ABSTRACT
This chapter presents a number of possible explanations for the demise of the German Historical School of Economics (GHSE) after being the leading school of economic thought. It begins by highlighting the Battle of Methods (Methodenstreit) and its damaging effects on the reputation of the GHSE. Even though it concluded without a decisive victor, the official end of this methodological debate marked the beginning of the separation of political economy from historical ethical economics. This chapter then discusses the significant roles of WWI and the rise of Nazism in the downfall of the GHSE. It also points out that Americans started to gain international recognition as leaders in the discipline of economics at the same time that the influence of the GHSE was waning. Eventually, after neoclassical and neoliberal economics became the leading school of economic thought, its theorists essentially turned their discipline into an ahistorical and value-free science, while also intensifying its mathematization and formalization. By eliminating many of the fundamental features of the GHSE, they transformed economics into a one-dimensional discipline that ignores its own historical development.
