Nietzsche, Schumpeter and Menger - The Methodenstreit with the German Historical School

This is probably the biggest "offer" we have made to our loyal friends so far: Nothing less than a lengthy excerpt from the Nietzschebuch - originally meant to be a chapter of Krisis and now a book in its own right (close to completion) The book is called Umwertung: Niet!sche"s "Transvaluation of All #alues" $n%oy reading it& It is of the utmost importance to realize that what Nietzsche opposes is not the instrumental approach to society and community: Nietzsche understands that not only is this instrumentalism possible, but it is also valid as a tool or strategy of power! This may sound surprising in a philosopher who spared no effort to lampoon British Empiricism in science whilst at the same time constructing his entire philosophical Entwurf on the reality of happenings, of events and appearances and of becoming against all rationalisms something that would normally have brought him closer to the Empiricists and even to the Machian Menger and the Austrian School. But what Nietzsche does not admit of is the validity of the values scientific (truth), moral (good or evil) and ethical (justice) that the historicists and the empiricists and Machians alike seek to ascribe to the reality of the istorein. Far from being or representing a value, history is an amethodon hyle the formless matter of Herodotus and Thucydides that exemplifies, e-veniences the nature or physis of the individuals involved. There is no virtue (arete) or even providence (Herodotean pro-noia) or spirit (Geist) in history, but there is fate which is certainly not Tyche or fortuna (chance!), but rather nothing more than, most important for Nietzsche as we shall evince dramatically in Part Two of this work, the manifestation of the Will to Power as the Rationalisierung of life and the world!

Three kinds of rationalities are possible, therefore. One is the empiricist rationality of scientific research, another is the teleological, idealist rationality introduced by Hegel, and finally we have the Rationalisierung that Nietzsche expounds as the objectification of the Wille zur Macht. How difficult and confusing it may be to separate the three is perfectly illustrated by the most philosophical economic theoretician of the neoclassical and Austrian schools, Joseph Schumpeter, who combined a solid Machian background in the Vienna of Karl Renner with a Nietzschean vision of reality filtered through Max Weber. Schumpeter begins Chapter Two of his Theorie with this sweeping and suggestive summation:

The social process which rationalizes our life and thought has led us away from the metaphysical treatment of social development and taught us to see the possibility of an empirical treatment; but it has done its work so imperfectly that we must be careful in dealing with the phenomenon itself, still more with the concept with which we comprehend it, and most of all with the word by which we designate the concept and whose associations may lead us astray in all manner of directions. Closely connected with the metaphysical preconception. is every search for a meaning of history. The same is true of the postulate that a nation, a civilization, or even the whole of mankind must show some kind of uniform unilinear development, as even such a matter-of-fact mind as Roscher assumed (p.57)

The footnote at rationalizes was expanded for the English translation and reads as follows:

This is used in Max Webers sense. As the reader will see, rational and empirical here mean, if not identical, yet cognate, things. They are equally different from, and opposed to, metaphysical, which implies going beyond the reach of both reason and facts, beyond the realm, that is, of science. With some it has become a habit to use the word rational in much the same sense as we do metaphysical. Hence some warning against misunderstanding may not be out of place.

Evident here is the maladroit manner and dis-comfort (not aided, and perhaps exacerbated, by the disjoint prose) with which Schumpeter approaches the question of the meaning of history. The Rationalisierung, which Schumpeter adopts from Weber, has made possible a scientific empirical treatment of social development (Entwicklung), but has done so only imperfectly, not to such a degree that we are able to free ourselves entirely of metaphysical concepts which is why we must be careful in dealing with the phenomenon [Entwicklung] itself. Nevertheless, Schumpeter believes that it is possible to leave metaphysics behind and to focus on both reason and facts, and therefore on the realm of science. In true Machian empiricist tradition, Schumpeter completely fails to see the point that Weber was making in adopting the ante litteram Nietzschean conception of Rationalisierung to which he gave the name. The social process which rationalizes is an exquisitely Weberian expression: far from indicating that there is a rational science founded on reason and facts that can epistemologically and uncritically be opposed to a non-scientifc idealistic and metaphysical rationalism, Weber is saying what Nietzsche intended by the ex-ertion of the Will to Power as an ontological dimension of life and the world that imposes the rationalization of social processes and development in such a manner that they can be subjected to mathesis, to scientific control! What Weber posits as a practice, one that has clear Nietzschean onto-logical (philosophical) and onto-genetic (biological) origins, Schumpeter mistakes for an empirical and objective process that is rational and factual at once forgetting thus the very basis of Nietzsches critique of Roscher and historicism, - certainly not (!) because they are founded on metaphysics (!), but because they fail to question critically the necessarily meta-physical foundations of their value-systems, of their historical truth or meaning!

Far from positing a scientific-rational, ob-jective and empirical methodology from which Roscher and the German Historical School have diverged with their philo-Hegelian rationalist teleology, Nietzsche is attacking the foundations of any scientific study of the social process or social development that does not see it for what it is Rationalisierung, that is, rationalization of life and the world, the ex-pression and mani-festation of the Wille zur Macht! By contrast, Schumpeter believes that the mere abandonment of any linearity in the interpretation of history, of any progressus (as Nietzsche calls it), is sufficient to free his rational science from the pitfalls of metaphysics!

This contrast between Nietzsches approach to the world of experience and perception and appearance as becoming, against the Machian empiricist approach to scientific reality and fact and truth is quite revealing: both Nietzsche and Mach start from the opposition of experience and perception to any meta-physical reality that may lie beyond the human perception of life and the world including, even for Mach, the Newtonian conception of space and time! But, a most crucial distinction, whereas Mach still believes in the epistemological reality of Newtonian physics and of the laws of science tout court, Nietzsche in extreme and radical contrast comes to question the very scientificity of this science and of this reality, whether Newtonian or indeed Machian, questioning in the process even the Kantian epistemological foundations of logico-mathematics! (We shall pay the closest attention to these matters which constitute the whole thrust and import of our present work in Part Two of this study.)

Here it will suffice to reiterate that Nietzsche shares wholeheartedly nay, makes it a point of pride of his philosophy dating from Birth of Tragedy - the anti-historical notion of fate not as pro-noia or pro-vidence, and not even as the cyclical and pagan, pre-JudaeoChristian interpretation of historical time, but certainly against the mediaeval Scholastic linear interpretation of Christian millenarism. (Cf. Mazzarino, PSC, Vol.3, refs. to Nietzsche.) Cyclicality, whether in its cosmological version (the exact repetition of events or palingenesis with final apokatastasis) more attributable to Epimenides, with whose concept of prophecy Nietzsche would have disagreed, or even historical-analogical (the repetition of cycles, anakyklosis) as with Polybius and Vico (corsi e ricorsi), was certainly not what Nietzsche intended to oppose to his presumed Christian linearity, but rather the ahistoricity or realism of a Thucydides or Machiavelli intent on the study of completed actions (autopsia, dia-gnosis).

Nietzsche may well have approved of Karl Mengers attack on the errors of historicism for its unwillingness to theorise mathematically certain social phenomena, economic ones in particular; but most certainly not in pursuit of a scientific empeiria, a factual research that could follow empirical methodological or scientific standards. Rather, he would stress the instrumental nature of any such mathesis: in other words, he would insist that such regularities and tendencies as the neoclassical Menger and Jevons sought (the phrase is Keyness, who uses it to describe the latters innate statistical quest, in Essays in Biography) a search joined even by Marx in his scientistic mode - exist not as absolutes or as explanations, but purely as descriptions of a reality that changes and is transformed continuously! This would explain Mazzarinos perplexity [PSC, Vol3, p.362] when confronting Nietzsches attack on Roscher for his historicist divergence from the Thucydidean focus on individual events and Mengers equally virulent anti-historicist diatribe with this most pro-Thucydidean of German historians and his successor, Gustav Schmoller, for refusing to draw scientific generalizations from history because of their focus on just such individual events! Mazzarinos perplexity can be overcome if one considers that whilst Nietzsche did not admit of a linear history from which a telos or a scientific truth could be deduced, nevertheless he could have agreed with Menger that scientific instruments could be applied in a practical or strategic sense to the study of a given historical space as nothing other than ex-ertions of the Will to Power, as the rationalization of life and the world!

It is most important to note at this juncture that, as we argue in our study on the origins of The Neo-classical Revolution in Economics, the Austrian and German Schools, however heated their controversy over the methodology of the social sciences (the famous Methodenstreit) constituted powerful forces in the concerted effort by capitalist bourgeois interests across Europe to counter the emergence of socialist parties and their ideologies in the name of an overall methodological subjectivism that displaced the entire focus of Political Economy from Labour to individual Utility and therefore from the dramatic transformation and concentration of the labour process (Taylorism and Fordism), of the composition of the working class (from the skilled [Gelernt]to the mass worker), and that of capital (the rise of large cartels and corporations vertically and horizontally integrated) in what has been generally described as the Second Industrial Revolution (see Alfred Chandler Jnrs The Visible Hand), to a vision of the liberal free and competitive market that championed the Planlosigkeit (spontaneous plan-lessness, anarchical freedom) of bourgeois civil society (Fergusons and Hegels burgerliche Gesellschaft) against the regimentation of the planned, organized economy advanced by the Sozialismus. It is the abandonment of all metaphysical illusions the better to conceal the greater illusion of marginal utility - that will allow the conceptual fusion by the German ruling elites in the period to World War Two and beyond of the German Historical Schools focus on individual, interventionist specific projects of German industrial domination in Europe, on one hand, and of the Austrian Schools elevation of individual consumer choices on the other. In this context, Nietzsches own philosophical Entwurf, together with the spread of Machism in science that subtended both the Austrian (Menger, Bohm-Bawerk, Mises and Schumpeter, then Hayek) and the Lausanne (Walras and Pareto) Schools, must be seen as one coordinated and massive intellectual counter-attack by capital against the emergent working class whose political expression will culminate with the overarching intellectual vision of Max Weber. (For an initial outline of these arguments, see Cacciaris Sul Problema dellOrganizzazione in PNR.)

The mathesis, which again will be the central theme of Part Two of this study, is a politicallycharged praxis that Nietzsche brilliantly identified but failed to enucleate sufficiently. Despite vague warnings about the dangers of scientisation from far-sighted critical thinkers such as Gunnar Myrdal (The Politics of Economic Theory) and Hannah Arendt (in The Human Condition) and Jurgen Habermas (in Theorie und Praxis), no serious attempt has been made to date to theorize or identify and spell out its nature and import. (We shall have occasion to explain later why Heideggers conception of Technik is at once inapplicable and irrelevant to the critique of capitalist social relations despite his most valiant efforts in that direction [in Die Technik und die Kehre and in Brief am Humanismus], capably but unconvincingly supported by Cacciari [Confronto con Heidegger in PNR].)

Thus, to repeat, the difference between Nietzsche and Menger is that whilst the former denied the possibility of a science of history, he may have agreed on the instrumental use of scientific techniques to societies and of economics in particular what constitutes the

Rationalisierung , whereas the latter took the historicist denial of the possibility of economic science as erroneous, just as did Schumpeter. Whilst Nietzsche would agree with Roschers historicism in exalting historical uniqueness (except perhaps for the analogical cyclicality of the Eternal Return), he would also agree with Menger that this historicism cannot prevent (except epistemologically) the adoption of certain scientific techniques as strategies (ideologies) in the overall Rationalisierung of life and the world. Menger, for his part, starting from a Machian position, would argue that these techniques are also scientific. So, whereas Nietzsche understands historicism as historical science and deprecates it, Menger interprets it as refusal to be scientific in economic matters which Nietzsche would allow! Marx will go even further than Menger by historicizing the laws of motion of modes of production in a historical-materialist sense, which is why he could deride jokingly the philo-Hegelian idealist emanationism of Thukydides-Roscher (in ch.9, Vol.1 of Das Kapital).

But the fact that Nietzsche, who championed Thucydides for confining himself to happenings, could attack Roschers historicism whilst Marx could do the same (although from a historico-materialist perspective) by lambasting ThukydidesRoscher ought to have warned the philosopher of Rocken about the possible different interpretations of Thucydides, with Marx placing the Greek historian clearly in the historicist camp. Later, Hayek and Schumpeter will assume a position similar to Mengers. Even the Mengerian assault on Roscher and the German Historical School is evidence of Nietzsches mistaken strictures on the compass of Thucydidess historical method, which could lend itself to broader historicist use in the reflexive history tradition (Hegel) of what Dilthey sought to theorise as the hermeneutic Geisteswissenschaften. (For a review of the hermeneutic current of historical interpretation, the obligatory reference, although from a heavily Heideggerian perspective, is H. GadamersWahrheit und Methode.)