German Historical School of Economics
The German Historical School of Economics emerged in the 19th century in Germany as a major force in academic economics and public administration. It dominated the intellectual landscape of German-speaking countries and significantly influenced the international economic discourse well into the 20th century.
Historical Context and Development
The German Historical School was born out of a reaction against the abstract and universal economic theories that gained traction in the late 18th and 19th centuries. Proponents of the school posited that economic theories could not be universally applied due to cultural and historical specificities; thus, they rejected the idea of universal economic laws. This school argued for an empirical, historical approach to understanding economic phenomena, emphasizing the importance of culture and history in shaping economics.
The school was characterized by its methodological influence from Leopold von Ranke, a historian who insisted on rigorous, source-based analysis. Von Ranke's approach to societal development deeply influenced the historical school's leaders, such as Wilhelm Roscher, a pioneering figure in the school's early formation.
Key Figures
Prominent leaders of the German Historical School included Gustav von Schmoller and Max Weber. Schmoller was particularly influential, advocating for a comprehensive understanding of economic systems through the study of concrete historical situations. Max Weber, while later moving beyond the school, contributed significantly to its development with his work on the interplay between sociology and economics.
Joseph Schumpeter, although not a direct part of the German Historical School, was influenced by its ideas. His emphasis on innovation and entrepreneurship can be seen as an evolution of the historical school's focus on historical dynamics and economic change.
Influence and Impact
The German Historical School had far-reaching impacts beyond Germany, influencing economic thought in countries like the United States and Great Britain. Its methodologies were pivotal in shaping the study of economic history and framed the narratives of economic development in Europe.
During its heyday, the school controlled many academic appointments in German universities, thanks to the influence of figures like Friedrich Althoff, who headed the university department in the Prussian Ministry of Education. This dominance ensured that many American economists were trained in German institutions, leading to the transmission of historical school ideas across the Atlantic.
Notably, the German Historical School was involved in the Methodenstreit, a "strife over method," with the Austrian School of Economics. This debate was central to the methodological disagreements between more empirical, historical approaches and theoretical, aprioristic economic theories.
Legacy
Though the German Historical School eventually waned as newer economic theories gained prominence, its legacy endures in the fields of economic history and business studies. The dynamic, change-oriented approach of scholars like Alfred D. Chandler, Jr. in the mid-20th century reflects the enduring influence of the German Historical School's methodologies.