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The Specification Problem in Economic History

Published online by Cambridge University Press:  03 February 2011

Robert William Fogel
Robert William Fogel
Affiliation:
University of Chicago
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Extract

The rise of the new economic history has provoked a vigorousdebate on methodology. At issue is the validity of the effort of econometric historians or cliometricians, as practitioners of the new work are sometimes called, to apply the mathematical models of economics to the study of history. Some older historians have attacked the use of such models on the ground that they violate the empirical character of the discipline. In this view, the models employed by the cliometricians represent an unwarranted intrusion of speculation into an area of research previously limited to the careful collection and presentation of facts. The most severe criticism has been directed at the propensity of the new economic historians to deal with questions of the counterfactual-conditional type, that is, with questions which ask how the development of the economy would have been altered by the absence of one or more of its observed features. It has been asserted that the models which underlie the answers to such questions are “figments” and that they cannot be verified. Consequently counterfactual models are held to be a direct threat to the integrity of economic history as an empirically confirmed description of the economic development of nations.

Type
Articles
Information
The Journal of Economic History , Volume 27 , Issue 3 , September 1967 , pp. 283 - 308
Copyright
Copyright © The Economic History Association 1967

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References

1 The debate has already wound through nearly a score of essays. In addition to the papers listed below see also those cited in Fogel, R. W., “The New Economic History: Its Findings and Methods,” The Economic History Review, XIX (12 1966), especially pp. 642–43Google Scholar.

2 See, for example, Fritz Redlich, “New and Traditional Approaches to Economic History and their Interdependence,” JOURNAL OF ECONOMIC HISTORY, XXV (Dec. 1965), 480-95.

3 Basmann, Robert L., “The Role of the Economic Historian in the Predictive Testing of ‘Economic Laws,’” Explorations in Entrepreneurial History, 2d. ser, Vol. II (Spring/Summer, 1965), pp. 159–86.Google Scholar

4 For a discussion of the problem of “objectivity” and theory in economic history see Hughes, J. R. T., “Fact and Theory in Economic History,” Explorations in Entrepreneurial History, 2d. ser., Vol. III (Winter, 1966), pp. 75–100Google Scholar.

5 Goodrich, Carter, “Economic History: One Field or Two?” The Journal of Economic History, XX (12 1960), 533.Google Scholar

6 Genovese, Eugene, “The Significance of the Slave Plantation for Southern Economic Development,” Journal of Southern History, XXVIII (11 1962)Google Scholar , reprinted n i Harry N. Scheiber, ed., United States Economic History (New York: Alfred A. Knopf, 1964), pp. 149-65; also reprinted in Harold D. Woodman, ed., Slavery and the Southern Economy (New York: Harcourt, Brace and World, 1966), pp. 223-33.

7 Ibid., p. 161.

8 Ibid., passim.

9 This inequality must hold, not for all values of the functions, but only for the range Genovese presumes to be relevant.

10 This discussion abstracts from the income effect of a fall in transportation rates, since that effect would probably have been quite small.

11 Although it is not labeled as such, one of the earliest and best discussions of the central position in economic and historical analysis occupied by counterfactual conditional questions is contained in Machlup, Fritz, The Political Economy of Monopoly (Baltimore: Johns Hopkins Press, 1952), pp. 448–54Google Scholar . See also Nagel, Ernest, The Structure of Science (New York: Harcourt, Brace and World, 1961), pp. 588–92Google Scholar ; Hempel, Carl G., “The Function of General Laws in History,” Journal of Philosophy (1942)CrossRefGoogle Scholar , reprinted in Patrick Gardiner, ed., Theories of History (Glencoe, 111.: The Free Press, 1959), pp. 344-56; and Conrad, Alfred H. and Meyer, John R., The Economics of Slavery (Chicago: Aldine, 1964), pp. 3–30Google Scholar.

12 Value-added is in constant dollars of 1879. United States Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1957 (Washington, D.C., 1960)Google Scholar.

13 The last example is especially bizarre, since a bushel of wheat weighs 60 pounds while a bushel of oats weighs only 32 pounds.

14 Phillips, Ulrich B., “The Economic Cost of Slaveholding in the Cotton Belt,” Political Science Quarterly, XX (06 1905)Google Scholar , reprinted in Gerald D. Nash, ed., Issues in American Economic History (Boston: D. C. Heath and Co., 1964), pp. 244-56.

15 , Conrad and , Meyer, Economics of Slavery, pp. 74–78.Google Scholar

16 The two series are taken from Engerman, Stanley L. and Fogel, Robert W., The Growth of the American Iron Industry, 1800-1860: A Statistical Reconstruction (in progress)Google Scholar . The total output series is the value of the gross product of the iron industry in dollars of 1860.

17 Andreano, Ralph, ed., The Economic Impact of the American Civil War (Cambridge, Mass.: Schenkman Publishing Co., 1962), pp. 150,165.Google Scholar

18 Fishlow, Albert, American Railroads and the Transformation of the Ante-Bellum Economy (Cambridge: Harvard University Press, 1965), ch. iv.Google Scholar

19 Fishlow, Albert, “Productivity and Technological Change in the Railroad Sector, 1840-1910,” in Output, Employment and Productivity in the United States After 1800, Conference on Research in Income and Wealth, Studies in Income and Wealth, National Bureau of Economic Research, Vol. 30 (New York: Columbia University Press, 1966), Tables 2 and 6.Google Scholar

20 David, Paul, “The Mechanization of Reaping in the Ante-Bellum Midwest,” in Rosovsky, Henry, ed., Industrialization in Two Systems: Essays in Honor of Alexander Gerschenkron (New York: John Wiley and Sons, 1966), pp. 3–39.Google Scholar

21 The Journal of Economic History, XXVI (09 1966), 277–98.Google Scholar

22 Ibid., p. 295. Since I am following Temin's notation, it is worth noting that he does not use subscripts to distinguish between labor employed in agriculture and labor employed in manufacturing. It should be understood, however, that the L of f(L, T) and the L of g(L, K) do not necessarily represent the same magnitude. Similarly when the symbol Q A is used as the dependent variable in equation (1), it stands for the total output of the agricultural sector. But when Q A is used below as an independent variable, as in equations (3 ) and (8), it represents only that part of agricultural output which becomes an intermediate product.

23 Habakkuk, H. J., American and British Technology in the Nineteenth Century (Cambridge, [Eng.]: The University Press, 1962)Google Scholar ; and Rothbarth, E., “Causes of the Superior Efficiency of U. S. A. Industry as Compared With British Industry,” Economic Journal, LVI (09 1946), 383–90CrossRefGoogle Scholar.

24 Gallman, Robert E., Value Added by Agriculture, Mining, and Manufacturing in the United States, 1840-1880 (unpublished Ph.D. dissertation, University of Pennsylvania, 1956), pp. 357–58.Google Scholar

25 Such a production function meets Temin's specification.

26 A persistence of the dual scarcity, of course, required costs of, and/or barriers to, international movements of both factors and commodities. These barriers did in fact exist and took the form of transport costs, information costs, tariffs, and factor immobilities. The last barrier may merely have reflected the nonmonetary cost an individual incurred when he uprooted himself from his homeland.

27 I have accepted Temin's contention that the rate of return in American manufacturing during the ante-bellum era wa s higher than the rate of return in British manufacturing. While this contention seems plausible, it should be noted that Temin does not provide data on manufacturing. The rates he cites pertain to government bonds ( , Temin, “Labor Scarcity,” p. 291)Google Scholar . Hence, the validity of his claim that manufacturing was “consistently” more profitable in the United States than in Great Britain during the ante-bellum era is not beyond doubt.

28 Ibid., p. 290.

29 At press time it was discovered that a factor of proportionality was inadvertently omitted from equations (6), (9), and (13). The omission does not affect the argument. It merely changes the scale in which the efficiency index is measured.