Karl Schlesinger: Ueber die theoretische Nationalökonomie und ihre Methoden als Hilfsmittel pragmatischer Wirtschaftshistorik (1917)

Karl Schlesinger’s methodological article argues that causal economic history requires the concepts and deductive procedures of theoretical economics. Its trajectory runs from a criticism of wartime price explanation through a defence of empirically grounded deduction to a programme of reciprocal cooperation between history and theory. Description and practical familiarity may explain simple events, but complex movements of prices, wages, interest, and capital require more systematic causal analysis.

Schlesinger selects wartime economic analysis because it supplies an immediately recognizable testing ground:

Vor allem wollte ich eine Arbeit wählen, die ein aktuelles Thema, das jedem geläufig ist, behandelt; als ein Kreis solcher Themen bot sich die Kriegswirtschaft dar.

English translation: Above all I wished to choose a work treating a topical subject with which everyone is familiar; the war economy offered itself as one such circle of subjects.

His central example is Eulenburg’s account of German meat prices, in which higher fodder costs apparently explain both falling cattle prices and rising pork prices. This divergence poses a methodological problem rather than establishing an error by itself:

Auf den ersten Blick scheint es, als ob eine solche Zwiespältigkeit in den Wirkungen der gleichen Ursache unmöglich, eine der beiden Erklärungen unbedingt falsch und ihr „weil" mit einem „trotzdem" zu ersetzen wäre.

English translation: At first glance it seems as though such a dividedness in the effects of the same cause were impossible, as though one of the two explanations must necessarily be false and its "because" would have to be replaced by a "nevertheless."

The task is to identify the accompanying conditions and intervening processes that could make both explanations valid. Under free competition, production costs influence prices through their effect on output; costs and quantities therefore cannot simply be listed as independent determinants. Demand also matters. The account under scrutiny includes a distinct use for urban pork supplies:

Dazu kam der weitere Umstand, daß das Schweinefleisch in den Städten zu Dauerware verarbeitet werden sollte.

English translation: To this was added the further circumstance that the pork was to be processed into preserved goods in the cities.

Demand for preserved provisions becomes an essential part of reconstructing the price movement. Timing offers another possible explanation: expensive fodder may initially encourage slaughter and depress prices, while subsequent depletion of livestock reverses the movement. Apparently contradictory observations can thus record different phases of one process.

For Schlesinger, causal ordering is substantive, not a matter of stylistic presentation. Different arrangements of the same factors imply different outcomes when particular conditions change. He identifies recurrent weaknesses in untheorized explanation: neglected conditions, faulty causal ordering, and insufficient qualitative and quantitative economy of thought. Qualitative economy connects unfamiliar processes with familiar ones, especially individual economic decisions; quantitative economy reduces the number of explanatory patterns required. Reconstructing aggregate movements through producers’ and consumers’ conduct serves both purposes.

The article then revisits the Methodenstreit, defending deduction without giving it a metaphysical foundation. Schlesinger distinguishes deduction proper from “extended deduction.” A syllogism cannot establish the truth of its premises, but extended deduction combines empirically established regularities to produce conclusions not available from direct observation alone. Observed relationships between costs and output, together with relationships between output and prices, can support a cost–price connection even when the complete sequence has not been observed together. Objections to unsupported syllogisms therefore do not invalidate deduction grounded in experience.

Direct induction from aggregate economic history encounters simultaneous changes in many variables, imperfectly measurable motives, and limited evidence. Schlesinger acknowledges the promise of H. L. Moore’s statistical methods while judging their contemporary reach restricted. Deduction from regularities of individual economic conduct helps distinguish competing explanations compatible with the same aggregate observations and reveals conditions left implicit in historical accounts. Its authority rests on empirical reliability, not logical form alone; uncertain data and limited quantitative precision still constrain its conclusions.

The concluding programme gives historians an active role in theoretical development. They cannot merely apply a finished body of laws: economics remains divided, mathematical formulations are not widely accessible, and theory incompletely incorporates state intervention, monopoly, friction, and adjustment over time. Historical inquiry must undertake particular deductions that can prepare more general laws of economic movement. It also trains judgment in applying abstract categories to mixed phenomena: an increase in bank deposits, for example, need not represent capital formation alone. Theory disciplines historical causal claims, while history exposes unresolved dynamic problems and develops the judgment needed for prediction and economic policy.