English historical school of economics
Encyclopedia
The English historical school of economics, although not nearly as famous as its German counterpart
, sought a return of inductive
methods in economics, following the triumph of the deductive approach of David Ricardo
in the early 19th century. The school considered itself the intellectual heirs of past figures who had emphasized empiricism
and induction, such as Francis Bacon
, and Adam Smith
. Included in this school are: William Whewell
, Richard Jones
, Thomas Edward Cliffe Leslie
, Walter Bagehot
, Thorold Rogers, Arnold Toynbee
, William Cunningham, and William Ashley.
and neo-classical
theorists. They recognized the need for careful statistical research. They rejected the hypothesis of "the profit maximizing individual" or the "calculus of pleasure and pain" as the only basis for economic analysis and policy. They believed that it was more reasonable to base analysis on the collective whole of altruistic individuals. Historical economists of the nineteenth century also rejected the view that economic policy prescriptions, however derived, would apply universally, without regard to place or time, as followers of the Ricardian
and Marshallian
schools did.
Alfred Marshall acknowledged the force of the Historical School's views in his 1890 synthesis:
, Auguste Comte
, and Herbert Spencer
appear among the influences on the English historical economists. The second half of Queen Victoria's
's reign saw the triumph of evolutionary concepts in the sciences: geology
, biology
and sociology
, and a transition from a "coal
and iron
" based manufacturing
economy to one based on communication
, urbanization
, finance
and empire
. The rise of the historical school of jurisprudence provided "allies in the struggle against the dominance of the abstract theory." Historical economists viewed classical
and neoclassical economics
as too formal and as a rationalization of free-trade policies in a colonial
and imperial
setting.
Historical school of economics
The Historical school of economics was an approach to academic economics and to public administration that emerged in 19th century in Germany, and held sway there until well into the 20th century....
, sought a return of inductive
Inductive reasoning
Inductive reasoning, also known as induction or inductive logic, is a kind of reasoning that constructs or evaluates propositions that are abstractions of observations. It is commonly construed as a form of reasoning that makes generalizations based on individual instances...
methods in economics, following the triumph of the deductive approach of David Ricardo
David Ricardo
David Ricardo was an English political economist, often credited with systematising economics, and was one of the most influential of the classical economists, along with Thomas Malthus, Adam Smith, and John Stuart Mill. He was also a member of Parliament, businessman, financier and speculator,...
in the early 19th century. The school considered itself the intellectual heirs of past figures who had emphasized empiricism
Empiricism
Empiricism is a theory of knowledge that asserts that knowledge comes only or primarily via sensory experience. One of several views of epistemology, the study of human knowledge, along with rationalism, idealism and historicism, empiricism emphasizes the role of experience and evidence,...
and induction, such as Francis Bacon
Francis Bacon
Francis Bacon, 1st Viscount St Albans, KC was an English philosopher, statesman, scientist, lawyer, jurist, author and pioneer of the scientific method. He served both as Attorney General and Lord Chancellor of England...
, and Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...
. Included in this school are: William Whewell
William Whewell
William Whewell was an English polymath, scientist, Anglican priest, philosopher, theologian, and historian of science. He was Master of Trinity College, Cambridge.-Life and career:Whewell was born in Lancaster...
, Richard Jones
Richard Jones (economist)
Richard Jones was an English economist who criticised the theoretical views of David Ricardo and T. R. Malthus on economic rent and population....
, Thomas Edward Cliffe Leslie
Thomas Edward Cliffe Leslie
Thomas Edward Cliffe Leslie , Irish economist. He was professor of jurisprudence and political economy in Queen's College, Belfast, noted for debunking the Wages-Fund doctrine and for addressing contemporary agrarian policy questions. A critic of Ricardian orthodoxy, he said that it had...
, Walter Bagehot
Walter Bagehot
Walter Bagehot was an English businessman, essayist, and journalist who wrote extensively about literature, government, and economic affairs.-Early years:...
, Thorold Rogers, Arnold Toynbee
Arnold Toynbee
Arnold Toynbee was a British economic historian also noted for his social commitment and desire to improve the living conditions of the working classes.-Biography:...
, William Cunningham, and William Ashley.
Concepts
The economists of the English historical school were in general agreement on several ideas. They pursued an inductive approach to economics rather than the deductive approach taken by classicalClassical economics
Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill....
and neo-classical
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
theorists. They recognized the need for careful statistical research. They rejected the hypothesis of "the profit maximizing individual" or the "calculus of pleasure and pain" as the only basis for economic analysis and policy. They believed that it was more reasonable to base analysis on the collective whole of altruistic individuals. Historical economists of the nineteenth century also rejected the view that economic policy prescriptions, however derived, would apply universally, without regard to place or time, as followers of the Ricardian
Ricardian
Ricardian may refer to:* A follower of Ricardian economics, namesake of economist David Ricardo * Ricardian , a supporter of the thesis that Richard III of England was a "good king"...
and Marshallian
Alfred Marshall
Alfred Marshall was an Englishman and one of the most influential economists of his time. His book, Principles of Economics , was the dominant economic textbook in England for many years...
schools did.
Alfred Marshall acknowledged the force of the Historical School's views in his 1890 synthesis:
… the explanation of the past and the prediction of the future are not different operations, but the same worked in opposite directions, the one from effect to cause, the other from cause to effect. As Schmoller well says, to obtain "a knowledge of individual causes" we need "induction; the final conclusion of which is indeed nothing but the inversion of the syllogism which is employed in deduction.... Induction and deduction rest on the same tendencies, the same beliefs, the same needs of our reason."
Influences
John Stuart MillJohn Stuart Mill
John Stuart Mill was a British philosopher, economist and civil servant. An influential contributor to social theory, political theory, and political economy, his conception of liberty justified the freedom of the individual in opposition to unlimited state control. He was a proponent of...
, Auguste Comte
Auguste Comte
Isidore Auguste Marie François Xavier Comte , better known as Auguste Comte , was a French philosopher, a founder of the discipline of sociology and of the doctrine of positivism...
, and Herbert Spencer
Herbert Spencer
Herbert Spencer was an English philosopher, biologist, sociologist, and prominent classical liberal political theorist of the Victorian era....
appear among the influences on the English historical economists. The second half of Queen Victoria's
Victoria of the United Kingdom
Victoria was the monarch of the United Kingdom of Great Britain and Ireland from 20 June 1837 until her death. From 1 May 1876, she used the additional title of Empress of India....
's reign saw the triumph of evolutionary concepts in the sciences: geology
Geology
Geology is the science comprising the study of solid Earth, the rocks of which it is composed, and the processes by which it evolves. Geology gives insight into the history of the Earth, as it provides the primary evidence for plate tectonics, the evolutionary history of life, and past climates...
, biology
Biology
Biology is a natural science concerned with the study of life and living organisms, including their structure, function, growth, origin, evolution, distribution, and taxonomy. Biology is a vast subject containing many subdivisions, topics, and disciplines...
and sociology
Sociology
Sociology is the study of society. It is a social science—a term with which it is sometimes synonymous—which uses various methods of empirical investigation and critical analysis to develop a body of knowledge about human social activity...
, and a transition from a "coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
and iron
Iron
Iron is a chemical element with the symbol Fe and atomic number 26. It is a metal in the first transition series. It is the most common element forming the planet Earth as a whole, forming much of Earth's outer and inner core. It is the fourth most common element in the Earth's crust...
" based manufacturing
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
economy to one based on communication
Communication
Communication is the activity of conveying meaningful information. Communication requires a sender, a message, and an intended recipient, although the receiver need not be present or aware of the sender's intent to communicate at the time of communication; thus communication can occur across vast...
, urbanization
Urbanization
Urbanization, urbanisation or urban drift is the physical growth of urban areas as a result of global change. The United Nations projected that half of the world's population would live in urban areas at the end of 2008....
, finance
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
and empire
Empire
The term empire derives from the Latin imperium . Politically, an empire is a geographically extensive group of states and peoples united and ruled either by a monarch or an oligarchy....
. The rise of the historical school of jurisprudence provided "allies in the struggle against the dominance of the abstract theory." Historical economists viewed classical
Classical economics
Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill....
and neoclassical economics
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
as too formal and as a rationalization of free-trade policies in a colonial
Colonialism
Colonialism is the establishment, maintenance, acquisition and expansion of colonies in one territory by people from another territory. It is a process whereby the metropole claims sovereignty over the colony and the social structure, government, and economics of the colony are changed by...
and imperial
Empire
The term empire derives from the Latin imperium . Politically, an empire is a geographically extensive group of states and peoples united and ruled either by a monarch or an oligarchy....
setting.
Literature
- Ashley, William J. 1897. "The Tory Origin of Free Trade Policy," Quarterly Journal of Economics, July 1897. McMaster, on line.
- Ashton, T. S. 1948. The Industrial Revolution. Oxford, Oxford University Press.
- Cliffe Leslie, T. E. 1870. "The Political Economy of Adam Smith." Fortnightly Review (London). 14:549-563. On line.
- Goldman, Lawrence. 1989. "Entrepreneurs in Business History", The Business History Review, Vol. 63, No. 1, (Spring, 1989), pp. 223–225.
- Alfred Marshall. 1890. “The scope and method of economics.” Appendix C § 3. Principles of Economics,; 8th ed., Macmillan, (1920) Library of Economics and Liberty, on line.
- Geoffrey Martin Hodgson, "Alfred Marshall and the British Methodendiskurs", How Economics Forgot History: The Problem of Historical Specificity in the Social Sciences, pp. 95–112. Routledge (2001) ISBN 0415257166
- Spiegel, Henry William. 1991. The Growth of Economic Thought. Durham & London: Duke University Press. ISBN 0822309734
- Rogers, Thorold. 1880. "Editor's Preface" to Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 2 vols. (1869); revised edition (1880), pp. xxxiv et seq; on line at Osmania University, Digital Library of India, Internet Archive.