When Nobel Prize winner Robert J. Shiller published his book Narrative Economics in 2019, he triggered a discussion among economists on the effects that narratives have on economic behavior.1 Remarkably, Shiller introduced his thesis neither by reflecting on narratology, nor by giving a contemporary example. Instead, he referred to a historical example, one that comes from the era of the “Roaring Twenties.”2 That alone may illustrate the vast heuristic potential that historical perspectives might contribute in terms of this issue.

In a two-day workshop in London in April 2022, economic historians and historians of science gathered to discuss the role of economic narratives for economic decision-making. The organizers of the conference suggested – as the title chosen indicates – to “flip” the focus from economics that are “narrative” to the “economic narratives” themselves. Pointing out that the causal processes behind stories and their ability to shape the behavior of economic agents has, so far, received only scant attention, they invited contributions that investigate how economic narratives have been formed and constructed in the past, how they have been transmitted and circulated, and how they informed choices and behavior and yielded social or economic consequences. As the organizers pointed out in their opening remarks, economic narratives often revolve around the same concepts. They had therefore decided to structure the workshop and the contributions around three pairs or dichotomies which had proven particularly important in history: Development/Underdevelopment, Crisis/Recovery, and Growth/Decline.

In his opening conversation, WILLIAM SEWELL (Chicago) reflected upon the concept of “narrative” and how to adopt it to economic history. Sewell defined narratives as central tools to handle complexity. According to Sewell, narratives necessarily simplify reality. This, however, causes numerous epistemological problems: Narratives, he claimed, could be proven definitely false, but not definitely true. Historians in particular face the dilemma that “successful” narratives usually stick to contemporary claims. Their analysis therefore risks to either provoke anachronisms or to miss public interest. This, Sewell argued, poses a particular challenge for economic history, since its objects are narratives emerging form economics, and therefore often claim to be sort of “timeless.” Such narratives, according to Sewell, are for instance the ideas of “business as exchange of commodities” or of “business cycles.” In order to prevent the impression of a “pastlessness of the past,” Sewell suggested focusing on the historic dynamics narratives undergo: How do narratives shape economic processes and how do the corresponding changes “strike back” onto the narratives themselves? Here, Sewell pointed particularly to the significance of economic narratives for capitalism and the tight relationship between the economic profession and capitalism.

Following the comment by FRANK TRENTMANN (London), the discussion revolved around the relationship between economic narratives and capitalism and capitalism’s “restlessness” (William Sewell) that might be triggered by the “directional dynamic” of narrative thinking. Trentmann and LAETITIA LENEL (Berlin) also discussed the importance and implications of other, non-sequential narrative forms, while MARY O’SULLIVAN (Geneva) alluded to economic historians’ share in creating and circulating sequential narratives about “economic men” glorified for their contribution to economic development and technological progress. On a more general note, Trentmann pointed to the “important bifurcation” that happened in the 1960s/70s, separating economic knowledge production and the social sciences. How, Trentmann asked, might we bridge that gap when trying to bring back culture into economics? This point was taken up repeatedly over the next day.

MARGARITA FAJARDO (New York) kicked off the session on “Growth and Decline”. Fajardo’s talk on the 20th century as a “development century” identified the “Global West” and the “Global North” (mainly the Soviet Union) as protagonists of the “golden era of development”. She pointed out that neoliberalist scholarship has its roots in the pursuit for economic development: Since the state-directed economy of the Communist Bloc remained underdeveloped in terms of prosperity, deregulation, in turn, was regarded as a key of wealth. This narration has shaped economics until today. While this tells us more about ideas and institutions of the north than about the object, Fajardo outlined how Latin American economists and policymakers created their own narratives of development. Bringing in their voices, she argued, might change the grand narrative.

VANESSA OGLE (Berkeley) explored how the narrative of development shaped concrete economic practices. In the 1950s and 1960s, the British Crown let several Caribbean islands under its control become tax havens. One of the main reasons for this was that these colonies were loss-making since they couldn’t export any natural resources nor any other goods of value. Ogle demonstrated how the institutions in charge made use of the narrative and ideology of development to deregulate taxing on the islands. According to this narrative, the territories in question should be allowed to establish themselves as tax havens to attract other firms and investors. This would benefit the people of the economically underdeveloped colonies and get them off the foreign-aid budget. This narrative, Ogle argued, proved as “successful” as false: Offshore companies did make the islands less costly to the Crown. They were not, however, favorable to the development of the economies.

The following talk by ANNE RUDERMAN (London) examined how the capitalist narrative of a world consisting of (non-material and material) “goods” contributed to the economic underdevelopment of the African continent. Namely, Ruderman outlined how companies of the 17th and 18th century knew what goods to bring to Africa to purchase slaves in exchange. With this, Ruderman also drew attention to our own stories as economic historians and the questions we are not asking, highlighting how our own narratives may reinforce the actors’ narratives. By asking if slavery caused industrial revolution or capitalism, Ruderman claimed, economic history tends to ignore how the “mechanisms of trade” contributed to underdevelopment, also leaving out African actors.

LAETITIA LENEL opened the second session and explored how surveys, a new forecasting tool adopted in the 1940s, prompted the emergence of the concept of rational expectations, and how this understanding of economic expectations led to a new narrative of how different economic actions were linked in time. In the context of the crises of the late 1980s and early 1990s, this new narrative motivated the Federal Reserve to adopt greater transparency, enabling the formation of rational expectations in the first place. With this, Lenel drew attention to how economic narratives emerge and how they come to shape economic actions, highlighting particularly the role of crises. Lenel identified crises as pacemakers of the transformation of narratives and argued for a focus on the reciprocal acting of crises and narratives: Narratives, she argued, play not only a causal role in the unfolding of crises, with crises also transforming our narratives, but our notions of crises are themselves products of earlier economic attempts of sensemaking.

Whilst Lenel focused on narratives dominating within the economic scientific community, TIAGO MATA (London) provided an overview of the genesis of narratives of crisis in popular media. He introduced his reflections by considering the example of the journalist John McDonald who moved to New York during the Great Depression and would later become ghost writer of Alfred P. Sloan’s memoirs My years with General Motors3. Mata demonstrated how McDonald used game theory as a kind of universal pattern to provide stories on rather abstract economic topics with thrilling plots. As another, closer-to-the-present example, Mata addressed a Pulitzer-Prize-winning series of articles on “America and the World a Decade after 9/11” published by the New York Times under the main headline “The Reckoning” in 2011. Naturally, the series reconstructed crucial decisions leading to the global economic crises of 2008/10. But, Mata argued, in spite of the title, there was no “reckoning” in the economic sense of the word. The articles would stick to more common political narratives instead of economic ones to explain the origins of the crisis to a wide audience.

In the final talk of the session, MARY MORGAN (London) addressed the history of business cycle research. By the late 19th century, economists had started thinking about intervals of crisis and recovery of five to ten and 15 to 25 years. Morgan pointed out the national distinctiveness of the visual representations of an economic narrative. Whereas each nation developed its own graphs to visualize the dynamics of business cycles, all of them had in common that they were predictive as well as “retro-understanding.” Due to the supposed repetitiveness they indicated “where we stand, where we come from and – maybe – where we go.” Morgan highlighted that the role of narratives in general and of business-cycle-models in particular, used by agents who want to change economy, was so far under-researched, emphasizing the vast potential of exploring the relation between – nationally distinct – visual representations of economic ideas and economic decision-making.

TREVOR JACKSON (Washington) opened the third session on “Growth and Decline”, asking how economic narratives such as “Growth and Decline” migrated to other spheres. Jackson showed how recovering the theological aspects of economic narratives may illuminate why and when narratives stick, emphasizing particularly the importance of economic narratives for capitalist imaginations.

In some respect, STEPHEN MACEKURAS’ (Bloomington) report on economic growth as a narrative resumed Jacksons talk. Macekura outlined different types of growth narratives that proved particularly powerful in economic history, with several of them illustrating the theological aspects of the idea of economic growth outlined by Jackson: growth as promise for future gain and means to create consensus; growth as narrative that helped define the Cold War; growth as a justification of a particularly whiggish interpretation and justification of Western narratives of development; and growth as escape from natural and environmental constraints. In his concluding remarks, Macekura raised the question how the growth narrative was challenged by current problems as it relied on the premise of an energy regime of cheap fossils.

SEBASTIAN SCHWECKE (New Delhi) dedicated his talk to the conditions of lending in contemporary India. He defined lending as an approach to “turn ‘unpresent’ future expectations into present money.” Until today, Schwecke highlighted, the Indian government decides on the conditions of creditworthiness. To enforce this and prevent “unqualified” people to take out loans, India has exempted credit contracting from the rules of contractual law, one of the “cornerstones” of liberalism. However, a system of private moneylending businesses emerged, furnishing the disregarded people with loans. Since the government failed to stop this, it consistently challenges governmental predictions that otherwise might be “self-fulfilling”.

MARY O’SULLIVAN closed the third section, giving a talk on the relations between economic practice and economic discourse. She particularly addressed the concept of profit as an analytical as well as a historical lens. Focusing on European textiles in Early Modern History, O’Sullivan compared how profits were understood and generated in economic practice and how they were constructed in the economic discourse.

In her closing presentation, MARY MORGAN showed how scientists use narratives as (1) sense-making technology, as (2) a form of representation, and as (3) an inference. After an account of the three different roles, which she illustrated by referring to reflections from the field of history of sciences and sociology of sciences, Morgan explored how economic actors make sense of the economy by narrativizing, and how these narratives are changing and transforming through events. These points were taken up in the final discussion, which focused on the relationship between economic narratives and economic practices and the role of economic experts. On a more self-reflexive note, participants discussed the relationship between our own narratives as economic historians and the narratives of our agents and why it is just now, in the era of “Fake News” and “Framing,” that narrative figures prominently among scholars of different disciplines. It was discussed whether scholars had taken up the topic as a result of the fact that grand narratives had recently been challenged, demonstrating once again the importance of a reflection on the constructiveness of the world.

Conference Overview:

Opening Conversation

William Sewell (Chicago)
Commentary: Frank Trentmann (London)

Session I: Development/Underdevelopment

Margarita Fajardo (New York)
Vanessa Ogle (Berkeley)
Anne Ruderman (London)
Alden Young (Los Angeles)
Rapporteur: Jeremy Adelman (Princeton)

Session II: Crisis/Recovery

Laetitia Lenel (Berlin)
Tiago Mata (London)
Mary Morgan (London)
Rapporteur: Mary O’Sullivan (Geneva)

Session III: Growth/Decline

Trevor Jackson (Washington)
Stephen Macekura (Bloomington)
Sebastian Schwecke (New Delhi)
Mary O’Sullivan
Rapporteur: Alexander Nützenadel (Berlin/London)

Closing presentation

Mary Morgan

Notes:
1 Robert J. Shiller, Narrative Economics. How Stories Go Viral & Drive Major economic Events, Princeton, Oxfordshire 2019.
2 Ibid., p. ix.
3 Alfred P. Sloan, Jr., My Years with General Motors, Ed. by John McDonald, New York 1963.