About the Interview
What challenges will China have to surmount in order to make its currency a true international currency? To answer this question and others, Barry Eichengreen studies history. In the old days, he says, historians and theorists worked smoothly together and saw one another as serious scholars. But those days are gone, and nowadays the profession largely neglects historical and institutional research. That's why Barry Eichengreen is running the Berkeley Economic History Lab to educate a future generation of scholars -- a generation that is historically literate and does policy-relevant research. These are the seeds of new economic thinking.
About Barry Eichengreen
Barry Eichengreen is the George C. Pardee and Helen N. Pardee Professor of Economics and Professor of Political Science at the University of California, Berkeley, where he has taught since 1987. Full profile
Comments
Barry Eichengreen is right. Actually economics is a social science having as object the economic aspects of actual social systems, of historical economic systems. It aims to generalize about them. Economic systems are the empirical or historical objects that economists are supposed study scientifically.
There is another science (economic decision-making theory) that economists often mix up with economics or political economy. Taking out general equilibrium and subjective value theory from microeconomics, we have, together with game theory, the core of economic decision-making theory.
While economics is a substantive and social science, the science of economic decision-making is a methodological science. While economics is supposed to adopt an empirical, historical-deductive method, decision-making science uses a hypothetical-deductive method.
The great mistake of neoclassical economics is to use the hypothetical-deductive method as its main method.
Professor Eichengreen is - without doubt - on the “right-track”. Understanding economic history is absolutely essential to informing and advancing both theoretical and applied economics. Considering applied economics, as with all things human, real economic activity is based on a very large but finite set of concepts and relationships. Therefore a clear understanding of historical reactions to economic shocks, for example, may provide policy makers with a window of opportunity to engineer and implement timely and appropriate policy responses to contemporary economic developments without “re-inventing the wheel”.
As for theoretical considerations, economic knowledge, a product of mankind’s unique ability to think, write, store, retrieve and communicate information, is not transferred from one generation of economic scholars to the next with complete fidelity.
Any number of factors can interfere with the
intergenerational transfer of economic knowledge. This may result in economic theories with little explanatory or predictive power. While economic theorizing can be conceived as an error correcting process, tragedy may occur when important insights previously articulated fail to find expression in contemporary policy and theory. A mistake like that may take generations to unwind, if at all, and may cost society dearly in the process. Therefore, I believe Professor Eichengreen's theoretical focus and his work are clearly important to the advancement of both applied and theoretical economics
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