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.
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 classical and neoclassical 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:
[T]he 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."
John Stuart Mill, Auguste Comte, and Herbert Spencer appear among the influences on the English historical economists. The second half of Queen Victoria's reign saw the triumph of evolutionary concepts in the sciences (geology, biology, and sociology) and a transition from a "coal and iron" based manufacturingeconomy 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.
The Austrian School is a heterodox school of economic thought that is based on methodological individualism—the concept that social phenomena result exclusively from the motivations and actions of individuals.
Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are driven by the supply and demand model. According to this line of thought, the value of a good or service is determined through a hypothetical maximization of utility by income-constrained individuals and of profits by firms facing production costs and employing available information and factors of production. This approach has often been justified by appealing to rational choice theory, a theory that has come under considerable question in recent years.
Economic history is the academic study of economies or economic events of the past. Research is conducted using a combination of historical methods, statistical methods and the application of economic theory to historical situations and institutions. The field can encompass a wide variety of topics, including equality, finance, technology, labour, and business. It emphasizes historicizing the economy itself, analyzing it as a dynamic force and attempting to provide insights into the way it is structured and conceived.
Alfred Marshall was an English economist, who was one of the most influential economists of his time. His book, Principles of Economics (1890), was the dominant economic textbook in England for many years. It brought the ideas of supply and demand, marginal utility, and costs of production into a coherent whole. He is known as one of the founders of neoclassical economics.
The problem of induction is the philosophical question of what are the justifications, if any, for any growth of knowledge understood in the classic philosophical sense—knowledge that goes beyond a mere collection of observations—highlighting the apparent lack of justification in particular for:
The historical school of economics was an approach to academic economics and to public administration that emerged in the 19th century in Germany, and held sway there until well into the 20th century. The professors involved compiled massive economic histories of Germany and Europe. Numerous Americans were their students. The school was opposed by theoretical economists. Prominent leaders included Gustav von Schmoller (1838–1917), and Max Weber (1864–1920) in Germany, and Joseph Schumpeter (1883–1950) in Austria and the United States.
Classical economics or classical political economy is a school of thought in economics that flourished, primarily in Britain, in the late 18th and early-to-mid 19th century. Its main thinkers are held to be Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Robert Malthus, and John Stuart Mill. These economists produced a theory of market economies as largely self-regulating systems, governed by natural laws of production and exchange.
Gustav FriedrichSchmoller was the leader of the "younger" German historical school of economics.
Thomas Edward Cliffe Leslie was an Irish jurist and economist. He was professor of jurisprudence and political economy in Queen's College, Belfast, noted for challenging the Wages-Fund doctrine and for addressing contemporary agrarian policy questions. A critic of Ricardian orthodoxy, he said that it had sidelined consumer behaviour and demand. He developed the idea of consumer sovereignty, but insisted that the analysis of demand should be based on historical and comparative institutional work.
Inductive reasoning is a method of reasoning in which the premises are viewed as supplying some evidence, but not full assurance, of the truth of the conclusion. It is also described as a method where one's experiences and observations, including what is learned from others, are synthesized to come up with a general truth. Many dictionaries define inductive reasoning as the derivation of general principles from specific observations, although there are many inductive arguments that do not have that form.
James Edwin Thorold Rogers, known as Thorold Rogers, was an English economist, historian and Liberal politician who sat in the House of Commons from 1880 to 1886. He deployed historical and statistical methods to analyse some of the key economic and social questions in Victorian England. As an advocate of free trade and social justice he distinguished himself from some others within the English Historical School.
Adolph Wagner was a German economist and politician, a leading Kathedersozialist and public finance scholar and advocate of agrarianism. Wagner's law of increasing state activity is named after him.
The Royal Economic Society (RES) is a professional association that promotes the study of economic science in academia, government service, banking, industry, and public affairs. Originally established in 1890 as the British Economic Association, it was incorporated by royal charter on December 2, 1902. The Society is a charity registered with the U.K. Charity Commission under charity number 231508.
The welfare definition of economics is an attempt by Alfred Marshall, a pioneer of neoclassical economics, to redefine his field of study. This definition expands the field of economic science to a larger study of humanity. Specifically, Marshall's view is that economics studies all the actions that people take in order to achieve economic welfare. In the words of Marshall, "man earns money to get material welfare." Others since Marshall have described his remark as the "welfare definition" of economics. This definition enlarged the scope of economic science by emphasizing the study of wealth and humanity together, rather than wealth alone. In his widely read textbook, Principles of Economics, published in 1890, Marshall defines economics as follows:
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Mainstream economics is the body of knowledge, theories, and models of economics, as taught by universities worldwide, that are generally accepted by economists as a basis for discussion. Also known as orthodox economics, it can be contrasted to heterodox economics, which encompasses various schools or approaches that are only accepted by a minority of economists.
Herbert Joseph Davenport was an American economist and critic of the Austrian School, educator and author.
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The neoclassical synthesis (NCS), neoclassical–Keynesian synthesis, or just neo-Keynesianism was a post-World War II academic movement and paradigm in economics that worked towards reconciling the macroeconomic thought of John Maynard Keynes with neoclassical economics. Being Keynesian in the short run and neoclassical in the long run, neoclassical synthesis allowed the economy to adjust via fiscal and monetary policies in the short run whilst predicting that equilibrium in the long run will be reached without state intervention. The synthesis, formulated by a group of economists, dominated economics in the post-war period and formed the mainstream of macroeconomic thought in the 1950s, 1960s and 1970s.
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The Land Tenure Reform Association (LTRA) was a British pressure group for land reform, founded by John Stuart Mill in 1868. The Association opposed primogeniture, and sought legal changes on entails. Its programme fell short of the nationalisation of land demanded by the contemporary Land and Labour League.