Idealism, and the neo-idealism of the turn of the century which was an extension as well as a revival of idealism, holds that it is impossible to know whether reality exists outside the mind. Rather, objects of perception are formed by the perceiving mind. The sense made out of these objects is thus subject to changes in that perceiving mind. Positivist liberalism conversely asserts that fixed, rational laws govern existence. German society at the end of the nineteenth century was so (...) ridden with change that the static positivism of the National Liberals was rejected by German historians, led by Max Lenz in the 1880s, and replaced by a return to the idealism of Ranke. The neo-idealists looked for dual causalities, studying the interaction of economics and politics and holding that history was engaged in change as well as recording it. Two theories resulted from German idealism, both capable of accounting for changes in institutional frameworks over time: Marxism and the German historical school of economics, the Kathedersozialisten. (shrink)