Carl Menger, Ueber Aufgabe und Methode der politischen Oekonomie (1887)

Menger’s review of Eugen von Philippovich’s published inaugural address (1886) makes a methodological intervention through an appreciative account of its argument. He credits the German historical school with opposing misguided speculation and insisting on realism, but argues that its reforms have overshot their legitimate aim: they threaten the very possibility of economic theory and obscure the distinct tasks of economic inquiry. Philippovich’s achievement is to defend theory while recognizing the importance of historical research.

The review moves from the authority to establish economic methodology, through the classification of economic sciences, to the legitimacy and limits of exact theory. Its opening question is whether methodology belongs to economists themselves or should be supplied by philosophy as a universal theory of knowledge. Philippovich argues that, since philosophy has not independently produced an adequate universal methodology, individual sciences must clarify their own procedures and thereby contribute to the general undertaking. Menger endorses this disciplinary initiative but adds a reciprocal obligation:

Allerdings — und dies möchte Referent den Ausführungen des Freiburger Gelehrten hinzufügen — ist es ebenswohl unsere Pflicht, die auf dem Gebiete der allgemeinen Erkenntnisstheorie bereits gewonnenen Einsichten zu unserem geistigen Besitzthume zu machen.

English translation: To be sure — and this the reviewer would add to the arguments of the Freiburg scholar — it is just as much our duty to make the insights already gained in the field of general epistemology our own intellectual possession.

Methodological autonomy thus does not license ignorance of epistemology. Menger attributes avoidable errors in historical economics to its neglect of existing methodological knowledge; he praises Philippovich for building on that knowledge rather than beginning afresh.

The conceptual centre is a threefold distinction among historical, theoretical, and practical economic sciences. History and statistics investigate economic development and conditions within determinate temporal and geographical boundaries. Theory studies the general nature and laws of economic phenomena. Practical disciplines formulate principles for purposive economic action, encompassing private household management, economic policy, and public finance. These are differentiated by their aims of knowledge, not ranked as mutually exclusive approaches.

Er charakterisiert genau die verschiedenen Erkenntnissziele, welche die drei obigen Gruppen von Wirthschaftswissenschaften verfolgen.

English translation: He characterizes precisely the various cognitive aims which the above three groups of economic sciences pursue.

For Menger, this differentiation restores a system of tasks blurred by the historical school. It also establishes theory’s independent justification: historical description cannot replace inquiry into general relations, any more than theoretical explanation alone supplies practical maxims. He regards Philippovich’s concise defence of this division as exceptionally clear and persuasive.

The next question is whether exact theoretical inquiry is appropriate to human affairs. Menger stresses Philippovich’s argument that exact laws require abstraction and isolation in the social sciences just as in the natural sciences. Criticism that demands an unabstracted reproduction of economic reality from exact theory therefore misunderstands what exact science can provide. This defence, however, is paired with a rejection of exaggerated theoretical ambitions:

Andererseits werden vom Verfasser die von einzelnen Theoretikern weit über das Maass des Erreichbaren der theoretischen Nationalökonomie zugeschriebenen scientificischen Functionen mit der nämlichen Entschiedenheit zurückgewiesen, diese letzteren vielmehr auf das richtige Maass zurückgeführt.

English translation: On the other hand, the author rejects with the same decisiveness the scientific functions which individual theorists have ascribed to theoretical economics far beyond the measure of the attainable, and reduces these latter rather to their proper measure.

The review’s governing position is consequently broader than a defence of abstraction against history. Menger commends a conception that gives historical, theoretical, empirical, and abstract inquiry their appropriate places without allowing any one direction to exhaust economics. Its relevance to the methodological controversy lies in this conjunction of differentiation and breadth: theory must be protected from impossible demands, but also confined to what it can actually accomplish. The closing praise identifies the reform Menger hopes the address will advance:

Die kleine Schrift wird durch die Eleganz ihrer Diction, die Schärfe ihrer Logik und die Unbefangenheit der Kritik wesentlich dazu beitragen, einer universelleren Auffassung der Aufgaben unserer Wissenschaft den Boden zu ebnen.

English translation: The little work will, by the elegance of its diction, the acuteness of its logic, and the impartiality of its criticism, contribute essentially to preparing the ground for a more universal conception of the tasks of our science.