In the main body of Marshall's “Principles of Economics” the term Political economy appears only three times, and it is curious to see that it is the very first word combination in his text. Indeed, the first chapter of the first book starts with: “Political Economy or Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing. Thus it is on the one side a study of wealth; and on the other, and more important side, a part of the study of man” (Marshall, [1920] 2011, p. 6). Onwards Marshall almost never uses Political Economy; actually he operates only with the term Economics, He was probably one of the inventors of the term economics! as economic science that deals with complex phenomena “is better described by the broad term "Economics" than by the narrower term "Political Economy" (ibid, p. 32).

Schmoller used a word Volkswirtschaftlehre, which is literally translated as the “Science of national economy”. There is another German word for economics, Wirtschaftwissenschaft, but Schmoller had chosen the term, containing a part Volks, standing for people or population. He defines Volkswirtschaft, i.e. national economy, as a system consisting of “larger social bodies with a series of cities and landscapes, established exchange mechanisms, family enterprises separated from the family economy (local and organizationally independent economies with the sole purpose of trade and the production of goods), the trade connecting all these bodies and making them interdependent, all the households, communities, and corporations and, finally, the power of the state established by means of coinage and road construction, by agricultural and trade laws, by traffic and trade policy, by a system of taxes, and by the constitution of the army” (Schmoller, 1900, p. 4). Schmoller's term Volkswirtschaft is closer to Tugan-Baranovsky's Political Economy rather than to Marshall's Economics. Generally speaking, there is confusion with the translation of the word Economics into German. The possible versions are: Ökonomie, Volkswirtschaftlehre, Wirtschaftwissenschaft, but at the same time these German words could be thereafter translated into English as Economy of even Political economy. To avoid ambiguity, the present study is focused on the fact that Schmoller had chosen not just Wirtschaft, i.e. economy, but Volkswirtschaft, i.e. national economy as a scope of economic science.

As it is widely believed, economists began using the word “Economics” instead of “Political economy” after the marginal revolution, and Alfred Marshall played the main role in term's popularization. Indeed, he is claimed to be the first economist who introduced the term in his “Economics of Industry” (1879) and “Principles of Economics” (1890). L.Robbins Google Books provides a curious instrument called “Ngram Viewer”, which measures frequency of the use of phrases and words in books over a particular period. A graph in the picture 1 shows the correlation between the emergence of “Economics” and “Political economy” in English literature from 1776 to 2008. As one may see, a turning point was exactly after the year 1890, when Marshall's “Principles” were first published. The result from “Ngram Viewer” is supported by L.Robbins who explained the process of changing: “In the last hundred years, however, beginning conspicuously, perhaps, with Alfred and Mary Marshall's Economics of Industry (1879), we have come to describe the generalized description as Economics or Economic Science; and the label Political Economy, as implying judgments of value of which we do not wish to be accused, has tended to drop out of use” (Robbins, 1981, p. 7). However, in Russian literature a significant change took place only in 1920 (see Pic. 2). Probably, the term introduced by Marshall could not penetrate into Russian literature as fast, as it was spread in English books. One will never face the word Economics in Tugan-Baranovsky's text In fact, the word appears once in a bibliographic reference, but never in the main body of “Foundations”.. Nevertheless, there may be other possible reasons of the authors' choice of the term. Marshall himself explained very clearly what the difference was, according to his ideas, between the meanings of Economics and Political economy. “Political Economy” for Marshall is a narrower term, and this science for him studies more political relationships and exigencies of party organization, diplomatic games and foreign politics. Economics is “a science, pure and applied, rather than a science and an art” (Marshall, [1920] 2011, p. 32), which means that economics avoids practical facts to some extent, but it does so only because in the end it claims to be a general science describing general principles and helping politicians themselves to understand better pure economical processes, non-depending on political games. Another important note is individualistic character of Economics but the national idea of Political economy, as “raison d'être of economics as a separate science is that it deals chiefly with that part of man's action which is most under the control of measurable motives”. Both for Tugan-Baranovsky and Schmoller individual consideration of human beings was important, but the supreme goal of economic science was to explain social phenomena and provide some useful prescriptions for policy-makers. Robbins' understanding of the difference in meaning of Economics and Political economy may be helpful for Tugan-Baranovsky's and Schmoller's positions description. In his view, Political economy was the term “covering that part of our sphere of interest which essentially involves judgments of value. Political Economy, thus conceived, is quite unashamedly concerned with the assumptions of policy and the results flowing from them” (Robbins, 1981, p. 8). It should become clear from the following analysis that the first part of this assertion (idea of value judgment) refers more to Tugan-Baranovsky's approach while the second (connection with policy's results) characterizes Schmoller's views about national, and, therefore, political character of Volkswirtschaftslehre.

The subject of economic science

Another important idea to compare is the definitions of subject of economic science suggested by Marshall, Schmoller and Tugan-Baranovsky. Marshall expressed his opinion in the second chapter of the first book, titled “The substance of economics”. He wrote there: “Economics is a study of men as they live and move and think in the ordinary business of life. But it concerns itself chiefly with those motives which affect, most powerfully and most steadily, man's conduct in the business part of his life” (Marshall, [1920] 2011, p. 14). Further Marshall explained the difference of economics' subject from that of physics (it is constantly changing) and provides some hints how to measure human's behavior in ordinary business of life. He conceded that there were some limitations of measurement, for example the presence of customs and habits in men's social life. However, in Marshall's opinion, “in business matters in the modern world such habits quickly die away” and “thus then the most systematic part of people's lives is generally that by which they earn their living” (ibid. p. 18). It is also pointed out that one should understand this idea broader than just earning money for its own sake. Hereby, defining the “steadiest motive” of a human being, Marshall successfully isolated the subject of economic science from those of other social sciences. G.Beccatini claims that “in Marshall's view the scientific study of the single actor cannot be separated from the study of the social environment in which he/she is embedded” (Beccatini, 2006, p. 610). In fact, this point of view is not contradictory to previously expressed idea of isolation. Studying some social aspects was necessary for Marshall; however, it was worthwhile until those aspects could directly affect the behavior of an individual, earning money.

Schmoller never managed to make such isolation. His definition of the subject of economic science, namely national economy, is given above. Later in Schmoller's “Grundriss” this term is also defined as a part of social life and cannot be considered regardless society. Schmoller then explains that not only social but also technical, physical, cultural determinants affect people's ordinary life, and they should all be taken into account by an economist. He concluded: “We want to capture the social relations and connections of economic life when we study the national economy” (Schmoller, 1900, p. 5). He emphasized the crucial role of morals, custom, and law as factors building a framework of people's economic behavior. Such an important role of morals, customs, and law was highlighted also by Backhaus, who pointed out that in Schmoller's analysis “customs, moral principles and legal rules, however, define not just the behavior of individual agents but typical patterns of behavior in entire economies” (Backhaus, 1993, p. 13). Shionoya (2005) highlighted the priority of studying the historical development of this “three norms”, constituting the institutional background of a society. Schmoller's attitude to separating economic and social aspects of men's behavior was full well summarized by Balabkins: “He was reluctant to isolate the economic dimension from its related fields of law, politics, sociology, technology, art, religion. Yet in his writing he practiced such isolation with great circumspection” (Balabkins, 1988a, p. 53). Balabkins also noted the similarity of Schmoller's position to than one of Roscher, whose opinion was always highly appreciated by Schmoller.

Tugan-Baranovsky economy is “a set of human's actions aimed at external nature and having as their purpose not the satisfaction by actions themselves but the creation of the material conditions necessary to meet our needs” (Tugan-Baranovsky, 1909, p. 13). As well as for Schmoller, for Tugan-Baranovsky economy was not yet a subject of economic science. Nevertheless, it is interesting to mention that giving the definition above, Tugan-Baranovsky criticized Schmoller's definition of economy: “Under the concept of economy we first of all mean activities that are aimed at meeting the external needs of our body, without which our existence is impossible. To get food from the mother nature with the help of hunting or cattle breeding, hoe or plow, protect yourself from the cold by building a house of wood or stone, make clothes from flax and wool, construct instruments and the necessary equipment for making all this” (Schmoller, 1900, p. 2). Tugan-Baranovsky believed that Schmoller's definition was too broad and did not distinguish economic activity from other types of human's activity. It was very important for the Russian economist to keep economic science within well-defined borders, while Schmoller always declared that it was impossible. At the same time, Tugan-Baranovsky himself demonstrated that eliminating technical and social elements from consideration would leave economists without work. He conceded than considering an isolated individual household without taking into account technical aspect and “hygiene” (medicine, labor conditions and some related aspects are intended), i.e. analyzing it from pure economic point of view would be meaningless. If the household is not involved into trade, an economist cannot add anything useful to technical and social analysis, that is why the subject of economic science is not an individual isolated household but the system of interconnected by means of trade and exchange individual households, namely national economy (Tugan-Baranovsky, 1909, p. 16-19). National economy does not have an owner, in contrast with an individual economy, and that is why there is room for economic analysis of the market, which is regulated by its own rules. Marshall did not emphasize such a problem; in his opinion, there was enough job for economics even when considering an individual.

In conclusion, the substance of economic science obtains the broadest meaning in Schmoller's analysis who “never pretended that life and economics were simple” (Balabkins, 1988a, p. 42). Marshall fully realized the complexity of the substance, however, with the help of “the steadiest motive” he managed to circumscribe the sphere of influence of economics. In Tugan-Baranovsky's view, economic science should not be too imperialistic, trying to cover all the aspects of human's ordinary life, that is why only the system of individuals, united in a trade network might be studied by economic science. He distinguished economic from non-economic activities, blaming Schmoller, Engels, and a Russian economist Chuprov for mixing up these two types of activities (Tugan-Baranovsky, 1909, p. 7). Indeed, in Schmoller's view economic science was embedded in the framework of social studies, and could not be separated from other disciplines, investigating people's life. One possible reason of such a complex view is that Schmoller's major at the university was Kameralwissenschaft, a subject composed of all social sciences equally important. In Schmoller's time there was no other option for young economists.

Induction vs deduction

The present study will further pay attention to author's attitude to the balance between facts and theory, induction and deduction. To express points of view about what should be primary in economic research, the Russian and English authors used almost similar words! Marshall said: “He [an economist] needs to make careful use of analysis and deduction, because only by their aid can he select the right facts, group them rightly, and make them serviceable for suggestions in thought and guidance in practice; and because, as surely as every deduction must rest on the basis of inductions, so surely does every inductive process involve and include analysis and deduction” (Marshall, [1920] 2011. p.450). Whereas Tugan-Baranovsky claimed: “As well as the theory not underpinned by facts is empty, facts not explained by theory are blind…facts themselves, even studied in a very detailed way, cannot create a science, because even their description is impossible without general theoretical assumptions which define which facts among the all deserve a description and which ones can be omitted” (Tugan-Baranovsky, 1909, p. 4). Thus, both the English and the Russian economists held the view that theory ought to ensue from the facts while the facts themselves provided unshaken foundations for the theory. Such a reconciling synthetic approach is a salient feature of Marshall's “Principles” as well as Tugan-Baranovsky's “Foundations”. An interesting fact to note is that Marshall provided his reasoning about the balance between practice and theory in the third appendix (in the last 8^th edition), unlike Tugan-Baranovsky, who spent pages and pages in the very beginning of his book to share with a reader all his doubts, logical chains, errors. This is more evidence of Marshall's care of his readers; he did not want them to be overloaded by even slightly superfluous information.

Explaining his position in more detail, Marshall quoted Schmoller: “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 the syllogism which is employed in deduction.... Induction and deduction rest on the same tendencies, the same beliefs, the same needs of our reason" (Marshall, [1920] 2011, p. 450). Schmoller himself claimed that induction and deduction are both needed for scientific thought “as the left foot and the right foot are both needed for walking”. Thus, from the first sight, all the three methodological approaches were twins. However, Balabkins, for example, remarked that Schmoller walked “on two methodological legs, but he limped a bit on the deductive leg” (Balabkins, 1988a, p. 63). Indeed, Schmoller conceded that deductive analysis is a necessary part of any science, however an economist should use deduction with caution because in the majority of cases this approach might be misleading due to the complicacy of social phenomena (Schmoller, 1918, p. 109). At the same time, Schmoller admitted some weaknesses of induction. Even though statistical data were indispensable in his research program, he did not rely on them only; quantitative analysis had to be supplemented by qualitative analysis (ibid, p. 116). Whatever, inductive method was primary. Hodgson briefly but clearly summarized the difference between Marshall and Schmoller: “Marshall sympathized with Schmoller and his followers, although he went further than Schmoller in emphasizing the analytical priority of theory” (Hodgson, 2005, p. 19). Tugan-Baranovsky in his views was closer to Marshall than to Schmoller. As N.Makasheva rightly observed, he “regarded abstract deduction as the basic method of the theoretical part” (Makasheva, 2016, p. 80), and the theoretical part was extremely important for the Russian economist. As for Schmoller, he was probably the most famous promoter of induction due to his participation and a crucial role in the intellectual skirmish called Methodenstreit. The German economist defended the approach of the German Historical School, opposing Carl Menger who developed the Austrian School's standpoint and promoted deductive methods. N.Balabkins noted than even after the reconciliation of these camps, Schmoller “stressed the purely hypothetical element in all theoretical formulations”, did not employ mathematical models, and “rejected all simplistic, mono-casual explanations” of economic phenomena (Balabkins, 1988a, p. 46).

Research process

“Principles”, “Foundations”, and “Grundriss” reveal also author's views of research process. Let the following analysis start with Tugan-Baranovsky's position. He began with claiming that methodology of any science is first, to describe particular phenomena and, second, to explain them. This division is discussed in more detail in Barnett (2004, p. 80-8), Nenovsky (2009, p. 56-57), and Sheptun (2005, p. 364). After analyzing the description of all the facts in natural sciences Tugan-Baranovsky discovered that it would be impossible to apply the same methods in economics because of the multiplicity of interests of economic agents. The unity of objectives cannot be observed in an economy, as it is in medicine where the only goal is to save a human's life. Practical interests define the classification of economic phenomena already on the very first stage. It seemed impossible to obtain a pure science when one fact might be always considered from different points of view, and when all facts could eventually be explained and claimed as right ones. Hence, Tugan-Baranovsky set out to find a universal criterion of phenomena classification. Ethics turned out to be such a criterion for him, and it was Kantian ethics, i.e. the supreme value of human personality. Without it economic science could not be called pure science and, in the end, could not exist! The next step of economic phenomena description is building a system of common economic terms, which was also very important for the Russian economist. Description was followed by explanation, and in this part Tugan-Baranovsky noticed that even if political economy should study practical issues of real life, it was impossible to create a logically interconnected set of explanations without the help of assumptions, psychological and social-institutional. In the first, psychological, group there were an idea of “homo oeconomicus”, availability of complete information for decision-making, rational acting. The second, social-institutional, group involved individuals acting in free exchange society (private property, propensity to exchange). The very significant point for the future comparative analysis is that Tugan-Baranovsky's “homo oeconomicus” is not necessarily an egoist, this concept is devoid of ethical coloring. N.Makasheva also emphasized that “the major methodological problem was not to design a value-free political economy but to find an ethical principle to become the foundation for the political economy of socialism” (Makasheva, 2016, p. 80). Schmoller held similar views. N.Balabkins pointed it out, claiming that “for Schmoller, the separation between value-free positive economics and value-loaded political economy was not clearly delineated” (Balabkins, 1988a, p. 63).

Schmoller explicitly discussed the two stages of economic research process: observation and description. Moreover, the keynote of “Grundriss” is the importance of historical and statistical data. They were present in Tugan-Baranovsky's work as well but not as much as in Schmoller's one. The German economist was not trying to explain facts when explanation required more than just facts themselves. Shionoya commented that Schmoller “could not allow an instrumentalist role of assumptions and hypotheses as deliberate mental constructs, because in spite of his nominalist position his ultimate goal was scientific realism” (Shionoya, 2005, p. 22). Practice-oriented research was a salient feature of Schmoller's analysis, and it determined his attitude to history and its role in economic science. So much attention paid to history in “Grundriss” and, therefore, a relativistic approach used there was not always appreciated by Schmoller's contemporaries. For instance, a reviewer of “Grundriss” in Russia, certain R.G. Voblyi, wrote in his review in 1907 that Schmoller's book “represented not a theory of political economy but its history” (Balabkins, 1988b, p. 584). At the same time, there is one important similarity in Schmoller's and Tugan-Baranovsky views. It is hidden in their perception of ethics in economics. As Shionoya pointed out, a crucial, system-constructing role of ethics in Schmoller's “Grundriss” could be best understood in terms of the methodological importance of teleology for the German economist (Shionoya, 2005, p. 24). In fact, Schmoller, while analyzing society and its parts, always paid special attention to purpose and means (die Zwecke und die Mittel) of a particular activity. Among the three norms, morals, customs, and law, the former plays a crucial role in establishing institutional framework of any society. Hence, as far as moral values are to govern a society as a whole, teleology turns out to be very useful for investigating institutional organization embodying ethics. Shionoya examined the application of teleological approach in Schmoller's research program and figured out that “the major content of teleology was a principle of justice” (ibid, p.23). The two features, peculiar to Schmoller's analysis, teleology and the principle of justice, determined the character of his research and played the same role as Kantian principle of supreme value in Tugan-Baranovsky's analysis.

Highlighting the above-mentioned ideas brings us to the consideration of Marshall's point of view about the methodology. The first difference is that he missed the description part, and maybe that is why he did not face a problem of multiplicity of positions, which was discussed by Tugan-Baranovsky. In turn, because of the absence of such a problem, he did not feel a need to seek the assistance of ethics as an absolute and universal criterion of facts classification. As a result, his ethics does not take part in the economic analysis, and if the economist describes some ethical ideas, it is always either separated from the theory or is necessary to discuss in “the steadiest motive” framework. The fact that one cannot find a lot of the description analysis in Marshall's work can be explained also by different levels of economics development in Russia and England. Tugan-Baranovsky felt an emerging need of systematization of all the findings, provided by Russian economists of the time, meanwhile Marshall in England already had had a powerful theoretical background, containing the system of terms. Instead, he immediately goes to explanation part, devoting a considerable share of his reasoning to an argument between induction and deduction method. Marshall, influenced by Darwin and Spencer, declared that economics had something in common with any natural science, because economics was dealing with a dynamic scope, depending not only on different interests but also on time, country, and, at the same time there were some established mechanisms that link the elements of this dynamic scope. In the chapter called “Economic generalizations and laws” Marshall gave a clear answer on how economic analysis should be conducted, saying: “The economist needs the three great intellectual faculties, perception, imagination and reason: and most of all he needs imagination, to put him on the track of those causes of visible events which are remote or lie below the surface, and of those effects of visible causes which are remote or lie below the surface” (Marshall, [1920] 2011, p. 32). Although Marshall did not speak about the importance of assumptions in an apparent way, in this sentence there was hidden the idea, in contrast with Schmoller, whose negative attitude to assumptions was already mentioned above. In Marshall's view, any economist needed imagination so much namely because he had to set up a system of reliable appropriate assumptions. Speaking about Tugan-Baranovsky's assumptions, we distinguished that one of the “economic man”, or “homo oeconomicus”. Also Marshall mentioned the significant influence of understanding properly this concept of the economic analysis. For him a human was not a venal egoist, who was only thinking about getting more and more money. There is no doubt that the human as a scope of Marshall's Economics did not aspire to wealth for its own sake, the need of money can be easily explained by the needs every person has, therefore money is not an evil, it is just a common measure of wealth that is why economic science deals eventually with earning money. He even refused to use the term “economic man”: “…they deal with man as he is: not with an abstract or "economic" man; but a man of flesh and blood. They deal with a man who is largely influenced by egoistic motives in his business life to a great extent with reference to them; but who is also neither above vanity and recklessness, nor below delight in doing his work well for its own sake, or in sacrificing himself for the good of his family, his neighbors, or his country; a man who is not below the love of a virtuous life for its own sake” (ibid, p.21). Schmoller's human being was close to Wagner's model, as he considered the plurality of motives that were driving people's activity. Section 5 of the second chapter of introductory part is fully devoted to description of these driving forces. The salient feature of human behavior examination in “Grundriss” was the absence of ceteris paribus assumption. N.Balabkins also highlighted this point, saying that Schmoller's refusal of “factoring out” economic phenomena and relegating all non-economic factors to the ceteris paribus cage was another methodological uniqueness f Schmoller (Balabkins, 1988a, p. 63).

Principle of continuity

Continuing the analysis of methodology, let us speak about some separate methods which the economists use in their studies. The very important one we have already mentioned above, looking at Marshall's contents. This is the principle of continuity in his analysis, which probably emerged from Marshall's reflections on Spencer's “First Principles”. As T.Raffaelli noticed, this principle involved such methods as aggregation and ceteris paribus “cage” application (Raffaelli, 2003, p. 89-93). Something similar may be found in Tugan-Baranovsky's work, but not in Schmoller's “Grundriss”. Approaches used by Marshall and Tugan-Baranovsky were quite similar. Actually, one can claim that Marshall' s aggregation was based on average values, while Tugan-Baranovsky did not use average value method, but they got the same result: in a big set of individuals each of them does not have sufficient power to influence a social result. To make this idea clear, we can give just two quotations. Marshall: “Nevertheless, if we take averages sufficiently broad to cause the personal peculiarities of individuals to counterbalance one another, the money that people of equal incomes will give to obtain a benefit or avoid an injury is a good measure of the benefit or injury” (Marshall, [1920] 2011, p. 16). Tugan-Baranovsky: “The price is set as a result of a conflict of many economic interests, having opposite characters, thanks to which each of them separately has no influence on the price setting” (Tugan-Baranovsky, 1909, p. 17). These assumptions then allow the economists to conduct their analysis of the economy as a whole (Tugan-Baranovsky call it national economy). Having noticed this similarity one can easily continue the analysis and discover another significant methodological idea: both Marshall and Tugan-Baranovsky recall the concept of Adam Smith's “invisible hand”. Eventually their economies are adjusted by themselves and equilibrium theory of free market functions well Tugan-Baranovsky draws the reader's attention to the fact that nobody fixes a precise amount of any good annually produced, however the quantity of demand is always approximately equal to the quantity of supply.. It is curious to note that Marshall used the very term “in average” and even provided a numerical example as evidence of his findings. Tugan-Baranovsky's method gave a similar result (one individual has not enough power to change the overall result). Authors' attitude to math methods is the subject of our further consideration, but already here it can be observed that for Marshall it is an essential, an integral part of the analysis, while Tugan-Baranovsky prefers long explanations instead of short examples in Marshall's style.

Employment of mathematical models

Let us now discuss how the economists used to apply mathematical tools in their analysis in order to finish with pure methodological part. Marshall finds the application of mathematical habits being of “great service”, but simultaneously, at any appropriate moment encourages researchers to be careful with using math language in order not to be trapped, as somebody can try to adjust the whole complex theory for it to fit a particular mathematical model. So, for the English economist mathematics is just a tool that can be very useful for economic analysis if one applies it with pondering. It is worth noting that Marshall eventually decided to put all the graphs and mathematical calculations into appendixes. In his opinion, as T.Raffaelli mentioned, “the aim of mathematics [was] to teach the economists ways of reasoning out economic problems” (Raffaelli, 2003, p. 84). Thus, the first possible reason of placing math out of the main body of “Principles” was its exercise character. However, Marshall could “underestimate” mathematics also because he realized the limitations of his own knowledge. His analysis, held in accordance with the principle of continuity, required mathematical models that had yet been unavailable to Marshall. Foster (1993) supported this notion, explaining that Marshall's static diagrams could not represent the evolutionary idea. Tugan-Baranovsky's position regarding the use of mathematical instruments was even more precise. He resorted to the help of numerical examples and calculations, demonstrating the Austrian School approach, but that's it. His well-known theorem that marginal utility of any product should be in inverse ratio to its labor cost is illustrated only with a numerical example. The Russian economist wrote in his textbook that the theorem could only be proved by means of advanced mathematical analysis, but he did not want to provide his reader with complicated math (Tugan-Baranovsky, 1909, p. 69). He understood well that mathematical models, if they work, are perfectly structured, while there is nothing perfect in real life and even the assumptions made in the beginning of the work could not eliminate an influence of stochastic life processes. This understanding was reflected in Tugan-Baranovsky's theory of capitalist business cycles. After trying to calculate the duration of the cycle, he admitted that “…capitalist cycle cannot be based on any kind of phenomena that is defined by rigorous mathematical frequency, as astronomical events” (Tugan-Baranovsky, 1909, p. 736). Here the author recalls again his idea of the impossibility of comparing the natural and economic sciences. At the same time, Schmoller who did not separate economic and natural phenomena, considered mathematics as “simpler science”, which had become “completely deductive” (Schmoller, 1918, p. 111). It is widely believed that adherents of Historical School of Economics considered mathematical calculations as speculations and did not trust them at all (see also Reiss, 2000, p. 486). Trying to reconcile inductive and deductive methods, Schmoller did use mathematics, but very carefully. Furthermore, the foundation of mathematical calculations was always unshaken, it was provided by statistical data. “Schmoller developed statistics to a discipline for the research of regularities in the national economy” claimed Hansen (Hansen, 2000, p. 493), commenting on Reiss (2000). Hansen also supposed the German economist to use mathematical apparatus more if “it had seem to be productive in answering questions to pressing problems of economic reality” (ibid). Thus, Schmoller resorted to help of math very rarely. Tugan-Baranovsky made use of math more, demonstrating the Austrian School approach, while Marshall provided even more calculations, merely placed in appendixes.

Conclusion on methodological approach

Therefore, one may conclude that methodological approaches of the three economists had a very important feature in common - their perception of induction-deduction balance. Even though Schmoller appreciated induction more he conceded the importance of deduction as well. However, his historical approach and relying more on statistics than on theoretical mind speculations was his distinctive feature. In spite of a big number of similarities between Marshall's and Tugan-Baranovsky's methods and approaches that we have already discovered, there is one striking contrast. Marshall claimed that economic science should not only explain the existing phenomena or events of the past but also predict the future, and that was much more important. Tugan-Baranovsky, instead, carried out a serious hard work in order to describe economic phenomena, explaining it using generally the same methods as Marshall did, but he did not look forward as diligently as the English economist tried to. The underlying reasoning can be the same as already mentioned before while we were discussing why Marshall did not pay much attention on descriptive analysis. Russian economic science lagged behind the European in some sense. Tugan-Baranovsky, writing his general work, claimed that a textbook had to summarize plenty of concepts, ideas and approaches with which a Russian reader had not been familiar yet. Marshall was a well-educated man, surrounded by the same well-educated scientists, so he felt an emerging need to move on, not to reflect the past. At the same time, the emerging need for Tugan-Baranovsky, as we have already noted, was providing a qualitative scientific background for his future studies and, mostly, for his followers. It would be also pertinent to remember here Marshall's motto: Natura non facit saltum. Namely because of the fact that all the events in an economy are developing consistently, it is possible to predict the future, relying on the previous observations. This principle of continuity was not mentioned neither in Tugan-Baranovsky's nor in Schmoller's works. Schmoller's predictions were generally based on historical observations, the legacy of Young German Historical School somehow determined the character of his research program, while Tugan-Baranovsky's program was mainly ruled by Kantian ideology, and Marshall's research was based on classical English tradition and its assumptions with plenty of supplementary practice-oriented concepts.

Comparing value theories. Tugan-Baranovsky's theory

Tugan-Baranovsky describes his concept of value in the first section of his book (“The general doctrine of the economy”). Value and cost he calls the basic logical categories of the economy. As usual, the author provides the retrospective of the theory's evolution, explaining the mistakes of predecessors (Proudhon, Hildebrand, Ricardo and Gossen were discussed). He was not fully satisfied neither by utility explanation of value, nor by the labor theory of value. Even the marginal utility theory was not a sufficient argument for value for the Russian economist, although he found Gossen's idea of diminishing marginal utility the most rational one. But what is then the theory that Tugan-Baranovsky could fully accept? The answer characterizes his way of working with all the theories. So what he did was the combination of Gossen's and Ricardo's argumentation, demonstrating by means of Austrian-style numerical examples that two theories did not contradict one another. As a result, without taking into account a production process, the value of finite goods was fully explained by the diminishing marginal utility argumentation; but after adding means of production, where labor is distinguished from raw materials, Tugan-Baranovsky introduced the meaning of labor efforts, expressed in hours necessary for one unit production, in value formation. The new law, which can be taken as “a son” of the second Gossen's law and Ricardo's labor theory, is as follows: “Marginal utilities of produced goods are inversely related to their labor costs” (Tugan-Baranovsky, 1909, p. 69).

The foregoing argument presented in “Foundations” was just a theoretical retelling of Tugan-Baranovsky's value theory (it is absolutely justified to name his reasoning “a theory”). At the same time, we should pay special attention to the underlying ethical component. The most important agent of production for the Russian economist was labor, and here, undoubtedly, the Kantian idea of the supreme value of human personality played its role. But why was he so much influenced by those ethical ideas of Kant? The answer can be found in the very beginning of the book, where Tugan-Baranovsky was deliberating about the moral principles, which are important for the economic analysis. He expressed his belief in the incredibly precise phrase: “We accept the only legitimate point of view, i.e. that one of a working man - not because we are moving from the general ethics to defending someone's private interest, but because the private interest of working man fully coincides with the supreme moral idea: absolute value of human personality. Meanwhile the latter is the only possible base of the political economy, because the science has a particular practical interest as its basis” (Tugan-Baranovsky, 1909, p. 38). Such an elegant interpretation of Marx's strong ideas could change the destiny of the Russian Empire if it would have been read and understood in a right way by every cook Reference to Lenin's famous idea that even a cook as a representative of the broad masses of the working people must learn to govern the state, should be involved in the governance. Further in the text of “Principles…” we again meet the influence of Tugan-Baranovsky's humanity concept: “Only ethics can give the rules to policy, in particular the central policy's idea should become an ethical idea of supreme and endless value of human personality” (Tugan-Baranovsky, 1909, p. 49).

It is important for the further comparison to remember that Tugan-Baranovsky distinguished the value concept from the cost concept. Cost is considered by him as the second basic logical category of the economy. Cost itself was divided into 2 categories: absolute - to determine the costs of human labor and relative - to determine the costs of other necessary factors (raw materials, capital, tools, etc).

Thus, Tugan-Baranovsky's value theory represents a unique attempt to combine marginal-utility and labor-in-production concepts while basing this combination on Kantian ethical principle. A.Nove pointed out that for the Russian economist, the two theories were “opposites but not contradictory” (Nove, 1970, p. 119). He also noted that Tugan-Baranovsky agreed with Marx's idea of exploitation and commodity-money fetishism, and quoted “Foundations” in support: “my theory of value and cost as two independent categories” - representing respectively subjective valuation and objective conditions of production - “makes possible the preservation of the social content of Marx's value theory” (Nove, 1970, p. 120). Subjective-objective approach is highlighted also by F.Allisson who investigated socialist economy proposed by Tugan-Baranovsky: “illustration of Tugan-Baranovsky's synthesis in the theory of value shows how he conceived planning in a socialist economy: building an economic plan based on the theory of value allows the synthesis between the objective (production) and the subjective (needs) sides of his human--ethical--economy” (Allisson, 2014 Page cannot be indicated as the citation was taken from web-version of the article: https://oeconomia.revues.org/755#entries ). The difference between objective and subjective value in Tugan-Baranovsky's analysis is considered in more detail in Allisson's book (Allisson, 2015, p. 114-16).

Marshall's theory

Now let us consider Marshall's ideas concerning the value and its formation that are going to be different from Tugan-Baranovsky's theory. The first difference is the absence of any ethical underpinning in Marshall's reasoning. He delicately avoids cases that need more than just pure economical explanation. One representative example can be provided as proof: “But if inventions have increased man's power over nature very much, then the real value of money is better measured for some purposes in labor than in commodities. This difficulty however will not affect our work much in the present volume, which is only a study of the "Foundations" of economics” (Marshall, [1920] 2011, p. 44). This difference is one that we have already observed, discussing the methodological approaches of both economists, and this is a fact that we will see also later. Marshall's value is accurately defined as follows: “The value, that is the exchange value, of one thing in terms of another at any place and time, is the amount of that second thing which can be given there and then exchanged for the first. Thus the term value is relative, and expresses the relation between two things at a particular place and time” (ibid, p. 43). This reminds us the cost theory of the Russian economist. Indeed, the value, explained like that, is nothing else that Tugan-Baranovsky's relative cost. At the same time, both economists noted that the utility theory is useless for explanation of the term “value”. Marshall said: “The notion of Value is intimately connected with that of Wealth; and a little may be said about it here. “The word value” says Adam Smith “has two different meanings, and sometimes expresses the utility of some particular object and sometimes the power of purchasing other goods which the possession of that object conveys”. But experience has shown that it is not well to use the word in the former sense” (ibid). Marshall's reasoning, as always, is clear; it does not confuse the reader; moreover, he immediately uses the term value in order to move on to the practical issue - money. “Instead of expressing the values of lead and tin, and wood, and corn and other things in terms of one another, we express them in terms of money in the first instance; and call the value of each thing thus expressed its price” (ibid).

Here we see that Marshall does not spend time discussing theoretic values, moving straight to practical things. Prices, in turn, were determined at the equilibrium point of Supply-Demand intersection. Thus, competition was an important factor, determining price and value of products (see also Keynes, 1924, p. 350-1). J. Laurence Laughlin (1887) even criticized Marshall for mixing up the categories of value and price. Actually, Marshall's normal value may be interpreted as equilibrium price (see Marshall's reflections, Marshall, [1920] 2011, p. 288).

A more interesting case then for Marshall became the value of money, he was thinking of the purchasing power concept, the “present value” counting. Marshall's theory of value was more practice-oriented than Tugan-Baranovsky's. The former preferred to deal with prices probably because they are observed and, in his opinion, practically represent theoretical category of value.

Schmoller's theory

Schmoller's value theory is outlined in the second volume of “Grundriss”, to be precise, in the fourth section of the third book “The social process of goods circulation and income distribution”. Schmoller began the section with his reflections on the topic of value in general. He distinguished economic values and supreme values, claiming that “all economic activity is thus accompanied by a higher cultural level, by a clean border regulation between the economic and the higher values” (Schmoller, 1904, p. 103). Schmoller's relativism could not but affect his theory of value. He stated that value was the relative concept, therefore, an extremely complicated one. Value was determined by the relations of people and their purposes, these purposes and means (Zwecke und Mittel), emotions and judgments, therefore Schmoller made use not only of relativism, but also of teleological purpose-means principle. Moreover, the way the economist explicated the theory reflects the Historical School approach.

Schmoller showed that during the whole historical development process human feelings and judgments were the basis for value formation. At the same time he also mentioned the term marginal utility, Grenznutzen, while explaining how a person forms his value judgment (ibid, p. 104). The definition given by the author himself is as follows: “We shall thus be able to characterize the economic value as the consciousness arising through comparison and estimation of the degree of importance which the single good or individual work has to offer to others through their usefulness and procurability for the economic purposes of man” (ibid, p. 105).

After defining the concept, Schmoller recalled such ideas as exchange value, proposed by Smith, value theories based on needs and scarcity. He also distinguished objective and subjective points of view on value formation, mentioned also by Tugan-Baranovsky. However, with objective side Schmoller associated the exchange value or market value: “Der Marktwert ist ein objectiver Wert” (ibid, 109). As for the price, Schmoller understood it as the value which had become concrete in individual cases. The value was considered as the psychological presupposition of the price, the ideal measure on which the individual practical case is measured (see ibid, p. 105-106). Therefore, the German economist interpreted prices as a practical category, as well as Marshall. The similarity seems even more striking after realizing that Schmoller did not think that the distinction between a special value and a special price doctrine made in the textbooks was necessary (ibid).

As well as Tugan-Baranovsky, Schmoller separated the categories of value, der Wert, and cost, die Kosten Tugan-Baranovsky pointed out that Marx used “emigrant-German” word Kost, obviously taken from English, instead of the correct Kosten, used by Schmoller (see Nove, 1970, p. 120). Another resemblance may be revealed, namely the supreme value idea, shared by both economists. As it was already mentioned above, Schmoller divided value category into economic and supreme (h?her). Economic science was dealing with the former. However, he also expressed his point of view about the latter: “The individual appeared to some extent as a supreme value, as a self-purpose (Selbstzwecke), beyond all economic value, as certain actions do not appear to be commercial” (ibid, p. 103). This is not the only similarity of the Russian and German scholars. Schmoller, like Tugan-Baranovsky, understood the ambiguity of personal value estimations since value was the relative concept. Reflections on universal independent value led the German economist to the idea of “fair (gerecht) value” or “fair price” The idea of fair value was inspired by Schmoller's particular attitude to social justice. This topic is discussed in more detail in Schmoller (1984). Schmoller claimed: “As long as the value of every good thing is a different one for each man, so long a certain inequality of profits will not seem unjust” (Schmoller, 1984, p. 34). Realizing the complexity of this concept Schmoller took a position, close to Tugan-Baranovsky's one. He wrote that there had always been a causal link between the value (or price) formation and the moral judgment on cheap and equitable prices, on abusing market position. However he did not proclaim ethical or moral principle as a universal criterion, as Tugan-Baranovsky did. Schmoller's value theory remained relativist and psychology-based (see also Shionoya, 2005, p. 24). R. Faucci confirmed that Schmoller rejected “abstract” value theories like that one of Ricardo (Faucci, 1988, p. 131).

Comparing distribution theories