods can be applied only to a few parts of our 

 enormous field of investigation. 



It is undoubtedly true that laws are discovered only by abstraction 

 from economic life, by isolation of processes and of the operation 

 of single factors. As the Vienna school desires to lay chief weight 

 in investigation upon the deductive method, and after the example 

 of the old school seeks to ascertain economic laws of nature, it is 

 clear that it would assign to economic history a merely subsidiary 

 role. But the student who is content to start with the view that in 

 political economy only certain regularities may be observed, and 

 that the problem is rather to determine the modifications which 

 civilization effects in the operation of human economic wants and to 

 observe the various combinations of different cooperating factors, 

 will strive to use the method of analogy, to study phenomena in 

 different periods and countries, and thus to render more acute his 

 judgment of the present. 



1 Untersuchungen iiber die Methode der Socialurissenschaften. Leipzig, 1883. 

 Die Irrtumcr des Historismus in der deutschen Nationalokonomie. 



