“In crisis periods, lessons from the past become central” – interview with Claude Diebolt

Economic crises pose a similar challenge as the study of wars, and in such uncertain periods lessons from the past through analogies become central. If the next crisis is exactly like the last one, any policymaker can simply follow the actual textbooks. But what if the next crisis is completely different? – underlined Claude Diebolt, CNRS research professor of economics at the University of Strasbourg and president of the French Economic Association in his interview given to Economania. In his opinion what makes economic historians unique is not their use of historical data or their focus on the past, but that they study the growth and evolution of economies over the long term. Economic historians give particular attention to noneconomic factors, such as legal and political systems, which distinguishes them from economic theorists. According to Professor Diebolt the disappearance of economic history from leading economics graduate programs is problematic essentially because economic history courses have a big picture focus and thus can provide added value to the education of an economist.

Kolozsi Pál (KP): Your works are focused on the interdependencies between economics, economic history and economic policy. What were the main turning points concerning the relationship of these three elements?

Claude Diebolt (CD): Simon Kuznets may have inspired the cliometric movement, but it was Robert Fogel who reunified economics and history. He used the latest techniques of modern economics and gathered reams of historical data to reinterpret American economic growth in sectors as diverse as railroads, slavery, and nutrition. Rather than conjecture about the causes of growth, he carefully measured them. He pioneered the use of large-scale cross-sectional and longitudinal data sets harvested from original sources to examine policy issues. Since World War II, the main achievements of cliometrics have been to slowly but surely establish a solid set of economic analyses of historical evolution by means of measurement and theory, and, following the path blazed by Douglass North, to recognize the limits of neoclassical theory and bring into economic models the important role of institutions. The culmination of this metamorphosis occurred in 1993 when Clio pioneers Robert Fogel and Douglass North received the Nobel Prize in Economic Science.

KP: How can we define cliometrics vis-a-vis economic history or history of economics?

CD: Cliometrics has been defined and summarized in numerous scholarly articles. They all pretty much start with the obvious, that cliometrics is the application of economic theory and quantitative techniques to study history; and then move on to the origin of the name, the joining of Clio (the muse of history), with metrics (“to measure,” or “the art of measurement”), allegedly coined by economist Stanley Reiter while collaborating with economic historians Lance Davis and Jonathan Hughes. Cliometrics has had a profound impact on economic history. It is responsible for transforming the discipline from a primarily narrative to a mathematical approach. This transformation has combined theory with quantitative methods, new and revised databases, and innovative techniques, expanding our knowledge of the process of economic growth. I define cliometrics as the quantitative projection of social sciences in the past. In my view, economic history through cliometrics is precisely the very definition of economics. In his History of Economic Analysis, Schumpeter argued that among the three pillars of economics, economic history was the most important. At the American Economic Association meetings in 1964 the AEA offered a session on economic history during which the star studded cast – including Douglass North and Robert Fogel – espoused the importance of economic history in the training of future economists. Now, a half century later, I seek to revisit the role of economic history in the disciplines of economics and history to consider how its role has changed since Schumpeter’s proclamation and where the discipline fits within the larger framework of economic theory and the education of the next generation of economists and historians.

KP: What are the main differences between economists and historians? Why the cooperation of these fields is „difficult”?

CD: The nature of the difficulty is primarily epistemological. I would say that the economist is a man/woman of generalizations, preoccupied with the typical or the average, not with the unique. When economists try to be more precise, they often incorporate an empirical bias (endogenous vs. exogenous debate) and use the two words theory and model as synonyms. In history, theory is frequently used to designate almost all general statement. The historian is concerned with the unique, not the average, with understanding, not prediction and control. Historians are looking for similarities/analogies (comparisons or metaphors) when they refer to their causal assertions as the product of imagination or intuition.

KP: What is the impact of the increasing availability of big data on cliometrics?

CD: It is the lack of relevant data more than the lack of relevant theory that is often the greater problem in research. In this way, cliometricians have made some of the greatest contributions to the fields of economics and history by discovering and compiling new data sets that can then be used by future researchers to better understand the evolution and growth of economies over time. The accumulation of the data is in itself monumental in many respects, but its usefulness has been expanded by the rapid growth of computing power. The ability to handle “big data” is not a cliometric issue by itself, but the construction of significant, important historical data sets, which can then be analyzed using the latest econometric techniques and computer programs, is very much a contribution of cliometrics. The marriage of cliometrics and big data is a natural one, and has been exploited by economic historians in new and creative ways.

Diebolt BWClaude Diebolt at the conference organized by the Hungarian Economic Association and the MNB Department of the Corvinus University (Budapest, 26. April 2019)

KP: How do you see the presence of economic history as a topic in economics journals? How do you see the top journals from that point of view?

CD: In 1994, Romer wrote the field of economic history is no longer a separate, and perhaps marginal, subfield of economics, but rather, is an integral part of the entire discipline. Economic history has always had a dicey relationship with the economics profession as a whole, but its very success, in the form of the cliometric revolution and an increasing number of publications in top leading journals, which showed that economic historians could use the same techniques and theories as any other subfield, ultimately may have proved to be its undoing.

KP: The last decades, one of the most dramatic changes concerning the education of economics was the disappearance of economic history courses from the curricula. How do you explain that fact and how do you assess it as an economist and a university professor?

CD: Cliometricians threw their lot in with the econometricians. They turned to the collection and accumulation of historical data and their use in testing hypotheses about economic activity. In this way, cliometrics brought economic history into the mainstream of economics as it was developing. Economic history is now dominated by the cliometric method, so much so that it may be a contributing cause to the demise of economic history positions and courses. To non-historians it appears that economic history is little more than the application of economic theory to historical data. Departments facing declining resources feel they can do without a specialist in economic history when anybody can apply theory to old data… should they choose to do so. In extension, the slow disappearance of economic history from leading economics graduate programs is problematic. Without the tools being taught, without specific instruction in the methodology and approach, we risk extinction. We as economic historians don’t need to convince ourselves about the difference between economists using historical data and economic history, but apparently economics departments don’t see the difference. What makes economic historians unique is not their use of historical data or their focus on the past, but that they study the growth and evolution of economies over the long term. In this way, economic history’s closest kin is development economics. In addition, the attention that economic historians give to noneconomic factors, such as legal and political systems, distinguishes them from economic theorists. Given the longer time span economic historians consider, doing so gives fuller attention to changes in institutions. So how bad is the situation? Since economists and economic historians alike have been predicting the proverbial falling sky of economic history for a century now, need we pay any heed at all? After all, we are obviously still here. While the demise of economic history has been staved off now, the fact that it has not yet succumbed does not mean it is immortal. It is resilient, but does face some significant challenges, despite the fact that it may be more widespread now than ever.

KP: What would be your advice concerning the teaching of economics? How should we change our way to teach economics, finance?

CD: Economic historians have contributed to the development of economics by combining theory with quantitative methods, constructing and revising databases, discovering and creating new ones entirely, and adding the variable of time to traditional economic theories. This has made it possible to question and reassess earlier findings, thus increasing our knowledge, refining earlier conclusions, and correcting mistakes. It has contributed greatly to our understanding of economic growth and development. The use of history as a crucible to examine economic theory has deepened our knowledge of how, why and when economic change occurs. A clear understanding of the causes of economic growth is among the most important things an economic historian can do. Cliometricians have played a leading, and not always appreciated role here, overturning some accepted wisdoms, leading to hard feelings, resentment, and controversy. However, they have also pushed forward the frontier of our understanding of economic growth and development. Finally, economic historians have spawned entire new approaches to the study of economics. At the forefront are the new institutional economics, pioneered by Douglass North, and anthropometrics, which counts among its initial practitioners Robert Fogel. It is no coincidence that these two were recognized with the Nobel Prize in Economic Science in 1993. The topics appearing most frequently on American economic history syllabi include: Long run trends in economic history and development, including globalization; Growth theories; Did institutions, culture, and religion matter?; Agriculture; Demography; Transportation; Money, banking, and finance; Industrial revolutions; Financial crises; Property rights; Great Depression; Almost any topic linking the past with the present (and sometimes the future). The overall themes that pervade these courses focus on big questions such as the sources and determinants of sustainable economic growth. In particular can technical progress alone increase social welfare or can capital accumulation also lead to a permanent increase in per capita income? What factors of production engender sustainable growth: physical, environmental, human, social or technological knowledge? What mechanisms guarantee long-term growth in a market economy? What are the market structures within which such growth can be achieved? Why are current societies more productive and wealthy than their ancestors? And why isn’t the whole world developed? The primary skills emphasized in these courses include: Basics or prerequisites in macroeconomics and econometrics, complementary to courses in economic growth, economic development, or political economy, but nothing about history of economic thought; Micro- and macroeconomic modelling; Strong focus on quantitative and empirical methods in economic history; Application of appropriate analytical tools; Recognizing the diversity of methodologies practiced in conducting economic history analysis; Constructing datasets; Putting economics in context (in a non-mathematical style) and deep sources analysis; Written and oral communication, group work, computer skills, academic integrity. This long run, big picture focus is common among all the economic history courses that I surveyed, and indeed, is central to my argument that economic history does provide added value to the education of an economist.

KP: More and more signs are showing that the global economy is potentially approaching a new crisis. What can we learn from history in such an uncertain period?

CD: Economic crises pose a similar challenge as the study of wars. Wars and economic crises are the result of conscious choices (rational decisions) made by lots of people following their self-interest… even they led to wildly irrational results. We learned from history that in such uncertain periods, confidence, fear, a propensity to gamble, follow the leader effect, stories are central to explain decision making. Often, I have the feeling that animal spirits are stronger than rational choices! According to this statement, lessons from the past (through analogies and with no paralogisms) became central. If the next crisis is exactly like the last one, any policymaker can simply follow the textbook created after 2008, and the response probably will be at least as effective. But what if the next crisis is completely different? What about toxic political environments? Inequality? Populism? Brexit? A severe cyberattack? The end of the European Empire, like the end of the Roman Empire? What about secular stagnation? In the end, all that depends also if we have an optimistic or a pessimistic vision for the future of the World!

Kolozsi Pál Péter

Claude Diebolt is a CNRS research professor of economics at the University of Strasbourg. He is the founder and the editor in chief of the journal Cliometrica. He is also the coeditor of the Handbook of Cliometrics and was the organizer of the 8th World Congress of Cliometrics. Claude Diebolt is the current president of the Comité National de la Recherche Scientifique (CNRS Section 37, Economics and Management Science), and the president of the Association Française de Science Economique. He is the founding president of the Association Française de Cliométrie and a former chair of the board of trustees of the Cliometric Society in the US. On March 6, 2019, Claude Diebolt received the 2018-2019 Sarton Medal for his research in Cliometrics.

Selected references

Diebolt C., “The Cliometric Voice”, History of Economic Ideas, 20 (3), 2012, pp. 51-61.

Diebolt C., “Cliometrica after 10 Years: Definition and Principles of Cliometric Research”, Cliometrica, 10 (1), 2016, pp. 1-4.

Diebolt C., Haupert M. (Eds.), Handbook of Cliometrics, Springer Verlag, Berlin, 2016.

Diebolt C., Haupert M., “Cliometrics”, AFC Working Papers, n°1, www.cliometrie.org, 2018, 42 pages.

Diebolt C., Haupert M., “We are Ninjas: How Economic History has Infiltrated Economics”, AFC Working Papers, n°4, www.cliometrie.org, 2018, 19 pages.

Diebolt C., Haupert M., “A Cliometric Counterfactual: What if there had been neither Fogel nor North?”, Cliometrica, 12 (3), 2018, pp. 407-434.