The double nature of economics and its history
Most important for historians of economic thought, the double nature of economics as a pure analytical science and as a more encompassing body of knowledge is the deeper reason for the specific and important role of the history of the subject as well as the history of the modern socio-economic process.
The main thrust of History (Schumpeter 1954a) can be summarized as follows: in a long process that exhibits various kinds of vicissitudes and detours, where all the above-sketched manifold influences and constraints play their role, economic thought eventually evolved towards a scientific body of economic analysis, with its specific models, methods and techniques. The latter are necessary conditions for a systematic treatment of the quantitative aspects of socioeconomic life. They moreover set the stage for the kind of cumulative progress and systematic improvement of economics which is a characteristic of modern science at large. It is of the utmost importance that all this is kept in mind. However, as already indicated, that story of progress in economics is not the whole story, and it is certainly not the main reason why JAS is important as a historian of economics even today. Given his overarching research agenda formulated and pursued from early on, the story of cumulative progress is hardly a plausible motive for investing so much energy towards the end of his career in what was to become his monumental, unfinished History. The perspective of a Whig story of cumulative progress could be a motive only for specialists and those who love the old work for its own sake, or those who are concerned with the provision of some kind of history-based identity for their discipline. For JAS, history widens the horizon in specific respects: it enhances the powers of judgement in the realm of competing new ideas, theories and models. It offers a unique opportunity to gain insights into the ingredients and the logic of discovery processes, as in their work scientists report their mental processes. Moreover, the subject matter of economics is a “unique historical process”, and the “filiation of ideas has met with more inhibitions in our field than it has in almost all others... results have been lost on the way or remained in abeyance for centuries. We shall meet with instances that are little short of appalling” (Schumpeter 1954a: 6).This suggests that a motive for studying history is a better understanding of the current development and the future perspectives of economics. This is specifically important in economics as a field in which a powerful apparatus of analysis was developed along the lines of core principles of modern science, even though the specific form of this development was, is and remains conditioned by a set of complex extra-scientific and extra-disciplinary forces and influences; forces and influences which are poorly understood when they are perceived only as distortions (1949a), as they are preparing the stage for various combinations of questions, concepts, models, and empirical approaches. Incidentally, the double nature of economics is also reflected in the definition of greatness quoted above, in so far as it invokes multiple revivals which are not plausible within the framework of Whig history of linear progress in economics.
Put in that way, it can be easily seen that, for Schumpeter, history of economics is not a hobby or a welcome opportunity for the display of erudition, but an integrative part of a comprehensive research programme with the goal of understanding the whole of the social process. It specifically refers to the modern process of rationalization at large, which he perceives not as a process of linear progress in which rationality and efficiency more and more rule all over the place, but as a process of change and vicissitudes. This process is conditioned by non-rational elements and eventually produces unintended outcomes. As he explains in Socialism (1942), those outcomes may subvert the institutional and cultural basis of the agents of change who were responsible for past episodes of the rationalizing process.
JAS’s habit of swiftly moving across a diverse landscape of different frameworks, levels and perspectives is challenging, and it poses problems in still another respect: there is hardly another economist or social theorist whose overall role in the development of twentieth-century economics is as puzzling to friends and foes. Specific discussions related to such “puzzles” include the question as to which extent this “enfant terrible” was an Austrian economist (Sturn 2014), or an unfinished precursor of evolutionary economics (Andersen 2009, 2011). “Although he was an Austrian by birth and training, he was not an ‘Austrian economist’”, writes Stolper (1968). This is true, but does not invalidate Erich Streissler’s observation (1983: 358) that “he took up so many ideas then current only in the Austrian economic tradition that any hypothetical historian of economic thought, not knowing Schumpeter to be an Austrian, could immediately trace him to this school”. Caldwell (2004) summarizes Schumpeter’s seemingly surprising turns as “Schumpeter’s multiple apostasies”. Apostasies presuppose orthodoxies. Perhaps the deepest of JAS’s conviction as a theorist is that innovative theorizing inevitably means transcending orthodoxies.
But how to prevent modern economics from becoming orthodox? In the light of this question, the coexistence of his late terminological shift emphasizing the character of scientific economics as a tool box and his re-affirmation of the importance of history (Schumpeter 1949b) can be taken as an acknowledgement of the problems of axiomatic “pure” economics which may tend to develop an aprioristic pretence of knowledge. An economist considering himself or herself “merely” a master of a tool box may be inclined to be interested in various other sources of knowledge relevant for the socio-economic domain. By contrast, if an economist believes him or herself to be in the possession of a deductive apparatus which allows him or her to derive results from axioms that are considered as aprioristically true, he or she may be less inclined to step out of the modelbased orthodoxy.
JAS had a price to pay for the tensions which characterized his uniqueness. As aptly expressed by Andersen (2011: 239), his work is in an important sense unfinished, or - to use a phrase coined by Streissler (1972: 441), referring to Carl Menger - he ended in doubt and not in positive theorems.
Richard Sturn
See also:
Eugen von Bohm-Bawerk (I); Evolutionary economics (III); German and Austrian schools (II); John Maynard Keynes (I); Public economics (III); Friedrich von Wieser (I).