Economic history is the academic study of economies or economic events of the past.
Research is conducted using a combination of historical methods, statistical methods
and the application of economic theory to historical situations and institutions. The
field can encompass a wide variety of topics, including equality, finance, technology, labour,
and business. It emphasizes historicizing the economy itself, analyzing it as a dynamic
force and attempting to provide insights into the way it is structured and conceived.
Using both quantitative data and qualitative sources, economic historians emphasize understanding
the historical context in which major economic events take place. They often focus on the
institutional dynamics of systems of production, labor, and capital, as well as the economy's
impact on society, culture, and language. Scholars of the discipline may approach their
analysis from the perspective of different schools of economic thought, such as mainstream
economics, Marxian economics, the Chicago school of economics, and Keynesian economics.
Sub-disciplines of the field include financial and business history, which overlaps with
areas of social history such as demographic and labor history. The quantitative study
of economic history is also known as cliometrics. Historians have recently re-engaged with the
study of economic history in a new field calling itself history of capitalism.
Early history of the discipline Arnold Toynbee made the case for combining
economics and history in his pioneering study of the Industrial Revolution. Toynbee declared,
“I believe economics today is much too dissociated from history. Smith and Malthus had historical
minds. However, Ricardo – who set the pattern of modern textbooks – had a mind that was
entirely unhistorical.” There were several advantages in combining economics and history
according to Toynbee. To begin with, it improved economic understanding. “We see abstract
propositions in a new light when studying them in relation to historical facts. Propositions
become more vivid and truthful.” Meanwhile, studying history with economics makes history
easier to understand. Economics teaches us to look out for the right facts in reading
history and makes matters such as introducing enclosures, machinery, or new currencies more
intelligible. Economics also teaches careful deductive reasoning. “The habits of mind
it instils are even more valuable than the knowledge of principles it gives. Without
these habits, the mass of their materials can overwhelm students of historical facts.”
In late-nineteenth-century Germany, scholars at a number of universities, led by Gustav
von Schmoller, developed the historical school of economic history. It argued that there
were no universal truths in history, emphasizing the importance of historical context without
quantitative analysis. This historical approach dominated German and French scholarship for
most of the 20th century. The historical school of economics included other economists such
as Max Weber and Joseph Schumpeter who reasoned that careful analysis of human actions, cultural
norms, historical context, and mathematical support was key to historical analysis. The
approach was spread to Great Britain by William Ashley and dominated British economic history
for much of the 20th century. Britain's first professor in the subject was George Unwin
at the University of Manchester. Meanwhile, in France, economic history was heavily influenced
by the Annales School from the early 20th century to the present. It exerts a worldwide
influence through its journal Annales. Histoire, Sciences Sociales.
Treating economic history as a discrete academic discipline has been a contentious issue for
many years. Academics at the London School of Economics and the University of Cambridge
had numerous disputes over the separation of economics and economic history in the interwar
era. Cambridge economists believed that pure economics involved a component of economic
history and that the two were inseparably entangled. Those at the LSE believed that
economic history warranted its own courses, research agenda and academic chair separated
from mainstream economics. In the initial period of the subject's development, the LSE
position of separating economic history from economics won out. Many universities in the
UK developed independent programmes in economic history rooted in the LSE model. Indeed, the
Economic History Society had its inauguration at LSE in 1926 and the University of Cambridge
eventually established its own economic history programme.
In the United States, the field of economic history was largely subsumed into other fields
of economics following the cliometric revolution of the 1960s. To many it became seen as a
form of applied economics rather than a stand-alone discipline. Cliometrics, also known as the
New Economic History, refers to the systematic use of economic theory and econometric techniques
to the study of economic history. The term was originally coined by Jonathan R. T. Hughes
and Stanley Reiter and refers to Clio, who was the muse of history and heroic poetry
in Greek mythology. One of the most famous cliometric economic historians is Douglass
North, who argued that it is the task of economic history to elucidate the historical dimensions
of economies through time. Cliometricians argue their approach is necessary because
the application of theory is crucial in writing solid economic history, while historians generally
oppose this view warning against the risk of generating anachronisms.
Early cliometrics was a type of counterfactual history. However, counterfactualism was not
its distinctive feature; it combines neoclassical economics with quantitative methods in order
to explain human choices based on constraints. Some have argued that cliometrics had its
heyday in the 1960s and 1970s and that it is now neglected by economists and historians.
In response to North and Robert Fogel's Nobel Memorial Prize in Economics in 1993, Harvard
University economist Claudia Goldin argued that:
economic history is not a handmaiden of economics but a distinct field of scholarship. Economic
history was a scholarly discipline long before it became cliometrics. Its practitioners were
economists and historians studying the histories of economies... The new economic history,
or cliometrics, formalized economic history in a manner similar to the injection of mathematical
models and statistics into the rest of economics.
The relationship between economic history, economics and history has long been the subject
of intense discussion, and the debates of recent years echo those of early contributors.
There has long been a school of thought among economic historians that splits economic history—the
study of how economic phenomena evolved in the past—from historical economics—testing
the generality of economic theory using historical episodes. US economic historian Charles P.
Kindleberger explained this position in his 1990 book Historical Economics: Art or Science?.
Economic historian Robert Skidelsky argued that economic theory often employs ahistorical
models and methodologies that do not take into account historical context. Yale University
economist Irving Fisher already wrote in 1933 on the relationship between economics and
economic history in his "Debt-Deflation Theory of Great Depressions":
The study of dis-equilibrium may proceed in either of two ways. We may take as our unit
for study an actual historical case of great dis-equilibrium, such as, say, the panic of
1873; or we may take as our unit for study any constituent tendency, such as, say, deflation,
and discover its general laws, relations to, and combinations with, other tendencies. The
former study revolves around events, or facts; the latter, around tendencies. The former
is primarily economic history; the latter is primarily economic science. Both sorts
of studies are proper and important. Each helps the other. The panic of 1873 can only
be understood in light of the various tendencies involved—deflation and other; and deflation
can only be understood in the light of various historical manifestations—1873 and other.
Scope and focus of the discipline today The past three decades have witnessed the
widespread closure of separate economic history departments and programmes in the UK and the
integration of the discipline into either history or economics departments. Only the
LSE retains a separate economic history department and stand-alone undergraduate and graduate
programme in economic history. Cambridge, Glasgow, LSE, Oxford, Queen's, and Warwick
together train the vast majority of economic historians coming through the British higher
education system today, but do so as part of economics or history degrees. Meanwhile,
there have never been specialist economic history graduate programs at universities
anywhere in the US. However, economic history remains a special field component of leading
economics PhD programs, including University of California, Berkeley, Harvard University,
Northwestern University, Princeton University, the University of Chicago and Yale University.
Despite the pessimistic view on the state of the discipline espoused by many of its
practitioners, economic history remains an active field of social scientific inquiry.
Indeed, it has seen something of a resurgence in interest since 2000, perhaps driven by
research conducted at universities in continental Europe rather than the UK and the US. The
overall number of economic historians in the world is estimated at 10400, with Japan and
China as well as the U.K and the U.S. ranking highest in numbers. Some less developed countries,
however, are not sufficiently integrated in the world economic history community, among
others, Senegal, Brazil and Vietnam.
Part of the growth in economic history is driven by the continued interest in big policy-relevant
questions on the history of economic growth and development. MIT economist Peter Temin
noted that development economics is intricately connected with economic history, as it explores
the growth of economies with different technologies, innovations, and institutions. Studying economic
growth has been popular for years among economists and historians who have sought to understand
why some economies have grown faster than others. Some of the early texts in the field
include Walt Whitman Rostow's The Stages of Economic Growth: A Non-Communist Manifesto
which described how advanced economies grow after overcoming certain hurdles and advancing
to the next stage in development. Another economic historian, Alexander Gerschenkron,
complicated this theory with works on how economies develop in non-Western countries,
as discussed in Economic Backwardness in Historical Perspective: A Book of Essays . A more recent
work is Daron Acemoglu and James A. Robinson's Why Nations Fail: The Origins of Power, Prosperity,
and Poverty which pioneered a new field of persistence studies, emphasizing the path-dependent
stages of growth. Other notable books on the topic include Kenneth Pomeranz's The Great
Divergence: China, Europe, and the Making of the Modern World Economy and David S. Landes's
The Wealth and Poverty of Nations: Why Some are So Rich and Some So Poor .
In recent decades, and notably since the global financial crisis of 2007–2008, scholars
have recently become more interested in a field which may be called new new economic
history. Scholars have tended to move away from narrowly quantitative studies toward
institutional, social, and cultural history affecting the evolution of economies. The
focus of these studies is frequently on "persistence", as past events are linked to present outcomes.
Columbia University economist Charles Calomiris argued that this new field showed 'how historical
processes governed changes in institutions and markets.' However, this trend has been
criticized, most forcefully by Francesco Boldizzoni, as a form of economic imperialism "extending
the neoclassical explanatory model to the realm of social relations."
Conversely, economists in other specializations have started to write a new kind of economic
history which makes use of historical data to understand the present day. A major development
in this genre was the publication of Thomas Piketty's Capital in the Twenty-First Century
. The book described the rise in wealth and income inequality since the 18th century,
arguing that large concentrations of wealth lead to social and economic instability. Piketty
also advocated a system of global progressive wealth taxes to correct rising inequality.
The book was selected as a New York Times best seller and received numerous awards.
The book was well received by some of the world's major economists, including Paul Krugman,
Robert Solow, and Ben Bernanke. Books in response to Piketty's book include After Piketty: The
Agenda for Economics and Inequality, by Heather Boushey, J. Bradford DeLong, and Marshall
Steinbaum , Pocket Piketty by Jesper Roine , and Anti-Piketty: Capital for the 21st Century,
by Jean-Philippe Delsol, Nicolas Lecaussin, Emmanuel Martin . One economist argued that
Piketty's book was "Nobel-Prize worthy" and noted that it had changed the global discussion
on how economic historians study inequality. It has also sparked new conversations in the
disciplines of public policy.
In addition to the mainstream in economic history, there is a parallel development in
the field influenced by Karl Marx and Marxian economics. Marx used historical analysis to
interpret the role of class and class as a central issue in history. He debated with
the "classical" economists , including Adam Smith and David Ricardo. In turn, Marx's legacy
in economic history has been to critique the findings of neoclassical economists. Marxist
analysis also confronts economic determinism, the theory that economic relationships are
the foundation of political and societal institutions. Marx abstracted the idea of a "capitalist
mode of production" as a way of identifying the transition from feudalism to capitalism.
This has influenced some scholars, such as Maurice Dobb, to argue that feudalism declined
because of peasants' struggles for freedom and the growing inefficiency of feudalism
as a system of production. In turn, in what was later coined the Brenner debate, Paul
Sweezy, a Marxian economist, challenged Dobs definition of feudalism and its focus only
on western Europe. History of capitalism
A new field calling itself the "history of capitalism" has emerged in US history departments
since about the year 2000. It includes many topics traditionally associated with the field
of economic history, such as insurance, banking and regulation, the political dimension of
business, and the impact of capitalism on the middle classes, the poor and women and
minorities. The field has particularly focused on the contribution of slavery to the rise
of the US economy in the nineteenth century. The field utilizes the existing research of
business history, but has sought to make it more relevant to the concerns of history departments
in the United States, including by having limited or no discussion of individual business
enterprises. Historians of capitalism have countered these critiques, citing the issues
with economic history. As University of Chicago professor of history Jonathan Levy states,
"modern economic history began with industrialization and urbanization, and, even then, environmental
considerations were subsidiary, if not nonexistent."
Scholars have critiqued the history of capitalism because it does not focus on systems of production,
circulation, and distribution. Some have criticized its lack of social scientific methods and
its ideological biases. As a result, a new academic journal, Capitalism: A Journal of
History and Economics, was founded at the University of Pennsylvania under the direction
of Marc Flandreau , Julia Ott and Francesca Trivellato to widen the scope of the field.
The journal's goal is to bring together "historians and social scientists interested in the material
and intellectual aspects of modern economic life."
Academic journals and societies The first journal specializing in the field
of economic history was The Economic History Review, founded in 1927, as the main publication
of the Economic History Society. The first journal featured a publication by Professor
Sir William Ashley, the first Professor of Economic History in the English-speaking world,
who described the emerging field of economic history. The discipline existed alongside
long-standing fields such as political history, religious history, and military history as
one that focused on humans' interactions with 'visible happenings'. He continued, ' primarily
and unless expressly extended, the history of actual human practice with respect to the
material basis of life. The visible happenings with regard-to use the old formula-to "the
production, distribution, and consumption of wealth" form our wide enough field'.
Later, the Economic History Association established another academic journal, The Journal of Economic
History, in 1941 as a way of expanding the discipline in the United States. The first
president of the Economic History Association, Edwin F. Gay, described the aim of economic
history was to provide new perspectives in the economics and history disciplines: 'An
adequate equipment with two skills, that of the historian and the economist, is not easily
acquired, but experience shows that it is both necessary and possible'. Other related
academic journals have broadened the lens with which economic history is studied. These
interdisciplinary journals include the Business History Review, European Review of Economic
History, Enterprise and Society, and Financial History Review.
The International Economic History Association, an association of close to 50 member organizations,
recognizes some of the major academic organizations dedicated to study of economic history: the
Business History Conference, Economic History Association, Economic History Society, European
Association of Business Historians, and the International Social History Association.