Overcoming Historicism

Eucken, Walter Article Overcoming Historicism Journal of Contextual Economics – Schmollers Jahrbuch Provided in Cooperation with: Duncker & Humblot, Berlin Suggested Citation: Eucken, Walter (2018) : Overcoming Historicism, Journal of Contextual Economics – Schmollers Jahrbuch, ISSN 2568-762X, Duncker & Humblot, Berlin, Vol. 138, Iss. 3-4, pp. 347-369, https://doi.org/10.3790/schm.138.3-4.347 This Version is available at: https://hdl.handle.net/10419/292537 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Overcoming Historicism* By Walter Eucken** Table of Contents I. Why Is Overcoming Historicism Necessary? | 1. On the Origin and Nature of Historicism | 2. Its Influence on the Sciences | 3. Criticism II. Resistance: Misunderstandings, Errors and Contrasts | 1. Misunderstandings | 2. Errors | 3. Contrasts. I. Why Is Overcoming Historicism Necessary? In the course of the late 18 th and early 19 th centuries, the intellectual life of Europe underwent a great, far-reaching transformation: The discovery of the historical world and the beginning of its systematic exploration. It is not as if the earlier centuries and above all the Enlightenment had overlooked the individual phenomena in the life of the peoples. I But it was precisely the Enlightenment that tended to underestimate these differences and peculiarities of cultures, peoples, and historical eras, asserting instead the fact that people, at all times and everywhere, had common traits as rational beings. So it appeared sensible to make generalizing judgments about history. The exploration of a “natural,”good condition of humankind was more important to the Enlightenment than the individualizing portrayal of humans, states, and nations. Already in the course of the Enlightenment, however, a new historical consciousness began to emerge. Think of Voltaire’sSpirit of Nations or Hume’sHistory of England or Gibbon’s great work on the Decline and Fall of the Roman Empire. Above all, however, it was Germany that turned its attention to the individualization of historical life, a decisive departure from the Enlightenment by seeking to profoundly understand individual personalities, cultures, peoples, and states in their respective fates: Herder, Goethe, Niebuhr, Wilhelm von Humboldt, the Brothers Grimm, and Ranke are some of the names which show the inner Journal of Contextual Economics 138 (2018), 347 –370 Duncker & Humblot, Berlin Journal of Contextual Economics 138 (2018) 3 –4 *Translated by Mark McAdam, Stefan Kolev, and Erwin Dekker. 1938. “Die Überwindung des Historismus.”Schmollers Jahrbuch für Gesetzgebung, Verwaltung und Volkswirtschaft im Deutschen Reiche 62 (II): 191–214. ** Born on January 17, 1891, deceased on March 20, 1950. Professor at the University of Tübingen (1925–1927) and University of Freiburg (1927–1950). OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 strength with which the turn to history took place in Germany. “What contributed to this turn was above all a thirst for more reality, for a broader basis of existence, for more vision II and more fullness of life, and also for more connections to the diversity of the great, manifold interrelatedness”(Rudolf Eucken). It was indeed “discoveries”that sprang from this new attitude: The discovery of the immense power of the irrational in history and the discovery of the changing diversity of historical life. This not only broadened man’s horizons, III but also acknowledged the individual more clearly as a drop in the great historical life stream of his people. “Every nation has its center of bliss within itself, like every sphere its center of gravity”(Herder). This awakening of the historical sense has affected and transformed all humanities, from linguistics to law and political economy. However, the movement did not remain philosophicalscientific, but –by various means, and above all through Romanticism –deeply influenced the political and cultural thinking of various classes, of German and many European as well as non-European peoples. All this is known. However, too little attention has been paid to the fact that the new relationship to history underwent a transformation in the course of the 19 th century that gave it a completely different character. For the creators of the new picture of history, historical life was in its own way individually shaped at every time and every place, but all that was regarded as individual was only the expression of a divine power. With the secularization of the 19 th century, this conviction faded and gradually disappeared. Thus the historically individual was regarded as something distinct, no longer as part of a supertemporal existence. Furthermore: At the beginning of the 19 th century, the belief in uniform human reason was still vivid and succeeded in finding valid truths precisely because it was part of the reason that reigns over the universe. All knowledge thus had the firm foundation of reason. This conviction was lost: If all historical life is individually distinct and depends on special natural and social conditions, then the observer himself must only be able to ascertain one –not more – historically dependent feature. The worldview grounded in the conception of historical development IV led to the belief in the historical change of reason and its categories. The observer, it is now thought, is carried away by the stream of historical life, like the events in the past and present that he perceives. As a consequence: All values of religion, morality, and culture become subjected to relativism. And so, too, truth. In radical contrast not only to the Enlightenment, but also to the founders of the historical worldview, V the idea of a unified truth is denied. Now one believes that each era has its type of people and each type of people its worldview, its “truths.”Truth, it is alleged, is always a function of the historically given conditions of existence: Historicism is thus formed, whose essence consists of the fundamental historicization of all our knowledge, thought, and judgment. This transition from the “discovery of historical reality”to “historicism”gradually took place under the pervasive influence of Hegel’s thought. An exam348 Walter Eucken Journal of Contextual Economics 138 (2018) 3 –4 OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 ple: Ranke is still impacted by the conviction that the historian, by penetrating and presenting the facts, must seek objective truths in order to know how it actually was, and that he thus gains an inkling of the divine order. Droysen would not have denied that science is ultimately about the truth. But he sets aside this thought –as his recently published lectures on “history” VI show – and emphasizes the right of political and religious partisanship so strongly that he almost relativizes his own point of view. Dilthey abandons the old foundations completely. “Life is primary and always present, the abstractions of knowledge are secondary and only refer to life.”Since this foundational power of life is constantly changing, timeless categories do not exist for him. Reason, too, is historicized, truth relativized, and he recognizes only one absolute variable: The changeable life. The fact that the transition to historicism did not take place in a single leap, but rather occurred gradually step by step, has led many to overlook the deep divide that separates the creators of the historical worldview from their successors. As a consequence, they are considered by the same name. A decisively important fact of intellectual history is hereby blurred. Even the correct understanding of today’s intellectual situation is only possible if a very sharp dividing line is drawn between the two. The discoverers of the historical worldview were, like all discoverers, shaped by great optimism; VII historicism is quickly and necessarily seized by skepticism. VIII Within historicism lies a different principle of life and thought that requires a special designation. There is an unambiguous and exact criterion for deciding whether individual thinkers belong to the older movement or to historicism: It is their relationship to the idea of truth. As soon as it –i.e. truth –is relativized, the transition to historicism is completed. This also results in an utterly different relationship to science. The discoverers of the historical world, holding to the old idea of science, assumed that science had the task of piercing the clouds of passion, IX ignorance, and prejudice that dominate everyday life, in order to truly recognize the destinies of peoples and individuals. Modern historicism is quite different, even the opposite: According to it, scientific research has as its main duty the expression of the state of mind of its circle of life, X and it does not in the least purport to assume the task of distancing itself from it and to seek some objective “truths.”For it, –i.e. modern historicism –every scientific “true”knowledge is the respective feature of an epoch, a culture, a class, a human species or even an individual human being.1 Overcoming Historicism 349 Journal of Contextual Economics 138 (2018) 3 –4 1Friedrich Meinecke has described the emergence of the historical-individual worldview in a recently published work that culminates in and concludes with a depiction of Goethe’s conception of history (Die Entstehung des Historismus, 1936). As expected, Meinecke offers deep insights in this book. But the work suffers from the unfortunate use of the term “historicism.”Had Meinecke not used the term to describe an intellectual movement that is far removed from contemporary historicism, and had he rendered the gap we are talking about more visible, the book would have contributed much more to the illumination of the intellectual situation today. OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 The end of the 19 th century and the beginning of the 20 th brought the complete victory of historicism. Since the last third of the 19 th century it has advanced on a broad front. It is like different formations of an army XI marching in the same direction. “What does the history of ideas prove other than that intellectual production transforms itself with material production?”young Marx already said. So-called scientific “truths”only expressed positions in class struggle –either bourgeois or proletarian. Marx and his students combined historicism and naturalism, and according to Otto Bauer’s formulation, science has the task of ordering experiences in a way that “corresponds most perfectly to the inclinations of a concrete social state of a certain class.”As vast as the distance between Marx and Dilthey or Nietzsche may be, they worked together for the prevailing of the historicist-relativistic attitude: The idea of development, the belief in life, and irrationalism united. Dilthey has also had a lasting effect on the thinking of German political economists. Nietzsche saw the imminent danger, but –as is often the case –he did much to increase it. With him historicism is elevated to pure subjectivism. “Truth is the kind of error without which a certain kind of living being could not endure. The value for life is ultimately decisive.”And, quite logically: “That which causes me to perish is not true for me.”Nietzsche’s students made additions to the master, reframed his thoughts and brought them into circulation: Spengler and Klages, Jaspers and Heidegger, and many others. When we hear from them again and again and in ever new formulations that the idea depends on existence and on life, and that therefore also all scientific knowledge is based on the respective existence of man, that it is related to the “here and now”and applies to concrete situations, then the same theme becomes more prominent to us which had already been put forth decades ago. We hear it –transposed –also in completely different realms of intellectual life: There is Comte with his often underestimated influence, Mach and with him a large part of today’s natural science research, which decisively denies to seek objective truths and which sees its task in describing the facts as briefly as possible. Then there is psychologism, which wanted to show that the supposedly true insights of man depend on the mental processes in the individual subject. Furthermore, the sociology of knowledge, which wants to find in communitization XII the conditions which form the respective knowledge and the respective truths of human beings, whereby the community is then understood biologically or politically or economically. It could be shown that most sciences underwent a historicist upheaval in the course of the 19 th century and at the beginning of the 20 th . For example, jurisprudence, where the idea of law was relativized, or political economy, which covered a long distance from Roscher to the present incursion of existential philosophy. 350 Walter Eucken Journal of Contextual Economics 138 (2018) 3 –4 An overview of the history of the term “historicism”and a compilation of some other literature can be found in Karl Heussi (Die Krisis des Historismus, 1932). OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 Our age is just as much an age of historicism as part of the 17 th and the 18 th century was an age of Enlightenment. And just as in the time of the Enlightenment men of very different intellectual influences were present and had varying degrees of impact, so it is also today. There are many varieties of historicism, just as there were many varieties of the Enlightenment. Skeptical writers and relativistic scholars seem to have little in common. But all these differences and contrasts should not make us ignore the fact that the attitude of historicism has become the dominant mindset of today, just as the Enlightenment left an imprint on its time. Later generations will see this better than we do, because then the insignificant shades will recede. It has been said that the predominant form of thought at the turn of the century was historicist. Rightly so. But one should not neglect to add that historicism continues its triumphal march to this day. 2. How Does Historicism Affect the Daily Business of the Sciences? There were and are many researchers who fundamentally affirm historicism, but who do not yet express it in their own research activities. The older scientific idea continued to provide impulses to the daily work of the sciences, even after it had already been abandoned in the general discussion. XIII Gradually, however, the effects that must result from historicism are becoming increasingly apparent and can be clearly recognized. If in the first centuries of the modern times up to the end of the classical German epoch, the inner attitude of science was determined by the fact that it should lead people through the opaque maze of passions and opinions of the day closer to knowledge of the truth, then one was well aware that this scientific truth remained a goal which one could never fully reach, but which one could approximate. This gave each science a fixed point of reference and a constant tension. XIV All scientific works were thus given a certainty, and it was based on the conviction that the works of God in nature and in the history of mankind could be recognized ever more clearly. It thus gained a special dignity and moral strength and a firm and important position in the lives of the peoples. It served not only true knowledge, but it also showed the way to true being. Historicism believed and believes –by making science dependent on life and its changeability –to create an even more lifelike and thus even greater science. XV But its result has been to create the opposite. With its relativization of the idea of truth, it destroyed the basis of science without offering a new one. The task which, in its opinion, falls to science, namely to express the aspects of the respective contemporary contexts of life, is itself not viable. XVI And those who see reason only as a function of changing historical life can have only little confidence in the production of knowledge through science. Furthermore, if science is regarded as a companion of life, XVII the main concern of the scientist must be to follow the flow of life, to adapt to the current situation, and to reOvercoming Historicism 351 Journal of Contextual Economics 138 (2018) 3 –4 OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 place “unmodern”questions and solutions with “contemporary”ones. Now science loses its grounding in itself. Political economy is particularly rattled hereby, finding itself –like no other science –in a difficult position in which it has to assert itself in a constant struggle against the views of powerful economic interests which are certainly situationally determined. XVIII Wherein does it now find stability? What is the point of science if it does not directly serve technical purposes? A skeptical mood towards science is now asserting itself even in the camp of scientists. Just consider Max Weber’s famous lecture on Science as a Vocation. For Max Weber, the old convictions of the meaning of science are “illusions.”What remains –as he notes –is the sole task of science operating for arbitrary purposes formulated by other powers. That is all. Especially the relationship of science to history becomes uncertain, as the development of history as a discipline reveals. The creators of modern historical consciousness approached history with fundamental questions. Thus all history amassed its meaning. But if the only thing that really lasts in history is the changeability of man, as historicism believes, then it would make no sense to seek answers in the past to fundamental questions that move man today. The phrase has been coined that man recognizes himself in history. A true statement. However, if man were to transform continuously throughout history, such a recognition of the self in history would be impossible. Why, then, at all history, especially since the findings of today are already outdated and obsolete tomorrow with the further development of historical life processes? XIX There seems to be no way out here, and the usual flight into the description of details, which has become characteristic of historicism in historical science and in other sciences, does not help either. In political economy, due to the historicist mistrust of ratio, the focus was on the presentation of individual facts which was supposed to provide a firm basis. This opinion was also expressed in Schmoller’s (1897) famous inaugural address as rector in Berlin on “Changing Theories and Fixed Truths”[see this volume, the editors]. Thus, a spotty way of thinking XX disseminated in German political economy in particular. Fundamental questions and theoretical research appeared doctrinaire. It was often forgotten that the description of individual facts does not yet constitute science, which is only initiated by addressing problems and which has to uncover relationships in reality. “Gervinus often repeats the view,”Ranke said in a speech in 1871, “that science must intervene in life. Very true, but to have an impact, above all, it must be science; for it is impossible to take one’s point of view from life and transfer it to science; then life affects science, not vice versa.”With this, Ranke predicted what became reality under the rule of historicism: Science lost its formative power. XXI Ranke advocated a scientific idea that establishes a firm hold in the respective historical moment and thus provides a point from which science can have an effect on life. 352 Walter Eucken Journal of Contextual Economics 138 (2018) 3 –4 OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 If, however, the life stream of history were the only absolute –as historicism implies –then science, which feels supported by this life stream as much as all other proceedings, can no longer possess any effective force. XXII It resembles a piece of wood that floats in the river and is unable to determine the course of the river. The cult of the factual is spreading. It offers its age nothing that extends beyond a particular moment in time. This also calls into question the external validity of science. It is merely one step from relativism to fatalism, which is often –but not always –taken. Once this step has been taken, science consequently refrains from influencing historical events at all. The only thing left for science is to forecast what will and what must come about. And so we see that in the age of historicism, many political economists are endeavoring to draw up laws of economic development, and from them forecasts, about the end or the advancement of the current economic order. Depending on one’s personality, either a belief in progress or a belief in doom emerges. But whatever the details may be, historicist science loses the power to form man and to recreate reality. XXIII 3. Any critical examination of historicism is doomed to failure from the outset if the older movement that led to the exploration of the historical world in its individual distinctiveness is mixed up with historicism. There cannot and must not be a return to the Enlightenment’s conception of history. The individualized consideration of cultures, states, peoples, and personalities has truly freed the image of history from its paralysis. Only now did the full understanding of the power of vital forces XXIV unfold. Constructions about history and countries were displaced by the view of the diversity of life. XXV Through it, science has gained a much greater closeness to life. We Germans in particular must not deny this great achievement of the German spirit. Neither can this discovery of historical individuality be reversed any more than the discovery of America could be. A completely different question, however, is how we have to deal with the way of thinking that was first created in the 19 th century and which is called historicism. It is a great task to criticize such a universally accepted view held by important thinkers and present among different segments of society. To challenge this perspective in its totality is the philosopher’s task. For all values –religion, law, morality, science –are questioned by historicism. Most philosophers of the present, however –apart from a few very important exceptions2–live entirely under the spell of historicism and have no distance at Overcoming Historicism 353 Journal of Contextual Economics 138 (2018) 3 –4 2On fundamental criticism and on overcoming historicism above all, see: Rudolf Eucken. “Philosophie der Geschichte.”In Kultur der Gegenwart, 256; Rudolf Eucken. 1925. Der Kampf um einen geistigen Lebensinhalt. 5th ed., especially 144 f.; Rudolf Eucken. 1920. Geistige Strömungen der Gegenwart. 6th ed., 262 f.; Edmund Husserl. 1928. Logische Untersuchungen. 4th ed.; Edmund Husserl. 1936. Die Krisis der europäischen Wissenschaften und die transzendentale Phänomenologie. Vol. 1. OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 all from it. For this reason, the sciences, which encounter historicism day by day, cannot avoid to critically scrutinize it; although they can only formulate criticism derived from their own work and thus cannot approach it as deeply and as broadly as is required by an examination of the overall view of historicism. Particularly critical is the following: First: The core historicist principle of the relativity and temporal contingency of all knowledge contains in itself an insoluble contradiction. Although it denies all binding and lasting truths, it believes at the same time that it can pronounce its central, relativistic thesis as binding and lasting truth. In this, historicism contradicts itself. Marx claims of his materialistic-technological conception of history from which its relativism results that it is absolutely true. If he were consistent, he would have to admit that this conception of history, too, together with its relativism, would only present itself as one aspect of its temporally contingent class position. But of course he does not draw this conclusion because it would devalue his view of history. Or Nietzsche: “The instinct of utility to conclude as we do,”he once writes, “is in our bodies, we are nearly this instinct …But what naiveté to draw from it a proof that we thus possess a ‘truth in itself.’” With this relativistic thesis Nietzsche wants to pronounce a “truth in itself.”He is doing exactly what he is mocking at the same time. To Dilthey, Spengler, Mach, and others, the same applies: However their relativistic opinion is formulated in detail, each of them claims absolute validity for it. With self-confidence, today’s existential philosophers proclaim their opinion of the conditionality of knowledge on existence. XXVI Whence do they take their self-confidence? To proclaim such sentences as true implies denying their content at the same time. By absolutizing the creative power of history and life, XXVII historicism invokes an unconditionality and believes that it has found an absolutely valid truth. But since it claims that there can be no absolutely valid truths, its attitude contains a deadly inner dilemma. Either it really renounces the idea of objective truth, then it must also renounce assigning objective validity to its central view, whereby its central tenet is relinquished. Or it actually believes in the objective truth of its central historical-relativistic thesis, in which case it is destroyed by believing in an objective truth; so it is also relinquished. There is no third option. This criticism is not new, one can already find it with Plato and many other Greek philosophers. But it seems to have been widely forgotten. Second: Our knowledge of intellectual history has been greatly enriched by the fact that in the last century the special conditions were elaborated under 354 Walter Eucken Journal of Contextual Economics 138 (2018) 3 –4 The widely known but overrated works of Ernst Troeltsch (for example, Der Historismus und seine Probleme, 1922; Der Historismus und seine Überwindung, 1924) are themselves testimonials of historicism, but also contain critical remarks. OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 form on code of trade and industry. From that point on, Schmoller viewed attention to fundamental questions as doctrinaire, he sought to avoid large-scale decisions and only took a stand on individual points. Under his leadership, most German political economists lost the ability to see individual economic policy issues as part of the overall economic constitution. At the same time, they lost their ability to work theoretically and thus to understand economic reality in its contexts. The abundance of undisturbed individual descriptions was no substitute. The performance and influence of political economy thus had to decline. The decades during which the Historical School prevailed in Germany and the current situation of German political economy certainly confirm this criticism. We do not criticize Schmoller for obscuring the image of a well-known scholar of the past, but because Schmoller’s figure continues to have an effect today and contemporary work engages him repeatedly. Finally, a few words about Marx: We are alleged to have cited Marx of all people as a key witness, says Laum, “that the ‘fatalism’which inhibits action and paralyzes decisiveness has grown from historical political economy.”And that is why he is trying to prove that Marx was not a historian. This effort is also in vain and is based on a misunderstanding. Because we know that Marx can neither be attributed to the Historical School nor was he a genuinely specialized historian, XLVI and of course we have never claimed anything of the kind. But Marx was an historicist. And one of the most effective ones. Through him the thought was popularized that the consciousness of man, his thought, and thus also science, change with societal existence; XLVII with him it was fully developed and found wide circulation. The same applies to the idea that societal existence develops naturally and cannot be shaped by the mind or by politics. It is precisely for this reason that we must engage him critically. So much for the one big misunderstanding of our critic. Everyday experience and theoretical analysis demonstrate that all households and businesses in a modern economy are intimately linked. This whole therefore requires a uniform and transparent order. The treatment of all individual questions of economic policy and commercial law must therefore rest on the idea of an economic constitution.“The economic constitution is to be understood as an overall political decision pertaining to the order of national economic life.” XLVIII It is the task of the state to create a functioning economic constitution. But ordering by no means entails central administration. On the contrary, autonomous decision-making by individuals XLIX who are active in the economy today cannot be dispensed with. The state, however, by virtue of clear principles of order which are to come into effect in competition law, antitrust law, corporate law, etc., ensuring that the autonomous activity of the individual L is not carried out either in conflict with other forces or that different, countervailing forces co-exist in parallel; and the state must ensure that this activity takes place within the framework of a true economic order for the benefit of the public at large. The task of political economy and jurisprudence is to Overcoming Historicism 361 Journal of Contextual Economics 138 (2018) 3 –4 OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 prepare this economic constitution on the basis of concrete economic and legal policy questions, and in general to support the triumph of thinking in economic constitutions. Herewith the direction of our efforts is briefly denoted. Laum’s account of our aspirations is interesting in that it contains exactly the opposite of what we really want. So he commits a further serious misunderstanding. For him, we are “theorists of liberalistic orientation” LI who find all interventions on the part of the state into the nomological mechanism of the economy LII disturbing and who thereby carry out an absolutization of the economy. It is not only that the debate suffers from such a misunderstanding – in parts, debate becomes impossible; moreover, it is the serious and significant issue at hand which suffers from such a misunderstanding. How are such fundamental and simultaneously harmful misunderstandings even possible? That is a question one cannot bypass. A phenomenon is repeated here that can also be observed elsewhere in the history of science when new endeavors appear. Despite clear wording and content, both are misunderstood. What causes such misunderstandings? It seems to me that it is because some political economists still cling to old confrontations and therefore do not see what is at stake today. Only in this way could Laum –contrary to everything we have said –come to the conclusion that we as so-called “theorists”wanted to initiate a struggle against historians, or that we wanted to continue the old Methodenstreit and he could not see that the struggle against “historicism”that is necessary today is something completely different. It was only because of his attachment to old juxtapositions that he was able to misconstrue our position about the laws of the economic constitution. LIII He is correct in deriving from our work that we consider performance-based competition LIV to be an indispensable principle of order in the modern economy. Yet he concludes wrongly that we reject state intervention in an allegedly nomological mechanism, thereby absolutizing the economy. As a result, he fails to consider the essence of our idea of the laws of the economic constitution. LV The old contrast is still present in his thought: On the one hand, proponents of laissez-faire and competition who see the economy as a statefree sphere; on the other hand, proponents of state intervention and central administration of the economy. He and many others are so ingrained in these categories that they do not even notice how we want to overcome this false opposition. LVI Because this is incorrect. Laissez-faire and competition are not identical in the least, as a glance at history reveals. And a state-constituted order of the economy LVII is necessary and demanded by us in particular. One tool of this state-constituted order, however, is performance-based competition, the enforcement of which is one of the state’s many tasks in asserting the economic constitution. LVIII 2. Serious scientific errors intensify the misunderstandings about what is at stake and which continue to burden the discussion. And there is one fact that is 362 Walter Eucken Journal of Contextual Economics 138 (2018) 3 –4 OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 very much in the foreground, which unfortunately is not only encountered when reading Laum’s essay, and which is therefore of more general interest: It is the attitude towards theoretical research of political economy. For the critic, theories are merely doctrines or dogmas. According to this view, each individual theorist elevated his own theory to a dogma and so there emerged countless theories, from theories of value to wage theories and business cycle theories, all of which are blatantly different from each other. Moreover, the theories or dogmas are alleged to be out of touch with everyday life, LIX and in their fragmentation the economic practitioner could purportedly not do anything with them, especially since the theoretical constructions have increasingly undergone exaggerated abstraction in the course of their development. Unfortunately there is also again talk of “the theoretical dogma of the necessity of egoism’s dictate.” LX A certain bitterness –this is also characteristic –emanates from Laum’s sentences about theoretical political economy. The reader wonders in vain why the critic, when rejecting and disliking theoretical research in such a way, ultimately adheres to the necessity of theoretical research. In contrast, it should be noted that only those should judge a science who really understand its problems, its ways of thinking, and its achievements. In order to cope with the problems posed by economic reality, we pursue theory. This is because the realization of the interdependencies of everyday economic life cannot be achieved by direct contemplation alone, but rather by theoretical investigation. The theory is therefore derived from the analysis of concrete facts, and it is not dogma or doctrine. In the course of its development, it has developed a method of thought which every political economist should master and about which Schumpeter aptly remarks: “But for this, that manner of thought must be taught, lest a reliable tradition and a professional opinion could ever be formed which embodies what we have in each case and which provides the basis for the operation; from there we can move out to new deeds without unnecessary loss of strength without always having to start from Adam and Eve, muddling through outdated controversies, and securing ourselves against primitive misunderstandings.”Who really approaches this from the viewpoint of the problems sees immediately that economic theory by no means represents chaos. To employ Schumpeter’s words once more: “There are no schools, only good and bad work. And none of us may do anything to obscure the fundamental fact, inherent to contemporary theory which relies on authority; the fact cannot be stressed often enough –especially to the beginner –that the basic construction of all authors worth taking seriously is one and the same.”Similar things have recently been stated repeatedly that the doctrine of the disintegration of theory must now finally be buried. The main movement of modern theoretical research is apparently hardly known to the critic. Does he not know of the fact that generations of theorists in the German Kulturkreis and in many other Kulturländer have been working for decades to improve the apparatus of theory, to make it more suitable in grasping the connections and Overcoming Historicism 363 Journal of Contextual Economics 138 (2018) 3 –4 OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 interdependencies of reality? Modern research into the business cycle, modern monetary theory, or the theory of specific market forms –to name just a few examples –have made it possible to gain completely different insights into reality from those which existed at the turn of the century. This has provided us with a new and more accurate depiction of the overall interdependences of the economy. LXI Although Laum suggests towards the end of his treatise that theory is undergoing a significant inner transformation, why does he then quarrel against it with such outdated tools which were already obsolete when they were first employed in practice? Become familiar with economic theory, its problems, its ways of thinking and its successes! Judge thereafter! Then everyone will recognize what the allegedly theoretical dogma of the necessity of egoism’s dictate is all about. It is certainly the case that theoretical thinking is always in danger of degenerating, of commencing from arbitrary definitions and not from the facts of the real economy. This leads to unrealistic speculation, as has often been the case in the history of political economy, for example in Spann’s recent work. Proper theoretical research has nothing to do with this kind of speculation and cannot be judged by it. But even actual theory is not “completed.”On the contrary. Theoretical research must permeate historical reality much more strongly than it has to date. New ways must be sought in order to bring theory closer to history and thus to make it more effective, and thereby also to drive out relativism. But scientific work in our field suffers not only from wrestling with the problems and their intricacies, but also with the ideologies of interested parties; in addition, it also has to struggle with unfounded accusations from professional circles which are repeated just as often and persistently as they have been refuted. 3. Misunderstandings can be cleared up, errors can be cleared up. But even then there remains a contradiction whose presence must not be obscured. It consists in the fact that with Laum a man of typically historicist scientific attitude speaks out. For Laum, as for many contemporary German scientists, every intellectual creation is not only dependent on its origin in time, space, and its völkische idiosyncrasy, but it is also bound accordingly in its validity. “List wrote as a German for Germans. He was also fully aware of the limited scope of his system.” LXII He adds: “Each theory is unique in its origin. As it originates from a certain zeitgeist and lebensraum to which it remains bound, so its scope is also limited.”It is true that this relativism is somewhat alleviated. However: “In the final analysis, the theory remains relative.”Consequently, the conclusion is drawn that science merely takes on a role of subservience. Yet the inference that he nevertheless regards science as a formative power does not follow. We have already shown why this historicist attitude is contradictory and unmotivated, and why every science thereby loses its solid foundation. But now 364 Walter Eucken Journal of Contextual Economics 138 (2018) 3 –4 OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 Laum still seeks a peculiar justification for his relativism, which is meant to apply especially to political economy. A few additional words on that matter. In order to recognize the connections and interdependencies of economic reality, we must devise and apply theories. For example: In order to explain how the balance of payments between gold currency countries or between countries with a free currency comes about, we carry out analyses for both cases and thus find theoretical propositions which highlight the connections we are seeking to establish. Or: In order to explain price formation and economic coordination LXIII in the monetary economy, we conceptualize various market forms on the basis of the precise observation of reality and then examine how price formation and production take place in these market forms. For example, in the event of incomplete competition LXIV on both the supply and demand sides as well as in cases of bilateral monopoly. Or we investigate the ideal-typical case of the centrally administered economy in which the central office determines everything and wherein neither work nor consumer choice are freely practiced. Theoretical sentences therefore contain generally valid statements about necessary connections and interdependencies within the possible constellations of conditions. LXV They are mental tools, the use of which makes it possible to recognize concrete connections and interdependencies. Now Laum believes that this ideal-typical, tool-like conception of theory, which he attributes to Max Weber, “inevitably involves its relativization.”He adds: “There can be many tools, all of which can be of importance. For the personal talents of the researcher and the factual necessity of the research direction in question are multifariously different. And so all those who want to use the tools (besides the scientists, of course, also the practitioners in the economy) will soon choose this, soon that, depending on their personal or material needs.” It is not essential here that the tool-like character of theoretical propositions was known in theoretical research long before Max Weber, which he knew himself and stated clearly. It is essential, however, that this tool-like view of theory does not in the least lead to its relativization, as Laum believes. Each theoretical proposition becomes “topical” LXVI if the condition constellation in question is approximately given at a certain time and place. Demonstrated by our examples: If we are to study the balance of payments between Germany and England between 1875 and 1914, we must apply the theory of the balance of payments of two gold currency countries. This choice is required by the problem. A personal need cannot be considered here. In order to explain the balance of payments of both countries in the period between 1919 and 1923 – i.e. after the destruction of the gold standard – LXVII another tool must be used, namely the theory of free currency. LXVIII Here, too, the matter at hand is decisive. If one investigates a market in which two incomplete monopolists LXIX face each other, such as the wage formation of locksmiths in the German toolmaking industry in 1926, which took place in a dispute between the employers’ Overcoming Historicism 365 Journal of Contextual Economics 138 (2018) 3 –4 OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 association and the trade union, then one requires the tool of the theory of bilateral incomplete monopoly. This selection, too, lacks any hint of arbitrariness. The topicality of theoretical propositions is constantly changing. If the gold currency does not exist, then the theory of the balance of payments between gold currency countries is simply not topical. But it remains true and it immediately becomes topical again when gold currencies come into force again somewhere. Conversely, the theoretical propositions about bilateral monopoly or about the totally centrally administered economy only gain in topicality, not in truth content, if such concrete cases appear in history and are to be investigated. As I have stated elsewhere: “Theoretical propositions are only time-dependent in their topicality, not time-dependent in their truth content.” The correctly elaborated theory is thus not “relative.”On the contrary, it is an indispensable tool to overcome the relativism of everyday experience and to identify the true connections and interdependencies of economic reality. In the field of political economy, historicism –in all its forms –can only then be eliminated if historical experience and theoretical-rational analysis are combined. How this is to be conducted in detail cannot be discussed here.5(It would be shown that the intensification of the view of individual facts in everyday economic life leads to this connection.) However, it must be noted that it is not sufficient to have theory and history side by side, which Laum and many others juxtapose as equal and equivalent methods. Such cooperation, to which we are called by Laum, would be unproductive. In this respect, too, we must learn from the history of our science and avoid past mistakes. It is not like Laum and some others think that theory is only allowed to pursue knowledge by logical deduction. If theory proceeds in this manner, it deduces from arbitrarily postulated definitions, speculates, and becomes unrealistic. Rather, theoretical work must begin with the analysis of concrete –i.e. historical –facts, then returning in its application of general-theoretical results to specific questions and to the individual historical fact and its manifold interrelationships. The pure historian, however, cannot understand the structure of everyday economic life; he cannot grasp more than individual economic facts and ultimately fails if he does not begin an inquiry of our problems with theoretical analysis from the outset. To advance theory and history side by side thus implies allowing the basic problem of our science –that is the question of the connections and interdependencies of everyday economic life of the past and the present –to fall to the ground unsolved. We have to work on historical and theoretical thought complementing each other step by step in political economy research. Both must be united in every single political economist. 366 Walter Eucken Journal of Contextual Economics 138 (2018) 3 –4 5See my work: Walter Eucken. 1934. “Was leistet die nationalökonomische Theorie?”In Kapitaltheoretische Untersuchungen; and my short piece: Walter Eucken. 1938. Nationalökonomie –wozu? OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 Overcoming Historicism 367 Journal of Contextual Economics 138 (2018) 3 –4 Annotations I “Völker”. II “Anschauung”. III “Gesichtskreis”. IV “Die entwicklungsgeschichtliche Weltansicht”. V “den Gründern historischer Weltansicht”. VI “Historik”. VII “Positivität”. VIII “Skepsis”. IX “die Trübungen der Leidenschaften”. X “die Seelenverfassung ihres Lebenskreises”. XI “sehr verschieden geartete Kolonnen eines Heeres”. XII “Vergemeinschaftung”. XIII “in der grundsätzlichen Reflexion”. XIV “einen festen Richtpunkt und eine dauernde Spannung”. XV “eine noch lebensnähere und damit noch größere Wissenschaft”. XVI “ist durchaus unselbständig”. XVII “als ein Trabant des Lebens”. XVIII “die wirklich seinsgebundenen Meinungen wirtschaftlicher Machtgruppen”. XIX “Entwicklung des geschichtlichen Lebensprozesses”. XX “punktuelles Denken”. XXI “gestaltende Macht”. XXII “wirkende Kraft”. XXIII “Kraft zur Bildung des Menschen und zur Neuschaffung der Wirklichkeit”. XXIV “das volle Verständnis für die Macht vitaler Kräfte”. XXV “durch Anschauung der Mannigfaltigkeit des Lebens”. XXVI “Meinung von der Daseinsbedingtheit aller Erkenntnis”. XXVII “Schöpfermacht der Geschichte und des Lebens”. XXVIII “die Spaltung der österreichischen und der reichsdeutschen Nationalökonomie”. XXIX “Aber diese Zeitbedingtheit der Fragestellungen und der Problembehandlung besagt nicht im mindesten, da die Gültigkeit der wissenschaftlichen Ergebnisse von den historischen Daseinsbedingungen abhängt”. XXX “daß Smiths Wirtschaftslehre von seiner Weltanschauung und seiner Umwelt abhängig gewesen sei”. XXXI “den Schlüssel zur Beurteilung ihres Wahrheitsgehaltes”. XXXII “Daseinsrelativität”. XXXIII “Nicht das Wie der Genese, sondern das Dass der sachlichen Inhalte und ihrer logischen Verknüpfungen entscheidet”. OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 368 Walter Eucken Journal of Contextual Economics 138 (2018) 3 –4 XXXIV “raumzeitliche Anschauungsform”. XXXV “Leistung des Erfinders und Organisators”. XXXVI “bloße ‘Richtigkeiten’”. XXXVII “Erfahrungswissenschaften”. XXXVIII “Anschauung der konkreten Wirklichkeit und Kraft des Denkens”. XXXIX “erweitert sie den Horizont des Menschen und wird zur Lebensmacht von bildender und gestaltender Kraft”. XL “gestaltend in die Wirklichkeit einzugreifen”. XLI “von der opportunistischen, ungrundsätzlichen Haltung der Gelehrten ergriffen wurden”. XLII “daß unsere Wissenschaften sich auf sich selbst besinnen”. XLIII “Der Historismus ist weit mehr, als eine wissenschaftliche Ansicht; er bezeichnet eine bestimmte wissenschaftliche Haltung”. XLIV “verwechselt Historismus und Geschichtsschreibung”. XLV “‘Wie aber steht es um die Historie’–so fragt Laum –‘der die Freiburger den ‘Relativismus’als wesenseigentümlich vindizierend’”? XLVI “der große Zug der grundsätzlichen Auseinandersetzung”. XLVII “daß Marx weder der historischen Schule zuzurechnen ist, noch auch eigentlicher Fachhistoriker war”. XLVIII “daß sich das Bewusstsein des Menschen, sein Denken und damit auch die Wissenschaft mit dem gesellschaftlichen Dasein ändern”. XLIX “Die Wirtschaftsverfassung ist als eine politische Gesamtentscheidung über die Ordnung des nationalen Wirtschaftslebens zu verstehen”. L “die selbstverantwortliche Entscheidung der Personen”. LI “die selbstverantwortliche Tätigkeit des Einzelnen”. LII “Theoretiker liberalistischer Prägung”. LIII “in den naturgesetzlichen Mechanismus des Wirtschaftsverlaufs”. LIV “unsere wirtschaftsverfassungsrechtliche Position verkennen”. LV “Leistungswettbewerb”. LVI “die Pointe unserer wirtschaftsverfassungsrechtlichen Idee”. LVII “wie wir diesen falschen Verlauf der Fronten überwinden wollen”. LVIII “eine staatliche Ordnung der Wirtschaft”. LIX “dessen Durchsetzung eine der vielen Aufgaben staatlicher Wirtschaftsverfassungspolitik darstellt”. LX “Im übrigen seien die Theorien oder Dogmen lebensfremd”. LXI “vom theoretischen Dogma von der Notwendigkeit der Alleinherrschaft des Egoismus”. LXII “ein neues und richtigeres Bild vom Gesamtzusammenhang der Wirtschaft”. LXIII “List hat als Deutscher für Deutsche geschrieben. Er ist sich der beschränkten Geltung seines Systems auch voll bewusst gewesen”. OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08 Overcoming Historicism 369 Journal of Contextual Economics 138 (2018) 3 –4 LXIV “Preisbildung und Wirtschaftslenkung”. LXV “Bei unvollständigem Wettbewerb”[Eucken’s notions of complete/incomplete competition are not identical with the neoclassical notions of perfect/imperfect competition, the editors]. LXVI “allgemeingültige Aussagen über notwendige Zusammenhänge im Rahmen möglicher Bedingungskonstellationen”. LXVII “aktuell”. LXVIII “nach Zerstörung der Goldwährung”. LXIX “die Theorie der freien Währung”. LXX “zwei unvollständige Monopolisten”. OPEN ACCESS | Licensed under | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/schm.138.3-4.347 | Generated on 2023-01-16 13:38:08