TheEnglish historical school of economics sought a return ofinductive methods in economics, following the triumph of thedeductive approach ofDavid Ricardo in the early 19th century.[1] The school considered itself the intellectual heirs of past figures who had emphasisedempiricism and induction, such asFrancis Bacon[clarification needed] andAdam Smith.[2][3] Included in this school areWilliam Whewell,Richard Jones,Thomas Edward Cliffe Leslie,Walter Bagehot,Thorold Rogers,Arnold Toynbee,William Cunningham, andWilliam Ashley.[1]
The economists of the English historical school were in general agreement on several ideas. They pursued an inductive approach to economics rather than the deductive approach taken byclassical andneoclassical theorists. They recognised the need for carefulstatistical research. They rejected the hypothesis of "the profit maximizing individual" or the "calculus of pleasure and pain" as the only basis for economic analysis and policy. They believed that it was more reasonable to base analysis on the collective whole of altruistic individuals.[4] Historical economists of the nineteenth century also rejected the view that economic policy prescriptions, however derived, would apply universally, without regard to place or time, as followers of theRicardian andMarshallian schools did.
Alfred Marshall acknowledged the force of the historical school's views in his 1890 synthesis:
[T]he explanation of the past and the prediction of the future are not different operations, but the same worked in opposite directions, the one from effect to cause, the other from cause to effect. As Schmoller well says, to obtain "a knowledge of individual causes" we need "induction; the final conclusion of which is indeed nothing but the inversion of theSyllogism which is employed in deduction.... Induction and deduction rest on the same tendencies, the same beliefs, the same needs of our reason."
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John Stuart Mill,Auguste Comte, andHerbert Spencer appear among the influences on the English historical economists. The second half ofQueen Victoria's reign saw the triumph ofevolutionary concepts in thesciences (geology,biology, andsociology) and a transition from a "coal andiron" basedmanufacturing[6] economy to one based oncommunication,urbanisation,finance, andempire. The rise ofthe historical school of jurisprudence provided "allies in the struggle against the dominance of the abstract theory."[7] Historical economists viewedclassical andneoclassical economics as too formal and as a rationalisation of free-trade policies[1] in acolonial andimperial setting.