Abstract: Theory and Empiricism: Economics and Business History
A theoretical preference for free markets shapes professional economics in the United States. Public discourse about free markets privileges deregulation because it promotes competition. Business historians are often familiar with economic, political, sociological, and literary theory. Nevertheless, the field has produced substantial knowledge about business through empirical research, which should be relevant to public discourse about free markets. Legal historian William J. Novak, well known for controversial scholarship on a long-lived robust American state, has recently challenged neoliberal theory. Because regulation was part of a durable state, he faults free market economists for assuming that the New Deal marked a turning point between laissez-faire and stronger government. He also argues that regulation was often used to limit private capture of government, which posed a challenge to democracy. Likewise, business historians' empirical research has produced substantial evidence that firms did not favor competition. Margaret Levenstein discussed the lack of enthusiasm for competition in her 2012 BHC presidential address ''Escaping Equilibrium.'' Indeed, the evidence is strong that businesses avoided competition by seeking new markets, technologies, and innovative manufacturing techniques, while engaging in cartels and mergers, and flaunting the antitrust laws.