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The Laces of Ipswich: The Art and Economics of an Early American Industry, 1750-1840

Author(s):Raffel, Marta Cotterell
Reviewer(s):Miller, Marla R.

Published by EH.NET (July 2004)

Marta Cotterell Raffel, The Laces of Ipswich: The Art and Economics of an Early American Industry, 1750-1840. Hanover, NH: University Press of New England, 2003. xii + 156 pp. $24.95 (paperback), ISBN: 1-58465-163-6.

Reviewed for EH.NET by Marla R. Miller, Department of History, University of Massachusetts — Amherst.

From the 1750s to the 1840s, women throughout the town of Ipswich, Massachusetts were heavily engaged in creating and sustaining the only successful commercial production of handmade bobbin lace in the United States, an enterprise that thrived for almost a century before the advent of machine-made lace undermined their efforts. The New England lace makers described in Marta Cotterel Raffel’s The Laces of Ipswich: The Art and Economics of an Early American Industry, 1750-1840 certainly have not garnered sufficient attention among historians of early American labor, craft and women. Raffel, an independent scholar and lace-maker herself, seeks to remedy this oversight by providing the first-ever study of this important chapter in the braided histories of women and work, craft production, and industrialization.

In the eighteenth century, most North American consumers purchased French, Flemish, Brussels or English lace imported by local merchants. A constellation of factors, however, combined to create a thriving network of lace makers in Ipswich, as environmental, economic and political change conspired to reconfigure the local economy. Though once a port town rivaling Salem, in the 1740s shifting sands gradually reduced the opening of the Ipswich River, closing the harbor to larger ships; at the same time, a general mid-century economic depression was exacerbated by events associated with the mounting imperial crisis. Lace-making, Raffel argues, enabled Ipswich women to cushion these blows. By 1776, she asserts, enough women were engaged in the craft that, “unlike other areas, the residents were poised to meet the demand for domestic lace” brought about by the Revolution and its aftermath (p. 20). By the turn of the nineteenth century, some 600 women — more than 1 in 4 of the adult female population — across as many households were engaged in lace production, creating a uniquely identifiable domestic alternative to imported lace, and a major commercial enterprise for Ipswich families.

The subtitle aside, this is really a book about art; economics is discussed in only the most general sense, in ways that specialists will find largely unsatisfying. But as a study of the art and craft of lace-making, this slim volume is effective and informative. In many ways a model of material culture study, Raffel’s well-illustrated book demonstrates clearly the value of cultivating an intimate understanding of the processes and tools associated with early American crafts. As a lace-maker, she is able to extract extraordinary insight from the surviving bobbins, pillows (the platform on which the lace is created), and parchments (the paper patterns), from portraits showing lace on garments, and of course from extant examples of the lace itself. Close study of the bobbins and kits, for example, suggests that these tools were supplied by a single source, hinting at the presence of commission merchants. Patterns of pricking in surviving parchments can reveal whether the lace produced from them was intended for personal or commercial use. Careful examination of a lace-trimmed cape revealed that the garment’s maker was not necessarily familiar with the lace itself, since the embellishment was applied with the wrong side facing out, giving a fascinating little glimpse into the limits of one consumer’s fashion knowledge. Insights like these throughout the book provide readers with an intimate view of the lace-maker’s craft from the perspective of a practitioner.

Unfortunately, Raffel’s core question — how it came to be that, in a town of some 4500 residents, more than a quarter of the women embraced lace-making for commercial markets, producing collectively more than 40,000 yards per year — remains unanswered. Though certainly the convergence of several commercial crises would have given Ipswich women every reason to look for alternate sources of income, the same was of course true for women in communities across New England. How these Ipswich residents came to lace making, why it thrived as it did, and why nothing similar was attempted by neighboring communities, remains unexplained. Though the author posits, for example, that “most of the women who made lace in Ipswich had emigrated from the lace-making centers of England” (p. 52), no evidence is offered to support that assertion, while elsewhere in the volume, brief biographical sketches of known lace-makers include only women born in Ipswich. Moreover, close consideration of the lace itself reveals that most Ipswich lace was made in the European style (with the footside, or sewing edge, to the left of the lace) as opposed to the English style (with the footside to the right), suggesting perhaps that it was not English immigrants at all who proved influential, but rather unidentified artisans from the Continent (p. 70; on p. 68, the author also suggests that perhaps Ipswich lace reflects an “amalgamation” of the two influences). There is surely a fascinating story behind the emergence of lace-making in Ipswich, but important elements of that phenomenon are not yet understood.

Similarly, there is more complex and substantive analysis yet to be done on the gender and market relations that shaped this effort. For example, Raffel posits that the appearance of commission merchants (as evidence by the distribution of uniform bobbins and kits) corresponds with the entrance of men into what had been a primary female sphere of activity; however, later in the study she documents the efforts of lace merchant Mary Sutton, who centralized the collection of Ipswich lace for Boston and Portsmouth markets, and who seems (at least from the evidence presented) at least as likely a candidate for organizing the lace workforce and their tools as any yet-unknown male figure(s). In addition, women were “involved,” she asserts, in lace-making’s movement into factories, but how and to what extent is not described. Raffel does not attempt to ground her project in the sizeable scholarly literature of women, work, artisanry and industrialization, and so the study does not engage in any sustained way with the larger questions scholars in those fields have been wrangling with in recent years.

Though specialists in the history of clothing and textiles will find much of value here, professional historians with broader interests will find much to quibble with in this book. Still, Raffel has made a significant contribution to the study of women and work in early America simply by recovering, with great sensitivity and insight, the work of the lace-makers themselves. The story of this early and isolated foray into domestic lace production is fascinating, and this volume provides a real service in its informed analysis of the material remains of lace making as it emerged in coastal Massachusetts.

Marla R. Miller directs the Public History program at the University of Massachusetts –Amherst. Her research and writing explores women and work in the early Republic. Her book on women’s work in rural New England’s clothing trades, The Needle’s Eye: Women and Work in the Age of Revolution, is scheduled to appear in Spring 2005 from the University of Massachusetts Press.

Subject(s):Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):North America
Time Period(s):19th Century

The Political Economy of Stalinism: Evidence from the Soviet Secret Archives

Author(s):Gregory, Paul R.
Reviewer(s):Harrison, Mark

Published by EH.NET (July 2004)

Paul R. Gregory, The Political Economy of Stalinism: Evidence from the Soviet Secret Archives. New York: Cambridge University Press, 2003. xi + 308 pp. $90 (cloth), ISBN: 0-521-82628-4; $32 (paper), ISBN: 0-521-53367-8.

Paul R. Gregory and Valery Lazarev, editors, The Economics of Forced Labor: The Soviet Gulag. Stanford, CA: Hoover Institution Press, 2003. xvii + 212 pp. $15 (paperback), ISBN: 0-8179-3942-3.

Reviewed for EH.NET by Mark Harrison, Department of Economics, University of Warwick.

In 1945 Allied victory in Europe opened up the archives of Hitler’s Germany to investigation. Sponsored by the U.S. and British strategic bombing survey groups, a number of talented young economists including John Kenneth Galbraith and Nicholas Kaldor spent years combing through twelve years of records. The results of their work included path-breaking studies of the political economy of the Third Reich.

The Soviet state collapsed in 1991. Its economic administration was more complex than that of Nazi Germany by an order of magnitude, and it lasted for many decades. It presented a far greater puzzle to western social, political, and economic thought. The records that it left are much more comprehensive. But economists are barely involved in their exploitation, most of which is being left to social and political historians.

Paul Gregory is one of a small band who have promoted economic research in the Russian archives; the other major figure, on my side of the Atlantic, is Robert W. Davies. For much of the last decade Gregory has been carrying on this work in collaboration with Russians and other westerners. Both the books under review use this research to investigate the Soviet economy and its institutions under Stalin. Gregory’s monograph, The Political Economy of Stalinism, generalizes from it to make a textbook for economists and economically-minded historians. The volume that he has co-edited with Valery Lazarev, The Economics of Forced Labor, brings together a series of new archive-based investigations on a specific theme, the role of labor coercion in the Soviet economy.

From a methodological point of view the most important shared aspiration of the two books is to extend the domain of economic analysis. Traditionally, western Sovietological economists thought of the Soviet economy as comprised of two spheres. One was the sphere of “mission oriented” activities that aimed at maximizing technological objectives regardless of cost, e.g. building sputniks. The other was the sphere of economic activities that aimed to maximize an economic benefit, e.g. building refrigerators (e.g. Berliner 1976, p. 506-9). It seemed obvious that economic analysis could throw more light on the latter than the former. One of the main contributions of new research has been to extend economic analysis to Soviet centralized decision making with regard to the adoption and pursuit of major technological and institutional missions including collectivization, forced industrialization, the foundations of centralized planning, and the development of the Gulag archipelago. What emerges is that these were also “economic activity” in the sense that the players were all looking for a payoff of one kind or another, and the costs they were willing to incur or impose on others depended on the private stakes.

First, The Political Economy of Stalinism. The argument of the book runs as follows. In Chapter 1 Gregory asks whether we should view the rise and fall of the Soviet economy in terms of “The Jockey or the Horse?” What was more important: the qualities and decisions of individual leaders (the jockey) or their institutional context and constraints (the horse)? He concludes that this is a largely false distinction: the Soviet command economy fostered dictatorship and those who are self-selected for dictatorship tend to conform to a type. Thus, “the jockey and horse are not selected independently” (p. 21). No one could have beaten Stalin to the leadership who was not even more controlled, crafty, and brutal than Stalin himself. In chapter 2 Gregory goes on to argue that the emergence of a command system with Stalin in charge was a largely inevitable consequence of the Bolshevik revolution. The defining event was the decision to collectivize peasant agriculture in 1929, which was intended to fix a growing crisis of grain marketings. Gregory argues that this crisis was largely a result of government policy, but the policy did not result from any misunderstanding of economics. Rather, government policy pursued more accumulation than the peasantry and market forces were prepared to allow, and Stalin’s response was then to abolish the market and subordinate the peasantry directly to the state.

Chapter 3 outlines the five “Principles of Governance” of the new Stalinist state, which Gregory identifies as a command system based on collective farming and forced industrialization; the suppression of views that diverged from the party’s general line; the merging of the ruling party with the state; the prohibition of factions and the subordination of interest groups to the encompassing interests of the party-state; and Stalin as a personal dictator empowered to settle disputes among the top leaders. The result was to place an astonishing workload on Stalin personally; since he had the right to arbitrate on all important decisions, and to select what was important, the result was that agents at lower levels passed a vast array of unselected trivia up to him. Gregory calls this “The Dictator’s Curse.” Although he chafed against it, Stalin preferred it to the alternative which could have left him out of the loop on decisions that might afterwards have turned out to be significant.

Given a dictatorship, what kind of dictator was Stalin? In chapter 1 Gregory outlines various types of dictator: benevolent, proprietary (i.e. Olson’s “stationary bandit”), selfish, or one that holds the ring. The Stalin that emerges from the chapters that follow is not benevolent, mainly proprietary, sometimes selfish and sometimes ring-holding when it suited him. The stationary bandit emerges most clearly in Chapter 4, which deals with the core of Stalinist economic policy. Here Gregory outlines a model of investment maximization subject to an inherited capital stock and a workforce that supplies effort subject to a “fair” wage. He substantiates this model with reference to two things: Stalin’s well-known obsession with accumulation, and his watchful concern for worker discontent that the archives have revealed. The secret police monitored worker morale and kept Stalin well informed. Stalin controlled this dissatisfaction in two ways: locally by redeploying consumer goods when signs of discontent appeared to grow critical and, when discontent became general, by cutting investment back. Although Stalin could maximize the volume of investment in this way, however, he could not make it efficient and the history of the period abounds in what look like disastrous decisions when it came to detailed allocation.

Chapters 5 to 9 deal, respectively, with long term planning at the center, the tensions between central planners and industrial ministries, opportunistic behavior within the ministries, the process of planning within the ministries, and the implementation of financial controls. Gregory suggests that long term plans were primarily political and motivational instruments that aimed to shift the focus and balance of power in Soviet institutions by flushing out opponents and enabling others to signal loyalty. When long term plans were broken down into operational targets for each sector responsibility for implementation had to be delegated, and this created scope for the pursuit of departmental and personal self-interest. This formed the basis of perennial plan bargaining. Because the producers themselves controlled the vital information about requirements and achievements the result was that Stalin’s planning agency, Gosplan, clashed repeatedly with the industrial ministries not only over real demands and supplies but also over information. Stalin kept Gosplan loyal and relatively truthful only by keeping it small and disinterested in the fulfillment of plans. Even so, Gosplan had to compromise with industry, for example, by leaving central plans highly aggregated; this gave industry control over fulfillment in detail.

Detailed allocation was then governed largely by intra-ministerial decisions. This was the point at which centralized guidance and the requirements of efficiency lost most of their impact. Ministerial planning was largely retrospective and plans usually remained preliminary; they were rarely taken to the final stage of official confirmation, which made them easier to revise. A detailed study of decision making in the chief administration for metallurgy shows that, while orders and information shuttled up and down the ministerial hierarchy, everyone engaged in characteristic forms of opportunism. To their inferiors, each official demanded rigorous implementation of orders, while bargaining with and concealing resources from those above them. Real allocation took place at a level far below that of the plans; more effort went into ensuring supplies than organizing production. Loyalty and personal promotion went hand in hand; the promotion of individuals required a growing number of high level positions, met by continually promoting sub-ministerial organizations to ministerial status. Regardless of their personal profile, all ministerial officials behaved in much the same way in relation to their own fiefs. Finally, in forming the motives for opportunism money was more important than has been thought, not necessarily for personal enrichment but for easing the path to plan fulfillment, and financial controls were chaotic.

Gregory concludes with a retrospective on the whole Soviet era, including the collapse of 1991. The inner logic of the system boiled down to coercion. “The extreme concentration of historical power was not a historical accident” (p. 252). “The system’s founders … clearly understood … that enterprises must be coerced if resources are allocated administratively. The system had to wait more than fifty five years for a dictator to come along who did not understand this basic principle” (p. 256). This would make it seem as if the fault for the Soviet collapse lay with Gorbachev. Gregory also argues, however, that the coercive system did not only concentrate power; it also deprived the dictator of criteria with which to make efficient decisions, and it deprived those below him of any motivation towards efficiency. Poor information and bad motivation was combined with complexity that increased through time and returns that diminished to the point of no return.

More detailed light is shed on coercion in the Soviet economy by the second book under review, The Economics of Forced Labor. This book results from collaboration between the editors, Gregory and Valery Lazarev, and several Russian scholars; there are also contributions by another American, a Britisher, and a German, so the cast of characters is genuinely multinational. Robert Conquest provides a short foreword after which Gregory’s introduction sets out the main lines of historical development of the Gulag (chief administration of labor camps of the Soviet interior ministry, NKVD, later MVD). This information, mostly already known, provides the context for the subsequent chapters. In the 1920s there was just one Soviet forced labor complex on the northern Solovetskii islands. The first big expansion came with the collectivization of peasant agriculture which threw hundreds of thousands of well-to-do peasant families into captivity; the Gulag was created in 1930 to handle the sudden inflow. After that, recruitment became big business and by the early 1950s there were about 2.5 million penal laborers, mostly engaged in forestry, mining, and construction; they formed significant shares of the workforce in these sectors, but never more than about 3 percent of the total workforce including farm workers, and less than this in terms of the value of national output. By the end the Gulag had evolved a complex functional and production branch structure; it employed “freely-hired” civilians in large numbers, and rented many of its own inmates out to civilian employers; it employed guards in a ratio that rose as high as one to ten inmates, but many of the guards were themselves inmates.

The introduction is followed by three overview chapters, five case studies, and concluding remarks by Valery Lazarev. Chapter 2 by Andrei Sokolov, “Forced Labor in Soviet Industry,” provides often neglected context in terms of the mechanisms of the wider Soviet labor market. The important thing here is that the growth of the Gulag was part of a wider process that had largely substituted coercion for other incentives by the end of the 1930s. State employees now faced draconian penalties of imprisonment and forced labor for lateness, minor absenteeism, and unauthorized departures; these remained in force until Stalin’s death. Wartime decrees imposed still harsher penalties on violations by workers in defense industry and transport. These laws were widely flouted yet still netted fifteen million convictions in twelve years, including a million Gulag terms of between three and ten years. They were thus a major recruiting sergeant for the labor camps. This also illustrates a fact that is not widely appreciated: although the Gulag population was smaller than western observers had sometimes guessed, it also had high turnover with many entering the system for relatively short periods before returning to society.

In chapter 3, Oleg Khlevniuk gives a short account of the political turning points in the history of the Gulag, and goes on to tackle two questions about the efficacy of forced labor. He shows that the Gulag authorities gradually lost faith in the utility of marshalling human masses into unskilled employment at gunpoint; forced labor became increasingly mechanized and skilled and even began to attract wage payments. There was a process of “conversion of slaves to serfs” (p. 57). Khlevniuk also questions the developmental role of forced labor in the sense that the projects on which it was employed were valued at cost, but the cost was much greater than their true worth to society. “Many prisoner-built projects were difficult, or almost impossible, to build with free workers, but was it necessary to build them at all?” (p. 64). The White Sea-Baltic Canal and the Baikal-Amur Mainline would not have been undertaken in a market economy, not because a market economy lacked the “advantages” of socialism but because they would never yield a profit under any system.

Aleksei Tikhonov analyzes “The End of the Gulag” in chapter 4. In 1953, within three months of Stalin’s death, MVD chief Lavrentii Beriia had released one and a half million prisoners, 60 percent of the gulag’s inmates. Tikhonov points out that this could not have been prepared overnight. In fact, elements within the MVD wanted to put an end to the growing financial losses of the Gulag, and were also alarmed by its high rates of recidivism. Seeing that the Gulag was not working in terms of either exploitation or rehabilitation, they had been trying to scale it down since 1949 with proposals to convert a large part of the camp workforce to exiled laborers, “freely-hired” although not free to go home. Ironically the original reformers were themselves victimized after Stalin died.

The next five chapters cover more specific aspects arising from forced labor in Noril’sk (Leonid Borodkin and Simon Ertz), the Far East (David Nordlander), Noril’sk again (Ertz), the White Sea-Baltic Canal project (Mikhail Morukov), and Karelia (Christopher Joyce). Some highlights: the experience of the Far Eastern camps illustrates the perennial tension between the possibilities for exploiting the forced laborers and the requirements of maintaining them. The Karelian camps show the experimental process by which the authorities learned the scope and limits of the exploitation of forced labor. The White Sea-Baltic Canal project was initially seen as a story of “successful” completion, and this stimulated illusory expectations for the future. The Gulag leaders willingly undertook the building of Noril’sk as a result because they underestimated the risks and difficulties that would arise. The operation of Noril’sk helped to expose illusions about the ease with which the inmates could be manipulated and coerced into supplying effort. The “profitable” exploitation of forced labor proved an elusive goal. As time went on the authorities lost faith in unbridled coercion and heavy punishments, and turned more and more to positive inducements including higher wages and early release in return for extra effort.

Both the volumes that I have reviewed here adopt the methodology of social science. Narrative provides background but is not the central focus. Alternative hypotheses are formulated and tested informally. The standards of evidence and proof are not those that are usually available in conventional applied economics. There are figures and tables but no large quantitative datasets and hardly any regressions. The great bulk of the evidence is qualitative: decrees, memoranda, judgments, letters, reports of conversations, and anecdotes. The argument proceeds mainly by illustration. This is characteristic of the new institutional economic history associated with the writing of figures such as Douglass C. North and Avner Greif. At the present it is not clear that anyone can do better.

One possible criticism of both books is that while it is obvious that the source materials are new it is not so clear that the conclusions are always novel. To give an example from each book: Gregory finds that the main purpose of long term plans was motivational, but Eug?ne Zaleski (1971, p. 291) also concluded that the main role of these plans was to act as a “vision of growth.” Several contributors to The Economics of Forced Labor note the surprising importance of positive incentives in securing effort from prisoners who were apparently completely powerless and whose reservation wage was apparently close to zero; but the same point was made before by Rasma Karklins (1989). Indeed, in the early chapters of his Gulag Archipelago Alexander Solzhenitsyn (1974) provided an extended analysis of the labor economics of the camps, based on anecdote and memoir; the incentives that he described are quite different from those emphasized by the work presently under review, and it would be of interest to see discussion of the possible reasons for this divergence. Having said this, there can be no doubt that the general level of evidential detail and economic analysis in the present works is greatly superior to anything that has been available hitherto.

These books share still other features. There is something in them to challenge everyone. Both assume some background knowledge of Russian and Soviet history and will be read with great interest by specialists and Honors students. Historians may find that they need to rethink historical problems in terms of the economic choices that were available. Economists will find themselves challenged by unfamiliar institutions and unusual problems to solve; in the past year I have used The Political Economy of Stalinism as a textbook for economics undergraduates who have been excited by the opportunity to think outside the boxes of Micro 101. As a teacher of economics and economic history I believe that these books signal new directions in the study of the Soviet economy that have interesting parallels with the new thinking in economic history and political economy associated with scholars like Greif and Daron Acemoglu. They will greatly influence the ways that we teach and do research in the future.

In summary, if you want to know more about where Soviet economic history is going I strongly recommend that you read these exciting new books. The Hoover Institution has generously made the full text of The Economics of Forced Labor available free of charge; the URL is:

http://www-hoover.stanford.edu/publications/books/gulag.html.

References: Berliner, Joseph S. 1976. The Innovation Decision in Soviet Industry. Cambridge, MA: MIT Press.

Karklins, Rasma. 1989. “The Organisation of Power in Soviet Labour Camps.” Soviet Studies, 41:2, pp. 276-297.

Solzhenitsyn, Alexander. 1974. The Gulag Archipelago, 1918-1956. Volume 1. London: Collins/Fontana.

Zaleski, Eug?ne. 1971. Planning for Economic Growth in the Soviet Union, 1918-1932. Chapel Hill, NC: University of North Carolina Press

Mark Harrison is professor of economics at the University of Warwick and honorary senior research fellow of the Centre for Russian and East European Studies, University of Birmingham. He is the author of a number of books and articles on Soviet economic history including “The Political Economy of a Soviet Military R&D Failure: Steam Power for Aviation, 1932 to 1939,” Journal of Economic History, 63:1, 2003, pp. 178-212. He edits the PERSA (Political Economy Research in Soviet Archives) Working Papers, available from http://www.warwick.ac.uk/go/sovietarchives.

Subject(s):Servitude and Slavery
Geographic Area(s):Europe
Time Period(s):20th Century: WWII and post-WWII

The Economics of Forced Labor: The Soviet Gulag

Author(s):Gregory, Paul R.
Lazarev, Valery
Reviewer(s):Harrison, Mark

Published by EH.NET (July 2004)

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Paul R. Gregory, The Political Economy of Stalinism: Evidence from the Soviet Secret Archives. New York: Cambridge University Press, 2003. xi + 308 pp. $90 (cloth), ISBN: 0-521-82628-4; $32 (paper), ISBN: 0-521-53367-8.

Paul R. Gregory and Valery Lazarev, editors, The Economics of Forced Labor: The Soviet Gulag. Stanford, CA: Hoover Institution Press, 2003. xvii + 212 pp. $15 (paperback), ISBN: 0-8179-3942-3.

Reviewed for EH.NET by Mark Harrison, Department of Economics, University of Warwick.

In 1945 Allied victory in Europe opened up the archives of Hitler’s Germany to investigation. Sponsored by the U.S. and British strategic bombing survey groups, a number of talented young economists including John Kenneth Galbraith and Nicholas Kaldor spent years combing through twelve years of records. The results of their work included path-breaking studies of the political economy of the Third Reich.

The Soviet state collapsed in 1991. Its economic administration was more complex than that of Nazi Germany by an order of magnitude, and it lasted for many decades. It presented a far greater puzzle to western social, political, and economic thought. The records that it left are much more comprehensive. But economists are barely involved in their exploitation, most of which is being left to social and political historians.

Paul Gregory is one of a small band who have promoted economic research in the Russian archives; the other major figure, on my side of the Atlantic, is Robert W. Davies. For much of the last decade Gregory has been carrying on this work in collaboration with Russians and other westerners. Both the books under review use this research to investigate the Soviet economy and its institutions under Stalin. Gregory’s monograph, The Political Economy of Stalinism, generalizes from it to make a textbook for economists and economically-minded historians. The volume that he has co-edited with Valery Lazarev, The Economics of Forced Labor, brings together a series of new archive-based investigations on a specific theme, the role of labor coercion in the Soviet economy.

From a methodological point of view the most important shared aspiration of the two books is to extend the domain of economic analysis. Traditionally, western Sovietological economists thought of the Soviet economy as comprised of two spheres. One was the sphere of “mission oriented” activities that aimed at maximizing technological objectives regardless of cost, e.g. building sputniks. The other was the sphere of economic activities that aimed to maximize an economic benefit, e.g. building refrigerators (e.g. Berliner 1976, p. 506-9). It seemed obvious that economic analysis could throw more light on the latter than the former. One of the main contributions of new research has been to extend economic analysis to Soviet centralized decision making with regard to the adoption and pursuit of major technological and institutional missions including collectivization, forced industrialization, the foundations of centralized planning, and the development of the Gulag archipelago. What emerges is that these were also “economic activity” in the sense that the players were all looking for a payoff of one kind or another, and the costs they were willing to incur or impose on others depended on the private stakes.

First, The Political Economy of Stalinism. The argument of the book runs as follows. In Chapter 1 Gregory asks whether we should view the rise and fall of the Soviet economy in terms of “The Jockey or the Horse?” What was more important: the qualities and decisions of individual leaders (the jockey) or their institutional context and constraints (the horse)? He concludes that this is a largely false distinction: the Soviet command economy fostered dictatorship and those who are self-selected for dictatorship tend to conform to a type. Thus, “the jockey and horse are not selected independently” (p. 21). No one could have beaten Stalin to the leadership who was not even more controlled, crafty, and brutal than Stalin himself. In chapter 2 Gregory goes on to argue that the emergence of a command system with Stalin in charge was a largely inevitable consequence of the Bolshevik revolution. The defining event was the decision to collectivize peasant agriculture in 1929, which was intended to fix a growing crisis of grain marketings. Gregory argues that this crisis was largely a result of government policy, but the policy did not result from any misunderstanding of economics. Rather, government policy pursued more accumulation than the peasantry and market forces were prepared to allow, and Stalin’s response was then to abolish the market and subordinate the peasantry directly to the state.

Chapter 3 outlines the five “Principles of Governance” of the new Stalinist state, which Gregory identifies as a command system based on collective farming and forced industrialization; the suppression of views that diverged from the party’s general line; the merging of the ruling party with the state; the prohibition of factions and the subordination of interest groups to the encompassing interests of the party-state; and Stalin as a personal dictator empowered to settle disputes among the top leaders. The result was to place an astonishing workload on Stalin personally; since he had the right to arbitrate on all important decisions, and to select what was important, the result was that agents at lower levels passed a vast array of unselected trivia up to him. Gregory calls this “The Dictator’s Curse.” Although he chafed against it, Stalin preferred it to the alternative which could have left him out of the loop on decisions that might afterwards have turned out to be significant.

Given a dictatorship, what kind of dictator was Stalin? In chapter 1 Gregory outlines various types of dictator: benevolent, proprietary (i.e. Olson’s “stationary bandit”), selfish, or one that holds the ring. The Stalin that emerges from the chapters that follow is not benevolent, mainly proprietary, sometimes selfish and sometimes ring-holding when it suited him. The stationary bandit emerges most clearly in Chapter 4, which deals with the core of Stalinist economic policy. Here Gregory outlines a model of investment maximization subject to an inherited capital stock and a workforce that supplies effort subject to a “fair” wage. He substantiates this model with reference to two things: Stalin’s well-known obsession with accumulation, and his watchful concern for worker discontent that the archives have revealed. The secret police monitored worker morale and kept Stalin well informed. Stalin controlled this dissatisfaction in two ways: locally by redeploying consumer goods when signs of discontent appeared to grow critical and, when discontent became general, by cutting investment back. Although Stalin could maximize the volume of investment in this way, however, he could not make it efficient and the history of the period abounds in what look like disastrous decisions when it came to detailed allocation.

Chapters 5 to 9 deal, respectively, with long term planning at the center, the tensions between central planners and industrial ministries, opportunistic behavior within the ministries, the process of planning within the ministries, and the implementation of financial controls. Gregory suggests that long term plans were primarily political and motivational instruments that aimed to shift the focus and balance of power in Soviet institutions by flushing out opponents and enabling others to signal loyalty. When long term plans were broken down into operational targets for each sector responsibility for implementation had to be delegated, and this created scope for the pursuit of departmental and personal self-interest. This formed the basis of perennial plan bargaining. Because the producers themselves controlled the vital information about requirements and achievements the result was that Stalin’s planning agency, Gosplan, clashed repeatedly with the industrial ministries not only over real demands and supplies but also over information. Stalin kept Gosplan loyal and relatively truthful only by keeping it small and disinterested in the fulfillment of plans. Even so, Gosplan had to compromise with industry, for example, by leaving central plans highly aggregated; this gave industry control over fulfillment in detail.

Detailed allocation was then governed largely by intra-ministerial decisions. This was the point at which centralized guidance and the requirements of efficiency lost most of their impact. Ministerial planning was largely retrospective and plans usually remained preliminary; they were rarely taken to the final stage of official confirmation, which made them easier to revise. A detailed study of decision making in the chief administration for metallurgy shows that, while orders and information shuttled up and down the ministerial hierarchy, everyone engaged in characteristic forms of opportunism. To their inferiors, each official demanded rigorous implementation of orders, while bargaining with and concealing resources from those above them. Real allocation took place at a level far below that of the plans; more effort went into ensuring supplies than organizing production. Loyalty and personal promotion went hand in hand; the promotion of individuals required a growing number of high level positions, met by continually promoting sub-ministerial organizations to ministerial status. Regardless of their personal profile, all ministerial officials behaved in much the same way in relation to their own fiefs. Finally, in forming the motives for opportunism money was more important than has been thought, not necessarily for personal enrichment but for easing the path to plan fulfillment, and financial controls were chaotic.

Gregory concludes with a retrospective on the whole Soviet era, including the collapse of 1991. The inner logic of the system boiled down to coercion. “The extreme concentration of historical power was not a historical accident” (p. 252). “The system’s founders … clearly understood … that enterprises must be coerced if resources are allocated administratively. The system had to wait more than fifty five years for a dictator to come along who did not understand this basic principle” (p. 256). This would make it seem as if the fault for the Soviet collapse lay with Gorbachev. Gregory also argues, however, that the coercive system did not only concentrate power; it also deprived the dictator of criteria with which to make efficient decisions, and it deprived those below him of any motivation towards efficiency. Poor information and bad motivation was combined with complexity that increased through time and returns that diminished to the point of no return.

More detailed light is shed on coercion in the Soviet economy by the second book under review, The Economics of Forced Labor. This book results from collaboration between the editors, Gregory and Valery Lazarev, and several Russian scholars; there are also contributions by another American, a Britisher, and a German, so the cast of characters is genuinely multinational. Robert Conquest provides a short foreword after which Gregory’s introduction sets out the main lines of historical development of the Gulag (chief administration of labor camps of the Soviet interior ministry, NKVD, later MVD). This information, mostly already known, provides the context for the subsequent chapters. In the 1920s there was just one Soviet forced labor complex on the northern Solovetskii islands. The first big expansion came with the collectivization of peasant agriculture which threw hundreds of thousands of well-to-do peasant families into captivity; the Gulag was created in 1930 to handle the sudden inflow. After that, recruitment became big business and by the early 1950s there were about 2.5 million penal laborers, mostly engaged in forestry, mining, and construction; they formed significant shares of the workforce in these sectors, but never more than about 3 percent of the total workforce including farm workers, and less than this in terms of the value of national output. By the end the Gulag had evolved a complex functional and production branch structure; it employed “freely-hired” civilians in large numbers, and rented many of its own inmates out to civilian employers; it employed guards in a ratio that rose as high as one to ten inmates, but many of the guards were themselves inmates.

The introduction is followed by three overview chapters, five case studies, and concluding remarks by Valery Lazarev. Chapter 2 by Andrei Sokolov, “Forced Labor in Soviet Industry,” provides often neglected context in terms of the mechanisms of the wider Soviet labor market. The important thing here is that the growth of the Gulag was part of a wider process that had largely substituted coercion for other incentives by the end of the 1930s. State employees now faced draconian penalties of imprisonment and forced labor for lateness, minor absenteeism, and unauthorized departures; these remained in force until Stalin’s death. Wartime decrees imposed still harsher penalties on violations by workers in defense industry and transport. These laws were widely flouted yet still netted fifteen million convictions in twelve years, including a million Gulag terms of between three and ten years. They were thus a major recruiting sergeant for the labor camps. This also illustrates a fact that is not widely appreciated: although the Gulag population was smaller than western observers had sometimes guessed, it also had high turnover with many entering the system for relatively short periods before returning to society.

In chapter 3, Oleg Khlevniuk gives a short account of the political turning points in the history of the Gulag, and goes on to tackle two questions about the efficacy of forced labor. He shows that the Gulag authorities gradually lost faith in the utility of marshalling human masses into unskilled employment at gunpoint; forced labor became increasingly mechanized and skilled and even began to attract wage payments. There was a process of “conversion of slaves to serfs” (p. 57). Khlevniuk also questions the developmental role of forced labor in the sense that the projects on which it was employed were valued at cost, but the cost was much greater than their true worth to society. “Many prisoner-built projects were difficult, or almost impossible, to build with free workers, but was it necessary to build them at all?” (p. 64). The White Sea-Baltic Canal and the Baikal-Amur Mainline would not have been undertaken in a market economy, not because a market economy lacked the “advantages” of socialism but because they would never yield a profit under any system.

Aleksei Tikhonov analyzes “The End of the Gulag” in chapter 4. In 1953, within three months of Stalin’s death, MVD chief Lavrentii Beriia had released one and a half million prisoners, 60 percent of the gulag’s inmates. Tikhonov points out that this could not have been prepared overnight. In fact, elements within the MVD wanted to put an end to the growing financial losses of the Gulag, and were also alarmed by its high rates of recidivism. Seeing that the Gulag was not working in terms of either exploitation or rehabilitation, they had been trying to scale it down since 1949 with proposals to convert a large part of the camp workforce to exiled laborers, “freely-hired” although not free to go home. Ironically the original reformers were themselves victimized after Stalin died.

The next five chapters cover more specific aspects arising from forced labor in Noril’sk (Leonid Borodkin and Simon Ertz), the Far East (David Nordlander), Noril’sk again (Ertz), the White Sea-Baltic Canal project (Mikhail Morukov), and Karelia (Christopher Joyce). Some highlights: the experience of the Far Eastern camps illustrates the perennial tension between the possibilities for exploiting the forced laborers and the requirements of maintaining them. The Karelian camps show the experimental process by which the authorities learned the scope and limits of the exploitation of forced labor. The White Sea-Baltic Canal project was initially seen as a story of “successful” completion, and this stimulated illusory expectations for the future. The Gulag leaders willingly undertook the building of Noril’sk as a result because they underestimated the risks and difficulties that would arise. The operation of Noril’sk helped to expose illusions about the ease with which the inmates could be manipulated and coerced into supplying effort. The “profitable” exploitation of forced labor proved an elusive goal. As time went on the authorities lost faith in unbridled coercion and heavy punishments, and turned more and more to positive inducements including higher wages and early release in return for extra effort.

Both the volumes that I have reviewed here adopt the methodology of social science. Narrative provides background but is not the central focus. Alternative hypotheses are formulated and tested informally. The standards of evidence and proof are not those that are usually available in conventional applied economics. There are figures and tables but no large quantitative datasets and hardly any regressions. The great bulk of the evidence is qualitative: decrees, memoranda, judgments, letters, reports of conversations, and anecdotes. The argument proceeds mainly by illustration. This is characteristic of the new institutional economic history associated with the writing of figures such as Douglass C. North and Avner Greif. At the present it is not clear that anyone can do better.

One possible criticism of both books is that while it is obvious that the source materials are new it is not so clear that the conclusions are always novel. To give an example from each book: Gregory finds that the main purpose of long term plans was motivational, but Eug?ne Zaleski (1971, p. 291) also concluded that the main role of these plans was to act as a “vision of growth.” Several contributors to The Economics of Forced Labor note the surprising importance of positive incentives in securing effort from prisoners who were apparently completely powerless and whose reservation wage was apparently close to zero; but the same point was made before by Rasma Karklins (1989). Indeed, in the early chapters of his Gulag Archipelago Alexander Solzhenitsyn (1974) provided an extended analysis of the labor economics of the camps, based on anecdote and memoir; the incentives that he described are quite different from those emphasized by the work presently under review, and it would be of interest to see discussion of the possible reasons for this divergence. Having said this, there can be no doubt that the general level of evidential detail and economic analysis in the present works is greatly superior to anything that has been available hitherto.

These books share still other features. There is something in them to challenge everyone. Both assume some background knowledge of Russian and Soviet history and will be read with great interest by specialists and Honors students. Historians may find that they need to rethink historical problems in terms of the economic choices that were available. Economists will find themselves challenged by unfamiliar institutions and unusual problems to solve; in the past year I have used The Political Economy of Stalinism as a textbook for economics undergraduates who have been excited by the opportunity to think outside the boxes of Micro 101. As a teacher of economics and economic history I believe that these books signal new directions in the study of the Soviet economy that have interesting parallels with the new thinking in economic history and political economy associated with scholars like Greif and Daron Acemoglu. They will greatly influence the ways that we teach and do research in the future.

In summary, if you want to know more about where Soviet economic history is going I strongly recommend that you read these exciting new books. The Hoover Institution has generously made the full text of The Economics of Forced Labor available free of charge; the URL is:

http://www-hoover.stanford.edu/publications/books/gulag.html.

References: Berliner, Joseph S. 1976. The Innovation Decision in Soviet Industry. Cambridge, MA: MIT Press.

Karklins, Rasma. 1989. “The Organisation of Power in Soviet Labour Camps.” Soviet Studies, 41:2, pp. 276-297.

Solzhenitsyn, Alexander. 1974. The Gulag Archipelago, 1918-1956. Volume 1. London: Collins/Fontana.

Zaleski, Eug?ne. 1971. Planning for Economic Growth in the Soviet Union, 1918-1932. Chapel Hill, NC: University of North Carolina Press

Mark Harrison is professor of economics at the University of Warwick and honorary senior research fellow of the Centre for Russian and East European Studies, University of Birmingham. He is the author of a number of books and articles on Soviet economic history including “The Political Economy of a Soviet Military R&D Failure: Steam Power for Aviation, 1932 to 1939,” Journal of Economic History, 63:1, 2003, pp. 178-212. He edits the PERSA (Political Economy Research in Soviet Archives) Working Papers, available from http://www.warwick.ac.uk/go/sovietarchives.

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Subject(s):Servitude and Slavery
Geographic Area(s):Europe
Time Period(s):20th Century: WWII and post-WWII

Inventing a Soviet Countryside: State Power and the Transformation of Rural Russia, 1917-1929

Author(s):Heinzen, James W.
Reviewer(s):Wheatcroft, Stephen

Published by EH.NET (June 2004)

James W. Heinzen, Inventing a Soviet Countryside: State Power and the Transformation of Rural Russia, 1917-1929. Pittsburgh: University of Pittsburgh Press, 2004. x + 297 pp. $44.95 (cloth), ISBN: 0-8229-4215-1.

Reviewed for EH.NET by Stephen Wheatcroft, Department of History, University of Melbourne.

James W. Heinzen of Rowan University, Glassboro, New Jersey has written a very interesting book on several aspects of the history of the People’s Commissariat of Agriculture of the RSFSR (NKZem-RSFSR) from 1917 to 1929. This was the main state agency in the Russian Soviet Federated Socialist Republic that was involved in agricultural administration during the period of War Communism and the New Economic Policy (NEP). The contribution of People’s Commissar A.P. Smirnov, 1922-28 in protecting agricultural specialists, and in promoting a cautious rightist economic policy has been underestimated and Heinzen’s book is welcome in providing us with more detail about the internal vedomstvennii (departmental) politics that surround developments that have generally been seen from the central party position. Such a broadening of the picture is necessary because the political conflict of the time, and the infamous struggles between the Rights, the Left and the Party Center have tended to dominate most accounts of this period, and to give the opinion that it was these struggles that dominated everything that was happening at the time.

A few historians, including R.W.Davies, E.A. Rees and myself have argued that while the party struggles determined who the political leader would be, policy was often determined on the ground in the key state agencies in a sort of political vacuum. Heinzen’s book is therefore a welcome addition to the growing number of vedomstvenii histories that are beginning to transform our understanding of how NEP worked, and why it collapsed.

The description of the early years of the People’s Commissariat and the precarious transition from Tsarist Ministry to Revolutionary People’s Commissariat is generally fine, but it is marred by an early blunder about the nature of this particular commissariat. On pages 21-22, when discussing the birth and early activities of the Commissariat, 1917-20, it is stated that “Unlike some commissariats, which were headed by an agency at the national level, the Commissariat of Agriculture was one of the so-called non-united commissariats, for which separate commissariats were established in each republic.” This is confused. In 1917-20 there was no Union of Soviet Socialist Republics. The country at this time was known as the RSFSR and federated with it Republics. NKZem-RSFSR was an agency at the national level. The distinction that Heinzen has introduced here at the birth of NKZem only became apparent after the formation of the USSR in 1922, when the decision was made not to create a People’s Commissariat at this time at the Union level. There was a reason for this, which relates to the fear that Lenin and other leading Bolsheviks had in the early stages of NEP that Party extremists would attempt to impose unrealistic universal plans on agriculture if an appropriate mechanism for this could be found. This is important for Heinzen’s story, because his story leads up to the establishment of an All-Union NKZem in 1929 precisely when such extremist and unrealistic plans were being launched.

My main criticism of the book is that it claims to be far more than it really is, that it doesn’t really cover all, or even all the important activities of NKZem RSFSR, and even more so does it fail to cover all the important aspects of state power and the transformation of rural Russia during this period.

I will just provide a few examples of the shortfalls in each of these cases.

The book spends little time looking seriously at the plans that were drawn up for the transformation of agriculture and how NKZem fitted into these plans, it also fails to provide much of an indication of the work actually carried out by NKZem, and it tends to suggest that very little was done.

Much of the planning for agricultural development was carried out in Gosplan, which was a universal centralized planning commission, which was set up at the same time that the policies which became known as NEP were accepted. Lenin initially opposed the creation of a Universal planning body, and only appears to have accepted it as a compromise for the party’s acceptance of NEP. Having been forced to accept Gosplan, he was keen to influence how it worked and was particularly anxious to ensure that it was staffed by cautious specialists. Lenin insisted that P.I. Popov, the non-party head of TsSU be the head of Gosplan Agricultural Sector. Popov, in his turn was determined to block any plan that required unrealistic surpluses of agricultural products to be extracted from agriculture. He quite reasonably insisted that major central planning needed to await improved statistical materials. There were at the time massive disputes over the size of grain harvests and even over the size of the population. Popov was also holding out for a midterm 1925 series of censuses to provide a serious basis for planning. The first multi-sectoral plan was drawn up as OSVOK in VSNKh because of Popov’s intransigence. Neither the Party Right, nor Smirnov in NKZem came to the support of Popov when he was attacked by Yakovlev and NKRKI in early 1926.

Subsequent conflicts over agriculture development were based on very shaky and distorted evaluations of agricultural reality. Lenin’s fear that the extremists would dominate the planning system and agricultural administration was becoming true. Smirnov was more involved in assisting Rykov to restrain the more extreme grain plans proposed for 1926 and 1927, but the failure to accumulate adequate reserves in combination with unwise pricing policy and poor weather, contributed to the grain procurement crisis of 1927/28. Kondratiev was a major victim of this crisis, not because the crisis provided a justification to attack NKZem, but because he was director of the Economic Conjuncture Institute of NKFin, where an article written by Vainshstein in the Bulletin edited by him warned that current policies were likely to lead to a restoration of War Communism.

Smirnov may have been a victim too, but he was probably more of a political figure than Heinzen suggests. His removal from NKZemRSFSR in March 1928 was not accompanied by dismissal, but with a move that could be interpreted as a promotion. He was already a member of the Party Orgburo, and in April he replaced Kubyak as a member of the Party Secretariat. He retained his important position as a member of STO until July 1929. His major demotion came relatively late after the XVIth Party Congress in July 1930 when he lost his place in the Secretariat and was demoted to Candidate member of the Orgburo.

As regards other neglected activities in NKZemRSFSR. One of the major achievements of NKZemRSFSR at this time was the extraordinary achievement of organizing the improvement of seed used for sowing.

Finally, on what may appear to be a fairly minor detail, Heinzen presents a confusing picture of the level of agricultural production in these years. He is generally correct in his text in describing the failure of grain production in the late 1920s to reach the pre-war level, but he does include a very misleading table which provides a totally different indication of the situation.[1] Although this may appear to be a minor matter I would argue that it is extremely important.

The main point about the Soviet countryside that was invented by Soviet State power in the late 1920s lies precisely in this confusion. The State invented a countryside that had abundant grain and where failure to market grain supplies was the result of peasant sabotage. Popov before 1926, and a whole stream of later heroic statisticians, (including surprisingly Osinskii) tried in vain to correct this distorted invention, and the major catastrophe that struck in 1932-33 was a consequence of this false invention. Any account of the politics of Soviet agriculture for this period which fails to describe this distortion is missing the main story. Heinzen’s account of the history of Smirnov’s attempts to protect rural specialists is important, but it does not live up to its claims to be a history of state power and the transformation of rural Russia, and unfortunately it fails to get to grips with one of the main distortions of the Soviet countryside that was invented at this time.

Note: 1. For most of his text Heinzen argues correctly, but in one critical table (table 4-1 on p. 140) he, for some reason, gives a totally misleading series which claims that mid 1920s levels of grain production were above the average pre-war level. The table comes from V.P. Danilov, the leading Russian authority on the Russian peasantry. But it is from a volume published in the USSR in 1977 at a time when the censor did not allow any figures to be published which disagreed with the current official assessments of the Soviet statistical system. So these are the ‘official’ Soviet figures of the time, which have been uncritically cited here. Danilov had no choice but to include these figures. Heinzen, should have known better, and in fact does know better. After the fall of the Soviet Union and the Soviet censor, Danilov was able to support other figures. Volume 3 of the important new series “Tragediya Sovetskoi Derevni,” which was produced under Danilov’s leadership, contains an appendix written by me which explains the distortions that were applied to the grain statistics of the late 1920s to make them appear larger than they were in reality. See V.P. Danilov et al., Tragediya Sovetskoi Derevni, Volume 3, Moscow 2001, pp. 842-865. As far as I am aware Danilov accepts my account of the scale of Russian grain harvests of this period, which is why he commissioned me to write that appendix.

Stephen Wheatcroft, together with R.W. Davies has just completed The Years of Hunger: Soviet Agriculture, 1931-33, Macmillan/Palgrave, 2004. This is volume 5 of The Industrialisation of Soviet Russia. He is one of the editors of the five-volume series led by V.P. Danilov, Roberta Manning and Lynne Viola, on “The Tragedy of the Soviet Village, 1927-1939,” Moscow, 1999-2004, and he is the author of the two articles on “Grain Balances and Harvest Evaluations” and on “Demographic Evidence of the tragedy’ in volume 3 of these volumes. He has written widely on Stalinist repression, the Famine and Stalinist Politics.”

Subject(s):Economic Planning and Policy
Geographic Area(s):Europe
Time Period(s):20th Century: Pre WWII

Freedom from Want: American Liberalism and the Idea of the Consumer

Author(s):Donohue, Kathleen G.
Reviewer(s):Gerber, Larry G.

Published by EH.NET (June 2004)

Kathleen G. Donohue, Freedom from Want: American Liberalism and the Idea of the Consumer. Baltimore: Johns Hopkins University Press, 2003. xii + 326 pp. $45.95 (cloth), ISBN: 0-8018-7426-2.

Reviewed for EH.NET by Larry G. Gerber, Department of History, Auburn University.

Kathleen G. Donohue, assistant professor of history at the University of North Carolina, Charlotte, has written an ambitious book exploring the evolution of modern American liberalism from 1870 to 1940 by concentrating on changing conceptions of consumption and consumers. Donohue is not the first historian to consider the ways in which the development of a consumer-oriented society transformed American liberalism, but her carefully focused reading of a large and diverse group of economic and social theorists sheds new light on the intellectual underpinnings of post-New Deal liberalism.

Donohue begins by describing the ?producer paradigm? that dominated American thinking about the political economy in the late nineteenth century. She observes that ?classical liberals? assumed that only those responsible for the production of wealth were entitled to enjoy its benefits and that consumption was at best an unfortunate necessity because it represented the destruction of wealth. Donohue points out that going all the way back to the Puritans, Americans had consistently viewed consumption as a vice, but that only with the development of classical economics in the nineteenth century did the producer come to be seen as the embodiment of all that was good. Late nineteenth- century radicals and socialists may have differed sharply with liberals about the desirability of capitalism, but they shared the belief that the producer, whether worker or entrepreneur, ought to be at the center of the political economy and that the interests of consumers and producers were, in many ways, incompatible. Theorists as diverse as William Graham Sumner, Henry George, Richard Ely, Charlotte Perkins Gilman, and the early Thorstein Veblen all adopted a producerist worldview that assumed an individual?s identity and worth derived from his or her role as a producer.

In the last two decades of the nineteenth century, according to Donohue, a number of influential writers began to challenge the negative view of consumption and consumers that had become so widespread. Even though intellectuals such as Simon Patten and Edward Bellamy continued to view production as the key element of the economy, they began to lay the foundation for a more positive view of consumption that divorced the right to consume from the individual?s role as a producer. The Progressive era subsequently proved to be a ?turning point? in the development of a consumerist perspective as Veblen and consumer advocates such as Florence Kelley began to associate the public interest with the interests of consumers and to undermine the positive connotations that had long been associated with the category of producer.

It was not until the final years of the Progressive era and the 1920s, however, that a new generation of social theorists, including Walter Lippmann, Walter Weyl, Stuart Chase, Robert Lynd, and Rexford Tugwell, completed the theoretical reconstruction of classical American liberalism by arguing that the nation?s political system should be organized around the consumer rather than the producer. Although the new consumer-oriented liberals offered a variety of prescriptions as to how government might most effectively intervene in the economy to safeguard the interests of the consuming public, they all assumed that a strictly market-based, producer-oriented, system no longer promoted the well being of society.

Such ideas, Donohue admits, had little impact on American politics until the Great Depression created a radically new political environment. Even at the outset of the New Deal, consumer-oriented liberals had to contend with advocates of a more traditional producer-oriented approach for influence within the Roosevelt administration. However, the failure of the NRA helped pave the way for the triumph of a consumerist approach. Ultimately ?consumerist left liberals? such as Tugwell, Chase, William Trufant Foster, and others who at one time worked within the Agricultural Adjustment Administration played a key role in making ?freedom from want? a central tenet of American thinking. They thus prepared the ground for the triumph of a Keynesian approach to the economy that was based on the premise that a consumption-oriented economy best served the public interest.

Freedom from Want is a well crafted example of traditional intellectual history. Donohue?s close reading of the works of a variety of economic and political theorists not only provides interesting new insights into the thought of the individuals she examines, but also allows her to construct a compelling narrative of the dramatic change that occurred over a span of half a century in liberal thinking about the role of consumption and consumers in the political economy. Her analysis effectively highlights the way in which the development of a consumer-oriented approach to the political economy undercut the potential appeal of socialism, which continued to place the producer/worker at the center of the political and economic universe.

However, Donohue?s history of ideas does have some self-imposed limitations. Although Donohue acknowledges the significance of the Great Depression, for most of her study she does little to relate the theoretical works she examines to actual changes in the American economy. It would, therefore, be useful to read Donohue?s book in conjunction with James Livingston?s Pragmatism and the Political Economy of Cultural Revolution, 1850-1940 (UNC Press, 1994), which examines many closely related issues while attempting to link the concerns of more traditional intellectual history to a sophisticated treatment of economic developments.

In addition, except for her discussion of the NRA and AAA, Donohue rarely makes any effort to connect her analysis of what intellectuals wrote about the idea of the consumer to actual public policy developments. Moreover, her emphasis on the significance of the AAA for the subsequent emergence of a consumption-oriented New Deal liberalism offers a less complete and less convincing account of the triumph of Keynesian welfare state liberalism within the New Deal than does Alan Brinkley?s The End of Reform (Knopf, 1995).

Such criticisms are not meant to detract from the value of Donohue?s work. Her principal objective is to trace the gradual development of the intellectual foundations upon which modern liberalism was built, and in this regard she makes a significant contribution. No one narrative can portray all the dimensions of this story, but Donohue deserves praise for dealing in depth with so many diverse thinkers. At times, her distinctions between ?left liberals? and ?consumerist left liberals? and ?new liberals? as opposed to ?corporate liberals? or ?Veblenian liberals? can be confusing. Yet, the confusion may well be an accurate reflection of the fact that the development she traces from the producerist worldview of 1870 to the consumer-oriented consensus that had emerged by mid-century was not unilinear.

Larry G. Gerber is the author of The Limits of Liberalism (NYU Press, 1983) and numerous articles in such journals as Business History Review , Journal of Policy History, Journal of Economic History, and Social Science History. He has just finished a book manuscript entitled ?The Irony of State Intervention: American Industrial Relations Policy in Comparative Perspective, 1914-1939.?

Subject(s):Household, Family and Consumer History
Geographic Area(s):North America
Time Period(s):20th Century: Pre WWII

Agrarian Change in Late Antiquity: Gold, Labour and Aristocratic Dominance

Author(s):Banaji, Jairus
Reviewer(s):Grantham, George

Published by EH.NET (May 2004)

Jairus Banaji, Agrarian Change in Late Antiquity: Gold, Labour and Aristocratic Dominance. Oxford: Oxford University Press, 2002. xvii + 286 pp. $85 (hardcover), ISBN: 0-19-924440-5.

Reviewed for EH.NET by George Grantham, Department of Economics, McGill University.

Of the many unresolved issues in Europe’s pre-industrial economic history, few have proved more recalcitrant to scholarly investigation than the economic evolution of the Later Roman Empire. The biggest impediment is the loss of almost all documents concerned with the distribution of land, its productivity, the details of fiscal and monetary institutions that affected aggregate economic performance, and prices. Papyri preserved in the arid climate of Egypt and Syria provide some numerical evidence from the eastern half of the Empire, but the only information bearing on daily economic life in the Western Empire comes from the legal texts and a few dozen fragments of commercial correspondence preserved on wooden writing tablets. As a result, the picture of the late Roman economy has had to be pieced together from histories often composed a century after the facts they relate, contemporary religious polemics, and the two great digests of Roman Law compiled in the late 430s and the 560s. This is the stuff of which myths are made. The central myth of the later Roman economy is that it imploded into rural autarchy based on privatized local government by landlords who ruled over a large class of agricultural dependents in a kind of latent feudalism. These views are best known to modern economic historians through the works of Moses Finley.

Professor Banaji’s book is one of a growing number of recent publications to challenge this myth, whose roots go back to the narratives constructed by Italian Renaissance humanists, and more recently to Max Weber. A firm supporter of the ‘stages’ theory to economic and social evolution as expressed in the writings of B?cher, Weber argued on a priori grounds that the classical economy could not have been capitalist — by which he meant a society peopled by profit-maximizing agents coordinated by market prices — because western capitalism arose in the unique historical circumstances of the central Middle Ages. The classical economy was a household economy writ large through the agency of agricultural slavery. Weber conceded the existence of the market, but he argued that it was a hothouse plant rooted in the easily depleted soil of slavery, and withered when that institution decayed into a kind of latent feudalism for lack of new supplies of slaves. In the first and arguably best chapter of this book, Banaji draws on an extensive body of inscriptions, classical sources and archaeological reports to show that the market economy flourished in rural areas through the fourth and fifth centuries. The evidence mainly concerns North Africa and the Levant, but there is no reason to suppose it is unrepresentative of other parts of the Empire. While the documentary material is anecdotal, the overall demonstration seems solid, and accords with archaeological findings. One of the questions that evidence raises is why historians dismissed it for so long. In a useful review of the historiography, Banaji observes that Weber seems deliberately to have ignored a seminal study of Egyptian papyri by one of Mommsen’s students, which demonstrated the continuity of monetized exchange from era of the Ptolemies to the fifth century AD.[1] The general conclusion, then, is one that a growing number of classical scholars are prepared to accept — that the Roman Economy was a ‘market economy.’

Solving the taxonomical problem, however, is no more than a preliminary step to resolving questions about the path of the late classical economy. McCormick’s recent analysis of the digitized source material indicates that market connections between Western Europe and the Levant survived the fall of the Roman Empire in the West and the loss of North Africa and most of the Middle East to the Arabs in the seventh century.[2] His work also supports the generally accepted view that in the aggregate the Roman economy was probably shrinking from the third through the seventh century, which is not inconsistent with evidence showing the persistence of markets and of regional prosperity. In the absence of information that might make it possible to weight the likely experience of different parts of the Empire over this long period, one must withhold judgment. Nevertheless, Banaji’s suggestion that the fourth century and much of the fifth were fairly prosperous is plausible. We now know that the ‘invasions’ were less disruptive than over-romanticized accounts made them seem.

These questions, however, are secondary to the main purpose of the book, which is to argue that the gold standard instituted by Diocletian and his successor Constantine set the foundation for late classical prosperity. The solidus established at Trier by Constantine in 310 held its value in gold to the end of the Empire. The same cannot be said of the copper and silver coins that constituted the bulk of the circulating media. Following the arguments advanced by the Swedish historian Gunnar Mickwitz, Banaji argues that the new gold coinage revolutionized the late Roman economy by securing a stable money, and by providing a means by which financially astute bureaucrats could accumulate fortunes that they subsequently invested in land. The argument thus reverses the old historiography by asserting that the new currency system assisted the revival and indeed an expansion of a monetized economy. The logic is nevertheless confusing. It seems to go like this.

In the troubled middle decades of the third century, the old Roman fiscal system collapsed under the combined weight of repeated wars among competitors for the Imperial throne and invasions by barbarians taking advantage of a temporary power vacuum along the frontier. To meet pressing needs the Imperial state began to collect taxes in kind, which were paid directly to troops stationed in the districts where the taxes were being raised. In the conventional historiography the appearance of an in-kind fiscal system went hand in hand with the reversion to a ‘natural economy.’ According to Mickwitz and Banaji, taxes in kind went to the troops; the bureaucrats continued to be paid in cash, and so had an interest in a stable currency. The gold standard is thus explained by interest group politics. Banaji seems to accept the view that in the third century the economy was becoming less monetized, and that this trend reversed itself after the establishment of the solidus. The logic of this argument is very obscure. The value of the solidus relative to the price of ordinary commodities and labor (a semi-skilled worker earned three solidi per year) was so high that it can hardly have been used except as a store of wealth or in banking and wholesale commerce. Evidence of its being used in ordinary transactions most likely refers to its use as a unit of account. The value of other coins relative to the solidus varied systematically over time. One should be able to make some sense of the pattern, as the copper coinage was the principal medium of exchange. Unfortunately Banaji is not a trained economist. His monetary analysis is hopelessly contaminated by the attempt to explain the variations in the relative value of the copper, silver and gold coinage by a political sociology. The monetary history of the later Roman Empire deserves better.

The remainder of the book analyzes the evolution of landholding in Egypt from fifth to the seventh century. The main argument is that a class of large owners whose original fortunes came from high office gradually displaced the local gentry. Banaji argues that the former accumulated their fortunes in specie. Much of the discussion is given over to the commercial activities carried out on these estates. The material, which comes from a considerable body of extant papyri, is suggestive but the line of argument is lost in details that seem to be directed at several distinct issues. In view of that evidence the notion that landholding became more concentrated after the fourth century seems plausible. One is nevertheless hesitant to extend the generalization to other parts of the Empire. Egypt was always a special case.

I looked forward to reviewing this book, and have been greatly disappointed by it. Its learning is undirected and confusingly set out. It does not state hypotheses in a way that might permit the reader to judge whether they are supported or disconfirmed by the facts. This is partly the fault of the facts, which are scattered and hard to aggregate into an empirical argument. Yet one comes away with the sense that there are enough facts to support a well-argued hypothesis. The strong point of the book is its document of pervasive market activity. It ought to be possible to reason from this demonstration to develop some conjectures bearing on the supply and especially the demand for money after 300 AD. Banaji’s book suggests that there are sufficient facts around to attempt this. What is needed is a bit more formal reasoning to provide some structure around which the facts can be organized. As has become all too common in academic publishing, the copy editing is shoddy; some sentences are incomplete, and others so poorly constructed that getting through them is a labor of Sysyphus. The book stands as an object lesson in why economic history should be done by people who understand economics. The monetary and fiscal history of the Later Roman Empire remains an enigma.

References:

1. Ulrich Wilcken, Griechische Ostraka aus Aegypten und Nubien (1899).

2. Michael McCormick, Origins of the European Economy (2001).

George Grantham has been working for an intolerably long time on a book on the long-run economic history of pre-industrial agricultural productivity in Europe. Recent publications and working papers include “Rationality Revised: A Brief History of the Concept of Rationality in Economics” in The Social Sciences and Rationality: Promise, Limits and Problems, edited by Axel van den Berg and Hudson Meadwell (Transaction Press, forthcoming, 2004); “Contra Ricardo: On the Macro-economics of Europe’s Agrarian Age,” European Review of Economic History (1999); “The Early Medieval Transition: On the Origins of the Manor and Feudal Government” (September 2003); and “Economic Integration in the First Millennium BC: The Alphabetic Revolution” (July 2003).

Subject(s):Government, Law and Regulation, Public Finance
Geographic Area(s):Middle East
Time Period(s):Ancient

The Invention of Coinage and the Monetization of Ancient Greece

Author(s):Schaps, David M.
Reviewer(s):Silver, Morris

Published by EH.NET (April 2004)

David M. Schaps, The Invention of Coinage and the Monetization of Ancient Greece. Ann Arbor: University of Michigan Press, 2004. xvii + 293 pp. $75 (cloth), ISBN: 0-472-11333-X.

Reviewed for EH.NET by Morris Silver, Department of Economics (Emeritus), City College of the City University of New York.

Briefly stated, David Schaps’ central argument runs as follows:

Coinage = Money (in the Greek experience the two are equated) was invented in Greece or Asia Minor (Lydia) in the later seventh or earlier sixth century. The Greeks eagerly copied/adapted this innovation and it spread rapidly in their cities during the sixth century. The result was a profound transformation in Greek economy and society. Before the Greek adoption of coinage, the ancient Mediterranean world knew only primitive money, not money as we know it. Primitive money was incapable of generating the revolution that Greece experienced.

I begin with a number of quotations capturing the argument and then, in the main part of the review, move on to consider the details.

This book will tell the story… of the development of money both in the Near East and in Greece up to the invention of coinage and its widespread adoption by the Greek cities, the only communities that adopted it wholeheartedly at its first appearance. (17)

Something new happened with the invention of coinage, and it produced a new idea that persists to our day. (5)

I have tried throughout only to sketch the ways in which Greek thought and behavior were changed by the introduction of money. (vii)

From the Greeks onward, we find a new way of speaking and ofthinking. Now a person might state the entirety of a household’s possessions in terms of money, as no member of a premonetary society would ever do. (16)

One of the central propositions of this book is that when we speak historically, the invention of coinage was the invention of money: that is, the concept that we understand as “money” did not exist before the seventh century B.C.E., when coins were first minted. There surely had been many items before that we may recognize correctly, as money, there were even places…where a single item performed all the functions associated with money. Never before, however, had these items been conceptualized as money, for money to the Greeks, as to us, was the measure of all things, something different in nature from all the valuables that might represent it. (15; emphasis in original)

All ancient Near Eastern societies had a conventional standard of value, usually precious metals or a specified grain. The standard of payment was always “primitive money,” never coin, and it did not always perform all the functions that coin was later to perform…. If Greece was the cradle of coinage and Lydia its birthplace, the societies of the Near East were its ancestors. (34)

Schaps links the unprecedented Greek adoption of coinage with Greek backwardness. The Greeks… who had only very primitive forms of currency, thought of coins as they had never thought of those items in which they had once traded, evaluated and paid. An ideal that had grown up in the East at a time when Greece had no need for it suddenly dawned on the Greeks when coins appeared. It was a time when the Greeks were in a period of economic and intellectual expansion for which their relatively primitive economic concepts did not provide an adequate basis…. Precisely because of their economic backwardness, they had no sufficient preexisting conceptual structure to compete with or subordinate the idea of money. (16-17)

Why did the ancient Near East (ANE) not move from a very evident monetization to “money, as we know it”? Technology would not have raised a barrier to the transformation. Why were coins so exciting to the Greeks and so uninteresting to their neighbors? The answer is that they filled a need peculiar to Greek society…. It was Greece that was searching for new forms of government and administration to manage the new complexity of the poleis and new ways of organization to maintain its people, and coins made that administration and that organization simpler and more manageable than spits and cauldrons [primitive money] could have done. (108)

This is interesting, but not entirely convincing. An alternative line of explanation is that coinage (guaranteed money) is not nearly as important economically as Schaps supposes. The alleged special interest of the Greeks in coinage may then reflect an ideological dimension peculiar to the Greeks. Schaps mentions “the particular Greek appreciation of the universality of money” (196). There is also a real question, explored below, whether Greece was really so backward monetarily as Schaps suggests.

Schaps’ presentation is quite clear and, obviously, there is rich material here. The view that coinage was invented by the Lydians is one that is generally accepted by scholars. I do have some problems with the equation of money with coinage and the meaning of “primitive money.” There is also something of a problem with respect to whom, according to Schaps, invented coinage: On the one hand, the Lydians invented coins and then the Greeks eagerly used them. On the other hand, the time when the Greeks eagerly used coins is the time of invention. These are relatively minor issues and I put them aside. On to the details!

I. Did the Ancient Near East Know Coinage?

A. Indirect Evidence

1. Schaps states that a “discussion of the factors that go into price determination does not form part of this book, for their importance arises in a money economy, and the point at which the Greeks achieved a money economy is the point at which this study ends” (30). I am not sure exactly what this means. Schaps is perhaps suggesting that the forces of supply and demand determine prices only in an economy with money, which he equates with coinage. This is, of course, completely false. Later Schaps adds “The Babylonian economy was still not, as it would become in the Hellenistic period, dominated by a market where prices changed each day; but it was not immune to the law of supply and demand” (49). This is a heroic understatement! Although we do not have daily price data, there is ample evidence of price changes and of the operation of supply and demand. Indeed, the Old Babylonian period (earlier second millennium BCE) has been characterized by Hallo (1958: 98) as one in which “there was a price on everything from the skin of a gored ox to the privilege of a temple office.”

2. Silver was indeed used as a means of payment in the ANE. However, rather than spreading through the population, it remained in the hands of merchants. “It never became, as coins eventually would, synonymous with wealth itself. It could not have done so, if only because too few people owned it. For this reason, the Babylonians never thought of silver as we think of money” (51).

The surviving documents do not demonstrate that Mesopotamians thought of money in the same way the Greeks did. Caution is justified about the reason for this presumed difference. There is evidence for the dispersal of precious metals in the population. As early as the middle of the third millennium in Ebla (in Syria) silver was used to purchase ordinary goods including clothing and grain as well as wine and semi-precious stones (Archi 1993: 52). Mesopotamian texts of the middle of the second half of the third millennium already show us street vendors, and, according to Foster (1977: 35-36, nn. 47, 48), the use of silver to pay rents and purchase dates, oil, barley, animals, slaves, and real estate; in addition, “silver was widely used in personal loans and was often in possession of private citizens and officials.”

3. Schaps asserts “The silver of the Near East had never been coined; it was weighed at each transaction, and the scale was an essential accessory to every sale” (49). This statement may reflect general belief, but it goes beyond the evidence. It is not true that ANE texts invariably mention weighing and/or scales. Indeed, to my knowledge, the mention of scales is infrequent. Nevertheless, Schaps is on strong ground in stressing the centrality of weighing in transactions recorded in the Bible.[1]

B. Direct Evidence

Schaps maintains that “an examination of the various primitive items that have at one time or another been claimed to be coins fails to reveal any clear example, and it may be useful to clear the air of the various hypotheses, which by their very number can create the false impression that coinage was common in the eastern Mediterranean Basin long before the Lydians and the Greeks” (222-23). Elsewhere he maintains that “the verisimilitude of the preceding suggestion is not much above zero” (235). Schaps may well be correct in rejecting this hypothesis. However, his treatment of the evidence leaves something to be desired.

1. The evidence is reasonably clear that the ANE went a good part of the way toward coinage by circulating ingots of guaranteed quality. Assyrian loan contracts of the eighth to seventh centuries use various formulas to advance “silver of (the goddess) Ishtar (of the city) Arbela (or Nineveh or Bit Kidmuri).” Lipinski (1979) argued brilliantly against interpreting this phrase to mean “temple capital.” Expressions of this kind, he suggested, refer to the quality of the metal, and their inclusion in contracts makes no sense unless the metal is impressed with a stamp of guarantee. The practice of guaranteeing metal quality, it may be added, probably goes back to the second millennium. The expression “silver of the gods” is found in texts from Mari in Syria and Amarna in Egypt. For example, in a letter concerning the disposition of an inheritance the king of Mari refers to the deceased person’s “silver of the gods” (Malamat 1998: p. 185; cf. CAD s.v. ilu 1.e).

In discussing the ingots from the temple of Arbela Schaps concludes: There was nothing particularly important about this development as far as Assyria was concerned. The temple’s ingots, even if stamped, were no more than good quality silver…. It will have been the business of a merchant to recognize them and to know good silver from bad, but there was nothing revolutionary about them. They may have come in convenient sizes…, but they were hardly standardized, and it is hard to imagine that a merchant would have failed to put them on the scale before accepting them. (92)

A guarantee of metal quality surely reduced the transaction cost of using money and it is therefore puzzling that Schaps considers this a development little or no importance. Moreover, he goes beyond the evidence in saying that the ingots were not standardized in weight. The texts do not say that the ingots were weighed.

2. Schaps writes of the Egyptian shaty “piece”: “It is regularly used as an item of account, not a medium of trade: that is, not ‘pieces’ but other items changed hands, bartered for each other and evaluated in terms of ‘pieces'” (224-25). In fact, there is evidence for the circulation of shaty‘s in texts of the Ramesside era (second half of the second millennium). In the Eighteenth Dynasty, a text (Papyrus Brooklyn 35.1453A) records the delivery of silver shaty‘s to a woman at the meryet “quay, marketplace” (Condon 1984: 63-65). In Papyrus Boulaq 11 merchants pay for quantities of meat and wine with shaty‘s (Castle 1992: 253, 257; Peet 1934). The texts do not say that the shaty‘s were weighed or tested for quality.

3. Schaps discusses the Egyptian Hekanakht letters of about 2000 BCE, but he does not refer to the following significant detail. Copper coins may be indicated when Hekanakht sends to his agent “24 copper debens” for renting land. James (1984: 245) explains that “the letter says quite clearly ’24 copper debens,’ not ’24 debens of copper,’ which ought to signify 24 pieces of copper each weighing, one deben.”

4. Schaps does not mention texts from the Assyrian trading station in Anatolia (earlier second millennium BCE) in which we sometimes find prices being expressed in terms of copper ingots, patallu and sad?lu. Thus, one Dakuku “owes 12 copper sad?lus as the price of donkey.” Dercksen (1996. 60, n. 179) notes that “quantity is expressed by simply giving the number of ingots instead of their weight [which] points to a more or less customary weight and size for this type” (emphasis added). I would add that use of the number of ingots also points to a standard quality.

5. Schaps defines “coin” as follows: “[A] coin is an object, usually but not necessarily of metal, which circulates as a medium of trade, and whose value is guaranteed by the stamp of the issuing authority” (223). He adds: “We may thus ignore without further discussions such items as spits, rings, and sealed bags of silver, which although they served many of the purposes that coins later served were not by themselves coins at all. They belong to the history of ‘primitive money’… (223).

Schaps’ dismissal of sealed bags of silver is most puzzling and instead of ignoring these, he offers a brief discussion of their significance. He concludes that “When silver was to be reused, a certain amount was given to the assayer in advance. Whatever the assayer did not use was sealed with a royal seal, obviating the need for weighing and assaying it again. The ‘sealed silver,’ then, is ordinary silver sealed in a sack, not a coin” (223-24).

In my view, sealed bags provide evidence for widespread use of “coinage” in the ANE. The background is as follows. Cuneiform sources of the first half of the second millennium refer to sealed bags of silver (e.g. kaspum kankum). We hear of “(silver) in lumps-sealed in a bag” (CAD s.v. kankua) and “x silver which is placed in its sealed bag” (CAD s.v. kan?ku 2). There is also mention of silver “marked” (udd?) with its weight (CAD s.v. id? 4.a). Copper might also be packed into purses called (c)hurshianu (CAD s.v.; Dercksen 1996: 66)

The sealed bags might be transferred: “I needed (and asked you for in writing) ten shekels of silver under seal.” x silver which PN gave to PN2 , and which is marked with the name of the merchant. (CAD s.v. s(umu 1.e); “you have sent me silver which is not fit for business transactions… send me silver, (in) a sealed bag” (CAD s.v. kaniktu 2). Oppenheim (1969) makes brief mention of cuneiform sources of the first half of the second millennium that refer to sealed bags of silver deposited with persons who used the silver in various transactions. Most directly, the practice of transacting with sealed bags of silver is reflected in the call, in eighteenth-century contracts from Mesopotamia (the city of Larsa), for merchants to pay for palace-owned goods with “sealed silver” (Stol 1982: 150-51). The transactional use of sacks is ignored by S.[2]

Some years ago, in reflecting on these references, it occurred to me that in eleventh-century-CE Egypt and elsewhere in North Africa, in Talmudic times (400-500 CE) and earlier in Carthage and in Rome (the tesserae nummulariae), various coins and (probably) metal fragments were kept in purses labeled on the outside with the contents and sealed by governments or private merchants. In addition to keeping the coins “fresh” — that is, preserving their full weight — Udovitch (1979: 267), who studied the usage in medieval Islam, explains: “these packaged and labeled purses made settlement of accounts much more convenient… by obviating the need to weigh, array, and evaluate coins for every individual transaction. Significantly, most payments and transfers of funds were executed by the actual physical transfer of the purses.” We may assume that these purses circulated among the wealthier classes.

Schaps responds as follows: “[Morris] Silver (126-27) obfuscates this point, going so far as to say that (medieval Islamic!) sealed purses ‘in short… were large denomination coins.’ This is surely to broaden the definition of a coin far beyond reason” (224, n. 9). Schaps obtained this quote from my 1985 edition. In 1995 I wrote: “In short, the sealed purses functioned as large-denomination ‘coins'” (161). The reason for the change in formulation is that numismatic specialists and antiquarians insisted that coins had to be made of metal. I was hammered on this, to an economist, unimportant detail. Schaps? properly broadened definition of “coin” makes my original formulation perfectly appropriate. Under his definition a “nickel,” as he says, can be wooden and “a dollar bill would also count as a ‘coin’ (223, n. 3). The important point is that there is evidence to suggest that the kaspum kankum functioned as/were coins!

6. Schaps does not mention evidence provided by Joann’s (1989). Hammurabi (1792-1750) paid/rewarded Mari’s soldiers with (mysterious) shamsh?tum “sun discs,” gold rings, silver of 5 or 10 shekels, and with small pieces of silver impressed with a seal. Joann?s bases himself on ARMT 25, 815 and a letter (A-486+) to Zimri-Lim, the king of Mari. The key word here is kaniktum from kan?kum “to mark a seal” (see CAD s.vv.). In the absence of (additional?) evidence for the use of kaniktum to make payments, Joann?s suggests that these sealed metal objects may have been “medals.” Perhaps. On the other hand, perhaps they were coins. Indeed, as far as I am aware, the evidence for coinage is more ample than the evidence for “medals”! The text is silent about whether and how Mari’s soldiers spent the small pieces of sealed silver.

7. Several bread-shaped ingots of the eighth century inscribed with the name of a king preceded by the Aramaic letter lamed have actually been found in the palace of Zinjirli, a north Syrian state located on the only good crossing of the Amanus mountains from east to west. The meaning of the possessive l is debated. One possibility is that it means “belonging to” in the sense of personal possession. Balmuth (1971: 3), however, suggests that it means “on behalf of” or “in the name of” (its meaning on coins of later times) and, therefore, that the inscription represents a royal guarantee of the metal. Any such guarantee might refer only to the quality of the metal or to both quality and weight. Schaps responds as follows: “But there is no indication that this disk… was ever meant to be currency at all, and coins did not become current in this area until centuries later” (91, n.52). Thus, Schaps comes close to saying that the ingot could not be a coin because they had not been invented yet! Schaps believes that the disks were designed for storage of wealth, not for making payments. Perhaps he has guessed right. The fact is, however, that there is simply no evidence beyond the inscribed ingots themselves.

As I will show next, Schaps requires much more from the Near Eastern coinage evidence than from the Greek.

II. Greek Coinage Evidence

1. There is clear evidence of a double standard in Schaps’ consideration of the Lydian evidence (93-6). The “Lydian” coins excavated in the Artemision at Ephesus are mostly dated to the seventh and earlier sixth centuries BCE. However, the dating remains controversial. Two of the pieces were dumps not coins. The significance of their inscriptions is still being debated. All but two of the ninety-three pieces conformed to the Milesian weight standard. There is no evidence that merchants would not have had to weigh them. There is no direct evidence that the coins circulated. The coins are made of the wrong metal, electrum instead of silver, gold, or copper. (Variation in the ratio of gold to silver, would seem to call for quality testing.) In short, despite numerous opportunities for raising objections, Schaps does not hesitate to call the finds in the Artemision, the “earliest datable coins” (93; emphasis added).

Schaps explains further: “The motivation behind the ‘cutting’… of such coins must have been quite different from the motivation of the temple of Arbela in casting its ingots. Ingots of a pound or so are a convenient way in which to store silver, and they were probably made for that purpose. Small and minutely subdivided weights of electrum [as in the Ephesus hoard], however, were undoubtedly made for payment not storage” (100). Possibly. However, there is evidence for the circulation of the Arbela ingots. A contract in which neither the temple nor its commercial agent is a party shows the silver being loaned out. The document originates some 50 miles from Arbela. On the other hand, no direct evidence is presented that the Ephesus coins circulated.

Contrast Schaps’ evaluation of the Artemision coins with his view of the Cappadocian lead disks, which may date to the mid-second millennium (225-26). The “ornamentation” on (one side) of the disks is similar but not identical. The disks “vary irregularly in weight.” They are made of the “wrong metal.” There is no evidence of “circulation from place to place.” Scholars have expressed doubts that “such small bits of lead could have had much monetary value” (225). “Nothing suggests that they are coins except their size and shape and the fact that they are made of metal…” (225). It would seem that ANE candidates for designation as early coins are always too large or too small or whatever.

2. Schaps does not demonstrate that the Greece took its inspiration from Lydian coins. Schaps explains: “The Greek coins were silver, not electrum…. The change to silver indicates that coins, even if they had begun as a solution to the problem of the variability of electrum, had come to be appreciated as what they now were: a countable unit of value” (104; emphasis added). Clearly, this terminology simply assumes an imitation and modification of Lydian coinage practices.

3. There are hints that the Greeks had long been familiar with “primitive money” or even coinage. Greek traditions and legends place coinage much earlier than the sixth century. Thus, Plutarch (Theseus 25.3) wrote in the first century CE that Theseus, the legendary unifier and king of Attica, issued coins. In the second century CE, the scholar Pollux (9.83), claimed that coinage was invented by the even more shadowy Athenian figure Erichthonius, an early king. We find reports in ancient literary sources that Pheidon, king of Argos, introduced a silver coinage possibly as early as the eighth century (see S 101-4).

Hacksilber “cut-silver” hoards have not been found inside Greece. However, an eighth century hoard was excavated in Eretria in Euboea. (The Taranto 1911 hoard is dated to c. 600.) Balmuth (1975: 296) suggests that “although many of these have been called silversmith’s hoards, the practicability of exchange by weight suggests that Hacksilber could simultaneously be both material for a jeweler and material for exchange.” Schaps does not “believe there was ever an internal bullion economy in Greece” (195).[3] However, Kim (2001) has presented evidence that money of weighed silver bullion was employed in the Greek world well before the introduction of coinage. There are references to the use of silver to pay fines in Solon’s time.

More importantly, Schaps provides evidence consistent with bullion usage. In the eighth century, at Gortyn in Crete, the leb?s “cauldron” was used to make payments. Schaps explains that “it is hard to escape the impression that cauldrons, as inconvenient as they may seem to be, were functioning as a means of payment… in which fines could be assessed and deposits demanded” (83, cf. 195). Actually, it is preposterous that physical cauldrons were used as means of payment. More reasonably, “cauldrons” might be the name for an ingot, perhaps stamped with the image of a cauldron. Mysterious monetary units are, after all, commonplace in the historical documents. Thus, a text from the ANE (Isin) records the purchase of an orchard for copper “hoes” ((c)haputu) inscribed with the name of the goddess Ninisina. Payments are also made in “sickles” and “axes” (CAD niggallu 1.b).

III. Alleged Revolutionary Effect of Coinage/Money

Schaps’ central proposition is not documented in a credible manner. In this endeavor, he receives only limited mileage from his strained identification of coinage with money. Sometimes he claims for money/coin the effects of Greek economic growth. In other instances, he admits that no revolution occurred. The quotations cited below illustrate his difficulties.

1. “The conceptual revolution that identified coins with wealth turned money into an item of which one could never have too much, or, indeed, enough” (175). What then of the Assyrian merchants of the early second millennium BCE whose wives scolded them “You love only money, and you hate your own life!” (Larsen 1982: 42)? More to the point, what of Solon (Fragment 13.43-45. 47-48, 71-73 West):

One hastens after one thing, another after something else; one man, desiring to bring home profit, wanders over the fishy sea in ships … another, whose concern is the curved plow, cleaves the thickly wooded land and slaves away for a year… but no limit of wealth [ploutou d’ouden terma] is clearly laid down for men; for those of us who now have the greatest livelihood [pleiston…bion] have twice the eagerness [diplasion specdousi]; who can satisfy [koreseien] all? (Balot 2001: 90)Presumably, this view originates in the late archaic period — i.e. before the Greeks adopted coinage. In any event, Solon does not link human acquisitiveness with coinage or money.

2. “To the extent, then, that Homeric society had distinguished prestige goods from nonprestige goods, money subverted the distinction: money could buy anything and could be gotten in exchange for anything. It follows that even a peasant or a shopkeeper could amass enough money to buy the most prestigious goods; and it followed from this that the possession of those goods, which is now open to everybody, no longer distinguished the best from the worst” (117).

3. “The history of the late archaic age in Greece is the story of the crumbling of oligarchies. This development was already underway before coinage had been invented…. Nevertheless, it is more than probable that money and the market had their share in continuing the process and in changing the entire concept of oligarchy” (120).

4. An (alleged) trend from socially embedded transactions to impersonal economics should not be attributed to the adoption of coinage. There is no doubt that economic transactions tended, as Greek society developed from the archaic age to the classical and the Hellenistic, to be more a matter of immediate mutual economic benefit and less a form of discharging social obligations. The invention of coinage certainly facilitated this change, which may, however, have been propelled more by simple population growth than by any technological or cultural development. (33)

5. “The agora grew up in the Kerameikos, the potters quarter, and excavations have found evidence of potters’ waste as far back as 1000 B.C.E., but there are not other signs of commercial or industrial activity before the growth of the agora itself [in the sixth century]” (113). “We cannot… prove that there was no retail trade before coins were invented; but what we have seen suggests that if there was any, there was not much” (115). The latter suggestion, however, does not depend so much on “what we have seen” as on what we have not, namely the archaic agora! “The place in which Athenians had previously congregated was hardly remembered by the Athenians and has not been securely identified to this day” (113).

In the end, Schaps offers a more balanced appraisal. The various participants “were all making a profit, and they were doing it in a way that would have been a good deal more difficult before the invention of coinage” (115). “Money, we may reiterate, did not create trade, but it marked the beginning of a new age of commerce in Greece” (122). “An expansion of retail trade was the first visible concomitant of coins. At this distance, we cannot tell which is cause and which is effect, but we can say at least that the marketplace and coinage grew up together” (196).

6. “Without money, the great temples, the dramatic festivals of Athens, its navy, and its democracy would have taken a very different form, if they had come to exist at all” (197). This is simply a reach.

7. “Merkelbach’s observation that a bordello was hardly conceivable before the invention of money is a plausible one, though the ‘money’ involved need not have been coins: the weighed silver of the Levant would also have been sufficient” (160). “Merkelbach’s observation” is “plausible” only because he does not identify money with coinage. How did Greeks pay for sexual services before the (alleged) “invention” of coinage/money in the sixth century? Schaps does not tell us.

8. “The ancient Greeks, even when money had become the universal medium of exchange, still considered the exchange of labor for money to be the exceptional case” (162). No revolution in the labor market.

9. “In sum, it appears that money never truly transformed Greek agriculture” (172).

Schaps, however, underestimates the market orientation of Greek agriculture in the later archaic period. Citing Hesiod (Works and Days 618-94), he (89, cf. 119) suggests that “Peasants might try to change an agricultural surplus into a more lasting form of wealth by sailing abroad during the seasons when the farm could be left alone.” What exactly was the “more lasting form of wealth” in these days (allegedly) before money/coin? With respect to Schaps? “agricultural surplus,” Redfield 2003: 168) points out that Hesiod advises “peasants” to “leave the greater part, and load as cargo the lesser” (Works and Days 690). Hesiod it seems can actually imagine farming entirely for export, although he is against it.” Moreover, Hesiod’s comment that “wealth means life to poor mortals” indicates an appreciation of production for the market.

IV. Peripheral Contributions

Apart from his central argument, Schaps makes a number of rather interesting and useful observations. Some examples follow.

“When the [Mycenaean] palaces had been burned and their far-flung bureaucracy dispersed, there will have been more need for exchange. The Homeric heroes did indeed have to weigh the value of a slave against the value of a tripod; if this seems to us a step toward the concept of money, it is not for that reason a sign of an expanding economy” (71). Thus, as I would see this, the Homeric era can be viewed and an “Intermediate Period” of a type familiar in Egyptian economic history.

Speaking of the marketplace in Athens, Schaps notes: These merchandises were not mixed: not only was there no one ‘general store’ that sold them all, but there was not even a single place where one could ‘do the shopping.’ Each merchandise had its own part of the agora, and a person would speak of being ‘among the fish’ or ‘among the banks.’ (167)

Or even, citing Aristophanes, “among the tragedies” (S 167, n. 19)!

Schaps (123) cites Aristophanes’ joke that a politician could win public support by lowering the price of sardines.

Schaps takes up private enterprise in the coinage business: It might, in theory, have happened that coining would have become a form of business, in which private individuals turned silver into coins that would have been accepted by the reputation of the coiner…. It did not happen in Greece. Once coinage was generally adopted in Greek cities, the coining of money was normally a state monopoly. (179)

By contrast, I would suggest, some of the inscriptions on the coins from the Artemision coins seem to be personal names, which leaves open the possibility that the issuers were private individuals.

Large business loans were made at Athens. “It is true, however, that large loans at Athens were, as far we can tell, never designed to be paid off in drips and drabs out of one’s regular income” (245).

There are also some rather unfortunate observations. “Behind the [Greek] prejudice [against merchants] though hardly ever explicitly expressed, lies a real paradox, namely, the syllogism that: (a) a trade should be fair; (b) if a trade is fair, both sides should remain with the same value; whence it follows that (c) if a person can increase his capital by trade, he is cheating someone” (177). It should be needless to say that there is no “real paradox.” An uncoerced exchange benefits both parties. Unless each contractor views his postexchange position to be superior to his preexchange position, exchange will not take place. Contrary to the Marxist perspective, exchange is productive. Specifically, trade rearranges an existing stock of goods in a way that enables each participant to become better off as measured relative to his own values at the time of deciding to trade. The creative nature of trade is little appreciated by scholars untrained in basic economic principles. Schaps (177, n. 7) compounds the problem by minimizing the contribution of the middleman in “making a market.” Later, he redeems himself by crediting the obolostat?s “obol weigher” for smoothing the function of the marketplace by “redistributing — for a fee — the coins that circulated in the market so that any seller could count on finding enough coins to start a day’s business” (186).

Concluding Remark

Not surprisingly, Schaps fails to demonstrate his thesis that coin=money revolutionized Greek economy and society. In my judgment, it is not nearly enough to cite the obvious advantages of coins in retail trade and to note that a Greek household might now express the entirety of its possessions in terms of money. With respect to the invention of coinage, the communis opinio has long been that it first appeared in the Greek world, not in the Near East. Schaps, to his credit, does explore the evidence for coinage in the Near East. However, he omits or misrepresents much and treats the remainder in an unbalanced manner. He has a tendency to make definitive statements not supported by evidence. Outside his central argument, he has many worthwhile things to say. The latter insights are sufficient to justify a favorable evaluation of the book.

Notes:

1. In Genesis 23.16, Abraham “weighed” for Ephron’s field the sum of 400 shekels of silver kesep ‘?ber lass?cher. The latter phrase is usually translated “current money of the merchant,” but the literal meaning is “silver passing for the merchant.” The expression makes us focus on the kind of silver that would be employed in commerce. Hurowitz (1986: 290, n.3), taking note of the Old Assyrian usage kaspum asshumi PN (personal name) equlam ittiq — “silver will travel overland to the name of PN” — concludes that the silver “must have been of a standard, recognized quality.” There is no mention in Genesis of a test of the quality of the metal. Hence, it seems reasonable that a merchant’s stamp or seal guaranteed the silver. Schaps (91, n. 50) rejects this interpretation. He (228, n. 37) is correct in insisting that the silver was weighed

2. Despite the dangers, some biblical evidence should be noted. In 2 Kings 12.10-12 we read that in the ninth century under King Jehoash: a box with a hole bored in it was set up in the temple for the collection of silver [presumably silver pieces] for a repairs fund; at a certain point the Temple officers removed the silver from the box and “tied it up”/”bagged it” [warrasuru]; then the silver was counted [wayyimnu]; and then the “measured”/”regulated” [metukkan] silver was given to contractors who delivered it to various workers at the Temple who used it to purchase timber and stone. The text does not say that the sacks were opened in order to make payments. Thus, expressing all due caution, the most direct understanding is that the sacks circulated outside the Temple.

3. There is some reason to believe that terms originally meaning “weigh” came to have the meaning “pay” (compare S 228, n. 37) The Greek material provides a possible example of this kind of development in meaning. A law of Solon states: “Silver is to be stasimon at however much the lender may choose” (Kroll 2001: 78; Schaps 2001: 97). The orator Lysias (later fifth-earlier fourth century BCE) explains “This stasimon, my good man, is not a matter of placing in a balance but of exacting interest at whatever rate one may choose” (10.18). Schaps (2001: 98) concedes that stasis may refer to weighing but he opposes Kroll’s interpretation of Lysias as referring to an obsolete procedure, the weighing of silver on a scale: “The claim hinges on the presumption that stasimon ‘properly’ should mean ‘weighable'; but there are no parallels for such a meaning.” What then does stastimon mean in Solon’s law? According to Schaps (2001: 98) the word means “nothing more than ‘is to be paid’.”

In fact, there are no other examples of the use of stasimos in the meanings “weighing” (Kroll) or “paying” (Schaps). What is clear is that “There is an absolute connection between the adjective stasimos and the noun stasis, both derived from the verb hist?mi ‘to stand up, to cause to stand up” (David Tandy personal correspondence dated March 2, 2004; LSJ s.v. hist?mi). The verb hist?mi is well attested in the meaning “to weigh.”

In classical Athens, long after the introduction of coins, we find the term obolostate? “weigh obols” in the meaning “making small loans” (LSJ s.v.). There is evidence here of an evolution from “weighing” to “paying.”

Abbreviations:

CAD: Gelb et al., The Assyrian Dictionary of the Oriental Institute (University of Chicago)

LSJ: Lidell, Scott, Jones, Greek-English Lexicon References

References:

Archi, Alfonso. (1993), “Trade and Administrative Practice: The Case of Ebla.” Altorientalische Forschungen, 20, 43-58.

Balmuth, Miriam S. (1971). “Remarks on the Appearance of the Earliest Coins.” In David G. Mitten et al. (eds.), Studies Presented to George M.A. Hanfmann. Cambridge, MA: Fogg Art Museum, 1-7.

Balmuth, Miriam S. (1975). “The Critical Moment: The Transition from Currency to Coinage in the Eastern Mediterranean.” World Archaeology, 6, 293-98.

Balmuth, Miriam S. (ed.) (2001). Hacksilber to Coinage: New Insights into the Monetary History of the Near East and Greece. New York: American Numismatic Society.

Balot, Ryan K. (2001). Greed and Injustice in Classical Athens. Princeton, N.J.: Princeton University Press.

Castle, Edward W. (1992). “Shipping and Trade in Ramesside Egypt.” Journal of the Economic and Social History of the Orient, 35,239-77.

Condon, Virginia. (1984). “Two Account Papyri of the Late Eighteenth Dynasty (Brooklyn 35.1453A and B).” Revue d’?gyptologie, 35, 57-82.

Dercksen, Jan Gerrit. (1996). The Old Assyrian Copper Trade in Anatolia. Leiden: Nederlands Historisch-Archaeologisch Instituut te Istanbul.

Foster, Benjamin R. (1977). “Commercial Activity in Sargonic Mesopotamia.” Iraq, 39, 31-44.

Gelb, I.J. et al. (eds.) (1956-). The Assyrian Dictionary of the Oriental Institute of the University of Chicago. Locust Valley, N.Y.: Augustin.

Hallo, William W. (1958). “Contributions to Neo-Sumerian.” Hebrew Union College Annual, 29, 69-107.

Hurowitz (Avigdor), Victor. (1986). “Another Fiscal Practice in the Ancient Near East: 2 Kings 12:5-17 and a Letter to Esarhaddon (LAS 277).” Journal of Near Eastern Studies, 45, 289-94.

James, T.G.H. (1984). Pharaoh’s People. Chicago: University of Chicago Press.

Joann?s, F. (1989). “108) M?dailles d’argent d’Hammurabi?” Nouvelles Assyriologiques Br?ves et Utilitaires, (no. 4 D?cembre), 80-1.

Kim, Henry S. (2001). “Archaic Coinage as Evidence for the Use of Money.” In Andrew Meadows and Kirsty Shipton (eds.), Money and Its Uses in the Ancient Greek World. Oxford: Oxford University Press, 7-21.

Kroll, John H. (2001). “Observations on Monetary Instruments in Pre-Coinage Greece.” In Balmuth (ed.), Hacksilber to Coinage, 77-91.

Larsen, Mogens Trolle (1982). “Caravans and Trade in Ancient Mesopotamia and Asia Minor.” Bulletin of the Society of Mesopotamian Studies, 4, 33-45.

Liddell, Henry George, and Robert Scott. (1968). A Greek-English Lexicon. Henry Stuart Jones and Roderick McKenzie, rev. ed. London: Oxford University Press.

Lipinski, Edward. (1979). “Les temples neo-assyriens et les origines du monnayage.” In Edward Lipinski (ed.), State and Temple Economy in Ancient Mesopotamia, II. Leiden: Brill, 565-88.

Malamat, A. (1998). Man and the Bible. Leiden: Brill.

Oppenheim, A. Leo. (1969). “Review of R. Bogaert.” Journal of the Economic and Social History of the Orient, 12, 198-99.

Peet, Thomas Eric. (1934). “Unit of Value s(‘ty in Papyrus Bulaq 11.” In M?langes Maspero, Vol. 1, Fasc 1. Cairo: Institut Fran?aise d?Archa?ologie Orientale du Caire, 185-99.

Refield, James M. (2003). The Locrian Maidens: Love and Death in Greek Italy. Princeton, N.J.: Princeton University Press.

Schaps, David M. (2001). “The Conceptual Prehistory of Money and Its Impact on the Greek Economy.” In Balmuth (ed.), Hacksilber to Coinage, 93-103.

Silver, Morris. (1985), Economic Structures of the Ancient Near East. Totowa, N.J.: Barnes & Noble Books.

Silver, Morris. (1995). Economic Structures of Antiquity. Westport, Conn.: Greenwood Press.

Stol, M. (1982). “State and Private Business in the Land of Larsa.” Journal of Cuneiform Studies, 34, 127-230.

Udovitch, Abraham L. (1979). “Bankers without Banks: Commerce, Banking, and Society in the Islamic World in the Middle Ages.” Center for Medieval and Renaissance Studies, University of California, Los Angeles, The Dawn of Modern Banking. New Haven. Conn.: Yale University Press, 255-74.

Morris Silver is Professor Emeritus of Economics in the City College of the City University of New York. His most recent publications about ancient economies are Taking Ancient Mythology Economically (Leiden: Brill, 1992) and Economic Structures of Antiquity (Westport, CT: Greenwood Press, 1995). “Modern Ancients” is forthcoming in Rollinger and Ulf (eds.), Commerce and Monetary Systems in the Ancient World , Fifth Annual Melammu Conference 2002. Professor Silver maintains a website on “Ancient Economies” at http://sondmor.tripod.com/index-html.

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):Middle East
Time Period(s):Ancient

British Trade Unions since 1933

Author(s):Wrigley, Chris
Reviewer(s):Friedman, Gerald

Published by EH.NET (March 2004)

Chris Wrigley, British Trade Unions since 1933. Cambridge: Cambridge University Press, 2002. viii + 106 pp. $40 (hardback), ISBN: 0-521-57231-2; $15 (paperback), ISBN: 0-521-57640-7.

Reviewed for EH.NET by Gerald Friedman, Department of Economics, University of Massachusetts at Amherst.

Professor of Modern British History at the University of Nottingham, Chris Wrigley prepared this volume for the Economic History Society as a summary text reviewing major issues in the history of British trade unions over the last seventy years. Despite its brevity, Wrigley’s text covers the most important topics in recent British history, including the rise of organized Labor in the mid-twentieth century, the role of unions in Britain’s survival and triumph in World War II, the question of a ‘British disease’ after World War II, and the decline of Labor since the election in 1979 of Margaret Thatcher. On each topic, Wrigley provides a succinct review of the major issues, a summary of recent scholarship, and a concise analysis. Both undergraduate and graduate students and all scholars unfamiliar with the terrain will find his work to be a useful introduction to the field.

Wrigley approaches British labor history judiciously, avoiding extreme statements or assertions of revolutionary changes. Instead, he emphasizes the continuity in British industrial relations and gradual historical change. He discounts, for example, arguments that the entry of Labor into Churchill’s wartime coalition governments marked a dramatic shift in the place of unions in British industrial relations. He acknowledges, for example, that British trade unions “emerged from the Second World War with both their size and their political and social status enhanced” (p. 7). But Wrigley also shows that union membership was growing rapidly even before the War, with half of the total growth in union membership for the 1935-45 period coming before 1939. Wrigley attributes much of the union growth in the 1930s to pro-union legislation and other state intervention in industrial relations by the National Government. Measures to rationalize wages and regulate competition, such as government sponsored Industrial Courts, had the effect of institutionalizing unions and insulating unionized firms and workers in them from nonunion competition. Wrigley questions whether these measures constitute full-blown corporatism in Britain. But they put wartime measures and union growth in a context of the longer term trend in British industrial relations towards corporatist-type arrangements.

Tight wartime labor markets and British Labor’s alliance with the government both contributed to continued rapid union growth during World War II. The appointment to the war cabinet of General Workers’ Union secretary general Ernest Bevin marked an explicit alliance of the British labor movement with the Churchill war government, and vice versa. Serving as Minister of Labor, Bevin supported regulations, such as the Emergency Powers (Defense) Act of 1940, that promoted production by restraining strikes and labor disputes. Wrigley outlines some of the concessions organized labor received in exchange for its support for production, including near automatic access to ministers and senior civil servants and regulations strengthening unions and their leadership. These two goals, maximizing production and strengthening unions, sometimes went together, such as when joint production committees of employers and trade union representatives were formed to discuss ways to boost production in the engineering and ordnance industries.

The involvement of unions in regulating labor relations and increasing production during World War II makes their post-war image particularly surprising. British unions were widely blamed for a ‘British disease’ where craft union organization led to disorderly labor relations, stagnant productivity, and inflationary wage settlements that forced monetary authorities to slow the economy. Drawing on an extensive scholarly literature, Wrigley defends British unions from most of these charges and denies that there was anything pathological about British industrial relations. Using comparative data on strike activity in ten industrialized economies, he shows that throughout the post-World War II period, the United Kingdom lost fewer workdays to strikes than most other countries. Wrigley also defends the macro-economic impact of British unions. Acknowledging that incomes policies were sometimes ineffectual, he vigorously defends them in general by arguing that agreements between governments and union leaders helped bring down inflation in some critical periods, such as when the Social Contract of the mid-1970s helped bring the inflation rate down quickly from 24 percent to 8 percent. Wrigley also cites evidence that incomes policies encouraged productivity bargains and sometimes fostered productivity growth.

After reaching over 12 million members in 1979, British trade union membership fell to barely 7 million members in 1997, or from over 50 percent of potential members to 30 percent. This marked a longer and further decline in union membership than in any previous period. Membership fell sharply during the Conservative Party governments of Margaret Thatcher and John Major, 1979-97, and has risen since the return of the Labor Party to power. The political climate was hostile to trade unions under the Conservative governments and Wrigley reviews a long series of legislation enacted to hinder unions and to discourage strikes. Still, it is hard to see how any, or even all, of this legislation could explain the period’s dramatic union decline.

It is also hard to explain the union revival under Tony Blair’s Labor Party government. Wrigley cites various efforts by unions to adapt to declining membership, including the amalgamation of several unions to save on administrative expense and to reduce jurisdictional disputes, as well as conscious efforts to recruit women, members of minority groups, and service and professional workers. He also cites union attempts to provide greater services to members to convince members, and nonmembers, of the value of union membership, including services such as discount credit cards, life insurance, telephone help lines, and legal services. Wrigley believes that these have “played a part in the … stabilization of membership at the end of the century” (page 39). One may question this conclusion.

Chris Wrigley has written a useful little book. It may be used profitably in undergraduate courses in British History, European Economic History, or Labor History. And it may be of value to scholars looking for a quick introduction and review of recent developments in British labor history.

Gerald Friedman has written on the economic history of the United States and Europe, on labor economics, and on the history of economic thought. He is the author of Statemaking and Labor Movements: The United States and France, 1870-1914 (Cornell University Press, 1998), and numerous articles on American and French unionism and union membership decline in advanced capitalist economies. Currently, he is writing a study of union decline in advanced capitalist economies, and a study of the decline of institutional economics in the United States.

Subject(s):Labor and Employment History
Geographic Area(s):Europe
Time Period(s):20th Century: WWII and post-WWII

The Size of Nations

Author(s):Alesina, Alberto
Spolaore, Enrico
, Enric

Published by EH.NET (February 2004)

Alberto Alesina and Enrico Spolaore, The Size of Nations. Cambridge, MA: MIT Press, 2003. x + 261 pp. $35 (cloth), ISBN: 0-262-01204-9.

Reviewed for EH.NET by Leonard Dudley, Economics Department, Universite de Montreal.

Nations tend to develop myths that attribute positive qualities to their founders and uniqueness to their political institutions. However, there is a quip attributed to Bismarck, “People will sleep better not knowing how their sausage and politics are made.” In this book, Alberto Alesina and Enrico Spolaore deconstruct the Bismarckian sausage factory in order to show us how states are made. They present their theoretical argument in eight steps, each beginning with a verbal outline followed by a formal model. Asterisks guide the non-technical reader around the algebraic danger zones. The result is a remarkable set of propositions that leaves little place for individual leaders, heroism, uniqueness, or even a subtitle.

The authors begin by discussing the simplest kind of law-making factory, a unitary state with pluralistic political institutions. They argue that in deciding where to place their political boundaries, voters trade off the advantage of a larger state in providing public goods at lower cost against the disadvantage of increased heterogeneity of preferences that would result. The authors show that total welfare is maximized when the world is divided into an optimal number of identical states.

Subsequent chapters add complexity to this initial core. A first modification allows for unilateral secession of border regions. Since residents of peripheral areas are more distant from the capital, where the public good is assumed to be produced, they receive fewer benefits for their taxes and therefore have an incentive to secede. As a result, under these more realistic assumptions, the equilibrium number of states is greater than the number that maximizes total welfare.

A second modification of the initial structure permits transfer payments that compensate potential secessionists in peripheral regions for the low benefits that they receive. If such schemes are feasible, then the equilibrium number of regions approaches the optimum. However, as the authors demonstrate in an elegant algebraic proof, if a border region agrees to join a larger state, there is a time-inconsistency problem. Once unification has occurred, since the median voter of the new state pays in taxes more than she receives in transfers, she will approve a decision to eliminate the transfer payments.

As Frederic Lane (1958) argued in a seminal paper, the vast majority of historical states do not fit the democratic model preferred by Western political economists. Rather, actual political decision-making has tended to be monopolized by a minority of citizens who provide protection in return for tax revenues. Alesina and Spolaore therefore devote a chapter to states ruled by a monopolizer of power. Their Hobbesian “Leviathan” is a ruler who need consider the welfare of only the fraction delta of his subjects. They demonstrate that when delta is equal to one-half, the result is the optimal number of states. More generally, with delta smaller than one-half, the outcome is a set of large states that are too few in number.

So far, the model predicts that actual democratic states will be too small to maximize the welfare of their citizens. How then can they account for evidence that the wealthiest states in terms of per-capita GDP tend to be small in terms of population? The authors devote a chapter to commercial policy, arguing that if trade barriers are lowered, it is easier for small states to be viable since they can reap scale economies by selling in foreign markets. As the authors recognize, however, trade policy is itself a function of country size, since smaller states will tend to favor freer trade.

The last three steps in the discussion deal with conflict, generalized war and federalism. The reader learns that there is also a two-way relationship between country size and conflict. For a given probability of conflict, a large country offers advantages to its citizens because it can produce the public good of protection more cheaply than a smaller country. However, since larger countries are less dependent on trade than smaller ones, a world of larger states can afford to have more frequent trade-disturbing international conflicts. As for the degree of decentralization, it depends on the extent of democracy. The higher the percentage of the population to be considered in political decisions, the greater is the optimal degree of decentralization.

An empirical chapter puts some of the authors’ principal hypotheses to the test. Are actual states too small for the efficient provision of public goods? Evidence that the public share is larger in small states than large states (with size measured by population), suggests that the cost of public goods is higher in the former. Does having too many states lower individual welfare? The higher per-capita GDP and faster per-capita economic growth in large states compared to small states in the postwar period again supports the theoretical result that the number of states is great than optimal from a welfare standpoint.

Finally, in an historical chapter, the authors apply their theoretical model to explain systematic changes in state size since the mosaic of small political units in medieval Europe. After 1500, they argue, the number of states declined, because an increase in trade restrictions and a greater frequency of international conflict made small states nonviable. Outside Europe, the movement to large empires was excessive, owing to the dictatorial nature of political power in these regions. In the late eighteenth and nineteenth centuries, rising external threats and a desire to have more weight in commercial disputes led to unification in the United States, Italy and Germany. Then, increasing protectionism in the late nineteenth century caused the industrialized countries to search for colonies as a vent for surplus production. Finally, a movement to free trade after World War II favored the breakup of colonial empires, including that of the Soviet Union, into a large number of small, open economies.

This book is a tour de force, offering a highly original synthesis of political science, economics, contemporary statistics, and historical facts. The argument is crystal-clear. And the authors succeed in building an inexorable momentum as they proceed step by step from the simplest model to the complexities of the real world. Their thesis that first, voters trade off the lower cost of public goods against increased heterogeneity in determining their state’s borders and second, this decision is sensitive to the probability of conflict and the cost of exporting to foreign markets, provides a powerful tool for explaining historical change.

But do the primary forces that determine state size lie on the demand side? For William McNeill (1982), it has been primarily military technology — a supply-side factor — that has determined state size. When military scale economies increased, he argued, it became less costly for centralized rulers to put down revolts in outlying regions. While the authors cite McNeill’s work, they fail to take into account that it implies a completely different vision of international conflict from the one they model. When military technology is stable over long periods, state borders will tend to remain in equilibrium and major conflicts should be the exception. Such was arguably the case for long periods of Chinese and Roman history, for the first part of the nineteenth century and for the last half of the twentieth century. Systematic conflict will then arise when the cost of providing protection changes, as occurred in the early modern period and between 1850 and 1950. In short, if we drop the assumption that the probability of conflict is exogenous, we need a theory that deals explicitly with changes in the cost of providing protection.

Moreover, on the demand side, can we assume that the willingness to trade. Too, is essentially exogenous? In his 1948 Beit lectures at Oxford University, Harold Innis (1950) argued that the size of nations was determined by the relative costs of storing, decoding and transmitting information. With the diffusion of standardized Latin and Carolingian script in the centuries preceding the high Middle Ages, he suggested, the cost of storing information in multiple copies fell. As a result, European states declined in size, and there arose considerable trade across political boundaries. In the early modern period, the diffusion of printing in the vernacular led a movement in the opposite direction, with the formation of large nation states and growing barriers to trade across linguistic borders. More recently, with a return toward the medieval pattern in many parts of Europe, can we ignore the decentralizing effects of the microelectronics revolution?

These considerations of military and informational technology suggest an alternative interpretation for the authors’ statistical results from the most recent period. The negative correlation between country size and the public share could reflect not the cost of public goods but the formation in the past of linguistic zones of different sizes. Voters today in large, heterogeneous states may simply be less willing to share their income than those in small, homogeneous states. If so, the negative correlation between the public share and country size need not be a sign that small states are inefficient.

The positive sign of country size in the income and growth regressions is also problematic. Here the effect of low income on the diffusion of military innovations is important. In the nineteenth century, the poverty of Africa and Asia made these regions easy prey for the colonial powers that conquered them in bits and pieces. When these powers subsequently retreated under pressure from nationalist movements, they left a large number of poor, small states whose boundaries bore no relationship to voter choice as modeled by the authors. Yet these states arguably dominate the authors’ regressions. Might causality not go from poverty to state size?

In short, by the end of the tour of the Bismarckian sausage factory, the reader will have satisfied her immediate hunger to understand how states are formed. Nevertheless, she will likely put the book down with the feeling that there is more to the question of the size of nations than the standardized frankfurters cranked out by Alesina and Spolaore. Of course, provoking the reader in this way may be precisely their intention. They have provided us with what will surely become a standard reference point for speculation about historical change.

References

Innis, Harold A., Empire and Communications (Oxford: Clarendon, 1950).

Lane, Frederic C., “Economic Consequences of Organized Violence,” Journal of Economic History, 18 (December 1958), pp. 401-417.

McNeill, William H., The Pursuit of Power (Chicago: University of Chicago Press, 1982).

Leonard Dudley is the author of The Word and the Sword: How Informational and Military Technology Have Shaped Our World (Oxford: Blackwell, 1991).

Subject(s):Urban and Regional History
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII

South Carolina and the New Deal

Author(s):Hayes Jr., Jack Irby
Reviewer(s):Couch, Jim

Published by EH.NET (January 2004)

Jack Irby Hayes, Jr., South Carolina and the New Deal. Columbia, SC: University of South Carolina Press, 2001. xvi + 290 pp. $34.95 (hardcover), ISBN: 1-57003-399-4.

Reviewed for EH.NET by Jim Couch, Department of Economics, University of North Alabama.

Jack Irby Hayes begins his book by describing the setting: in the 1930s South Carolina was a state in which slightly more than half of the population were African-American; more than half were Baptists; and approximately half were engaged in agriculture — which for all practical purposes meant the production of cotton. And South Carolina plantation owners at the time had a tremendous advocate in Senator Ed Smith, better known as “Cotton Ed” Smith. South Carolina’s other senator, James F. Byrnes, Hayes asserts, “emerged as the most influential senator from South Carolina — and quite possibly from the entire South — since John C. Calhoun” (p. 18). Both these individuals would play a large role in the implementation of Franklin Roosevelt’s New Deal.

After describing other members of South Carolina’s congressional delegation, Hayes focuses on the actual programs of the New Deal, how the various agencies were staffed, how they operated, and how each program impacted South Carolina. He criticizes the relief programs of the Hoover administration as unfair and too conservative. In particular, he asserts that local control meant an inequitable allocation of aid to “the unemployed middle class” in an effort to “not upset the existing class structure,” and that “obviously, it was time for the federal government to intervene in the interest of fairness and sufficiency for all” (p. 38).

Strangely, he then goes on to report egregious instances of corruption in the implementation of the new federal programs. The book provides additional evidence, albeit from a single state, to support the growing consensus among economists that the New Deal was little more than a gigantic vote-buying scheme. Politics, unfortunately, served as the impetus for much of the actions of the various agencies created by Roosevelt.

One anecdote tells how a particular congressman was punished for his rather prescient views. John J. McSwain represented South Carolina’s Fourth Congressional District where the cities of Spartanburg and Greenville are located. McSwain believed that air power represented the future of military combat and argued for a separate branch of the arm forces — an Army Air Corp – and wanted the number of planes expanded from 1800 to 4400. Furthermore, McSwain predicted that America would eventually be attacked from the air. Military officials dismissed his ideas and relations between the representative and members of Roosevelt’s cabinet grew ever more acrimonious. When Greenville applied for Public Works Administration funding for a post office, a swimming pool, an airport and a stadium, all the projects were delayed in an effort to send McSwain a message.

Support for FDR waned as the administration pushed for the so-called second New Deal. Hayes contends that the residents of South Carolina were less than excited about Roosevelt’s “attempts to advance African-Americans” (p. 156). He explains that the average South Carolinian “had in mind a fine tuning of a state and national economy already on the road to recovery, not the revolution in separation of powers, race relations, and industrial relations that followed” and began to “distrust at least a part of the New Deal as too Northern, too radical and too minority oriented” (p. 148).

Indeed, Hayes repeatedly asserts that Roosevelt’s unprecedented care for African-Americans created tension between the administration and South Carolina’s congressional delegation. However, in one of his most interesting chapters, “A New Deal for African Americans,” Hayes documents how many of these programs adversely affected blacks. A revolution of how blacks were treated simply did not occur. Hayes claims that the New Deal did offer some benefit to minorities: “for many blacks … the New Deal completed what historians call ‘psychological emancipation'” (p. 168). It is difficult to imagine that southern politicians were overly concerned about something as nebulous as psychological emancipation.

Hayes’ assertion that support for the administration fell off in FDR’s second term is certainly valid but his claim that racism was the cause ignores significant evidence to the contrary. The book completely ignores the work of the Senate Special Committee to Investigate Unemployment and Relief chaired by South Carolina Senator James Byrnes (in fact, the committee became known as the Byrnes Committee). The Committee was created in part to investigate the activities of the Works Progress Administration (WPA). Harry Hopkins, the Director of the WPA, was asked to explain why certain regions of the nation received larger appropriations than other sections. Hopkins was far less than forthcoming which led the New York Times to write (December 29, 1938): “The allocation of WPA funds cannot indefinitely be permitted to rest upon the personal discretion of any one man or small group of men. The relief funds belong to the whole country. Their allotment must be placed upon a basis that the whole country understands clearly and accepts as fair.”

Hayes criticizes Byrnes for attempting to alter WPA legislation by adding a uniform match of 25 percent (Hayes incorrectly reports a 50 percent matching requirement by Byrnes) so that every state and locality would face the same requirement. The author claims that “Byrnes was miffed by an earlier presidential promise to request no more than $1 billion” (p. 28) rather than the requested $1.5 billion. In reality, Byrnes, like other southern senators, had become cognizant of the fact that WPA matching requirements varied considerably from state to state. For example, Tennessee, a relatively poor state, contributed 33.2 percent of total WPA expenditures while the relatively rich state Pennsylvania contributed only 10.1 percent. South Carolina’s match was 20.8 percent. Georgia Senator Richard Russell bitterly complained: “the poorer states — discriminated against as they are in the matter of per capita expenditure, in monthly wage, and in hourly wage — are, in addition, required to contribute more from their poverty toward sponsored projects than the wealthier States are” (U.S. House of Representatives 1939: 210). The Byrnes proposal would have created a level playing field so that all states would be treated impartially. By rejecting a uniform match, the creation of WPA jobs were at FDR’s discretion and, as economists have shown, he used his discretion for political advantage sending more jobs and dollars to states he needed in the next election.

Hayes contends that Roosevelt went to work against the Byrnes proposal to save the program. “Realizing the Byrnes proposal would cripple the WPA, Roosevelt and Harry Hopkins … began to marshal the opposition” (p. 29). How the proposal would have crippled the WPA is not made clear in the book.

Likewise, Hayes points out that Byrnes was annoyed with the allocation of WPA largesse. Rather than portraying Byrnes as a representative fighting to make sure his constituents received an equitable slice of New Deal dollars, the author asserts, “Apparently, Southern nationalism emanating from the Confederate War was never far below the surface in the senator’s personality” (p. 29). Hayes is even more critical of South Carolina’s other senator: “Apparently paranoid in his advancing years, he claimed to have ‘uncovered’ nothing less than a conspiracy against the South and Southern Democracy” (p. 35). Hayes applauds the people of South Carolina and their representatives when they support the New Deal and castigates them when they begin to oppose it. The New Deal, he asserts, was too far reaching in its advancement of blacks and this caused their apostasy; not the fact that South Carolina received meager benefits while other, more politically valuable states, received the lion’s share.

His analysis of what the New Deal accomplished is equally shallow. Hayes asserts that the New Deal “shored up individual self-esteem and increased a passion for learning” (p. 203). He continues, the New Deal “recaptured the American spirit of community for all South Carolinians and restored their faith in capitalism, democracy and progress” (p. 203). Those readers interested in a serious analysis of the legislation should read Rethinking the Great Depression by Gene Smiley (2002).

Jim F. Couch is a Professor of Economics at the University of North Alabama. He is the coauthor of The Political Economy of the New Deal, Edward Elgar, 1999, with William F. Shughart.

Subject(s):Government, Law and Regulation, Public Finance
Geographic Area(s):North America
Time Period(s):20th Century: Pre WWII