The historical school of economics was an

approach Approach may refer to: Aviation *Visual approach *Instrument approach *Final approach Music * ''Approach'' (album), by Von Hertzen Brothers * ''The Approach'', an album by I:Scintilla Other uses *Approach Beach, a gazetted beach in Ting Kau, Ho ...

to academic

economics Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and intera ...

and to

public administration Public Administration (a form of governance) or Public Policy and Administration (an academic discipline) is the implementation of public policy, administration of government establishment (public governance), management of non-profit establ ...

that emerged in the 19th century in Germany, and held sway there until well into the 20th century. The professors involved compiled massive economic histories of Germany and Europe. Numerous Americans were their students. The school was opposed by theoretical economists. Prominent leaders included

Gustav von Schmoller Gustav Friedrich (after 1908: von) Schmoller (; 24 June 1838 – 27 June 1917) was the leader of the "younger" German historical school of economics. He was a leading '' Sozialpolitiker'' (more derisively, '' Kathedersozialist'', "Socialist of t ...

(1838–1917), and

Max Weber Maximilian Karl Emil Weber (; ; 21 April 186414 June 1920) was a German sociologist, historian, jurist and political economist, who is regarded as among the most important theorists of the development of modern Western society. His ideas profo ...

(1864–1920) in Germany, and

Joseph Schumpeter Joseph Alois Schumpeter (; February 8, 1883 – January 8, 1950) was an Austrian-born political economist. He served briefly as Finance Minister of German-Austria in 1919. In 1932, he emigrated to the United States to become a professor at H ...

(1883–1950) in Austria and the United States.

Tenets

The historical school held that

history History (derived ) is the systematic study and the documentation of the human activity. The time period of event before the History of writing#Inventions of writing, invention of writing systems is considered prehistory. "History" is an umbr ...

was the key source of knowledge about human actions and economic matters, since economics was culture-specific, and hence not generalizable over space and time. The school rejected the universal validity of economic

theorem In mathematics, a theorem is a statement that has been proved, or can be proved. The ''proof'' of a theorem is a logical argument that uses the inference rules of a deductive system to establish that the theorem is a logical consequence of th ...

s. They saw economics as resulting from careful empirical and historical analysis instead of from logic and mathematics. The school also preferred

reality Reality is the sum or aggregate of all that is real or existent within a system, as opposed to that which is only imaginary. The term is also used to refer to the ontological status of things, indicating their existence. In physical terms, r ...

, historical, political, and social, as well as economic, to

mathematical model A mathematical model is a description of a system using mathematical concepts and language. The process of developing a mathematical model is termed mathematical modeling. Mathematical models are used in the natural sciences (such as physics, ...

ling. Most members of the school were also ''Sozialpolitiker'' (social policy advocates), i.e. concerned with social reform and improved conditions for the common man during a period of heavy

industrialization Industrialisation ( alternatively spelled industrialization) is the period of social and economic change that transforms a human group from an agrarian society into an industrial society. This involves an extensive re-organisation of an econo ...

. They were more disparagingly referred to as ''Kathedersozialisten,'' rendered in English as "socialists of the chair" (compare

armchair revolutionary Armchair revolutionary (or armchair activist and armchair socialist) is a description, often pejorative, of a speaker or writer who professes radical aims without taking any action to realize them, as if pontificating "from the comfort of the arm ...

), due to their positions as professors. The historical school can be divided into three tendencies: * the Older, led by

Wilhelm Roscher Wilhelm Georg Friedrich Roscher (; 21 October 18174 June 1894) was a German economist from Hanover. Biography Roscher studied at Göttingen, where he became a member of Corps Hannovera, and Berlin, and obtained a professorship at Göttingen in ...

, Karl Knies, and

Bruno Hildebrand Bruno Hildebrand (6 March 1812 – 29 January 1878) was a German economist representing the "older" historical school of economics. His economic thinking was highly critical of classical economists, especially of David Ricardo. His '' magnum opu ...

; * the Younger, led by

, and also including Etienne Laspeyres,

Karl Bücher Karl Wilhelm Bücher (16 February 1847, Kirberg, Hesse – 12 November 1930, Leipzig, Saxony) was a German economist, one of the founders of non-market economics, and the founder of journalism as an academic discipline. Biography Early life ...

Adolph Wagner Adolph Wagner (25 March 1835 – 8 November 1917) was a German economist and politician, a leading ''Kathedersozialist'' (academic socialist) and public finance scholar and advocate of agrarianism. Wagner's law of increasing state activity is ...

Georg Friedrich Knapp Georg Friedrich Knapp (; March 7, 1842 – February 20, 1926) was a German economist who in 1905 published ''The State Theory of Money'', which founded the chartalist school of monetary theory, which argues that money's value derives from i ...

and to some extent

Lujo Brentano Lujo Brentano (; ; 18 December 1844 – 9 September 1931) was an eminent German economist and social reformer. Biography Lujo Brentano, born in Aschaffenburg into a distinguished German Catholic intellectual family (originally of Italian desce ...

; * the Youngest, led by

Werner Sombart Werner Sombart (; ; 19 January 1863 – 18 May 1941) was a German economist and sociologist, the head of the "Youngest Historical School" and one of the leading Continental European social scientists during the first quarter of the 20th century. ...

and including, to a very large extent,

. Predecessors included

Friedrich List Georg Friedrich List (6 August 1789 – 30 November 1846) was a German-American economist who developed the "National System" of political economy. He was a forefather of the German historical school of economics, and argued for the German Custom ...

. The historical school largely controlled appointments to chairs of economics in German universities, as many of the advisors of

Friedrich Althoff Friedrich Althoff (1839-1908), was head of the university department in the Prussian Ministry of Education, and played a leading role in developing the research university in Prussia. This system became the model for research universities in the U ...

, head of the university department in the

Prussia Prussia, , Old Prussian: ''Prūsa'' or ''Prūsija'' was a German state on the southeast coast of the Baltic Sea. It formed the German Empire under Prussian rule when it united the German states in 1871. It was ''de facto'' dissolved by an em ...

n Ministry of Education 1882–1907, had studied under members of the school. Moreover, Prussia was the intellectual powerhouse of Germany, so dominated academia, not only in central Europe, but also in the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...

until about 1900, because the American economics profession was led by holders of German PhDs. The historical school was involved in the ''

Methodenstreit ''Methodenstreit'' (German for "method dispute"), in intellectual history beyond German-language discourse, was an economics controversy commenced in the 1880s and persisting for more than a decade, between that field's Austrian School and the (Ge ...

'' ("strife over method") with the

Austrian school The Austrian School is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motivations and actions of individuals. Austrian schoo ...

, whose orientation was more theoretical and aprioristic.

Influence in Britain and the United States

The historical school had a significant impact on Britain, 1860s–1930s.

Thorold Rogers James Edwin Thorold Rogers (23 March 1823 – 14 October 1890), known as Thorold Rogers, was an English economist, historian and Liberal politician who sat in the House of Commons from 1880 to 1886. He deployed historical and statistical metho ...

(1823–1890) was the Tooke Professor of Statistics and Economic Science at King's College London, from 1859 until his death. He is best known for compiling the monumental ''A History of Agriculture and Prices in England from 1259 to 1793'' (7 vol. 1866–1902), which is still useful to scholars. William Ashley (1860–1927) introduced British scholars to the historical school as developed in Germany. In the United States the school influenced the institutional economists, such as

Thorstein Veblen Thorstein Bunde Veblen (July 30, 1857 – August 3, 1929) was a Norwegian-American economist and sociologist who, during his lifetime, emerged as a well-known critic of capitalism. In his best-known book, ''The Theory of the Leisure Class'' ...

(1857–1929) and especially the Wisconsin school of labor history led by

John R. Commons John Rogers Commons (October 13, 1862 – May 11, 1945) was an American institutional economist, Georgist, progressive and labor historian at the University of Wisconsin–Madison. Early years John R. Commons was born in Hollansburg, Ohio on ...

(1862–1945). More importantly, numerous aspiring economists undertook graduate studies at German universities, including

John Bates Clark John Bates Clark (January 26, 1847 – March 21, 1938) was an American neoclassical economist. He was one of the pioneers of the marginalist revolution and opponent to the Institutionalist school of economics, and spent most of his career as ...

Richard T. Ely Richard Theodore Ely (April 13, 1854 – October 4, 1943) was an American economist, author, and leader of the Progressive movement who called for more government intervention to reform what they perceived as the injustices of capitalism, especial ...

Jeremiah Jenks Jeremiah Whipple Jenks (1856–1929) was an American economist, educator, and Professor at Cornell University, who held various posts in the US government throughout his career. He served as a member of the Dillingham Immigration Commission from 1 ...

Simon Patten Simon Nelson Patten (May 1, 1852 – July 24, 1922) was an economist and the chair of the Wharton School of Business at the University of Pennsylvania. Patten was one of the first economists to posit a shift from an 'economics of scarcity' to ...

, and

Frank William Taussig Frank William Taussig (1859–1940) was an American economist who is credited with creating the foundations of modern trade theory. Early life He was born on December 28, 1859, in St. Louis, Missouri, the son of William Taussig and Adele Wuerpe ...

. Canadian scholars influenced by the school were led by

Harold Innis Harold Adams Innis (November 5, 1894 – November 9, 1952) was a Canadian professor of political economy at the University of Toronto and the author of seminal works on media, communication theory, and Canadian economic history. He helped deve ...

(1894–1952) at Toronto. His staples thesis holds that Canada's culture, political history and economy have been decisively influenced by the exploitation and export of a series of "staples" such as

fur Fur is a thick growth of hair that covers the skin of mammals. It consists of a combination of oily guard hair on top and thick underfur beneath. The guard hair keeps moisture from reaching the skin; the underfur acts as an insulating blanket t ...

, fishing, lumber, wheat, mined metals and coal. The staple thesis dominated economic history in Canada 1930s–1960s, and is still used by some. After 1930 the historical school declined or disappeared in most economics departments. It lingered in history departments and business schools. The major influence in the 1930s and 1940s was

with his dynamic, change-oriented, and innovation-based economics. Although his writings could be critical of the school, Schumpeter's work on the role of innovation and entrepreneurship can be seen as a continuation of ideas originated by the historical school, especially the work of von Schmoller and Sombart.

Alfred D. Chandler, Jr. Alfred DuPont Chandler Jr. (September 15, 1918 – May 9, 2007) was a professor of business history at Harvard Business School and Johns Hopkins University, who wrote extensively about the scale and the management structures of modern corporatio ...

(1918–2007), had a major impact on approaching business issues through historical studies.

Members of the school

* Karl Knies *

Étienne Laspeyres Ernst Louis Étienne Laspeyres (; 28 November 1834 – 4 August 1913) was a German economist. He was ''Professor ordinarius'' of economics and statistics or '' State Sciences'' and cameralistics (public finance and administration) in Basel, Riga ...

Friedrich Wilhelm Joseph Schelling Friedrich Wilhelm Joseph Schelling (; 27 January 1775 – 20 August 1854), later (after 1812) von Schelling, was a German philosopher. Standard histories of philosophy make him the midpoint in the development of German idealism, situating him be ...

Karl Polanyi Karl Paul Polanyi (; hu, Polányi Károly ; 25 October 1886 – 23 April 1964),''Encyclopædia Britannica'' (Chicago: Encyclopædia Britannica Inc. 2003) vol 9. p. 554 was an Austro-Hungarian economic anthropologist and politician, best known ...

Manfred Prisching, "Understanding inescapable modernization: Werner Sombart and Joseph Schumpeter." ''Journal of Evolutionary Economics'' 25.1 (2015): 185+

English school

Although not nearly as famous as its German counterpart, there was also an English historical school, whose figures included

Francis Bacon Francis Bacon, 1st Viscount St Alban (; 22 January 1561 – 9 April 1626), also known as Lord Verulam, was an English philosopher and statesman who served as Attorney General and Lord Chancellor of England. Bacon led the advancement of both ...

and

Herbert Spencer Herbert Spencer (27 April 1820 – 8 December 1903) was an English philosopher, psychologist, biologist, anthropologist, and sociologist famous for his hypothesis of social Darwinism. Spencer originated the expression " survival of the fi ...

. This school heavily critiqued the deductive approach of the classical economists, especially the writings of

David Ricardo David Ricardo (18 April 1772 – 11 September 1823) was a British political economist. He was one of the most influential of the classical economists along with Thomas Malthus, Adam Smith and James Mill. Ricardo was also a politician, and a ...

. This school revered the inductive process and called for the merging of historical fact with those of the present period. Included in this school are:

William Whewell William Whewell ( ; 24 May 17946 March 1866) was an English polymath, scientist, Anglican priest, philosopher, theologian, and historian of science. He was Master of Trinity College, Cambridge. In his time as a student there, he achieved ...

, Richard Jones,

Walter Bagehot Walter Bagehot ( ; 3 February 1826 – 24 March 1877) was an English journalist, businessman, and essayist, who wrote extensively about government, economics, literature and race. He is known for co-founding the ''National Review'' in 1855 ...

, Arnold Toynbee, and William Cunningham, to name a few.

References

External links

New School for Social Research
{{Authority control 19th-century economic history