Fifteen years after the Global Financial Crisis: Recessions and Business Cycles in the History of Economic Thought

Intuitive understanding as a common method of Austrian and German economic schools

Chaplygina Irina, Lomonosov Moscow State University

The history of economic thought suggests that the Austrian school fundamentally opposes the German school, especially in their approach to studying economics. In our thesis, by referencing to the work especially of L.Mises and V.Sombart, we demonstrate that both schools approve of understanding as a core tool for economists because it only helps to reveal the meanings of observed economic processes. L. Mises argued that the source of knowledge is only an intuitive grasp of the essence of the fact. V. Sombart insisted that without knowing the spirit of the economic system, it is impossible to understand its laws. To explain this common feature, we examine the influence of some German intellectual movements (Romanticism, Historicism, Kantianism, neo-kantianism) on each school and trace the role of Germanic tradition as an intellectual basis for these authors. Finally, we argue that the famous Methodenstreit between Menger and Schmoller arises precisely because both schools belong to a similar intellectual tradition.

Area: Eshet Conference

Keywords: Austrian school, German school, method, intuitive understanding

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