1 Historicism

The first source of my political and historical indoctrination was the Gartenlaube, the periodical of provincial Germany. In 1888, the year of the three kaisers, it ran numerous illustrated features on the lives of the two who had died. Not seven years old at the time, I devoured these articles with great fervor.

The historical bias of this family publication presented itself to me later and more explicitly in the works of the kleindeutsch¹ historicists. As an Austrian, it was not difficult for me to identify strong political overtones in their writings. I soon began to see through their methods of analysis, which had been unflatteringly referred to as falsifications of history. Großdeutsch² historicists were no more honest or thorough in their work; they were merely less competent.

Upon graduation from high school, the problems of economic, legal, administrative, and social history attracted me more than did those of political history. I decided to study law rather than history, which had been my earlier plan. At the time the study of law at Austrian universities was arranged in such a way that three to four semesters of the total eight were dedicated to the history of law exclusively, with the remaining four to five being relegated to political economy and public law. The school of law provided students with more favorable options in the study of history than did the school of liberal arts. The political historians who taught in the latter were scholars of third and fourth rank. The only historicist of significance coming out of Austria at the time was Heinrich Friedjung, who was denied access to an academic career, as the emphasis in historical education at the University of Vienna lay in the study of paleography.

In 1900, historicism stood at the zenith of its success. The historical method was considered the sole scientific method of the science of human action. From the height of historical enlightenment, the historical political economist looked down upon the orthodox dogmatist with unspeakable disdain. Economic history was the fashionable science, and, in the German-speaking world, Schmoller was considered the master of political economy. Ambitious young men from around the world flocked to his seminar.

I was still in high school when I became aware of a contradiction in the position assumed by those in Schmoller’s circle. On the one hand they rejected the positivist demand for scientific law built on a society’s historical experience; on the other hand they were of the opinion that economic theory could be abstracted from a society’s economic experience. It was astonishing to me that this inconsistency was hardly noticed.

The relativism of the school, which degenerated into many of its adherents’ developing a blind adulation of the past and its institutions, also aroused my disapproval. Whereas some fanatics for progress had judged all that was old to be damnable and bad, these pseudohistorians rejected anything new in arduous preference for the old. At that time I had not yet come to comprehend the significance of liberalism, but the fact that it was an achievement not realized before the eighteenth century provided on its own no sufficient argument against it. I failed to understand attempts to justify tyranny, superstition, and intolerance through relativism and historicism. I considered attempts to uphold the sexual morality of the past as a model for the present a brazen falsification of history. But the most extreme excesses occurred in the areas of church and religious history, where both Catholics and Protestants tried to suppress everything they found to be disagreeable.

On at least one point, the honesty of Austrian legal historians’ work stood in refreshing contrast to the bias found in the efforts of the Prussian historians. In his five-hour lecture on Austrian history, which was required of all first semester law students, Professor Siegmund Adler dealt with Duke Rudolf the Founder, and the forgery of the Privilegium Majus, with a thoroughness that could withstand the sharpest criticism. It was not until decades later that Ernst Karl Winter found the courage to palliate this chapter of Austrian history by labeling the late duke a socialist whose socialism exceeded even that of Kaiser Friedrich Wilhelm I, the idol of German socialists.

It was not clear to me that an argument against private property could be derived from the fact that a piece of land had, in the past, been considered community property; nor could I understand that monogamy and family should be abolished because of promiscuity that had existed in the past. I saw nothing but nonsense in these trains of thought.

Likewise, I failed to understand the contrasting point of view, which, characteristically enough was held by those same people. According to this opinion, any development made over time was progress, a higher development, and therefore morally justified.

The honest relativism of genuinely inquisitive historicists had nothing in common with the false relativism of this school. Logically, however, it was not more firmly founded. According to its tenets, there was no distinction between expedient and inexpedient politics. Dealing in a realm of givens, it remains to the sage historicist not to judge, but to observe and to accept, in much the same way that a natural scientist relates to natural phenomena.

It does not take many words to highlight the fallacy in this point of view, which divides many economists even today. Making value judgments is not the calling and task of science. But it is one of the two tasks of science, and, according to some, the only task of science, to instruct us with regard to the suitability of means used in attaining certain ends. The natural scientist does not make value judgments, but informs his fellow man as to what means are available to him for the purpose of reaching particular goals. It is up to the sciences of human action to examine the appropriateness of the means and methods used in the attainment of the action’s objective, rather than to make judgments concerning the ultimate objective itself.

I discussed these matters frequently with Ludo Hartmann, and in later years with Max Weber and Alfred Frances Pribram. All three were so steeped in historicism that it was difficult for them to recognize that my position was correct. Fiery temperaments on the parts of Hartmann and Weber eventually won out over philosophical misgivings, thrusting them into lives of political action. Lacking in this urge toward action, Pribram remained faithful to his quietism and agnosticism. Of him one could say what Goethe said about the Sphinx:

Sitzen vor den Pyramiden

Zu der Völker Hochgericht,

Übershwemmungen, Krieg and Frieden

Und verziehen kein Gesicht.³

As for the kleindeutsch historicists, I found fault in their crude and materialistic position concerning power. In their view, power meant bayonets and cannons, and Realpolitik involved militarism. Anything else was called illusion, idealism, and utopianism. They were never able to comprehend Hume’s famous teaching, namely, that all government is founded on public opinion.

In this respect, their great adversary, Heinrich Friedjung, was of the same thinking. A few months before the outbreak of the First World War, he told me,

I do not understand what is said of the mood of the Russian masses, and the revolutionary ideologies that inspire the Russian intelligentsia. It is all so vague and unclear. Rather, it is the will of leading statesman and the plans they hammer out that are the deciding factors.

This was no different from the opinion of Johann Schober, the petty constable who later became Austria’s chancellor. Toward the end of 1915 he reported to his superiors that he did not believe that the situation in Russia would result in revolution. “Who would lead this revolution? Certainly not that Mr. Trotsky, who takes care to sit in the Café Central and read newspapers.”

In 1900, there was only one man on the faculty in Vienna who belonged to the German Historical School. Karl Grünberg had worked with Knapp in Strasbourg, and then published a book that described the agrarian policies of the Austrian government in the Sudetenland. This book slavishly followed in form, presentation, and method Knapp’s book on the old provinces of Prussia. It was neither economic history, nor was it administrative history. It was an excerpt from official documents, an account of policies as described in these documents. It could have been easily produced by any able government official.

It was Grünberg’s ambition to create a center for economic history in Vienna, much as Knapp had done in Strasbourg. At the time, Knapp’s students were researching peasant liberation in specific German provinces. For his own students, Grünberg was planning an account of peasant liberation in different regions of Austria. He arranged for me to work on the history of the landlord-peasant relationship in Galicia. I tried as best I could to free myself of too narrow an association with Knapp’s system. I succeeded only in part, and my resulting 1902 publication was more a history of government measures than an economic history. A second historical work, which I published independently of Grünberg in 1905, was not much better; under its title, Zur Geschichte der österreichischen Fabrikgesetzgebung,⁴ it described older Austrian laws regarding limitation of child labor in industry.

While dedicating a great deal of my time to these publications, I made plans for more extensive research. These would be social and economic histories, and not excerpts from official documents. These plans were never realized. After having completed my university studies, I was never again at leisure to spend time working in archives and libraries.

It was because of my constant and burning interest in history that I was able to recognize the inadequacy of German historicism early on. This historicism did not deal with scientific problems; it dealt with the glorification and justification of Prussian policies and the Prussian authoritative government. German universities were state institutions, and their instructors were civil servants. Professors were aware of their status as servants of the Prussian king. If they used their nominal independence to criticize government measures, it had no meaning beyond that of the grumbling commonly associated with any such body of officials.

This university “enterprise” of economic political science was off-putting to young people of intelligence and genuine curiosity. In contrast, it held a strong attraction to halfwits. It was not difficult to walk into an archive and paste together a historical thesis from a stack of official reports. Before long, most university positions were held by men who could be classified as intellectually limited, were their abilities to be measured against those of men in independent professions. One must bear this in mind when wanting to understand how men such as Werner Sombart acquired such great reputations. Not being entirely stupid and uneducated had its merits.

University instruction in an a priori science presents special problems if we are to adhere to the principle that an instructor ought to be a researcher as well. In every field there are very few who can make actual contributions to its intellectual treasury. In the a posteriori sciences, however, pioneers and followers work together with the same tools, and there exists no outward distinction between them. In his laboratory, every professor of chemistry can compare himself with the great pioneer. Although his contribution may be modest, his research methods are the same.

Things are different in philosophy, in economics, and in a certain sense, in mathematics. If academic positions were contingent upon independent contributions to economics, barely a dozen professors could be found throughout the world. If positions are awarded only to those researchers who had made original contributions, care must be taken to take into account research done in related areas. In effect, this makes the appointment to academic positions dependent upon scholarly activity in other areas: the history of ideas and doctrine, history of economics, and especially the economic history of the most recent past, which is often erroneously labeled economic problems of the present.

The fiction perpetrated in scholarly circles that all professors are equal does not permit professors of economics to be divided into two classes: those who work independently as theorists, and those whose work consists of economic history and description. The inferiority complex of these “empiricists” has led to a campaign against theory.

It was in Germany (and later in other countries) that this campaign first took on a nationalist tone. In the first half of the nineteenth century, professors in Germany were at best mere transmitters of English economic thought. Only a few, among them Hermann and Mangoldt, earned places in the history of political economy. The older historical school maintained a nationalistic resentment toward western thought, and Nazi arguments rejecting western ideas were thrown into the mix by the younger historical school. University professors delighted in replacing bad English teachings with singularly beatific German ones. John Stuart Mill was the last Englishman with whom the Germans were somewhat familiar. He was the “epigone” of the evil classicists, and was given credit for having anticipated some of the great ideas of German economics.

The German Historical School did not produce a single thought. It did not write a single page in the history of science. For eighty years it eagerly propagandized for National Socialism, but the ideas for this propaganda were adopted, not created. The school’s historical investigations were methodically deficient, and its publications were heavy handed at best. But the worst aspects of the school were its untruthfulness and conscious dishonesty. Writers of her partisan literature were always looking “up” for inspiration from government ministers, and professors did their best, despite their limitations, to serve their masters: first the Hohenzollern family; then the Marxists; and finally, Hitler. Werner Sombart lent shape to their ideas most pointedly upon designating Hitler as the bearer of divine mandate, since “all authority is from God.”

The greatest achievement of historicism, the historical theory of the Southwest German School of philosophy, was the work of other men. Max Weber, the school’s consummate scholar, spent a lifetime fighting against such German pseudohistoricism.