"Economists have devoted themselves to studying imaginary systems, and they don't distinguish between the imaginary system and the real world."
(There's a better one with the same flavor that I can't find right now where he basically says that all the Nobel prizes in economics have gone to economists who study a world which doesn't exist.)
So the idea that we can apply economic models to questions of history seems ridiculous. Especially since one of the central claims of McCloskey in "Does the Past Have Useful Economics?" is that we should be looking at history to inform our theory. There are other issues, such as how time has been dealt with in neoclassical economics (the answer: not very well, it's almost just like another dimension in space...), but this central point is very important because it strikes at the heart of what the new economic historians aim to do: reinterpret economic history using these models and data.
On the data -- few historians would disagree that the new economic history has done a great service to history by digging up massive amounts of data and compiling great databases of information on wages, slave prices, and other juicy details from employers' books. However, when it comes to how these economists have used the data, things are much more open to questions of methodology. Time on the Cross emphasizes formal methods, which are not "wrong" in and of themselves, but some argue that they clash with the traditional methodology of history (and of much social science) prior to the 1950s which was more oriented towards qualitative methods. When you combine this with the inherently conservative nature of neoclassical formal methods you have a mix that would definitely upset your traditional liberal historian.
But is there substance to the critique? I think there is. While one could argue that any historian uses models and that theory is always going to be a political project, the pressing need of the new economic historians to quantify everything seems not only a misplacement of emphasis of formal methods but can be downright hurtful to their analysis. For example, the narrow view of exploitation which they take up in Time on the Cross to argue that slaves were not as exploited as is commonly thought completely misses the main point and compromises the effectiveness of their argument. Essentially, they use a measure of the rate of exploitation which is the amount a slave produces over their compensation (in wages, living expenses, etc.). Even if Fogel and Engerman (rightly) point out that this isn't the whole of exploitation, simply by making the argument they are not adding anything productive to the debate at all. And what's worse, they imply that in a world of market processes where slaves get paid their marginal product exploitation is not an issue. Indeed, Ransom and Sutch used the same line of argument and measure of exploitation in their discussion of the postbellum Southern economy in One Kind of Freedom to say that racial exploitation is embodied in this labor market disequilibrium, implying that notions of power in the employer-employee relationship would be nonexistent were it not for overt racism. This is a world in which the neoclassical ideal is the baseline and so history is the story of deviations from this baseline. I simply cannot buy into such a story (and indeed, some very good neoclassical economists would not even buy into this story) , and I can see why people would be so upset by some passages of this book.
Another (less controversial!) thread of debate concerns the relationship between different economic systems in history. First and foremost, how do we characterize slavery as a socioeconomic system? Is it capitalist? Agrarian pre-capitalist? Feudalism? Whatever it is, the experience of the Southern U.S. is certainly not anomalous, as societies built on the idea of property in persons have existed for thousands of years. I think it's best to view slavery as an independent system of agricultural production for profit using people as (economic) property as the central means of production, and I do think this is where Fogel and Engerman operate on a stronger basis. Essentially, some historians of slavery in the South have argued that it's an institution that would have died out eventually -- either due to lack of markets, or declining productivity through exhausted resources, or some other economic reason. I believe that such arguments, especially made about entire institutions, do not do justice to the agency of anyone in such a system. If you have two distinct groups in an economic system and you argue that the system as a whole was on its way down the tubes, then you basically are arguing that both groups of agents were passive adjusters to forces out of their control. Fogel and Engerman instead give agency to both the strength of the families of slaves and also the rationality/profit-seeking behavior of the plantation owner by arguing that slavery was not on its way out immediately prior to the civil war. Here's a good quote explaining my point:
"While the New Orleans data show that slaveowners were averse to breaking up black families, they do not tell us about the reasons for their reluctance. Because earlier historians became overly preoccupied with dramatic and poignant but relatively isolated instances of the destruction of black marriages, they failed to grasp the extremely important role that the master class assigned to the family institution, a role that will be examined in chapter 4. Commitment to an exaggerated view of the eagerness of masters to put families on the auction block prevented historians from recognizing the strength and stability that the black family acquired despite the difficult circumstances of slave life." (Time on the Cross pg. 52)
In fact, you could argue that this was a central weakness of Marx's own theory: he failed to attribute sufficient level of agency to the proletariat and therefore saw the downfall of capitalism as occurring prematurely. Regardless of whether you buy into the conservative argument that individuals are inherently individualist, history has shown us that capital or state interests have not always been antithetical to worker interests and that worker interests haven't always been about overthrowing the property relations of capitalism. I of course would love to hear arguments against this and in fact to an extent I am one who is trying to produce such arguments, but it's by no means an easy question. Nevertheless, the ability of the capitalist system to reproduce itself at a rate contrary to Marx's and others' own predictions points to other forces at work in an economic system, and this, by analogy, is what Fogel and Engerman are doing with the traditional view of slavery. I think this is one very valuable contribution they have made.
Nevertheless, it will be an interesting week and I'll be sure to post more comments in the coming days!