The Historical School ofJurisprudence and the German Historical School of Economics
Savigny’s work in legal science provided ‘a pattern for the parallel science of economics’ (Neff 1950, 356). More precisely, the integration of the features of the HSJ into political economy aimed to achieve the same result ‘as the method of Savigny and Eichhorn has attained in jurisprudence’ (Ashley 1894, 102).
In the 19th century, there was a belief among scholars that once the historical approach was ‘properly cultivated’ in economics, ‘it will never be quite abandoned’ (Ashley 1894, 104). In Germany, ‘the historical method’ was originally ‘passed’ on ‘from the lawyers’ to the economists in the works of Roscher, who studied jurisprudence and philology at the universities of Gottingen and Berlin between 1835 and 1839 (Ashley 1908, 7). He sought ‘to build a historical economics along the lines’ of the HSJ (Schumacker 1934, 373). In other words, the impact of the HSJ was very visible in ‘the case of Roscher, who took arguments from the jurists and attached importance to what he considered to be a close parallelism between the situations in the legal and the economic fields’ (Schumpeter 2006, fn8, 399). He basically inherited his views about the transformation of political economy into a historical science from Savigny. In fact, Roscher’s Outline for Lectures of Political Economy was accepted as an extension of the concepts of the HSJ to the discipline of economics, as he applied the historical method of the HSJ into political economy.In addition to Savigny, Roscher also relied on the works ofJustus Moser (1720—1794), whom he considered to be the founding father of the HSJ, as well as the greatest German national economist of the 18th century. Furthermore, Roscher’s views about the historical approach were also inf luenced, to some extent, by the works of Eichhorn, Goβchen, and Leopold Ranke (Wolowsky 1878, 30). He even dedicated his first book, Leben, Werk und Zeit- alter des Thukydides (1842), to Ranke.
Ultimately, Roscher’s importance to the development of the Historical School of Economics was not only attributed to his efforts in applying the ‘laws of economics’ to trade, ‘agriculture,’ and various other industries, but also on account of the fact that he derived the methods and purposes of this school of thought from those of the HSJ (Senn 2005, 76). Roscher and his followers basically took on ‘the name Historical School, in order to ally themselves with the great reformers’ in HSJ (Ely 1883, 233).Theorists of the GHSE adopted the historical method of the HSJ, which maintains that ‘every historical event was to be analyzed as to its particular features, especially its national aspects’ (Pribram 1983, 213). Similar to their counterparts that adhered to the HSJ, they were of the opinion that various aspects of the social and economic development of a nation were outcomes of the spirit of its people. That means economics is not an abstract science that is shaped purely by the reason and rational thinking of individuals. On the contrary, it is an historical science that is shaped by the common spirit of people. Therefore, by adopting the historical approach of the HSJ, the GHSE was moving away from an abstract individualistic approach and toward one that is collectivist. In fact, much like the HSJ, adherents of the GHSE were of the view that changes in the economic circumstances of a nation and its institutions were not outcomes of the arbitrary will of a person or a group of people. Instead, people, their community, and their particular historical development all played roles in shaping such changes.
Theorists of the GHSE used the historical method to discover evolutionary economic patterns and laws of development. With respect to the nature and advancement of laws in legal science, theorists of the GHSE and the HSJ were in agreement that economic laws were not universal; rather, they were particular laws that changed based on the specific characteristics of a society and its institutions, as well as the spirit of its people.
In other words, since these laws were derived from the particular characteristics of a society, they were not universally applicable everywhere, at any time, and under all circumstances; instead, they were accepted as relative and evolutionary laws. That means it was entirely possible for a law to be successfully adapted to one period in the historical development of a particular place and then turn out to be completely unfit for another period or location. In order to determine the appropriate laws and patterns of development for economic life, the GHSE supported using the comparative historical approach to identify differences and similarities in the development of various forms of societal organization, including tribes, empires, and nations. This is because they believed that historical studies made it possible for people to learn from their experiences and avoid making similar mistakes when designing present-day policies and reforms.The codification debate between Thibaut and Savigny led to accusations that the historical school was being ‘hostile to the liberal spirit of modern times’ (Wolowsky 1878, 33). However, the support that Roscher, Knies, and Hildebrand provided for the HSJ was ‘sufficient to remove this prejudice’ (ibid.). The fact that the works of members of the HSJ were ‘inspired by an enlightened love for progress, do not allow of such a misconstruction’ (ibid.). This is mainly because ‘the historical point of view does not consist in the worship of the past, any more than in the depreciation of the present... the historical method harmonizes wonderfully well with the wants of genuine progress’ (ibid.). Accordingly, adherents of the GHSE supported ‘the free and creative power of man, acting within the limit permitted to it by the degrees of intelligence reached, of the development of morals, and of individual liberty’ (ibid.).
The GHSE believed that the discipline of economics would be completely lost without the historical method. Notably, Roscher was convinced that the historical method was the best and most conclusive of methods, because it was concerned with time, space, and societal organization. In fact, it was his commitment to integrating the historical method of the HSJ into political economy that resulted in applied economics becoming an important aspect of the GHSE. Roscher’s efforts to implement the methods of the HSJ in economics culminated in him earning the title of ‘the true founder of the discipline of applied economics’ (Schumacker 1934, 373). Ultimately, theorists of the GHSE applied the historical method to political economy in a way that would ‘unfurl the noble banner borne by the most venerated masters of the science’ (Wolowsky 1878, 29).