How Historians and Economists differ
Thursday, December 31, 2015 Filed in: Book Reviews
“The Social Relations of Farming in the Early American Republic: A Microhistorical Approach”
Naomi R. Lamoreaux
“Rethinking Microhistory: A Comment”
Journal of the Early Republic 26, Winter 2006
I’ve been reviewing mostly books on this page, which I think is most appropriate since relatively few people have the types of academic access that makes journal articles easy to find and read. But there’s no denying that academics still rely on articles to break new stories and (possibly more interesting) to fight over evidence and interpretation. One of the big battles in Early American History that impacts Environmental History and that has been fought primarily in journals is the question of the “Market Transition,” which at its core may really be a fight over the meaning and importance of Capitalism in American History.
In the first of a recent pair of articles that takes the debate on the market transition to a wider and much more interesting place, Martin Bruegel argues that the economic determinism represented by most business histories can and should be counteracted by a very detailed, microhistorical approach to the tasks and relationships necessary to running an early nineteenth-century farm. Bruegel criticizes histories that simply reduce “the scale of observation to illustrate the local impact of larger processes,” suggesting that they simply “normalize” peculiarities and thus validate the “general hypothesis” held prior to observation (525). In contrast, he says, microhistory “deepens and enriches the analysis of economic transactions” by providing “a more circumscribed, grass-roots focus [that] suggests…the malleability of conventions” (552).
Economic Historian Naomi Lamoreaux responds by suggesting that attempts like Bruegel’s verge dangerously on “antiquarianism” (a term she uses frequently, 555). Speaking for economists, Lamoreaux says she does “not see why making an analysis more complicated should necessarily be considered a good thing” (556). While at first glance, Lamoreaux’s suggestion that historians writing narratives are doing the same thing as economists building models might strike historians as annoying and just, intuitively, wrong; I think it’s incumbent on historians to think about this and articulate the differences.
Lamoreaux suggests that in order to lead to new knowledge, acts of “complication” must not only show us how the previous “simplification” failed to account for something both real and important, but they must then arrive at a new re-simplification that incorporates this new insight (557-61). Lamoreaux deploys Paul David’s elaboration of Robert Solow’s famous growth model to illustrate her point, in a way that I think illustrates both the validity of her point, and a fundamental gap between the interests of economists and those of historians. Her point is that economists have recently begun to understand that “Many economic phenomena are…’path dependent’ in that they are conditional on the particular sequence in which events unfolded” (558). This is important, because in addition to what might seem like a belated acknowledgement by economists of contingency and the Second Law of Thermodynamics, it means in Lamoreaux’s words, “that contingency matters—that history matters” (557-8). And maybe it means that economists realize there’s a difference between models and the way things actually work out in the real world. That’s good news for historians who want to work with economists, but Lamoreaux’s argument also highlights the main difference between the two fields.
“The words exogenous and endogenous are economic jargon,” Lamoreaux says, “but they capture an essential feature of all narratives. There is always an inside and outside to a story; there is always something external to the dynamics of a story that sets its events in motion” (558). This may or may not be true, but I suspect it is nowhere near as relevant to the historian as it seems to be to the economist. Lamoreaux argues that the two important elements of any story are the “equilibrium growth path” and the “external shocks” that can alter it. Shocks are usually big events, occasionally big people. “They are unlikely to be induced by the actions of people who are relatively powerless. If that is the case, however, what is the role for microhistory? What is the role for history written ‘on the ground’?” (559)
I think the answer is obvious to historians. But again, I think we have to spell it out. So here’s my answer, as it occurs to me today at least:
History can’t afford to, and most historians couldn’t bear to, reduce the past to a series of equilibrium growth paths and exogenous shocks. We’ve been in that trap before. The path dependency and contingency we see have infinitely more variables than those sought (and therefore usually found) by economists. Historians should take college-level statistics and econometrics courses, so they can understand the way economic models are constructed. No matter how much they strive to be empirically descriptive rather than normative, the fact that they put the equation at the center means that the assumptions, caveats, exceptions are all pushed to the margins. All of Environmental History, viewed this way, is basically an exploration of things economists have regularly dismissed as “externalities.”
And then there’s temperament. The economist wants to simplify: wants to find rules that can be projected into the future. To predict. Most historians I know would prefer to complicate a picture than to “clean it up.” Sometimes this introduces trivialities—but from whose perspective? Is it fair to say that everybody who fails to be big enough to be an “external shock” is irrelevant? Irrelevant to whom? Most historians, I think, are not interested in returning to a whiggish world where only elite white men have agency. In the end, I think it comes down to two things. Epistemology and markets. What do you think is important in the nature of reality? Waves, or particles? And, who do you think you’re working for?