What are our objectives when we study economic history? Certainly we want to better understand the dynamic process by which social interactions generate the changes that constitute history. We want to know why X happened, instead of Y. We want to know how the existence of social processes A and B and environmental process Z may have influenced the way the social formation developed over time. And we probably want to know these things not simply because of a curiousity about the past but also because we want to understand how specific configurations of social (and environmental) processes shape our present and will shape our future. In other words, the study of economic history has a very important role informing our understanding of contemporary societies. Finally, in exploring economic history we may also have as an objective the improvement of our general knowledge of economic transformation, growth, and development. Specific economic histories provide us with examples of success and failure in the pursuit of economic improvement. We can look for those combinations of social processes and natural environments that seemed to precede periods of economic growth and/or development and seek to improve our theoretical understanding of the nexus linking such processes and natural environments to growth and development, more generally.

How do we proceed to satisfy our objectives in the study of economic history? What theoretical framework (set of concepts and logic) will serve us best in this regard?

Mainstream economic theory in the United States has been dominated by a particular paradigm since the 1920s: neoclassical economic theory. This theory is founded upon the assumption that all economic activity can be explained by the decisions of autonomous, resource constrained, utility maximizing (rational) economic agents. History can, therefore, be understood as the product of the multitude of decisions by such economic agents over time. Most of the versions of neoclassical theory make certain other assumptions, such as highly competitive markets within which these relatively powerless economic agents make decisions in the absence of coercion or violence. Overall, the assumptions of the theory are not in accord with what we find in the historical evidence (or the present). Most damning is the fact that the initial assumption about human psychology is not in accord with a long history of psychological research. Indeed, neoclassical economic theory could simply be viewed as a crude psychological theory used to draw conclusions about economics. This theory is crude because the simplistic view of human beings as driven by a singular impulse --- the drive to pleasure/utility maximization --- is at odds with the complex understanding of human behavior that has evolved within the field of human psychology over the past 100 plus years of research and theorizing. Consequently neoclassical theory leads to false conclusions about the dynamics of social interaction. We get an incorrect reading of the path that historical change takes, given any configuration of existing social processes.

In other words, neoclassical theory fails the utilitarian test. It is a useless theory, whether employed in the analysis of current day phenomena or in analyzing history.

The irony is that the neoclassical paradigm has its roots in a very exciting period of history: a transitional period, if you will. The basic bone structure of neoclassical theory was formed from the work of a troika of theorists in the late 19th century: Carl Menger, William Jevons, and Leon Walras. Their major theoretical publications appeared during the 1870s, a period in which a new social organization of production, appropriation, and distribution of social wealth (of value) came to dominate all other forms in the Northeastern part of the United States and in Great Britain. This new and powerful form of social organization of production, appropriation, and distribution of value was called capitalism. Capitalism was epitomized by voluntary wage-labor contracts and the centralization of command and control over the surplus value generated within production. In its most prominent institutional form, the capitalist corporation, this new social system provided a means of mobilizing large numbers of direct producers under the command and control of a centralized industrial bureaucracy with the function of appropriation vested in a board of directors.

Capitalism, in its corporate manifestation, served the process of industrialization quite well. Capitalist corporations, because they could control such large amounts of surplus value, became the locus for the investment of financial capital. The concentration of financial capital within capitalist corporations allowed them to mobilize huge armies of industrial wage laborers. The growth in industrial production stimulated rapid economic growth in Great Britain and the Northeastern part of the United States in the mid to late 19th century. The rapid growth of capitalism and the capture by capitalist corporations of financial capital led to the rapid decline of alternative forms for the organization of production, appropriation, and distribution of value. In particular, this period was also one in which the role of self-employed artisans declined in a wide range of markets, replaced by the new and growing capitalist corporations. Slavery, a chief rival to capitalism as a means of mass mobilization of laborers and the centralized control over the surplus value generated by such laborers, had suffered a fatal blow with the defeat of the Confederate insurrection in the United States by 1865.

Perhaps even more telling, this period saw the relative growth of large-scale capitalist corporations at the expense of smaller scale capitalist firms. In other words, during the period when neoclassical theory was developing into a hegemonic economic theory, the world was moving not towards their vision of the perfectly competitive market of equally powerless economic agents engaging in fair transactions, but towards a world of powerful corporations dominating markets, especially the markets for the buying and selling of labor-power (the primary owned commodity of wage laborers). The utopian vision of neoclassical theory, therefore, had very little to do with the reality on the ground. Nevertheless, over the next few decades it would come to dominate the discipline of economics, successfully marginalizing its rivals, labelling them as heterodox and largely pushing the practice of heterodox theories out of policy making bodies and the academic establishment.

Perhaps the fact that neoclassical theory won control of the profession of economics should be sufficient to make the paradigm the tool that we deploy in making sense of economic history. However, to do so would be to abandon our earlier stated objectives. These objectives, which require a hard-nosed concern for the truth, even at the cost of rejecting the orthodoxy, remain our primary concern. Therefore, we must seek a theoretical framework that gives us a better understanding of history than we might ever hope for by deploying a utopian framework of thought.

The theory we will use in this endeavor is post-structuralist Marxian theory. Post-structuralist Marxian theory attempts to rethink the dynamics of social relationships, the interaction of such social relationships with the natural environment, and the logic of cause and effect in producing change.

One of the most prominent aspects of the post-structuralist Marxian theory and one that seems to fit our mission is that it embraces complexity. We live in a world of complexity. We see this from the subatomic world on up. Simple reductionist explanations will not provide us with the sort of understanding that we seek. It will not improve our ability to predict the future or to make sense of the past. Post-structuralist Marxian theory begins with a complex ontology, embracing the concept of overdetermination. Since Freud introduced the concept of overdetermination into social science, it has provided us with a logic by which we can view the interaction of social and environmental processes without privileging one subset of such processes (giving those processes significance) over another such subset (making those processes insignificant). Instead, overdetermination represents an ontology that recognizes the significance of all social and environmental processes. Everything has an effect. The only question, then, is what that effect is (in the context of all the other effects). It changes the focus of our attention from trying to identify causes to trying to understand the unique effects of social and environmental processes at any given moment in time, given the context.

Because overdetermination is an ontology (a theory of cause and effect) that presumes that all events are consequential in shaping the dynamics of social interactions, then it represents a clear alternative to the reductionism of neoclassical economic theory (as well as the reductionism of orthodox Marxian theory).

The specific post-structuralist Marxian theory we will develop is the product of a rethinking of Marx's Capital by two UMass economists, Stephen A. Resnick and Richard D. Wolff. The journal, Rethinking Marxism, and the organization, The Association for Economic and Social Analysis, are critical institutional vehicles for the teaching and dissemination of post-structuralist Marxian theory. Resnick and Wolff have advanced the utility of Marxian theory by simultaneously deploying an overdeterminist ontology and elaborating concepts which can be traced to Marx's three volume, Capital. In particular, they have created a sophisticated version of Marx's ideas about surplus distribution which formed the core of volume III of Capital. This provides social analysts interested in the historical transformation of societies with the tools for understanding the changing ways that social surpluses have been generated, appropriated, and distributed and the way these different class processes have shaped other aspects of the social formations (societies) and vice versa. This adds a rich and sophisticated new element to the study of economic history and allows us to see social processes which are invisible within the more limited confines of either neoclassical economic theory or more orthodox version of Marxian theory. And it does this without limiting our ability to think about the dynamic effects of differing political institutions, market processes, types of ownership, or other factors that have been elevated to transcendental status within alternative economic theories, including variant forms of neoclassical economic theory. Indeed, it is the open-mindedness of post-structuralist Marxian theory that makes it particularly attractive to anyone seeking to develop an unbiased understanding of economic history.

Copyright Satyananda J. Gabriel, Mount Holyoke College, 2003.