The Economist on the end of economic history

The Economist has noticed Peter Temin's paper on the death of economic history (on which I had posted before) and suggests that "since the financial crisis there has been something of a minor revival." There isn't much of an explanation of why there is a revival, or much evidence for the revival, I might add. The reason alluded for the supposed revival is that "three big questions in economics over the past few years have become battles over economic history, rather than theory in its own right." These three questions would be the effect of public debt on growth, the causes of inequality, and the effects of inflation and deflation.

The economic history content in the debates related to the three questions, in all fairness, is thin at best. And the problems with the debates actually do arise from a common acceptance of neoclassical economics, and are, thus, rooted in theory. Reinhart and Rogoff are not economic historians, and their discussion of debt, for example when compared to John Brewer's discussion of the role of debt in the rise of the British Military-Fiscal State, is poor at best. There is some discussion of the correlation with growth, inflation and currency movements, with limited understanding of causality. Which, as it turns, was botched by the misuse of data. The same can be said about Piketty (and now this Rognlie twist; he had vanished; my previous issue with him here), that uses mainstream theory that does not fit his data (which is better and shows the rise of inequality in the last three decades), but lacks any sense of history. There is no understanding of the social forces behind the rise of inequality in Piketty's work. And the idea that those that are afraid of inflation now have some basis on the history of "the risk hyperinflation has posed to democracy" is beyond preposterous. Not just because there is no risk of hyperinflation in any advanced economy at the moment (and that shows lack of theoretical understanding of what causes this phenomenon), but worse, it tends to obscure that the Great Depression, not the 1923 hyperinflation, brought down the Weimar Republic. Seriously, unemployment, the collapse of the economy creates the conditions for the rise of fascists (go check Greece now)

Note that marginalism always had a complicated relation with economic history. The German Historical School can be seen, or at least some authors within the school like Roscher and Schmoller, as noted by Bill McColloch (see second essay here), as part of the marginalist school. And Max Weber's views, which put Marx's relation between the economic base and the superstructure upside down, might be seen as the basis for a neoclassical theory of history. But the fact is that Weberian analysis was never embraced or even well understood in mainstream circles, even if it would be the kind of theory of history that would fit their analysis. The same applies to Douglas North's New Institutionalism.

My impression is that the decline of economic history, and history of economics I would add, within the mainstream of the profession, a subject that as noted by Temin had peaked in the 1970s, is essentially tied to the result of the capital debates, the rise of what I referred to as the return of vulgar economics, and the segregation of heterodox economists. It's a particular problem of the broader crisis of economics. And the revival is overstated. As much as the mainstream did not, and will not be abandoned in spite of its evident failures during the last (current) crisis, do not expect economic history courses (or history of thought ones) to be reinstated or created in the departments at the 'top' universities. The average mainstream economist will remain ignorant of history and the history of its own field. The Economist writers are a good example of the consequences of that.