The Methodenstreit pitted inductive data gathering against deductive first-principles theory

Evidence

Schmoller argued that economists should devote the majority of their attention to the accumulation of vast sets of data, from which they would eventually use induction to arrive at their analysis. Menger did not deny the benefi ts of historical information or inductive reasoning, but he believed that economic theory emerged primarily through deductions from fi rst principles. And while Schmoller used his accumulated data to advocate for reform, Menger’s respect for the organic logic of the market led him to express suspicions of plans to bring about rapid or dramatic social change. — Angus Burgin, The Great Persuasion, 60

Categorization

• DEFINE: Defines the Methodenstreit: the methodological dispute pairing Schmoller’s inductivist data-accumulation with Menger’s deductive theory-from-first-principles, with political consequences attached to each.
• XREF: Frames the recurring tension between empirical/historical economics and formalist deduction that persists in the discipline today. — connects to: Free-market economists were publicly branded as a priori deductivists since the Methodenstreit. — Angus Burgin, The Great Persuasion: Reinventing Free…, 408; Good theory explains data but cannot remain at data’s level — Mark Fisher (edited by Darren Ambrose), K-Punk: The Collected and Unpublished…, 2456; The Austrian school’s deductive method crystallized in the Methodenstreit against German historicism — Angus Burgin, The Great Persuasion: Reinventing Free…, 60

Broader Connections

• Free-market economists were publicly branded as a priori deductivists since the Methodenstreit. #expands (0.95) — Angus Burgin, The Great Persuasion, 408