How Economics Forgot History: The Problem of Historical Specificity in Social Science

How Economics Forgot History: The Problem of Historical Specificity in Social Science

How Economics Forgot History: The Problem of Historical Specificity in Social Science

How Economics Forgot History: The Problem of Historical Specificity in Social Science

Synopsis

This work questions the tendency of economic method to try and explain all economic phenomena by using the same catch-all theories and dealing in universal truths. It argues that theory has to take account of historical context.

Excerpt

This book has had a very long inception. It concerns a central problem in social science and some steps towards its resolution. I have believed for over thirty years that the problem of historical specificity was one of the key questions in the social sciences. This problem starts from the presumption that different socio-economic phenomena may require theories that are in some respects different from each other. Essential variation among objects of enquiry may impose limits on successful explanatory unification. An adequate theory of (say) the feudal system may differ from an adequate theory of (say) capitalism. Any common aspects of these theories will reflect common features of the real systems involved. Nevertheless, differences between different systems could be so important that the theories and concepts used to analyse them must also be substantially different, even if they share some common precepts. A fundamentally different reality may require a different theory. This, in rough outline, is the problem of historical specificity.

Karl Marx made this argument in the 1840s and it was the starting point of his own economic theory. Although my own flirtation with Marxism was relatively brief, and I became a resolute critic of several of his ideas, I remained convinced of the importance of this insight.

In particular, for a long time I have also thought that the recklessly over-general postulates of mainstream economics have weakened, rather than strengthened it as a theoretical system. Universal theories are based on the maxim: 'one theory fits all'. Universal theories can have limitations in dealing with specific, concrete phenomena. As in the case of much mainstream economics, they can be insufficiently sensitive to historical and geographic variations.

In the 1980s I became more familiar with the works of the German historical school. For well over a hundred years, they too had tackled and debated this problem. Furthermore, I realised that Carl Menger's famous attack on the German historical school in the 1880s had not been successful in brushing the problem of historical specificity aside. Moreover, the influence of the German historical school had been so wide that leading British economists, including Alfred Marshall, had taken much of their argument on board. In addition, similar concerns had inspired the emerging American institutional economists in the early part of the twentieth century.

I discovered that there was a Lost Continent of theoretical, methodological and empirical studies in economics, largely hidden under the twentieth-century

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