In 2015, when interviewing Jonathan Sumption, Matt Stadlen asked a deceptively simple question: “Why does history matter?” Sumption replied: “It matters because it’s a tremendous source of vicarious experience.” This made my ears prick up. Learning from experience – including vicarious experience – sits at the very heart of economic theory.
Although there’s been a lot of work addressing the ways in which we learn from our own experience, I think learning from the experience of others, learning from history, has been rather neglected.
How do we learn from history? What is the method? Some believe there isn’t one. The nineteenth-century German Historical School of Economics, for example. For them, every event is ineliminably particular; fundamentally unique. Accordingly, the very notion of learning from history is illusory.
I am unconvinced but concede that the essential prerequisite of learning from history, that we abstract from the particular, involves a jump into shark-infested waters.
The most common method of learning from history is the use of historical analogy. A careful study across five continents by the political scientist Robert Axelrod found an average of one historical analogy per newspaper article. And of course, because most of us don’t possess a vast stock of historical knowledge, we tend to see the same analogies trotted out time and time again.
Be that as it may, how does historical analogy work? It’s straightforward, isn’t it? Just identify some particular historical situation, map it on to current events and deduce future outcomes. In this way, according to the historian John Tosh, historical analogies make “the past accessible and can convincingly validate policies and decisions and are therefore often used in policy-making”.
So, historical analogies act as powerful epistemic tools that enable us to uncover new knowledge. Sounds great – shame it’s wrong.
I began to notice serious limitations when I read something in the Economist in February this year. There was a leader article that poured scorn on a historical analogy that’s quite popular. According to the article, for a significant number of people, the current state of the West closely resembles Rome before the fall: “decadent, depraved and about to collapse amid a barbarian invasion”. What particularly interested me was the complete absence of any genuine argument. For the leader writer, the fall of Rome was self-evidently a silly analogy to use. But why was it silly?
That led me to the question: is there a scientific or even a rational basis for selecting a specific historical analogy in preference to another? What are the grounds for preferring, say, the repeal of the Corn Laws to the fall of Rome? The trouble is that there’s no scientific or logical basis on which we can judge certain aspects of a situation relevant, and others irrelevant, without reference to our existing beliefs.
A striking analogy can add a veneer of plausibility to a position
This dawned on me when reading an article in the Independent by Andrew Hammond from the LSE. According to Hammond, “History can provide an especially useful framework in addressing similar or identical policy challenges.” He goes on to warn: “To avoid potentially major misjudgement, attention also needs to be devoted by politicians to any significant differences between past and present conditions.”
Now the problem became clear: by what criteria are differences between past and present conditions to be judged significant? That sounds like a question that could be subjected to scientific analysis. It isn’t.
You know what the conditions of significance actually are? Nothing more than whether those conditions allow us to derive the conclusions we wanted to reach in the first place. We see an analogy as valid when, and only when, it confirms our position.
Analogy isn’t an epistemic tool, it doesn’t uncover anything new. Analogy is nothing more than a tool of rhetoric. A striking analogy can add a veneer of plausibility to a position and it can aid communication, but what it cannot do is lead us to a surprising conclusion. If an analogy produces a conclusion that surprises the person using the analogy – or the person hearing the analogy – positions aren’t changed; the analogy is simply rejected. That is precisely what the leader writer at the Economist did.
Does this mean we are doomed to some kind of nihilism? Must we adopt the “my truth” idiocy? No. All we have to do is keep in mind that learning from history is, in the old-fashioned way of putting it, an art not a science. For that reason, conclusions regarding the future must remain tentative.
Peter Lawlor was the Chief Economist at the German Stock Exchange and continues to advise senior politicians and Wall St institutions. These are strictly his own views
