ABSTRACT OF PAPER
Title: More than Fighting Windmills: Scope and Method in the German Methodenstreit (1871- 1883)
Author: van 't Klooster Jens
Despite its crucial role in the development of the German economic profession, there is no account of the Methodenstreit between Carl Menger and Gustav Schmoller that establishes a point of controversy which is (i) substantial and (ii) mutually recognized as being the actual topic of the debate. This paper proposes a new interpretation of the debate that gives such a role to the scope of economic science. There are roughly two strands in existing interpretations of the Methodenstreit. The first focuses on philosophical background assumptions regarding the justification of theory. In this context, different authors follow J.N. Keynes (1897) sketch of a confrontation between inductive and deductive approaches to economics. Recent scholarship has done much to improve the understanding of Schmoller’s position (Peukert, 2001), but this has made the actual differences with Menger more mysterious: Schmoller did not reject deduction from an idealized representation of economic reality and Menger empathically endorsed the legitimacy of generalizations based on collected data. This absence of substantial epistemological disagreement motivates the second strand of interpretations, which denies that the debate had any intellectual core to begin with. Such author see the Methodenstreit as ‘at bottom a debate about the admissibility of social reform and other activist social policy’ (Grimmer-Solem, 2003, 246) or a ‘clash[] of temperaments and of intellectual bents’, where both sides were ‘fighting […] harmless windmills (Schumpeter, 1954, 783). Though existing doubts regarding the substance of the debate are not unfounded, I argue that the protagonists in fact had a substantial and mutually recognized point of controversy; the scope of economic science. The term scope is used here to describe a prescriptive conception of (i) explananda and (ii) explanantia that are specific to an individual scientific discipline. Bringing out the role of scope in the historical exchange will show that it presages many of the questions that are at the centre of recent debates on the importance of economic pluralism. In both his Principles and his Investigations, Menger seeks to delimit the proper explanantia of theoretical economics to the availability of goods, given needs and choices by idealized economic agents. Rather than engaging with the marginalist theory of prices or the laissez-faire economic policy Schmoller associated with these views, his criticism focuses on a somewhat different point: Accepting that the marginalist price theories are an adequate way to explain prices, Schmoller considers it ‘characteristic of an unworldly and naive armchair academic’ to stop the investigation at this point and exclude many other, more fundamental factors influencing human satisfaction of needs. Instead, the discipline should aim for an overall better understanding of the complexity of social reality and human psychology. The paper reconstructs the different positions that both parties take up in the course of the debate so that a meaningful debate on scope emerges. This debate revolves around the question whether Menger is correct, as Schmoller takes him to argue, that the Principles is indeed coextensive with the proper scope of economic science. The paper discusses the context of these claims and Schmoller’s critical response in his first 1873 review. It then outlines how Menger’s 1883 Investigations respond to Schmoller’s criticism and how Schmoller 1884 review of Menger’s Investigations refines the initial critique.
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