This paper argues that history of economics has a fruitful, underappreciated role to play in the development of economics, especially when understood as a policy science. This goes against the grain of the last half century during which economics, which has undergone a formal revolution, has distanced itself from its ‘literary’ past and practices precisely with the aim to be a more successful policy science.
The paper motivates the thesis by identifying and distinguishing four kinds of reflexivity in economics. The main thesis of this paper is that because these forms of reflexivity are not eliminable, the history of economics must play a constitutive role in economics (and graduate education within economics). An assumption that I clarify in this paper is that the history of economics ought to be part of the subject matter studied by economics when they are interested in policy science. Even if one does not accept the conclusion, the fourfold classification of reflexivity might hold independent interest.
The paper is divided in two parts. First, by reflecting on the writings of George Stigler, Paul Samuelson, George and Milton Friedman, I offer a stylized historical introduction to and conceptualization of the themes of this paper. In particular, I identify various historically influential arguments and strategies that reduced the role of history of economics within the economics discipline. In it I also canvass six arguments that try to capture the cost to economics (understood as a science) for sidelining the history of economics from within the discipline. A sub-text of the introduction is that for contingent reasons, post World War II economics evolved into a policy science. Second, by drawing on the work of Kenneth Boulding, in particular, George Soros, Thomas Merton, Gordon Tullock, I distinguish between four species of reflexivity. These are used to then strengthen the argument for the constitutive role of the history of economics within the economics profession. In particular, I argue that so-called Kuhn-losses are especially pernicious when faced with policy choices under so-called Knightian uncertainty.
Robert S. Goldfarb1997. “Now You See It Now You Don’t: Emerging Contrary Results in Economics” Journal of Economic Methodology vol. 4(2): 221–44; see also Robert S. Goldfarb and H.O. Stekler (2000) “Why Do Empirical Results Change? Forecasts as Tests of Rational Expectations” History of Political Economy. 2000; 32: 95–116.
See for example Eric Schliesser (2009) “Prophecy eclipses and whole-sale markets in Babylon: a case study on why data driven economic history requires history of economics a philosopher’s reflection” Jarhrbuch für Wirthschaftsgeschichte. Edited by Bertram Schefold.
See Paul A. Samuelson (1987) “Out of the Closet: A Program for the Whig History of Economic Science” Keynote Address at History of Economics Society 1987. History of Economics Society Bullet in 9(1): 51–60. For very effective criticism see Charles Kurdas (1988) “The ‘Whig Historian’ on Adam Smith: Paul Samuelson’s Canonical Classical Model” HES Bulletin 10(1): 13–24; I thank Nicholas Theocarakis for calling my attention to it. For a balanced survey of Samuelson’s activity as a historian see Steven G. Medema & Anthony M.C. Waterman. (2010) “PAUL ANTHONY SAMUELSON: HISTORIAN OF ECONOMIC THOUGHT” History of Economic Ideas 18(3): 67–86.
See Eric Schliesser (2005) “Galilean Reflections on Milton Friedman’s ‘Methodology of Positive Economics’ with Thoughts on Vernon Smith’s ‘Economics in the Laboratory’ ” Philosophy of the Social Sciences 35(1): 50–74.
John B. Davis and Matthias Klaes (2003) “Reflexivity: Curse or Cure?” Journal of Economic Methodology 10(3): 329–352 identify three kinds of reflexivity: immanent epistemic and transcendent. All four of the kinds of reflexivity I identify incorporate aspects of their three kinds.
Michel Foucault (2008) The birth of biopolitics: lectures at the Collège de France 1978–79 London: Palgrave Macmillan.
Kenneth E. Boulding (1948) “Samuelson’s Foundations: The Role of Mathematics in Economics”The Journal of Political Economy 56(3): 187–199. I thank M. Ali Khan for caling my attention to it.
Kenneth E. Boulding (1956) “General Systems Theory-The Skeleton of Science Management Science” 2(3): 197–208.
Donald A. MacKenzie (2006) An engine not a camera: how financial models shape markets Cambridge MA: MIT Press.