"History matters" is a core intellectual guideline for understanding the relationship between inequality, democracy and development.

“History matters” is a core intellectual guideline for most heterodox economists. Typically, this expression is used to indicate that current and future economic outcomes are strongly coined by past events – hence, we often observe heterogeneous & path-dependent developmental trajectories across our objects of research, which can be better understood by illuminating differences in starting conditions, past successes & failures or lasting institutional features. In this general form, the guideline history matters can be applied to variety of different levels of analysis – for instance, when inspecting the performance of firms (micro, e.g. here or here), the innovation trajectories coining certain sectors, industries and organizations (meso, e.g. here) or the economic development of different countries or regions (macro, e.g. here or here).

Thereby, it is always helpful to remind oneself, that the very same historical conditions, that might be illuminating from an analytical viewpoint, often have to be rationalized as constraints when taking the perspective of the affected actors. Or in the words of a classic:

“Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past.”(Marx)

Past constraints are especially painful in those special cases, where history repeats itself and established features limit or prevent significant changes in the planned course of action. A clear-cut example for such a painful case of history repeating seems to the European fiscal policy response to the Covid crisis, which is expected to fall far behind the efforts undertaken by the US (see here). The same self-destructive pattern – Europe curtails the fiscal expansion much too early for a full-fledged recovery to follow – also coined the policy-response after the financial crisis and eventually led to a double-dip recession. It remains to hope that European authorities will learn quickly from these past mistakes and aim to remove at least some of the constraints tying our hands to organize a fair & green recovery. Having just spelt out that, I see that the chances are slim and the prospects are dire, but at last I spelt it out ;-)

All the best,

Jakob

PS: Related to the idea of a fair & green recovery in Europe I have written two very pragmatic policy studies with Rafael Wildauer and Stuart Leitch from the University of Greenwich (UK) trying to assess (a) the amount of investments required to render Europe carbon-neutral and (b) how much of these investments could be financed by a European wealth tax.

PPS: Be sure to closely check out the journal section this time. I found great papers, e.g. by Baki Güney Isikara on The Weight of Essentials in Economic Activity, by Ron Martin on a pluralistic economic geography or by Geoffrey Hodgson on mythical markets, that distracted me a lot in the course of the editing process ;-)