1 Chapter 4 The Theory of Business Cycles from a Methodological Perspective Andrea Salanti [E]ach cycle being a historical individual and in part conditioned by circumstances for which there is no exact analogue in other cycles, we have always to deal with – and even to construct ad hoc theories for – facts the relevance of which varies according to the level of abstraction on which we wish to move: a cycle theory may still aim at being general or fairly general, and yet contain elements that are nonessential from the stand point of a pure model. (Schumpeter 1954, p. 748) The passage I have chosen as epigraph might be regarded as a reminiscence of the nowadays almost completely forgotten Methodenstreit, the lost battle of German historical school against early marginalism. Actually, however, the question of the possibility of attaining general patterns/theories/laws in economics (and, more generally, within the realm of the so called social sciences) was raised well before. Indeed, it can be traced back at least to the following passage by David Hume, which exhibits one of the first explicit stat ements of the possibility of a “scientific” approach to what we currently identify as social sciences: But it is at least worthwhile to try if the science of man will not admit of the same accuracy, which several parts of natural philosophy are found susceptible of. There seems to be all the reason in the world to imagine that it may he carried to the greatest degree of exactness. If, in examining several phenomena, we find that they resolve themselves into one common principle, and can trace this principle into another, we shall at last arrive at those few simple principles on which all the rest depend. (Hume 1938 [1740], p. 5) The consequences of the advocated change of perspective can hardly be overestimated 1 . We can realize as far reaching they may have been by comparing the following two passages by Richard Cantillon and Adam Smith. [T]he price or intrinsic value of a thing is the measure of the quantity of land and of labour entering into its production, having regard to the fertility or produce of the land and to the quality of the labour. But it often happens that many things which have actually this intrinsic value are not sold in the market according to that value: that will depend on the humours and fancies of men and on their consumption. (Cantillon 2001 [1755], p. 16, italics added)