ABSTRACT
In 1883 the historical school was in a position of overwhelming influence in the universities of both Germany and Austria. It had also spread elsewhere in Europe. In that year, Carl Menger – with his major work on methodology know as the Untersuchungen – launched from Vienna a frontal attack on historicism (Menger, 1883, 1985). Menger (1985, p. 49) identified ‘that error which confuses theoretical economics with the history of economy’ and tried instead to establish a central place in economics for deductive and abstract theory. Unlike modern and misinformed critics, Menger did not depict the historical school as antitheoretical. Instead, he argued that their theoretical attempts were misconceived. Within a year of its publication, Gustav von Schmoller responded by publishing an unfavourable review of the Untersuchungen, and Menger (1884) counterattacked with a polemical book on ‘the errors of historicism’. The debate became both lively and acrimonious.1
