Historical Method of Studying Economics

List of top six economists who adopted historical method of studying economics:- 1. Richard Jones 2. Water Bagehot 3. John Kells Ingram 4. Thomas Edward Cliffe Leslie 5. Arnold Toynbee 6. Thorold Rogers.

Economist # 1. Richard Jones (1790-1855):

Richard Jones is generally regarded as an isolated representative of the historical methods in England in the nineteenth century. His major works are “An Essay on the Distribution of Wealth and on the Sources of Taxation,” ‘An Introductory Lecture on Political Economy’, and “Text Book of Lectures on the Political Economy of Nations.”

Most of his views on economic subjects are found in these important works. Jones blamed Physiocrates for treating agriculture the only source of surplus. He had also made vigorous attack on the Ricardian theory of rent. According to Jones rent was of two types: ‘peasant rent’ and ‘farmer’s rent’. From the practical point of view, ‘peasant rents’ are more important. Jones criticised the abstract suppositions made by Ricardo.

Ricardo assumed that:

(1) Lands were first appropriated by those who were prepared to take pains involved in cultivating it and

(2) There was free access to uncultivated lands.

Jones regarded these assumptions not correct, since these are not supported by historical facts. Credit goes to Jones for inviting attention to the fact that the term rent in common usage means contract rent and not economic rent. Jones also criticised the wages fund theory. The economic ideas of Jones were brought to the outside world by Dr. Whewell who only published his writings.

Economist # 2. Water Bagehot (1826-1877):

Bagehot’s chief contribution lies in his reconciliation between facts and theories supported by history. He was a banker and writer and edited the “Economist”. His greatest positive contribution to economic thought lay in the field of money and banking and the functions of an entrepreneur or capitalist. Entrepreneur was considered a productive agent and his expenses will amount to the cost of production of any commodity.

He wrote articles on ‘International coinage’, ‘Lambard Street’, ‘Depreciation of Silver, and Economic Studies’. He wanted the use of both deductive and inductive methods. According to him, the historical and deductive methods were not contrary to each other. Physical Sciences require more verification. However statistics were “Scrap of Scraps”.

He was the first of the English economist to appreciate the idea of evolution in connection with the social science.

His three objections to the English political economy were:

(1) The propositions suited to a society of grown up competitive commerce only,

(2) Their principles did not apply universally as they were abstract and

(3) It lacked verification.

His criticism was constructive.

Economist # 3. John Kells Ingram:

Ingram’s famous works are “the Present Position and Prospects of Political Economy” and “History of Political Economy.” His views are contained in these works. He was a reputed scholar of philosophy, political science and several literatures. He served for many years as Professor of Greek and Professor of Oratory and English Literature. He treated economics as a branch of sociology.

He criticised classical political economy on the following grounds:

(1) Improper use of deduction,

(2) Too absolute character of theoretical conclusions,

(3) Too much emphasis on wealth and

(4) The abstract way of presenting conceptions.

The results of these abstractions was that they arrived at wrong conclusions which are useless for practical purposes. Thus the classical writers were too individualistic according to Ingram. He wanted the economic studies to be based on physics and biology.

To him economic laws should reflect changing developments. His History of Political Doctrines were essentially relative and has proved that the classical ideas were the product of their environment. He was an optimist, hence he did not accept the Ricardian view that the worker’s condition could not be improved under competition and private property.

However Toynbee said that free trade, factory legislation, trade unions and cooperative societies have definitely improved the wages of the labourers. He also favoured the extension of public enterprise and public housing. He was not an opponent of deductive method but he criticised the classical writers for making excessive use of the deductive method. He was a vigorous opponent of confiscation and violence.

Economist # 4. Thomas Edward Cliffe Leslie (1825-1882):

Leslie an Irish economist was a professor of Political Economy at the Queens College, England, and was the first economist who adopted the historical method of study. His economic ideas are found mostly in his major works like Land Systems and Industrial Economy of Ireland and continental countries. Ingram wanted the economic studies to be based on modern physics and biology.

Economist # 5. Arnold Toynbee (1853-1883):

Arnold Toynbee was more a social reformer than an economist. He concentrated his attention on the study of poverty and labour problems. His Lectures were published under the title, “Lectures on the Industrial Revolution of the 18th century in England.” Credit goes to Arnold Toynbee for coining the term ‘Industrial Revolution’.

Toynbee disproved Ricardian ideas and pointed out that one of the weaknesses of political economy was that it had not been associated with historical facts. He stated that economic theories should be supplemented by historical facts and statistical data. To him historical methods compare the stages of economic development in different countries and thereby enabled the discovery of laws of universal application.

Economist # 6. Thorold Rogers (1823-1890):

Rogers emphasised the need for careful historical and statistical investigation. His ideas were similar to those of Jones and Bagehot. His best known books are: History of Agriculture and Prices in England, Manual of Political Economy, Six Centuries of Work and Wages, The First Nine years of the Bank of England and The Economic Interpretation of History. Rogers main opposition was to the Ricardian theory of rent. The movement from more to less fertile lands was not supported by history.

According to Kim, economics suffered from two things namely, too many definitions and disregard for historical facts. Through historical study he found that much which popular economist believed to be natural, was highly artificial, what they called laws were inaccurate inductions, hasty and inconsiderate.