Isaiah Berlin is one of our favorite writers because he had an unmatched ability to explain complexity clearly. In his essay, “The Concept of Scientific History (1960),” he contrasts the opposed but complementary human demands, “one for unity and homogeneity, the other for diversity and heterogeneity.” The two regressions abstract historical events in the form of mathematical formulae – the first abstracts to a lesser degree than the second because it is conditional – but both are still abstract and restricted to a general (but useful) way of viewing things that is characteristic of some of the natural sciences, economics, and econometrics. Perhaps Berlin had studied econometrics. He writes, “At times some among these generalisations can be clearly stated, and combined into models; where this occurs, natural sciences arise. But the descriptive and explanatory language of historians...cannot…be reduced without residue (our emphasis) to…general formulae, still less to models and their applications.”
The second way of viewing known facts is historical. A historian’s view requires not abstraction, but verstehen, the ability to understand the lives that people who lived at a unique time and place and to place those lives in context of their societies. This is real; the above is abstract; and we think both have their places in the social sciences, noting each word. The real conditional sets the stage for possibly useful and definitely interesting abstraction.
Just don’t use one formula; the Gaussian copula blew up the entire financial system.
The regression equation during that market phase was S&P = 6.06 + 12.54 (Earnings Per share).
ρ2 = .98 out of 1