25/09
INTRODUCTION
ECONOMIC HISTORY: history of economic activity of human societies
↪ “Economic history is the study of past and present economic events in one or
more countries” ” (C.M. Cipolla)
○ Population
○ Means of production and context (natural resources, geography like land, water,
mineral beds, technology, labor and Capital)
○ Distribution
○ Consumption
EARLY STEPS
Before modern times , economics was not treated as a subject in itself and a separate
science.
The terms “economics” - from the Greek ‘oikonomia’ – just means “household management”
(Aristotle) → NB: In most cultures across Eurasia agriculture and manufacturing were
viewed in a positive manner, but trade and banking were not held in high esteem, they were
seen as despicable (in Greek mythology, Hermes was both the god of trade and thievery)
↓
FORERUNNERS: Early economic thinking was intertwined with philosophical and
theological considerations → the economic behavior of individuals raised ethical questions
• Mercantilist philosophers (XVI-XVIII centuries → importance of trade to a nation prosperity)
• Defining the domain of Economics (XVIII century)
↪ Early chairs in Political Economy: Gasser (at Halle, 1727); Genovesi (at Naples, 1754)
↪ Discovery of separate “laws” or regularities • The discipline evolved in the XIX century
(a succession of competing Schools)
The birth of economics as a new academic discipline in the age of
Enlightenment
- The Fable of the Bees: or, Private Vices and Public Benefits, 1714 (Bernard
Mandeville)
- An Inquiry into the Nature and Causes of the Wealth of Nations, 1776 (Adam Smith)
↪ Key factors of production: land, labor, capital
↓
The metaphor of the “invisible hand” :unintended social benefits of individuals’
self-interested actions → Human beings are rational individuals who want to
maximize their material well-being
- The rise of modern individualism (=self-reliance and freedom of action for individuals
over collective or state control): “By pursuing his own interest he frequently promotes
that of the society more effectually than when he really intends to promote it” (book
IV – The Wealth of Nations)
↓
Personal freedom is the key to both wealth and happiness •
↪ Division of labor promotes trade and that is beneficial to all
, ↪ Economic interdependence promotes peace (I. Kant, Perpetual Peace, 1795)
HISTORIANS AND ECONOMISTS
Economic history studies economies and economic events. It investigates the causes
of the “wealth of nations” →It’s a discipline of hybrid character and unclear
boundaries, mediating between the tradition of humanities and the social sciences
with their current tendency to be more “scientific” in method (i.e., to more resemble
natural sciences) and ambition of formulating general, universal rules of human
activity. → It uses both qualitative and quantitative sources.
BUT also → Importance of the cultural and historical context in which economic
events take place
HISTORIANS: deal with long term historical processes of change. They can reach
generalizations, but they do not lead to the creation of universal laws: context
matters!
ECONOMISTS: develop general theories often claiming universality of application
(i.e. to any time and any society). Existence of universal ahistorical patterns is often
assumed and theories tend to ignore historical contexts.
↪ Economic theory is built around the assumption that human beings are just
“rational” individuals who all want to maximize their “utility”.
↪But if we want to understand the behavior of real human beings, the simple
economic motives are not enough. → “Human psychology is much more complex than the
rather simpleminded economic models suggest” (Fukuyama)
Neither history, nor economics, meet the criteria of scientific research of natural sciences
(because of lack of possibility of experimental testing of theories).
ECONOMIC HISTORY AS A FIELD OF STUDY
The German historical school of economic history
○ Legacy of German scholar Leopold von Ranke (1795- 1886), the father of modern
“professional” historical science
↪ “how it actually was” – wie es eigentlich gewesen
↪ “To history has been assigned the office of judging the past, of instructing the
present for the benefit of future ages”
○ Three generations of scholars:
1. Gustav Schmoller (1838- 1917)
2. Max Weber (1864-1920)
3. Werner Sombart (1863- 1941)
- no universal truths in history
- emphasis on sources and placing the past in context
- inductive method of reasoning (from particular to general) vs
deductive approach (testing a theory)
- opposition to English political economy (and English economic policy)
and to the the Austrian School of neoclassical economics (Karl
Menger, 1840-1921)
,Arnold Toynbee and his Oxford lectures (1884)
○ “I believe economics today is much too dissociated from history”
○ Concept of Industrial Revolution, analysis of change in the British economy, disputing
the universality of most economic laws
Influence and importance of Karl Marx (1818-1883) and Marxism
○ “dialectical materialism”: historical development is a constant struggle of opposites,
and change is brought about by developments in the material world. Social and
economic arrangements change along with the development of production relations.
○ different eras and societies are defined by different modes of production.
The French School of the Annales
○ Annales d’histoire économique et sociale (1929)
○ Broad appeal
○ Keywords : Long term trends (longue durée); Structures: geography, social and
economic conditions, mentality; Less attention to traditional political and military
history (histoire événementielle)
○ Leading scholars:
- Lucien Febvre (1878-1956)
- Marc Bloch (1886-1944)
- Fernand Braudel (1902-1985)
- Georges Duby (1919-1996)
- Jacques Le Goff (1924-2014)
➢ Comparative analysis
➢ Histoire totale (interdisciplinary)
➢ Area studies (agriculture, trade, banking, business …)
New economic history
- Cliometrics (USA, 1958):
1. Alfred Conrad (1924-1970), John Meyer (1927-2009), Stanley Reiter
(1925-2014), Robert Fogel (1926-2013), Douglass North (1920-2015)
2. Emphasis on theory and modeling
3. Application of economic theory and econometrics to economic history
4. Importance of institutions
– Caveats: subordination of research to theory and reduction of all the
aspects of economic activity to purely quantitative terms,
glossing over all the qualitative aspects of economic life →
social conditions, mentality, quality of goods and so on. The
risk of generating anachronism.
, - Recent trends:
1. Business history
2. Environmental history
3. Wealth distribution (and the dangers of income inequality) → T. Piketty,
Capital in the Twenty-First Century (2013)
THE WEST AND THE REST
○ Development of world history research
○ Periodization → C. Levy Strauss, Race and History (1952)
→ C.M. Cipolla, The economic history of world population (1962)
↪Neolithic revolution (ca. 8,000 BCE)
↪Industrial revolution (ca 1800 CE)
○ Relations among civilizations : W.McNeill, The rise of the West: a history of the
human community (1963)
↪ Middle Eastern dominance (up to 500 BCE)
↪ Eurasian cultural balance (500 BCE – 1500 CE)
↪ Western dominance (after 1500 CE)
○ Growing interest for non-western history → Revisionist approaches and
de-colonization of the past
- Edward Said, Orientalism (1978)
↪ De-europeanization of perspective
- Eric Wolf, Europe and the people without history (1982)
↪ Importance of connections
- More research from local historians around the globe
○ New broader approaches
- The core-periphery model → I. Wallerstein, The modern world-system,
(1974-1980)
- Comparisons between Europe and Asia → K.Pomeranz, The great
divergence (2000)
The dominant narrative: “for the last thousand years, Europe (the West) has been the prime
mover of development and modernity” (D. Landes) → Many disagree → but → Why wealth
and power are distributed so unevenly? Why have some nations been blessed, and why are
so many others still mired in poverty?
WHY STUDY ECONOMIC HISTORY?
“I don’t know much about history, and I wouldn’t give a nickel for all the history in the world. It
means nothing to me. History is more or less bunk. It’s tradition. We don’t want tradition. We
want to live in the present, and the only history that is worth a tinker’s damn is the history
that we make today.” – Henry Ford, Chicago Tribune, May 25, 1916
An understanding of context is vital to an understanding of the present and an outlook on the
future → and context to a significant degree is history. → Studying history provides a better
understanding of how the present evolved out of the past and how the future is in a process
of evolving out of the present. → History builds a capacity to assess any context. → It
INTRODUCTION
ECONOMIC HISTORY: history of economic activity of human societies
↪ “Economic history is the study of past and present economic events in one or
more countries” ” (C.M. Cipolla)
○ Population
○ Means of production and context (natural resources, geography like land, water,
mineral beds, technology, labor and Capital)
○ Distribution
○ Consumption
EARLY STEPS
Before modern times , economics was not treated as a subject in itself and a separate
science.
The terms “economics” - from the Greek ‘oikonomia’ – just means “household management”
(Aristotle) → NB: In most cultures across Eurasia agriculture and manufacturing were
viewed in a positive manner, but trade and banking were not held in high esteem, they were
seen as despicable (in Greek mythology, Hermes was both the god of trade and thievery)
↓
FORERUNNERS: Early economic thinking was intertwined with philosophical and
theological considerations → the economic behavior of individuals raised ethical questions
• Mercantilist philosophers (XVI-XVIII centuries → importance of trade to a nation prosperity)
• Defining the domain of Economics (XVIII century)
↪ Early chairs in Political Economy: Gasser (at Halle, 1727); Genovesi (at Naples, 1754)
↪ Discovery of separate “laws” or regularities • The discipline evolved in the XIX century
(a succession of competing Schools)
The birth of economics as a new academic discipline in the age of
Enlightenment
- The Fable of the Bees: or, Private Vices and Public Benefits, 1714 (Bernard
Mandeville)
- An Inquiry into the Nature and Causes of the Wealth of Nations, 1776 (Adam Smith)
↪ Key factors of production: land, labor, capital
↓
The metaphor of the “invisible hand” :unintended social benefits of individuals’
self-interested actions → Human beings are rational individuals who want to
maximize their material well-being
- The rise of modern individualism (=self-reliance and freedom of action for individuals
over collective or state control): “By pursuing his own interest he frequently promotes
that of the society more effectually than when he really intends to promote it” (book
IV – The Wealth of Nations)
↓
Personal freedom is the key to both wealth and happiness •
↪ Division of labor promotes trade and that is beneficial to all
, ↪ Economic interdependence promotes peace (I. Kant, Perpetual Peace, 1795)
HISTORIANS AND ECONOMISTS
Economic history studies economies and economic events. It investigates the causes
of the “wealth of nations” →It’s a discipline of hybrid character and unclear
boundaries, mediating between the tradition of humanities and the social sciences
with their current tendency to be more “scientific” in method (i.e., to more resemble
natural sciences) and ambition of formulating general, universal rules of human
activity. → It uses both qualitative and quantitative sources.
BUT also → Importance of the cultural and historical context in which economic
events take place
HISTORIANS: deal with long term historical processes of change. They can reach
generalizations, but they do not lead to the creation of universal laws: context
matters!
ECONOMISTS: develop general theories often claiming universality of application
(i.e. to any time and any society). Existence of universal ahistorical patterns is often
assumed and theories tend to ignore historical contexts.
↪ Economic theory is built around the assumption that human beings are just
“rational” individuals who all want to maximize their “utility”.
↪But if we want to understand the behavior of real human beings, the simple
economic motives are not enough. → “Human psychology is much more complex than the
rather simpleminded economic models suggest” (Fukuyama)
Neither history, nor economics, meet the criteria of scientific research of natural sciences
(because of lack of possibility of experimental testing of theories).
ECONOMIC HISTORY AS A FIELD OF STUDY
The German historical school of economic history
○ Legacy of German scholar Leopold von Ranke (1795- 1886), the father of modern
“professional” historical science
↪ “how it actually was” – wie es eigentlich gewesen
↪ “To history has been assigned the office of judging the past, of instructing the
present for the benefit of future ages”
○ Three generations of scholars:
1. Gustav Schmoller (1838- 1917)
2. Max Weber (1864-1920)
3. Werner Sombart (1863- 1941)
- no universal truths in history
- emphasis on sources and placing the past in context
- inductive method of reasoning (from particular to general) vs
deductive approach (testing a theory)
- opposition to English political economy (and English economic policy)
and to the the Austrian School of neoclassical economics (Karl
Menger, 1840-1921)
,Arnold Toynbee and his Oxford lectures (1884)
○ “I believe economics today is much too dissociated from history”
○ Concept of Industrial Revolution, analysis of change in the British economy, disputing
the universality of most economic laws
Influence and importance of Karl Marx (1818-1883) and Marxism
○ “dialectical materialism”: historical development is a constant struggle of opposites,
and change is brought about by developments in the material world. Social and
economic arrangements change along with the development of production relations.
○ different eras and societies are defined by different modes of production.
The French School of the Annales
○ Annales d’histoire économique et sociale (1929)
○ Broad appeal
○ Keywords : Long term trends (longue durée); Structures: geography, social and
economic conditions, mentality; Less attention to traditional political and military
history (histoire événementielle)
○ Leading scholars:
- Lucien Febvre (1878-1956)
- Marc Bloch (1886-1944)
- Fernand Braudel (1902-1985)
- Georges Duby (1919-1996)
- Jacques Le Goff (1924-2014)
➢ Comparative analysis
➢ Histoire totale (interdisciplinary)
➢ Area studies (agriculture, trade, banking, business …)
New economic history
- Cliometrics (USA, 1958):
1. Alfred Conrad (1924-1970), John Meyer (1927-2009), Stanley Reiter
(1925-2014), Robert Fogel (1926-2013), Douglass North (1920-2015)
2. Emphasis on theory and modeling
3. Application of economic theory and econometrics to economic history
4. Importance of institutions
– Caveats: subordination of research to theory and reduction of all the
aspects of economic activity to purely quantitative terms,
glossing over all the qualitative aspects of economic life →
social conditions, mentality, quality of goods and so on. The
risk of generating anachronism.
, - Recent trends:
1. Business history
2. Environmental history
3. Wealth distribution (and the dangers of income inequality) → T. Piketty,
Capital in the Twenty-First Century (2013)
THE WEST AND THE REST
○ Development of world history research
○ Periodization → C. Levy Strauss, Race and History (1952)
→ C.M. Cipolla, The economic history of world population (1962)
↪Neolithic revolution (ca. 8,000 BCE)
↪Industrial revolution (ca 1800 CE)
○ Relations among civilizations : W.McNeill, The rise of the West: a history of the
human community (1963)
↪ Middle Eastern dominance (up to 500 BCE)
↪ Eurasian cultural balance (500 BCE – 1500 CE)
↪ Western dominance (after 1500 CE)
○ Growing interest for non-western history → Revisionist approaches and
de-colonization of the past
- Edward Said, Orientalism (1978)
↪ De-europeanization of perspective
- Eric Wolf, Europe and the people without history (1982)
↪ Importance of connections
- More research from local historians around the globe
○ New broader approaches
- The core-periphery model → I. Wallerstein, The modern world-system,
(1974-1980)
- Comparisons between Europe and Asia → K.Pomeranz, The great
divergence (2000)
The dominant narrative: “for the last thousand years, Europe (the West) has been the prime
mover of development and modernity” (D. Landes) → Many disagree → but → Why wealth
and power are distributed so unevenly? Why have some nations been blessed, and why are
so many others still mired in poverty?
WHY STUDY ECONOMIC HISTORY?
“I don’t know much about history, and I wouldn’t give a nickel for all the history in the world. It
means nothing to me. History is more or less bunk. It’s tradition. We don’t want tradition. We
want to live in the present, and the only history that is worth a tinker’s damn is the history
that we make today.” – Henry Ford, Chicago Tribune, May 25, 1916
An understanding of context is vital to an understanding of the present and an outlook on the
future → and context to a significant degree is history. → Studying history provides a better
understanding of how the present evolved out of the past and how the future is in a process
of evolving out of the present. → History builds a capacity to assess any context. → It
