How Economics Forgot History: The Problem of Historical Specificity in Social Science. By Geoffrey M. Hodgson. New York: Routledge, 2001. XIX + 422 pp. Index, notes, bibliography, references. Cloth, $120.00; paper, $36.95. ISBN: cloth 0-415-25716-6; paper 0-415-25717-4.
How Economics Became a Mathematical Science. By E. Roy Weintraub. Durham: Duke University Press, 2002. XIII + 313 pp. Index, notes, bibliography. Cloth, $54.95; paper, $18.95. ISBN: cloth 0-822-32856-9; paper 0-822-32871-2.
Few scholars, at least in the Anglophone world, have done more to advance learning in the history of economic thought than Geoffrey Hodgson (of the University of Hertfordshire) and Roy Weintraub (of Duke University). Their research publications have, over the years, stimulated a variety of fruitful discussions concerning the evolution of the modern economics discipline and the development of its doctrines. How Economics Forgot History and How Economics Became a Mathematical Science, the most recent contributions from these prolific investigators, continue in this pattern, and they do so in ways that should interest a broad, interdisciplinary readership. These two works are also read in tandem with great profit, for they succeed in ably demonstrating the virtues of combining different strategies for the analysis and writing of the history of economics itself.
Geoffrey Hodgson's How Economics Forgot History is grounded in a far more traditional methodology than Weintraub's, offering a wonderful work of intellectual retrieval and redemption that brings back to life a now altogether obscure and increasingly forgotten trend in the evolution of the social sciences. Through great erudition, stylistic care and virtuosity, and splendid documentation and notation, Hodgson reanimates the historically grounded argumentation of earlier generations of economists who sought to frame their work less in terms of a general theory of human behavior and more with reference to the significance of historical change and detail. This he does by focusing on what he calls "the problem of historical specificity" in the social sciences and the "limits of explanatory unification in social science" (p. 23).
In the work and impact of the German historical school, spanning the 1840s through the 1930s, Hodgson situates the most significant alternative path in the evolution of modern economic theory. Admirably detailing the general tenets of that school, and highlighting its focus on empirical detail and inductive theorizing, Hodgson seeks, in his words, "to recover what has been long crushed and discarded by the reckless juggernaut of general theorizing in social science" (p. 20). To do so, he is determined to demonstrate that, contrary to the claims of its most powerful critics, the German historical school was hardly "against theory."
The leading progenitors and practitioners of the German approach-Friedrich List (1789-1846), Karl Knies (1821-1898), Bruno Hildebrand (1812-1878), Gustav von Schmoller (1838-1917), Werner Sombart (1863-1941), and Arthur Spiethoff (1873-1957), to name a few-not to mention the large cadre of exceptional scholars and activists they trained and inspired (such as Eugen von Bohm-Bawerk [1851-1914], Richard T. Ely [1854-1943], Rudolf Hilferding [1877-1941], Gunnar Myrdal [1898-1987], Joseph Schumpeter [1883-1950], and Thorstein Veblen [1857-1929], again to name but a few)-embraced the role and importance of theory while insisting that the usefulness of any particular set of abstract ideas was decisively limited by the specific structures and mechanisms of socioeconomic systems defined in time and space. In other words, qualitative change in economies over time necessitated, in their view, a similar evolution in the concepts and analytics deployed to understand them. Abstraction had its place, but ahistorical generalizations, applied willy-nilly to the study of all economic systems at all times, were, to their minds, powerfully misleading.
Within the United States, where the legacy of the German school lived on in the work of the "American institutionalists," critics deployed the "anti-theory" card with particularly devastating effect. The institutionalists conceived of economics as a quite catholic field, in which any claims to realism (and relevance) rested perforce on broadly construed disciplinary boundaries. Indeed, Wesley Mitchell (one of the founders of the National Bureau of Economic Research in 1920) and Thorstein Veblen had consistently and vigorously attacked the manner in which a new generation of investigators, schooled in the principles of the marginalist calculus, ignored human activity that could not be understood simply as the "rational" and calculating response of individuals to the constraints of the market. What's more, they found particularly objectionable the ways in which such researchers assumed that rational calculation was a universal human trait characteristic of all epochs and cultures.
Busying themselves with the careful and comprehensive collection of data on various economic phenomena-in the case of Mitchell, his career would be focused on the prodigious compilation of business-cycle statistics-the institutionalists were virtually submerged in an onslaught of criticism in the 1930s and 1940s about their propensity to engage in crude empiricist projects. In the eyes of leading antagonists, the theoretical bankruptcy of American institutionalism was persuasively demonstrated in a 1947 article on the subject by future Nobel Memorial Prize Laureate Tjalling Koopmans.1
Needless to say, Hodgson rejects outright the presumption and assumption of anti-institutionalists like Koopmans. How Economics Forgot History is a closely argued story of precisely how the historically grounded, empirically rich methodology of an older kind of economic analysis, of which American institutionalism was but one vivid example, was subverted, marginalized, and forgotten. Far from being the result of a straightforward intellectual process, in which superior ideas confronted and eventually crowded out inferior ones, the demise of a historical economics, in Hodgson's eyes, emerged out of a unique, powerful, and almost insidious combination of new ideas, professional boundary-keeping, political pressures, and the unpredictable contingencies of events.
On the one side, the German historical school, and all that it represented in the way of an alternative to what would become a dominant neoclassical paradigm-of which marxism was and is the most dramatic and significant exemplar-was uniquely unhinged by the intellectual momentum of the "marginalist revolution" itself. In the great Methodenstreit that, in the 1880s, pitted Austrian theorists of rational behavior (such as Carl Menger [1840-1921]) against the seniors of the German historical school, the virtues of a scientific vocabulary about human behavior, and the potential for quantitative measurement of that conduct, left a newer generation in possession of a disciplinary and professional high ground that embraced rigor, precision, and a shared, esoteric vocabulary.
On the other, the rise of "marginalism" in economic thought equipped an emergent professional community of economists, struggling for social and institutional recognition, with the trappings of better established fields-most especially in the natural sciences-that enjoyed standing, influence, and funding in recognition of their supposed capabilities, accomplishments, and usefulness. In short, the seemingly precise vocabulary of marginalist analysis provided crucial tools for the policing of the boundaries of an emergent professional community-an essential condition for professionalization itself. To these forces of historical change was also added the political reaction against socialist agendas inspired by the work of Karl Marx and his followers, a reaction much galvanized by the work of marginalist theorists who had apparently and persuasively shown the flaws of the marxian approach overall.
By the early decades of the twentieth century, in the Anglo-American academy, two immensely influential figures solidified the project of disciplinary reconstruction heralded by the marginalist revolution. In Britain, Lionel Robbins, in An Essay on the Nature and Significance of Economic Science,2 masterfully represented the new economics as a study of the allocation of scarce resources among competing ends, while in the United States Talcott Parsons, in his monumental study, The Structure of Social Action,3 also decisively contributed to the redefinition of the discipline as the science of choice. These were but two dramatic examples, Hodgson documents, of the systematic and successful effort of a modern economics to eliminate the "problem of historical specificity" from its domain. Even more to the point, by understanding "the economising action of the individual as the general foundational impulse of all economic activity," and by relegating other human motives and behaviors to other fields of inquiry, economics succeeded in reconfiguring its object and method of study in distinctly scientistic (not to mention ahistorical) ways (p. 83).
Counterposed to the process of marginalist advance and triumph in the discipline, Hodgson also sees uniquely historical and contingent processes of enervation and decline in the traditions of the German historical school and its progeny. It is here that he advances some of the most interesting and provocative arguments of his book. In the rise of National Socialism in Germany, and in the ensuing world war, Hodgson locates the death blows to the vitality and legacies of the German historical school. Completely devastated by the political purges of Nazism, physically destroyed by armed conflict, and then uniquely rebuilt under American and British supervision in the postwar period, the German academy lost many of its distinctive features (including its unique approach to economic analysis) in the latter half of the twentieth century. Reflecting upon the important contributions of those theorists who had sought to further the lessons of the German school (such as Schmoller, Sombart, and Max Weber), Hodgson notes that their failure to have a permanent and enduring impact on the field of economics should not obscure this other reality-that war and its aftermath reconfigured economics on the Continent in peculiar and irresistible ways.
How Economics Forgot History concludes with a determined effort by its author to reconstruct an economics methodology that is sensitive to historical and qualitative change. Readers will perhaps find this portion of the volume less satisfying, but they will nonetheless be impressed by its thoughtfulness, imagination, and care. Striving to find a balance between extreme forms of empiricism and rationalism, Hodgson makes a powerful case for the importance of distinguishing between concepts that are transhistorical in their purchase and those that are closely linked to the workings of particular socioeconomic formations.
If, as Hodgson demonstrates, economics "forgot history," it is also true that the discipline, at the same time, became a "mathematical science." Or, at least, its leading figures think it did. In a remarkably thought-provoking, stimulating, and at times quite moving book, Roy Weintraub adroitly combines autobiography and biography to analyze the profession's "putative engagement" with the ideas of twentieth-century mathematicians. Such an investigation links up directly with the work of Hodgson, for it specifically explores the ways in which methodological developments in physics and mathematics shaped the struggle for disciplinary stabilization among economists when the late-nineteenth and twentieth-century debates sparked by the work of the German historical school and the American institutionalists dominated the professional landscape.
That modern economics was reshaped by mathematics is not, of course, a novel proposition. As Weintraub portrays, by the turn of the twentieth century, calls for the use of math in economic analysis had been, if not widespread, certainly well known. "[T]o turn economics into a science," he observes, given the already well-appreciated success and prestige of the natural sciences, a growing number of practitioners embraced "a new understanding that for [the field] to take its place as the queen of the social sciences, it needed to emulate the queen of the sciences itself" (p. 37). Telling the story of the consequences of this shift in view is Weintraub's main object. He brings to the narrative the expertise of an immensely skilled mathematician and economist and the gifts of a graceful and engaging writer.
In the literature that seeks to examine the "mathematization" of economic theory, the traditional approach has been framed either by notions of disciplinary triumphalism-the conquest of "bad" by "good" science, in the context of the mainstream narrative-or, conversely, by notions of a suppression of intellectual debate and diversity, the imposition of a kind of "party line" in which neoclassical propositions cleared the field of alternatives such as marxism, institutionalism, and other "subversive" agendas. In either case, as Weintraub ironically notes, the two views are part of what is essentially a morality play, in which either good triumphs over evil or vice versa, depending on your point of view.
Weintraub carefully (and honestly) avoids taking sides in this morality play. His objective is altogether different, new, and significant: to demonstrate that, whatever the consequences of the increasing penetration of economic reasoning by mathematics (and whatever one's particular opinion of the ultimate impacts of that development on the evolution of the economics discipline as a whole), the argument over formalistic reasoning in economics recapitulates a more deep-seated and enduring debate among mathematicians themselves about the use of math in scientific reasoning and the nature of scientific argument itself. In other words, in what is one of the core contributions of his book, Weintraub demonstrates that controversy over the virtues of economics being a "mathematical science" actually (and usually unwittingly) recreates a modern debate among mathematicians, another Methodenstreit waged "between those who would argue that mathematical rigor (and scientific knowledge) must develop not from axioms but from observations . . . so that the truth of a theory or model may be tested or confirmed by reality . . . and those who would claim that mathematical . . . models are rigorous (and 'true' in the only useful scientific sense of the word) if they are built on a cogent axiom base" (p. 100). There is, as Weintraub convincingly demonstrates, a direct parallel between this profound argument among mathematicians and the perennial disputes among economists about the relative merits of "theory" and "application."
Weintraub tells his story, and makes his claims, with a broad perception of intellectual trends-in both economics and mathematics-and a deft sense of how to combine biographical and analytical accounts. Readers will find themselves getting better acquainted with not only the pantheon of great mathematical economists (such as Kenneth Arrow, Gerard Debreu, Francis Edgeworth, Tjalling Koopmans, and Vilfredo Pareto) but also with a cadre of major mathematical minds likely less familiar (such as Griffith Evans, Kurt Godel, David Hilbert, Paul Volkmann, and Vito Volterra, not to mention an assemblage of interwar-era French theoreticians who, in collaboration, published immensely influential work under the pseudonym of an obscure French military commander, Nicolas Bourbaki). At the same time, they will be treated to Weintraub's utterly convincing assessment that links this "internalist" history of the evolution of mathematical method with a careful elucidation of the ways that evolution influenced the thinking of major figures in the twentieth-century history of economics. They will also be further enlightened by Weintraub's appreciation of the ways in which institutional rivalries (such as the celebrated stand-off between the Cowles Commission and both the University of Chicago Economics Department and the early members of the National Bureau of Economic Research) also helped to shape disciplinary and professional outcomes.
Of course, by the middle of the twentieth century, a new generation of economists, epitomized by Paul Samuelson, had embraced mathematics as the essential tool and "language" of modern economic reasoning, not bothering with the details of any debate over the strengths and weaknesses of data-based versus axiomatic reasoning. In their minds, "economies 'are,' and economics 'is,' and mathematics is [simply] a non-natural mode of analyzing 'it'" (p. 170). It is this position that Weintraub devastatingly portrays as historically and conceptually naive. Placed squarely against this limited and rather simplistic appreciation of the role and impact of economic reasoning in the sciences is Weintraub's detailed explication marshaled to demonstrate "that mathematics is a separate and distinct set of discursive practices and arguments" (p. 171).
Weintraub concludes his extraordinary book with an altogether unusual blending of professional and personal history. He tells the story of his father's career-intertwined with observations about his own. Sidney Weintraub was a most significant economist in his own right, an important figure in the evolution of modern macroeconomics in the United States. In his close relationship with his mathematician brother, Hal, Sidney Weintraub's career affords his son, Roy, the opportunity to provide close, textual detail of the general interdisciplinary influences that are the main themes of his book. It is a delightful, at times funny, always warm and touching, and in the end deeply poignant vignette. Debates and arguments over the meaning of mathematics, the role of mathematical reasoning in economic argument, and the confrontation of Sidney's "real world empiricism" with Hal's abstract formalism, all these punctuated what was of course a life intensely shared by brothers. The tale evokes a tight, loving relationship, one sadly ruptured by Hal's premature death at the age of thirty-one-a tragedy eerily echoed by the book's dedication to another much loved brother (of Roy's), also lost at too young an age. Yet it is also a story (at a very personal level) of the very links and misunderstandings between economists and mathematicians that have punctuated the modern development of economics as a "mathematical science."
Reading Hodgson and Weintraub, one is struck by the ways in which both these works demonstrate the impressive vitality and virtuosity of scholarship in the history of the social sciences. Despite the tendency of the vast majority of graduate training programs in economics to ignore the history of thought in their curriculums (and in their provisioning of faculty positions), the fact remains that some of the most exciting and consequential contributions in the discipline today come from those who contemplate its roots, its evolution, its paths not taken. Geoffrey Hodgson and Roy Weintraub have produced some of the very best of what contemporary scholarship in the history of the social sciences has to offer. They remind us that exploration of disciplinary history is important, rewarding, and enlightening. In the process, they remind us that we ignore learning in the history of our disciplines at great risk, and we do an incredible disservice to our students when we allow or encourage them to do the same.
[Author Affiliation]
Michael A. Bernstein is professor of history and associated faculty member in economics at the University of California, San Diego. He is the author of numerous books and articles on the modern economic and political history of the United States, including A Perilous Progress: Economists and Public Purpose in Twentieth Century America (2001).
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