2—
Economic History[*]
As a field of learning, economic history grew up at the end of the nineteenth century, drawing partly on the tradition of historical economics in Germany, with Gustav Schmoller as its leading exponent, and partly on the profuse use of historical illustrations by Adam Smith, Karl Marx, Alfred Marshall, and others as they expounded economic theory. History itself had become more rigorous in the nineteenth century, and the theory of evolution attracted economists interested in tracing the development of economic institutions. While some statistical material had been gathered since the times of William Petty and Gregory King, the production of statistics grew rapidly in the nineteenth century, particularly the last third, providing economists and historians with expanding material for analysis. By the end of the century, economic history had become a distinct subject in British universities, with its own professors. In the United States a few scholars professed themselves economic historians and were located generally in departments of economics, occasionally in departments of history. German universities organized seminars in economic and social history, and the economic aspects frequently dominated the social.
Economic history, M. M. Postan maintained, was produced, like the mule, by cross-breeding between economics and history, though he felt
[*] Unpublished. This article was commissioned by an economic encyclopedia but rejected on the ground that the editors wanted an entry focused on the role of economic theory in economic history. It has benefited from comments from William N. Parker, W. W. Rostow and Peter Temin, all of whom, however, urged the inclusion of more material on American economic historians than my background in European research has been able to provide.
under no compulsion to indicate which of the parents was asinine, nor to judge whether the outcome was sterile (quoted in Pollard, 1964, p. 291). The economics from which it derives rests on the wide definition of that subject by Alfred Marshall, who called it the study of mankind in the everyday business of life, rather than on Lord Robbins's narrower definition as the study of choices among ends using scarce means with alternative uses. The broader definition encompasses the "impurities" of technology, law, sociology and politics, which play significant roles in economic life, not to mention such vagaries of nature as the weather (Hancock, 1946). Economic history differs from history, moreover, in wanting to go beyond narrating what actually happened in the past to explaining why. In a debate over economic growth in Italy in the nineteenth century, the historian Rosario Romeo lamented that he was interested in finding out merely what happened in Italy, whereas his opponent, the economic historian Alexander Gerschenkron, was searching for general laws applicable to all growing economies (Gerschenkron, 1968, p. 121). While some economic historians go so far as to say, with Fernand Braudel (1984, p. 619), master of the rhetorical question, "Is not the secret and underlying motive of history to explain the present?", or even further — "The purpose of history is to enable man to understand the past and to increase his mastery over the society of the present" (E.H. Carr, quoted in S. Checkland, 1971, p. 308) — A. W. Coats (1966, p. 332) has warned against such an intention: "Those who study history in the hope of relieving present discontents are apt to distort the past".
In addition to uncovering generalizations about economic life and informing current policy, economic history has been put to another use: to test economic models for the extent of their applicability. Economic theories are frequently deduced from axioms, and sometimes from observation of one case or a small number of cases. The record of the past is a laboratory in a social science largely prevented from experimenting, in which theories can be tested for generality. The Stolper and Samuelson (1941) theorem, for example, based on two countries, two factors of production, and each producing two goods, explaining why the relatively scarce factor in each country wants protective tariffs on imports, while the abundant factor favors free trade, is helpful in combination with information on the political strengths of the separate factors in explaining the choice between tariffs and free trade in some countries on some occasions, but only some, as historical studies show (Kindleberger, 1978, chs 2, 3). Other tariffs are explained by public-choice theory (Pincus, 1977) and some tariff wars by game theory (Coneybeare, 1984). Leland Yeager, a theorist with a strong prior commitment to the purchasing-power-parity theory, makes a distinction
between using economic theory as a tool of historical research, which he applauds, and appealing to history to discriminate between correct and incorrect economic theories — in the instant case dealing with the gold standard. In Yeager's (1985, p. 662) view the facts underlying or informing economic theory "ought" to be more basic, dependable and enduring than the contingent facts or specific historical conditions and episodes.
G.R. Elton denies that general laws emerge from economic history, offering the example derived from English, French and Russian revolutions that political revolutions are engineered by social groups that have benefited from recent improvement in their economic position and status, claiming that there are many other revolutions in which the energizing force came from groups that were really destitute (Fogel and Elton, 1983, pp. 96–7). A more narrowly economic example comes from R. Cameron and a number of colleagues, testing the hypothesis that banks played a major role in the economic development of Europe after the industrial revolution in England. A series of case studies of Scotland, France, Germany and Belgium supported Gerschenkron's thesis on economic backwardness — that banks could substitute for missing entrepreneurship (Cameron, 1967). An extension of the original study to Austria, Italy and Spain, however, made clear that while banks such as the Crédit Mobilier founded in France in 1851, may be one means to vigorous growth in backward countries, they are not always sufficient to achieve it (Cameron, 1972).
Subject Matter
The subject matter of economic history has been shaped partly by the availability of materials for study, and partly by contemporary concerns. Among the earliest statistical series most easily accessible were those on prices, wages and money and banking. Thomas Tooke and William Newmarch wrote A History of Prices and the State of Circulation , in six volumes, the first two appearing in 1838. Thorold Rogers planned an eight-volume History of Agriculture and Prices in England , publishing two volumes in 1866, two more covering the period 1401–1583 in 1882, and volumes 5 and 6, dealing with 1584–1702, in 1887. He had collected material for two more volumes to bring the account to 1793 before his death. A popular version of the longer work was issued in 1884 as Six Centuries of Work and Wages . Studies of prices in France were produced by Labrousse (1933) and Hauser (1936), in Germany by Elsas (1936; 1940; 1949), for the Netherlands by Posthumus (1935), in Denmark by Friis and Glamann (1958), in Sweden by Jörberg (1972), and
for many other countries. Earl J. Hamilton's (1965) study of the "price revolution" of the sixteenth century, written in 1934 and based on the influx of silver from the New World after the discovery of America, has given rise to a notable debate (Outhwaite, 1969). As interest turned to working conditions, historical studies shifted to real wages, using nominal wages deflated by price series. In this area the work of Henry Phelps-Brown and Sheila Hopkins (1955, 1956, 1957, 1959) on wage rates, especially in the building trades of England, of François Simiand (1932) on France, and Gerhard Bry (1960) on Germany, deserve mention.
The central topics in the twentieth century up to World War II were the industrial revolution, a phrase made popular by Arnold Toynbee in lectures given in 1872 and published in 1884, and business fluctuations in prices and output. A variety of cycles of varying periodicity was claimed to have been discovered — one of 39 months, representing accumulations and run-offs in inventories, the so-called Kitchin cycle, named after its discoverer; another of eight to nine years associated with waves of investment in plant and equipment, the Juglar; a 20-year cycle associated with house construction, identified by Simon Kuznets; and a 50-year cycle in prices, but not in output, due to Kondratieff (for discussion, see Schumpeter, 1939). Kondratieff was unable to provide an explanation for the 50-year cycle, with peaks in 1817, 1873, 1920 (or 1929) and 1951, and troughs in 1848, 1896, 1936, and perhaps 1972. Rostow (1978), who provides the later dates, attributes the cycle to pressures of population against resource availability, and their relaxation, while J. W. Forrester (1989) ascribes it to periodic overinvestment in capital equipment. A simple explanation would lie in the random periodicity of major wars, but a recent study by a political scientist has sought to prove that the wars themselves have economic origins, and are endogenous (Goldstein, 1988). An even longer cycle of 150 years, with peaks in 1350, 1650, 1817 and 1974, had been adduced by Braudel (1984, pp. 76ff.) who relates it to major structural changes in the world economy. One of the first studies in economic history to use economic theory rigorously was Rostow's (1948) dissertation on Juglar cycles.
A major concern of economic history, in addition to prices, wages and cycles, has been the study of economic growth and development. Adam Smith's Wealth of Nations focused on the question. The historical school in Germany in the nineteenth century, incorporating Darwinian notions of evolution, propounded theories of economic evolution by stages, in which economies grew in per capita income and developed institutionally. Marx's theory, tracing the development of economic life from feudalism to capitalism, and projecting its ultimate arrival at socialism, is the most widely known, but there are others. List traces a
development from savagery, through pastoral life, agriculture, agriculture and manufactures, to agriculture, manufactures and trade, Bücher, from household economy, through town economy, national economy to international economy; Hildebrand, from barter, through money, to credit; the British historian, W.J. Ashley, set out a pattern that evolved from household to guild, the domestic system and factory; in the United States, N.S.B. Gras's system ran from village through town to nation and the world. In the postwar period, the notion of stages was revived by W.W. Rostow (1960). Rostow's system has five stages: traditional society, the development of preconditions, takeoff into sustained growth, the drive to maturity, and high mass consumption. Takeoff is the great watershed in his system. A similar conception comes from Gerschenkron (1968), who insisted, however, that substitutability among various types of institutions in fulfilling preconditions was possible; banks and/or government might substitute for individual industrial entrepreneurs, depending on a country's degree of backwardness. His concept, analagous to Rostow's takeoff, was that of a "big spurt." Without explicitly adopting the concept of stages, Sir John Hicks (1969), tracing history up to the start of the industrial revolution, outlined how traditional economies based either on custom or command developed into market economies, first centered around city-states and then expanding to fill out large nations when these grew to become political units with effective administration.
Hildebrand's scheme of whole economies evolving along a path from barter through money to the use of credit was sharply attacked by the medieval economic historian M.M. Postan (1973, pp. 2–6), who observed that credit was well developed institutionally, though circumscribed in use, at the times that barter and money flourished. A wider attack on the German concept of stages comes from Braudel (1981; 1982; 1984). He argues that the materialism of the household, largely self-contained and using little money, all of it copper, existed side by side in Europe with the market economy of towns which used silver money, and with the world economy of what Adam Smith called "distant trade," using silver, gold, and especially credit in the form of bills of exchange. A similar view is set out in Edward Whiting Fox (1971), distinguishing the France of the ports and the gateway cities of Paris and Lyons, from "the other France" of the interior. It is further illustrated in Eugen Weber (1976), who describes the changes in thought and practice produced by the French revolution in Paris and the larger towns of France as they penetrated slowly into the countryside, with peasants taking a century to become "Frenchmen" with the help of conscription in 1870 and of universal education.
A prominent role in the takeoff in Rostow (1960) is taken by so-
called "leading sectors", although it is not completely clear whether the designation is based on a growing sector's size, its speed of growth, or its impact in transmitting rapid growth to other sectors with which it is linked. A debate has taken place in the theory of economic development between, on the one hand, proponents of balanced growth who held that because of Say's Law, stating that supply creates its own demand, an economy had to grow in all sectors simultaneously at rates determined by the income elasticities for the products in question, since otherwise a sector that grew ahead of the others would be unable to sell its output (Nurkse, 1953), and those, on the other hand, who denied such necessity. The theory of balanced growth implicitly assumed a closed economy in which excess supply could not be sold abroad as exports, or deficiencies in inputs or consumption made up through imports. Even assuming a closed economy, however, the opposing theory argued that a sector or industry far in advance of others would stimulate them in one of two ways, either by creating a demand for other sectors' outputs as inputs in the leading sector — a backward linkage — or by making a supply of cheap inputs available to other industries — a forward linkage (Hirschman, 1959). This insight has been used to explain how an innovation in one industry or branch, such as the flying shuttle that increased productivity in weaving, created an enormous increase in demand for cotton yarn that led to innovations in spinning. This is part of the basis of the cliché that necessity is the mother of invention, with an additional element, discussed below, that invention may respond to scarcities in factors of production — resources, manpower or capital — that create a different sort of bottleneck. That invention and innovation respond to economic pressures of this sort is undeniable (Schmookler, 1966), but they can also occur, like resource discoveries, exogenously. One brand of economic history has attributed critical significance in economic advance to a few crucial innovations: hay that enabled cattle and other livestock to be better fed in winter and emerge stronger in springtime; the rudder which allowed the Venetians to build larger ships beyond the capacity of an oar to steer; the latten fore-and-aft sail that made it possible for the Portuguese in the fifteenth century to extend the range of their ships by enabling them to tack home against the trade winds; or the horse collar which substituted the horse for the ox and sped the process of ploughing. These and similar innovations were presumably developed in response to economic need. But the metallurgist Cyril Stanley Smith (1970), has indicated that many innovations are the work of artists in search of better or more beautiful materials rather than necessity — for example, sculptors working with metal alloys such as bronze, or builders of cathedrals developing the extrusion process to make lead channels to hold
stained glass. And some inventions, such as Berthollet's discovery of the process for producing chlorine, were undertaken solely in response to a demand for beauty, a luxury attribute in a commodity, rather than a necessity. The kings of England wanted their linens white, and sent them to Holland for bleaching in whey and sunlight. Chlorine enabled the bleaching to be done anywhere.
A highly original Canadian economic historian, Harold Innis (1930), has woven the history of the development of his country about the relations of different commodities to their economic environment. Canadian development, for example, was advanced hardly at all by the export of beaver pelts to Britain as raw material for the making of felt hats: production of beaver fur required large amounts of land, and little labor or equipment, and accordingly did not lead to settlement. The cod fisheries, on the other hand, had a differential effect, turning on whether the fishermen from Europe did or did not have access to cheap salt. Those with salt, notably the Portuguese and the French, could salt down their catches on board and had no reason to go ashore in the New World; those without, the British, were forced to land to dry the cod in the sunshine, formed settlements and established a colony. The major stimuli to Canadian development, however, were the timber industry and mining, both of which required large amounts of labor and then agriculture to feed the workers. The spread of agriculture to the Plains ultimately led to railroads. Through similar linkages the gold rush in California induced the development of agriculture to feed the miners; in due course agricultural development outstripped mining. Innis's staple theory of economic development can be extended to the recruitment of entrepreneurs, with merchants in the putting-out system readily becoming manufacturers of cloth, and locksmiths, clockmakers, wheelwrights, and the like, going into the mechanical industries, and apothecaries into chemicals.
Various historians have emphasized different aspects of the growth process. David Landes pays particular attention to technology, both in his discussion of the industrial revolution and subsequent development (Landes, 1968), and in his study of clocks and watchmaking, which also treats the increasing preoccupation with time in the modernization process (Landes, 1983). Schumpeter (1949) concentrated on entrepreneurs, including their background in class, national character, and like. The impact of religion on the development drive has been treated by Weber (1904) and Tawney (1952), while a Swedish economic historian (Samuelsson, 1961) casts doubt on their conclusion that the Protestant parts of Europe responded to development stimuli more fully than the Catholic. The question of attitudes arises especially in the question whether there has been entrepreneurial failure, and the
beginnings of economic decline — a stage not included in Rostow's model. In writing on economic dynamics, Burton Klein (1977) makes a distinction between the "happy-warrior" type of entrepreneur who breaks out of constraints, takes risks, and produces "fast history," exchanging micro-stability, with many firms failing, for macro-economic growth, and middle-class rationality which avoids risks, makes for micro-economic stability for firms, but slow overall growth and slow history. At one time David Landes (1951) and John Sawyer (1951) each ascribed the slower growth of France than that of Britain between the French revolution and 1940 to the dominance in the former of the family firm, interested in avoiding risks and preserving the family fortune for future generations.
Economic historians have long attributed importance in economic growth to natural resources, in explaining, for example, why the industrial revolution came first in Britain instead of Holland or northern Italy, which were richer than Britain at the end of the seventeenth century. Habakkuk (1962) believes that British inventions in the industrial revolution tended to economize on natural resources, in which that country was less well endowed than the United States, whereas US inventions tended to be labor-saving because labor was the scarce factor there. Two difficulties confront this view: first, that if the comparison runs between Britain and France, rather than between Britain and the United States, Britain with its abundant coal was resource-rich, not resource-poor; second, that in static equilibrium, though perhaps not in a dynamic model, the marginal return to a currency unit's worth of input of any factor of production should be the same as that of any other.
Still related to factor endowments and country growth is the Lewis (1954) model of growth with unlimited supplies of labor, with its affinity to the Marx model of capitalism's exploitation of the mass reserve army of the unemployed, the lumpenproletariat, after the primitive accumulation of capital from the enclosures that drove labor off the land into the city. In the Lewis model, excess labor holds down wages, and ensures that any exogenous increase in the marginal-revenue product of labor goes to land or capital as rent or profits. To the extent that the rent and profits are reinvested and yield still higher potential returns to labor, the process becomes self-reinforcing until the supply of labor runs out. At this point further investment raises wages and dampens or reverses the rise in profits and rents. It has been hypothesized that this model helps explain the rapid rise in British growth after the industrial revolution, and the failure of wages to rise from the 1770s to 1850, but the suggestion has been denied (Pollard, 1978). Agriculture's failure to release peasant labor tied to the land has been blamed for slow French
growth, although questions have lately been raised whether both the speed of British growth and the leisurely pace of French have not been exaggerated. The United States, on the other hand, can be said to have grown with an analogous model of growth with unlimited supplies of land, with improvements in productivity going to labor rather than to agriculture with its free land until the frontier was finally fully exploited.
Much study of economic growth is statistical in character, the investigators seeking to measure inputs and outputs with great care and to range the resulting data against various theories of growth and development. The pioneering effort among contemporary economists was perhaps that of Colin Clark (1957), but the outstanding efforts, for which he received the Nobel prize, were those of Simon Kuznets (1966). Major studies on leading countries have been prepared under the editorship of Moses Abramovitz and Kuznets (e.g. Carré et al. , 1972; Matthews et al. , 1982). Mathias and Postan (1978) consists of 1500 pages devoted to a study of particular inputs in particular countries in recent years. A number of individual scholars pursue work along these lines, notably Paul Bairoch, Edward Denison, and Angus Maddison. In virtually all these investigations, however, after great ingenuity has been expended in attributing fractions of economic growth to one or another input, or to such factors as economies of scale, investment in human capital (education), and the like, there remains an unexplained residual of sizeable proportions that is ascribed, somewhat unsatisfactorily, to technical progress or some other unmeasurable aspect of the process.
Studies of economic growth, prices, wages and cycles have focused primarily on countries. There are, of course world studies such as Braudel's Civilization and Capitalism, 15th–18th Century (1981; 1982; 1984) and Wallerstein's The Modern World System (1974; 1980; 1989), or Woodruff's Impact of Western Man (1966), studies of continents and subcontinental areas, such as Latin America, the Middle East, the Pacific Rim, and of areas within single countries. To celebrate the 1960 centennial of Italian unification, the Banca Commerciale Italiana commissioned an overall economic history of Italy, only one volume of which was finished before the author's death (Luzzato, 1963), plus some 20 regional studies covering separate provinces as a whole or more limited sectors or functional aspects such as agriculture, banking and industry in particular provinces. A few economic historians compare one country with another: France with Germany (Clapham, 1953), industrial Belgium with late industrializer Holland (Mokyr, 1974), and especially France and Britain (Kindleberger, 1964; Crouzet, 1972; O'Brien and Keyder, 1978). Occasional studies concentrate on bilateral relations between countries in a given function over a specific time period (Wilson, 1941; Ferns, 1960). Still more narrowly focused com-
parisons have run between the cities of Hamburg and Frankfurt am Main in West Germany (Böhme, 1968) and between Antwerp and Amsterdam (Van Houtte, 1972).
National studies have been criticized as too narrow, and, with transport continuously cheaper and economic integration under way, perhaps even anachronistic (Parker, 1984, p. 184). As already noted, Braudel and Wallerstein adopt world frameworks. On the other hand, Crouzet and Pollard regard the country as too big a unit for the analysis of the industrial revolution because of the diversified experience of various regions, affected, say, by the presence or absence of guilds. Parker concedes that the nation is a conventional accounting unit, and that economic history must make room for state policy, on the one hand, and national character, on the other. He insists, however, that attitudes, techniques and practices are not identical within given countries, and spread from parts of one nation to parts of another. He is particularly taken by the impact of the coal deposit running from the Pas de Calais in France, through Walloon Belgium to South Holland and the Ruhr. Significant differences exist, however, between the mining laws, entrepreneurial attitudes and the education of mining engineers in France and West Germany so that it is difficult to escape entirely from the national framework (Parker, 1984, ch. 5).
Lord Acton, quoted by W. Ashworth (1971), urged historians to study problems, not periods, and his advice has been widely followed in economic history. A.P. Usher participated with co-authors in an economic history of Europe (Bowden et al. , 1937) and wrote a textbook on the industrial history of England. His major contributions, however, were made through monographs: on the grain trade of France (Usher, 1913); the history of mechanical inventions (Usher, 1929, rev. 1954); and early deposit banking in the Mediterranean area (Usher, 1943). Such a reach was wide. Most scholars of given economic functions and processes specialize, and particular branches of economic history have grown up around technology, demography, management and industrial organization, money and banking, particular industries, including agriculture, individual companies, shipping, migration and the like. Financial history has been characterized as falling into four broad categories: the orthodox that explains the development of money and banking generally, or in a given country, and traces the evolution of financial instruments and techniques of commercial or central banking for some considerable distance; the heroic that assigns a leadership role, usually in economic growth, to banks and bankers; the populist that emphasizes how bankers, merchants and their political allies have exploited the common run of people in their own countries or in foreign countries or colonies; and the statist that underlines the role of central and com-
mercial banks in support of the state (Jones, 1982). The orthodox is illustrated by Pierre Vilar (1976), or by the detailed studies of the Bank of England by Andréadès (1909), Clapham (1945) or Sayers (1976). Notable among the heroic is Cameron's (1961) monograph claiming that the Crédit Mobilier of France facilitated the development of all of Europe, either by its own lending or by example. Volume 3 of Braudel's Civilization and Capitalism (1984) furnishes a populist view of merchants and bankers. Connections of banks with the state become especially clear in connection with war: the Bank of England was established in 1694 in the Nine Years War, the Bank of France during the Napoleonic wars, and the National Bank Act in the United States during the Civil War. In all instances, the new institutions or legislation provided help for the state's finances.
Many topics in economic history become the subjects of intense discussion, to such an extent that a British publisher, Methuen, has published a series of small books covering "Debates in Economic History." These deal with such issues as the role of agriculture in British growth, the causes of the industrial revolution in England, the growth of English overseas trade in the seventeenth and eighteenth centuries, and the like. Many hardy perennials are posed and debated as problems: the economic bases of the enclosures in Britain, produced by changes in the relative prices of wheat and wool, by the reduced need for real insurance against crop failure inherent in the three-field system, or by the demand for defining property rights to stimulate output; whether the inflation in Germany after World War I was the consequence of monetary expansion by the Reichsbank or had its origin in balance-of-payments problems, arising in the first instance from reparations payments, and then from the need to restock the economy; the decline of the British aristocracy in the seventeenth century; the standard of living in Britain during the Napoleonic wars and afterwards; whether the origin of the price revolution of the sixteenth century was monetary — the influx of American silver — or real — the faster growth in population than in agricultural output; the Poor Laws in England up to 1832; the capital shortage in Germany in the mid-nineteenth century; and so on.
New interest in a topic or the development of new theories can lead to renewed study and new interpretations. The German inflation from 1914 to 1923 was widely analyzed in the 1920s and 1930s; with the revival of the quantity theory of money after World War II and the inflation of the 1970s, the topic aroused new interest and a series of monographs and symposia appeared (e.g. Holtfrerich, 1980). Jacob Viner (1924) studied the balance of payments of Canada from 1896 to 1913, a period of heavy borrowing from London, testing, and to his own satisfaction
proving, the price-specie-flow mechanism under the gold standard as an effective means for transferring capital from one country to another in real goods and services. His interpretation was questioned at the time by R.H. Coats (1915), the Dominion statistician. With the development of the Keynesian foreign-trade multiplier, G.M. Meier (1953) reworked the Viner material to assign a higher role to income movements than to gold movements and prices. Still later, J. Ingram (1957) went over the record again, incorporating a Harrod-Domar growth model that allowed for the growth of output and explained some phenomena that Viner left unresolved. More recently a new monetary interpretation of balance-of-payments adjustment, relying on prices held steady by worldwide arbitrage under purchasing-power parity, has undertaken a fresh assault on the Viner interpretation (Rich, 1984).
Causation in Economic History
Some purely random or accidental events produce significant effects in economic history: crop failures, extremes of weather, plant diseases, and perhaps war, discoveries and epidemics. The "perhaps" is required especially for the last two sets of accidental causes, since it has been suggested that plagues, such as the Black Death in the fourteenth century, were the result of improvements in transport which brought people with diseases held in check by antibodies built up over years into contact with other peoples without such resistance (McNeill, 1976); and Pierre Vilar (1976) has propounded the theory that the search that led to Columbus's discovery of the New World was caused by the lack of money in Europe as a consequence of the drain of specie to the Levant and the Far East, and a conscious search for gold. War is usually regarded as the product of political factors and exogenous to economics. In the Marxian lexicon, on the other hand, war is an endogenous outcome of the struggle for markets under capitalism.
Apart from accidental factors with economic consequences, the search for causes in economic history poses great difficulty. In general equilibrium many causes tend to be necessary to a given outcome, none sufficient. In partial-equilibrium analysis, when a few factors are studied and all others, including feedbacks, are impounded under the head of ceteris paribus , there is danger of abstracting from one or more necess ary causes. Occam's razor and the principle of parsimony call for simplicity and elegance, especially the elimination of as many trivial contributing causes as possible. Some economic historians believe that in economic history one must seek economic causes for economic outcomes to the greatest extent possible (Hobsbawm, 1965, p. 157), but
Hicks (1969, p. 23) views economic history as a forum where economists, political scientists, lawyers, sociologists and historians can talk with one another. Parsimony has led many economic historians to move, if not all the way to mono-causality, at least to a position that emphasizes a single cause above others. Major causes singled out by various economic historians include money and banking (Cameron, Gerschenkron, Hoselitz, Vilar, etc.); property rights (North and Thomas); resources (Parker); technology (Landes); widening of the market (Adam Smith); capital accumulation (Ashton); population growth as a response to a series of bumper crops (Deane); and so on. Ashton (1949, p. 167) objects to economic historians who go to great length to systematize economic history, noting that facts are stubborn, and can be viewed either logically or chronologically, but seldom both at the same time. He further objects to the coiners of phrases such as commercial revolution, industrial revolution, Great Depression, Juglars, proto-industrialization, etc., in which, he claims, rhetoric is substituted for thought (Ashton, 1949, p. 163).
A typical problem involves many causes, all to some degree necessary, none sufficient, taking the form:
where E is the effect and the C s are contributing causes. McClelland (1975) points to the difficulty of knowing whether the list of C s is complete, and suggests that it is virtually impossible to say that the effect E is "always" or "necessarily" ahead of the function f . In this case causation becomes little more than observed correlations. The new "scientific" economic history seeks to build models along the lines above and to calculate weights for the various C s by the device of the "counterfactual," removing one cause at a time and calculating the outcome without it. The social saving of the railroad in US economic growth was deemed to have been small, using a model that had growth dependent on various forms of transport — horse and wagon, canals and railroads — all, however, with constant-cost functions over the full range of possible output, and all in use simultaneously (Fogel, 1964). In theoretical terms, of course, any one form of transport in these circumstances can be dispensed with and the others expanded to take its place. One economic historian, contrasting the economist's approach to that of the historian, insists that causation can be found only in models, since it is unobservable in real life. He contrasts the formal, optimizing behavioral models of the economist, however, with the vague, multidisciplinary heuristic models of the historian, presumably to the derogation of the latter (Fleisig, 1985, p. 352).
Much of the so-called new scientific history has a revisionist cast to it,
taking some cliché of history and seeking by rigorous methods to turn it on its head. In addition to the standard view that the railroad was central to US economic growth that Fogel sought to dismiss, Fogel and Stanley Engerman (1971) set out of disprove that slavery was a dying institution before the US Civil War, demonstrating with ingeniously derived data, manipulated with statistical sophistication, that slave agriculture was as efficient as that of whites in the north. Donald McCloskey, Peter Temin, Lars Sandberg and others undertook to demonstrate that the British entrepreneur was not responsible for the relative decline of the British economy after about 1875, as widely held, by "proving" that entrepreneurs were maximizing profits within the limits of available supplies and existing demand, but using static models in which entrepreneurs have no capacity to break bottlenecks, penetrate into new markets, or innovate (slow history). Patrick O'Brien and Caglar Keyder (1978) try to establish with assorted statistical material that France was richer per capita in 1785 than Britain, this in the face of the general view to the contrary. A growing number of historians are attacking the view that there was an industrial re volution, as opposed to an e volution, in England (Cameron, 1989, pp. 163–5). A German economic historian has lately attempted to subvert the general view of the Marshall Plan's importance by maintaining that the Federal Republic had sufficient land, labor and capital to grow at the rate achieved with Marshall Plan aid (Abelshauser, 1990). His model, however, assumed an absence of bottlenecks.
A scholarly but sharp confrontation between a "cliometrician", skilled in the use of economic theory and sophisticated econometrics in writing economic history, and a traditional historian, relying on a wide range of evidence from archives, reports, contemporary accounts, biographies and the like and "vague, multidisciplinary, heuristic models", suggests that neither approach has a marked advantage over the other, and that each must be employed by its practitioners with great care. "Scientific" history runs the risk of embodying its conclusions in its assumptions; traditional history the danger that its evidence may be unrepresentative, with the historian smuggling untenable assumptions into an apparently straightforward narrative (Fogel and Elton, 1983, p. 124). The scientific historian claimed that his method called attention to important processes, hitherto ignored, and yielded findings that proved strikingly different from those of the old research. At the same time it was admitted that the statistical method substituted an ahistorical stereotype for real individuals who behaved often in different ways, and that cliometrics has failed to produce timeless generalizations or coherent accounts of given economies over extended periods of time (Fogel and Elton, 1983, pp. 63, 68).
Is Economic History Necessary?
Scientific economic history is sometimes said to be merely applied economics using historical data, but with most of the history removed. As graduate curricula in economics become more sophisticated in the mathematical theories they use, and in econometric and statistical techniques, economic history may be left to be picked up along with applied economics in general, and economic history in the traditional sense will be squeezed out of the curriculum altogether to make room for more and more high-powered mathematics. Economic historians for the most part resist this development, claiming that the past has useful economics, and that broad economic history, as opposed to narrow cliometrics, develops more facts, better facts, better economic theory, better economic policy and better economists (McCloskey, 1976). A panel of theorists and historians went beyond this in insisting that economic history honed the intuition, needed, along with analytical skill, in making an economist, helping develop alertness in allowing for the contingent as well as the systematic. Economic history, it was concluded, while certainly not sufficient to train an economist, was surely necessary to the education of one (Parker, 1986).
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