Each week, Symposium’s blog highlights comments about the week’s featured article. This week’s piece is “Why Write the History of Capitalism?“
Prof. Louis Hyman, guest blogger
Yesterday, at the History of Capitalism Summer Camp at Cornell, we discussed microeconomics. Campers had their first encounter with supply-and-demand curves, cleverly referred to by one member as “capitalist scissors.”
As I sat there, I could see the collective act of will among historians as they accepted an idea antithetical to our discipline: assume no change. The concept of supply and demand is centered on the notion of market equilibrium. While the participants stayed cordial, it was clear they had to struggle to accept the idea of equilibrium – namely, that markets could come to rest.
The simple introductory graphs of economics have price on the vertical axis and quantity on the horizontal axis. The lines represent how much of a product offered at a given price (supply curve) intersects with how much consumers want at a given price (demand). The curves do exactly what they purport to do, but for historians, everything that matters is outside the graph — people, politics, technology, and sometimes power. So for them to actually understand the graphs, they were required to hold all those other things constant.
Of course, the world is never constant. It is always changing. Economists know this as much as we do, and the supply and demand curves are simplifying assumptions. Yet, for most audiences, that visceral truth of change is subordinated to the desire to “think like an economist.” To fully take on this worldview requires actively repressing what we know about reality.
For a day or two at this camp, we can hold reality at abeyance, but for those who want to get an “A” or to seem knowledgeable to their bosses, that worldview begins to displace the reality of change because the latter is so messy and complicated. But business people need to grapple with change every day as much as historians do.
Even more important than holding everything outside that graph constant is the graphs’ implication that where they intersect is stable. Prices and quantities can move away from the equilibrium, but market forces will inevitably bring supply and demand to that point. If the graph is stable and everything else is held constant, then there is no change.
Deep in our guts, that notion roiled the room. Most economists, who use more complex ideas than the simplest supply and demand curves, would no doubt agree. But at its foundation, it was not hard to notice the basic tension between history, which focuses on real change, and economics, which yearns for imaginary stability.