More Silliness from the History of Capitalism Folk

In the chronicle of Higher Education Jefferson Cowie asks “Why Are Economists So Small Minded?”

Sections from the article are in bold.

History is valuable, and, if the education of economists were more of an intellectual endeavor than a pipeline to careers in finance, it could be one intellectual component in a basket of approaches to get students to think more widely. Unfortunately, economic historians tend to be busy reducing history to the application of contemporary models to old data sets. And they don’t like to talk with people in the history department very much.

He quotes approvingly from Piketty:

To put it bluntly, the discipline of economics has yet to get over its childish passion for mathematics and for purely theoretical and often highly ideological speculation, at the expense of historical research and collaboration with the other social sciences. Economists are all too often preoccupied with petty mathematical problems of interest only to themselves. This obsession with mathematics is an easy way of acquiring the appearance of scientificity without having to answer the far more complex questions posed by the world we live in.

Hard to imagine why economists wouldn’t want to talk this historian.

Professor Cowie: “Let’s chat about your childish passions, ideological speculation, and petty preoccupations.”

Economist: “Maybe some other time.”

I don’t know what he means by “reducing history to the application of contemporary models to old data sets.” He of course does not provide any specific examples, just generalizations. The economic historians I know of are collecting evidence to create new data sets and developing theories to try to better understand the past.

The criticism that economists are preoccupied with purely theoretical mathematical models is not supported by the evidence. For instance in the latest American Economic Review (Feb 2016) 7 of 9 papers are empirical. It is not some unusual special issue. All the recent John Bates Clark Medalists have won for their empirical work. It is like these critics, like Cowie, picked up their critique of economics from their adviser, who got it from their adviser, with the trail going back to somebody in the 1960s or 1970s.

What really irritated me was the suggestion that economic historians should be more like the historians of capitalism.

In the past several years, there has been a resurgence of interest in the history of capitalism. What once might have been called the study of "political economy" is an emerging intellectual framework combining an array of methods and questions with a return to putting capital at the center of the historical narrative. The hope of those engaged in the history of capitalism is to challenge the clinical modeling of social life. There is not one thing we can call "capitalism," after all, but a contingent historical assemblage of work, investment, production, politics, and trade from the 15th-century spice trade through slave cotton to today’s digital labor.

The new historians of capitalism tend to be more consciously ecumenical in their research and interpretive methods. Their strength is the opposite of mainstream economics. As the historian Louis Hyman has put it:

"When the story calls for linear regression, they use linear regression. When the story calls for the backstory of the commodity, they de-fetishize and figure out the story. When gender is the dominant force in the archive, they use feminist theory. Leveraging the ease of data analysis, the historians of capitalism display a return to numbers that has been lacking in historical scholarship of late. While math is widely used, its models are not lionized. Data does not displace the human element in history, but complements it. It is used to clarify and explain, but not be so complex that it can’t be conveyed to normal humans."

Which historians of capitalism, other than Hyman himself, are using regression analysis? I have read Baptist, Beckert, Mihms, Hyman, Ott and Levy. I don’t recall seeing it there. Maybe, it was and I forgot. If it is there, I look forward to someone reminding me where. 

The primary features of the new history of capitalism seem to be hostility toward economics (including economic historians), ignorance or disregard of the work done by economic historians, and a willingness to play fast and loose with numbers.

It would be nice if they would learn enough about economics not to write about things like "productivity per person." And I can’t count how many times I have seen someone repeat Baptist’s entirely made up number about the share of GDP accounted for by slave produced cotton as if he had actually done something. He is the most egregious example, but he is not alone. There are other examples from other historians of capitalism that I have mentioned in previous blog posts.

I was very optimistic when I first heard about the new history of capitalism. I am the person that it should appeal to. I believe that history should play a larger role in economics and that economists should pay more attention to other disciplines. I did a Masters in Economic History from the LSE before getting a Ph.D. in Economics. While doing those degrees, I took graduate courses in other disciplines: sociology at the LSE and political science at Washington University. Most of my work does not contain fancy math or statistical analysis. If the new historians of capitalism were actually doing what Hyman says they are doing I would still be optimistic, but they are not. They are content to throw out dated critiques of economics, generalization about economist’s motives, and made up numbers about what happened in the past. The new historians of capitalism need to do better. Their audience deserves it.


Note: This post has been edited from its original version, which did not make clear that the second section from the article  was Cowie quoting from Piketty.