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The Merchants of Zigong: Industrial Entrepreneurship in Early Modern China

Author(s):Zelin, Madeleine
Reviewer(s):Shiue, Carol H.

Published by EH.NET (September 2006)

Madeleine Zelin, The Merchants of Zigong: Industrial Entrepreneurship in Early Modern China. New York: Columbia University Press, 2006. xxiv + 404 pp. $45 (cloth), ISBN: 0-231-13596-3.

Reviewed for EH.NET by Carol H. Shiue, Department of Economics, University of Colorado.

The considerable fortune accumulated by the famed salt merchants of China has often been attributed to their privileged access to government licenses that limited salt sales through quotas. In this volume, Madeleine Zelin, Professor of History and East Asian Languages and Cultures at Columbia University, uses source materials based on municipal archival documents of case records of legal suits; business accounts and contracts; local gazetteers; memoirs and transcribed oral histories; and other primary and secondary materials to evaluate the economic history of the salt industry. Among the many substantial findings that emerge in her study is that the industry was built on much more than the government’s regulations on salt.

The “Merchants” of the title refer to the entrepreneurs of Zigong, in the western hinterland province of Sichuan, who dealt in the business of producing and trading salt. Salt production was a multi-step process that began with raising the salty brine. This required pumping and well drilling, a costly venture that could potentially take five or ten years. Afterwards, furnaces were needed to evaporate the salt. Because the tasks involved in processing were invariably larger than anyone could undertake alone, production ultimately relied not only on advances in new technologies, but just as importantly, on organizational structures that allowed groups (such as corporate groups and lineages) to finance the drilling, to create profit sharing arrangements, and to allow a rental market in productive assets. The first chapters of the book describe the technology used in salt production. Using the example of two saltyards, Chapter 2 discusses the structure of investment contracts in well drilling. Chapter 3 shows how partnerships (e.g. contracts for renting a well or for renting a furnace and leasing brine and gas) were used to organize fragmented resources and to merge smaller amounts of capital. Zelin provides important new evidence of an active industrial sector where property rights and contracts were recognized and enforced by the existing legal framework, but commercial laws governing limiting liability and the effects of bankruptcy did not exist until the turn of the twentieth century.

For acquiring the necessary capital, banking and credit services were not critical to the early development of the salt industry. Instead, assets were often brought together through kin and the establishment of lineage trusts, with little outside sources of financing. Chapter 4 focuses on the role of the lineage in structuring the management of the firm, taking as examples several families that had accrued large fortunes as salt developers.

In addition to capital, processing the salt required a sizable labor force, and the possibility of shipping the goods to potential buyers. Large vertically integrated firms could ensure not only their own supplies of brine and gas, but establish contacts in merchant networks for the sale of their goods. Chapter 5 considers working conditions in the salt industry, which was the largest employer outside of agriculture in Sichuan. Chapter 6 considers the question of the impact of government regulation on producers.

The remaining chapters, Chapters 7-10, turn to the changes in the twentieth century, when the prosperous salt empires of the previous century faced decline, mainly as a result of political instability and the lower profitability of processing brine. In addition, increasingly over the late-nineteenth century and twentieth century, the state sought to tax salt in transit. Chapter 7 surveys the impact of technological changes. Chapter 8 details the family histories of the salt magnates in the later period. Chapter 9 brings the implications of politics to bear on the business of merchants, and Chapter 10 addresses the question of the long-term implications of the industry on Zigong’s economic development.

The text assumes some familiarity with the institutional background of early modern China, and most chapters are packed with carefully teased out analysis from original sources, but Zelin also provides brilliant summaries in the introductory and concluding sections of each chapter that tend to be targeted to a wide audience in business history. The book’s glossary compiles an excellent list of more than 750 names and terms used in the text in both pinyin and in Chinese. If this sounds specialized, it is — but the writing is so clear and engaging that even the general reader will want to know more about the uses of bamboo piping in pumping or the intra-familial spats of the merchant clans.

A recurrent theme of the book is that the business arrangements seen in the Chinese salt industry belie not only previous perceptions about the predatory influence of the “feudal” state on entrepreneurial incentives in China, but also the purported uniqueness of Western business practice. On both fronts, this book breaks important new ground and will have a major influence on the future research agenda. The Merchants of Zigong, however, is fundamentally not a comparative study, and as such its comparisons are based mostly on secondary sources from the business history of the United States. Nevertheless, it is at these points that some of the more provocative observations emerge. For example, Zelin observes, “On a much more limited playing field, the chengshouren then played much of the same role of informed ‘honest broker’ performed by investment bankers like J.P. Morgan” (p. 48). In another analogy, Zelin finds that the advantages of vertical integration in the Chinese salt industry “match in importance the organizational breakthrough made by the great American oil and steel companies?” (p. 96). The implication of the analogies is that despite differences in institutional environments, similarities in business practice between China and the United States arose out of underlying similarities in “opportunities and constraints” (p. 292). For those who see more differences than similarities between oil and salt, the correspondences may seem to be too broad brush. How far should the similarities be taken, and what is the significance of the differences? It may take another book to answer these questions, but the undertaking would be well worth it.

The Merchants of Zigong is a microeconomic case study that expands our knowledge of business practices in the nineteenth and twentieth centuries by leaps and bounds while shedding light on the institutions in which the Chinese firms operated. It is a work that shows just how good historical scholarship on China can be and the volume is one that researchers will refer to time and time again.

Carol H. Shiue is Associate Professor of Economics at the University of Colorado at Boulder, a Research Affiliate at CEPR and a Research Economist at the NBER. She is the author of “Transport Costs and the Geography of Arbitrage in Eighteenth-Century China,” American Economic Review, December 2002, and co-author (with Wolfgang Keller) of “Markets in China and Europe on the Eve of the Industrial Revolution,” NBER and CEPR Working Papers. Additional details on her work can be found at http://spot.colorado.edu/~shiue/.

Subject(s):Markets and Institutions
Geographic Area(s):Asia
Time Period(s):20th Century: Pre WWII

Planters’ Progress: Modernizing Confederate Georgia

Author(s):Morgan, Chad
Reviewer(s):Adams, Sean Patrick

Published by EH.NET (July 2006)

Chad Morgan, Planters’ Progress: Modernizing Confederate Georgia. Gainesville: University Press of Florida, 2005. xii + 163 pp. $55 (cloth), ISBN: 0-8130-2872-8.

Reviewed for EH.NET by Sean Patrick Adams, Department of History, University of Florida.

Do we need another case study of the American Civil War? While the public demand for the beards and bullets side of America’s Iliad appears insatiable, many historians have wondered if every single aspect of this struggle has already been thoroughly chronicled. For those interested in questions of political economy, however, the American Civil War offers some tantalizing and yet unexplored possibilities, as wartime conditions can trigger dramatic changes in societies. The peculiar demands of a prolonged military struggle on a nation can erode longstanding institutional practices once considered as solid as bedrock. War can also thrust new actors to the forefront of a society; not just in military venues, but in the civilian realm as well. Fissures created by the unique demands of wartime, moreover, allow new entrepreneurs to blossom where they previously had no succor. Thus, there is still a great deal to learn about the intersection of political, military, and economic policies during this well-traveled period.

Chad Morgan’s slim volume entitled Planters’ Progress: Modernizing Confederate Georgia offers a new perspective on the impact of the Civil War upon southern industrialization. Morgan, a Triangle Research Libraries Network Fellow at North Carolina State University, takes issue with the longstanding argument that military exigencies forced the South to industrialize. He argues that Confederate industrialization was not a “clean break with the past” but “instead an elaboration and acceleration of existing tendencies” p. (2). As such, Morgan finds more continuity than change among planters’ conceptions of industrial growth at the same time that the Civil War years placed an unprecedented strain on Georgia’s economy. While his argument is not without its faults, Planters’ Progress is a valuable contribution to the burgeoning field in nineteenth-century political economy.

Morgan begins with an overview of Georgia’s antebellum industrial sector and attempts to challenge the prevailing wisdom about the antebellum southern state. After chronicling the rise of cotton mills in antebellum manufacturing centers like Athens, Augusta, and Columbus and the concurrent expansion of railroads in Georgia, Morgan reminds us that the South compared quite favorably with other nations in terms of industrial growth. He also makes a case for Georgia’s economic prowess by the eve of the Civil War. Here Morgan follows in the footsteps of Milton Sydney Heath, whose Constructive Liberalism still resonates a half-century after its publication.[1] Heath argued that Georgia’s public officials vacillated between laissez-faire and “constructive liberal” policies in the antebellum decades and drew upon an avalanche of statistical evidence to demonstrate that point. Morgan, on the other hand, asserts that Georgia witnessed a steady increase of state power and that planters did not oppose industrial development, but merely wanted to control it. “If industrialization ever took off in earnest, as happened during the Civil War,” Morgan claims, “slaveholders could bring state power to bear on industrialists to block their ascendance while preserving jurisdiction over manufacturing for the government” (p. 17)

Restoring agency to the South’s public policymakers makes sense, but Morgan’s main body of evidence for this trend comes from a close read of the writings of proslavery ideologues George Fitzhugh and Henry Hughes rather than a systematic exploration of Georgia’s political economy. By focusing on intellectual trends at the expense of political battles, Morgan avoids the sloppy world of legislative policymaking altogether. Yet this leads him to assign a great deal of prescience to Georgia’s planters, to whom, “Secession finally gave … an opportunity to pursue a modernity they had long sought” (p. 31). Was the goal of economic “modernity” so clear cut in nineteenth-century America? The work of historians such as Colleen Dunlavy, Robin Einhorn, Richard John, John Larson, William Novak, and Heather Cox Richardson — all of whom have restored contingency and conflict to nineteenth-century political economy — certainly questions that premise.[2] In fact, Morgan’s claim that the Civil War “was a fight over how the South would modernize — with or without slavery” (p. 109) evokes the same assumption that Planters’ Progress attacks throughout the text; namely that the South was a “pre-modern,” “pre-industrial,” and “pre-statist” society that needed to catch up to the North’s more advanced status in these categories. Whiggish conceptions of economic development thus undermine the argument at points, particularly when Morgan attempts to place Georgia’s case within the broader context of nineteenth-century political and economic history.

Planters’ Progress is much more effective in its discussion of Georgia’s wartime economy. Josiah Gorgas, the head of the Confederate Ordnance Bureau, made Georgia the hub of Confederate military production and the state’s industrial sector thrived as a result. The Civil War also saw the rise of Atlanta as a significant rail and manufacturing center, a process that Morgan attributes to the state-sponsored production of war materials. In areas where antebellum industries were established, wartime demand pushed production levels even higher. Morgan’s depiction of the “seemingly overnight creation of a government manufacturing establishment” (p. 44) and the heavy-handed Confederate oversight in running it is a compelling story of how rapid industrialization can occur out of necessity.

The story of labor relations in Georgia during the Civil War is an important one for Planters’ Progress. Here the strong presence of the Confederacy in Georgia’s manufacturing sector muted the labor unrest that often accompanies rapid industrialization. More specifically, Morgan argues, the presence of government officials allowed industrialists to employ a variety of black and white, male and female, and free and enslaved labor in ways that a civilian economy would find unpalatable. Of course, at the same time that a “combination of repression, segregation, and outright luck” in Confederate Georgia “defused a potentially explosive situation,” this style of industrial development resulted in “reprehensible conditions for workers” (p. 86). As the fortunes of the war shifted in the Union’s favor by 1864, this overwhelming state presence shifted from a managerial role into a more humanitarian one, as Georgians from all castes and classes drew upon public resources to survive the deprivations triggered by General Sherman’s invasion of the state.

In the end, Planters’ Progress provides an instructive case study of a state’s economic transformation during wartime conditions. Although Morgan’s wider arguments about Georgia’s “modernity” are less convincing, his concise account of rapid economic development during the Civil War is a model of efficient and effective prose backed by evidence. In a field often overburdened with duplication, Planters’ Progress is recommended reading for economic and political historians grappling with the complex nature of southern industrialization during the turbulent decades of the mid-nineteenth century.

Notes:

1. Milton Sydney Heath, Constructive Liberalism: The Role of the State in Economic Development in Georgia to 1860 (Cambridge: Harvard University Press, 1954).

2. While not a formal school or organization, these historians are commonly cited as good examples of the “new institutionalist” approach that has revitalized the study of political economy in the nineteenth-century United States. See Colleen Dunlavy, Politics and Industrialization: Early Railroads in the United States and Prussia (Princeton: Princeton University Press, 1994); Robin Einhorn, Property Rules: Political Economy in Chicago, 1833-1872 (Chicago: University of Chicago Press, 1991); Richard John, Spreading the News: The American Postal System from Franklin to Morse (Cambridge: Harvard University Press, 1995); John Larson, Internal Improvement: National Public Works and the Promise of Popular Government in the Early United States (Chapel Hill: University of North Carolina Press, 2001); William Novak, The People’s Welfare: Law and Regulation in Nineteenth-Century America (Chapel Hill: University of North Carolina Press, 1996); Heather Cox Richardson, The Greatest Nation on Earth: Republican Economic Policies during the Civil War (Cambridge: Harvard University Press, 1997).

Sean Patrick Adams is the author of Old Dominion, Industrial Commonwealth: Coal, Politics, and Economy in Antebellum America (Baltimore: Johns Hopkins University Press, 2004).

Subject(s):Servitude and Slavery
Geographic Area(s):North America
Time Period(s):19th Century

Technology Matters: Questions to Live With

Author(s):Nye, David E.
Reviewer(s):Szostak, Rick

Published by EH.NET (June 2006)

David E. Nye, Technology Matters: Questions to Live With. Cambridge, MA: MIT Press, 2006. xiv + 282 pp. $28 (cloth), ISBN: 0-262-14093-4.

Reviewed for EH.NET by Rick Szostak, Department of Economics, University of Alberta.

In this book, David Nye (Professor of Comparative American Studies and History at Warwick University) devotes a chapter each to ten important questions regarding the causes and effects of technological innovation. Most of these questions — including the effects of innovation on the environment, employment, and culture — are subjects of contentious public discourse. The book seems aimed at clarifying these issues for a general audience, though Nye notes that scholars are often guilty of misunderstanding the course of technological change.

The first chapters are the most satisfying. While Nye could have been a bit more precise in answering “what is technology?,” the first chapter does a good job of describing the phenomenon of technological innovation as well as some of the other phenomena to which it is closely linked. The second chapter provides a very good critique of both technological determinism and the idea that the course of technological innovation is inevitable, and the third discusses the severe limitations of technological predictions.

The fourth chapter asks how historians understand technology. Nye may underestimate the size of the minority that fails to follow the set of good practices he suggests. Historians should eschew determinism and predictability. Nye suggests that historians of technology give roughly equal weight to technology, politics, the economy, and society (by which he largely means ‘culture’) in their analyses. He applauds the complementarity between ‘internalist’ (focused on technical developments) and ‘contextual’ history, but does not note that the field of history of technology has swung sharply between these two orientations in the postwar period. He applauds historians for increasingly focusing on incremental innovations and the long process of development, and thus downplaying the role of the ‘heroic inventor.’

At times in the early chapters Nye is too strident in his anti-determinism. In chapter 4, he finally appreciates, following Thomas Hughes, that technological systems once in place constrain further technological and social choices. Only in later chapters does he recognize in passing that even individual innovations provide both constraints and incentives: they do not determine but certainly exert causal influence on a range of individual and societal decisions.

While Nye strives in the first four chapters to provide answers to his questions, the latter chapters tend to provide conflicting arguments regarding the effect of technology on various other phenomena. Though the information provided is useful and accurate, many readers may wish that Nye had more clearly attempted to weigh the relative importance of these arguments. Nye relies throughout the book on powerful examples rather than a careful attempt to delineate the typicality of these, and thus the reader has little guidance in choosing which examples to place greatest confidence in. The lack of subtitles in any of the chapters exacerbates the difficulty of comparing one line of argument to another.

Yet I do not wish to be harsh. Nye’s goal, it seems, is to debunk some strongly held but simplistic views of technology. As noted above, the earlier chapters strive to convince readers that technology is not some inevitable force inexorably shaping our lives (whether to good or evil effect) but rather that human actors shape innovation in a host of ways. Later chapters then provide counter-examples against simplistic beliefs that technology necessarily destroys local cultures, ruins the environment, causes unemployment, and reduces human security. Nye notes that some technologies such as the personal computer work against cultural conformity, while consumers shape the effects of other technologies such as mass production in ways that preserve autonomy. (Again a more careful statement of how technology may limit but not determine choices would have been helpful.) Likewise, technological innovation can at times aid the environment (though most of the chapter on the environment addresses the question of whether humans should lessen their wants rather than expand their production). Nye details how the idea of technological unemployment has been around for centuries but unemployment rates have not risen secularly (he skips over the question of whether medium-term technological unemployment was observed during the Great Depression and 1970s). And Nye notes that technology has freed many humans from the insecurities associated with hunger and disease while creating new sources of insecurity.

A book that covers such a wide scope lends itself to inevitable quibbles. The unwary reader may be needlessly confused in the first chapter between the essence of technology and the causal relationships of which it is part. Nye’s discussion of predictability clearly distinguishes between major and incremental innovations, but leaves the impression that the latter are virtually as unpredictable as the former. Nye’s discussion of culture largely misses the key question of how strong the link is between the available range of consumer goods and the beliefs and attitudes that lie at the heart of culture: those who decry cultural homogenization are often guilty of implying that what one wears and eats defines who one is. The chapter on the environment skips the entire debate between optimists and pessimists. The chapter on employment discusses (uncritically) how work effort has increased in some ways in recent years, but largely ignores the amazing decline in the length of the workweek in previous centuries. And the chapter on whether technology should be regulated fails to suggest any criteria for distinguishing cases such as new pharmaceuticals where some sort of oversight may be a good idea from other technologies where markets can best adjudicate.

This is a handy book to recommend to students (or colleagues) who need an antidote to the more simplistic versions of technological determinism, environmentalism, or cultural decline that circulate on university campuses. The range of detailed historical examples utilized by Nye is quite impressive. Many students will be encouraged by the book to a more nuanced perspective, and guided to further reading. Others, unfortunately, may find it hard to integrate the information provided into a coherent understanding of the issues at stake.

Rick Szostak is Professor of Economics at the University of Alberta, and will be visiting the Department of History and Civilization at the European University Institute in Florence during 2006-7. He intends to write a book, Exogenous Growth: Interdisciplinary Perspectives. Recent publications include Technology and American Society: A History (with Gary Cross, second edition, 2004), Classifying Science: Phenomena, Data, Theory, Method, Practice (2004); “Evaluating the Historiography of the Great Depression: Explanation or Single-Theory Driven?” (Journal of Economic Methodology, 2005); “Allocating Scarce Shoreline: Institutional Change in the Newfoundland Inshore Fishery” (with Ken Norrie, Newfoundland and Labrador Studies, 2005) and “Economic History as It Is and Should Be” (Journal of Socio-Economics, 2006). He has recently completed a book manuscript, Restoring Human Progress: Transcending the Postmodern Condition.

Subject(s):History of Technology, including Technological Change
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

Alanson B. Houghton: Ambassador of the New Era

Author(s):Matthews, Jeffrey J.
Houghton, Alanson B.
Reviewer(s):Westerman, Thomas D.

Published by EH.NET (June 2006)

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Jeffrey J. Matthews, Alanson B. Houghton: Ambassador of the New Era. Lanham, MD: Rowman and Littlefield, 2004. xxii + 263 pp. $27 (paperback), ISBN: 0-8420-5051-5.

Reviewed for EH.NET by Thomas D. Westerman, Department of History, University of Connecticut.

When done well, biography provides insights into history that monographs often lack. Jeffrey J. Matthews’s “diplomatic biography” of Alanson B. Houghton, the United States’ first post-Word War I ambassador to Germany, offers a helpful entr?e into the background of U.S.-European interwar diplomacy. Matthews, an associate professor of cross-disciplinary studies at the University of Puget Sound, tells the personal and professional story of Houghton, whom Matthews calls “the most influential ambassador in Europe” in the 1920s (p. xi). Matthews’ study of Houghton is not only a biography but also an argument about the complexity and dangers of interwar U.S.-European economic and diplomatic relations. Matthews argues that U.S. relations with Europe should not be characterized as “independent internationalism” but rather as “a conservative and frequently reactionary form of internationalism” and that Houghton “became not only its leading diplomat abroad but also the chief policy critic within the Harding and Coolidge administrations” (p. 4).

Matthews presents Houghton as a perceptive and farsighted diplomat who, before such a view was fashionable, advocated a coherent U.S. policy promoting European recovery, reconstruction, and stability. Houghton received his appointment to Berlin (and later London) through political patronage. He was educated at Harvard and in Germany. He inherited and expanded the family business — the Corning Glass Works — and served two terms as a congressman from New York. While in Congress from 1918 to 1922, he served on the foreign affairs committee and then on the powerful Ways and Means Committee. Houghton, it seems, was a good progressive Republican and “[d]uring his two terms, Representative Houghton proved less concerned with the division of federal authority and more interested in creating an effective and efficient national government” (p. 33). His appointment by President Warren G. Harding in 1922 was received positively by the Senate and the German government.

Matthews positions Houghton as the lynchpin in U.S.-German-European relations. Time and again, Matthews argues, Houghton served as an advisor, facilitator, and confidant to those in higher positions. This is especially evident in the discussion of the Dawes Plan of 1924-25 that sought to break the impasse over of German reparations. Indeed, Matthews titles one chapter “America’s Honest Broker” and tells us that upon Houghton’s appointment to London in 1925, he was “the most powerful ambassador in the world, and he meant to exercise his influence” (p. 117).

Houghton’s power derived from the confidence the White House had in him, the sober knowledge he had of German politics, and the friendships he formed in Berlin. He continued to advise on German matters even during his posting in London. Houghton was even rumored to be a possible nominee for secretary of state in the Coolidge administration. Though Europe was certainly a crucial focus for U.S. foreign policy, it was not the only important area of concern. Matthews’ thesis of a “conservative internationalism” may work well when applied to Houghton’s ambassadorship, but it would be interesting to see how well it would work when applied worldwide.

Though other politicians sought to restrain the emergence of U.S. power on the international stage, Houghton wanted to help implement that power in a responsible and efficient manner, particularly in Europe. This outlook did not simply stem from American vanity. Matthews writes that Houghton “meshed hardheaded realism with optimistic idealism” (p. 6) and that he understood “the integration of the global economy through raw material and capital exchanges, trade competition, and technology transfers … [and] he came to appreciate America’s changing position within the international system” (p. 41). Matthews positions Houghton as the main internal critic of the reactionary conservatism that seemed dominant in U.S. diplomacy, hampering European recovery and stability.

For instance Houghton criticized Secretary of Commerce Herbert Hoover’s plan in 1926 to “develop ‘the potent weapon’ of independent rubber supplies” (p. 160). The British had a monopoly on rubber and, Matthews asserts, Houghton feared such a policy would force the U.S. to “embark on a colonial policy that would ‘put us head on with England'” (p. 161). The so-called independence that Hoover advocated ran counter to the global (or, at least, U.S.-European) interconnectedness that Houghton perceived profitable. Rhetoric and policies such as Hoover’s harmed the United States’ standing as a leader for reconstruction because they antagonized European nations in the narrow hope of securing domestic favor. This is just one example of how Matthews uses Houghton’s ambassadorship as a way to illuminate the complexities of U.S. foreign relations in the 1920s and the difficulties related to the emerging global economy.

Matthews’s biography is the eleventh in the “Biographies in American Foreign Policy” series published by Rowman and Littlefield’s SR Books. His study of Houghton fulfills the series’ mission to “humanize and make more accessible those decisions and events that sometimes appear abstract or distant.” Matthews gives a human face and voice to the tense and complicated economic, business and political relations between the United States and Europe in this period. The author not only scoured the traditional source base of diplomatic historians — presidential libraries, newspapers, memoirs, and institutional archives — but he also had unrestricted access to Corning Incorporated’s store of family records in Corning, NY. Matthews was also able to glean remembrances from one of Houghton’s grandsons and conduct an interview with Andrew Elder, who worked for Houghton immediately after his ambassadorial work.

Thomas D. Westerman is a Ph.D. student at the University of Connecticut, Storrs where he is working on a history of the Commission for Relief in Belgium and its effect on the development of international institutional humanitarianism.

Subject(s):International and Domestic Trade and Relations
Geographic Area(s):North America
Time Period(s):20th Century: Pre WWII

Marginal Man: The Dark Vision of Harold Innis

Author(s):Watson, Alexander John
Reviewer(s):Neill, Robin

Published by EH.NET (March 2006)

Alexander John Watson, Marginal Man: The Dark Vision of Harold Innis. Toronto: University of Toronto Press, 2006. ix + 525 pp. $65 (Canadian) (cloth), ISBN: 0-8020-3916-2.

Reviewed for EH.NET by Robin Neill, Department of Economics, Carleton University and the University of Prince Edward Island.

Watson asserts a dominating and consistent intention in all of Harold Innis’s academic activities, from before his service in the First World War to his death in the early 1950s: an intention to raise concern about the condition of Western Civilization. In the past, according to Watson’s Innis, Western Civilization had been renewed by activity liberated from ossified intellectual and institutional expressions of its genius. This renewal took place on the margins of established forms of civilization. Indeed, Watson’s Innis, born on the frontier of Euro-American civilization, is a “marginal man” crying doom. As he saw it, the forces suppressing insurgency on the margin were getting the upper hand. By exhaustive reference to Innis’ writings, the sources of his ideas, and his political program in the academic world, Watson makes his point. It may be a mere imputation that Innis was from the beginning self-conscious of his role as prophet, but that Innis assumed this role, whether deliberate and self aware or not, is evident from Watson’s exhaustive and exhausting exposure of Innis’s analysis of the advance of Western civilization.

Watson is not writing as a practicing academic or private sector economist. Following degrees in English Literature, Political Science, and Political Economy (PhD, 1981) he has given most of his time to Care Canada, a non-sectarian international humanitarian aid organization. At the time of the publication of Marginal Man he was its Chief Executive Officer. Still, there is something that can be said apropos of the book that should be of interest to Canadian economic historians, and historians of economic thought of whatever nationality.

There are now at least four book-length treatments of Innis, each with a different purpose. (1) Donald Creighton’s Harold Innis; Portrait of a Scholar (University of Toronto Press, Toronto, 1957) is a eulogy out of which, by reference to Innis’s studies of the fur trade and the cod fisheries, Creighton drew the conclusion that Canada was a British country, and, by implication, not French and not American. (2) My own, A New Theory of Value: The Canadian Economics of Harold Innis (University of Toronto Press, Toronto, 1972) was part of an extended attempt to take a fresh look at Canadian economic development through the history of economic thought in Canada. In that exercise I had some success in extracting Innis’s economics from his broader considerations, but I was more successful later when I compared Innis to Herbert Simon and found similarities. I was not fully successful (in my own estimation) until I saw Innis as a partial contributor to a grand narrative of Canadian economic development. Innis wrote about primary product exports. Others, bringing the narrative closer to the substance of the Canadian case, wrote about agriculture, manufacturing, and banking. This grand narrative, to which they (Adam Shortt, Donald Creighton, W.A. Mackintosh, W.J.A. Donald, S.D. Clark, Vernon Fowke, and others) were all contributing, was still unfinished when grand narratives of national emergence passed from intellectual fashion in North American history. Watson’s account quite misses this. (3) Paul Heyer’s Harold Innis (Rowman and Littlefield, London, 2003), focusing on “the later Innis,” is a most readable account of the content of Innis’s essays on media of communication. Innis’s essays were considered, and perhaps still are considered, unreadable by all but a few devoted disciples. Watson apologizes for this by asserting that Innis developed a special method of presentation with hidden purposes, without explicitly explaining what those purposes were. I think Innis’s “special method” was a consequence of the time constraints on a very busy academic administrator, and of the less than felicitous literary style that marked all of his work. Heyer goes some distance in overcoming the difficulty. Finally there is John Watson’s Marginal Man.

Watson focuses on Innis’s personal life, his motivation and his inner struggles, but in a one-sided way. At the very end of his exhaustively researched account Watson refers to Innis as a pleasant, encouraging, even light hearted and sociable person. The depiction comes as a surprise after most of the book depicted him as an obsessive, psychopathic, Machiavellian academic entrepreneur, successfully bullying his way up the administrative ladder at the University of Toronto. Indeed, after reading Watson’s restrained account of Innis’s apparently pathetic relationship with a particular female student, it takes some effort to see him as in any way light hearted. The book presents Watson’s dark vision of Innis, as much as it presents Innis’s dark vision of the trend of Western Civilization.

In other ways Watson’s treatment of Innis is one-sided. He reveals, with painstaking, even excessive, proof, that in his communication essays Innis relied on the writings and insights of a number of contemporary Classicists — to a point just short of “plagiarism” (the word is Watson’s). But much that Innis wrote from 1935 on was heavily influenced also by a number of economists in the United States, and Watson only mentions this. Watson seems not to have been looking for the economist in Innis. Terms such as “Historical Economics,” “Institutional Economics,” “Neoclassical Economics,” and “Positive Economics” do not appear in the index. Three pages (111-14) out of 416 are devoted to Innis’s place in the history of economics. The term “cyclonics,” by which Innis pointed to the dynamics of an economy passing from one general equilibrium to another under the impetus of technological change, is given a passing nod in two pages (159-60). All of this, of course, is not a criticism of the book, but an indication of its content.

Watson’s biography of Innis, like all biographies, is a work of art. It puts a construction on Innis’s work, attributing to it a single, consistent, life-long intention to elaborate a paradigm of the advance of civilization. In this paradigm, advance is generated by the vision of frontiersmen who are free from the entrenched, unchanging, and suffocating mentality of those at the center of which the frontier is a frontier — hence, “marginal man.” With this construction Watson is able to assert that the communication studies that Innis produced towards the end of his life were not an outgrowth of his staples histories, but part of a larger pre-existing project. By the end of the book one is almost convinced.

Watson misses the fact that Innis was not the only one dealing with the generality of his concern in the middle years of the twentieth century, though Innis took a different approach. Frank Knight, with whom he was in constant contact, and J.J. Spengler, like Innis, were shocked at the passing of Modernity. In Modernity, rationality, objectivity, a generally accepted moral order, and truth, though not achieved, were thought to be achievable and approaching achievement. Much of what Innis wrote in his last seventeen years was an account of changing informational environments — an attempt to explain the passing of Modernity. The account was depressing for Innis, Knight, and others, because it led up to the advent of the Postmodern view in which objective truth and emotion-free rationality are thought to be not attainable. There were many others, however, who, writing very shortly after Innis, saw the same thing without dismay. Intellectual historians, philosophers, and sociologists of science (Jacques Derrida, John Higham, Maurice Mandelbaum, H.J. White), whose work was germinating contemporaneously with “the later Innis,” saw that the informational environment was changing, and accepted that all informational environments were largely constructed and constantly changing under pressure from internal and external forces.

It was Marshall McLuhan, who was aware of trends in literary criticism and pursued communication studies with Innis, who introduced me to Postmodernism at Toronto in the early 1950s – indeed, even when I was first hearing of Innis. That aspect of McLuhan’s thought and its implications for the place of Innis in the history of thought have not found a place in Marginal Man.

Robin Neill is Adjunct Professor of Economics at Carleton University and the University of Prince Edward Island. Neill is author of A New Theory of Value: The Canadian Economics of H.A. Innis, University of Toronto Press, 1972; “Rationality and the Informational Environment: A Reassessment of the Work of H.A. Innis,” Journal of Canadian Studies, 22, 1988: 78-92; and “Innis, Postmodernism, and Communications: Reflections on Paul Heyer’s Harold Innis,” History of Economic Thought and Methodology, 24, 2006 (forthcoming). He is currently researching the place of the history of economics in the practice of economics, and continentalizing forces in the economic development of Canada.

Subject(s):History of Economic Thought; Methodology
Geographic Area(s):North America
Time Period(s):20th Century: Pre WWII

Feeding the World: An Economic History of Agriculture, 1800-2000

Author(s):Federico, Giovanni
Reviewer(s):Gardner, Bruce

Published by EH.NET (March 2006)

Giovanni Federico, Feeding the World: An Economic History of Agriculture, 1800-2000. Princeton, NJ: Princeton University Press, 2005. xiv + 388 pp. $45 (cloth), ISBN: 0-691-12051-X.

Reviewed for EH.NET by Bruce Gardner, Department of Agricultural and Resource Economics, University of Maryland.

Feeding the World depicts the history of world agriculture since 1800 as an outstanding success story. The goal of the book is to explain how this feat was achieved.

After two brief chapters setting the stage and describing the distinctive features of agriculture, the book consists of three chapters (3-5) that lay out the facts as we know them (via statistics) followed by four chapters (6-9) that investigate the technological and institutional context in which agriculture developed as it has. The tenth and final chapter provides a synthesis of the facts and trends, and the pros and cons of some alternative explanations of them in the context of overall economic growth.

The events that call for explanation, and that warrant the label of success story, are that since 1800 the world’s population has grown from roughly 1 billion to 6.5 billion people, while food production has not only kept up but enabled increasing per capita food consumption, and with a trend toward decreasing prices of food relative to other goods at least since 1850. These outcomes can be called a success not only on their own terms but especially in view of the Malthusian pessimism of intelligent observers not only circa 1800 but at many junctures between then and now when the world’s food-supply good fortune was thought to be at risk of ending.

The statistical chapters cover output, prices, and trade (chapter 3), inputs (chapter 4), and productivity (chapter 5). The problems facing numerical estimates of these quantities and their rates of change over time are given a full and sensitive discussion. What is most striking though is the audacious follow-up. Confrontation with these difficulties leads not to a retreat from quantification but a series of tables that gives annual rates of change going far back into the nineteenth century for a great number of individual countries as well as regional and world aggregates. A nice example of the author’s creative ambition is his time series chart (Graph 3.2) of world trade in agricultural and total goods, 1850 to 2000. He splices estimates from four disparate sources to show clearly the huge expansion of agricultural trade over the period (trade volume in 2000 being 75 times the 1850 level), the even faster growth of nonagricultural trade since 1950 (but not before then), and the big departure from the overall trend of strong growth between the outbreak of World War I and the end of World War II.

The culmination of the book’s statistical efforts is a set of estimates of total factor productivity (TFP) growth in agriculture. TFP growth is found to be the principal source of output growth in the industrial countries and an important source in the less-developed world. TFP growth has been substantial in most countries especially in the twentieth century, and since 1950 has grown faster in agriculture than in manufacturing, belying the idea of agriculture as stagnant and backward.

Chapter 6 opens the discussion of what has caused increases in TFP. Two main sources are considered: increases in the efficiency of resource use with given technological capabilities, and improvements in technology. Technological change is the focus of Chapter 6, which in 32 well-informed and closely reasoned pages highlights the findings and controversies of the large literature on both the sources of invention and the adoption of technology by farmers.

Chapters 7 through 9 address the characteristics of an economy that foster, or frustrate, the development and adoption of TFP-raising technology. Chapter 7 focuses on property rights and the economic organization of farming — size of farms, land tenure, cooperative enterprise. Chapter 8 goes into more detail on the institutions that govern property ownership and exchange, but does not assign a clear causal role to any of them as sources of productivity growth. Chapter 9 is devoted to agricultural policies around the world. A fundamental transformation in policies is seen, from “benign neglect” before the 1930s to a growing agenda of governmental regulation after. This agenda of regulation and support, while politically successful, is concluded not only to have failed to contribute to TFP growth, but to have imposed net burdens on the economies that implemented the policies.

Chapter 10 summarizes the results of the book in fifteen “stylized facts.” The ones most centrally related to the goal of the book are that agricultural output grew mainly due to increases in inputs in the nineteenth century and TFP growth in the twentieth, and that publicly-funded research and extension have played a major role in this growth. An implication of the brief (two-page) summary discussion is that technological change is in the driver’s seat, and that other factors have been important only insofar as they fostered or hindered new technology being improved and implemented on farms. And, while there have been notable developments in property rights, land ownership, the role of family farms, product and input markets, and agricultural policies, the author is in the end unwilling to credit developments in any of these areas as important causal factors in long-term agricultural output or TFP growth, apart from the disasters created by attempts to collectivize agriculture in the Soviet Union and China.

The generalization offered about institutions is that they “have successfully adjusted to the needs of technical progress” (p. 222). It is surprising to find such a modest bottom-line role for institutional change as a causal agent. Such a role underlies the continuing efforts of the World Bank and others to use property rights, markets, and related institutions as key long-term policy levers to promote growth. I take the author’s reticence to join the bandwagon as derived from the fact that the long-term trends the book focuses on simply do not permit sorting out causes from effects. Still, it is notable that the discussion ends up treating institutional change as more effect than cause. Could it be that institutional reforms have less independent force as a source of economic growth than current opinion sees them as having? I would like to see the author’s conclusions on this matter in more detail, however tentative that discussion would have to be. In the case with which I am most familiar, the United States, it is wrong to summarize the governmental role as benign neglect before 1930. George Washington, in his 1796 annual address to Congress, noted that institutions for promoting agriculture grow up “supported by the public purse; and to what object can it be dedicated with greater propriety?” (quoted in W.L. Wanlass, “The U.S. Department of Agriculture,” in Johns Hopkins University Studies in Historical and Political Science, 1920). U.S. land-grant universities were provided substantial federal support starting with the Morrill Act of 1862, and both federal and state-level support for agricultural education and technical assistance and research have been important ever since. For decades before 1930 waterways, irrigation, drainage, and other infrastructure were subsidized, at times to a fault. The evidence that these activities and investment made a difference in U.S. TFP growth is reasonably solid.

Most of Chapter 10 is devoted not to conclusions from the earlier chapters but rather to a discussion of the role of agriculture in general economic growth. The discussion of this difficult issue is knowledgeable and judicious and worth having, but has a somewhat tacked-on feel given the stated purpose of the book.

The author, Giovanni Federico, is Professor of Economic History at the European University Institute of Florence, Italy. He writes in the style and substance of a modern economic historian, that is, making cogent use of the tools of economic theory and empirical practice. His writing is exceptionally clear and jargon-free. His scholarship is wide-ranging and thorough and avoids superficiality. He is an adventurous scholar. While fully cognizant of the limitations of his data, he goes ahead anyway and quantifies his best judgments and pushes as far as possible with their implications. He at times likely pushes further than the data will go, but the sources of his conclusions are transparent so if you want to challenge him you know what you have to do.

Federico takes seriously the arguments of historians who are not imbued with an economist’s outlook, and when he finds fault with positions taken in the literature, he does so in a gentlemanly but firm way. On contentious topics, such as the induced innovation hypothesis, he is sensible and fair to all sides. Though he would not claim to have written the final word on either the measurement of agricultural growth or the explanation of its causes, Federico’s work is an important contribution to our knowledge of the facts and their interpretation.

Bruce Gardner is Professor in the Department of Agricultural and Resource Economics at the University of Maryland, College Park. He is author of American Agriculture in the Twentieth Century: How It Flourished and What It Cost, Harvard University Press (2002).

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

U.S. Development Aid: An Historic First

Author(s):Butterfield, Samuel Hale
Reviewer(s):II, John R. Hanson

Published by EH.NET (September 2005)

Samuel Hale Butterfield, U.S. Development Aid: An Historic First. Westport, CT: Greenwood Press, 2004. xvi + 315 pp. $92.95 (cloth), ISBN: 0-313-31910-3.

Reviewed for EH.NET by John R. Hanson II, Department of Economics, Texas A&M University.

Proponents of foreign aid to poor countries are fighting back against conservative critics of aid after a decade or more of defensiveness on the subject. Advocates are mainly drawn, as always, from the social elites, and the liberal counterattack smacks, as always, of noblesse oblige. Bill Clinton is only one of those who have decried the “stinginess” of the American public toward the less developed world. Like-minded opinion makers include the eminent economist Jeffrey Sachs; a former president of Rice and Columbia Universities, George Rupp; Tony Blair, Prime Minister of the United Kingdom; and the rock star Bono. President George W. Bush boosted the budget of the United States Agency for International Development (USAID) by more than twenty-five percent during his first term in office. Generally speaking, the arguments for aid remain unchanged, moral instead of analytical, sentimental instead of realistic, visionary instead of parochial. Intellectual respectability, to be sure, today requires that proponents of aid at least acknowledge its spotty record over the years in fostering economic progress. George Bush, noting this and accepting current orthodoxy in development economics, wants to link aid to structural and institutional reform in poor countries.

This tome by Samuel Hale Butterfield is for the most part in the new and not-improved vein. What makes it distinctive, however, is that it is an exhaustive quasi-memoir by a retired foreign aid officer at USAID. It is, in part, a fond reminiscence of his career, but in larger part, a defense of USAID’s work from the inside, as well as the global foreign aid project of the developed world. It is not misty-eyed about the poor — useful insights about the practicalities of foreign aid operations and impediments to their success abound. But its true value derives from the concrete, meticulous, well-organized, occasionally pedantic, chronology and description of USAID’s actual day-to-day work in the field from its inception almost up to the present. I doubt that such a full account of the operations of USAID, or any foreign aid operation, located within the context of politics and economic theory and practice exists anywhere else in the literature. It is, needless to say, not an expose — truly egregious stupidities and venalities in the conduct of foreign aid are ignored or glossed over. Bureaucrats are always selfless and the motives of politicians and policymakers normally irreproachable. Butterfield is an enthusiastic team player. Still, the book is, and could be used pedagogically as, a case study of the collective mind of ideologically-committed bureaucrats charged with implementing the programs of the modern welfare state.

Butterfield’s book contains eighteen chapters arranged chronologically, except for the introduction and two summaries, from the inception of foreign aid to poor countries in the late 1940s up to 2001. The first six chapters or so briefly describe the early politics and philosophy of American foreign aid and, at greater length, the start-up problems for both USAID itself and the agency’s early aid missions to poor countries. The discussion is much enhanced by fulsome detail with respect to the politics of building a new program from the ground up and the particular problems of implementing a general mission statement. The earnest account is not fascinating reading, I regret to say, but it makes available for posterity a great deal of material not included in exhortative and, in my opinion, vaguely narcissistic books by foreign aid prima donnas, such as Jeffrey Sachs’s recent The End of Poverty. (Sachs’s book should be entitled How I Jetted into the Third World and Found Wisdom.)

A notable feature of Butterfield’s account in the early chapters, but also throughout the book, is the naming of particular officials and desk officers who were present at the creation, soon after, and during the rest of his career. Mentions of these people are always warm and laudatory, although little is said, critical or otherwise, about their precise decisions, actions, or influence on foreign aid policies or implementation. But the author, an honest man, does concede and demonstrate more than once that these policies sometimes failed. These details and descriptions lend the book a pleasant, nostalgic tone, but, contrary to the author’s likely intention, they also could be interpreted to mean that staffing a program (or a government) with fine fellows is no guarantee of success. So I think this book unintentionally contradicts the self-serving “we are good, so we do good” argument so common among agents of the welfare state.

The rest of the book spells out in clear, specific, and balanced terms how USAID policies and practices evolved during the last forty years or so of the twentieth century, especially in response to new economic ideas and social priorities. The population issue, for instance, was slow to become a concern to foreign aid officials, but eventually became one of the highest priorities in defining criteria for aid allocations. Different presidents favored different approaches to aid, often reflecting the economic conventional wisdom of the moment and requiring USAID to defer. This is what George W. Bush is doing today. Butterfield describes the interplay of the various forces nicely, although in the bureaucrat’s typically bland, non-judgmental, and often unexciting terms. The book is a treasure trove of information about how some of the hottest public debates affected the day-to-day work of a government agency. Butterfield could turn out to be invaluable for reference purposes.

Yet his chronicle, contrary to his apparent intentions, raises doubts about the beneficial long-run effects of foreign aid in host countries. He is, to be sure, critical of specific actions USAID took in particular places and at particular times. Yet he seems oblivious to the implications of the frequent rearrangement of bureaucratic priorities. Today, population control; tomorrow, free markets. It is obtuse of him to pass over so lightly the lack of constancy in foreign aid policy, assuming a certain attitude or policy was wise to begin with. And, of course, not all USAID policies actions were well-conceived initially. Butterfield does make a good case for the significant benefits of some specific programs or projects in poor countries. But the long-run implications of changing intellectual or political fads and fashions and attendant unpredictability of aid policymakers do not trouble him enough to mention. Permanently beneficial foreign aid presupposes deep understanding of development processes and correct diagnosis of problems. It requires perseverance and predictability on the part of the aid donor. It requires similar qualities, plus receptiveness, on the part of the aid recipient. Otherwise, it is necessarily hit or miss. Randomness is, in fact, one of the most important things this well-meaning book tacitly conveys to me about USAID’s activities in the less developed world during the more than half-century of its existence. Since USAID is in the mainstream of foreign aid activity, this lesson applies to the rest of the developed world’s foreign aid project.

John R. Hanson II is Professor of Economics at Texas A & M University. He is the author of “Proxies in the New Political Economy: Caveat Emptor,” Economic Inquiry (October 2003).

Subject(s):International and Domestic Trade and Relations
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

The Collapse of Darwinism, or The Rise of a Realist Theory of Life

Author(s):Snooks, Graeme Donald
Reviewer(s):Hodgson, Geoffrey M.

Published by EH.NET (June 2005)

Graeme Donald Snooks, The Collapse of Darwinism, or The Rise of a Realist Theory of Life. Lanham, MD: Rowman and Littlefield, 2003. xv + 341 pp. $80 (hardcover), ISBN: 0-7391-0613-9.

Reviewed for EH.NET by Geoffrey M. Hodgson, Business Studies, University of Hertfordshire.

Graeme Donald Snooks — an economist by training now at the Institute of Advanced Studies at the Australian National University — proclaims that Darwinism has failed in explaining both biological speciation and the development of human society. Alongside this apparently devastating critical blow against much of modern science, he also expounds his own ‘theory of life.’ This he claims can ‘completely … as possible’ explain developments and events such as speciation, the end of the dinosaurs, ‘the dynamics of human civilization as well as the dynamics of nature,’ ‘why we are not smarter than we are,’ and ‘the future of life as well as its past’ (p. 197).

The book divides into three parts. The first two parts discuss Darwinism and its alleged collapse. The third part proposes his ‘dynamic-strategy view of life.’ Snooks claims a scientific ‘breakthrough’ establishing ‘general laws that can explain the origins and dynamics of the real world’ (p. 279). Scientific modesty does not seem to be his strongest suit.

Much of Snooks’ positive attempt to discover an alternative universal explanation of long-term dynamic change has been developed before, in no less than eight books published since 1993, in which he has previously discussed ‘the forces of historical change,’ ‘longrun dynamics,’ ‘the sources of global change,’ ‘the laws of history,’ ‘a general economic and political theory,’ and ‘a general theory of economic development,’ to cite phrases from their titles and subtitles.

By elaborating his own view of appropriate scientific procedure, Snooks attempts both to undermine Darwinism and to develop guidelines to erect his own theory. His course of action is to present the wave-like patterns of development over millions of years as data, and then somehow to derive the ‘laws’ that explain these patterns.

Given that Snooks bases both his negative critique of Darwinism and his positive attempt to build an alternative theory on his views concerning the correct scientific method, his views on the philosophy and methodology of science are discussed here. I shall then move on to discuss his critique of Darwinism and his alternative ‘realist theory of life.’

Snooks on Scientific Method

Snooks is eager to find philosophical flaw in ‘Darwin’s method of theory building’ (p. 33) and to proclaim that his own alternative theory is more scientific and realistic. He advocates ‘realism’ and the ‘inductive, or historical, method’ (p. 41).

Snooks brushes aside the famous ‘problem of induction,’ which is seen as ‘the absence of mechanical rules for generalizing from empirical data.’ For Snooks, this problem is ‘not as debilitating’ as the problems with deductivism. But this is only part of the problem. Ever since David Hume, the problem of induction has not merely been recognized as the absence of rules for generalization, but the impossibility of generalization through induction from any realizable number of observations. Ten million observations might confirm that ‘all living grass is green,’ but we can never be sure that somewhere there exists a blade of grass of a different color.

Snooks ignores another problem with inductivism, widely elaborated in philosophy. This is that any empirical enquiry requires conceptual and theoretical preconceptions. In particular, imputations of cause and effect cannot be built on evidence alone. Consequently, some theory must precede empirical enquiry, and all factual investigation is theory-laden. Snooks seems unaware of all this.

Instead he adopts a crude form of empiricism where ‘science’ must rid itself of all ‘metaphysics’ (pp. 27, 178, 220). Snooks writes: ‘Science is not a matter of “word games” but of experiment and empirical verification/falsification’ (p. 91). He is evidently unaware that one of the major turns in the philosophy of science, associated partly with Karl Popper and Willard van Orman Quine and leading to the decline of logical positivism, was the reestablishment of the proposition that all science relies on ontological or metaphysical presuppositions.

From his vaguely defined methodological stance, Snooks criticizes Darwin’s use of analogy. Snooks focuses on Darwin’s account of how the breeder of domestic animal employs methods of deliberate selection to improve the stock. Darwin used this appeal to the analogy of ‘artificial selection’ to make his broader theory of ‘natural selection’ understandable. Snooks seizes on this as ‘the farmyard analogy’ and repeats his description of Darwinism as ‘the farmyard theory’ ad nauseum.

Snooks rightly observes that nature is not a farmyard, and thereby concludes that the ‘farmyard analogy’ is bound to be unrealistic. Given this general lack of realism with analogies, reasoning by analogy is generally suspect according to Snooks, and instead the scientist must appeal to the facts, using the ‘inductive, or historical, method.’ By assembling the facts and making appropriate generalizations, ‘there is an endogenous regularity and predictability than can be persuasively modeled. But only if we abandon Darwinism in all its forms’ (p. 196).

Again this shows little awareness of the philosophy of science. Modern philosophers have established that metaphor and analogy are indispensable to scientific enquiry. When Snooks makes frequent appeals to ‘realism’ he shows no appreciation that realist philosophers of science that have been in the forefront in promoting this argument. But, for all its talk of ‘realism,’ Snooks makes no explicit use of modern realist philosophy.

The Critique of Darwinism

Mounting a critique of Darwinism is difficult because of the huge amount of material on the topic and because to some degree Darwinism itself has evolved as a doctrine. Faced with these problems, the critic would best proceed by addressing modern accounts that claim to identify the essence of Darwinism. Apart from the populist works of Richard Dawkins, which promote a particular and controversial version of Darwinism, where would we find such accounts of the meaning of Darwinism? By far the most important contributions to our understanding of the essence of Darwinism have come from philosophically inclined writers such as Daniel Dennett, David Hull, Ernst Mayr and Elliott Sober. But Snooks makes no use whatsoever of this relevant material.

Instead, he assembles a picture of ‘Darwinism’ through a collage of selected quotations and personal presumptions. According to Snooks, the central propositions of ‘Darwinism’ include an idea of natural selection ‘built on the totally untenable assumption that all organisms at all times and in all places attempt to maximize the number of their offspring’ (p. 11). In addition: ‘Every organism in the plant and animal kingdoms is somehow programmed to produce as many offspring as possible in all places and time. The resulting struggle for existence over scarce resources is always extremely severe’ (p. 22). Furthermore, Darwin made an ‘unrealistic’ prediction of slow, continuous and gradual change (pp. 12, 251).

Note the critical strategy here. When presenting what he regards as key Darwinian propositions, Snooks generally formulates them in an extreme form. He thus sees natural selection as based on the idea that organisms always and everywhere maximize their offspring.

However, modern formulations of the principle of selection, as in the works of Elliott Sober and George Price, make no use whatsoever of such an idea. Neither Darwin nor any other serious biologist ever entertained such a notion. Indeed, there is a large literature in modern (Darwinian) theoretical and empirical biology (by Timothy Clutton-Brock and others) that considers the trade-off between fecundity and survival. The resolution of this trade-off depends on the characteristics of the species concerned. Where parental care is less necessary or costly, species tend to produce large numbers of offspring. In other cases they devote resources to the care and survival of fewer progeny, rather than maximizing their number. In describing the maximization of offspring as the central Darwinian imperative, Snooks is plain wrong.

Snooks dismisses the role of scarcity in Darwinian theory, with assertions such as: ‘In reality genetic change associated with speciation … only occurs when … competition is minimal and natural resources are abundant’ (p. 12). A problem here is that the concept of scarcity is often unrefined and we need to think more carefully what scarcity means. There is a big difference between global or absolute scarcity and scarcity in a local and immediate sense. A period of relatively abundant resources does not necessarily mean that they are immediately available to all individuals. Even with abundance, organisms must struggle to obtain and process resources. It is in this sense that the Darwinian notions of scarcity and struggle are relevant and general, and survive Snooks’ rebuttal.

Turning to the notion that Darwinian evolution is necessarily gradual, as Darwin himself emphasized, Snooks ignores recent discussions of the apparent dilemma between punctuated equilibria and (Darwinian) gradualism, by Dawkins and others. The dilemma turns out to be apparent rather than real, first because in accounts of punctuated change, even the more rapid spurts of evolutionary change take place over hundred of thousands of years, and second, because there is nothing in Darwinian theory that upholds that evolution always has to occur at constant speed. Contrary to Snooks, long periods where natural selection operates with little net effect on the characteristics of a species are entirely compatible with Darwinian theory. Obversely, Darwinism can readily accommodate period of more rapid evolutionary change, whether caused by exogenous environmental shocks or endogenous processes of positive feedback.

Addressing later versions of Darwinism, Snooks deploys the catch-all description of ‘neo-Darwinism’ but concentrates almost entirely on the gene-centered and sociobiological versions, with their concepts of the ‘selfish gene’ and the ‘genetic leash.’ Snooks thus writes of ‘neo-Darwinism’s exclusive concern with genetics’ (p. 11). We are presented with generalized caricatures such as: ‘According to Darwinism, individuals in nature and, by implication, in human society are merely mindless robots when it comes to procreation’ (p. 25). Or again: ‘All Darwinians have difficulty in reconciling competition, which is supposed to drive evolution, and cooperation, which holds societies together’ (p. 60). Or finally: ‘the neo-Darwinists … insist that it is our genes that decide behavior’ (p. 201).

But Darwin never said that evolution was blind. Instead he emphasized deliberation and cunning. Furthermore, although the reconciliation of competition with cooperation has interesting technical problems, it was upheld by Darwin himself and has pride of place in the modern, rigorous theory of group selection, developed by writers such as Joseph Henrich, Elliott Sober, and David Sloan Wilson. Finally, few ‘neo-Darwinians’ allege that genes actually ‘decide’ behavior. Sociobiologists such as Edward Wilson actually propose that genes help to determine the repertoire of behavioral possibilities and other factors do the deciding.

In concentrating on gene-centered accounts of Darwinism, Snooks largely ignores the modern literature on cultural and institutional evolution, where transmission takes place at levels other than that of the gene. He thus neglects the earlier work of Thorstein Veblen, and omits modern Darwinian theories of ‘coevolution,’ or ‘dual inheritance’ by Robert Boyd, William Durham, Peter Richerson and others.

Snooks claims that Darwinism focuses on outcomes, whereas his own theory concentrates on processes. Again this is a monstrous distortion of Darwinism. As Veblen recognized long ago, the very essence of Darwinism is the causal explanation of process. And as Dennett elaborated in his 1994 book on Darwin’s Dangerous Idea, the revolutionary character of Darwinism resides largely in its algorithmic theory involving step-by-step explanations of process.

Snooks rarely retreats from his extreme caricatures of ‘Darwinism’ and ‘neo-Darwinism.’ In one statement where he does so, he describes ‘the core’ of his ‘disagreement with Darwin’ in the following terms: ‘An individual’s role in life is a function of its contribution to the strategic pursuit … Individuals specialize according to comparative advantage and cooperate in their society’s strategic pursuit in order to maximize the probability of their survival and prosperity’ (p. 64). Remarkably there is nothing in this statement that undermines the assertions of Darwin or Darwinism. The idea of organisms adopting strategies for survival and fitness is central to Darwinian biology. Overall, Snooks is chasing a phantom Darwinism that exists in his imagination rather than in reality.

The New Laws of Life

Snooks’ alternative is described as ‘the dynamic-strategy theory of life.’ (Strange, because Darwinism embraces both dynamism and strategy.) This includes the foremost proposal of ‘the competitive driving force of individual organisms to survive and prosper.’ (Strange, but this sounds much like Darwin’s ‘struggle for existence.’)

Snooks goes on to propose that organisms adopt ‘dynamic strategies’ in response to their circumstances. Such ‘strategies’ include genetic change, technological change, family multiplication, commerce and conquest. The ‘constraining force’ is the ‘eventual exhaustion’ of the dominant adopted strategy. To this he adds the possibility of ‘random’ exogenous shocks.

Snooks thus claims ‘an observable pattern and an existential meaning’ to all life: ‘The rise and fall of species and of dynasties, the great genetic and technological revolutions, the great dispersions, civil wars, world wars, and extinctions are all part of a whole. They are the outcome of individual organisms attempting, through the pursuit of a range of dynamic strategies, to gain access to resources so as to survive and prosper’ (p. 217). Again there is some resemblance to Darwinism here. However, what is lacking in Snooks’ statement, but is found in Darwinism, is a method of explaining why organisms choose one strategy rather than another. In Darwinism this involves the principle of selection, not only of genes, but also — much more importantly in the human context — of culturally transmitted dispositions. Indeed, in general, Snooks’ ‘breakthrough’ theory bears some resemblance to the Darwinism he dismisses but is inferior to Darwinism in lacking a framework for reaching a full causal explanation of all the steps in the process. Snooks writes of ‘the strategic desire of mankind for survival and prosperity’ (p. 102), but provides an inadequate causal explanation of this desire, and of the strategic choices that result. Darwinism attempts to fill this gap.

The causal gap is exemplified in statements such as the following: ‘Intelligence was a response to strategic demand generated by those individuals who were pioneering the exploitation of strategic opportunities opened up by the demise of the dinosaurs’ (p. 184). This statement lacks an account what caused the ‘response.’ Pointing to a strategic need does not answer this question, unless we admit an untenable functionalism where things happen somehow in response to a systemic need for them to occur.

On the partial resemblance of Snooks’ theory to Darwinism, consider his account of ‘the law of motivation in life,’ which ‘states that the constant preoccupation of organisms throughout the history of life is the struggle to survive and prosper under varying degrees of scarcity‘ (p. 283, my emphasis). Scarcity is again rehabilitated in Snooks’ remark that ‘decisionmaking is based on the need to economize on nature’s scarcest resources — intelligence’ (p. 202). Snooks here seems to have forgotten his earlier invectives against Darwin’s presumption of omnipresent scarcity.

Snooks gets so carried away with his new ‘laws of life’ that he rehearses them in circumstances where the empirical evidence is inadequate, against his own invocation of the principle of induction. He dismisses theories of dinosaur extinction involving the impact of asteroids or comets. Instead, he argues that ‘unsustainable pressure was placed on available natural resources, and there was an increasing degradation of the global environment, a loss of ecological balance, and a widespread adoption of the conquest strategy. This led to a “world war” between the various species of the dinosaur dynasty. It was a struggle to the death’ (p. 180). This is clearly an example of highly speculative and incomplete theoretical explanations getting way ahead of all the available evidence.

Conclusion

What is scarce in this volume is a good dose of intellectual humility. Apart from its grand ambition to demolish one great theory and replace it with another of equivalent standing, it is often rambling and repetitive. Even on his own ground of economics, it makes significant errors. For example, we are told that T. R. Malthus ‘advocated a policy of unfettered competition at home and abroad’ (p. 9). In fact, Malthus opposed laissez faire and supported the protectionist Corn Laws. We are told that J. R. Commons in 1934 made a distinction between organizations and institutions (p. 271), which is also untrue.

In proclaiming its theoretical collapse, Snooks predicts that the current ‘popularity of Darwinism will be short-lived’ (p. 8). I am often reluctant to make predictions, but I hazard three here, for the next twenty years. I predict that Snooks will continue, at most, to have a minimal impact with his ideas in reputable, refereed, academic journals. I predict that Snooks’ ‘theory of life’ or ‘laws of life’ will be largely unvisited and eventually forgotten. I predict that Darwin’s reputation as one of the greatest thinkers in the last two hundred years will be preserved, if not enhanced.

Geoffrey M. Hodgson is editor-in-chief of the Journal of Institutional Economics, and author of The Evolution of Institutional Economics: Agency, Structure and Darwinism in American Institutionalism (Routledge, London, 2004).

Subject(s):History of Economic Thought; Methodology
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

The History of Foreign Investment in the United States, 1914-1945

Author(s):Wilkins, Mira
Reviewer(s):Edelstein, Michael

Published by EH.NET (January 2005)

Mira Wilkins, The History of Foreign Investment in the United States, 1914-1945. Cambridge MA: Harvard University Press, 2004. xxvi + 980 pp. $95 (cloth), ISBN: 0-674-01308-5.

Reviewed for EH.NET by Michael Edelstein, Department of Economics, Queens College and the Graduate School, City University of New York.

The book jacket of this volume describes the author, Mira Wilkins of Florida International University, as “the foremost authority on foreign investment in the United States.” Book jackets are known for their hyperbole and general flimflam. However, in this case the book jacket writer is underselling the author. Mira Wilkins is the foremost authority on both foreign investment in the United States and U.S. investment abroad.

The current volume is Wilkins’s fourth on the subject of American cross-border investment flows. Previous volumes include The Emergence of Multinational Enterprise: American Business Abroad from the Colonial Era to 1914 (1970), The Maturing of Multinational Enterprise: American Business Abroad from 1914 to 1970 (1974), and The History of Foreign Investment in the United States to 1914 (1989), all published by Harvard University Press. The current volume is a comprehensive history of the cross-border inflows from 1914 to 1945, covering both foreign direct investment (FDI) and foreign portfolio investment (FPI) in the United States. There are 612 pages of text and 254 pages of footnotes.

A modern capitalist economy is a highly complex phenomenon. It is arguable that one of the most insightful perches from which to observe its workings is that of a scholar of foreign investment. Scholars, of course, know that long-distance portfolio and direct investment are a central feature of the investment process in modern economic growth. Modern British historians, for example, have long debated the extent and character of inter-regional investment flows between the “provinces” and “London.” Similarly, American economic historians have worried about the size and character of inter-regional investment flows from the older regions on the East coast to the Midwest, mountain, and Pacific regions. However, very importantly, there are practically no aggregate data to track the inter-regional movement of funds and corporate competencies. Furthermore, private corporate and financial records are not organized to easily research these inter-regional phenomena. In this sense, our national political institutions and legislation offer something of a gift, at least in the U.S. case, as they provide an abundance of public and private data on cross-border movement of funds, ownership, patents, etc. So, in fact, Mira Wilkins presents us with an extremely rich business history of world and American enterprise, granted through the unique lens of what foreigners thought would enhance their net worth. Still, the breadth of foreign investment activity in the U.S., especially in the period covered by this volume, 1914-1945, means Wilkins is covering a very large chunk of American business and financial history.

In the nineteenth century foreign FDI and FPI in the U.S. was subject to slow, if any, institutional change. In general there were very few barriers to cross-border investment in the U.S. America was a world-class debtor. The immense size of its investment activities and their profits could not help but draw savings from most of the developed economies of Western Europe, although predominantly the U.K. FPI was paramount but FDI was not trivial, including FDI in the form that Wilkins may be said to have discovered, the free-standing company. The aggregates of FPI and FDI clearly had an annual ebb and flow but even these cyclical variations have a certain regularity explored by Kuznets, Abramovitz, and Williamson. The only abrupt, non-cyclical shocks to the volume and character of foreign investments were associated with the Civil War and its longer lasting greenback monetary regime.

The period with which Wilkins is here concerned, 1914-1945, is quite different. The U.S. moved from net debtor to net creditor status, the most important one in the post-World War II world. Furthermore, this movement took place in an environment with very abrupt institutional and cyclical changes that must have astounded those who could remember the quieter environment before 1914. First, World War I entailed severe restrictions by the European belligerents on all forms of current foreign investment; outstanding FPI in the U.S. was commandeered to fund munitions and other purchases. Then, with American entry to World War I, German FDI and other investments were commandeered by the U.S. government, including their patent wealth. By the end of World War I the U.S. was a net creditor. Inward flows of FDI and FPI returned in the immediate post-World War I years but were subject to radically evolving war debt repayment and currency restrictions. The mid-years of the 1920s show a high tide of foreign investment in the U.S. as some semblance of economic and financial order returned to Europe and U.S. growth was energized by electrification and the automobile. This high tide then gave way to the brutal 1929-1933 downturn, ending with the collapse of the U.S. banking system and the devaluation of the dollar. Foreign investment of both types dropped precipitously in these years. Inward foreign investment recovered, 1933-1939. The Hawley-Smoot Tariff Act probably induced some FDI trying to get behind the heightened tariff barriers but both FPI and FDI were also importantly influenced by foreigners seeking a safer haven from Europe’s autarkic and confiscatory regimes. When World War II started in 1939 the European belligerents again imposed capital restrictions and commandeered U.S. investments to fund munitions purchases. Even before 1939, the German government and German corporations, remembering U.S. actions during World War I, made it a matter of policy to sell off, abandon, or hide their U.S. investments through third-party investors in Holland, Switzerland, Panama, etc. With U.S. entry into World War II, of course, Axis investments were once again commandeered and confiscated by the U.S. government, again including German patent wealth. This then is the chapter structure of Wilkins’s book, 1914-1918, 1919-1923, 1924-1929, 1929-1933, 1933-1939, 1939-1941, and 1941-45. And, the weight of her analysis proves this chapter structure correct; each short period has very different institutional and expectational structures governing both FDI and FPI placed in the U.S.

In each period, Wilkins separately covers FDI and FPI. In the case of FPI, discussion moves country by country, sector by sector, with the greatest depth for the U.K., the most important FPI sender. There is excellent coverage of the portfolios and motivations of foreign mutual funds, mortgage, insurance, and banking enterprises which held American FPI. On trend, FPI in American railroad and land resources retreated while industrial and utility FPI increased.

FDI is analyzed sector by sector and company by company. Any reasonably sized foreign company with investment in the U.S. has a story in each of Wilkins’s chapters. There is a wonderful richness to each period’s history. One can only wonder at the presentiment of Unilever’s U.S. subsidiary, for example, which opened new factory floor space and new product lines, and started radio advertising, 1930-32. And in each year, 1930 to 1932, net profits after taxes rose, higher than ever before in the Unilever subsidiary’s history. In the same years, Royal Dutch Shell moved aggressively to acquire more oil fields and reserves, despite losses; Anglo-Persian remained aloof, too absorbed with the drop in oil prices and (unsuccessful) moves to control world prices.

A central part of the FDI story during these years is the ups and downs of German FDI in the U.S. After commandeering German property during World War I and holding it captive for some years after the war, American alien property authorities quietly relented in the mid-1920s and German owners reappeared, often from behind American and other covers. As before World War I, German FDI was particularly strong where German technology and patents were at the frontiers of industrial capabilities (e.g., chemicals), the patents often acting as a bargaining chip in secret world market sharing agreements. Indeed, these patent-sharing agreements are one of the most significant stories that Wilkins covers. That she was able to gather so much information on these matters is surely due to the radical shift in Franklin Roosevelt’s antitrust policy. By the late 1930s, the White House, Congress, and Justice Department had decided that illegal international cartel arrangements and the immense patent holdings of large domestic and foreign corporations represented a threat to an American recovery based on rapid technical change. A good deal of the energy of the 1939-1941 Temporary National Economic Committee, its hearings, and its reports were focused on these phenomena. While the Justice Department’s antitrust cases in this area were moth-balled during World War II, the antitrust division returned to the fray after 1945 and altered the terrain of corporate patent and research strategy with its court-ordered settlements requiring wider licensing of patents. The terrain was also altered by the commandeering of German patent assets during World War II, made widely available to American corporations for war and post-war production. Much is known about the U. S. government’s commandeering of German assets during both world wars. Wilkins deserves a great deal of credit for carrying her story forward into the post-World War II years, assembling the disparate threads of the post-war history of these ex-German assets.

One way to measure the course of FPI and FDI in the U.S. over these years is as a percentage of GNP (p. 565). In 1914, total foreign investment (FI = FDI + FPI) was 19.5% of GNP while FDI was 4.7%. By 1918, the total (FI) was down to 3.9% while FDI was 1.3%. The war years had dramatically reduced the investment total and its FPI-FDI distribution. The 1920s did not change these percentages very much but the 1930s raised them so that by 1939 they stood at 6.8-9.6% and 3.2%, respectively. By the end of World War II, however, they were back to where they were in 1918; total FI was 3.7% and FDI was 1.3%. What Wilkins has carefully laid out is the micro-history of these movements, who entered, who stayed out, who endured, and who failed. One acquires very clear ideas of what, why, and how capital was reallocated and expanded during the first half of the twentieth century at the level of the firm and the central role of technological knowledge. Wilkins’s rich account of foreign investment in the U.S. is also a major part of the story of the retreat from the pre-World War I high-tide of globalization. Business and economic historians of the twentieth century are surely and greatly in Mira Wilkins’s debt. Finally, it should also be said that students of the macroeconomic movements of foreign investment will ignore this micro-history and its abrupt changes at their peril.

Michael Edelstein is the author of the “International Transactions and Foreign Commerce” chapter in the Millennial Edition of Historical Statistics of the United States (Cambridge University Press, forthcoming).

Subject(s):International and Domestic Trade and Relations
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

Is Geography Destiny? Lessons from Latin America

Author(s):Gallup, John Luke
Gaviria, Alejandro
Lora, Eduardo

Published by EH.NET (January 2005)

John Luke Gallup, Alejandro Gaviria and Eduardo Lora, Is Geography Destiny? Lessons from Latin America. Stanford: Stanford University Press (a co-publication with the Inter-American Development Bank), 2003. xiv + 171 pp. $21.95 (paperback), ISBN: 0-8213-5451-5.

Reviewed for EH.NET by Patrice Franko, Department of Economics, Colby College.

Although Is Geography Destiny? rejects a determinist view that geography controls growth in Latin American, it persuades the reader of the importance of geography in shaping the opportunities and constraints on economic change in the region. It is at once an obvious story — of course geography molds outcomes — and a provocative one — why hasn’t the growth literature historically paid more attention to the dramatic geographic characteristics shaping growth in the region? It is also an important policy piece. Growth strategies must more explicitly incorporate lessons of geography to address problems of poverty and inequality in Latin America.

The book proceeds in three parts. The first chapter analyzes the influence of geography on levels of economic and social development between countries. How have central geographic factors — the productivity of land, the presence of endemic disease, natural disasters, the location of populations and markets, particularly relative to the coast and urban settings — differentiated growth among Latin American countries and between the region and the rest of the world? The dramatic geographies of Patagonia, Machu Pichu, the Amazon and the Central American rainforests that make for sensational travel also create poverty when physical barriers cannot be overcome. Is Geography Destiny is rich in its description of the varied physical and human geographies of the region. The authors document that Latin American countries exhibit some of the highest degrees of geographic fragmentation in the world. That is, it is unlikely that two individuals drawn at random from the same population will live in the same ecozone. Their connection between geographical fragmentation, social cleavage and inequality make this an important conclusion for the design of poverty programs.

Geographical characteristics conditioned historical growth patterns. Highland populations in the Andes, Mexico or Central America isolated indigenous cultures from contact with European disease; such isolation also created minimal contact with emerging national markets and policies. Colonizers rejected the harsh conditions of the tropics where malaria and yellow fever wiped out occupying troops, steel quickly turned to rust, clothing never dried and furniture fell apart. Instead, they favored more temperate climates to establish colonial roots and implant stronger institutional frameworks, with the nontropical regions becoming the richest on the continent. Colonial settlement patterns were strongly correlated with less productive tropical land, leading to latitude as a strong predictor of GDP per capita in the 1800s.

The effects of poor land and frail institutions persist today. Even controlling for income, inhabitants of tropical latitudes can expect to live seven fewer years than those in desert or dry regions. Vulnerability to the physical environment increases death tolls during natural disasters, killing 227,000 people and costing the region between 700 million and 3.3 billion dollars over the past thirty years. It is estimated that less than four percent of damages in the region are insured, leaving a gaping hole in public and personal finances when a hurricane washes ashore or an earthquake rocks a densely concentrated city. Weak physical infrastructure in the face of geographical constraints acts as a tax on trade. Overland shipping across the continent can be as expensive as shipping goods half way around the world — adding to the explanation of why national integration, even under the incentives of import substitution industrialization, was historically compromised in Latin America. Instead, port cities, with huge concentrations of population and their associated problems of congestion and pollution, developed with an outward focus. A greater share of Latin Americans live in primary, mega cities than do people in other regions of the world. Geography has promoted unbalanced growth.

International competitiveness is conditioned by the geographical factors discussed in Is Geography Destiny. Health and human settlement patterns affect educational outcomes. Transportation challenges impact growth; the import substitution literature often lamented the lack of regional economies of scale — without facing head on the mountains, jungles or deserts as reasonable explanations for the failure of the model.

But how can we filter out the effect of geography from the simultaneous growth of institutions? How do we know that geography and not weak institutions caused suboptimal performance? The second part of Is Geography Destiny pushes the level of analysis to countries with geographically distinct regions within Latin America: Bolivia, Brazil, Colombia, Mexico and Peru. This country focus controls for the historical evolution of political institutions across countries, asking how, within the same framework, regional growth has responded to geographic constraints. The country studies presented in the book solidly link geographical condition with evolving institutions within and between countries and also highlight the strong degree of heterogeneity in response to geography across nations . The concluding section asks what can be done within the constraints of geography. The authors advocate a basic needs approach to infrastructure designed through a decentralized, participatory approach which incorporates market-based incentives. By ignoring hurricanes and earthquakes, endemic disease, urban infrastructure deficits and rural isolation, economic policy is made vulnerable to unexpected failure. Something must be done to provide greater resiliency in policymaking. The authors might be questioned, however, for assuming an uncritical stance toward global integration as the primary criterion for addressing geographical constraints. Their suggestion that access to international markets should be the primary criterion for investment in roads, ports, railways and markets should be carefully evaluated by policymakers for cultural and environmental impacts. The recent Asian tsunami has underscored the fragility of life in overpopulated areas vulnerable to natural disaster. In the Western Hemisphere, the Economic Commission for Latin America and the Caribbean documented $2.2 billion in losses due to the 2004 hurricane season in the Caribbean alone. As Is Geography Destiny accurately points out, the technological capabilities to reduce geographically-based vulnerability to extreme events is out of the reach of most Latin American nations. Achieving the United National Millennium Goal of reducing the number and effects of natural and man-made disasters will take strong cooperation and financing by the richer nations in the world. The argument for investment by both Latin American nations and the international community rests not only on the globalization of markets but also on the ethical argument of averting preventable tragedies brought on by geographic conditions. Is Geography Destiny makes an important contribution to our understanding of the underlying priorities for policy attention.

Patrice Franko is the Grossman Professor of Economics at Colby College in Waterville, Maine and is the author of The Puzzle of Latin American Economic Development, second edition (Lanham, MD: Rowman & Littlefield, 2003).

Subject(s):Historical Geography
Geographic Area(s):Latin America, incl. Mexico and the Caribbean
Time Period(s):20th Century: WWII and post-WWII