History and Economics may appear in recent decades as having little in common. On the one hand, historians, perhaps influenced by the postmodernist approach, refrain from “modeling” history through general theories, and emphasize instead the relative truth of any interpretation of history that is necessarily dictated by the context. Economists, on the other hand, stress the universal truth of economic theory as a conceptual tool to understand human behavior regardless of time and space; i.e. regardless of the context. In addition to this first order “conceptual” difference between the two disciplines, there is also methodological “tension” between the qualitative historical approach and the quantitative economic analysis.
Nevertheless, history and economics were much closer disciplines in the past. Many renowned economists (e.g. Adam Smith, Karl Marx, W. W. Rostow, Milton Friedman, and Alexander Gerschenkron to name a few) used history in varying degrees in order to develop their theories about economic development. Many historians, especially those working within the Marxist tradition, were open to theorization and quantification in historical research.
The philosophy of the History Program at the Institute for Advanced Study in Toulouse (IAST) is to appreciate the conceptual and methodological differences between the two disciplines yet to explore the benefits of trade (or the common areas of research) between them. This is achieved through organizing a wide range of activities that combine both economists and historians as well as other social science disciplines, including regular seminars, conferences, publications, and graduate courses. Some of the possible common areas of research are:
- New Institutional Economics emphasizes the importance of institutions in shaping economic outcomes. One recent line of this literature examines the historical “lock-in,” by which historical institutions persist and continue to shape economic outcomes until today. In other words, this literature provides support to the hypothesis that “history matters.”
- The study of the long-run economic development process may benefit a lot from examining historical phenomena. Many of the current areas of consensus in economics are shaped by the current economic phenomena in the developed world. Examining these phenomena in a longer time span may allow us to revise many of these areas of consensus.
- History provides many interesting “natural experiments” that allow us to test a range of hypotheses that are otherwise untestable. For example, some of the most intriguing economic and political changes took place in the past (e.g. Industrial Revolution, Health Revolution, Rise of Democracy). History is the natural laboratory to examine these phenomena, the understanding of which may shed light on our understanding of the twenty-first century.
- Economic analysis of incentives and institutions may help enrich the historical analysis of past social and political institutions.