Frank Knight and the Historical School

Abstract

The present paper is concerned with Frank H. Knight (1885–1972) and his attitude towards the historical school of economics1. It is argued that Knight paid attention to the historical school during his whole life and struggled to develop his own historical framework. The paper falls into five sections. Following this overview the second section recalls the conventional view that there is no real relation between Knight and the historical school; Knight is introduced as a stranger to the historical school. In contrast to this textbook version the following passages analyze Knight’s way of thinking in three steps. His extensive commentaries on the historical school and their protagonists are discussed in the third section. Focusing on Knight as a promoter of Max Weber, the fourth section examines Knight’s role in the dissemination of German social thought into the Anglo-American context. Moreover, Weber is identified as a crucial influence on Knight. Comparing his notion of ideal competition with Weberian ideas it is shown how close his critical stand on the ethical consequences of ideal competition is to the dominant figure of the younger historical school. The fifth section aims at a reconstruction of a historical dimension in Knight’s economic methodology. The final conclusion reflects on the gap between Knight as a stranger to the historical school and his efforts to develop a historical framework of his own. It tries to understand the obvious tensions in Knight’s work from different angles and considers why Knight finally remained reluctant to convert to the historical school.

Special thanks to Ross B. Emmett and Stephen A. Marglin for extensive discussions of and comments on earlier drafts. Thanks also to Klaus Rathe, the participants at the Political Economy Seminar at Harvard University and the Kress Seminar on the History of Economic Thought. This article is based upon work supported by the Schweizerischer Nationalfonds.