Basically, Economics is the study of wealth. But this study is in relation to man and his daily life activities. Thus, a correlation between history and economics is quite natural. Economic conditions play a vital role in the course of history. If a country could attain a height of civilisation in a period, it must have been because of good economic conditions of a countryor various countries in various periods. To know the economic conditions of India during reign of Akbar or Shahjahan we shall have to go through the pages of history. In history we are also told that certain empires faced liquidation only because of economic reasons. In the same vein, the course of economic events has been influenced by historical circumstances, e.g. Mohd. Tughlak had certain plans, but the historical conditions of his time did not favour them and so he could not succeed, however, afterwards these plans were considered to be good and scientific.
Economic history became popular in the time of Condorcet, Comnte, Buckle, Marx and Bury. There has been a new orientation in our historical outlook from the days of the materialistic interpretation of history by Marx, and as such, class struggle, man’s skill in earning his daily bread, means of transport and communication, consumption, distribution, production, population growth, agriculture, industry, arts and crafts, trade, business and commerce, land revenue, taxes and a host of all other economic activities of the past figure very prominently in history.
Since Darwin spoke of the struggle for existence and Marx explained it in terms of economic determinism, economic history, particularly since the Russian Revolution of 1917 has assumed such importance as to overshadow all other branches of man’s activity. Theories have been advanced that the mainspring of all historical activities, whether war or conquest, colonization or imperialism, originated because of economic motives.
Indian historians such as Hiren Mukherjee, Palme Dutt, Kosambi, Muhammad Habib and others were greatly impressed by Marxian thought and have tried to present an analysis from that particular standpoint. The institutions of slavery, feudalism, imperialism, capitalism, socialism have all been explained in terms of economic motives.
Modern economic theory depends largely on statistical data, and the expression of economic laws have become mathematical in nature. Historians have not remained free from the influence of statistics, and a new branch called Cliometrics has come into vogue, according to which the use of mathematics has come into greater play in the writing of history. To avoid approximation, ambiguity and vagueness, historians are using statistics to be precise in their data. But too much use of this science will rob history of all its charm as a fascinating story of the past. It becomes confusing and uninteresting if an algebraical formula is used. For example good historical writing is described as A=a+b. Here A stands for the net result that flows from the historian’s mind and pen, a is the data or the sources he finds in the records, and b is the imaginative, interpretative and explanatory skill of the historian which are so essential to make history meaningful. In other words this formula tells us that history writing is not merely using scissors and paste to cut some information from somewhere and put that information elsewhere, but an arduous physical and mental work in which a laborious search for material precedes an intelligible use of data through reflective powers to make the information intelligible and useful. The proper use of Cliometrics has resulted in what is called Quantified History. But the very nature of historical evidence will resist these scientific modes of expression, and history will essentially remain a humanistic study.