The only way to test economic theory is to see if they are supported by what has happened in the real world. A third reason is in order to compare and contrast the performance of different types of economic systems. The historian studying American economic history studies the changes in the production, distribution, and consumption of goods and services in the United States over time. An economic history course covers many of the topics covered in the typical American history course, but they are viewed from a different perspective. The economic historian is also very much concerned with how efficient slavery was in producing good and service.
Economic history is both the seed bed for economic theories and their testing ground.
What happened in the past may lead to theories as to why they happened. Theories about why, under given circumstances, certain things should happen can be tested by observing what happened in the past when such circumstances existed. All economic activity takes place in a social setting made up of social institutions, habits, beliefs, and values, and it is as important to understand how these institutions emerged and how the structure of societies change over time as it is to concentrate only on those activities that are somehow measureable. Some economic historians, like other historians, think that history was cyclical, while others, like Karl Marx, viewed it as a linear progression. Like other historians, economic historians observe, select, collect, and analyze past events.