In the mid-19th century, out of their dissatisfaction with the neglect of the economic theories about other countries' experiences in the British classic economics, the economists in the German Historical School worked hard to construct an economic theory that was congruent to the developmental stage in their own country's culture and history. Their deeply-cherished concern about the reality in a transitional era when Germany was approaching modernization drove them to propose that the living condition of the working class be improved by the power of the state. In the late 80's of the same century, the Methodenstreit of German Historical School versus the Austrian School broke out, after which the mainstream economics was well on its way in terms of theoretical refinement and scrutiny, whereas the influence from the Historical School gradually subsided. Even so, the lessons from the Historical School are still enlightening to research in contemporary social sciences. This paper describes the unique basics in the theory building of the Historical School; explains the background and meaning of its academic origin, research methodology, and the Methodenstreit; and from there, discusses implications for contemporary social sciences.
