Here is the full section the original quote is from. I’ve never even seen the German book that was the basis for HA but I am willing to bet that the term he used for this type of “historical understanding” when he is using the word understanding is Verstehen . This is part of a relevant passage from Rothbard’s Individualism and the Philosophy of the Social Sciences which I quoted here :
From this philosophical perspective, then, all disciplines dealing with human beings — from philosophy to history, psychology, and the social sciences — must take as their starting point the fact that humans engage in motivated, purposive action and are thus different from the unmotivated atoms and stones that are the objects of the physical sciences. But where, then, does praxeology or economics differ from the other disciplines that treat human beings? The difference is that, to the praxeologist, economic theory (as distinct from applied economics, which will be treated below) deals, not with the content of human valuations, motivations, and choices, but with the formal fact that people engage in such motivated action. Other disciplines focus on the content of these values and actions. Thus psychology asks how and why people adopt values and actions; ethics deals with the problem of what values and choices they should adopt; technology explains how they should act in order to arrive at chosen ends; and history tries to explain the content of human motives and choices through recorded time. Of these disciplines, history is perhaps the most purely verstehende , for the historian is constantly attempting to describe, understand, and explain the motivations and choices of individual actors. Economic theory, on the other hand, is the least verstehende , for while it too begins with the axiom of purposive and intentional human action, the remainder of its elaborated structure consists of the deduced logical—and therefore true—implications of that primordial fact.