Counterfactual history, also sometimes referred to as virtual history, is a form of historiography that attempts to answer "what if" questions known as counterfactuals. Black and MacRaild provide this definition: "It is, at the very root, the idea of conjecturing on what did not happen, or what might have happened, in order to understand what did happen. The method seeks to explore history and historical incidents by means of extrapolating a timeline in which certain key historical events did not happen or had an outcome which was different from that which did in fact occur. It has produced a book genre which is variously called alternative history, speculative history, or hypothetical history.
One goal is to estimate the relative importance of a specific event, incident or person. For instance, to the counterfactual claim "What would have happened had Hitler drunk coffee instead of tea on the afternoon he committed suicide?", the timeline would have remained unchanged—Hitler in all likelihood still would have committed suicide on April 30, 1945, regardless of what he had to drink that afternoon. However, to the counterfactual "What would have happened had Hitler died in the July 1944 assassination attempt?", all sorts of possibilities become readily apparent, starting with the assumption that the German generals, had they been able to consolidate power over remaining Nazi functionaries such as Goebbels and Himmler, would probably have sued for peace, bringing an early end to World War II. (Historians generally feel popular support for the Party was still very strong in July 1944, and the party apparatus of Himmler, Goebbels, Speer, Bormann, Goering etc. would survive even an assassination of Hitler.) Thus, the counterfactual brings into sharp relief the question of how important Hitler was as an individual and how his personal fate shaped the course of the war and, ultimately, of world history.
Although there are Victorian examples of counterfactual history, it was not until the very late 20th century that the exploration of counterfactuals in history was to begin in earnest.
An early example is If It Had Happened Otherwise (1931) which features a contribution by Winston Churchill who examined what would have happened had Robert E. Lee won at the Battle of Gettysburg. Although this volume is notable for featuring imagined histories by serious historians, the histories are presented in narrative form (in most cases with a fairly whimsical tone) without any analysis of the reasoning behind these scenarios, so they fall short of modern standards for serious counterfactual history and are closer to the fictional alternate history genre.
A significant foray into treating counterfactual scenarios seriously was made by the economic historian Robert Fogel. In his 1964 book Railroads and American Economic Growth: Essays in Econometric History, Fogel tried to use quantitative methods to imagine what the U.S. economy would have been like in 1890 had there been no railroads. Fogel hypothesizes that, in the absence of the railroad, America’s large canal system would have been expanded and its roads would have been improved through pavement; both of these improvements would take away from the social impact of the railroad. He estimates that “the level of per capita income achieved by January 1, 1890 would have been reached by March 31, 1890, if railroads had never been invented.”
Few further attempts to bring counterfactual history into the world of academia were made until the 1991 publication of Plausible Worlds: Possibility and Understanding in History and the Social Sciences by the Cambridge sociologist Geoffrey Hawthorn, who carefully explored three different counterfactual scenarios. This work helped inspire Virtual History: Alternatives and Counterfactuals (1997), a collection of essays exploring different scenarios by a number of historians, edited by the historian Niall Ferguson. Ferguson has become a significant advocate of counterfactual history, using counterfactual scenarios to illustrate his objections to deterministic theories of history such as Marxism, and to put forward a case for the importance of contingency in history, theorizing that a few key changes could result in a significantly different modern world. A series of "What If?" books edited by Robert Cowley presented dozens of essays by historians or prominent writers about "how a slight turn of fate at a decisive moment could have changed the very annals of time."
Some scholars argue that a counterfactual is not as much a matter of what happened in the past but it is the disagreement about which past events were most significant. For example, William Thompson employs a sequence of counterfactuals for eight lead economies that have driven globalization processes for almost a thousand years. From Sung China to Genoa, Venice, Portugal, the Netherlands, Britain, and the United States, and claims that each actor in succession played an unusually critical role in creating a structure of leadership that became increasingly global in scope across time 
Differences from alternate history
Counterfactual history distinguishes itself through its interest in the very incident that is being negated by the counterfactual, thus seeking to evaluate the event's relative historical importance. Such historians reason arguments for each change, outlining changes in broad terms only, as befits a mere byproduct of the exercise.
An alternate history writer, on the other hand, is interested precisely in the hypothetical scenarios that flow from the negated incident or event. A fiction writer is thus free to invent very specific events and characters in the imagined history.
The line is sometimes blurred as historians may invent more detailed timelines as illustrations of their ideas about the types of changes that might have occurred. But it is usually clear what general types of consequences the author thinks are reasonable to suppose would have been likely to occur, and what specific details are included in an imagined timeline only for illustrative purposes.
The line is further blurred by novelists such as Kim Stanley Robinson, whose alternate-history novel The Years of Rice and Salt has a character talking of historians' use of counterfactuals, within the novel's alternate history. He dismisses this as "a useless exercise".
Most historians regard counterfactual history as perhaps entertaining, but not meeting the standards of mainstream historical research due to its speculative nature. Advocates of counterfactual history often respond that all statements about causality in history contain implicit counterfactual claims—for example, the claim that a certain military decision helped a country win a war presumes that if that decision had not been made, the war would have been less likely to be won, or would have been longer.
Since counterfactual history is such a recent development, a serious, systematic critique of its uses and methodologies has yet to be made, as the movement itself is still working out those methods and frameworks.
Aviezer Tucker has offered a range of criticism of this approach to the study of the past both in his review of Ferguson's Virtual History in History and Theory and in his book Our Knowledge of the Past: A Philosophy of Historiography, as has Richard J. Evans in his book Altered Pasts.
- Martin Bunzl, "Counterfactual History: A User's Guide," American Historical Review (2004) 109#3 pp. 845-858 in JSTOR
- Jeremy Black; Donald M. MacRaild (2007). Studying History. Palgrave Macmillan. p. 125.
- Arnold, Martin (December 21, 2000). "Making books: The 'What Ifs' that fascinate". New York Times. Retrieved 25 June 2012.
- Churchill, Winston. "If Lee Had Not Won the Battle of Gettysburg". The Churchill Centre. Archived from the original on January 5, 2009.
- Railroads and American Economic Growth: Essays in Econometric History | Book Reviews | EH.Net
- Smoler, Frederic (September 1999). "Past Tense". American Heritage 50 (5).
- Thompson. W. The Lead Economy Sequence in World Politics (From Sung China to the United States): Selected Counterfactuals. Journal of Globalization Studies. Vol. 1, num. 1. 2010. PP. 6–28 
- Review by Keith Brooke
- Tucker, Aviezer (May 1999). "Historiographical Counterfactuals and Historical Contingency". History and Theory 38 (2): 264–276. doi:10.1111/0018-2656.00090.
- Tucker, Aviezer (2004). Our Knowledge of the Past: A Philosophy of Historiography. Cambridge University Press. doi:10.2277/0521834155. ISBN 978-0-521-83415-5.
- Bresnahan, James C. (ed.): Revisioning the Civil War: Historians on Counterfactual Scenarios, ISBN 0-7864-2392-7
- Cowley, Robert (ed.): What If?: The World's Foremost Military Historians Imagine What Might Have Been, Putnam Publishing Group, ISBN 0-425-17642-8; Pan ISBN 0-330-48724-8
- Cowley, Robert (ed.): More What If?: Eminent Historians Imagine What Might Have Been, Pan, ISBN 0-330-48725-6; Berkley Publishing Group ISBN 0-425-18613-X
- Robert Cowley (ed.): What If? America: Eminent Historians Imagine What Might Have Been, ISBN 0-330-42729-6
- Ferguson, Niall (ed.): Virtual History: Alternatives and Counterfactuals, ISBN 0-330-35132-X; ISBN 0-465-02323-1; ISBN 0-330-41303-1
- Hawthorn], Geoffrey. Plausible Worlds: Possibility and Understanding in History and the Social Sciences, ISBN 0-521-40359-6; ISBN 0-521-45776-9
- Ransom, Roger L. The Confederate States of America: What Might Have Been, ISBN 0-393-05967-7; ISBN 0-393-32911-9
- Tetlock, Philip E. and Aaron Belkin (eds.): Counterfactual Thought Experiments in World Politics, ISBN 0-691-02792-7; ISBN 0-691-02791-9
- Tetlock, Philip E., Richard Ned Lebow, and Geoffrey Parker (eds.): Unmaking the West: "What-If?" Scenarios That Rewrite World History, ISBN 0-472-11543-X, ISBN 0-472-03143-0
- Counterfactual Thought Experiments: A Necessary Research Tool - Academic discussion of counterfactuals in history, and suggested ground rules for their use
- Counterfactual History: A User's Guide - article by Martin Bunzl from The American Historical Review
- The Counterfactual History Review