chapter  1
6 Pages


It is the problem of economic theory to exhaust scientifically the content of everyday economic experience and to interpret it. All persons are familiar with a narrow, practical sphere. From these limited views theory deduces a broader interpretation which enables us

to understand the meanings of the economy even in those wide social relations that far transcend the experience of the individual. In doing this it cannot be expected that theory should follow the sequence of ideas in the individual consciousness beyond the point at which the promptings to action are explained. It should, on the contrary, avoid any more penetrating psychological analysis. Our theory finds in the consciousness of every economically active human being a wealth of experiences which are common property of all. These are experiences which every scientist shares with the layman, without resort to special scientific instruments. They are experiences concerning facts of the outer world, as for example, the presence of goods of various sorts; experiences concerning the source and current of the economic activity of mankind. Can we conceive of economic theory refusing to draw from a fountain-head so inexhaustible in its riches, so dependable in its purity! I t will be the natural method of its investigations, to follow the guidance offered by our recollection of the course and significance of the economy which is practically familiar to all of us. No theorist will be able to ignore his practical consciousness of economic relations. Were he even to regard with suspicion the results to which it leads, he could never silence the psychical consonances of his economic experiences. He can never obliterate his intimate knowledge of himself and his economic surroundings. There never has been a theoretical school of economics which, ignoring these psychical consonances, has accomplished its aim unaided by them. The "psychological" school is distinguishable from its earlier confreres solely by the fact that it has transformed a naive procedure into conscious method. Let this method be abandoned today, and but little time will elapse ere logical precision will demand that we elevate once again this psychical aid from an unacknowledged cooperator to a carefully planned method.