ABSTRACT

My relationship with John Henry goes back almost five decades to the academic year 1969-1970 at McGill University in Montreal, Canada. During that memorable academic year, I had enrolled in a two-semester undergraduate economics course, titled European Economic History. As destiny had it, John Henry had been hired to teach the course as a sessional lecturer, while at the same time still struggling to complete his doctoral dissertation that, according to him (see Henry 1995, ix), had been largely influenced by the 1960s Cambridge capital controversies. Sometime during those years, while working on his thesis, his research interests expanded to include the broader question of the link between developments in economic theory and the evolution of the economy, which together constituted the subject-matter of his course. Though his original teaching material was primarily about economic history, in actual fact it entailed the remarkable blending of discussions about the evolution of economic ideas and how these ideas interacted with the historical transformations of the whole economy along relativist lines, very much in the style of what blossomed two decades later in his much-celebrated book The Making of Neoclassical Economics (1990). Although that original 1969-1970 course was subsequently removed as a 100-level first-year economics course and was revamped and split into various 300-level courses, the McGill economics department deserves some credit for still offering students a suitable selection of courses in both economic history and the history of economic thought, which have now almost virtually disappeared from both the undergraduate and graduate curricula of numerous economics departments in Canada and elsewhere in the English-speaking world. If economic history is made available at all to students, it is now being taught more and more in history departments, not by economists but typically by historians. This is hardly the most desirable outcome. Much as

Veblen (1898, 375) had stated it long ago in his criticism of the German Historical School, the traditional source-based descriptive historiographical method of the historians tends to avoid the use of abstract concepts and theories when analyzing and drawing conclusions from the evidence and thus focuses more on an analysis of broad social patterns of behavior and the evolution of technology via descriptive taxonomy. Indeed, historians often have little training in economic analysis and, as historians, are perhaps even less exposed than mainstream economists to fundamental historical debates in economic methodology. These visible changes over the last half century in the curricula in many colleges and universities have been significant. Even in my own department (at the University of Ottawa) at the undergraduate level we are left only with a couple of historically oriented courses-one in Canadian economic history and one in the history of economic thought-mostly because the few remaining heterodox economists, nowadays primarily Marc Lavoie and I, have struggled over the years to preserve such courses in the economics curriculum, with history of thought still remaining a compulsory course for the honors undergraduate program. In contrast, in many departments elsewhere in North America, history-focused courses have disappeared as required courses for undergraduate training and, in many cases, are not even offered as optional courses. Presumably this is to ensure that mathematical economics courses prevail, thereby occupying a growing share of the curriculum. Possibly, this is also to give students the misleading impression that economics is something akin to the physical sciences whose subject matter can be detached from history and substantive institutional analysis. Despite the fact that there have developed such visible countervailing academic movements over the last decade to try to reverse this tendency, associated primarily with the appearance of student initiatives, such as the Post-Autistic Economics movement that began in France in 2000, followed by the Kansas City Proposal of 2001, and even nowadays with the worldwide ‘Rethinking Economics’ movement, historically oriented research activities, as well as related university heterodox economics courses, continue to be under attack from the mainstream. An important example of such struggles is what happened in Australia in 2007, when the Australian Bureau of Statistics even reclassified and inserted history of economic thought into a new grouping: ‘History, Archeology, Religion and Philosophy,’ thereby effectively trying to remove it from economics as a discipline. In 2011, the European Research Council also tried to eliminate history of economic thought from its economics division. Although these attempts to delegitimize history officially within the discipline of economics by trying to enforce some form of collective amnesia among economists did not succeed because of widespread mobilization by heterodox economists, all these various attacks on history-oriented economics courses took place at a time when mainstream neoclassical economics was itself under severe criticism, especially in the thick of the financial crisis,

when it failed miserably in its predictive capacity and when the use of neoclassical equilibrium analysis to explain the crisis seemed completely inappropriate. Nowadays, some seven years after the financial crisis, little has changed and, much like the ‘Inquisition’ in Galileo’s times, scholastic-like cloistered departments remain without history-oriented courses in their economics programs, with general equilibrium theory continuing to reign supreme and constituting the hard core of the material of ‘high level’ undergraduate and graduate teaching. This is so even though, as an analytical tool with its unrealistic underlying assumptions, neoclassical equilibrium theory is of little help in understanding both historical and contemporary economic reality. In a discipline where repeatable laboratory experiments are not feasible, how can one claim to explain the world merely through simple theoretical structures often based on axiomatic analysis that relies on introspection as, for instance, neo-Austrians do, or to seek superficially to mimic immanent empirical regularities, regardless of the realism of the assumptions or presuppositions underpinning the theory à la Friedman? Economic behavior is ‘time-dependent’ and one cannot simply make assumptions methodologically about the economic behavior of a single agent, homo economicus, which abstracts from historical context and evolving culture, against which Veblen (1898, 389-390) was so fiercely opposed already over a century ago. As Hodgson (2001) argues forcefully, one must take account of historical context or “historical specificity.” Instead, when history enters at all in the discussion of what are otherwise timeless theoretical equilibrium models of the world, it is only at the so-called “applied economics” level. However, even at that level, students are forced to view the world through the lenses of time-series analysis in a closed methodological loop in which the relevant history is presumed to be embedded in the data set used to test a hypothesis with the latter theoretical proposition itself being derived from axiomatic reasoning. This is not at all to question the relevance of statistical testing. The problem is that “applied economics,” as conceived by the mainstream, is not about getting insights from historical narration coupled with statistical observations to help one better capture the many facets of reality; rather, econometric analysis has become mostly an exercise in confirming that one’s theory is “consistent” with some ‘observed’ data set that is itself theory-dependent-i.e., based on time-dated theories about how to structure and quantify observable reality. It is never a study of actual multidimensional social events that offer knowledge about the past, in the style of, say, John Kenneth Galbraith’s The Great Crash, 1929, Charles Kindleberger’s The World in Depression 1929-1939, or Celso Furtado’s The Economic Growth of Brazil, or about how theory can be used to shed light on the decision-making process of actual people within a historically-specific context, where quantifiable data is used to support rather than replace the historical analysis.