The Historical Economists


Economics is faced with six fundamental questions: (i) will the society organized on the principles of exchange stay composed or will it fall apart (the question of existence of equilibrium)?, (ii) will such an equilibrium be unique (a multiplicity of equilibria poses difficult and embarrassing questions)?, (iii) will such an equilibrium be robust (the question of stability of equilibrium)?, (iv) will such an economy (society) be efficient?, (v) will it grow or expand forever?, and (vi) will it be just? The classical economists, Adam Smith in particular, answered all these questions affirmatively using a characteristic methodology. However, Karl Marx challenged the entire structure of faith in the merits of the exchange economy and shattered all optimism regarding the said order. The neoclassicists, mostly using their own new (mathematical, marginalist, rationalistic, atomistic, hedonistic, etc) methodology set out to prove that answers to all those six questions were in affirmative. They restructured the faith in the said order. In so doing, they had to distance themselves from the reality and they did not mind doing so. This endeavour made neoclassical economics dogmatic and religious in nature. Leijonhufvud (1973) characterized neoclassical economics in the most sarcastic manner.

The Historical school held that history 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 theorems. The economists in this school saw economics as resulting from careful empirical and historical analysis instead of from logic and mathematics. They also preferred reality, historical, political, and social as well as economic, to self-referential mathematical modelling.

The Historical Economists
Georg Friedrich List Wilhelm Georg Friedrich Roscher
Karl Knies Bruno Hildebrand
Gustav von Schmoller Adolph Wagner
Étienne Laspeyres Karl Bücher
Werner Sombart Max Weber
Francis Bacon Auguste Comte
Herbert Spencer Wesley Clair Mitchell
John R. Commons Arnold Toynbee
Walter Bagehot William Cunningham

 

 

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