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Inference,
EconomicTheory,Statistical
*
and EconomicHistory
thataccumulated
factslyingin disorder
beginto assume
It is a truthperpetually,
is thrownamongthem.
someorderwhenan hypothesis
HerbertSpencer
therecould only be
If we were not ignoranttherewould be no probability,
But our ignorance
cannotbe absolute,forthentherewouldno longer
certainty.
at all.
be anyprobability
Henri Poincare
THIS
of
to examinecritically
the function
paperis an attempt
in economichistory.
theoryin historicalresearchand particularly
We shall take as our startingpoint the assertionthat the historian
about
is not interestedsimplyin collectingfactsor true statements
some segmentof previousexperience.He wants to find causes and
to explainwhat happened.The purposeof thispaper is to introduce
some of the problemsattachedto the conceptsof historicalcausality
universeand to suggesthow theanalytic
and explanationin a stochastic
toolsof scientific
inference
can be appliedin economichistoriography.
avoidarguments
and will therefore
We wishto avoidmethodenstreit
about precedenceor relativeimportance.The literatureis already
overburdenedwith the logbooksof intellectualvoyagesinspiredby
dichotomy.We rejectthe posthe false chartsof the history-theory
sibilityof such a dichotomyfromthe outset.Instead,we shall assert
simplythateconomicsas a sciencedeals withhistoricalprocessesand
is dependentupon historicalresearch.In any positionotherthan the
the tools of economicanalysis
therefore,
extremeof antiquarianism,
must have some functionin the handlingof the historicalmaterial
that deals with economicprocesses.These tools-theory,statistical
and generallaws of natureand causality-haveseemedto
inference,
or useless,even antitheticalto a
many historiansto be unnecessary
historicalpointof view.The elementsof thisnegativeargumentwill
provideus with an outlinefromwhich to propose the affirmative
position.
*The authorswish to thank the Harvard Foundationfor AdvancedStudy and Research
for a grantfor clericalassistance.The Foundationis not responsiblefor any of the opinions
and conclusionsin the paper.
524
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Thisconcentration
uponorderand sequence-andultimately
upon
causalordering-isnot intendedsimplyas a contrast
or alternative
to the recording
of factsaboutsomeblockof experience.
Histories
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526
forouremphasis
uponcausal
Recognizing
thisis sufficient
justification
In addition,
itgivesus a criterion
forthechoiceamongtrue
ordering.
of thesequenceor conjunction
statements:
it is the"causalfertility"
our
search
whichshouldguide
amonghistorical
data.1
inherent
Thereare,however,
seriousand quitespecialdifficulties
eventsand to findcauses
in theattempt
to explainsingular
historical
have led one groupof historians
to
amongthem.Thesedifficulties
and scientific
betweenhistorical
explanation.
drawsharpdistinctions
In theextreme,
groupofhistorians
havebeenled
a secondimportant
in historical
todenythatthedeliberate
searchforcausesis meaningful
by thefollowing
quotastudy.The first
position
maybe represented
tionsfromPopperandRickert,
respectively:
2
(i)
(2)
line of interest,
sharplyto be
Generalization
belongssimplyto a different
fromthatinterest
in specific
eventsand theircausal explanadistinguished
tionwhichis thebusinessofhistory.
to find-theveryconcept
Historicallaws are notjust moreor less difficult
of historical
law carriesan innercontradiction.
Historicaland nomothetic
scienceare mutually
exclusive.
The moreextreme
of
in thefollowing
statements
position
is reflected
Croceand Collingwood,
bothof whichcarrya strong
respectively,
Idealistbias:3
(i)
(2)
The facthistorically
butonly
thought
has no causeand no end outsideitself,
in itself,coincident
withits real qualitiesand with its qualitativereality.
is notthemereevent,butthethought
For history,
theobjectto be discovered
it. After
expressed
in it. To discoverthatthoughtis alreadyto understand
processof inquiring
thehistorian
has ascertained
thefacts,thereis no further
intotheircauses.When he knowswhathappened,he alreadyknowswhy
and therefore
all history,
is the
it happened.. . . The history
of thought,
own mind.
re-enactment
of pastthoughtin thehistorian's
of generalizing
abouthisThe difficulty,
perhapstheimpossibility,
toricaleventsis usuallyattributed
to thespecialcharacteristics
of past
1 See MortonG. White, "Toward an AnalyticalInterpretation
of History,"in Philosophic
Thoughtin France and the UnitedStates,Marvin Farber,ed. (Buffalo,New York, i950),
pp. 705-26.
2Karl Popper,
The OpenSociety
and Its Enemies(Princeton,
I950),
II, 25i and Heinrich
Rickert,Die Grenzender naturwissenschaftlichen
Begrigsbildungquoted in F. C. Lane and
J.C. Riemersma,Enterpriseand SecularChange (Homewood,Illinois,I953), p. 432.
3 BenedettoCroce,The Theoryand Historyof Historiography
(London: GeorgeG. Harrap,
I921),
p. 76 and R. G. Collingwood,The Idea of History(Oxford:The ClarendonPress,I946),
pp. 2I4-I5.
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Economic Theory,StatisticalInference
529
522-34.
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Economic Theory,StatisticalInference
53I
narrowcasestudiesofunusually
or influential
prosperous
persons
and
groups,and theconcentration
uponverylimitedperiodsin historical
time.Modernexamplesof thistendency
in economic
can be
history
foundin thestudiesconducted
undertheheadingof entrepreneurial
research.
That the entrepreneurial
approach,
withits acknowledged
debtto Schumpeter
(one ofthemostpositivistic
builders
of complete
andpervasive
modelstohavegracedtheeconomic
should
profession),
havetakenthisdirection
is particularly
intriguing.
Thereis nothing
inherently
wrongwiththiskind of historiography;
it is extremely
usefulifrelatedto generalhistorical
patterns
or theories
of economic
behavior.
The difficulty
is thattheserelationships,
whichare per se
inimicalto theprofessions
of uniqueness,
are specified
in onlya few
ofthebetter
entrepreneurial
studies.
It is notthefactthat"in history
anything
can happen"thatmakes
itso difficult
forhistorians
togeneralize
or,byextension,
totesthypotheses.It is wordmongering
to suggestthathistorians
can interpret,
assess,makejudgments,
butnotconcludeor testor generalize.
When
one says"in history
anything
can happen"and therefore
thatthe
student
ofhistory
can onlyattendto theparticular
eventwhichhas
indeedoccurred,
one meansto saythatthereare too manyrandom
variablesin the availablegeneralization
and that,sincewe do not
knowthedistributions
of thesevariables,
we had bettergiveup explanation
and concentrate
uponrecording
factsaboutspecific
events.
Butexplanation
in a historical
system
can be interpreted
as theestimationof probabilities
of transition
fromone stateto a succeeding
state,giventheinitialconditions
and a causallaw or generalization.
In thatinterpretation
thetaskof theeconomic
historian
is to search
out thevariations
in theexogenous
variables,
thatis, to add to the
setofempirically
realizedindependent
conditions.
Unfortunately,
data
arenotfoundwithneatlabels-"condition"
and"observation-sentence"
or "exogenous,
endogenous,
and random."The response
to thisfact
has too oftenbeen to fall back upon uniquenessand to denythe
possibility
of establishing
causalhypotheses.
In the luxuriant
diction
of Croce,"The materialof history
is the singularin its singularity
and contingency,
thatwhichis once and thenis neveragain,the
fleeting
network
of a humanworldwhichdrifts
like cloudsbefore
thewindand is oftentotally
changedbyunimportant
events."
'0 The
resignation
impliedin thisstatement
is, of course,neitheruniversal
10
I939),
p. 88.
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quoted in Gardiner,HistoricalExplanation,
p. Ioo.
13 C. G. Hempel and P. Oppenheim,"Studies in the Logic of Exploration,"Philosophy
of Science(Apr. 1948), 135-75, esp. p. 145; Braithwaite,
Scientific
Explanation,esp. pp. 322-25.
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III
overthenatureofhistorical
has had a peculiar
Argument
causality
impacton thestatement
and thenatureof hisof historical
findings
toricalinvestigations,
as we have just seen.In essence,it has bred
extremes.
unnecessary
The continued
existence
of theseextremes
is curiousbecauseboth
are rejected
todayby modernphilosophy
and science.This rejection
holdstrueregardless
of whether
thedataare of historical
or experimentalorigin."5
The presently
is to seek
acceptedscientific
objective
as complete
explanations
as possiblebutto denytotalexactitude
as,
indeed,evenbeingattainable.
remaina goal,sought
Totalexplanations
forbutneverfullyattained.
Withthisadmission
the statement
of humanimperfections,
of a
hypothesis
becomes,
forexample,
in notational
formas follows:
X
a+bY+e
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The agreement
ofcertain
actualconditions
withdeducedconditions
is necessarily
doesnotimply,
ofcourse,
the
corthat original
hypothesis
rect.This is so becausetheremaybe otherinitialhypotheses
from
can be deduced.We are able,in
whichthesameobserved
conditions
to rejecta hypothesis
overall
butnotto acceptone hypothesis
short,
In agreement
withtheprinciple
others.
enunciated
in thelastsection,
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Economic Theory,StatisticalInference
54I
deductive
system,
we canfrequently
deviseat leasta testof cotenability.l8
A morescientific
tothestudyofeconomic
approach
hasbeen
history
advocated
in thepreceding
discussion.
This raisestheinevitable
questionofwhether
suchadvocacy
extends
to theintroduction
ofthevery
formaland complextechniques
of modernprobability
statistics
into
historical
studies.Answering
thatquestionin a simplecategorical
fashionis difficult,
sincethereare at issuesuchcomplexproblems
as
thecentral
disagreements
separating
theso-called
subjective
and objectiveprobability
schools.
The objections
to usingformalprobability
testsmaybe broadly
intotwomajorcategories.
classified
First,thereis a seriousquestion
abouttheappropriateness
of usingprobability
modelswithhistorical
data.Although
all therandomness,
and otherassumptions
normality,
whichcommonly
underlyprobability
modelsmightbe met in the
scientific
or in a well-designed
laboratory
sampleor questionnaire
thereis littledoubtbutthattheassumptions
study,
arenotmetbymost
economic
historically
generated
data.
Evenwiththemanyrecent
advances
inthedevelopment
ofanalytical
toolsforuse witheconomictimeseries,the application
of formal
econometric
or statistical
techniques
to theanalysisof suchdata remainsfraught
withhazard.For example,the economicstatistician
mustusuallybehave,forwantofbetter
knowledge,
as if his totaldegreesoffreedom
equalthetotalnumber
ofavailableobservations;
becauseofthelackofrandomness
in thegeneration
of his data,thisasis rarely
sumption
met.Similarly,
mostprobability
testsarebasedupon
theassumption
thatsamplingis froma largeuniverse
and involves
forinferring
techniques
theproperties
of theuniverse
froma small
sample.Buttheeconomicstatistician-cum-historian
usuallycannotbe
he has in factso fewobservations
selective;
thathe mustemployall
thatareavailable.Nor is thisproblem
solvedeitherbythemerepass18 Excellenttreatments
of the counterfactual
conditionalmay be foundin Nelson Goodman,
"The Problemof Counterfactual
Conditionals,"Journalof Philosophy,XLIV (Feb. I947),
II3-28,
and in Braithwaite,ScientificExplanation,pp. 295-3I7.
The slaveryexamples are
froman unpublishedpaper,AlfredH. Conradand JohnR. Meyer,"The Economicsof Slavery
in the Ante-bellumSouth," presentedat the Conferenceon Researchin Income and Wealth,
NationalBureau of EconomicResearch,at Williamstown,
Mass., Sept. 1957.
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1957),
p.
440.
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