Economic Ethnography as a form of Analytic Narrative -- the empirical side of comparative political economy

|Peter Boettke|

Under the influence of Don Lavoie in the 1980s, some faculty and graduate students (me among them) sought to pursue alternative empirical strategies in economics and political economy from the more conventional econometric approach.  Don demanded this simply for the reason that the questions that economists concerned with processes of adjustment and adaptation; questions of institutional evolution; questions of the emergence of norms; questions of informal enforcement mechanisms; questions of 'evolution toward a solution' were inappropriately handled in the more conventional model and measure research program, and required a different framework of analysis in order to generate acceptable answers. What if, Lavoie asked us all to consider, one could combine the analytical strengths of praxeology (Misesian rational choice theory, market process analysis and spontaneous order theorizing) with the interpretative sociology and anthropology of individuals such as Clifford Geertz or Erving Goffman.  Of course, to the Austrian economists this meant spending sometime with Mises's student and the phenomenological sociologists Alfred Schutz, and his students, such as Peter Berger.  The intellectual possibilities for an empirical research program addressing economic culture and the institutional framework just exploded for the young research economist and political economist.  Field work and case studies substitute for exercises in statistical significance.  But the political economist is also not content with mere "thick descriptions", but of both utilizing an analytical framework to frame the understanding of the human condition under examination, but also illustrating the power of the analytical framework with the detailed case.  N = 1 doesn't necessary mean that every case is its own island -- the general and the particular are weaved together illuminating and illustrating at the same time.

Lavoie's methodological push resulted in work among a new generation of economists that ranged from more traditional case study histories to sociological explorations of culture to anthropological field work to radical ethnographic explorations.  Along the way alternative bank notes, Soviet planning, Soviet black markets, and Soviet transition puzzles, worker cooperatives in the US as well as the system in Yugoslavia, female entrepreneurs and the cultural foundations of development, Mexican art markets and the cultural blending of globalization, paradoxes of reform in failed and weak states, pirates, prison gangs, and communities in the wake of natural disasters were studied in-depth and the results were published in articles and books. 

The work of Vincent and Elinor Ostrom can also not be forgotten here because their work from the very beginning complemented Lavoie's methodological push because it both explicitly tied into the constitutional political economy and public choice of Buchanan and Tullock analytically, but also made reference to Goffman and the comparative case study approach empirically.  The fundamental distinction in the Ostrom's work between rules in form and rules in use, as well as their emphasis on polycentricity permeated all these studies whether explicitly acknowledged or not.  See, e.g., Antoni Kaminski, An Institutional Theory of Communist Regimes: Design, Function, and Breakdown. San Francisco, CA: ICS Press, 1992.

Comparative case studies in political economy as an empirical strategy enable the researcher to access and explore the dynamics of the human condition in a diversity of institutional environments in a way that the conventional tool kit in contemporary economics doesn't permit.  All research methods have intellectual "opportunity costs" -- comparative case studies are expensive and they are less precise than the conventional form of data analysis among economists, but when done right (e.g., see Elinor Ostrom's Governing the Commons) comparative case studies provide much better analysis of the underlying mechanisms that provide the social glue in human interactions.  We can see how individuals and groups engaging in the evolution toward a solution so that situations of dire conflict can be transformed into opportunities for social cooperation.  We can see, in short, how individuals and groups come to adopt rules of social intercourse that enable them to live better together than they ever could have apart, and in so doing and under the right set of rules will enable them to realize peaceful cooperation and productive specialization.  Individuals and groups don't always make that last transition stage from subsistence to the full exchange order, but again the comparative case study approach guided by the analytical framework of praxeology (properly understood) enables the researcher to identify the institutional sticking points along the way that are blocking that transition.  The conventional empirical research strategy of economists and political economists cannot answer these sort of questions -- sometimes because the data is unavailable or unreliable, and thus to force the questions to be only those that you can pursue in that research approach means you abandon the questions that must be asked.

Note something important in the message I am trying to communicate --- I am not saying that all empirical research should be in this Lavoie spirit, that would be as silly as to suggest that all empirical economics should take the form of an econometric study.  Econometrics has its uses in empirical economics -- it is not a tool for "testing" theories (that is a philosophy of science point) and it is not a tool for economic theory either (that is a conceptual point about the nature of what economic theory is).  But econometrics is a very useful tool, but not the only tool in empirical research.  That is all anyone is saying -- so it is actually a fairly modest point -- but unfortunately one that must be stressed because so many economists are trained to think differently and to believe that econometrics is the only tool in empirical research. So sometimes the critic -- especially in their philosophy of science mode, or their conceptual mode, made appear most immodest in making the critique of the standard tool-kit.  Don't let the rhetoric mislead you, the claim that is being made is one that goes all the way back to Aristotle -- and that is choose the methods of analysis that are appropriate for the questions being asked.  There is often great benefit from work done in the conventional economics approach --- what could be termed thin descriptions/clean empirics.  But there is also value to be found in the work done by anthropologists -- what could be seen as thick descriptions/dirty empirics.  Probably not much value added to the sort of misguided efforts of some empirical political scientists and sociologists that try to combine thick description with clean empirics --- this usually leads to really bad statistical analysis and conceptual confusion in the inferences.  But the sort of comparative case studies practiced by the Ostroms, or those that were pursued by those inspired by Lavoie, or by Lavoie's immediate students, can more or less be located in the intellectual space of thin description/dirty empirics -- the analytic narrative approach of comparative historical political economy.

The work that has been done in this tradition have received some significant praise but often without recognizing the methodological point behind it. To a significant extent that is how it should be --- the only question that really matters is whether the work illuminates and illustrates effectively the phenomena under investigation.  But at some point, it is also important to recognize the methodological point because the analytic narrative approach is under appreciated and thus under represented within the fields of economics and political economy.  Methodology matters because it determines what is considered the right questions to ask, but more importantly what is considered appropriate answers.  Challenging the conventional wisdom means you are challenging the questions and the answers.  There is no way to soft peddle that, and change the nature of a discipline to be more accepting -- thus the appearance of immodesty for a very modest claim once again.

But the best first step in this "battle" is to produce very high quality work that is recognized by one's peers across the social and policy sciences.  So I was absolutely elated to see David Skarbek's The Social Order of the Underworld short-listed for the Thinking Allowed Ethnography Awards in association with the British Sociological Association.  Congratulations David and well-deserved.

 

Comments

[Roger McKinney]

I first became interested in the connection between anthropology and economics with the book "Culture Matters: How Values Shape Human Progress" edited by Lawrence E. Harrison, Samuel P. Huntington. It's almost a tribute to Protestant Christianity.

Also, I read Geert Hofstede's study of IBM employees world wide to discern cultural differences and how they relate to economic development. Great stuff! We need more!

[Don Kirk]

What is "properly understood" praxeology, compared to improperly understood?