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Methodenstreit was a controversy over the method and epistemological character of economics carried on in the late 1880s and early 1890s between the supporters of the Austrian School of Economics, led by Carl Menger, and the proponents of the (German) Historical School, led by Gustav von Schmoller. The German word Methodenstreit means a dispute over methods.The Historical School contended that economists could develop new and better social laws from the collection and study of statistics and historical materials, and distrusted theories not derived from historical experience.
The Austrian School by contrast believed that economics was the work of philosophical logic and could only ever be about developing rules from first principles - seeing human motives and social interaction as far too complex to be amenable to statistical analysis - and purporting their theories of human action to be universally valid.
The first move was when Schmoller wrote a highly critical review of Carl Menger's Principles of Economics.
Menger's reply was a pamphlet entitled The Errors of Historicism in the German Political Economy in 1884.
It would in due course include thinkers such as Lujo Brentano, Max Weber, and Werner Sombart for the Historical School, and Eugen von Böhm-Bawerk, Friedrich von WieserFriedrich von Wieser ( July 10, 1851 July 22, 1926) was an early member of the Austrian School of economics. Born in Vienna the son of a high official in the War Ministry, he first trained in sociology and law. He was the brother-in-law of another promine, and Ludwig von MisesLudwig von Mises ( September 29, 1881, Lwow October 10, 1973) was a notable economist and a major influence on the modern Libertarian movement. He was born in Austria-Hungary and subsequently taught at the University of Vienna in the years 1913 to 1934, w for the Austrian School.
The term "Austrian school of economics" came into existence as a result of the Methodenstreit, when Schmoller used it in an unfavourable review of one of Menger's later books and was intended to convey an impression of backwardness and obscurantism of HabsburgHabsburg (also spelled Hapsburg was one of the ruling houses of Europe: rulers of Austria (as dukes 1282 1453, archdukes 1453 1804, and emperors 1804 1918), kings of Bohemia 1526 1618 and 1621 1918, kings of Spain ( 1516 1700), and Holy Roman Emperors for Austria compared to the more modern PrussiansThe word Prussia ( German: Preussen (Preussen Polish: Prusy Lithuanian: Prusai Latin: Borussia has had various (often contradictory) meanings: The land of the Baltic Prussians (in what is now parts of southern Lithuania, the Kaliningrad exclave of Russia.
On an intellectual level the methodenstreit was a question of whether there could be a science, apart from history, which could explain the dynamics of human action.
Politically there were overtones of a conflict between the classical liberalismClassical liberalism is a political and economic philosophy, originally founded on the Enlightenment tradition, that tries to circumscribe the limits of political power and to define and support individual rights. A comprehensive discussion of classical l of the Austrian School and the welfare stateThere are three main interpretations of the idea of a welfare state # A welfare state is a type of government that assumes the primary responsibility for the individual and social welfare of its citizens. The welfare state refers to the provision of welfa advocated by the Historical School.
Economic history
