EH.net Book Review

Published by EH.Net (May 2012)

Robert A. McGuire and Philip R. P. Coelho, Parasites, Pathogens, and Progress: Diseases and Economic Development.  Cambridge, MA: MIT Press, 2011. viii + 343 pp. $30 (hardcover), ISBN: 978-0-262-01566-0.

Reviewed for EH.Net by John E. Murray, Department of Economics, Rhodes College.

An old saw proposes that holding a hammer makes everything look like a nail.  When Robert McGuire and Philip Coelho suggest (p. 5) that Jared Diamond’s bestseller (1997) should have been titled Germs, Germs, and Germs, the reader may think that the authors carry not a hammer but a microscope.  Everywhere in this history, germs appear as the critical and virtually only influence on economic development.  By the end the reader better understands microbes in American history, but may still wonder if natural resource endowments, property rights and contract law, accumulating human capital, and flexible markets played a role as well.

Published by EH.Net (April 2012)

Robert F. Hébert and Albert N. Link, A History of Entrepreneurship.  London: Routledge, 2009.  xix + 121 pp. $115 (hardcover), ISBN: 978-0-415-77738-4.

Reviewed for EH.Net by Arthur M. Diamond, Jr., Department of Economics, University of Nebraska at Omaha.

A History of Entrepreneurship is a brief survey of what several well-known, and several less-well-known, economists have had to say about the role of the entrepreneur in the economy. Hébert and Link have collaborated on the history of entrepreneurship before.  Besides some papers, their 1988 monograph is substantially the same as the current monograph and their 2006 monograph appears identical except for new versions of the very brief Preface, Introduction and Conclusion.  (If you decide the monograph is useful to you, you may want to buy the 2006 version available for download through SSRN for a mere $19.) Since this is a very slight revision of their 1988 monograph, it is not surprising that almost all of the literature cited is from the mid-1980s or earlier.  Much recent literature is ignored (e.g., Mark Blaug’s insightful 1998 paper).

Economic writings on entrepreneurship are organized, mainly by time and geography, into ten brief chapters – Schumpeter is given his own chapter.  Chapters are devoted to French economists, English economists, the neo-classicals, and American economists.  Among twentieth-century economists, besides Schumpeter, significant attention is devoted to Frank Knight, Israel Kirzner, and Ronald Coase.

The monograph does not aim to make a contribution to economic history, and none is made.  Economic historian Arthur Cole's Harvard workshop on entrepreneurship receives a couple of pages (pp. 78-79) of discussion, but almost entirely in terms of the theoretical stance of the workshop participants.

Published by EH.Net (April 2012)

Richard Pomfret, The Age of Equality: The Twentieth Century in Economic Perspective. Cambridge, MA: Harvard University Press, 2011. xi + 283 pp. $29 (hardcover), ISBN: 978-0-674-06217-7.

Reviewed for EH.Net by Michael Huberman, Department of History, Université de Montréal.

Remember the 1970s? As an undergraduate I recall taking a course in Comparative Economic Systems which dealt with different manners of organizing production and economies more broadly. We studied the interdependence of politics and economics, using as examples workers’ self-management in Yugoslavia, countervailing forces in the U.S., import-substitution policies in India, and the social market economy of the German Federal Republic. Richard Pomfret must have taken a similar course – and done extremely well at it.

In this brief but immensely rich, provocative, and rewarding book, Pomfret organizes world economic history in the last century around the battle of competing systems. There are obvious pitfalls with this conceptual framework, but Pomfret, who is a consummate author, is extremely agile in avoiding them. The story begins with the Age of Liberalism attached to the industrial revolution. While the application of new technologies generated a lot of wealth during the long-nineteenth century, not all the gains trickled down and were distributed fairly. Liberal reform in theory was predicated on the idea of equality in opportunities and not outcomes.

Published by EH.Net (March 2012)

Carl Wennerlind, Casualties of Credit: The English Financial Revolution, 1620-1720. Cambridge MA: Harvard University Press, 2011. x + 348 pp. $40 (hardcover), ISBN: 978-0-674-04738-9.

Reviewed for EH.Net by Bruce G. Carruthers, Department of Sociology, Northwestern University.

Published by EH.Net (March 2012)

James Simpson, Creating Wine: The Emergence of a World Industry, 1840-1914.   Princeton: Princeton University Press, 2011.  xxxvii + 318 pp. $39.50 (hardcover), ISBN: 978-0-691-13603-5.

Reviewed for EH.Net by Noel Johnson, Department of Economics, George Mason University. 

After his inauguration as President of France in May of 2007, Nicolas Sarkozy received not one, but two, threatening videos from balaclava wearing terrorists.  The first came from the Abu Hafs al-Masri Brigade, an Islamic group upset with the new President’s association with “Zionists.”  The second video came from discontented wine growers from the South of France, the Comité d’Action Régionale Viticole (CRAV), and demanded that Sarkozy immediately raise the price of wine.  Both groups threatened bloody retaliation.  Perhaps surprisingly, however, it was only the wine growers who made good on their promise through a series of violent riots over the summer.  This story raises several important questions about modern France, the wine industry, and the regulatory state.  Why are French wine producers, or at least those from the south (the Midi), unable to compete in the modern marketplace?  Why do they feel it is the place of the state to shield them from competition?
 

Published by EH.Net (March 2012)

Sharon Ann Murphy, Investing in Life: Insurance in Antebellum America.  Baltimore: Johns Hopkins University Press, 2010.  xii + 395 pp. $65 (hardcover), ISBN: 978-0-8018-9624-8.

Reviewed for EH.Net by Eric Hilt, Department of Economics, Wellesley College.

The first half of the nineteenth century witnessed a transformation of the American economy that some historians have termed the “market revolution.”  Financial markets and institutions played a central role in this process, as banks proliferated and securities markets deepened.  In addition, beginning in the 1820s, insurance companies began to offer American households life insurance policies.  Over the course of the nineteenth century, the business expanded rapidly, and by 1870 more than $2 billion in life insurance was in force in the United States.  The companies that underwrote these policies became important intermediaries within the financial system.

Sharon Ann Murphy’s Investing in Life tells the story of the development of the American life insurance industry through the 1870s.  Best characterized as a business history of antebellum life insurance, Murphy utilizes a rich variety of archival records from early companies, as well as newspapers and printed sources, in presenting her narrative.  The book focuses on the strategies employed by the industry’s entrepreneurs to surmount the challenges they faced in establishing and expanding the business.   

Published by EH.Net (February 2012)

Curzio Giannini, The Age of Central Banks. Cheltenham, UK: Edward Elgar, 2011. xxxi + 298 pp.  $135 (hardcover), ISBN: 978-0-85793-213-6.

Reviewed for EH.Net by John H. Wood, Department of Economics, Wake Forest University.

Modern central banks are known for more than the determination of the money stock.  They are also bank regulators and handlers of financial crises.  This has always been so, Curzio Giannini, former Deputy Director of the International Relations Department of the Bank of Italy, tells us.  He urges economists to think of money not simply as a policy variable in the neoclassical model but as “an institution that is held up by trust: trust in its future purchasing power and trust in the continued convention that payment is complete when money changes hands” (p. xxv).  At the center of the institution of money is the institution of the central bank.

The principal controversies surrounding monetary institutions – such as the British Bank Act of 1844, the Bank of England as lender of last resort, the Federal Reserve as a solution to the inelasticity of the currency, and Bretton Woods and international trade – have addressed the viability of the payments system rather than simply the price level.  Price stability was taken care of by the monetary standard during most of history.  The growth of a complex payments system, and the need for trust, or confidence, in that system gave rise to central banks.

Published by EH.Net (February 2012)

Edward L. Glaeser, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier.  New York: Penguin Press, 2011.  ix + 338 pp. $30 (cloth), ISBN: 978-1-59420-277-3.

Reviewed for EH.Net by Fred H. Smith, Department of Economics, Davidson College.

In 1998 Edward Glaeser published an article in the Journal of Economic Perspectives entitled “Are Cities Dying?”  The article makes a strong case for why technology had not, and would not, make cities obsolete.  In the subsequent fourteen years, Glaeser has written dozens of articles on urban economics.  Many of the articles have touched on topics that are of great interest to urban economic historians: From “Are Ghettos Good or Bad” to “Why the Poor Live in Cities” Glaeser addresses topics that have informed our understanding of how, and why, cities have evolved over time. 

In his new book, Triumph of the City: How Our Greatest Invention Makes us Richer, Smarter, Greener, Healthier, and Happier, Glaeser assembles a layperson’s tour of his life’s work in urban economics.  Triumph of the City is an effective coda to his article from 1998, for it demonstrates that not only is the city not dying, it is essential to our continued well-being as a species. 

Published by EH.Net (February 2012)

Douglas W. Allen, The Institutional Revolution: Measurement and the Economic Emergence of the Modern World. Chicago: University of Chicago Press, 2011.  xiv + 267 pp. $30 (cloth), ISBN: 978-0-226-01474-6.

Reviewed for EH.Net by Mark Koyama, Department of Economics, George Mason University.

In this astute and elegantly written book, Douglas Allen argues that the industrial revolution was accompanied by an institutional revolution. This institutional revolution replaced many seemingly archaic institutions such as the practice of restricting some offices in government to aristocrats while selling others (including army commissions and the right to collect taxes). The revolution substituted public for private provision in areas such as the building of roads and lighthouses and led to the rise of a professional bureaucracy and police force.  Allen's point is not that these early pre-modern institutions were inefficient or wasteful. On the contrary, in his account, they were adapted for their environment: the high variance, high measurement cost, early modern world.

Published by EH.Net (January 2012)

Orfeo Fioretos, Creative Reconstructions: Multilateralism and European Varieties of Capitalism after 1950. Ithaca, NY: Cornell University Press, 2011. xix + 245 pp. $50 (hardcover), ISBN: 978-0-8014-4969-7.

Reviewed for EH.Net by David Coates, Department of Political Science, Wake Forest University.

There is now a long established interest in the character and economic fortunes of different models of capitalism. Important debates continue about their internal dynamics of change. Do modern economies flourish to the degree to which we find “institutional complementaries” within them, as in the original “varieties of capitalism” (VOC) formulation by Hall and Soskice; or do we need to bring something “back in” to supplement or replace the incipient “institutional determinism” of that approach? Do we need to make the “constructivist” turn favored by Vivien Schmidt and others, or do we need to make the “class” turn favored by analysts influenced by an on-going stream of Marxist scholarship? If the argument of this impressively researched and coherently argued work by Orfeo Fioretos holds, the intellectual turn we need to take is towards behavioral economics and the concerns of international political economy, by recognizing the role multilateral strategies play (and have played in the immediate past) in shaping the trajectory of particular European capitalisms and the incentive structures operating on their key firms. We need to bring “the state” back in to our analyses, but to do so in a new and important way.

Published by EH.Net (January 2012)

Donald W. Katzner, At the Edge of Camelot: Debating Economics in Turbulent Times. Oxford: Oxford University Press, 2011. xiv + 199 pp. $50 (hardcover), ISBN: 978-0-19-976535-5.

Reviewed by David F. Ruccio, Professor of Economics, University of Notre Dame

Donald W. Katzner, in invoking the Arthurian legend, may have run the risk of overselling the Department of Economics at the University of Massachusetts Amherst. However, both the department he and his colleagues built and his book documenting the history of that department are, in fact, quite honorable.*

The department was remarkable because, with very few exceptions (then or now) among the 125 or so Ph.D.-granting economics programs in the United States, it challenged the prevailing orthodoxy by hiring a significant number of “radical” economists and by training a much larger number of graduate students. It literally defined and then extended the frontiers of radical political economy. And it did so with a neoclassical economist (Katzner himself) as the chair during its early, formative years.

The book itself is noteworthy because it is the only history of an economics department of which I am aware (Frederic Lee’s [2011] effort, which can be usefully read as a companion volume, is a much wider history of heterodox economics in the twentieth century), and it was written by a key participant. The most valuable sections of the book consist of Katzner’s recollections from the 1976-1981 period when he served as chair (with the appropriate caveats about fallible memory), supplemented by interviews he conducted with other participants (both faculty and graduate students) and documents he collected (from before and during his time as chair).

Published by EH.Net (January 2012)

Jim Tomlinson, Carlo Morelli and Valerie Wright, The Decline of Jute: Managing Industrial Decline.  London: Pickering and Chatto, 2011.  xiii + 219 pp. $99 (hardcover), ISBN: 978-1-84893-124-4.

Reviewed for EH.Net by Gordon Stewart, Department of History, Michigan State University.

This superb book deserves to be considered for a prize. It is a close-grained account of the jute industry in Dundee from the 1940s to the 1980s but it is much more than that. In the course of their study of the decline of one industry the authors lay bare some of the fundamental economic, social, and political forces that shaped post-war Britain, and illuminate the complex impact of globalization on the manufacturing sector of the British economy. Many books on such topics end up by focusing on one aspect of the story – whether it be the role of capital, government policies, strategies of employers, or the responses and actions of workers. The three authors deftly bring together every dimension. The narrative and analysis move easily from women workers, who dominated the jute labor force until the late 1950s, to the policy deliberations of civil service mandarins at the Board of Trade, while fully acknowledging the ultimately inescapable pressures exerted by the international macroeconomic environment. Valerie Wright’s sure exposition of the complex gender issues at play among the workers sits informatively alongside the economic and policy analyses of Jim Tomlinson and Carlo Morelli. It is a remarkable achievement for three authors to produce such a coherent narrative, and a ringing tribute to the benefits of collaborative scholarship.

Published by EH.Net (January 2012)

James R. Fichter, So Great a Proffit: How the East Indies Trade Transformed Anglo-American Capitalism. Cambridge: Harvard University Press, 2010. xi + 384 pp. $35 (hardcover), ISBN: 978-0-674-05057-0.

Reviewed for EH.Net by Thomas H. Cox, Department of History, Sam Houston State University.

James R. Fichter’s So Great a Proffit: How the East Indies Trade Transformed Anglo-American Capitalism sheds new light on America’s early trade with Asia during the late 1700s and early 1800s. Seeking to move beyond traditional portrayals of national economic development, Fichter contends that “American trade to the East Indies as a whole had repercussions for society, economics, and politics on both sides of the Atlantic” (p. 4). In particular, competition from private American merchants undermined British mercantilism and “helped begin Britain’s nineteenth century free trade empire.” For the young American republic trade with Asia meant “the accumulation of wealth and financial capital into the hands of the wealthiest Americans, creating financiers who would profoundly alter the shape of American business” (p. 4). Located at the intersection of economic, cultural, American, and British history, Fichter’s work is necessarily broad based, painting in broad strokes themes for future historians to further flesh out.

Published by EH.NET (December 2011)

Roger E. Backhouse and Bradley W. Bateman, Capitalist Revolutionary: John Maynard Keynes. Cambridge, MA: Harvard University Press, 2011. 208 pp. $26 (hardcover), ISBN: 978-0-674-05775-3.

Reviewed for EH.Net by Steven Kates, School of Economics, Finance, and Marketing, RMIT University, Melbourne.

Two prominent economists, one English and one American, have written a book about how Keynes and Keynesian economics have shown their mettle over these troubled years since the Global Financial Crisis (GFC). Roger Backhouse and Brad Bateman have titled their work Capitalist Revolutionary: John Maynard Keynes. It is a work of counter-revisionist history even before we revisionists have had a chance to tell our own story first.

The book is about the non-war in economics that ought to be happening but isn’t. It is a defense of Keynes and Keynesian economics against post-stimulus attacks that, other than in a few instances, have not occurred at all. It sets Keynes up as a counter to an extreme libertarian laissez-faire strawman view of how economies ought to be left alone in all instances, first in their regulation and then in allowing recessions to burn themselves off when they come. They therefore conclude that given this is the choice, Keynes is the answer. Well, if that were the choice, Keynes would be the answer, but since it’s not the actual choice we have, they do not really satisfy the criticisms of anyone who holds neither Keynesian nor such extreme libertarian views.

Published by EH.NET (December 2011)

Eric L. Jones, Locating the Industrial Revolution: Inducement and Response. Singapore: World Scientific, 2010. vii + 272 pp. $68 (hardcover), ISBN: 978-981-4295-25-3.

Reviewed for EH.Net by Dan Bogart, Department of Economics, University of California -- Irvine.

The Industrial Revolution is often modeled as a national or continental phenomenon.  The most common questions are why did Britain industrialize first and not France, or why Europe and not Asia? However, there is a case to be made that the Industrial Revolution was a regional phenomenon. Here the classic question is why did northern England industrialize and southern England not. Southern England was more densely populated and had significant manufacturing ca.1700. Its de-industrialization poses a puzzle.