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Eli Heckscher, International Trade, and Economic History
Published by EH.NET (August 2007)
Ronald Findlay, Rolf G.H. Henriksson, Hakan Lindgren and Mats Lundahl, editors, Eli Heckscher, International Trade, and Economic History. Cambridge, MA: MIT Press, 2006. xi + 560 pp. $50 (cloth), ISBN" 0-262-06251-8.
Reviewed for EH.NET by Nick Crafts, Department of Economics, University of Warwick.
This edited volume contains the proceedings of a 2002 conference which marked the fifth anniversary of Eli Heckscher's death. The aim of the symposium was "to create a forum where economists and economic historians could meet to develop a picture of how relevant Heckscher's research program and results are perceived to be by current practitioners" (p. x). Each area of Heckscher's scholarship gets a separate section (parts II to VI) and there are also sections devoted to material of a more biographical nature relevant to the development of Heckscher's views on methodology and politics (parts I and VII). This review focuses on parts II to VI which are the most interesting for the vast majority of the EH.Net audience.
Part II deals with Heckscher-Ohlin Trade Theory and contains chapters by Ronald W. Jones and Kevin O'Rourke. The former re-evaluates Heckscher's 1919 paper and concludes that its contribution is truly seminal. The latter is an interesting econometric analysis of attitudes to globalization which concludes that high-skilled workers in OECD countries are relatively pro-globalization, as might be supposed on a Stolper-Samuelson view of the world. Strikingly, however, there is no paper that assesses how much Heckscher-Ohlin trade theory still has to contribute to the understanding of trade and industrial location in the era of the new international economics and the new economic geography.
Part III considers Historical Applications of Heckscher-Ohlin Theory and contains papers by Peter Temin, Ronald Findlay and Mats Lundahl, and Jeffrey Williamson. The first two are papers that seek to make bricks without (much) straw. Temin analyzes trade across the Mediterranean Sea in biblical times, while Findlay and Lundahl develop a Malthusian model with an endogenous frontier to look at demographic shocks in the 800 years ending with the Black Death. This is a nice model but seems to owe more to Malthus than to Heckscher. Williamson's paper is an excellent econometric analysis of the pattern of tariffs during 1870 to 1938 which concludes that this was the era when Stolper-Samuelson (factor endowment) arguments mattered a lot. The standard of the papers in this section is notably high but unfortunately the breadth of the historical coverage is not really adequate to fulfil the aspirations of the conference organizers.
Part IV turns to Mercantilism and offers four quite varied papers. Lars Magnusson directly addresses the issue of how valuable Heckscher's work is nowadays. He argues that although its analysis is seriously dated, nevertheless there is still value in the impressive command of historical detail. Deepak Lal explains how Mercantilism helped him to make sense of cycles of economic repression and reform in developing countries. Douglas Irwin summarizes his well-known game-theoretic analysis of mercantilist rivalry between the British and Dutch East India Companies. Finally, Joel Mokyr uses Heckscher as an excuse to develop some interesting points about the role of Enlightenment economic thinking — especially the increasing realization that trade was not a zero-sum game — in stimulating the Industrial Revolution. The sub-text of this section seems to be that, actually, the current relevance of Heckscher's great work is quite limited.
Part V deals with The Continental Blockade, with weighty contributions from Francois Crouzet, Lance Davis and Stanley Engerman, and Patrick O'Brien. These authors offer differing views as to the current value of Heckscher's work. Davis and Engerman conclude that, on the whole, it remains an essential work whose interpretations are still acceptable, while O'Brien is much more critical. He argues that to a modern audience the work seems Anglocentric and fails properly to understand how and why the British state defeated Napoleon's attempt to close continental markets to British trade. Crouzet's position is intermediate in that he sees the book as still deserving to be described as a masterpiece but nevertheless a rather partisan account.
Part VI is about Swedish Economic History. The most interesting of these papers to the general audience of economic historians is Lennart Schon's essay on the 1870-1930 period of Swedish industrialization. He argues that prior to 1890 this followed a Heckscher-Ohlin trajectory based on exports of industrial products based on Swedish natural resources but subsequently technological progress was more central and a major structural transformation ensued. The other two papers in this section are probably for a more specialist readership. Johan Soderberg discusses Heckscher's vision of economic development and suggests that his thesis that the Western world reached its apogee around 1900 is unpersuasive. Mats Morell looks at Heckscher's analyses of food consumption in early-modern Sweden and suggests that although the conclusions may be more or less valid everything else was seriously flawed. Here, too, it seems that Heckscher no longer has a great deal to offer.
Overall, this is a collection in which many economic historians will find something of interest and the quality of most of the contributions is very high. On the other hand, few economic historians will want to read the whole set of papers. Those who do will quite possibly come to the view that, while Heckscher was indeed a major figure in the development both of economics and of economic history, his time has gone.
Nick Crafts is Professor of Economic History at the University of Warwick. His most recent publication is a volume edited with Ian Gazeley and Andrew Newell, Work and Pay in Twentieth-Century Britain, Oxford University Press, 2007.