The Historical School
The second half of the nineteenth century was a kind of crossroads for a variety of methodological positions. One controversy took place between classical thought and the German historical school, which applied the historical method to economic research.
Its members denied the universality of economic laws, rejected any theoretical approach to knowledge, and supported empirical analysis. At the level of economic policy they advocated an active role for the government. This doctrine became the dominant economic paradigm in many European countries before the spread of marginalism. In those years many American economists studied in European universities and became historicists, deeply influencing the birth of the American Institutionalist School. As will be seen below, some historicists, such as John Bates Clark and Richard T. Ely, played a role in the foundation of IO (Hovenkamp 1991). For a long time classical and pre-marginalist theories coexisted with historical studies based on historical and empirical analysis.