The Limitations of Economic Counterfactuals: The Case of the Lancashire Textile Industry

Management & Organizational History, Vol. 2, p. 315, 2007

17 Pages Posted: 9 Jul 2011

See all articles by Steve Toms

Steve Toms

University of Leeds - Leeds University Business School (LUBS); University of Leeds - Division of Accounting and Finance

Matthias Beck

Queen's University Belfast

Date Written: 2007

Abstract

The article presents a history of the Lancashire cotton textile industry from the perspective of decision-making entrepreneurs as embedded historical actors, in contradistinction to the economics-based counterfactuals that dominate the recent historiography of the industry.A simulation approach is used to recreate the decision- making parameters faced by entrepreneurs and is used to support a genealogical path-dependent interpretation to overcome the problems of teleology and hindsight. Using historical evidence and evidence from the simulation, a critique of three economics-based counterfactuals is developed. These are the Lazonick counterfactual, the Keynesian counterfactual and the neo-classical counterfactual. It is shown that none of these take into account the full context of the decisions that were taken and none therefore offer a convincing explanation of the collapse of the industry.

Keywords: entrepreneurs, history simulation, Lancashire cotton textiles

JEL Classification: D84, L67, N14, N23, N64

Suggested Citation

Toms, Steve and Beck, Matthias, The Limitations of Economic Counterfactuals: The Case of the Lancashire Textile Industry (2007). Management & Organizational History, Vol. 2, p. 315, 2007. Available at SSRN: https://ssrn.com/abstract=1881793

Steve Toms (Contact Author)

University of Leeds - Leeds University Business School (LUBS) ( email )

Leeds LS2 9JT
United Kingdom

University of Leeds - Division of Accounting and Finance ( email )

Leeds LS2 9JT
United Kingdom

Matthias Beck

Queen's University Belfast ( email )

25 University Square
Belfast, BT7 1NN
Ireland

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