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Nathan Rosenberg – 1927-2015

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written by Joel Mokyr

The economic history profession has lost one of its most original, creative, and wide-ranging minds in the passing of Nathan Rosenberg on Aug. 24, 2015. Rosenberg was one of the founding fathers of Cliometrics, a member of the first group of Cliometricians that congregated at Purdue University in the late 1960s, and which included other luminaries among them Lance Davis, Jonathan Hughes, and Stanley Reiter (who is widely credited with coining the term “Cliometrics”). By 1970, this group had moved away from West Lafayette and dispersed to institutions such as Northwestern and CalTech. Rosenberg was hired by the University of Wisconsin, and was a member of a different group of influential and distinguished economic historians in Madison, including at one time or another Jeffrey Williamson, Peter Lindert, Morton Rothstein, Rondo Cameron, and Claudia Goldin. While at Wisconsin, Rosenberg was the editor of the Journal of Economic History and instrumental in its growing focus on the new economic history that was theoretically informed by economics and quantitatively more sophisticated — the very essence of the Cliometric Revolution.

In 1974, Rosenberg moved to Stanford, where he taught for more than a quarter century until his retirement in 2002. As department chair at Stanford  between 1983 and 1986 he helped build  the department and maintain its position as one of the top economics departments in the country. Moreover, his leadership guaranteed that economic history remained an integral part of the undergraduate and Ph.D. programs and includes some of its most distinguished practitioners such as Gavin Wright and Avner Greif, as well as younger and promising scholars. Today, thanks  to Rosenberg’s initiative and entrepreneurship, the Stanford department is housed in a gorgeous building named after Ralph Landau, whose support for research and teaching in  economics was first stimulated by a fortuitous meeting with Rosenberg. The partnership with Landau, a chemical engineer and entrepreneur fascinated by economics, led to a fruitful scholarly collaboration between him and Rosenberg, especially in two well-regarded collections they edited together. Thanks in large part to Rosenberg’s resourcefulness, the graduate program at Stanford has thrived and produced many distinguished members of the economic history profession and applied economists working on innovation. While not all of them worked with him directly, his influence on the flourishing of economic history at Stanford was undeniable. Many of the former graduate students he trained and inspired co-authored and co-edited papers and books with him, such as David Mowery with whom he wrote Technology and the Pursuit of Economic Growth (Cambridge University Press, 1989). Without exception these young economists admired and adored him; two of them, Scott Stern and Shane Greenstein, were my former colleagues, and the three of us were instrumental in Northwestern awarding him an honorary doctorate in 2006, in the same class of honorary degrees as the then little known junior senator from Illinois. If ever there was an academic conspiracy that can be called a true labor of love, this was it.

As a scholar, much of Rosenberg’s most important and influential work is captured by the
title of his Inside the Black Box, a collection of essays on the nature of technology (Cambridge
University Press, 1982). In it, he stated from the onset that “economists have long treated
technological phenomena as events transpiring inside a black box…the economics profession has
adhered rather strictly to a self-imposed ordinance not to inquire too seriously into what transpires
inside that box. The purpose of this book is to break open and to examine the contents of the black
box” (p. vii). That metaphor captures the central theme of Rosenberg’s career.

What, then did Rosenberg find inside that black box? In his typical self-deprecating way, he once remarked to me that once you open the big black box of technology, you find inside a smaller black box, and so on, much like Russian matryoshka dolls. Maybe, he reflected, in the end this is what scientific progress really consists of? But of course, opening the black box led Rosenberg to considerably more important insights on the nature of technological change. I will list only a few that I find the most insightful — others can have other preferences. One is his emphasis on the subtle and complex interplay between science and technology stressed in his magnificent essay “How Exogenous is Science?”. In it he points out the many feedback effects that run from technology to science, and debunked the “linear model” that draws the main arrow of causality from Science to Applied Science to Technology. Since Rosenberg’s work, historians of technology have heaped scorn on the linear model. Technology in his view is not the mechanical “application of science” to production; it is a field of knowledge by itself, quite different in its incentives, its modes of transmission, and its culture. It is affected by science, but in turn provides “pure research” with its instruments and much of its agenda. In many cases, he noted, scientists were confronted by the fact that things they had previously declared to be impossible were actually carried out by engineers and mechanics and had to admit somewhat sheepishly that were possible after all. More than a decade later, in his later book Exploring the Black Box, he returned to the important but often-neglected link between technology and scientific progress, provided by scientific instrumentation.

A second item Rosenberg found inside his black box early on was the importance of the machine
industry in the generation of technological change and economic growth, a topic he explored early
in his career in his influential 1963 Journal of Economic History paper, “Technological Change in
the Machine Tool Industry” reprinted in his Perspectives on Technology (Cambridge University
Press, 1976). The paper stressed the crucial importance of machine tools in creating the
mechanization that was at the heart of the Industrial Revolution in the United States and Britain, and showed that without the improvements in lathes, planers, milling machines and precision grinders, much of the growth of modern manufacturing could not have happened. In his later book Technology and American Economic growth (Harper & Row, 1972) he explained how the ever-growing specialization, and not just the quality improvement and lower prices of these precision metal-cutting and shaping devices, stimulated and supported the rise of modern industry. In his citation for the Leonardo Da Vinci medal that the Society for the History of Technology awarded Rosenberg in 1995, David Hounshell wrote that “His 1963 article remains to this day perhaps the single most influential essay ever written in our discipline. In it, Rosenberg grasped the essential nature of the technical knowledge embedded in the machine tool industry and recognized how that knowledge would not fit easily into existing economic models.”
A third item that many historians of technology, whether economists or not, have found extremely
insightful in Rosenberg’s black box is his concept of “focusing devices,” first enunciated in his 1969
Economic Development and Cultural Change paper “The Direction of Technological Change,”
(reprinted in Perspectives on Technology). It is an intuitively powerful concept that essentially
proposes that much of technological progress occurs because a firm, a group, or the government
realizes that there is an urgent need for a clear solution to a pressing and well-defined social issue
or bottleneck in production. The solution is not always forthcoming of course — Rosenberg cited
with great glee Hotspur’s decisive riposte to Glendower’s claim that he could call the spirits from
the vastly deep: “why, so can I, so can any man; but will they come when you call for them?” (see
his Technology and American Growth, p.51). But when the solution is arrived at, it often solves far
more than it was intended for and overshoots its target, and thus it creates a new bottleneck. This
leapfrogging or “compulsive sequences” phenomenon was used to describe the eighteenth century
cotton manufacturing, but in fact it applies to much of the rest of the technological revolutions of the eighteenth century. At the start of the century, British society knew well that it faced a number of hard but well-defined problems: finding longitude at sea, pumping water out of deep-shaft coal
mines, ridding society of smallpox, and turning pig iron into wrought iron cheaply and rapidly. By
1800 these problems had all been solved. Rosenberg’s essay deals with firms and their recognition
of an opportunity for profit, but one can easily add other motives, from the altruism of Jonas Salk,
the driving ambition of James Watson to the political ideology of the men and women working on
Project Manhattan.
Academic work was the center of Rosenberg’s life. After his retirement, he continued to write and
publish. Together with Bronwyn Hall, he edited the massive two-volume Handbook of the
Economics of Innovation (Elsevier, 2010), which contains wonderful survey essays by every serious
scholar working in the area. He also published a sparklingly original and creative paper (jointly with Manuel Trajtenberg) in the Journal of Economic History (2004) on the economic significance of the Corliss steam engine and its effect on American industrialization. The brand new Handbook of Cliometrics (2015) contains an essay by Rosenberg jointly with Stanley Engerman on “Innovation in Historical Perspective.”  There was much more to Rosenberg’s intellectual persona than his interest in innovation and technical knowledge. He was fascinated by the “greats” of economics — especially Smith and Marx, on whom he wrote perceptive essays, as well as lesser but equally fascinating figures such as Charles Babbage. He published a collection of his essays on the History of Economics as he saw it (often from the point of view of technology), entitled The  emergence of Economic Ideas: Essays in the History of Economics — idiosyncratic, perhaps, but never dull. In the editors’ introduction to the first volume of the Economics of Innovation compilation, Rosenberg and Hall cite a long passage from Schumpeter’s preface to the Japanese edition of his 1937 book The Theory of Economic Development. Schumpeter recounted a debate he had with Walras on whether economics should concern itself only with statics or should also be concerned with the rapid changes in the economy. These kinds of historical issues held endless fascination for Rosenberg. The first essay in his published Graz Lectures, Schumpeter and the Endogeneity of Technology: Some American Perspectives (Routledge, 2000), was entitled “Joseph Schumpeter and the Economic Interpretation of History.” He cited at length and with almost palpable delight Schumpeter’s statement that economic history was absolutely required for the scientific study of economics. Rosenberg was also interested in modern medical research and its place in the modern American research university. He surely was the only economic historian to have published a paper both in The New England Journal of Medicine and The Energy Journal (and probably the only one to have published in either).
Rosenberg was one of the broadest and most intellectually curious minds I ever met. He was, as Ken Arrow remarked in his eulogy, an enormous lover of books and owned many thousands of them — yet ironically his own preferred format was the short pointed essay or at most a short and summary book such as his brief Technology and American Economic Growth. Having read papers on science and technology his entire life, he may have adopted the scientist’s preferred mode of communication over the long and heavily-detailed books written by the typical economic historian. He never wrote a single-authored magnum opus on economic history. The closest he ever came to a big-think ambitious “explanation of everything” was the set of Rosenberg’s lecture notes that L.E. Birdzell collected and then together published as a book How the West Grew Rich. It is a lovely and often insightful book, but it lacks the grandeur and sweep of a David Landes, Douglass North, or Eric Jones, who have written books with similar themes. Rosenberg’s comparative advantage was the brief essay, and the books he published were mostly collections of these essays. These essays were, without exception, beautifully written: he had the gift of expressing a complex and nuanced
economic relation in a short and elegant phrase. They are still read by students and scholars all over the world.
As a person, Rosenberg was deeply loved and admired by those who knew him well. He was urbane
and erudite even by the high standards of the great economic historians of his generation. He was
witty to the point of being hilarious, and could be sarcastic and cutting when he wanted. He was also a deeply caring husband, father and grandfather, the emblematic Jewish father who knew that
investment in human capital and family cohesion were the essence of Jewish culture. He was a great colleague and a warm and wonderful friend. Of all the many senior economic historians of that generation whom I knew and admired over the years, he was the only one whom I regarded as much as a relative as a colleague. I will never forget you, Uncle Nate.

British Economic Growth, 1270-1870

Author(s):Broadberry, Stephen
Campbell, Bruce M. S.
Klein, Alexander
Overton, Mark
van Leeuwen, Bas
Reviewer(s):Persson, Karl Gunnar

Published by EH.Net (August 2015)

Stephen Broadberry, Bruce M. S. Campbell, Alexander Klein, Mark Overton and Bas van Leeuwen, British Economic Growth, 1270-1870. Cambridge: Cambridge University Press, 2015. xxxix + 461 pp. $40 (paperback), ISBN: 978-1-107-67649-7.

Reviewed for EH.Net by Karl Gunnar Persson,  Department of Economics, University of Copenhagen.

This collective work is an ambitious and careful attempt to reconstruct historical national income accounts for England/Britain over six centuries — from 1270 to 1870. GDP is estimated from the output side unlike the study by Gregory Clark (2010), which covers approximately the same period and reconstructs national accounts from the income side. The major results from these two studies differ profoundly: Clark is an advocate of “Malthusian stagnation,” while British Economic Growth presents a more dynamic view of the pre-industrial economy. The contrasting results are a reminder that historical national accounting is marred by the fragility of the underlying data and is sensitive to approximations and assumptions needed to reach an end result.
British Economic Growth, 1270-1870 begins by establishing population levels (chapter 1) and by implication population growth rates. It acknowledges that population level estimates differ by a wide margin for the medieval period and the authors opt for estimates in the middle of the existing range.

In chapters 2 and 3 agricultural volumes are reconstructed by first establishing the area of agricultural land in use, the share of different crops, the number of cattle, etc. Output for the different components can then be estimated using yields and conversion ratios for various crops and animals. The final step is to aggregate these outputs into an agricultural sector output. All this is done in a transparent way, largely based on primary sources.  The incremental nature of agricultural progress is visible in increasing yields and reduced fallows. However, for the medieval period the documentation stems from the estate sector which is a relatively small part of the agrarian sector, less than a quarter. Was the non-estate sector, run by tenants, sharecroppers and free-holders, more efficient? The authors indicate that there is some evidence that this was the case, but they nevertheless assume that conditions in the estate sector prevailed in agriculture at large. For the post medieval period, paradoxically perhaps, the documentation is thinner and farm accounts do not appear until the end of the eighteenth century

Chapters 4 and 5, which are devoted to industry and services, rely more on the secondary literature. Output volumes in the various subsectors are established in chapter 4, and then aggregated to GDP and GDP per head in chapter 5. The resultant pre-1700 GDP series are, of course, a major accomplishment of synthesis, while the post-1700 figures differ only marginally from those established by Nicholas Crafts and Knick Harley and they all rely heavily on Walther G.  Hoffmann’s (1955) pioneering work.

Part 2 of British Economic Growth, 1270-1870 has a more analytical approach, discussing how the new results compare to those of other studies. The central claim in the book is to stress the resilience of the growth process even when faced with continued population growth and resource constraints. When GDP per head increased after the Black Death, because of a softening of resource constraints, the Malthusian expectation would be that income would fall when population stated to grow again in the sixteenth century. The authors take an explicit non-Malthusian position showing that the expected reversal did not happen. In fact the authors argue that income per head doubled from the pre-Black Death period to the mid eighteenth century. Their target here is the argument of Clark (2010) and Michael Postan before him, that pre-industrial income per head was stationary in the long run. That is, income increases were transitory and the only permanent effect of technological change would be an increase in population. Chapter 6 is devoted to comparing real wages series with GDP per head. Clark’s reconstruction of GDP is driven by his real wage series which tend to support the Malthusian thesis. However, wage data are constructed from day wages and British Economic Growth argues that you can reconcile a stationary day wages series with increasing GDP per head by adjusting for known increases in days worked in the sixteenth to eighteenth centuries. The authors do not seriously challenge the validity of the day wage series as such, even if there is a discussion in the literature. One major problem is that the salaried working class was a quite small proportion of the labor force. Most people were tenants, free-holders and self-employed, and very little is known about their income and whether it tracked day wages.

How do you assess the accomplishment of this study in the face of alternative interpretations? One way is to look at the general consistency of the many claims made. One surprising result in chapter 7 is that kilocalorie use per head implied by the agrarian output and population series is more or less stable over the entire period. The implication is that the increase in income per head did not spill over into increased demand for calories, but only into more expensive calories, say, beer instead of porridge.  The calorie intake throughout is not far off the minimum requirement for an active life, and at the same level as in France in the eighteenth century, although French workers were known as being less productive in physically demanding work in that period. There are in fact a number of recent assessments of calorie supplies, reviewed by Morgan Kelly and Cormac Ó Gráda (2013), and while all studies apply the same methodology results differ too much for comfort. The most optimistic ones by Robert A. Allen and Craig Muldrew end up at calorie intake about 70 percent higher in the eighteenth century. Kelly and Ó Gráda suggest that agricultural output might in fact be underestimated in British Economic Growth.

Another puzzle refers to the sharp increase of the relative share of the non-agricultural labor force in the sixteenth and seventeenth centuries (chapter 9). Such a change would presumably have generated changes in consumption patterns in favor of industrial goods and services. However, changes in the consumption pattern of that magnitude are not entirely plausible given the reported slow growth of income. Is income growth underestimated for this period? Other indicators point in that direction. For example per capita consumption of metals had tripled by 1700 compared to its peak medieval level, which you would suspect to be associated with more vigorous growth of income.

British Economic Growth, 1270-1870 will be a work of reference, inspiration and controversy for decades to come. Some results will undoubtedly be challenged and revised. Others will stand the test of time. The claim that England/Britain was on a trajectory of slow income growth from medieval times is one of the results which probably will last.

References:

Gregory Clark (2010). “The Macroeconomic Aggregates for England, 1209-1869.”  Research in Economic History, 27: 51-140.

Walther G. Hoffmann (1955). British Industry, 1700-1950. Oxford: Basil Blackwell.

Morgan Kelly and Cormac Ó Gráda (2013). “Numerare est Errare: Agricultural Output and Food Supply in England before and during the Industrial Revolution.” Journal of Economic History, 73: 1132-63.

Karl Gunnar Persson is Professor Emeritus of Economics at University of Copenhagen.  A revised and enlarged edition of his book An Economic History of Europe: Knowledge, Institutions and Growth, 600 to the Present (in collaboration with Paul Sharp) was published in 2015 by Cambridge University Press.  karlgunnar.persson@econ.ku.dk

Copyright (c) 2015 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (August 2015). All EH.Net reviews are archived at http://eh.net/book-reviews/

Subject(s):Economic Development, Growth, and Aggregate Productivity
Geographic Area(s):Europe
Time Period(s):Medieval
16th Century
17th Century
18th Century
19th Century

Jacob Myron Price

Jacob Myron Price passed away, after a long illness, on Wednesday, May 6th, at Glacier Hills retirement and nursing facility in Ann Arbor, Michigan.         

Born November 8th, 1925, the son of Oscar and Agnes (Pike) Price in Worcester, Massachusetts, Jack, as he was known to family and friends, became a distinguished historian of the early modern Atlantic economy.  His father’s employer, the Kelvinator Corporation, moved the family to Boston, Baltimore, and Pittsburgh where Jack attended public schools.  He entered Harvard College in 1942 just before his 17th birthday, and was drafted into the Army after completing his sophomore year.  He served in the U.S. Army Air Force as a cryptographic technician, mostly in India servicing the famous “Hump” flights over the Himalaya Mountains to supply Chinese forces fighting the Japanese invasion.  He rose from the rank of Private to Staff Sergeant before his honorable discharge in 1946.  He completed his Harvard bachelor’s degree in 1947, with High Honors and as a member of Phi Beta Kappa; earned a master’s degree in 1948; and completed his Ph.D. in 1954.

He taught at Harvard and Smith College, in 1956 joining the History Department at the University of Michigan, where he spent the rest of his career, retiring in 1991.  He won numerous honors and awards, among them Fulbright scholarships for graduate study in England, and Guggenheim Fellowships (twice).  He was a Fellow of the Royal Historical Society and of the British Academy, served as president of the Economic History Association 1987-88, and was a Visiting Fellow at All Soul’s College, Oxford.

His research began with a study of the Anglo-American development of the market for tobacco in Russia, 1676-1722.  His work throughout his career was characterized by a fusion of microscopic analysis of individual merchants and their firms with a broad contextual sweep, encompassing social, political, and diplomatic history.  His study of  the global tobacco trade culminated in 1973 with the magisterial two-volume France and the Chesapeake, in which he used his micro-macro approach to focus on the effects of the French royal monopoly of tobacco purchases and sales on American producers and British distributors, ending with the destruction of the monopoly by the French Revolution.

Jack Price had a remarkable command of the archival sources for economic history, and an equally remarkable ability to find and follow the many threads of the complex story of early modern entrepreneurship.  Along the way, he published numerous articles and reviews that illuminate aspects of the 18th century far beyond his early studies of the tobacco trade.  Most of the best of this work has been collected and published in three volumes of his essays 1995-6.  It is worth noting that Jack Price himself was not a user of tobacco.

Beyond his own research, Jack took time to support younger scholars, through his active involvement with the Institute for Historical Research of London University, and his generous support of the Price Fellowships for young researchers working in the Clements Library at the University of Michigan.  Michigan undergraduates who experienced his lectures in British history found them to be models of both clarity and seriousness.  Twice (1971-72 and 1979-84) he chaired the Michigan History Department.

Personally, Jack might impress those who did not know him well as dour, even brusque.  Basically he was a shy person without family who was wedded to his work.  He depended on a small circle of close friends in Ann Arbor, and a wider circle in the American and English academic world.  These friends knew that he was a passionate, deeply knowledgeable lover of classical music, especially opera, and that he could be exceptionally kind and generous to any of them who needed his help.  They also saw the evident pleasure he took in being with their families, and especially watching the children grow.

Those who would sample the mature best of his scholarship may turn to his short book, Capital and Credit in British Overseas Trade (1980), which touches in important ways on the controversial issue of the origin of the Industrial Revolution, and the even shorter Perry of London (1992), in which he traces the all-too human rise and fall of an important trading family and its firm, both books published by Harvard University Press.

Before age and illness overtook and slowly incapacitated him, Jack had begun work on the origins of modern British banking.  He never married.  His parents and a younger brother, Malcolm, predeceased him.  His only survivors are his devoted friends.

Sustainability: A History

Author(s):Caradonna, Jeremy
Reviewer(s):Hill, Joshua P.

Published by EH.Net (December 2014)

Jeremy Caradonna, Sustainability: A History. New York: Oxford University Press, 2014. vii + 331 pp. $28 (cloth), ISBN: 978-0-19-937240-9.

Reviewed for EH.Net by Joshua P. Hill, Department of Economics, Montana State University-Billings.

Jeremy Caradonna’s stated purpose for his book is “to demonstrate that the fundamental idea of creating a sustainable society has a long genealogy that stretches back at least to 1700” (p. 254). He also seeks to summarize the major themes of, and the occasional tensions in, “sustainist” thought and to draw lessons from the last three-hundred years for members of this movement.

Caradonna (Associate Professor of History at the University of Alberta) begins his history with pre-industrial societies, recognizing that ecological problems pre-date the industrial revolution. He contends that there was recognition in these societies that certain behaviors were unsustainable but that it was from the industrial revolution that a school of thought emerged that is recognizably “sustainist.”

Caradonna rapidly traces a thread through centuries of thinkers and political movements. Along the way he ably documents the fact that interest in environmental quality has grown over the last three centuries and that government has as often been used to undermine environmental quality as to support it. He examines some of the literature on the link between wealth and happiness, questions whether GDP is a useful measure of well-being, discusses alternative measures, and lambasts government-led growth. He documents the success of private efforts (including an extensive summary of those by entrepreneurs and businesses) to improve environmental quality and the repeated failure of centrally-led efforts to do so.

A central theme through the book is that we may not have the optimal mix of material prosperity and environmental quality. There is little attention paid, however, to how we should figure out what balance we should have. Instead, it is assumed that this mix is already known and that what is necessary is to marshal grassroots, commercial, and governmental forces to pursue it. The words “overpopulation” and “overconsumption” recur incessantly with no examination as to how we know that people are over-consuming or over-populating. This is unfortunate since this is the core of the issue.

Caradonna spends a great deal of his book on economics. He has clearly read enough to identify shortcomings within the discipline (such as an over reliance on GDP and upon mathematic formulation) and to use economic vocabulary like “externality.” He concludes from his foray into economics, however, that omitting externalities from mathematical models was the goal for practitioners rather than an oversight. In a telling quote, he states that “Instead of calling pollution what it was, it became euphemized as ‘spillovers’ or the ‘spillover effect.’ (p. 127).

He lambasts neoclassical economics “with its ‘growthmania,’ general indifference towards pollution and ecosystem destruction, and dogmatic belief that ‘tastes and preferences’ are innate in humans rather than culturally shaped” (p. 112) as being the root of much ecological evil in the last two hundred years and lauds the emergence of sustainability economics as a separate field which contends “that society needed a stable, just, and ecologically sound economy” (p. 116).

There is certainly a kernel of truth in his criticisms of economics. Institutions were neglected for a period, some economists have become overly reliant upon GDP as a measure of well-being, government economic planning certainly caused environmental degradation (not to mention human suffering), and ethics and morality do not have a large place in most academic articles. However, these issues have been recognized by economists. Nearly all introductory economics textbooks provide extensive examination of the shortcomings of GDP. The Nobel prizes of Ronald Coase and Douglass North were recognition of the importance of property rights and institutions. Those of James Buchanan and Friedrich Hayek highlighted the difficulties of using government for social policy.

Caradonna’s misinterpretation of economic thought is unfortunate precisely because of how crucial tradeoffs are. He highlights the difficulty of placing a value on spillovers but misses the fact that this is precisely the strength of a system of private property rights coupled with the common law doctrine of trespass and nuisance. These generate prices which reveal individuals’ preferences and facilitate cooperation and coordination. Such a system is, in truth, the only way that anyone can answer the question of what the ideal mix is.

In the end, this book is two intertwined but distinct pieces. The first highlights increasing interest in environmental issues, that material wealth does not necessarily translate into happiness, that government and centralized solutions to social problems often go awry, that mathematical formulation can be deceptive, that how we quantify the world around us matters, and that entrepreneurs and social groups can ably solve spillovers if given an arena in which to do so. The second piece is a polemic. It largely ignores what is documented in the first and argues for greater government control, for heavier reliance upon alternative quantitative measures of well-being, and for a smaller role for individuals to express their preferences in the realm of voluntary exchange.

Taken as a whole, this book will be of less use to those seeking to understand the rise of the “sustainist” movement or practical solutions to environmental issues than it will be to confirmed members of the movement who are looking for an encouraging story of how they are destined to overcome.

Those looking for deeper treatments of the issues raised in this book should look to, among others, Terry Anderson and Donald Leal (2001), Diane Coyle (2014), and Paul Heyne (2008).

References:

Terry Anderson and Donald Leal (2001), Free Market Environmentalism, New York: Palgrave.

Diane Coyle (2014), GDP: A Short but Affectionate History, Princeton, NJ: Princeton University Press.

Paul Heyne (2008), “Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion [edited by Geoffrey Brennan and A.M.C. Waterman], Indianapolis: Liberty Fund.

Joshua P. Hill is Assistant Professor of Economics in the College of Business at Montana State University-Billings. His research focuses on the interface between firm structure, political economy, and economic growth.

Copyright (c) 2014 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (December 2014). All EH.Net reviews are archived at http://eh.net/book-reviews/

Subject(s):Agriculture, Natural Resources, and Extractive Industries
Markets and Institutions
Geographic Area(s):General, International, or Comparative
Time Period(s):18th Century
19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

John Allen James: A Scholarly Remembrance

Submitted by: Chris Hanes, Hugh Rockoff, Mark Thomas and David Weiman

John anniversary 2013

John entered the MIT graduate program during the early, lofty days of the “new” economic history, and emerged as one of its most deft, sensible and versatile practitioners.  His PhD dissertation—directed by Peter Temin—exemplifies the promise of this new approach to historical analysis.  It addresses a central issue in American political economic development, the formation of a more integrated (or “perfect”) money market in the late nineteenth-century.  Influenced by the earlier contributions of Lance Davis and Richard Sylla, John set out to document systematically the timing and spatial extent of this financial innovation, and then to explain why it occurred where and when it did.  He adapted current finance theory (CAPM) to the historical context by incorporating possible market imperfections due to spatial factors such as local market power.  He collected mounds of data on national banks across the country to derive average annual loan rates—the key variable to be explained —over the period 1888 to 1911.

John’s results, subsequently published in his early scholarly articles (one of which was awarded the prestigious Arthur H. Cole prize by the Economic History Association) and then masterfully synthesized in his book Money and Capital Markets in Postbellum America, still constitute the received wisdom on this topic.  Part of the staying power of John’s work can be attributed to the wide range of techniques that he mastered and used.  John refined the art of descriptive statistics especially graphical analysis—or “eye balling the data” in his words—but he also built sophisticated models and tested them using the most current econometric methods.  And then true to his calling as both economist and historian, he constructed a compelling narrative showing the interaction between popular (or in the case of regional interest rates, more accurately Populist) politics and banking development.  First, he showed that the convergence of bank rates to levels in the Northeast occurred unevenly across the regions of the U.S.  It was most pronounced in the Midwestern and Pacific Coast states, and least evident in the South.  The latter observation was the subject of a separate article on Southern financial underdevelopment, and resurfaces in his recent co-authored research on the evolution of the American currency-monetary union.  Second, he dated this convergence from the late 1880s, timing which defied the alternative hypotheses based on the formation of a national commercial paper market (which occurred earlier) and passage of relevant federal banking reforms (in 1900).  Finally, his results emphasized the importance of local market power as a factor in explaining the delayed and uneven narrowing of regional interest differentials.  Reinforcing this conclusion, John marshaled statistical and qualitative evidence relating the erosion of bank market power to the liberalization of state banking laws in the 1880s, but only where populist candidates challenged incumbents.  Regional differences in the risks of lending, although present, it turned out were of secondary importance in explaining regional differences in interest rates.

John’s subsequent research shows his continued fascination with the manifold, profound transformations in the American economy from the Civil War era through the Roaring Twenties.  He contributed significantly to the debates over the first and second industrial revolutions in a series of articles on the causes and consequences of technological innovation over the nineteenth century.  He first investigated whether labor scarcity induced American manufacturers to adopt more capital-intensive, labor-saving (that is mechanical) innovations.  His most widely cited paper on this issue, co-authored with then University of Virginia colleague Jonathan Skinner, provided the definitive resolution of the “labor scarcity” paradox, showing that new mechanical technologies substituted for relatively scarce skilled labor but were strategic complements to unskilled labor and natural resources.  In turn, the James-Skinner view corroborates empirically an alternative frontier thesis, which emphasizes America’s relative abundance of natural resources and not the lure of abundant farm land on labor supplies.  Applying a similar production function analysis to the late nineteenth century period, John also furnishes one of the few statistical tests of Alfred Chandler’s influential thesis relating shifts in the pattern of technological innovation to the rise of big business.

The James-Skinner article is also noteworthy for its application of general equilibrium simulation modeling in economic history.  John had first deployed this methodology in his analysis of U.S. tariff policy before the Civil War.  Armed with a new sophisticated—and disconcertingly intractable—technique for deriving general equilibrium outcomes, John corroborates the conventional view on the distributional impacts of antebellum tariffs: all other things equal, they burdened Southern cotton exporters but benefitted Northern manufacturers and their workers.  At the same time he challenges the mainstream by suggesting that average tariff rates across the period may have been economically “optimal.”

John also made many important contributions to the general macroeconomic history of prewar United States. Working solely and with several co-authors including Christopher Hanes, Jon Skinner, and Mark Thomas, John’s program embraced pay and wealth inequality during the first industrial revolution; public and private savings behavior and economic growth; unemployment-inflation dynamics and the shifting Phillips curve relationship; and changes in the sources and extent of unemployment and cyclical fluctuations.  John’s work in these areas appealed to macroeconomists and made use of the latest econometric methods.  His 1993 article in the American Economic Review pioneered the use of structural vector autoregression analysis in economic history.  A decade later he published another paper in the AER, which used nineteenth century wage data to look for evidence of downward nominal wage rigidity, a phenomenon that had only recently become a focus of research in monetary policy (and has become even more relevant in the post-2008 slump).  Though much of John’s work in these areas appeared in general-interest economics journals, it displayed all the virtues of the best economic history.  John was careful to account for peculiarities of historical data and institutions, and to point out the implications of his findings for the larger sweep of American social history.

John’s foray into the history of U.S. savings tackled thorny questions at the macro and micro levels.  Complementing his earlier work on the impact of Civil War debt repayment (or public savings) on late nineteenth century growth, John, in tandem with Skinner, analyzed the dramatic rise in the personal savings rate during the first industrial revolution (published in a volume that placed him among the elite in the profession).  True to form, they identified a novel mechanism operating through changes in the occupational rather than the age distribution of the population.  And ironically (at least for John), their results downplayed the importance of financial market innovations, such as the spread of deposit banking so important in his earlier work.  But typical of John’s commitment to following the lead of the data, he could not and did not resist the apparent paradox.

A number of years later John investigated the microeconomics of saving behavior with former Virginia graduate student Michael Palumbo and colleague Mark Thomas.  Grounded in the historical equivalent of ‘big data’—almost 28,000 observations of late 19th century working-class households from Federal and State Bureau of Labor Statistics surveys—they modeled the distribution of savings by age group, derived estimates of the persistence of family income and savings rates over time, and then simulated wealth accumulation by 10,000 model households.  Their striking conclusions challenged critics of old-age insurance and working-class profligacy: workers did not save at higher rates in the era before Social Security than in the 1980s.  They also showed that few late nineteenth century working class households saved enough before age 65 to meet their living expenses in old age (an expected 10 more years of life), and conjectured that they likely depended on their children, in particular co-habitation with an older son or daughter in the very houses where they had raised their families.  Further research revealed that workers smoothed their consumption over a medium-period time horizon, indicating the influence of precautionary savings motives in response to a world of considerable riskiness from unemployment, illness, incapacity, and premature death of the household head.  Attesting to his growing interest in Japan, John (in work with Isoa Suto) extended this approach to Japanese savings behavior in the era before the social safety net.[2]

John’s other major contributions to the micro-economic foundations of macro-economic outcomes focused on wage and unemployment dynamics in late 19th century labor markets.  In characteristic fashion, he collected all available data on these topics and then framed questions of historical and current import.  Besides challenging earlier research showing signs of nominal wage rigidity, John also investigated and did not find evidence of increasing wage inequality over the period.  On the unemployment front, he estimated flows into and out of jobs based on the 1885 Massachusetts census, and found evidence of significant positive duration dependence, for employment and non-employment spells.  With a vaster dataset (containing over 100,000 observations), John estimated the natural rate of unemployment in 1909 to be just under 6 percent, strikingly similar to estimates today.  To explain this relatively high rate, his simulation analysis, which divided the labor market into stable-primary and floater-secondary workers, pointed to an eclectic mix of factors: seasonal disturbances for many stable workers, lay-offs for workers in cyclically sensitive sectors, and brief, relatively frequent spells for the floaters.  The paper, co-authored with Mark Thomas, won John his second Arthur H. Cole Prize from the Economic History Association.  Their joint work also challenged the findings of Christina Romer by showing that unemployment was more cyclically volatile during America’s first Gilded Age than it was during its Golden Age (in the post-WWII period).  His broader conclusion from these various strands of research is both simple and striking—labor markets and the macro-economy worked differently in the past and historians need to focus on the role of changing institutions and changing policies to try to explain how and why history matters.

Just prior to his sudden and untimely death, John returned to a topic briefly addressed in his dissertation and subsequent book on banking-financial markets in postbellum America.  At a St. Louis Fed conference, he presented data showing the increased efficiency of a largely private, decentralized banking system in greasing the wheels of commerce by moving money from one location to another, even across the country, at relatively low cost.  Teaming up with David Weiman, they explained this trend by the formation of a tiered network of correspondent banks centered on New York.

James and Weiman elaborated this initial paper into a book-length project to explain the evolution of this neglected economic infrastructure from the demise of the Second Bank of the United States to the formation of the Fed.  Informed by current policy debates, they conceived these transformations in terms of the “benefits and costs” of alternative institutional forms—private versus public and hierarchical networks versus bureaucracies.  En route, they decided to write on the Civil War era banking legislation, which institutionalized the emerging private correspondent banking network.  Their initial foray uncovered a striking connection between the adoption of a common currency and a longer-term trend toward a “more perfect” bank money (or payments) union.

Armed with this serendipitous result, James and Weiman have broadened the scope of their project to show the complex interplay between the “punctuated” evolution of the interbank payment network and the American monetary union.  Conceived along these lines, their book (in progress with a manuscript expected by the end of 2015) will complete what for John was a lifetime’s exploration of the development of the banking system in postbellum America.  Banks, we know, are peculiar financial institutions, both credit and payments intermediary.  John’s first book Money and Capital Markets analyzed their former dimension, and his forthcoming book will attend to the latter.

John’s scholarly contributions cannot be measured solely by his outstanding research record.  He was an academic mensch, to use a most fitting Yiddish expression.  John never refused the thankless tasks of a productive scholar—the endless referee reports, book reviews and discussant comments—but even when critical, he always struck a constructive tone sweetened with a good dose of his dry wit.  (In the case of the discussants’ role, we should also note that ever the cosmopolitan John would rarely pass up the opportunity to venture far and wide to see new sites and especially opera productions.)  But John’s spirit truly shone through in his interactions with younger scholars from all walks of intellectual life.  He was an intellectual gourmand ever curious to broaden his own substantive and theoretical-methodological horizons, but also a genuinely gifted mentor who guided others down their own paths, not his own.  And he was always ready to share his data, and willing to explain how to use them.  This aspect of John’s career can be best measured by the outpouring of affection from his “juniors,” who now can proudly call him a colleague, collaborator, and friend.  And they all describe him in virtually identical terms: brilliant, probing, curious, supportive, generous, decent, kind, humane, compassionate and passionate.  We are sure that this list is not complete but can attest to one fact.  John will be sorely missed by all of those whose lives he touched so profoundly.

 

Selected Highlights from John’s Career

Capitalism in Context: Essays on Economic Development and Cultural Change in Honor of R. M. Hartwell, ed. (with Mark Thomas). Chicago: University of Chicago Press, 1994.

Money and Capital Markets in Postbellum America. Princeton: Princeton University Press, 1978.

“Political Economic Limits to the Fed’s Goal of a Common National Bank Money: The Par Clearing Controversy Revisited” (with David F. Weiman). Research in Economic History.

“Main Street and Wall Street: The Macroeconomic Consequences of New York Bank Suspensions, 1866 to 1914″ (with David F. Weiman and James A. McAndrews), Cliometrica,7 (2013), 99-130.

“The National Banking Act and the Transformation of New York Banking after the Civil War” (with David F. Weiman), Journal of Economic History, 71(June, 2011), pp. 340-364

“Early Twentieth-Century Japanese Worker Saving: Precautionary Behavior before a Social Safety Net” (with Isao Suto), Cliometrica, forthcoming.

“From Drafts to Checks: The Evolution of Correspondent Banking Networks and the  Formation of the Modern U.S. Payments System, 1850-1914″ (with David F. Weiman), Journal of Money, Credit, and Banking, 42 (April, 2010), pp. 237-265.

“Consumption Smoothing among Working-Class American Families before Social

Insurance” (with Michael Palumbo and Mark Thomas), Oxford Economic Papers, 59 (October, 2007), pp. 606-640.

“The Political Economy of the U.S. Monetary Union: The Civil War Era as a Watershed” (with David F. Weiman), American Economic Review Papers and Proceedings, 97 (May, 2007), pp. 271-275 .

“Romer Revisited: Long-term Changes in the Cyclical Sensitivity of Unemployment” (with Mark Thomas), Cliometrica, 1 (April, 2007), pp. 19-44.

“Have American Workers Always Been Low Savers?” Patterns of Accumulation among Working-Class Households, 1885-1910,” (with Mark Thomas and Michael Palumbo), Research in Economic History, Volume 23, Amsterdam: Elsevier, 2005. Pp. 127-175.

“Financial Clearing Systems” (with David F. Weiman). In Richard Nelson, ed.,

Complexity and Limits of Market Organization, New York: Russell Sage, 2005. Pp. 114-155.

“A Golden Age? Unemployment and the American Labor Market, 1880-1910″ (with Mark Thomas), Journal of Economic History, LXIII (December, 2003), pp. 959-994.

“Wage Adjustment under Low Inflation: Evidence from U.S. History” (with Christopher L. Hanes), American Economic Review, 93 (September, 2003), pp. 1414-1424.

“Industrialization and Wage Inequality in Nineteenth-Century Urban America” (with Mark Thomas), Journal of Income Distribution, 9 (2000), pp. 39-64.

“Savings and Early Economic Growth in the United States and Japan,” Japan and the World Economy, 11 (1999), pp. 161-83.

“The Early History of Nominal Wage Rigidity in American Industrial Labor Markets,” Rivista di Storia Economica, XIV (December, 1998), pp. 243-73.

“The Rise and Fall of the Commercial Paper Market, 1900-1930.” In: M. Bordo and R. Sylla, eds., Anglo-American Finance: Financial Markets and Institutions in 20th Century North America and the UK, Homewood, IL: Dow Jones-Irwin, 1996. Pp. 219-59.

“Reconstructing the Pattern of American Unemployment Before World War I,” Economica, 62 (August, 1995), pp. 291-311.

“Job Tenure in the Gilded Age.” In: George Grantham and Mary MacKinnon eds., Labour Market Evolution, London: Routledge Kegan Paul, 1994. Pp. 185-204.

“Economic Instability in Nineteenth-Century America,” American Economic Review, 83 (September, 1993), pp. 710-31.

“The Stability of the Nineteenth-Century Phillips Curve Relationship,” Explorations in Economic History, XXVI (April, 1989), pp. 117-34.

“Sources of Savings in the Nineteenth-Century United States” (with Jonathan Skinner). In: Peter Kilby, ed., Quantity and Quiddity: Essays in U.S. Economic History in Honor of Stanley Lebergott, Middletown, CT: Wesleyan University Press, 1987. Pp. 255-85.

“The Resolution of the Labor Scarcity Paradox,” (with Jonathan Skinner), Journal of Economic History, XLV (September, 1985), pp. 513-40.

“The Use of General Equilibrium Analysis in Economic History,” Explorations in Economic History, XXI (July, 1984), pp. 231-53.

“Public Debt Management Policy and Nineteenth-Century American Economic Growth,” Explorations in Economic History, XXI (April, 1984), pp. 192-217.

“Structural Change in American Manufacturing, 1850-1890,” Journal of Economic History, XLII (June, 1983), pp. 433-60.

“The Optimal Tariff in the Antebellum United States,” American Economic Review, LXXI (September, 1981), pp. 726-34.

“Some Evidence on Relative Labor Scarcity in Nineteenth-Century American Manufacturing,” Explorations in Economic History, XVIII (September, 1981), pp. 376-88.

“Financial Underdevelopment in the Postbellum South,” Journal of Interdisciplinary History, XI (Winter, 1980), pp. 443-54.

“Cost Functions of Postbellum National Banks,” Explorations in Economic History, XV (April, 1978), pp. 184-95.

“The Welfare Effects of the Antebellum Tariff: A General Equilibrium Analysis,” Explorations in Economic History, XV (July, 1978), pp. 231-56.

“Banking Market Structure, Risk, and the Pattern of Local Interest Rates in the United States, 1893-1911,” Review of Economics and Statistics, LVIII (November, 1976), pp. 453-62.

“The Conundrum of the Low Issue of National Bank Notes,” Journal of Political Economy, LXXXIV (April, 1976), pp. 359-67.

“The Development of the National Money Market,” Journal of Economic History, XXXVI  (December, 1976), pp. 878-97.

“Portfolio Selection with an Imperfectly Competitive Asset Market,” Journal of Financial and Quantitative Analysis, XI (December, 1976), pp. 831-46.

 

[1] Composed by Christopher L. Hanes (SUNY-Binghamton), Hugh Rockoff (Rutgers University), Mark Thomas (University of Virginia), and David F. Weiman (Barnard College, Columbia University)

 

[2] John had earlier explored the different historical savings patterns in Japan and the U.S. and their implications for economic growth.

 

 

Guano and the Opening of the Pacific World: A Global Ecological History

Author(s):Cushman, Gregory T.
Reviewer(s):Levy, Juliette

Published by EH.Net (August 2014)

Gregory T. Cushman, Guano and the Opening of the Pacific World: A Global Ecological History. New York: Cambridge University Press, 2013. xvii + 392 pp. $99 (hardcover), ISBN: 978-1-107-00413-9.

Reviewed for EH.Net by Juliette Levy, Department of History, University of California, Riverside.

This is not the first book about guano, nor is it the first commodity study that connects the world around it. This book, however, may be the first book that is both a detailed and intricate history of the Pacific basin (mostly weighed to the Peruvian/Latin America side of it) and a fascinating history of the development of an environmental discourse in it. This is as much an environmental history, as it is the history of environmental thought in the Pacific basin. Cushman traces the discourse, theories and acts of environmentalism, nature, ecology and population through the many phases of guano exploration, use and export. He carries the analysis through the nineteenth and twentieth centuries, articulating how environmental issues became tied to local and global politics and economics.

Cushman is an excellent writer, bringing in a variety of perspectives, from scientists, environmental evangelists, politicians, economists and commodity traders, as well as island populations and bird-watchers, going so far as to imagine the perspective of the guano-producing birds themselves. In the hands of a less-talented writer this might have become quite confusing, but instead the personal (and animal) perspectives help anchor and reinforce the tight knit of humankind’s relationship with its environment.

To say this book has far-reaching ambitions is an understatement — it is after all a “global ecological history” and as such, the author had to tie the history of bird excrement to the broader implications of late nineteenth-century export booms, agricultural productivity growth, ecological depredation, political transformations and the weaving of a global economic project around the competitive access to this ecological asset. And by and large, the author succeeds in fulfilling these ambitions. Most of all, here is the rare environmental history that is actually about the environment. And here is a global history that does indeed span more than one country and continent. Cushman’s training as a Latin American historian does not obscure his perspective over the rest of the world and in his treatment of Peru (the erstwhile world leader in guano production) does not ignore the efforts, and the significance of the efforts, of the many other countries that tried to ride the guano trail.

He is also not biased by previous assessments of global history. The global nineteenth century, with its colonial expansions into Africa and neo-colonial trade networks has often been cast as the age of American expansionism and local elite cooptation. Here Cushman reveals how the issue of economic growth and national economic strategy at the time occupied the relatively young Latin American nations.  Peru had a bold environmental plan, devised for national growth, and Chile too joined in territorial expansion as a means of securing international and domestic power. This claim is certainly not new, but it is refreshing (as it were) to see the small guano-covered islands becoming pawns in this game. He also continues the story well into the twentieth century, allowing the reader to trace the origins of the conservation movement in the U.S. and Latin America via the studies of ornithologists and naturalists — all of which leads to a coherent long-view environmental history.

The book is dense, and it is not a straight-forward assessment of the issue. This may have something to do with the author’s articulation of his argument. In his own words, the argument is seven-fold and touches on the following issues: 1) the geographical parameters of the Pacific world; 2) the creation/construction of the Pacific world; 3) the agency of nature on the creation of the Pacific world; 4) connection between the Pacific world and the industrial revolution; 5) cultural influences of the transformations in the Pacific world and industrial revolution; 6) social groups that orchestrated much of the guano world; and 7) the ethical ramifications of the world created by guano.

This 7-fold argument is explored across eight chapters, which each also have their own theme and motivating arguments. Chapter 2 focuses on the importance of bird waste in opening the Pacific world Chapters 3 and 4 focus on what the author calls neo-ecological imperialism — with two case studies of post-colonial exploration for nitrates among newly independent nations of Latin America and Austral Asia. Chapter 5 studies how nitrate exploration contributed to creating environmental governance at the turn of the twentieth century in Peru and neighboring regions. Chapter 6 focuses on Peru in the context of guano, the Pacific world, ecology and economy. Chapter 7 turns to Pacific geopolitics specifically between the two World Wars. Chapter 8 delves into the formation of early twentieth century environmentalism in the context of population concerns and chapter 9 deftly discusses the tensions between development projects and the environmental advisors hired to increase the productivity of agriculture in the mid-twentieth century.

One wishes for a more streamlined narrative, which a more forceful editorial hand might have achieved. But this is a minor quibble in a book that is packed with more insight and detail than one single book usually has. There is enough here for two books at least, so historians, environmentalists, and social scientists will find much to explore and learn in its pages.

It remains that Cushman’s specialty is in the environmental aspect of the story, which overlaps with policy and consumption — and history of course. History is actually the most important actor in this valuable book. In his tracing of the policies of young nations in the nineteenth century, which were trying to position themselves in a global market that grew largely out of its colonial use of their resources, Cushman attaches environmental consequences to the colonial legacy. And it is in this environmental treatment of history that Cushman may be reminding all of us that history is meaningless is we don’t acknowledge, and study, its dependence and relationship to its physical environment.

Juliette Levy is Associate Professor of History at the University of California, Riverside. Her most recent book, The Making of a Market: Credit, Henequen and Notaries in Yucatán, 1850-1900, was published in 2012 by Penn State Press. juliette@ucr.edu

Copyright (c) 2014 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (August 2014). All EH.Net reviews are archived at http://www.eh.net/BookReview

Subject(s):Agriculture, Natural Resources, and Extractive Industries
Geographic Area(s):Latin America, incl. Mexico and the Caribbean
Time Period(s):19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

Cotton: The Fabric that Made the Modern World

Author(s):Riello, Giorgio
Reviewer(s):Jones, Eric

Published by EH.Net (June 2014)

Giorgio Riello, Cotton: The Fabric that Made the Modern World.  New York:  Cambridge University Press, 2013.  xxviii + 407 pp.  $35 (hardcover), ISBN: 978-1-107-00022-3.

Reviewed for EH.Net by Eric Jones, La Trobe University.

Reviewing this book is a tall order because it is strikingly broad in coverage and even bolder in the sweep of its claims, geographical, chronological and methodological.  The volume is also full of contemporary illustrations of textiles, which, when few physical items have survived, is a practical alternative.  I have never seen so many pictures in a scholarly text on commodity history, used here to support Giorgio Riello’s insistence that economic historians are too narrow in the evidence and approach they use – more of which anon.  It is true that cotton has been the subject of innumerable industrial histories that do not begin to match this author’s reach back to A.D. 1000 or his delving into the detail of textile history in Asia, though his claims for primacy may still be thought a mite overdrawn.  Riello, who is Professor of Global History at the University of Warwick, wishes to answer two main questions: why cotton came to outclass other fibers used for clothing and why northwest Europe, more particularly northwest England, became the improbable location from which manufactured cotton cloth flooded the world market.  He does better, in my view, in tackling the former question than the latter.  Much is to be learned, nevertheless, from both halves, for this is a rich and elaborate work.

Picking out any single section is difficult because so many topics, themes, clever distinctions and academic debates are introduced in a largely successful crusade to demonstrate that cotton is a good lens for viewing global history (though by dealing primarily with India and England, the book is really international history, give or take the late arrival of the nation state).  I will mention only two outstanding treatments of the “why cotton” issue.  The first is the extended demonstration that developments in the printing and design of fabrics should take their place alongside innovations in spinning and weaving.  The second is some ingenious calculating of ghost acreages to show how unreasonably expensive in land or labor it would have been for England to have produced at home enough of any fiber to satisfy its burgeoning industrial sector.  The point is emphasized that the novelty of European cotton production was to delink manufacturing geographically from the source of its raw material.

There is no need to quarrel with the breadth of the geography or chronology other than to say that the choice does rather depend on what one is trying to explain.  Economic historians may, however, bridle at the remark that they are just as interested in measuring outcomes as in explaining them and attribute “all the merit (or blame)” parsimoniously, to one or at most a handful of variables.  This, says Riello, is “a rather narrow way of accruing alternative explanations.”  Insofar as we are guilty as charged, this misconceives the economic method.  Economic historians of my acquaintance are concerned with magnitudes (how many, how much, how often, etc., as Clapham said) but they have an end in view that does not necessarily blind them to the complexity of the world: they simply wish to identify as much order in it as possible.  Admittedly some overdo the approach, bruising the tender tissues of history in the iron grip of neoclassical theory.  Price theory will take you 60 percent of the way, quipped Lance Davis, but he meant only 60 percent.  As soon as sociological and other variables are introduced, the reproducible and the definite deliquesce into less tractable realism.  Maximizing these things simultaneously proves too hard for any of us.  Introducing great breadth, as Riello does, creates engaging narratives but is a different exercise.  Perhaps ironically, Cotton turns out to be far more analytical than his methodological statements might lead one to expect.

Beyond this, Riello joins the coterie of academics determined to cut the role in world history of Europe, and especially of England, down in size.  That the West borrowed ideas about design from India, whence it imported cotton textiles before producing them at home, is familiar enough.  Nevertheless, some credit might be given to the European shipping that did uniquely take trade into another hemisphere.  Riello asserts that England was extreme rather than exceptional, which depends on what these terms mean and as it stands is surely misleading.  He says that whereas the old classic on cotton by Wadsworth and Mann aimed to show how Lancashire changed the world, he wants to show how the world changed Lancashire.  He wishes explicitly to side-line technological history, saying for instance that even if factories did emerge in England suddenly they were only epiphenomena.  They were symptoms of something bigger.  But factories, and a fortiori textile machinery, indeed the entire Lancastrian industrial revolution, were what broke the mold of world history.  Ideas and materials had filtered from the East but that is not the point, even without any allowance for independent discoveries.  The point is the response.  However early in time developments in making cotton had occurred in Asia, and whatever transmission to Europe there was, the technological response in England was utterly novel and utterly formative of the modern world.  The cant term would be “game-changer.”

Riello’s central purpose is to demonstrate how a specific good changed the way people lived, their tastes and physical conditions, and to do this in a way that dissociates him from the supposed limitations of economic history.  The formation of tastes is admittedly something that economic historians do not pretend to understand but I do not see that this book endogenizes it in a rigorous way.  Exposing the passionate heart of Riello’s approach and its apparent defects is of course the first task when reviewing.  It may, however, distract attention from the scope of his achievements.  Given the depth of scholarship and unusual range, a catalogue of contents ought not to be an appendix – but a full account of all the subsidiary episodes and puzzles discussed would be beyond the permissible length of this review.  On its own terms Cotton’s history is immensely informed and informative.

Eric Jones, Emeritus Professor, La Trobe University, and former Professor, Melbourne Business School, is the author of Locating the Industrial Revolution: Inducement and Response (World Scientific, 2010), The Fabric of Society and How It Creates Wealth (Arley Hall Press, 2013, with Charles Foster), and Revealed Biodiversity: An Economic History of the Human Impact (World Scientific, 2014).

Copyright (c) 2014 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (June 2014). All EH.Net reviews are archived at http://www.eh.net/BookReview

Subject(s):Industry: Manufacturing and Construction
International and Domestic Trade and Relations
Geographic Area(s):General, International, or Comparative
Asia
Europe
Time Period(s):Medieval
16th Century
17th Century
18th Century
19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

Catch Up: Developing Countries in the World Economy

Author(s):Nayyar, Deepak
Reviewer(s):Ward-Peradoza, Marianne

Published by EH.Net (May 2014)

Deepak Nayyar, Catch Up: Developing Countries in the World Economy.  Oxford: Oxford University Press, 2013.  xvii + 221 pp. $45 (hardcover), ISBN: 978-0-19-965298-3.

Reviewed for EH.Net by Marianne Ward-Peradoza, Department of Economics, Loyola University Maryland.

Deepak Nayyar, Professor Emeritus at Jawaharlal Nehru University, takes us on a journey tracing the contours of developing country participation in the world economy from the second millennium to the present.  Catch Up thus goes beyond the traditional post-1950 assessment of development experiences, providing additional context and some new perspectives on developing country economic performance.  In particular, the author seeks to contrast divergence between developed and developing countries in the nineteenth and early twentieth centuries with the closing of the gap that occurred in the late twentieth and early twenty-first centuries.  In addition to the evolution over time, the analysis highlights the disparity in outcomes across regions in the developing world.  For the purposes of this study, the developing world is Africa, Asia (excluding Japan), and Latin America including the Caribbean.

The book is divided into two broad sections.  The first, comprising chapters 2 and 3, examines the period 1000 to 1950.  The second section, chapters 4 through 9, focuses on the post-1950 period, and considers the nature of developing country participation in the world economy since 1950.  Nayyar supports his arguments throughout using GDP, population, trade, and manufacturing data along with inequality and poverty measures for developed and developing countries.  While it is possible to raise various questions about data choices and sources, these issues are tangential and do not appear to affect the overall argument.   Two striking points emerge from the analysis.  First, divergence before 1950 and catch up in recent decades are more about divergence and subsequent catch up in Asia, and India and China in particular, than in developing countries as a group.  Second, regional disparities in economic performance across developing countries are substantial.
Chapters 1 through 3 provide the foundation for the analysis of “catch-up” in the post-1950 period.   Chapter 1 identifies the issues to be addressed.  Chapter 2 documents the process of divergence that characterized the interaction between developed and developing countries in the two centuries before 1950.  While developing countries dominated world manufacturing production in 1750, this situation would soon change.  Between 1820 and 1950 the share of world GDP for developing countries (called “The Rest”), fell from 63.1% in 1820 to 27.1% in 1950.  This dramatic decline occurred largely due to declines in GDP, particularly manufacturing output, in India and China.   Over the same period, the “West” increased its share of world GDP from 36.9% in 1820 to 72.9% in 1950.  Chapter 3 seeks to identify the factors that set the stage for the observed divergence.  The factors identified include the development of initial conditions in Europe during 1500-1700, the start of the industrial revolution in Britain and its expansion to Europe, and the global economy of the late nineteenth century.

Chapter 4 picks up in the post-1950 period, and documents the end of divergence between developing and developing countries, and the beginnings of the process of catch-up.  Between 1950 and 1980, developing countries continued to fall behind industrial countries, though at a slower pace than in the nineteenth century.  The period 1950-2008 was characterized by a closing of the gap in levels of GDP and GDP per capita relative to industrial countries and higher growth rates in developing countries.  As with the divergence for the period before 1950, this process of catch up is driven by GDP gains in Asia, as Latin America maintained its position relative to industrial countries and Africa continued to fall behind.

Chapter 5 focuses on international trade, international investment and international migration. While developing countries have experienced expansion in their share of world trade as compared to 1900, the disparities in outcomes across regions remain.  In the post-1950 period, Asia has seen dramatic gains in the share of world trade, while Africa experienced declines, and Latin America after declines in the 1990s, remains at approximately 1970 levels.  The data on foreign investment is for a much shorter period, starting in 1990.  Activity was again more heavily concentrated in Asia with the significance of international investment at the end of the twentieth century similar to levels at the end of the nineteenth century.
Chapter six focuses on structural change across regions.  Asia emerged as the only developing region showing the classic pattern of structural change with a reduction of GDP and employment shares in agriculture, along with increases in manufacturing and services.  Asia was also the only region that saw a substantial increase in its share of world manufacturing valued added.   For developing countries as a group, there is a transition in the composition of merchandise exports over time from primary products, to low-technology manufactures, to medium-technology manufactures to high-technology manufactures.  This stands in contrast to the late nineteenth century when developing countries exported primary products and imported manufactured goods.

Chapter seven focus on the performance of fourteen individual countries identified as leaders.  The author considers four countries in Latin America, eight countries in Asia and two countries in Africa.  These examples, encompassing a wide range of endowments, transition paths and development models, highlight the diversity of approaches that can produce successful outcomes.   The broad lessons that emerge are the importance of physical infrastructure and access to education (called initial conditions by the author), enabling institutions to support the process of industrialization, and supportive governments.

Chapter eight address the evolution of poverty and inequality across countries and people.  While inequality across countries has declined since 1950, inequality within countries, including developing countries has increased.  Similarly, poverty rates have declined somewhat since 1980 but the number of people classified as poor (living below PPP $1.25 and PPP $2 per day) remains substantial.  While Asia has driven the catch up process that is the central theme of this book, it remains home to over seventy percent of the world’s poor.

Chapter 9 concludes, outlines opportunities and potential problems for developing countries, and sketches some possibilities for the future.  The author sees the beginning of the twenty-first century as heralding a shift in the world balance of power similar to the rise of Britain in the nineteenth century, and the rise of the United States in the twentieth century.  What does this mean for the twenty-first century?  While the analysis highlights the importance of Asian economies in the recent catch up process, it remains unclear if any potential shift in the world balance of power will tilt toward one country, or several countries.

This book will be of interest to anyone interested in the evolution of the world economy. The focus on the role of developing countries in this process provides a new perspective on this important topic. Perhaps the most useful aspect of this book is that it integrates a long history of complex and multifaceted growth experiences across the developing world into a coherent and concise format, making it accessible to a wide audience.  Scholars from across the social sciences, policy-makers, students and general readers will all find this book interesting and insightful.

Marianne Ward-Peradoza is Associate Professor of Economics at Loyola University Maryland.  Her research is focused at the intersection of economic history, economic development and international macroeconomics.  She is working on international comparisons of incomes and productivity for a variety of industrial countries in the late nineteenth and early twentieth centuries and several Caribbean countries in the twentieth century.

Copyright (c) 2014 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (May 2014). All EH.Net reviews are archived at http://www.eh.net/BookReview

Subject(s):Economic Development, Growth, and Aggregate Productivity
Geographic Area(s):General, International, or Comparative
Africa
Asia
Latin America, incl. Mexico and the Caribbean
Time Period(s):18th Century
19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

The Great Escape: Health, Wealth and the Origins of Inequality

Author(s):Deaton, Angus
Reviewer(s):Parman, John

Published by EH.Net (March 2014)

Angus Deaton, The Great Escape: Health, Wealth and the Origins of Inequality.  Princeton, NJ: Princeton University Press, 2013. xv + 360 pp. $30 (hardcover), ISBN: 978-0-691-15354-4.

Reviewed for EH.Net by John Parman, Department of Economics, College of William and Mary.

In The Great Escape, Angus Deaton describes the historical rise of the world’s population out of poverty and poor health.  Deaton, the Dwight D. Eisenhower Professor of Economics in the Woodrow Wilson School of Public Policy and International Affairs and the Economics Department at Princeton University, offers a thorough accounting of the simultaneous rise of income and longevity; it is a general history of the progress of the world that recognizes the importance of both wealth and health to wellbeing.  The book’s constant theme is that this is a story of both growth and inequality.  Overall increases in income and longevity have been dramatic in scale but those gains have not been distributed evenly.  Deaton sets out to demonstrate just how impressive the escape from poverty and death has been and identify which groups have made that escape and which have not, a task the book accomplishes quite well.  In the process, many questions are raised about the underlying causal relationships between health, wealth and inequality.  It is here that the book leaves the reader with much to think about but few definitive answers.

While the book sets out to examine the nexus between health and wealth, making a strong case for why the two should be viewed in tandem, the bulk of the chapters treat them separately.  The first chapters trace the history of human health.  There is a brief treatment of health in pre-industrial times based on skeletal records and anthropological studies of hunter-gatherer tribes but the bulk of the material focuses on longevity from the time of the Industrial Revolution onward.   Deaton offers a clear, compelling story of how nutrition, scientific advance and particularly the rise of germ theory helped the Western world reduce mortality from infectious disease.

With this discussion of the history of health in rich countries, two central themes of the book take shape.  First, improvements in wellbeing often, at least initially, beget greater inequality.  Scientific advance brings about solutions to health problems that are initially affordable only for the wealthy.  Deaton’s examples range from smallpox variolation in the eighteenth century to the modern drugs readily available to rich countries but prohibitively expensive for those in poor countries.

The second crucial point Deaton seeks to make is that the spread of these innovations, the improvement in wellbeing throughout the income distribution, is dependent on public health programs and, more generally, politics and institutions.  The benefits of germ theory were not widespread until there was the political will and the state capacity to implement public health programs such as water treatment and other modern sanitation measures.

This issue is reinforced when Deaton turns to health in the modern world.  With elegant graphs and careful analysis, Deaton describes the overall rise in world life expectancies and the convergence of poor countries to rich countries but explains that these trends are misleading.  Life expectancies are rising in rich countries because we are making progress in extending the lives of our elderly, tackling issues of chronic adult diseases with expensive medical innovations.  The rise of life expectancies in the poor countries, however, is being driven by reductions in childhood mortality.  While declining childhood mortality is certainly good, it is distressing that it is still high enough to support large declines; children in developing countries are still dying from diseases for which medical science has answers.  The book further chips away at the rosy interpretation of convergence in life expectancies with data on heights that reveal far less convergence in health between rich and poor countries.

Deaton notes that it is not necessarily lack of income that has prevented poor countries from fully converging to the health outcomes of rich countries.  If one ignores China and India, there is no relationship between economic growth and long term declines in infant mortality.  (A recurring question throughout the book is whether one should treat India and China as just two unique cases out of many developing countries or focus on India and China given their enormous populations.  Deaton does an excellent job of explaining why answering this question is crucial for determining how to measure world progress and direct international aid efforts.)  It is the lack of good institutions in poor countries that helps maintain these health inequalities.  Deaton fingers failure of the state as a main culprit: governments fail in the provision of public health goods and underinvest in their health care systems.  He hints at a version of the resource curse; governments that gain their revenue and power from natural resources do not depend on the people for revenue and are therefore uninterested in the population’s general health and wellbeing.

In the later chapters, the book shifts from improvements in health to improvements in material wellbeing.   GDP per capita and poverty rates do the work that longevity and height did in the earlier chapters, albeit for a shorter time period and a smaller set of countries.  Deaton focuses on income in the United States over the twentieth century and GDP per capita and poverty rates for cross-country comparisons covering the past half-century.  As with longevity and height, Deaton goes to great lengths to explain how these measures are constructed and precisely what they can and cannot capture.  The limited data he employs to discuss income growth and inequality lead to a history that is well known to any economist.  The value of his discussion for the academic lies more in forcing the reader to reconsider the limitations of the stylized facts we have grown comfortable with.

Deaton’s history of material wellbeing echoes his approach to health.  The Scientific Revolution and the Enlightenment kick started a world in which innovation led to economic gains.  These gains have been enormous but far from evenly distributed either across or within countries. Technology is once again at the heart of both growth and inequality.  To explain American growth and inequality, Deaton points to the ideas of skill-biased technological change and the race between education and technology familiar to economic historians from the work of Goldin and Katz.  Bad institutions are once again a main contributor to the failure of poor countries to converge to rich countries.

The history of health, wealth and inequality leads to the pressing question of what is to be done.  As the book notes in great detail, many people are still living in poverty and dying from diseases that are now non-existent in wealthy countries.  Deaton’s answer to what should be done comes in the form of a strongly worded argument for what should not be done.  Aid, at least in its current form, is not the answer.  The bad institutions and bad governments that have kept poor countries from achieving the physical and material wellbeing enjoyed by those in wealthy countries also prevent aid from being effective.  Deaton argues at length that international aid is at best ineffective and often times counterproductive.  In contrast, his discussion of what can be done is rather brief.  The extensive work being done on how households in developing countries respond to various aid programs, the results of randomized control trials, and, most significantly, the potential impact of expanding educational opportunities in developing countries all receive passing mention but little analysis in terms of what effective steps may be taken.

The Great Escape is an eloquent and passionate description of what sickness and health look like for the world’s populations and economies.  Deaton’s history of health and wealth offers a compelling narrative for both the general reader and academics alike.  It raises a range of questions of why some countries falter, why others succeed and what can be done to close gaps between them.  Unfortunately, the book’s length cannot accommodate a rigorous discussion of the causal links between human behavior, institutions, health and wealth that matches the detail and care with which the histories of health and wealth are presented.   The book succeeds in demonstrating just how great the Great Escape was for many countries but leaves the reader largely uncertain about how others will follow.

John Parman (jmparman@wm.edu) is an assistant professor of economics at the College of William and Mary.  He is currently researching the impact of childhood health shocks on household resource allocation in the early twentieth century and the evolution of spatial patterns of segregation, health and economic development in the United States over the past century.

Copyright (c) 2014 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (March 2014). All EH.Net reviews are archived at http://www.eh.net/BookReview

Subject(s):Economic Development, Growth, and Aggregate Productivity
Historical Demography, including Migration
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative
18th Century
19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

Project 2000/2001

Project 2000

Each month during 2000, EH.NET published a review essay on a significant work in twentieth-century economic history. The purpose of these essays was to survey the works that have had the most influence on the field of economic history and to highlight the intellectual accomplishments of twentieth-century economic historians. Each review essay outlines the work’s argument and findings, discusses the author’s methods and sources, and examines the impact that the work has had since its publication.

Nominations were received from dozens of EH.Net’s users. P2K
selection committee members were: Stanley Engerman (University of
Rochester), Alan Heston (University of Pennsylvania), Paul
Hohenberg, chair (Rensselaer Polytechnic Institute), and Mary
Yeager (University of California-Los Angeles). Project Chair was
Robert Whaples (Wake Forest University).

The review essays are:

Braudel, Fernand
Civilization and Capitalism, 15th-18th Century Time
Reviewed by Alan Heston (University of Pennsylvania).

Chandler, Alfred D. Jr.
The Visible Hand: The Managerial Revolution in American Business
Reviewed by David S. Landes (Department of Economics and History, Harvard University).

Chaudhuri, K. N.
The Trading World of Asia and the English East India Company, 1660-1760
Reviewed by Santhi Hejeebu.

Davis, Lance E. and North, Douglass C. (with the assistance of Calla Smorodin)
Institutional Change and American Economic Growth.
Reviewed by Cynthia Taft Morris (Department of Economics, Smith College and American University).

Fogel, Robert W.
Railroads and American Economic Growth: Essays in Econometric History
Reviewed by Lance Davis (California Institute of Technology).

Friedman, Milton and Schwartz, Anna Jacobson
A Monetary History of the United States, 1867-1960
Reviewed by Hugh Rockoff (Rutgers University).

Heckscher, Eli F.
Mercantilism
Reviewed by John J. McCusker (Departments of History and Economics, Trinity University).

Landes, David S.
The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present
Reviewed by Paul M. Hohenberg (Rensselaer Polytechnic Institute).

Pinchbeck, Ivy
Women Workers and the Industrial Revolution, 1750-1850 
Reviewed by Joyce Burnette (Wabash College).

Polanyi, Karl
The Great Transformation: The Political and Economic Origins of Our Time
Reviewed by Anne Mayhew (University of Tennessee).

Schumpeter, Joseph A.
Capitalism, Socialism and Democracy 
Reviewed by Thomas K. McCraw (Harvard Business School).

Weber, Max
The Protestant Ethic and the Spirit of Capitalism
Reviewed by Stanley Engerman.

Project 2001

Throughout 2001 and 2002, EH.Net published a second series
of review essays on important and influential works in economic
history. As with Project 2000, nominations for Project 2001 were
received from many EH.Net users and reviewed by the Selection
Committee: Lee Craig (North Carolina State University); Giovanni
Federico (University of Pisa); Anne McCants (MIT); Marvin McInnis
(Queen’s University); Albrecht Ritschl (University of Zurich);
Winifred Rothenberg (Tufts University); and Richard Salvucci
(Trinity College).

Project 2001 selections were:

Borah, Woodrow Wilson
New Spain’s Century of Depression
Reviewed by Richard Salvucci (Department of Economics, Trinity University).

Boserup, Ester
Conditions of Agricultural Growth: The Economics of Agrarian Change under Population Pressure
Reviewed by Giovanni Federico (Department of Modern History, University of Pisa).

Deane, Phyllis and W. A. Cole
British Economic Growth, 1688-1959: Trends and Structure
Reviewed by Knick Harley (Department of Economics, University of Western Ontario).

Fogel, Robert and Stanley Engerman
Time on the Cross: The Economics of American Negro Slavery
Reviewed by Thomas Weiss (Department of Economics, University of Kansas).

Gerschenkron, Alexander
Economic Backwardness in Historical Perspective
Review Essay by Albert Fishlow (International Affairs, Columbia University).

Horwitz, Morton
The Transformation of American Law, 1780-1860
Reviewed by Winifred B. Rothenberg (Department of Economics, Tufts University).

Kuznets, Simon
Modern Economic Growth: Rate, Structure and Spread
Reviewed by Richard A. Easterlin (Department of Economics, University of Southern California).

Le Roy Ladurie, Emmanuel
The Peasants of Languedoc
Reviewed by Anne E.C. McCants (Department of History, Massachusetts Institute of Technology).

North, Douglass and Robert Paul Thomas
The Rise of the Western World: A New Economic History
Reviewed by Philip R. P. Coelho (Department of Economics, Ball State University).

de Vries, Jan
The Economy of Europe in an Age of Crisis, 1600-1750
Review Essay by George Grantham (Department of Economics, McGill University).

Temin, Peter
The Jacksonian Economy
Reviewed by Richard Sylla (Department of Economics, Stern School of Business, New York University).

Wrigley, E. A. and R. S. Schofield
The Population History of England, 1541-1871: A Reconstruction

Project Coordinator and Editor: Robert Whaples (Wake Forest
University)