The end of history in economics
Right in the middle of a deep crisis of established economics the history of economic thought is threatened with extinction in Europe.
Here is an abbreviated translation of an article by Norbert Häring that is in today’s Handelsblatt, the German language equivalent of the FT and WSJ. There then follows a letter from the secretary of the European Society for the History of Economic Thought.
The end of history in economics
by Norbert Häring
Few economists have contributed as much to the economic development of Germany as he did. The man successfully fought against German backwardness and fragmentation into fathoms. As a scholar, he was an important opponent of Adam Smith. However, in modern economic textbooks Friedrich List is a footnote at best. He is not suffering this fate alone. The history of economic thought leads a shadow existence. Many prominent universities have quietly buried the subject. One of the few remaining lighthouses in Europe, the large department of economic thought of the University of Amsterdam is now being shut down.
This fate could await the whole discipline in Europe. Scholars of economic history and history of economic thought have long been on the defensive because publication success has become the sine qua non in academic science. The “leading” journals hardly ever accept their papers. “They refers us field journals”, says Hans-Michael Trautwein, who chairs the section on history of economic thought within the German economic association Verein für Socialpolitik (VfS). Since they can show few publications in “leading” journals, economic historians are at a severe disadvantage in applying for grants and receiving professorships.
Now, history of economic thought and general economic history are threatened with being completely cut off from the funds that subsidize research. The European Research Council (ERC), the most important source of academic research funding in Europe, with an annual budget of over a billion euros, has issued new guidelines for applicants. The “panel descriptors” which tell applicants to which panel they should direct their application do not include history of economic thought or general economic history any more. There are only entries for history of institutions and for quantitative economic history. In the eyes of those left out, this is a disaster. They fear that they will not only be cut off from European funding, but also from national funds, as national institutions tend to align their classifications with that of the ERC. Protest letters from associations all over Europe rained on the ERC, including one from the European Society for the History of Economic Thought (ESHET).
“A whole research area could be eliminated from economics”, warns Trautwein,. ERC-president, Helga Nowotny tried to placate the protestesting associations by stressing that the ERC had only issued guidelines for authors, not a list of research areas that can be funded. Those who do research in quantitative economic history or institutional history, find as suitable the panel in economics. The others might have to contact a panel dealing with the study of the human past: archaeology, history and memory, according to Nowotny. ” We have the choice, to be evaluated either by theoreticians without historical competence or by historians without theoretical economic competence and interest”, say Trautwein.
In a reply to a request for comment by “Handelsblatt”, the ERC-president finds a more conciliatory tone. “I understand the concerns of the ‘ scientific community”, she writes and adds: “Their arguments have convinced me and I will do what I can.”
The demise of the history of economic thought is making a renewal of mainstream economics even less likely, even though the financial crisis has amply demonstrated its urgent need for more pluralism. The discipline acts as if it had reached the end of history, as if it had found eternally valid truths. Forgotten is the reminder of John Kenneth Galbraith that economic ideas are always a product of a certain time and place: Gustav Schmoller? Ludwig von Mises? Knut Wicksell? Few students have to learn and understand the teachings of these great economic theorists any more. Piero Sraffa, Joan Robinson? Never heard of them.” The generation of those, who have still learned and can teach history of economic thought is dying out”, says Trautwein.
And here is the letter from the Secretary of ESHET to the European Research Council.
Dear Professor Nowotny,
Many thanks for your e-mail explaining the structure of the ERC Panels and the way in which History of Economics may fit into it. We understand that Dr Steve Kates from Australia wrote to you directly and we fully support the spirit of his letter. We would, nevertheless, like to summarise our position in this short letter.
The European Research Council, in its mission statement declares that:
“Its main aim is to stimulate scientific excellence by supporting and encouraging the very best, truly creative scientists, scholars and engineers to be adventurous and take risks in their research. The scientists are encouraged to go beyond established frontiers of knowledge and the boundaries of disciplines”. (Emphasis added).
The highlighted sections are, of course, closely related. The main ‘risks’ one normally takes in his, or her, research—in particular in the social sciences—is that of offending one’s peer. Falling foul of the dominant paradigm would close publication venues, eliminate employment prospects and, of course, dry out funding. To take risks also means to go beyond the established frontiers of knowledge and the boundaries of disciplines.
There are few more contested disciplines than economics. The dominant paradigm is not doing well when it comes to empirical confirmations and it therefore derives a great deal of its strength from a view that it is the culmination of over two hundred years of human attempts to understanding the working of the economic system.
Whether or not this is a correct description of how human thinking about economics has evolved is, we believe, crucial both to the dominance of the current paradigm as it is for real adventurous thinking about economics which goes beyond the boundaries of disciplines. There are, in principle, two types of research in History of Economics. The first is more historical in nature and is focused on understanding the writing of past scholars in the context of the world in which they lived. This, sometimes, may reveal that what modern economist thinks is a long tradition of thinking about an economic problem is nothing of the sort. The second type of research is focused on examining past ways of thinking as alternatives to current thinking. At the time in which old thinkers worked, there was no army of thousand academics eager to explore and develop their ideas. As a result, some of these ideas which–when developed– could constitute a real alternative to the way we think today, are lost again.
The contested mainstream has been very successful in removing this dangerous kind of adventurous research which goes beyond the boundaries of established disciplines. In the Anglo Saxon world it is extremely difficult to find a job opening for historians of economics. Many economics departments have stopped teaching history of economics altogether. Funding opportunities are scarce, it is virtually impossible to publish in general journals of economics anything to do with the history of economics and the publication outlets of historians of economics are deemed (for no good reason) inferior for the purpose of research rankings and funding (mainly in the UK).
Nevertheless, in spite of this hostile environment, many academics (and in particular, economists) are drawn to the history of economics. Their intellectual integrity tells them that there is something wrong with the way modern economics is using ‘old’ ideas and the way in which the subject is defined. There is no one like the classical economists to show the way in studying economics across disciplines and beyond their boundaries.
If the ERC wishes to be true to its professed mission then it must allow for dissent to be an explicit part of the funding formula. SH1 is a panel devoted to economics, finance and management. The only way an application in the history of economics to this board can have a chance is to ensure that there is an explicit category under which to catalogue this submission. By having a sub-category for SH1 which is the history of economics, the panel will have to approach experts in the fieldin order to evaluate the application. As things stand, there is no duty laid on the panel to treat an application in the history of thought seriously. They can always dismiss it as outside their remit of considerations.
A similar fate awaits the historian of economics were he, or she, to apply to the SH6 panel. It is very rare for colleagues who do history of economics to be part of the history circle both in terms of employment, conference circuits and publication outlets. There is no reason to believe that historians would be very sympathetic to those historians of economics who are engaged in analytical reconstructions, in particular as historians in their discipline do not normally have the required training in economic theory. The absence of a clear sub-category of the history of economics would leave the applications to the mercy of uninterested historians. Like in SH1, the presence of a clear sub-category would force the panel to deal with the application properly.
So it is clear, in our mind, that an extra category of the history of economics is essential. Whether or not it is a sub-category in SH1 or SH6 is secondary. However, given the mission statement of the ERC, the natural home for this sub-category would inevitably be that of SH1.
Professor of Economics
Secretary of ESHET