The Daily Bell published an interview with me yesterday.
For as many years as I can remember as a professional economist I have described my research activities as follows:
My research has primarily been in the area of comparative political and economic systems and the consequences with regard to material progress and political freedom. In addressing these questions, I have also had a particular interest in 20th century economic thought and the methodology of the social sciences because of my judgment that much suffering throughout the 2nd and 3rd worlds in the 20th century were caused by bad ideas in economic theory and public policy and that these bad ideas were promulgated because of misguided notions in the philosophy of science as applied to the social sciences. It has become an important part of my research efforts to explore and tell the tale of this mistaken intellectual path. The Austrian School of Economics, its ideas, its historical figures, and its fate in the economics profession and public policy discourse has been a source of continued intellectual inspiration for me since my undergraduate days and is no doubt evident throughout all my writings.
Fields of Interest: Market Process Theory, Comparative Political Economy, History of Economic Thought and Methodology, Economic Development, Economic Methodology, Austrian Economics, Political Economy, Informal Institutions
In the years since I have been a practicing economist, the methodological swings have been interesting to observe, if also frustrating. At one point in the 1980s and early 1990s, I thought economists were going to final open up to a multiple methods methodology with respect to empirical research and we would see a return of traditional narrative historical research. My believe was inspired by D. N. McCloskey's "rhetorical turn", but also the professional reception of the work of Avner Greif. In the mid 1990s, I was very convinced of this turn due to three factors -- (1) it was obvious that official statistical analysis failed to capture what was wrong with the economies in East and Central Europe and the former Soviet Union, and that only opening our eyes to the informal sector would solve that mystery, and this also seemed true for what was going on in less developed economies, (2) Greg Mankiw's very clear analysis of the shortcomings in the then standard growth regressions in terms of sorting out the causal explanation for differing performance in his Brooking Papers in Economic Activity 1995 paper, and (3) Greif's analysis in "Cliometrics After 40 Years." Now in retrospect, I realize that I read a lot into these that is perhaps unique to me. But I took these signs as the opportunity for a wedge to form that could be exploited by those interested in field research in political economy and the constructing of analytic narratives, which I argued was the appropriate empirical complements to market process theory and public choice analysis (including constitutional political economy).
But while research in the analytic narrative tradition is feasible in the field of political economy and economic history, it did not result in the sort of methodological sea-change that I had expected. Instead, the sort of comparative historical political economy that I had hoped would take on a leading role in modern economics and political economy is still a minority position. But it is a growing minority if you look at the publication placement and scholarly impact of work by Pete Leeson, Chris Coyne, Ben Powell, Ed Stringham and David Skarbek. Their work respectively represents the outgrowth of this optimism for a methodological rethinking. The research program in comparative historical political economy has been laid out in systemic form in a few essays that Chris, Pete and I have published jointly -- (a) The New Comparative Political Economy; (b) Institutional Stickiness and The New Development Economics, and (c) Comparative Historical Political Economy.
As we explain in the last of these papers, empirical research must be comparative, historical and political economy. One of my favorite articles in recent years is Daron Acemoglu's Journal of Economic Perspectives reminder to researchers in development economics that progress in the field requires the primacy of a theory of individual behavior and economic forces at work as well as an accouting for political economy. Our papers should be read in that same line of argument, and also on the empirical front demanding that the real action goes on behind the official view and the statisical agencies working from that official view. In economic relations, it is the de facto and not the de jure alone that we must uncover if we hope to understand the relationships and modes of interaction that define the social order.
So we come back again -- methodological individualism, institutional analysis, and process tracing provides the analytical framework, and field work and narrative history forms the basis for empirical research. We can, of course, supplement our empirical research with pattern recognition with statistical tools, and lab experiments to illustrate the analytical framework or computer simulations to again illustrate the analytical framework. But good old fashion historical research, and the use of archives, memoirs, ethnography, and on-the-ground soaking and poking, should be in the empirical tool-kit of economists and not just Mostly Harmless Econometrics. Remember it is Comparative Historical Political Economy -- same players different rules means a different game. We must examine how different rules produce "better" or "worse" games, or to put it another way, how alternative institutional arrangements are either conducive to productive specialization and peaceful cooperation, or thwart such efforts at human betterment.
Anyway, as I say in the interview linked above, I am very optimistic about the scientific and scholarly future of the contemporary Austrian school of economics. But there should be little doubt that a methodological sea-change is required to see the wide scale appreciation let alone acceptance of the Austrian school of economics and the broader agenda of classical liberal political economy.