ECONOMIC HISTORY AND KINDRED SCIENCES 211 



If, with John Stuart Mill, we identify political economy with the 

 theory of value, or, with Menger, lay the chief stress in economic 

 investigation upon the determination of concepts of value, of money, 

 of wage and price regulation, we must necessarily give the preference 

 to the deductive method. But even here economic history can per- 

 form an important service. It has shown us the variations in the 

 value of the precious metals and of money at different periods, and 

 thus leads us to the causes by which value is determined as well as 

 to the peculiarity of the functions of money, indicating how far it 

 partakes and how far it divests itself of the character of a com- 

 modity. Only by the empirical method have we learned to under- 

 stand the nature of credit and the economic significance of paper 

 money, bills and notes. Tooke and Newmarch and others, by follow- 

 ing up the history of prices, have contributed greatly to a clear 

 understanding of price regulation. The study of wages during the 

 last three decades has proved to us in Germany that they are not 

 determined solely by the relation of demand and supply, but that in 

 our stage of civilization ethical considerations play an important 

 part, that the pressure of public opinion in favor of the working 

 classes is a factor in the regulation of wages and prices, which for- 

 merly was not at all suspected and would scarcely have been discov- 

 ered by the deductive method, at any rate would certainly not 

 have been correctly estimated, since it varies with civilization. 



But the limit of the service which economic history can perform 

 for political economy is prescribed by the fact that in modern times 

 such radical changes have taken place in economic life and in our 

 culture that conclusions from the past can be drawn only in a very 

 limited degree for the present. The political economist must therefore 

 leave archive studies for the most part to the historian, and he must 

 regard it as a principle that for him the object of historical studies 

 is not to determine the conditions of the past in themselves, but to 

 take account of them only so far as they are needed to throw light 

 on the present. The historian may bury himself in the study of a 

 remote period and there remain, but the political economist must 

 start with the present and trace the development back as far as 

 appears necessary for his comprehension. Historical work is and 

 remains for him a secondary matter, the investigation of the present 

 being of prime importance. The whole contrast between the present 

 scientific standpoint of political economy and that of the Manchester 

 school lies undoubtedly in the conception that the guiding motives 

 of man in economic life have not remained the same, but have 

 experienced the utmost change through civilization, thus breaking 

 down the theory that human actions conform to law. On the one 

 hand, therefore, the necessity of studying the development of man 

 becomes evident, and on the other, the limited validity of the ex- 



