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Economic activity is human activity, and economic history is the historical study of the economic aspects of human existence. This research paper presents an overview of the aims and methods of economic history, discusses its position between the social sciences and the humanities, and highlights some current research agendas. The primary focus of the piece is on the historical and theoretical traditions of the discipline, and the lasting impact of methodological changes that occurred in the mid-twentieth century associated with the ‘new economic history.’
- Defining Economic History
- Origins and Development
- The Emergence of the New Economic History
- The Search for Balance
- Historical Economics
- The Future of Economic History
Defining Economic History
Economic history is neither a branch of mainstream economics nor a branch of intellectual history relating to the history of economic thought. In basic terms, economic history (histoire économique in French, Wirtschaftsgeschichte in German, jinji shi in Chinese, kaizái shi in Japanese) is the historical study of the economic aspects of human existence. The broad intellectual range of the discipline enables it to extend beyond purely economic themes (such as the organization of production and distribution, the relation of state and industry, aspects of trade and commerce) and so consider, among other things, inequality, living standards, welfare, social transformation, science, technology, and education. With its focus on mankind’s existence in a world of innovation, growth, and development, economic history is a discipline whose core principles possess a powerful human dimension.
This is a short research paper on a large topic relating to the aims and methods of economic history. Central to this discussion is the social scientific formalization of economic history in the mid-twentieth century. This marked the transition of the discipline from traditional economic history to the ‘new’ economic history, and so rooted the discipline in the methodology of economic science. In doing so, it ignited lasting ‘creative tensions’ between scholars trained in historical method and those trained in economic theory.
Origins and Development
The origins of economic history can be traced to the work of the early practitioners of political economy and social science: writers such as Smith, Marx, and Weber all employed historical evidence in their study of economic practices, social phenomenon, and the capitalist system. As a distinct academic discipline, the origins of economic history lie in late nineteenth-century German, British, and American scholarship and the construction of a methodology with strong links to established themes of general history (i.e., political, ecclesiastic, and legal histories), the work of the German historical school (dismissive of abstract economic theory and focused on the impact of variation in economic development), and the institutional economics associated with Thorstein Veblen. Its position as a subject of scholarly enquiry and academic teaching expanded steadily in the nineteenth century and was firmly consolidated by the early twentieth century with the creation of specific academic posts and later specialized journals – the Economic History Review (first published in Britain in 1927), the Annales d’histoire économique at sociale (first published in France in 1929), and the Journal of Economic History (first published in the United States in 1941). During this period, the interests of economic historians focused on comparative historical research to investigate the broad issues of economic life. Such studies incorporated some quantitative analysis, but little attention was given to employing explicit economic theory in analyzing past economic events or processes. As a consequence of these developments, economic history by the mid-twentieth century had developed as a discipline largely separate from economics.
The Emergence of the New Economic History
The key developments and refinements of economics theory that emerged by the end of the Second World War were fueled by new approaches to the study of the aggregate economy, growing interest to the mechanisms of economic growth, and the better availability of long-run economic data. By the 1950s, new attention to the subject of modern economic growth led many economists, particularly in the United States, to explore the long-held assumptions and conclusions associated with the older generation of economic historians. The conclusions of these younger, economics-trained scholars were damning: the quality of early economic history research had been undermined by largely descriptive, illustrative, and institutional approaches; quantitative analysis lacking rigor; and little attention had been paid to the application of economic theory to historical data.
It is here that we find the principles that propelled the cliometric revolution (from the Latin: Clio, the ancient Greek muse of history; metrics meaning measurement), so leading to the social scientific formalization of economic history between the 1950s and the 1970s. Cliometrics – otherwise known as the ‘new economic history’ or ‘econometric history’ – provided an innovative methodology that emphasized (1) a strong focus on the precision and formalism of scientific method in order to elevate the discipline of economic history to a scientific level, and (2) the systematic application of mathematically formalized economic models and quantitative techniques to the study of historical economic phenomenon. Belief in the potential of these methodological developments, most notably in evaluating and challenging existing historical interpretations and scholarship, is palpable in the following quote by the American economic historian, Douglass C. North, published in the early 1960s:
A revolution is taking place in economic history in the United States. It is being initiated by a new generation of economic historians who are both sceptical of traditional interpretations of U.S. economic history and convinced that a new economic history must be firmly grounded in sound statistical data. Even a cursory examination of accepted ‘truths’ of U.S. economic history suggests that many of them are inconsistent with elementary economic analysis and have never been subject to – and would not survive – testing with statistical data.
North (1963): 128–129
The speedy acceptance of this new form of economic history among economists owed much to its focus on mathematical methods and rigorous quantitative techniques. Institutional structures reinforced the distinct character of this intellectual movement, famously through a special gathering held in Massachusetts in the autumn of 1957 and conferences and seminars at Purdue University in West Lafayette, Indiana. From these emerged the style, tone, and research agenda – primarily related to American economic history – that came to define the ‘new economic history’ for many years. Notable examples of this early work included Alfred H. Conrad and John R. Meyer’s groundbreaking study of the profitability of slavery in the ante-bellum South (Conrad and Meyer, 1958), and Robert Fogel’s (controversial) use of counterfactual analysis to explore the contribution made by the railways to American economic development in the nineteenth century (Fogel, 1964).
The overall impact of this new research agenda marked, as William Sewell Jr. has noted, “a move from economic history as the study of the forms of economic life to economic history as the historical study of the determinants of national economic growth” (Sewell, 2010: 152). It was now economic historians trained as economists, utilizing statistical techniques and mathematical models, who seized the commanding position in the discipline with their attention focused on investment, technological development, total factor productivity growth, historical national accounts, and long-term patterns of economic change.
It should come as no surprise that this new, quantitative-analytical study of economic history attracted numerous criticisms. By far, the most famous example of this came with the publication of Robert Fogel and Stanley Engerman’s dramatic reinterpretation of the viability of American slavery in Time on the Cross: The Economics of American Negro Slavery (Fogel and Engerman, 1974).
The standard critique of the ‘new economic history,’ which emerged in the 1960s and continues to this day, concentrated on the degree of abstraction applied by cliomatricians and the construction of historical narratives that correspond to the conceptual framework of conventional (neoclassical) economics. Critics argued that this tendency to view history purely through the prism of abstract models raised numerous methodological questions, ranging from the ease by which investigators could select independent variables in order to condition the results of regression analysis through to the dangers inherent in counterfactual propositions.
A distinctive feature of the ‘new economic history’ was the employment of the counterfactual hypothesis method. The basic principle here was simple: in order to establish the impact of a particular factor, it was necessary to consider what the situation would have been in the absence of that factor. Such questions could be asked through the use of economics theory, with the specification and criteria of the economic model serving to construct counter-to-fact conditions. Yet the end result, in the eyes of many, was to produce mere ‘fictions’ rather than detailed historical interpretations. As an example of this, we may note Fritz Redlich’s criticisms of Fogel’s use of counterfactual analysis in exploring the impact of the railways on American economic growth (Redlich, 1965).
The Search for Balance
From the 1970s onward, criticism and dissatisfaction from within the ranks of scholars associated with the ‘new economic history’ began to suggest a new way forward. Here the criticism was that while of the systematic application of static neoclassical analysis had destroyed the explanations of an older generation of economic historians, it provided limited answers and failed to construct clearer explanations of long-run economic change. To quote Douglass C. North:
It is the systematic use of standard neo-classical economic theory which has both provided the incisive new insights into man’s economic past and also serves to limit the range of enquiry.
North (1974): 1
There was now the realization for the need to provide a deeper examination of the structure of economies, the intricate interactions of economic and social forces, and the formal and informal rules that governed the ways people had lived their lives. In searching for balance, economic historians were therefore prompted to construct a broader analytical approach in order to evaluate the importance of factors such as entrepreneurship, cultural heritage, the evolution and impact of institutions, property rights, contract law, and government.
Thus, by the 1980s, it has been recognized that the study of economic history could not be practiced by rigid adherence to a methodological apparatus focused purely on quantitative techniques and standard economic analysis. Yet a more holistic form of the discipline – operating through a renewed framework that embedded economic development in the social, cultural, and political environment – clearly echoed themes that had been prominent within traditional economic history before being systematically ignored in the wake of the cliometric revolution. It was that move to enrich the study economic history from the 1980s onward, through the reintegration of a more traditional historical methodology, that has led one critic to identify the rise of cliometric economic history as, ultimately, a “revolution that bit its own tail” (Drukker, 2006).
The extreme application of the new methodology associated with the ‘new economic history’ led to the emergence of what may best be described as ‘historical economics.’ This is a variant of economic history as practiced by economic-trained economic historians whose objective is to use history to either illustrate theory or test hypothesis derived from theory. This fundamentalist form of cliometric/econometric history, with its research program derived from, and conforming to, the standards and practices of modern economics, suggests to its practitioners that the discipline continues to develop a rich understanding of modern economic growth. The reality, however, is that this formulation of economic history – with its focus on the utilization of historical time series as a means of testing sophisticated theoretical models – serves as a very poor basis on which to study the economic aspects of human existence. Indeed, ‘historical economics’ ultimately diminishes the richness of economic history by relegating it to little more than a branch of applied economics. Yet it must be recognized that ‘historical economics,’ although practiced by some scholars, is far from being the standard form of economic history that exists in the twentieth-first century.
The Future of Economic History
Where does economic history stand today? It is clear that, since the end of the Second World War, economic history has witnessed the dominance of economics-trained/based economic historians over history-trained/based economic historians. This is impossible to deny – the modern form of economic history is supported by the application of economic theory and quantitative techniques, and the majority of economic historians are to be found in leading PhD-producing economics departments. Although never achieving the same degree of dominance among European economic historians compared with their American counterparts, the successes of the ‘new economic history’ were formally recognized in 1993 with the awarding of the Nobel Memorial Prize in Economics to Robert Fogel and Douglass C. North.
It is certainly true the current status and character of economic history holds a very lowly position within the humanities. In briefly examining this issue we may note two key themes. The first concerns the activities of the early cliomatricians (in the 1960s and 1970s) who oversold their new methodology to historians by reinterpreting established interpretations through a blinding barrage of esoteric economic and quantitative methods. A second theme concerns recognition of important developments within the study of history since the 1980s, including the rejection of economic determinism associated with Marxist analysis, the compartmentalization of history into subdisciplines focusing on specific themes and case studies, and the impetus of the ‘cultural turn’ that emphasized literary and linguistic analysis over quantitative analysis. Thus, whereas economic history deals with the (dirty) world of trade, commerce, industrialization, and growth, the research agendas of social and cultural historians from the 1980s onward have increasingly focused on topics such as race, gender, identity, consciousness, and public memory. Both of the above themes – lasting reactions to the attitudes of the early practitioners of the ‘new economic history,’ and developments in the methodology of history since the 1980s – have made historians antipathetic to the study of economic history. From the perspective of the modern (cultural) historian, researchers in the area of economic history are easily dismissed for employing an inappropriate, narrow methodological framework that strips humanity from the historical narrative! Irrespective of the fact that economic history has moved beyond the strict methodological principle associated with the ‘new economic history’ (and so focusing on the relations between past economic events, institutions, social structures, and cultural change), the subject – indeed, it could be argued, anything connected with economic issues! – remains heavily tainted in the eyes of many historians.
Yet set within the context of the social sciences, economic history remains a rich and active field of investigation and it cannot be denied that the twenty-first century form of the discipline encompasses a variety of methodological approaches. While it is impossible to predict the future direction of research programs, it is evident that current practitioners are consciously working to strike a balance between formal theory (drawn from disciplines across the social sciences, and not just economics), quantitative methods, and historical techniques. The geographic range of current research now extends beyond the traditional areas of North America and Western Europe to include
- the history of economic development across medieval, early modern, and modern time periods;
- the history of debt, taxation, and credit relations;
- the causes and impact of financial crises within capitalist societies (clearly a growing area of interest since the global crisis of 2008);
- detailed case studies of different sectors and processes, including agriculture, demographic change, transport and communications, labor markets, education, and urbanization;
- the study of national economies/societies within the wider framework of global economic development and debates surrounding economic globalization;
- the Great Divergence of living standards between Asia and Western Europe (and, by extension, the emergence of Asian economic history as major area of research);
- quantitative analysis of the relationship between economic development, living standards, and biological well-being (otherwise known as anthropometric history); and
- debates connecting economic growth with environmental degradation (and hence the growing attention to environmental history).
Even the most cursory examination of these topics will show that the modern focus of economic history is definitely not concerned with the simplistic application of econometric methods to historical data!
It was noted in the introduction to this research paper that economic history possesses a powerful human dimension. Economic activity is human activity, and it is this core principle that, as Patrick O’Brien has highlighted, makes economic history “too fundamental to be virtually ignored by historians and too complex to be left to economists with their shortcuts into cross-country multiple-regression” (Lyons et al., 2008: 443). Similar themes are reflected in comments by Pat Hudson, who has argued that economic historians today are presented with opportunities to “critique the narrow purview of much contemporary economic theory” as well as “ambush the many cultural historians who appear to have forgotten what the economy is” (Hudson, 2010: 249). The great opportunities available to economic historians stem, therefore, from the position of the discipline between the cultures of the social sciences and the humanities, and hence the continuing importance their contributions can make to the historical study of economic life.
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