Eugen von Böhm-Bawerk · 1884
Eugen von Böhm-Bawerk’s 1884 review of Carl Menger’s 1883 treatise combines an exposition of its four books with a qualified defense of exact theory in economics. It presents methodological controversy as consequential for substantive research:
Methodische Untersuchungen, die von berufener Seite ausgehen, werden immer auf ein gewisses Interesse und Ansehen rechnen dürfen; theils schon wegen der Schwierigkeit ihres Stoffes, theils wegen der weitgreifenden Anwendbarkeit ihrer Resultate.
English translation: Methodological investigations which proceed from a competent quarter may always count upon a certain interest and regard; partly because of the difficulty of their subject matter, partly because of the far-reaching applicability of their results.
Böhm-Bawerk situates Menger’s intervention within dissatisfaction with earlier economics. Recognition that existing theory remained incomplete encouraged alternative research programs:
Unter dem Einfluss solcher Ideen führten sich zwei neue Forschungsmethoden in die politische Oekonomie ein, die wir kurz als die historische und die organische Methode bezeichnen können.
English translation: Under the influence of such ideas, two new methods of research introduced themselves into political economy, which we may briefly designate as the historical and the organic method.
Historical research enriched knowledge of economic development, but its elevation into an exclusive method threatened abstract explanation. Organic approaches promised a broader understanding of social relations while risking the substitution of analogies for causal analysis. Böhm-Bawerk presents Menger’s response as constructive and critical:
Zu diesem Ende unternimmt er es, einerseits die wahren Erkenntnissziele und Erkenntnisswege der theoretischen National-Oekonomie nachzuweisen, andererseits die methodischen Irrthümer der jetzt herrschenden Richtungen aufzudecken.
English translation: To this end he undertakes, on the one hand, to demonstrate the true cognitive goals and cognitive paths of theoretical political economy, and, on the other hand, to uncover the methodological errors of the currently prevailing schools.
The first book receives the closest attention. Menger distinguishes historical, theoretical, and practical economic sciences by their purposes, rather than merely by their objects. History investigates concrete phenomena and particular relationships; theory seeks recurrent types and general connections. Within theory, realistic-empirical inquiry examines phenomena in their actual complexity and establishes observed regularities, whereas exact inquiry isolates strictly typical elements and explains their combinations under specified conditions. The former cannot promise exceptionless laws; the latter gains precision by abstracting from complicating influences. Neither approach exhausts legitimate knowledge.
Böhm-Bawerk supports this defense of abstraction but identifies an unresolved problem. Exact laws cannot simply be refuted by comparison with a reality containing factors excluded from their premises. Nevertheless, reality must remain their ultimate test in some sense. Menger therefore needs to clarify how exact knowledge remains answerable to experience. This reservation qualifies the endorsement without abandoning the distinction between analytical isolation and comprehensive empirical description.
Two further qualifications establish Böhm-Bawerk’s independence. Separating economics from neighboring social sciences does not rule out their deliberate recombination: interdisciplinary synthesis can supply understanding that specialization leaves incomplete. Nor does the legitimate isolation of self-interest justify excluding altruistic conduct from exact economics. Provision for a family or assistance to the poor can be economically significant even when motivated by concern for others. Economics need not explain the psychological origin of such motives to investigate their effects, including effects on prices. Its explanatory scope cannot therefore be identified exclusively with egoism. Böhm-Bawerk nonetheless endorses Menger’s explanation of the national economy through the interactions of individual economies.
The remaining books extend this argument. Book II assigns historical development a legitimate but differentiated role: empirical theory must register temporal and local variation, while exact theory must address problems arising from changing institutions and practices. Historical illustrations and histories of doctrine cannot replace theoretical explanation.
Book III restricts organic analogies to an illustrative role. Institutions emerging without deliberate agreement or legislation still require causal explanation through individual actions. Menger’s discussions of money and settlements show how exact analysis can account for unintended social formations without treating society as a physiological organism.
Book IV examines the historical school’s genealogy, challenging both the novelty of its principles and its asserted continuity with historical jurisprudence. Böhm-Bawerk also praises the appendices and anticipates the treatise’s importance for methodological debate. His review combines advocacy with correction: exact theory deserves standing alongside empirical inquiry, but its defense must preserve accountability to reality, opportunities for interdisciplinary synthesis, and an economic analysis broad enough to include motives beyond self-interest.
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