Thorstein Veblen
Review author to: 'Über einige Grundfragen der Socialpolitik und der 
Volkswirtschaftslehre'. Von GUSTAV SCHMOLLER. Leipzig: Duncker & 
Humblodt, 1898, 8vo. pp. ix + 343.
The Journal of Political Economy, Vol. 6, No. 3. (Jun., 1898), pp. 416-419.
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[416] The volume reproduces in collected form three well-known 
essays of various dates: (1) The polemical chapters of Professor 
Schmoller's controversy with Treitschke (Über einige Grundfragen des 
Rechts und der Volkswirtschaft - 1874-5); (2) The essay on the Scope 
and Method of Economic Science (Die Volkswirtschaft, die 
Volkswirtschaftslehre und ihre Methode - 1895), originally written for 
Conrad's Handwörterbuch; and (3) the Inaugural Address of October 
last, delivered on the occasion of Professor Schmoller's induction into 
the rectorship at the University of Berlin (Wechselnde Theorien und 
feststehende Wahrheiten im Gebiete der Staats- und 
Socialwissenschaften und die heutige deutsche Volkswirtschaftslehre 
- 1897). It is notable as indicating thhe extent and the character of the 
changes that have passed over the "historical method" during the 
past twenty-five years. The earlier of the essays gives Professor 
Schmoller's position at the time when he first came prominently 
forward as the champion of that method, and its defender against 
those who spoke for a return to a rehabilitated classicism. It marks the 
supersession of Roscher's "historico-physiological" by the "historical" 
method, through discontinuing, or at least discountenancing, the use 
of the physiological analogy in economic theory. On the basis of this 
early controversy with Treitschke, Professor Schmoller got the 
reputation, not altogether gratuitous, at the hands of his critics, of 
being spokesman for the view that economic science is, and of right 
ought to be, without form and void. But if this construction of his views 
was not altogether gratuitous, still less was it altogether well 
grounded. The elements of his later methodological work are visible in 
this early essay, but they are most readily visible and most significant 
when seen in the light of his later utterances on the same head. 
Without the consistency and application given to these elements in his 
later work, it is doubtful if there would have been occasion seriously to 
qualify the disparaging opinion [417] passed upon his efforts by his 
Austrian critics. What gives added color to the contentions of those 
who carp at the historical method, as shown in Schmoller's exposition 
is the fact that very much of his constructive work has been of a 
character to bear out the criticisms leveled at him on methodological 
grounds. Much of his own work, as well as the greater part of the 
voluminous work carried on under his hands by his many disciples, 
has been of the nature of compilation and description - narrative, often 
discursive and fragmentary. But as to this prevalent character of his 
published work, it is to be said that he has, professedly, been 
occupied with the foundations of a prospective theoretical science of 
economics. And this prospective science "is, as regards its foundation, 
descriptive" (p. 226). The second of the essays contained in the 
volume leaves no ground for the objection that Professor Schmoller 
makes the science an undisciplined congeries of data. He gives, in 
concise and telling form, a prospectus for a theoretical science, such 
that, whatever strictures may be offered by his critics, it can assuredly 
not be characterized as being without form and void.

The method of any given science is determined (1) by the general 
standpoint which human knowledge, taken as a whole, has reached at 
the time; that is to say, by the generic features of the ideals and 
methods of knowledge which are in vogue at the time, and which are 
fundamentally of the same character for all directions of human 
thinking and knowledge. .... (2) Scientific method depends on the 
nature of the subject-matter under inquiry. So mathematics follows a 
different method of procedure from physics, and the latter a different 
one from physiology, etc. .... (3) The method employed in any given 
science at any given point of time depends on the degree of 
development which the science has reacted at the time. In its crude 
beginnings knowledge always proceeds by half truths and sweeping 
generalizations; only little by little is the method of procedure improved 
and subtilized; emphasis falls now on observation and description, 
now on classification, and again, attention may be centered upon the 
causal explanation of phenomena (pp. 228-230).

It is this third count that seems to have been most insistently present 
in Professor Schmoller's mind in shaping his work in the past, 
especially his published writings. Economics has hitherto, in Professor 
Schmoller's apprehension, been in the inchoate stage only, and the 
method proper to the science, has, therefore, been conceived to be 
description and collation. In his lectures, and in the guidance [418] 
given his students, especially during later years, the same scrupulous 
regard for the requirements of economics as an inchoate science 
simply has not been so decisive, at least not to the full extent. It is 
evident both from the character which his work is now assuming and 
from the tone of this essay that the science is now felt to be rapidly 
passing this inchoate stage, and that the economists may now 
legitimately turn to constructive theoretical work.
Several chapters (iv-x. pp. 231-276) are given to a discussion of the 
methods and aims of economic science in the past; to an exposition, 
in outline, of the part which observation and description must play as 
preliminary to constructive work; to the use of statistical inquiry; to a 
characterization of the true historical method, and the relation of 
historical inquiry to economics; and last, but not least, to the important 
place of a taxonomic discipline - definitions, concepts and 
classification - in the science. In this latter discussion, it may not be 
out of place to point out, Professor Schmoller gives but scant 
acknowledgment to the really large and substantial deserts of the 
classical writers under this head. The most substantial and 
characteristic move in advance made by Professor Schmoller in the 
methodological discussion then follows under xi (Die Ursachen).

Observation and description, definition and classification are 
preparatory work only. What we seek by these means is an 
apprehension of economic phenomena as a connected whole. .... Our 
insight in this respect can never be complete or fully adequate. .... But, 
in any case, the more we confine ourselves to seeking an explanation 
of the facts at hand on the basis of what has immediately gone before, 
the more nearly will we succeed in this undertaking. And, in any event, 
there must remain before our eyes, as the ideal of all knowledge the 
explanation of all facts in terms of causation. The natural sciences 
have accustomed us to apprehend every event as conditioned by 
causes, which we conceive of as forces (p. 277).
As causes at work in the sequence of economic phenomena we have 
mechanical and organic forces on the one side, and psychical forces 
on the other, which meet as two independent groups of causes 
contributing to the result to be studied. Whatever opinions we may 
hold as to the relation between physical and psychical life; however 
much we may be inclined to emphasize the fact that our spiritual life is 
conditioned by the facts of our nervous system; although we may, with 
full justification, hold that all our sensations and feelings are 
inseparable from certain physiological processes; this much remains 
beyond question, that the coexistence and sequence of spiritual 
phenomena are not to be explained through nerve changes simply, 
and that [419] for the present, and apparently for all time to come, the 
ultimate ascertainable facts of material existence and the most 
rudimentary adjustments of the spiritual life are ranged over against 
one another as independent and self-explaining groups of 
phenomena. Hence all efforts to explain the actions of men through 
direct recourse to merely physical or biological factors must be 
declared mistaken or inadequate (p. 278).

Hence the causes in terms of which economic theory must in the last 
resort formulate its results are psychical facts - facts of human motives 
and propensities.

There is no science possible outside the range of the universal law of 
causation - not even it the domain of the spiritual life. But the causes 
at work in the psychical sequence are essentially different from the 
mechanical ones. And hence it becomes incumbent on a practical 
science, such as economics, to carry its inquiry, as far as may be 
needed, into the details of psychological processes (pp. 286-287).

The aim of economics, as of any science, adopting any method, must 
be the determination of uniformities and laws (pp. 298-307). But the 
descriptive, empirical generalization of uniformities, simply, must not 
be accepted as a determination of the laws of the phenomena under 
inquiry. Normalization and taxonomic schedules are not science in the 
modern acceptance of the word.

We are no longer content to call empirically ascertained uniformities 
laws, but only those uniformities the causes of which we have been 
able to seize and fix (p. 302). Economics is now in a fair way to 
become such a science. History and philosophy have brought it back 
to a realizing sense of the phenomena of collective life; statistics and 
industrial history have shown the way to a methodologically adequate 
empiricism; and psychology holds up before the science as its only 
competent purpose the quest for the substantially decisive causes of 
all human affairs (p. 309).
T. B. V.