ABSTRACT
We have recently argued that when focusing on very long-term longitudinal trends in economics, two ideal types of economic theory appear to have coexisted in parallel over an extended period of time (Reinert and Daastøl 2004). These ideal types can be seen as constituting two separate filiations1 – to use Schumpeter’s term – and they come into occasional methodological clashes. Werner Sombart (1928: 919) fittingly calls the first tradition activistic-idealistic, a tradition born with the Renaissance. The second type of economic theory he calls passivistic-materialistic, a tradition having its origins with Mandeville and Adam Smith and solidifying as the ‘a priori method’ with David Ricardo. The purpose of this chapter is to outline the characteristics of the two traditions – the tradition behind today’s mainstream and ‘The Other Canon’ – and to discuss the position of Austrian economics in this context.
