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Schumpeter’s Market: Enterprise and Evolution

Author(s):Reisman, David
Reviewer(s):Sautet, Frederic

Published by EH.NET (September 2005)

David Reisman, Schumpeter’s Market: Enterprise and Evolution. Cheltenham, UK: Edward Elgar, 2004. vii + 294 pp. $120 (hardcover), ISBN: 1-84376-164-5.

Reviewed for EH.NET by Frederic Sautet, Mercatus Center, George Mason University.

Over the last two decades, Joseph Schumpeter’s work has experienced a resurgence of interest. Not only are Schumpeterian models of economic growth now explored by many academics (e.g. the works of Richard Lipsey and Kenneth Carlaw), but also some economists are starting to realize that the multi-disciplinary approach to economics, as Schumpeter practiced it, may be more fruitful than it was once thought.

In the last decade or so, several biographies and intellectual histories of Schumpeter have been published (e.g. the works of Richard Swedberg and Yuichi Shionoya), along with many articles on his life and work. David Reisman’s book, Schumpeter’s Market, is a welcome addition to this growing field of research on Schumpeter’s work and his influence in modern day economics.

Reisman’s book is an intellectual history of the work of Schumpeter with a special focus on “three irreducible constructs”: market, enterprise and evolution. Reisman’s impressive knowledge of Schumpeter’s intellectual output enables him to trace the evolution of Schumpeter’s life-long themes. It is not an easy task to present a picture of Schumpeter’s vision, as there are many tensions and complexities in his intellectual history. While Reisman provides the reader with ample details about Schumpeter’s work, the book misses an overall explanation of the tensions and complexities of his work.

After a short introduction, Reisman presents, in chapter 2, what he calls Schumpeter’s vision. This vision is two-fold. On the one hand, it is made of a substrate: the capitalist system based on free exchange and the existence of markets. On the other hand, it is made of culture, ideas, values, polity and what makes the civilization of capitalism. One cannot study one without the other, and the task at hand for the economist, as Schumpeter saw it, is to understand how the two interact. This is what makes Schumpeter’s vision appealing: economics to be well practiced must reinvent itself and grow beyond its boundaries.

Reisman explains that Schumpeter, while against socialism and the socialists, never claimed to have any solution to the practical problems of the world. Schumpeter was a historical determinist who, like Marx and Engels before him, thought that socialism was inevitable. As Schumpeter put it: “There is inherent in the capitalist system a tendency toward self-destruction” (p. 189). This, along with the theme of capitalism and innovation, was the most recurrent idea in Schumpeter’s work. In Reisman’s words: “Capitalism was under threat in 1950 as it had been under threat in 1918. Schumpeter throughout the whole of his academic career was predicting the end” (p. 208).

Paradoxically perhaps, Marx and Schumpeter had much in common agreeing on historical analysis and on the direction the world would take in the decades to come. However, Schumpeter did not follow Marx on the economics, as it was clear in his mind that the capitalist system worked better than Marx thought. To Schumpeter, the market was not subject to the various problems enumerated by Marx (e.g. the falling rate of profit). But, the tension was there: while Schumpeter defended capitalism against Marx, he also explained that it contained the seeds of its own destruction.

Chapter 3 presents the fundamental issues that Schumpeter discussed throughout his life. Schumpeter held that a pre-analytic vision was necessary for any science to take place. (This idea is crucial to the explanation of entrepreneurial activity as Kirzner has argued in his work: entrepreneurs do not grope at random, they act on some sort of a pre-scientific hunch.)

Reisman explains that Schumpeter also had a love affair with Walras, whom he considered as the greatest theoretician of economics. However (and paradoxically), Schumpeter saw comparative statics ? la Walras as a world away from actual situations in which change was without end.

Finally, economic sociology and economic history are two other fields that Schumpeter avidly explored. He saw the first one as the study of institutions, structured relationships, conventions, etc and the second one as necessary to understand causation and mechanisms in the present world.

Chapter 4 considers capitalism in Schumpeter’s writings as well as the role of entrepreneurship (and innovation, which he saw as identical). The essence of capitalism is creative destruction and the entrepreneur is its source. Entrepreneurship is the essential engine which propels the world; it is what makes economic evolution possible. Schumpeter, explains Reisman, identifies the entrepreneur as the agent of change in the social system. However, the main function of entrepreneurship is to put into practice, not to create from nothing. The entrepreneur innovates, which consists in getting things done. This relates to a very important distinction in Schumpeter’s work: invention may lead to innovation but the latter doesn’t necessarily proceed from the former.

In Chapter 5 Reisman presents Schumpeter’s view of the role of the large corporation. While Schumpeter defends the dynamic of market capitalism, he also argues that capitalism is inexorably evolving towards corporate capitalism, which will ultimately lead to its demise. Big corporations will sooner or later be stifled by their bureaucratic structures, which will tend to suppress inner entrepreneurial activity. Schumpeter also believed that the large corporation is a powerful engine of technological advance. In other words, market structure (i.e. oligopoly or monopoly) does make a difference to innovation. Reisman is quick to point out that this hypothesis (i.e. monopoly leads to innovation) has not been proven. Scherer for instance conducted a number of studies to find a relationship between firm size and productive research and development but couldn’t find any. However, Schumpeter also argued that innovation leads firms to be monopolists, at least for a while, and thus market structure is both a cause and a consequence of innovation. What Schumpeter, in his vision of the role of the big corporation, seems to overlook is the innovative role of the small firm. Reisman justly argues, in a very Hayekian fashion, that the small firm has local knowledge and is often at the origin of major innovative changes (e.g. Apple Computer and Xerox Corporation).

The sociology of capitalism is the subject of chapter 6. First, Reisman shows Schumpeter’s interest for social class analysis. While agreeing with Marx that class conflict deserves attention, Schumpeter also makes the point that the social mobility found in the capitalist system reduces the scope for class conflict. Clearly capitalist entrepreneurs need proletarians and vice versa.

Second, Schumpeter, arguing against Marxism and Leninism, contends that capitalism is not the cause of aggression, militarism and conquest. Imperialism in Schumpeter’s view is a survival from the pre-capitalist age of economic evolution. Aggression is not part of the system of exchange of market capitalism but a left-over from the tribal past.

Finally, Reisman goes over the motives for entrepreneurial activity. Clearly, entrepreneurs, in Schumpeter’s work, are motivated by pecuniary success. However, this is not the only motive, the entrepreneur also has the will to conquer, the impulse to fight and the desire to compete for the sake of it. Schumpeter’s sociology of entrepreneurship, remarks Reisman, is in some ways similar to that of Veblen. Although the entrepreneur may want to succeed to afford conspicuous consumption, he may also have other final motives in mind, such as showing his intrinsic value as a superior man to others. Schumpeter sees the desire of a better future for one’s own family as running deep in homo economicus, and this may be the most important entrepreneurial motive. A discussion of the role of profit (in relationship to entrepreneurship) in a disequilibrium situation is missing here — especially as Schumpeter’s cycle theory assumes entrepreneurship in a world without profit.

Chapters 7, 8 and 9 discuss the issue of socialism at greater length. While Schumpeter goes out of his way to defend capitalism, he also argues in favor of historical determinism: socialism will inexorably win the final battle. Big business bureaucracy is here to stay and the evolution from corporation to state will take place. Corporate capitalism develops and will become the dominant mode of organization. The paradox that Schumpeter tries to unveil is that “capitalism fails because it succeeds” (p. 132). Entrepreneurs are ousted and the bourgeoisie is expropriated. Schumpeter does not think that there could be a “third way” between capitalism and socialism. Capitalism bears the seeds of its own destruction and thus the only way in the end will be socialism.

There are problems with Schumpeter’s view of course. For instance, Reisman mentions that even Galbraith thought that Schumpeter had failed to grasp the differences between business bureaucracies and state bureaucracies. Moreover, Schumpeter seemed to have been influenced by the work of Berle and Means on ownership and control in the corporation and dismisses completely the role private ownership plays in maintaining competition alive through the capture of profits. It is not true that big corporations are kept out of the gale of creative destruction. Reisman explains that the small-firm sector is always a potential danger for any firm in the market. But he fails to mention the crucial work of Henri Manne, which addressed the issues raised by Berle and Means on the one hand, and Schumpeter on the other regarding the future of the joint-stock corporation.

Schumpeter would have retorted that it is not only the economic deficiencies of capitalism that will bring its own end; it is also because of the superiority of socialism. Socialism has a comparative advantage in the area of productive efficiency. Schumpeter seems to subscribe to the view that capitalism implies “anarchy of production,” a problem that socialism through careful planning can take care of.

As Reisman points out, Schumpeter does not seem to grasp the informational challenge to obtain productive efficiency. He ignored the arguments put forward by Mises and Hayek in the socialist calculation debate and focused exclusively on the ideas of Barone, Lange, and Lerner on market socialism. Schumpeter’s socialism is based on the Ministry (i.e. the central planning board) deciding the quantity supplied. Reisman notes that Schumpeter never explains where this mysterious supply comes from. Moreover, Schumpeter seems to underestimate the latitude politicians and civil servants would have to impose their choices instead of some supply that would maximize social utility. There is no political economy of socialism in Schumpeter’s view.

Here, Reisman underemphasizes the importance of the socialist economic calculation debate in the 1930s. In Mises’ view, no economic calculation by the central planning board is possible in the absence of individual property rights on the means of production. The problem of market socialism is not the result to be obtained (i.e. minimizing average cost and equalizing marginal cost to price) but the idea that the results could be obtained outside the market system. No economist interested in the debate would have ignored Mises’s and Hayek’s position. The fact that Schumpeter ignored it is very strange to say the least and deserves an explanation, which is missing in Reisman’s book.

At the end of the day, explains Schumpeter, socialism offers a “new cultural world.” What eventually drives people to socialism is its appeal as a social system: people will stand for the equality socialism will provide, while they will turn down the values of capitalism. Capitalism is dependent on cultural continuity for its success, but this is also its main vulnerability.

Chapters 10 and 11 dig more deeply into the mechanisms that transform capitalism and lead to a socialist commonwealth. Schumpeter thought that the weakening of the aristocracy in Europe would lead to a decline in the ethos of self-discipline and leadership. In destroying its own feudal roots, capitalism undermined itself. Moreover, it led to the rise of a new intellectual class living off the production of capitalists and entrepreneurs. This was the result of too much education and inevitably led to over-qualified people with low-paying jobs. Those who chose to become intellectuals became naturally hostile to capitalism.

The decline of the family and family values reduced the time-horizon of businessmen and their will to fight the rise of the bureaucracy. More importantly perhaps, Schumpeter warns of the danger of increased taxation, public expenditure, and government regulation, as it creates unintended consequences that will call for more taxation and spending.

When one looks at the whole picture: the fall of the aristocracy, the rise of the intelligentsia, the emergence of the big corporation, and the lack of cultural appeal of capitalism for the masses; the future is very gloomy. Reisman correctly points out that Schumpeter failed to see the robustness of the capitalist system, and the extent to which opinion leaders and intellectuals are dependent on democracy for their own survival. Even at the height of the 1930s when half of Europe was turning away from democratic and liberal principles, the masses of Western Europe and North America were not inspired by the totalitarian Russian revolution. Reisman has a point, but he underestimates the threat lobby groups may represent for the future of the liberal democratic order. He should have discussed here the rent-seeking society argument developed by the Virginia public choice school and by Mancur Olson in his work on the logic of collective action. In some ways, Schumpeter could be considered as a forerunner of the public choice literature.

Reisman also argues against Schumpeter (and Mises for that matter) that the middle of the road is possible, as the last fifty years have shown. Social democracy is an alternative to socialism: “Fettered capitalism functions adequately even if not reasonably well” (p. 218). It remains to be seen whether the social problems (such as high unemployment, soon-to-be bankrupt public retirement schemes, etc) that plague many Western European countries are part of what Reisman calls a “well functioning economy.” The answer is rather that both Schumpeter and Mises were right: there is no middle of the road policy in the long run. The difference between these two authors is that Mises (and Hayek as well as many other Austrian economists) never thought that pure capitalism inexorably degenerated into socialism.

The last two Chapters (12 and 13) focus essentially on the economics of Schumpeter and his theories of growth and cycles. Schumpeter stood firmly against the rising tide of Keynesianism. Investment will never be deficient because creative destruction will always be at work. Laissez-faire meant that entrepreneurial forces would always be unleashed for the betterment of the masses. Reisman provides this very interesting quote from Schumpeter written at the height of the Great Depression in Europe in 1931: “The capitalist system as such needs neither regulation nor planning, in a depression or outside of a depression, in order to function. … It operates on its own, and with results unprecedented in economic history. The logical solution for a series of serious shortcomings would not be an increase but a reduction in State intervention” (p. 234).

Schumpeter criticized Keynes’ General Theory for not being general at all but entirely specific (to a situation of crisis such as the Great Depression). However, by the time he published Capitalism, Socialism and Democracy in 1942, Keynesian principles had already swept the department of economics at Harvard.

Reisman notes that in the 1930s Schumpeter held the view that the way out of a crisis is through less government (as in the quote above). However, Schumpeter also promoted emergency spending as a possible solution to very serious crisis (and remember that he did not want to take policy positions). Schumpeter added a section to the second edition of Capitalism, Socialism and Democracy in 1946, in which he made that point. “Schumpeter late in life,” Reisman explains, “appears to have developed a tendency towards Keynesianism” (p. 237).

Schumpeter’s cycle theory is well known. It starts in a situation of equilibrium. The basic idea is that some firm innovates, and this disrupts the equilibrium in place. Because of its success and the monopoly rents it derives, the firm’s activities attract other firms, which all engage in the same activity. The important detail is that entrepreneurial activity is entirely financed by bank credit, which fosters the boom. At some stage, there is over-supply of output. This triggers a fall in prices in order to liquidate the stocks and this leads to the bust. In Schumpeter’s view, it is the innovators demanding money who create the cycle and not the loose bank rules. In this sense, cycles are inherently part of capitalism.

There are many problems with Schumpeter’s cycle theory. As Reisman points out, Schumpeter blamed the entrepreneur rather than the banking system because he did not believe that bank credit could cause disruptions between the monetary and the real spheres. Some economists criticized him for holding this view because the cycle has to have a pure monetary component. Schumpeter does not explain why there is a clustering of entrepreneurial errors. Austrian economists such as Mises and Rothbard have based their theory of the business cycle on the clustering of entrepreneurial errors induced by bank credit. This clustering cannot be the result of general entrepreneurial activity, as it is inconsistent with the nature of entrepreneurship; it must be the result of false price signals that entrepreneurs follow. Reisman should have explored this avenue in greater detail, as it is the most powerful criticism of Schumpeter’s cycle theory.

Schumpeter’s cycle theory is also a theory of innovation. It begins in a Walrasian general equilibrium with a zero interest rate (no time preference), no savings, and given consumer values and tastes. In such an environment, the only possible source of change is technology via entrepreneurship. Schumpeter has been hailed for his insights into economic development when his main contribution was simply to imagine a way out of the Walrasian box of his own making. In the absence of profits in equilibrium, it is difficult to understand how any entrepreneurship could take place. Moreover, in the absence of savings, capitalists cannot finance entrepreneurial activity and thus one has to resort to pure bank credit. What Schumpeter demonstrated as being inherent to capitalism was a feature of his own model. There again, Reisman neglects to explore this crucial problem of Schumpeter’s theory.

This book will be a reference to economists interested in the complexities of Schumpeter’s work, especially in so far as markets, firms and evolution are concerned. Overall however, the organization of the chapters is somewhat confusing: there are repetitions of the same themes in different places for no obvious reason (e.g. the issues of aristocracy and intelligentsia are introduced and discussed in various chapters). A different arrangement of the chapters may have facilitated the reading of the book. This being said, it does reflect the complexity of the evolution of Schumpeter’s thought.

Moreover, one has to wait for the conclusion to obtain an overview of the tensions and contradictions of Schumpeter’s work. A chapter summarizing Schumpeter’s views and the complexity of his thought is missing. An explanation of the major tension of his career (identified in chapter 2) is needed somewhere towards the end (the idea of the inevitable coming of socialism while capitalism is the superior social system). Instead Reisman provides pieces throughout the book without recapitulating.

Schumpeter had a vision of economics and social science that was more encompassing than most others in his days. Reisman — who is Professor of Economics at the Nanyang Technological University, Singapore and Professor Emeritus of Economics at the University of Surrey, UK — does a good job at presenting the complexity of Schumpeter’s thought, but he leaves the reader somewhat alone to figure out the reason why Schumpeter’s vision never entirely succeeded.

Frederic Sautet is a Senior Research Fellow at the Mercatus Center at George Mason University. His publications include An Entrepreneurial Theory of the Firm published by Routledge in 2000. He is also the editor of the Mercatus Policy Series.

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

Locust: The Devastating Rise and Mysterious Disappearance of the Insect that Shaped the American Frontier

Author(s):Lockwood, Jeffrey A.
Reviewer(s):Amato, Anthony J.

Published for EH.NET (March 2005)

Jeffrey A. Lockwood, Locust: The Devastating Rise and Mysterious Disappearance of the Insect that Shaped the American Frontier. New York: Basic Books, 2004. xxiii + 294 pp. $25 (cloth), ISBN: 0-7382-0894-9.

Reviewed for EH.NET by Anthony J. Amato, Center for Rural and Regional Studies, Southwest Minnesota State University.

In Locust: The Devastating Rise and Mysterious Disappearance of the Insect that Shaped the American Frontier, Jeffrey A. Lockwood examines the locust swarms that devastated European-American agricultural operations in the Central North American Grassland and Rocky Mountains. In the second half of the nineteenth century, both regions suffered periodic locust plagues, the largest of which came in the middle of the 1870s and stripped the landscape of vegetation from Alberta to Arkansas. Despite all its power and significance in nineteenth-century North America, the Rocky Mountain locust (Melanoplus spretus) remains largely mystery. Lockwood, an entomologist who is a professor of Natural Sciences and Humanities at the University of Wyoming, chooses to tell of the story of these swarms and their sudden cessation as a “whodunit.” The crime is the mysterious end of the advances, and Lockwood as the detective poses the key questions that guide his investigation: why did the swarms (the victim) die, and, if they were killed off, who did it and how? For the detective, the mystery is compounded by the possibility that there might been no victim at all and hence no crime. (Until quite recently, scientists were unsure about what the Rocky Mountain locust was and whether it was actually a separate species.) Locust reopens the investigation into this unsolved case. Unconvinced by explanations ranging from livestock-versus-bison grazing to European-American fire suppression, Lockwood seeks an air-tight ecological explanation to two lingering questions: what specific events and conditions converged and gave rise to the massive swarms of insects, and what specific events and conditions caused their sudden disappearance in the first decade of the twentieth century. In the fourteen chapters of his book, he conducts his investigation and makes a case for insecticide, but an insecticide that was committed by different perpetrators in a different manner than previously alleged.

In chapters one though five, Lockwood sets the stage and outlines the scene of the crime. People have long struggled — and continue to struggle — with the hungry hordes. Their unstoppable advances have drawn different reactions. Medieval Europeans, for example, debated the proper response to locusts — were they a punishment from God and should they be accepted by a penitent people, or were they Satan’s minions and should they be fought? Drawing on another view present in the Christian tradition, mid-nineteenth-century Americans cast the plagues as divine tests and their first response was “to retaliate” (p. 49). They fought the insects by every means that they had their disposal, including converted reapers, voracious chickens, and arsenic compounds, and in their spare time they even dreamed up fanciful new ways such as the “horse-drawn flamethrower,” which never made it off paper and into the field (p. 51). When “Christian faith and Yankee ingenuity” failed to contain the plagues of the 1870s, farmers turned to a “surefire solution” — government (p. 63). At first, government intervention proved problematic. Politicians were loath to encourage demoralizing dependence and unsustainable land rushes, and the scope of the disasters exceeded anything that states could address. In the end, the federal government intervened, offering relief aid to the stricken and launching pest management initiatives. This limited intervention came about because a collapse of agriculture on frontier could reach beyond the confines of the region and threaten Eastern creditors, railroad barons, and the captains of manufacturing, all of whom had built their empires on the successful agricultural settlement of the West.

In chapters six though nine, Lockwood examines the locust’s quick exit and scientists’ efforts to understand the creature. A trio of scientists, Charles Valentine Riley, Norman Criddle, and Boris Petrovich Uvarov, formed the modern understanding of the locust. Riley, who “pioneered … integrated pest management” (p. 111), focused the fight on the insects’ eggs, searched for natural enemies, and stressed the need to diversify agriculture. Norman Criddle, who might have been “the last man to have seen a living Rocky Mountain locust” (p. 128), concocted and perfected powerful pesticides, while making extensive contributions to the classification and understanding of locusts and their meeker fraternal twins, grasshoppers. Uvarov, who did his work on Eurasian and African locusts, discovered that environmental conditions (population changes, crowding, and migration) could trigger a metamorphosis in locust species, making members of the same species appear as though they were an entirely different species. While twentieth-century scientists were making breakthroughs in taxonomy and ecology, few noticed that the hordes of locusts had vanished. By the mid-1930s, only a group of perplexed specialists wondered what had become of the Rocky Mountain locust (spretus): had it retreated to isolated valleys, had it lost its place to more successful grasshoppers, or had it changed in form to become or revert to sanguinipes, a more widespread meeker species? An analysis of the genitals of sanguinipes and spretus, however, revealed almost insurmountable differences between the two, and no experiment in breeding and environment succeeded in inducing a spretus-like state in sanguinipes.

In chapters ten through fifteen, Lockwood reviews others’ cases and makes his own case. Not content to rely on mere circumstantial evidence and to resolve the species question once and for all, Lockwood turns to DNA. In the beginning and at the end of his book, he recounts his treks to alpine glaciers in western Wyoming in order to obtain samples of insects from past centuries. On these treks, he collected frozen specimens and precisely dated their demise by using glacial layering, advances, and retreats. He then submitted the specimens for full DNA profiling, and the lab results that came back showed that his samples of spretus had a DNA profile completely different than that of the closest living species. Therefore, the Rocky Mountain locust was a distinct species that is now extinct.

Lockwood then turns to how and who. As early as the 1940s, many scientists accepted spretus was extinct. Faced with a missing insect, they began to put forward theories as to its rapid rise and hasty demise. The first scientists to address the issue insisted that settlers’ introduction of alfalfa did it in because the locust feasted on this junk food and the result was undernourished nymphs. Subsequent investigators, more informed by ecology, maintained that the bison’s demise brought about the locust population explosion but the spread of cattle-grazing ultimately destroyed the insect. Finding these theories inadequate and unsatisfactory, a third group of scientists focused on changes in climate or on the link between fire, Native Americans, and grasslands, with European-American fire suppression responsible for the destruction of the conditions and habitat best for the locust. After highlighting the gaping holes that he and others have found in all of these theories, Lockwood advances his own explanation. It was settlers’ activities in Rocky Mountain river valleys that killed the locust. In the 1880s and 1890s, settlers poured into mountain valleys, which formed the insect’s permanent zone, its home. This small zone served as a nursery critical for its early life stages as well as an area in which it could always thrive. Here there was just enough moisture needed to support a constant low-lying vegetative cover, and the insect found loose soils necessary for its eggs. Agriculture destroyed this home. Farmers flooded great stretches of land for alfalfa, their cattle and horses overgrazed and compacted the soil, and their plows destroyed and unearthed the eggs. Together, these acts created killer cold in the topsoil and extremely damp conditions that encouraged blight diseases in spretus. It was just a matter of time after farmers’ entry into the mountains before the locust was killed off. Case closed.

Lockwood concludes Locust by describing an encounter that he had with an insect that appeared to be spretus. Overjoyed at first, he decided to conceal the location of his find for fear that if this indeed was spretus, he would endanger it by disclosing its location. The locust, he points out, is seen as a pest and thus enjoys no protection under the Endangered Species Act. For him, the destruction of the species as a menace is a more likely prospect than its protection for biodiversity’s sake. He takes this moment to speculate about the fate of the locust, which is the antithesis of charismatic megafauna. He also contemplates people’s attitudes toward nature and their connections to the environment.

Lockwood has provided a fascinating and convincing account. He turns to a broad range of sources and studies to open up the past. In order to support his points about species, life stages, and ecology, he draws from the large body of taxonomic, ecological, and physiological studies of locusts and grasshoppers. Nevertheless, the reviewer would have liked to get a stronger sense that Lockwood has caught the perpetrators — the valley settlers — in the act. He too readily allows loose macro-level statistics and crude calculations to take the place of local facts and conditions. Documentation of agriculture in specific valleys does exist. Because they were prime real estate with fertile soils and water rights, valley parcels did not often escape documentation as nearby highland and plains areas often did. Commemorative county histories and land records offer ample detail about exactly who first cultivated which land when. A little more archival and printed evidence would allow him to make his case not just with a preponderance of the evidence, but it would dispel any reasonable doubt.

At points, Locust could benefit from a more thoughtful approach to style and presentation. The writing is clear and compelling. Nevertheless, some readers will be irritated by Lockwood’s humor, digressions, and his anachronistic and over-the-top references, which include comparing a medieval animal trial to the O.J. Simpson trial. The reviewer sees a need for a more firm editor who could have solved these problems, but the reviewer acknowledges trade-offs, especially in a world where too many academic books are dull and dry. Locust could also benefit from drawing on more works in environmental and economic history. Lockwood makes reference to the works of Stephen Pyne and Gilbert Fite, but other important works escape his attention. These works could aid him in his search for a smoking gun. They also could help him put his history in a broader context and appreciate the complex intersections of nature, humans, and economy. His last chapter rightly stresses present responsibilities and calls on readers to care, but its emphasis on “our agrarian ancestors” (p. 259), collective responsibility, and the singularity of past destruction distorts the very past he encourages readers to care about.

Locust is a major contribution to the history of North America and it has implications well beyond the boundaries of environmental studies. Without the regular disasters, the economic development of the American West from Iowa to Utah would have been far different, and the abrupt end of the regular swarms of devastation changed agriculture and settlement. It is in the field of environmental history where Lockwood makes his mark though. Prior studies of the locust plagues, such as Annette Atkins’s Harvest of Grief, did not focus on them as environmental events. For Lockwood, the locust’s rise and disappearance are first and foremost environmental events. Taking an ecological approach and recognizing that creatures are significant for what they are and for what they do, he concludes that the regular advances of swarms formed “an immense aperiodic energy flow that linked life processes on a continental scale” (p. 137). In light of many recent environmental studies in the humanities, it is refreshing to come across a piece written by a research scientist willing to test theory and find truth. Lockwood investigates real insects, not metaphors and rhetoric, and historians should seek inspiration in his treatment of a real creature in a real environment. The book speaks to scientists, too. Many of those working in the natural sciences will be taken by his ability to reach an audience, but they should not overlook his success in creating a living and relevant natural history. Locust, not just another piece toward the completion of the puzzle of the dead past, demonstrates the power of past investigations in solving the mysteries of the present. As the reviewer read the book, swarms of locusts threatened sites across northern Africa and even islands in the eastern Atlantic. As news of the hordes’ advances spread, Lockwood’s investigation of spretus suddenly became the present. A demonstration of great erudition and enthusiasm, Locust‘s blend of history, science, and storytelling appeals to casual pleasure readers, while challenging scholars in many fields. Beyond having great popular and scholarly appeal, Locust offers precious insights into the often mysterious connections between people and environment.

Anthony J. Amato is an associate professor at Southwest Minnesota State University’s Center for Rural and Regional Studies. He is the author of “The Flow of History: An Essay on Rivers, the Past, and the Present.”

Subject(s):Historical Geography
Geographic Area(s):North America
Time Period(s):19th Century

Cultures in Contact: World Migrations in the Second Millennium

Author(s):Hoerder, Dirk
Reviewer(s):Cohn, Raymond L.

Published by EH.NET (April 2004)

Dirk Hoerder, Cultures in Contact: World Migrations in the Second Millennium. Durham, NC: Duke University Press, 2002. xxii + 779 pp. $100 (cloth), ISBN: 0-8223-2834-8.

Reviewed for EH.NET by Raymond L. Cohn, Department of Economics, Illinois State University.

Dirk Hoerder, Professor of History at the University of Bremen, is a well-known historian of migration, having written and edited a number of previous books on the subject. In this book, he treats us to an encyclopedic review of human migration during the second millennium. The book represents an impressive, almost unbelievable, accomplishment. Hoerder’s actual text runs 582 pages of small type and includes 71 maps. There are extensive endnotes, a list of map sources, a long bibliography divided mainly by time period, and a useful index. Furthermore, the book is user-friendly. When discussing the migration of a particular group, references are given to sections in other chapters where the same group is discussed during other time periods. Thus, a reader will find it easy to follow the story of a particular migratory group. Notwithstanding a few criticisms discussed later, I believe Hoerder’s book will become a classic and remain for years a valuable reference for anyone working on any aspect of the history of human migration since 1000 AD.

Besides the long time period considered, four additional features distinguish the book. First, Hoerder connects migration movements with world events, and world events with migration movements. In fact, much of the time, I felt I was reading a world history of the second millennium. Second, Hoerder discusses moves made by individuals within countries and regions as well as among them. Third, movements everywhere in the world are examined so, though European expansionism was an important cause of many movements, the book is not Eurocentric. Thus, for example, one can find discussions not only of migrations such as the Jewish Diaspora and the large nineteenth-century Atlantic immigration, but also of migrations within Africa and Latin America before sizable European contact and the more recent migration of many Asians to the Persian Gulf oil countries. Fourth, Hoerder devotes space to the migration of females when their experience differed from that of males. As near as I can tell, Hoerder accomplishes his objective to discuss every sizable human migration between 1000 and 2000 AD. The only minor exception I noted is that his discussion of the migration of African-Americans northward in the United States ends in the 1920s.

The book is divided into four chronological parts. Part 1 covers the time period from about 1000 AD to about 1500 AD. This part examines movements within Europe, including the Ottoman Empire, and European interaction with other continents. “The medieval and early modern periods, once said to be characterized by peasants bound to the soil, were in fact times of high mobility” (p. 59). Hoerder illustrates this statement by discussing the Jewish Diaspora, the Muslim movement into Spain, the crusades, early slavery, and the migrations of the Normans and the Wendish. People moved for marriage, because of droughts and religious persecution, and as farmers, soldiers, pilgrims, prostitutes, traders, and workers. This part ends with a discussion of Ottoman expansion into Europe, migrations by students and artists as the Renaissance flourished, and the European voyages of discovery during the fifteenth century.

Part 2 examines European expansion across the world up to about 1800. The first four chapters in this part are similar. Each one discusses migration in one area before the European voyages of discovery — Africa, Asia, Latin America, or the settler economies (mainly the United States but also South Africa and Australia) — and then discusses the effects of the European expansion. A fifth chapter looks more closely at forced labor migrations involving native peoples and Africans in the Americas, and a concluding chapter examines the consequences of the European expansion, including the formation of new races due to intermarriage between Europeans and native peoples.

Part 3 extends the story into the early twentieth century. The first four chapters discuss movements within Europe, Russian expansion to the East and South, and two important international migrations: European transatlantic migration to the Americas, including migration within the Americas; and the migration of Asian contract workers not only to South America, Africa, and other parts of Asia, but also to the United States, Canada, and Britain. The final chapter of this part considers population movements associated with imperialism. The chapter examines who moved out from Europe (including females) and again considers mixed race marriages, the children that resulted, and the relationships that developed among the different races in the areas affected by western imperialism.

Part 4 covers migrations from about 1920 to the end of the millennium. One chapter examines the forced labor systems that were used in Germany, Japan, and the USSR through World War II. In parts of this chapter and the next, Hoerder describes in fascinating detail the general “un-mixing” of peoples that occurred due to the World Wars, decolonization, and the rise of many more nation-states. Descendants of European settlers in Asia were forced back to Europe, Asians were forced out of many parts of Africa, etc. Important migrations between the 1920s and 1950s were of farmers onto and off of marginal lands, Jews to Palestine, and the development of the apartheid system in South Africa. A final major chapter considers migrations since World War II. Hoerder discusses the guest-worker migrations to Western Europe, the growth of Asian and Latin American migration to North America, and the move of Asians to the Persian Gulf and Australia. Migration trends within Latin America, Asia, and Africa are also discussed, along with the movement of people out of Eastern Europe after 1989. As I said above, Hoerder’s goal is to be encyclopedic.

Most economists reading this book will occasionally find the language disconcerting. Hoerder’s view of the world is one probably shared more by historians and some other social scientists than by most economists. Two quotes will suffice. In his introduction to Part 4 concerning migration since about 1920, Hoerder says: “The military-statist imperial reach of the northern hemisphere was replaced by domination strategies of transnational capital” (p. 443). Then, in discussing more recent migration, he says: “The postcolonial world may be interpreted in terms of ‘global apartheid,’ in which low-wage jobs and low standards of living are assigned to people outside North America, Europe, and Australasia” (p. 508). Though Hoerder is not unaware of economic theories involving the benefits of free trade and the importance of institutions and worker productivity (including education) to economic growth, he doesn’t let these arguments affect his world view. In any case, this type of language is not extensive and most chapters can be read without encountering such sentences.

Finally, a few words need to be said concerning the 71 maps. Virtually all of the maps are quite complex. They are also sometimes hard to interpret. In the first half of the book, many of the maps contain four shades of solid gray and I frequently had difficulty figuring out which shade was which on the map. The maps improve about halfway through the book, when crosshatches, lines, etc., begin to be used. Overall, the maps are fascinating and extremely valuable but only if one spends a good deal of time examining them. I wish that just a little more care had been taken in their construction.

Raymond L. Cohn is Professor of Economics at Illinois State University. He is the author of “Immigration to the United States” in the EH.Net encyclopedia and writes frequently on European immigration to the United States during the nineteenth century.

Subject(s):Historical Demography, including Migration
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

The World Economy and National Economies in the Interwar Slump

Author(s):Balderston, Theo
Reviewer(s):Parker, Randall E.

Published by EH.NET (March 2004)

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Theo Balderston, editor, The World Economy and National Economies in the Interwar Slump. New York: Palgrave Macmillan, 2003. xii + 226 pp. $75 (hardback), ISBN: 0-333-73864-0.

Reviewed for EH.NET by Randall E. Parker, Department of Economics, East Carolina University

Theo Balderston and the line up of international scholars contained in The World Economy and National Economies in the Interwar Slump pursue a very important purpose. As Balderston explains, “the several chapters of this book were commissioned to review the Depression experiences of various countries in the light of their international monetary relations and broadly in the light of the Eichengreen-Temin thesis” (p. 1). I have discovered that wherever one falls on the continuum of opinion regarding the Great Depression, one finds, in no particular order, Eichengreen’s Golden Fetters, Temin’s Lessons from the Great Depression, and Friedman and Schwartz’s A Monetary History of the United States, the main books to reach for in understanding the U.S. experience. Embarking on a reading of Balderston’s book, one wonders if this will now be the volume to reach for in understanding the international experience in light of the Eichengreen-Temin (henceforth ET) thesis. These are words of high praise and they are fulfilled upon completion of the reading.

Chapter one summarizes the ET thesis and the issues to be examined in the subsequent chapters of the book. Balderston, of the University of Manchester, is the author of this chapter and after neatly laying out the essential features of the ET thesis, he comments on the work of other authors in the book, specifically as their contributions “examine the roles of (a) diplomatic conflict, especially in relation to Reparations, (b) of the enlarged demand for gold as a consequence of interwar monetary uncertainties, and (c) of ideologies (note the plural) in the history of the gold standard and the Great Depression” (p. 1).

Chapter 2, written by Pierre Siklos of Wifred Laurier University presents a comparison of the U.S. versus Canada during the Depression. He cuts to the chase in explaining that while much of the literature examines how the Depression was transmitted worldwide, recent inquiry focuses on what can be learned by examining the extent to which economic ideology, politics and institutional factors made the slump as severe as it was. This is where cross-country comparisons are particularly useful. After providing a useful review of the literature, Siklos asks several questions which need explanations. If the price-specie-flow mechanism was working properly, why did U.S. and Canadian prices and interest rates move in the same direction? Why did the U.S. and Canadian economies recover asymmetrically? Why did the Canadian government prefer a stable float of the Canadian dollar instead of maintaining the gold standard? There is significant value added to laying out what we know and what we do not know.

Chapter 3, written by Pierre Villa of Paris IX Dauphine University, claims that French economic policy was beholden to the “balanced budget doctrine” and the “stabilization of credit doctrine,” a close cousin to the “real bills doctrine.” Moreover, the major conclusion is that French management of the Depression would have required changes in the franc/gold parity, short-term interest rates and public expenditures that would have been unthinkable at the time, similar to the argument Paul Samuelson makes regarding the Federal Reserve and changes in the money supply during the Depression. He claims that international policy coordination was inconsistent with the defense of gold ratios and other credibility maintaining rules. Indeed, he sees the Maastricht treaty and the deficit/debt-to-GDP ratios it requires as of the same stripe as gold standard rules in that they prohibit coordination. Perhaps (never mind the structural problems of the French economy). Most of the chapter is devoted to turning what we thought we knew about France during the interwar era on its head. The franc was not undervalued in the late 1920s, it was overvalued. The gold inflows were just a reversal of former gold outflows. French consumption was countercyclical in 1931 and 1932 (surprise!) — opposite to U.S. procyclical consumption. All the results of the Eichengreen-Wyplosz (1988) model … think the opposite. Villa also concludes “monetary policy should be targeted on the real interest rate (GDP growth) (sic.) as adjusted for the public debt trade-off” (pp. 83-84). I’m sure Ben Bernanke and Alan Greenspan would love to hear more on the mechanics of this policy prescription.

Michael Kitson, from the University of Cambridge, writes on the experience in the U.K. during the Depression in Chapter 4. From beginning to end, these fourteen pages are well written, loaded with substantive content and should be considered the place for any student of interwar economic history of the U.K. to start. Kitson provides a nice summary of the deflationary bias of the gold standard and then goes on to discuss factors that may have made the U.K.’s experience during the Depression relatively milder than most countries. Contrary to Eichengreen (1992), Kitson maintains that, given its structural flaws, no amount of cooperation or coordination would have saved the gold standard.

The economic history of Germany is covered by Albrecht Ritschl from Humboldt University in Chapter 5. I must admit that the first half of the chapter contains econometrics that I’m still scratching my head over. Time series with unit roots, confirmed after running Dickey-Fuller tests, are estimated in levels. Cointegration problems that require error-correction models are ignored. Consumption functions are estimated and analyzed with no mention of the permanent income hypothesis. No matter. All of the empirical models were estimated to support the quite believable major conclusion of the first half of the chapter: given its history with hyperinflation, Germany, in spite of the real harm to the economy, needed a credible nominal anchor more than any other major country during the interwar period. This is probably what made them stay on the gold standard long after it was time to leave. Learning this was worth the rocky econometric trip. The second half of the chapter contains a well-argued analysis of the reparations problem that Germany faced and its role in exacerbating the Depression in Germany and the fall of the Weimar Republic.

India and her economic record during the Depression is examined in Chapter 6, written by G. Balachandran of the Delhi School of Economics. Any student of this period with interest in the impact of the Depression on the “periphery” countries will want to pay close attention to this well-written and information-packed chapter. Balachandran suggests that the Depression was a watershed in the independence movement of India due to the uneven impact the Depression had among different segments of the population and the pro-cyclical policies imposed on her by the British. The author, in the first part of the chapter, places the economic experience of India and what occurred back then in the language of the modern literature on the Depression. He then, in the spirit intended for this book, uses the rest of the chapter to explain gold flows and the imperial experience of India as a colony of Britain during the interwar years. Balderston describes this chapter as “scintillating.” To me “scintillating” is a formula one car buzzing by you at two hundred miles per hour. But in the word usage of scintillating meaning “brilliant,” this chapter no doubt fits that description.

New Zealand is discussed in Chapter 7 by John Singleton of Victoria University of Wellington, New Zealand. Given that the New Zealand economy was primarily agricultural in nature, the commodity price shock that hit British and world markets was the main transmission mechanism of the Depression to this country. Therefore, debt deflation is the main explanation for the New Zealand experience, i.e., open Kindleberger (1973) and you have the story here. The way out of the Depression that was taken was the path of orthodox thinking: deflation, wage cuts, and wait for the British economy to rebound. The Labour Party of the time thought the opposite and recommended monetary and fiscal expansion. Devaluation occurred twice in New Zealand, ostensibly to spread the misery of Depression around a bit. Even so, New Zealand did not have a central back to co-ordinate expansionary policy after the devaluation until August 1934. Nevertheless, devaluation was one of the factors that ushered in recovery of the New Zealand economy. The chapter is a standard presentation and well explained. Singleton also presents two pages of text on how the British tried to lead New Zealand and Australia, as members of the sterling bloc, collectively around by the nose in monetary affairs. After the chapter on India, I think there is a theme here.

Paul Gregory and Joel Sailors, both of the University of Houston, write about the Soviet Union in Chapter 8. Gregory and Sailors rightly claim the rapid industrialization and development of the Soviet Union during the interwar made it the model of emulation for Western Europe, and especially Africa, Asia and Latin America in the 1950s and 1960s (I’m sure India and Argentina wish they had that one back). Explaining what made the interwar experience of the Soviet Union different from the rest of the world is the focus of the chapter.

The Soviet Union was an autarkic economy that was shielded from international monetary crises and fluctuations in international capital flows and trade disruptions. No gold standard horrors here for the Soviets. Even better, no deflation either since the consumer price level grew 700 percent between 1928 and 1937. The Soviet economy industrialized very rapidly as is well known. Between 1928 and 1937 investment went up as a share of GNP for 13 to 26 percent while consumption fell over the same period from 85 to 64 per cent of GNP. One wonders if that was from planning or the fact that there were just so many fewer Soviet consumers after Uncle Joe was done with his fun and games. Be that as it may, Gregory and Sailors correctly conclude that the Soviet experience during the interwar era left it unprepared to integrate into the post-WWII world economy. The autarkic isolation they practiced during the Depression (Temin is correct, this was a product of the WWI experience too) left them unable to absorb and utilize “technology transfers, capital transfers, the effects of competition, and the lowering of trade barriers that so impacted on the postwar economic history of the industrialized world” (p. 209).

Chapter 9 concludes with some counterfactual experiments by Eichengreen and Temin. These counterfactuals are highly substantive and are great instructors for the lessons of what we learn from economic history. Ben Bernanke once said to me that counterfactual historical discourses are not meaningful if one asks “how would US history be different if Robert E. Lee would have had an F4 fighter jet?” Right on target, Eichengreen and Temin ask the reasonable questions: What made policy makers steadfastly cling to failed policies long after it was clear the world economy was burning down? What ultimately led to changes in these policies and regimes? How would the Depression have been different if the U.S. had followed Britain off the gold standard in September 1931? How would the Depression have been different if Britain, the U.S., and Germany all devalued in the autumn of 1931? The Depression across the world may have only been a recession. A different economic history may have produced a different history for the rest of the twentieth century. If there was no Great Depression would there have been no World War II? We’ll never know, but that sure sounds right to me.

Theo Balderston is to be credited for putting this book together. Although the quality of the writing is uneven (which one should expect), this book should be viewed as a primer on understanding the international experience during the Great Depression in light of the Eichengreen-Temin thesis. Put a copy next to your copies of Golden Fetters, Lessons from the Great Depression, and A Monetary History of the United States.

References

Eichengreen, Barry. Golden Fetters: The Gold Standard and the Great Depression, 1919-1939. New York: Oxford University Press, 1992.

Eichengreen, B. and C. Wyplosz. “The Economic Consequences of the Franc Poincare,” in E. Helpman, E. Razin and A. Sadka, editors, Economic Effects of the Government Budget, Cambridge: MIT Press, pp. 257-86.

Friedman, M. and A. J. Schwartz. A Monetary History of the United States, 1867-1960. Princeton: Princeton University Press, 1963.

Kindleberger, Charles P. The World in Depression 1919-1939. Berkeley: University of California Press, 1973.

Temin, P. Lessons from the Great Depression. Cambridge: MIT Press, 1989.

Randall E. Parker is the author of Reflections on the Great Depression (Edward Elgar, 2002) and focuses his research on the economics of the interwar era.

Subject(s):Macroeconomics and Fluctuations
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: Pre WWII

The Rise and Fall of the Soviet Economy: An Economic History of the USSR from 1945

Author(s):Hanson, Philip
Reviewer(s):Kontorovich, Vladimir

Published by EH.NET (October 2003)

Philip Hanson, The Rise and Fall of the Soviet Economy: An Economic History of the USSR from 1945. Pearson Education, 2003. xii + 279 pp. $32.00 (paper), ISBN: 0-582-29958-6.

Reviewed for EH.NET by Vladimir Kontorovich, Department of Economics, Haverford College.

In half a century, the Soviet economy went from being the envy of the Third World and a mortal threat to the First to total disintegration. The story is told here by Philip Hanson, recently retired Professor of the Political Economy of Russia and Eastern Europe at the University of Birmingham (England) and a leading expert on the subject.

He starts out by describing the peculiar organization of the centrally planned economy, which emerged in the 1930s and persisted until the very end, and then proceeds in chronological order. The author notices that the rise and fall of the Soviet economy and society was mirrored, on a smaller scale, within the reigns of Khrushchev, Brezhnev, and Gorbachev. Each started with high hopes and some economic improvement, and ended with disappointment and a weaker economy. There are two chapters for each General Secretary, one for the up phase and one for the down phase of the reign. There is also a chapter on the Brezhnev-Gorbachev interregnum, and a conclusion appraising the Soviet economic experience.

Hanson calls his book a work of synthesis, drawing on what other, mostly Western, authors have written about the Soviet economy (p. 2). But on some of the most important issues his analysis departs far from the received wisdom. The author argues that the underlying cause of the decline of the Soviet economy was the weakening of administrative authority over economic actors. As no ruler emerged able or willing to fill Stalin’s boots, relations between the layers of bureaucracy were getting ever more forgiving, and pressure on the workers was lightened for fear of riots. Economic performance deteriorated as orders became less demanding and their enforcement increasingly lax.

Hanson’s argument echoes the one put forward by Moore (1954, p. 71), when the study of the USSR was in its infancy. Yet as the discipline grew up, this idea was soundly forgotten. Most western analysts viewed political control over the economy, resource al-location by command, and administrative pressure as weaknesses of the Soviet economy, at least in the increasingly complex post-World War II environment. They saw reforms aimed at increased autonomy of managers and greater use of monetary indicators within the confines of the socialist system as the only solution to the economy’s woes, as did the more enlightened of their Soviet colleagues. The analysis of the recurrent Soviet reforms was the bread and butter of the profession (p. 41). Hanson looks at each of these reforms and their results and shows that at best they made no difference. (Policies determining resource allocation across sectors, such as Khrushchev’s boost to consumption, did sig-nificantly impact the course of the economy.)

In an unnecessary retreat from his own argument, Hanson remarks that the hypothesis of abating pressure as the main cause of the Soviet growth slowdown cannot be tested empirically. I do not see why. The relaxation of pressure consisted of a series of observable steps: the end of terror, decriminalization of tardiness and absenteeism, and a shift from piece rate to time rate in wage setting. It may have included the less frequent increases in output norms for workers, more frequent annual plan target revisions for the enterprises, and lower turnover of managers and officials. With today’s access to infor-mation, it would be possible to document these trends in detail and trace their impact on economic performance at the level of enterprises and sectors.

In another major departure from much of the literature he purports to synthesize, Hanson states that the military industry was the economy’s main sector (p. 31), and military par-ity with the West its main achievement. He also sees military competition with the West as a possible reason for the system’s demise (p. 248). While this point of view has been getting more attention recently, it was at best marginal in the Sovietology’s heyday. Western scholars, preoccupied with their own concerns, viewed the Soviet economy as an alternative model of economic development or a test of Marxist ideas, rather than as a massive arsenal.

There is only so far an author of such a wide ranging work can get away from the accumulated interpretations. Hanson argues that the Soviet economy was first of all a military economy, but his sources constrain him to tell a story centered on aggregate growth rates, consumption/investment tradeoff, and efficiency. He argues that the main plot of the post-Stalin years was the waning of administrative pressure, but his sources constrain him to tell the story of reforms. Much research needs to be done before a de-tailed history of the Soviet economy as a military economy with waning administrative pressure can be written.

One instance in which the synthesized material exerts its pull on the author is avoidable. Thus, in the discussion of the causes of the growth slowdown, Hanson uses the CIA capital stock growth series to estimate total productivity growth, as has been the common practice in the field. Yet these data, copied without change from the official Soviet source, were in current prices, hence exaggerating the growth of capital and leading to the underestimation of the growth of total factor productivity (Kontorovich, 1988). This is ironic because in the 1980s Hanson was among the few scholars to question the CIA’s belief that the Soviets somehow deflated their capital stock and investment data, even though all their manuals and textbooks said otherwise (Hanson, 1984).

The book is intended for the general reader, and this does not just mean the avoidance of specialized terminology. The writing is graceful and witty. Hanson uses fiction and memoirs to supplement his sources in dealing with the period when honest social re-search was banned. The description of the economic system, which precedes the histori-cal account, makes the book self-contained and a good textbook for undergraduate classes.

References: Hanson, Philip, “The CIA, the TsSU and the Real Growth of Soviet Investment,” Soviet Studies, 36 (4), October 1984.

Kontorovich, V., “Inflation in the Soviet Investment and Capital Stock Data,” Soviet Studies 41 (2), April 1989.

Moore, Jr., Barrington, Terror and Progress USSR: Some Sources of Change and Stability in the Soviet Dictatorship (Harvard University Press), 1954.

Vladimir Kontorovich is a professor of economics at Haverford College. He has co-edited two books on the causes of the Soviet collapse.

Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):Europe
Time Period(s):20th Century: WWII and post-WWII

The Backbone of History: Health and Nutrition in the Western Hemisphere

Author(s):Steckel, Richard H.
Rose, Jerome C.
Reviewer(s):Collins, William J.

Published by EH.NET (May 2003)

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Richard H. Steckel and Jerome C. Rose, editors, The Backbone of History: Health and Nutrition in the Western Hemisphere. New York: Cambridge University Press, 2002. xx + 633 pp. $75 (cloth), ISBN: 0-521-80167-2.

Reviewed for EH.NET by William J. Collins, Department of Economics, Vanderbilt University.

The Backbone of History is a coherent collection of papers that distill data from skeletal remains to make comparisons of living standards across vast stretches of time and space. Early versions of the papers appeared at a conference sponsored by the National Science Foundation in 1996 at Ohio State University, but the co-editors laid the groundwork for the project’s data compilation more than ten years ago. The scope and scale of the project are ambitious: over 12,000 skeletons from more than 200 sites spanning 7,000 years are in the project’s database, more than fifty contributors are listed as co-authors, and the book sheds light on some high-stakes historical issues, including the health implications of the transition to settled agriculture and long-run group disparities in health status. The volume’s contributions to knowledge are wide-ranging and significant. Moreover, the papers and their underlying dataset will spur future research on Western Hemisphere populations. In combination with a similar project currently collecting European evidence, the work’s impact may be magnified even further.

The authors of this volume, borrowing a line from Seamus Heaney, glean the unsaid off the palpable. But just how much history can be gleaned from bones and teeth that are hundreds, and in some cases thousands, of years old? Readers who have had relatively little exposure to research in paleopathology may be surprised by just how much information the remains convey. In this regard, Alan H. Goodman and Debra L. Martin provide a helpful orientation in their chapter on “Reconstructing Health Profiles from Skeletal Remains” (Chapter 2). Of course, there are limitations and potential pitfalls to making strong inferences based on this evidence, and wherever possible supplemental evidence on health and living standards should be brought to bear, but I am inclined to agree with the co-editors that the skeletons “furnish the best and, in many cases, the only picture available of human health over the millennia” (p. 3).

An outstanding feature of the project, and the aspect that binds this volume into a coherent body of work, is a shared methodological approach to interpreting the records of skeletal remains. In particular, the area- or topic-specific chapters (5 through 18) are based on a common format for scoring remains and forming a composite index of health. The methodological common ground is cleared in Chapters 2 to 4. Chapter 3, “A Health Index from Skeletal Remains” (by Richard Steckel, Paul Sciulli, and Jerome Rose), is absolutely fundamental to the rest of the volume since the frequent cross population comparisons are based on the authors’ proposed health index. The index combines available information on stature, enamel hypoplasias, dental health, infections, and degenerative joint disease.

Some qualifications should be mentioned here. First, Steckel, Sciulli, and Rose are appropriately cautious about making strong inferences regarding relative living standards on the basis of the index. They label the index “Mark I,” and they point out that this is a starting point, not a definitive measure, for forming health comparisons based on skeletal remains. To the extent that the index is subject to significant revision, the subsequent quantitative ranking of populations is also subject to substantial revision. Second, there are aspects of life (and death) that do not leave impressions on bones; for example, acute diseases that kill swiftly may not leave evidence embedded in the skeleton. Third, for readers accustomed to fretting about selectivity biases in samples and standard errors in measurement, there is not much comfort in the figures. In general, the authors of these chapters are well aware of the limitations of the material and the samples with which they are working, including the multiple layers of uncertainty underneath the index values, and so this last point is intended as a strong caution to readers, especially those who consider bypassing the methodology section.

In the final paper of the book’s methodology section (“Paleodemography of the Americas,” Chapter 4), Robert McCaa derives estimates that imply significant variation in fertility levels over time and across populations in the available samples. An apparent switch from a “low-pressure” to a “high-pressure” demographic regime about 1,500 years ago, even among non-horticulturalists, is especially interesting in that it suggests that agriculture might have been a response to, rather than a cause of, demographic regime change.

A second outstanding feature of the volume is that each site- and topic-specific chapter supplies some historical context before delving into the examination of skeletal remains. This helps non-specialists appreciate what questions are at stake in the analysis, provides a sense of what biases, if any, may accompany the sample, and situates the investigation in the existing literature on the population under study.

Space does not allow for a thorough review of each of the fourteen site- and topic-specific chapters. I will give a brief rundown and highlight a few important points. Approximately 80 percent of the skeletal sample consists of Native Americans, but the first group of papers focuses on European and African Americans in North America within the last 200 years. Shelley Saunders, Ann Herring, Larry Sawchuk, Gerry Boyce, Rob Hoppa, and Susan Klepp write on “The Health of the Middle Class: The St. Thomas’ Anglican Church Cemetery Project” (Chapter 5). Rosanne Higgins, Michael Haines, Lorena Walsh, and Joyce Sirianni report on “The Poor in the Mid-Nineteenth Century Northeastern United States: Evidence from the Monroe County Almshouse, Rochester, New York” (Chapter 6). Paul Sledzik and Lars Sandberg examine “The Effects of Nineteenth-Century Military Service on Health” (Chapter 7). Ted Rathbun and Richard Steckel examine “The Health of Slaves and Free Blacks in the East” (Chapter 8), whereas “The Quality of African-American Life in the Old Southwest near the Turn of the Twentieth Century” is surveyed by James Davidson, Jerome Rose, Myron Gutmann, Michael Haines, Keith Condon, and Cindy Condon (Chapter 9). The comparisons across free blacks, slaves, middle-class whites, and poor whites are intriguing, in large part because the relative health ranking of the groups is so unstable, depending on which component of the health index is under scrutiny.

The next two parts of the book deal with Native Americans, and to a lesser extent with European Americans, in Central and South America. Rebecca Storey, Lourdes Marquez Morfin, and Vernon Smith report on “Social Disruption and the Maya Civilization of Mesoamerica” (Chapter 10). Lourdes Marquez Morfin, Robert McCaa, Rebecca Story, and Andres Del Angel measure “Health and Nutrition in Pre-Hispanic Mesoamerica” (Chapter 11). “Patterns of Health and Nutrition in Prehistoric and Historic Ecuador” (Chapter 12) by Douglas Ubelaker and Linda Newson, and “Economy, Nutrition, and Disease in Prehistoric Coastal Brazil” (Chapter 13) by Walter Alves Neves and Veronica Wesolowski, provide evidence on South American populations. The Central American sites are all pre-Columbian and are all below the sample average in terms of the overall health index. The native populations in South America are more diverse in their outcomes: some appear to be well above the sample average, and others are well below. The extremely high score of “Coastal Brazil” (and some others), however, seems to reflect a quirk of the indexing procedure, which does not attempt to impute values for missing data. All of the South American sites score poorly on the stature measure (when it is available), but Coastal Brazil does not have an estimate for stature, and so its average health score (calculated only using the criteria that are observed) is not pulled down in the same way that other South American population averages are by their low stature measures.

Five papers on Native Americans in North America comprise the next section of the volume. The geographic coverage for North America is extensive, the samples are relatively large, and the data provide rich and varied depictions of life before and after contact with Europeans and Africans (and their diseases). C.S. Larsen, A.W. Crosby, et al. contribute “A Biohistory of Health and Behavior on the Georgia Bight” (Chapter 14). Paul Sciulli and James Oberly report on “Native Americans in Eastern North America” (Chapter 15). Chapter 16 is entitled “Cultural Longevity and Biological Stress in the American Southwest” and written by Ann Stodder, Debra Martin, Alan Goodman, and Daniel Reff. Phillip Walker and Russell Thornton examine “Health, Nutrition, and Demographic Change in Native California” (Chapter 17). Finally, S. Ryan Johansson and Douglas Owsley describe “Welfare History on the Great Plains: Mortality and Skeletal Health, 1650-1900″ (Chapter 18).

Chapters 19 and 20 are both written by Steckel and Rose, and both provide useful “big picture” views of the project. Chapter 19 is critical. In it, the authors attempt to discern broad patterns in the health measures, both across groups and over long stretches of time. Historically, Native North Americans in the East, on average, appear to have been relatively healthy compared to other occupants of the Western Hemisphere, including the European Americans. Native Central Americans score at the bottom of the distribution, on average, a few index points below African Americans. If one looks at stature alone, rather than the composite index, African Americans score surprising well — higher than any other group in the sample. Importantly, there appears to have been a decline in Native American health status in the centuries preceding the arrival of Columbus. In the Western Hemisphere, the transition to settled agriculture and the consequent rise of dense, populous settlements, which until fairly recently was celebrated as the basis for subsequent economic and social progress, appears to have been associated with significant declines in the average human’s health. Of course, such a finding does not contradict the eventual benefits of economic development, but it does reinforce a significant caveat to our interpretation of the transition away from hunting and gathering.

Chapter 20 is the editors’ conclusion, a valuable aspect of which is the subsection on “research needs,” essentially a call for refinement of the existing analysis and the collection of more data. Chapter 21 (“The Body as Evidence; The Body of Evidence”), written by George Armelagos and Peter Brown, and Chapter 22 (“Overspecialization and Remedies”) by Philip Curtin, are short, insightful reviews the volume’s evidence, methods, and promise.

I believe that this volume achieves just what the editors and contributors intended. After assembling a large, consistently coded dataset, a valuable contribution by itself, the authors illustrate how the skeletal remains can shed light on the comparative health of populations over very long periods of time. Each chapter is engaging, organized, and likely to spur renewed debate about the specific population under study as well as about the Western Hemisphere’s economic history. I recommend the book highly to anyone interested in Native American history and to anyone interested in long-run demographic trends and turning points.

William J. Collins is the author “Race, Roosevelt, and Wartime Production: Fair Employment in World War II Labor Markets,” American Economic Review, March 2001, and “Exploring the Racial Gap in Infant Mortality Rates, 1920-1970,” NBER Working Paper 8836. Additional details on his work can be found at http://eh.net/Clio/index-CollinsResearch.html.

Subject(s):Living Standards, Anthropometric History, Economic Anthropology
Geographic Area(s):North America
Time Period(s):Prehistoric

The Indian Slave Trade: The Rise of the English Empire in the American South, 1670-1717

Author(s):Gallay, Alan
Reviewer(s):Mancall, Peter C.

Published by EH.NET (April 2003)

Alan Gallay, The Indian Slave Trade: The Rise of the English Empire in the

American South, 1670-1717. New Haven: Yale University Press, 2002. xviii +

444 pp. $45.00 (hardcover), ISBN: 0-300-08754-3.

Reviewed for EH.NET by Peter C. Mancall, Department of History, University of

Southern California.

It comes as no surprise to state that slavery was a crucial part of the

economy of the southeastern colonies of British North America. As historians

and economists have long recognized, the enslavement of Africans imported from

Africa or the West Indies was crucial for the development of plantation

agriculture in the region. By 1708 individuals of African descent amounted to

approximately one-half of the population of South Carolina, and by 1720 or so

their numbers constituted two-thirds of the population. Their presence gave

this region a unique demographic profile in the British North American

colonies. That story, told brilliantly by the historian Peter Wood in his

classic study from 1974 entitled Black Majority, has dominated scholars’

understanding of forced labor in this area.

Allan Gallay, a professor of history at Western Washington University, has now

complicated this narrative. During the same decades that Carolina became a

stable province, its colonists looked to Native Americans to provide labor for

them. Often this labor was coerced by nothing more than the lure of the market

itself: Native Americans hunted whitetail deer for colonists or offered food to

them in exchange for manufactured goods from Europe. But this free labor was

not sufficient to satisfy colonists, who needed people to produce crops for

export. English colonists recognized that selling captured Indians was doubly

beneficial. By exporting captives to other parts of the Atlantic basin as

slaves, Carolinians made a profit and removed individuals and groups who might

have stood in the way of colonial expansion into the interior.

Gallay’s book is more than a history of efforts by British (and other European)

colonists to enslave and sell Native Americans and then, eventually, to bring

that noxious commerce to its end. In fact, the vast majority of the book has

little to do with the Indian slave trade itself. What Gallay offers here is a

thorough, up-to-date, readable and engaging history of Carolina — and much of

the old southeast — from approximately 1670 to 1717. There is much here on

diplomacy and debates between colonists, including many details that reveal how

difficult it was for Carolina’s proprietors to maintain order in the nascent

colony. Gallay’s real insights about the local slave trade are primarily

confined to the penultimate chapter in the book.

Yet the fact that Gallay, as the journalists’ phrase has it, has buried his

lead should not put off economists and historians who want to understand the

colonial southeast. Quite the contrary: Gallay’s mastery of the primary and

secondary source literature provides readers with abundant information about

crucial colonial politicians, traders, and missionaries. He makes readers

realize that it is irresponsible to lump all Native peoples together under the

heading “Indian.” Some of those Native peoples, captured in war and sold into

bondage, ended their lives far from their ancestral homes. Others, also Native,

were crucial players in this trade, a part of the story that echoes John

Thornton’s analysis of the participation of some Africans in the Atlantic slave

trade (see his Africa and Africans in the Making of the Atlantic World,

1400-1800, second edition, Cambridge University Press, 1998). Gallay

provides a series of maps of the entire southeast, a great service to the many

readers who will not know the location of particular indigenous nations. He

shows where Indian slaves went and extracts valuable clues from the writings of

perceptive observers and from legal codes — some of them the product of

northern colonists who came to fear southern Indian slaves and sought to

prevent their continued importation. He recognizes the crucial role of

conflict, especially the devastations of the Yamasee War that raged from 1714

to 1717. Further, Gallay writes with a sense of urgency that should be welcomed

by readers who have grown tired of reading lightly revised dissertations that

would have made better articles than full-length books.

Still, the part of the book that will be of most interest to economic

historians will be the chapter in which Gallay provides some estimates for the

number of Native American slaves. Gallay claims that “the drive to control

Indian labor — which extended to every nook and cranny of the South — was

inextricably connected to the growth of the plantations and that the trade in

Indian slaves was at the center of the English empire’s development in the

American South. The trade in Indian slaves was the most important factor

affecting the South in the period 1670 to 1715: its impact was felt from

Arkansas to the Carolinas and south to the Florida Keys” (p. 7). He adds that

the “Indian slave trade provided the strongest link between the South’s many

peoples in the late seventeenth and early eighteenth centuries” (p. 9). These

are bold claims that can only be supported by careful demonstration of the ways

that the Indian slave trade worked and some quantitative evidence revealing the

actual number of individuals captured and sold for their labor.

To his substantial credit, Gallay shows how the business operated and he makes

a valiant effort to estimate the number of individuals enslaved. The evidence

enables him to describe how individuals and even groups became ensnared. But it

is less useful as a source for quantitative measures for the entire Indian

slave trade. The most important numbers appear in a single table (on p. 299).

Here Gallay carefully separates the number of slaves from various places or

indigenous nations and estimates that from 1670 to 1715 there were between

24,000 and 51,000 Natives enslaved in the entire “South.” The region includes

Florida, which lost the most individuals to slavery, through the southeast to

the lower Mississippi Valley. There were significant differences between the

trade in Native slaves and the African slave trade. Gallay believes that the

commerce in Indian bodies and labor “was akin more to the resale of Africans

from the West Indies than to the African slave trade” (p. 314). But despite the

differences in terms of final destinations and the scale of the trade, Gallay

recognizes that slavery in this period in the Americas meant the same for

Africans and Native Americans: “removal from their homes, denial of their

rights and basic humanity, subjection to lifelong servitude, and the passage of

slave status from mother to child” (p. 314).

The trade in Native slaves came to an end when colonists devoted more of their

efforts to purchasing Africans. By the end of the 1710s the British came to

realize that the capture and sale of Indian slaves was more difficult for them

than participating in the transatlantic African slave trade. The enslavement of

Indians was also a problem for the Spanish and French in the region. Yet though

Gallay describes these other Europeans’ attitudes towards the taking of

captives and the use of forced labor, in the end this is primarily a book about

the British and their ability to overcome internal divisions, ignore their

earlier claims that they would avoid mistreating Indians, and embrace a system

of labor exploitation that sent Native men, women, and children far from their

homes. Later scholars might be able to provide more accurate measures of the

scale of the trade, but Gallay’s work will remain crucial for anyone who wants

to know how the various peoples of the South interacted in the colonial period.

Peter C. Mancall, Professor of History at the University of Southern

California and the President, from 2002 to 2004, of the Forum on European

Expansion and Global Interaction, is the author (with Eric Hinderaker) of At

the Edge of Empire: The British Backcountry in North America, forthcoming

in May 2003 from Johns Hopkins University Press.

Subject(s):Servitude and Slavery
Geographic Area(s):North America
Time Period(s):18th Century

Consumerism in World History: The Global Transformation of Desire

Author(s):Stearns, Peter N.
Reviewer(s):Aimaq, Jasmine

Published by EH.NET (January 2003)

Peter N. Stearns, Consumerism in World History: The Global Transformation of

Desire. London and New York: Routledge, 2001. xii + 147 pp. $17.95

(paperback), ISBN: 0-415-24409-9; $60 (hardcover), ISBN: 0-415-24408-0.

Reviewed for EH.NET by Jasmine Aimaq, Department of History, University of

Southern California.

According to author Peter Stearns (George Mason University), the rationale

behind writing Consumerism in World History: The Global Transformation of

Desire is that our world is currently “permeated by consumerism” — hence

the importance of understanding why consumerism developed and what causes have

sustained it. Stearns, well established as a leading voice in World History,

argues that his study of consumerism will allow a better grasp of various

international issues, and offer some readers new perspectives on themselves. He

then presents a succinct, brief analysis of the evolution of consumerism in a

142-page volume broken into three main parts. The first part analyzes the

emergence of consumerism in the West; the second, the globalization of

consumerism; and the third, the future of consumerism.

A review of this work first requires an establishment of perspective. It

appears that the book is intended for a general readership, since it cites no

primary sources, nor makes references to secondary sources, and can therefore

not be evaluated primarily on the grounds of scholarly rigor and original

research. Stearns’ book must instead be reviewed in terms of the contribution

it makes in broader terms, namely, as a general, insightful presentation of

ideas and perspectives on the emergence of consumerism in human society. To

that end, Stearns proposes to focus on two phenomena: the historical

development of the consumer apparatus, and the emergence of needs and goals

from the customer side. He notes particularly that the book is value-neutral,

treating consumerism as neither inherently good or evil.

In his preface, Stearns explains that Consumerism in World History rests

on a fairly recent strand of research, which shows that contrary to what was

previously thought, the phenomenon of consumerism predates the Industrial

Revolution. Stearns does not, however, identify in what manner his work either

complements or challenges existing research. There is no direct link to

previous scholarship, making it impossible to evaluate the full value of

Stearns’ contribution. Also in his preface, Stearns signals that his work “…

rests on several assumptions, which of course need to be tested in the chapters

to come …” Here, Stearns risks the pitfalls of circular reasoning, namely,

the adoption of ideas that are at once assumptions and cases to be tested.

What follows, however, is a lucid, insightful and highly readable discussion on

the rise and nature of consumerist society, i.e. society in which many people

formulate their goals in life partly through acquiring goods that they clearly

do not need for subsistence or for traditional display. Since consumerism is

predominantly associated with “Western” civilization, Stearns spends a third of

the book discussing the emergence of consumerism in Europe, and its eventual

spread to the United States. Stearns argues that consumerism represented

compensation in a modernizing society — compensation for the disruption of

traditional social channels, a means of demonstrating modest achievement in new

ways.

While this point is illuminating, the argument would have greater depth if the

facets of traditional life, and exactly which facets were disrupted and

replaced with consumerism, were explored more fully. Stearns notes the decline

of traditional religion, for instance, but does not analyze the concept of

consumerism as a religion of its own. This has been one of the interesting

contributions of recent studies outside of history — in sociology,

environmental studies, and religious studies, for instance. The emergence of

consumerism parallels the emergence of the free market, and arguments presented

by scholars such as David R. Loy (“The Religion of the Market,” in Visions

of a New Earth: Religious Perspectives on Population, Consumption and

Ecology) and others emphasize the religious role that consumerism fills in

contemporary society.

The lack of a discussion on this perspective in Stearns’ work is somewhat

disappointing, particularly in light of growing recognition among scholars and

others that consumerism and environmental protection are fundamentally and

dangerously at odds. If, as Stearns states in his preface, we are to study

consumerism in large part to “better grasp a host of international issues,”

consumerism’s relationship to the deteriorating global environment should be

foremost among those. The absence of this issue is especially striking in

Chapter 6, which provides an otherwise illuminating discussion on “The dark

side of Western consumerism.” The strength in this chapter is that Stearns

effectively links critiques of consumerist values to broader movements such as

anti-Americanism. But the relationship between the environment and consumerism,

and the link between critics of consumerist values and spokesmen for the

environment, seems crucial to the subject of the chapter; for some reason,

however, it has been overlooked.

Similarly, the question of gender relations is addressed, but not fully

explored. Stearns provides an insightful account of changes in gender relations

as one aspect in the historical emergence of consumerism. But the relevance of

gender to consumerism extends beyond the early stages of the phenomenon; it

would be relevant to analyze whether contemporary relations between the genders

foster consumerist behavior today, i.e. whether women acquire material goods in

order to demonstrate economic parity with men, whether men pursue material

acquisition to a greater degree than before in an effort to out-compete women,

or alternatively, one another, in a society where women are increasingly

economically self-sufficient. Given Stearns’ expertise on gender in world

history, his full insights on this issue would have been especially welcome.

The discussion in the first part of the book serves largely as an insightful

introduction to different perspectives on consumerism, and provides an

excellent foundation for further research. But it is the second part of the

book that is perhaps the book’s most illuminating and original. Here, Stearns

offers a round-the-world view of consumerism, describing the phenomenon, its

character, manifestation and scope, in Russia, East Asia, Africa and the

Islamic Middle East. Readers who are familiar with studies on consumerism will

welcome this contribution. It is fair to say that so far, most scholars in the

field discuss these regions only to gauge the extent to which indicators of

“Western” civilization and modernization, including consumerism, have

effectively reached non-Western societies. In this work as well as previous

publications, Stearns, while well aware of the influence of the West in the

spread of consumerism, demonstrates a true knowledge and genuine appreciation

of the “world” in “world” history. Once again, however, the discussion would

have benefited from a deeper analysis of societal factors such as the role of

religion, which Stearns discusses as only one of numerous factors, and its

relationship to consumerist values.

The final part of the book, which contains only two brief chapters, deals

briefly with the accelerating pace of globalization and the spread of “Western”

style consumerism. While the first chapter of this section offers nothing

controversial, and serves as a sort of summary of globalization in terms well

understood by scholars, the media and social observers, the second chapter —

and book’s Conclusion — takes a surprising turn. Stearns spends the final

pages of his work investigating “Who wins — Consumerism or Consumers?” This is

surprising mainly because it seems to contradict the author’s introductory

declaration of this study as value-neutral, as an analysis that does not wish

to present consumerism as either ‘good’ or ‘bad.’

Particularly on pp.139-142, Stearns directly addresses the ‘good’ and ‘bad’ of

consumerism, asking, for instance, whether consumerism is making the world too

homogeneous, and directly asking whether consumerism “is a good thing, in terms

of human values.” The inclusion of this discussion does not follow from what

the reader is led to expect in the opening of the book, and is therefore a

structural weakness. In terms of the substance of Stearns’ response to the

questions, it is again notable that environmental issues are alluded to in only

the most general way, although they figure very prominently in today’s debate

on consumerism and globalization.

Stearns’ most recent book is nevertheless an excellent introduction to the

study of consumerism in world history, and a highly recommended read for anyone

interested in the subject. Graduate students or scholars interested in

developing a thesis relating to consumerism will come away from this book with

a good general grasp of the phenomenon, and will be happy to find abundant

secondary sources listed as “Suggested Readings” at the end of each chapter.

Jasmine Aimaq is a Visiting Professor at the Departments of History and

International Relations, University of Southern California. She is the author

of a book on French-American relations in Vietnam and several articles, and

currently conducts the USC History Department’s course on Modern World History.

Subject(s):Household, Family and Consumer History
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

The Ordinary Business of Life: A History of Economics from the Ancient World to the Twenty-First Century

Author(s):Backhouse, Roger E.
Reviewer(s):Samuels, Warren J.

Published by EH.NET (August 2002)

Roger E. Backhouse, The Ordinary Business of Life: A History of Economics

from the Ancient World to the Twenty-First Century. Princeton, NJ:

Princeton University Press, 2002. x + 369 pp. $35.00 (hardcover), ISBN:

0-691-09626-0.

Reviewed for EH.NET by Warren J. Samuels, Department of Economics, Michigan

State University.

Roger Backhouse, who holds a chair in the History and Philosophy of Economics

at the University of Birmingham, is a leading, indeed virtuoso, historian of

economic thought. He has written three different histories of economic thought.

His A History of Modern Economic Analysis (New York: Basil Blackwell,

1985) focused on the history of economic theory, centering on the theories of

value and price. Theory exists somewhat in its own ethereal world. Backhouse’s

Economists and the Economy: The Evolution of Economic Ideas, 1600 to the

Present Day (New York: Basil Blackwell, 1988) presented the context in

which economic theory developed along with the development of theory itself.

The context consisted of economic history, political economy and the history of

economic ideas. Theory, while not necessarily directly generated by context,

was closely related. Backhouse’s The Ordinary Business of Life has a

differently designed combination: the economic-history context, so long as it

was important, then increasingly the development of economic theory as a

separate discipline. The title conveys the message, using Alfred Marshall’s

definition of economics rather than Lionel Robbins’s definition ostensibly

limiting economics to the analytics of pure resource allocation. (I say

“ostensibly” because it is the rare historian of economic thought who can

remain so narrow.) The intended reader is not the doctoral candidate seeking

deeper mastery of economic theory — who has the textbooks of Mark Blaug or

Ingrid Rima, for example, for such purpose — but the advanced undergraduate

and lay reader. The book also appears in the Penguin series.

Such a trio comports with a variety of conceptions of the discipline and its

history. It also gives effect to the Post Modernist view that different stories

can be told about the same putative subject — though, of course, the subject

changes with the story (even this point Backhouse holds at arm’s length; see p.

328). That Backhouse can author three such different accounts attests to his

skill and versatility, his non-dogmatic view of the history of economic

thought, and that while he is not wedded to Post Modernism he does go part way

with it. Not many historians of economic thought have the combined knowledge of

economic history, intellectual history and economic theory that Backhouse

offers to the world.

The historical coverage by chapter reflects the design strategy. The sequence

is as follows, after a Prologue: The Ancient World, The Middle Ages, The

Emergence of the Modern World View — the Sixteenth Century; Science, Politics

and Trade in Seventeenth-Century England; Absolutism and Enlightenment in

Eighteenth-Century France; and The Scottish Enlightenment of the Eighteenth

Century. Through chapter 6 on the Scottish Enlightenment (including Adam

Smith), the emphasis is clearly on political, social, and broad intellectual

developments. Thereafter, the focus is on the development of economic theory,

almost as if the foregoing types of development were suspended, though the

message may instead be that modern economics is an emanation of the modern

(Western) economy and not the pure, a-institutional science its practitioners

tend to claim: Classical Political Economy, 1790-1870; The Split between

History and Theory in Europe, 1879-1914; The Rise of American Economics,

1870-1939; Money and the Business Cycle, 1898-1939; Econometrics and

Mathematical Economics, 1930 to the Present; Welfare Economics and Socialism,

1870 to the Present; Economists and Policy, 1939 to the Present; and Expanding

the Discipline, 1960 to the Present; concluding with an unnumbered epilogue,

“Economists and Their History.”

Readers of this review may be particularly interested in Backhouse’s treatment,

in Chapter 3, of the emergence of the modern worldview; and the split between

history and theory (Chapter 8). They may fault Backhouse for neglecting

economic thought in other cultures (if only to explore how culture-laden is

Western economics, just as one might study how theory-laden are facts); for not

being more critical; for neglecting American economic thought before 1870; and

so on.

Backhouse, to his credit, however, emphasizes the inevitable selectivity and

thereby limited coverage of his or anyone’s story of the history of economic

thought. He also warns the reader of the danger of presentism, of treating

“past writers as though they were modern academic economists” (p. 3), while

insisting that we inevitably view the past through the lens of the present and

proposing that we identify and state our “preconceptions as explicitly as

possible” (p. 7). He emphasizes that different generations ask different

questions, “perhaps even questions we find it hard to understand,” such that

the question of “progress” in economics is problematic (p. 8).

Notwithstanding these and perhaps other Post Modernist ideas, the domain

treated in this and Backhouse’s other books is rather conventional. Not

surprisingly, the story turns from externalist to internalist: “As economics

developed … into an academic subject, the problems economists tackled were

increasingly ones that arose within the discipline.” Thus, “Given that my main

aim is to explain how the discipline reached its present state, developments

within its theoretical ‘core’ are clearly prominent” (p. 9). A critic might ask

how economic thought reached its (parlous) present state.

Backhouse thus increasingly narrows his domain as academic economists did

likewise; academic practice thus eclipses the other elements of the story.

Actually, therefore, Backhouse, like many other historians of economic thought,

tells two stories: the story of economic thought broadly considered and the

story of the technical ideas of a narrowly focused academic discipline. But he

alerts the reader that those “developments within its theoretical core … are

not the whole story” (p. 9). If Backhouse had included something of the broader

work of, say, Vilfredo Pareto and Friedrich von Hayek, or Kenneth Boulding and

Herbert Simon, as he does with Smith, a different story might have been told.

Perhaps that is the design for a fourth book!

Part of the story Backhouse tells as follows: Histories that glowingly tell of

the technical progress of economics “conceal as much as they reveal. Behind the

fa?ade of increased mathematical rigour and precision lie fundamental changes

in the meanings that have been attached to central conceptions and in the ways

in which economists have understood what they were doing” (p. 327). If

Backhouse can successfully convey to his reader an appreciation of some of the

linguistic problems in economics (and elsewhere), he will have raised the level

of historiographical understanding in practice. (See Warren J. Samuels, “Some

Problems in the Use of Language in Economics,” Review of Political

Economy, Vol. 13, no. 1 (2001), pp. 91-100.) His other field is

methodology, and he is very good at it, too.

Warren Samuels is the author of numerous books and articles in the history of

economic thought and was named Distinguished Fellow of the History of Economics

Society in 1997. Among his recent books is Historians of Economics and

Economic Thought: The Construction of Disciplinary Memory, edited with

Steven Medema (Routledge, 2001).

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

Bonds of Enterprise: John Murray Forbes and Western Development in America’s Railway Age

Author(s):Larson, John Lauritz
Reviewer(s):Churella, Albert J.

Published by EH.Net and H-Business (June 2002)

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John Lauritz Larson, Bonds of Enterprise: John Murray Forbes and Western Development in America’s Railway Age. Iowa City: University of Iowa Press, 2001. xxiii + 257 pp. $17.95 (paper), ISBN: 0-87745-764-6.

Reviewed for H-BUSINESS and EH.NET by Albert J. Churella, Social and International Studies Program, Southern Polytechnic State University.

Perhaps no other economic change has so consumed Americans than the emergence of big business in the 19th century. As the invisible hand of the marketplace gave way to the visible hand of management, output rose, prices fell, and the United States became an economic powerhouse. This process also fundamentally changed the nature of the relationship between business, businessmen, individual citizens, and their democratic system of governance. Big business concentrated wealth and power, and manipulated the streams of commerce in ways that seemed antithetical to the political rhetoric of Jacksonian Democracy. Technical discussions associated with the management of large, vertically integrated enterprises were thus matched with a passionate debate regarding the equitable relationship between capitalism and democracy. Railroads, the nation’s first big business, were at the center of these debates since they embodied massive concentrations of capital and constituted the lifeblood of many communities. While many scholars have studied parts of the railroad revolution, few have attempted to integrate all of the multifaceted effects of this process.

John Lauritz Larson, an associate professor of history at Purdue University, provides just such an integrated account in Bonds of Enterprise. Larson examines the career of John Murray Forbes (1813-1898), whose life spanned the very different worlds of personal, market capitalism and “visible-hand” big-business management. Like a spider at the center of a web (although Larson would probably eschew such a malevolent analogy) Forbes touched all of the varied aspects of the “railroad question.” As Larson points out, this book is not so much a biography as it is a selective depiction of Forbes’ role in developing the “bonds of enterprise” that linked both cities and competing interest groups to each other. Thomas McCraw used a similar approach in Prophets of Regulation, linking four notable individuals to the regulatory mechanisms that they hoped to create. While Bonds of Enterprise may not garner the same degree of notoriety, it is still a fascinating and important work. While still a young man, John Murray Forbes earned his fortune in the China trade. He relied heavily on the standard pillars of long-distance capitalism in the early 1800s; family connections and trust backed by an impeccable reputation. By the 1840s, Forbes settled into what he believed would be a respectable semi-retirement and he invested heavily in railroad securities.

Perhaps the pivotal moment in Forbes’ career occurred in 1846 when he acquired control of the moribund Michigan Central Railroad, a state-owned project that typified the internal improvement mania that had arisen before the Panic of 1837. Like most such rail and canal projects, the state initially envisioned the Michigan Central to be solely a trunk line designed to encourage general commercial development. Private entrepreneurs would then construct feeders to the mainline, allowing, in a very Jacksonian fashion, all of the common men equal access to the economic potential of the railway.

Forbes increasingly saw the economic function of the railroad in quite a different light. He realized that only a combined branch-and-trunkline railroad could earn a satisfactory profit, and he felt that railroad development should proceed gradually and sequentially, allowing each region of the frontier to develop before proceeding to the next. In the process, the railroad must inevitably change transportation patterns in the region that it served causing some regions-and some individuals-to prosper, and others to fail. Like many 19th century entrepreneurs, Forbes had only the haziest idea of the competitive forces that America’s first big business had unleashed. He was, however, deeply troubled by his role in this process. He had grown up in, and attained wealth by, a system of personal capitalism. He professed a life-long belief in the limitless potential of a virtuous citizen in a democratic society. Yet, like Henry Ford nearly a century later, he helped to bring about massive economic and social transformations that, within his lifetime, helped to shatter the moral principles that he held dear.

Forbes and his associates plunged into the “system-building” phase of railroading during the 1850s. No longer advocating a sequential approach to railroad expansion, Forbes increasingly saw railroads as essential to the economic development of the West. As he pieced together the Chicago, Burlington, and Quincy system, Forbes preferred to maintain the fiction of local control as long as possible, relying heavily on home-grown investors and managers. While this method allowed local entrepreneurs to assume many of the risks and enabling the Boston capitalists to expropriate all of the rewards, Larson does not see this as a stain on Forbes’ exemplary business ethics. Nor does he blame Forbes for any of the relatively mild financial machinations associated with the Burlington; these he lays at the feet of James F. Joy and other unscrupulous financiers who abused Forbes’ trust.

As farm prices fell after the Civil War, farmers in Iowa protested rate differentials and other types of “unfair” competition. They believed that a lack of competition had caused these problems, while Forbes and other system-builders increasingly understood that overbuilding and excess competition were to blame. Forbes believed that he was advancing the cause of progress by opening up the West and by increasing the general welfare through his business enterprises. He seemed genuinely astonished that the seemingly ungrateful beneficiaries of his efforts depicted him as a profit-hungry robber baron. Perhaps because Forbes’ “style of business was paternalistic, and his patient efforts to develop the Iowa country had been met with hostility,” (p. 142) he responded with a stubbornness that seemed to veer between puzzlement and outrage. For example, the Burlington deliberately inflamed the passions of westerners by raising long-haul rates to conform to Iowa rate-equalization-legislation. Forbes thought that grandstanding populist politicians like Iowa governor William Larrabee were ignorant of the fundamentals of railroad economics; Larrabee was determined to fight “a war against the arrogance of ‘experts’ who scorned the authority of popular government.” (p. 187) Forbes believed that, in the end, only railroad officials could adequately understand the complexities of rate-making, and could thus capture, or at least reduce, the deleterious effects of state and federal regulation.

Ultimately, Larson’s biographical approach strikes very near his target, but it is not quite a bullseye. The reader is left with a thorough knowledge of Forbes’ career, of the railroads that Forbes controlled, and of the regulatory problems that affected those railroads. Clearly, Forbes brought together many of the disparate threads that connected all of the institutions and all of the historical actors associated with the transformative effects of railroads on American life. But there were also many currents that swirled and eddied far from the gaze of that Boston-based Midwestern railroader. There is no doubt that Forbes was a pioneer; whether or not he was typical is another matter.

Portions of Larson’s analysis seem rather quaint and outdated. Bonds of Enterprise originally appeared in 1984, and has now been reprinted with a short additional introduction and amended bibliography. Still, this book employs scholarship that is nearly two decades old. Scholars such as Gabriel Kolko figure prominently in the original bibliography, even though their findings have been superseded by more balanced research efforts. Larson seems needlessly stereotypical in his descriptions of “the squalid poverty of the Chinese” (p. 11) and “that exquisite pride of Oriental leisure.” (p. 17-18) Nor can we be positive that “Forbes seemed to thrive on tension.” (p. 23) And, it may be giving Forbes too much credit to suggest that, “He generated a model for developing the vast interior of the United States, and he adapted or invented many of those instruments of corporate enterprise with which industrialists and financiers revolutionized American life.” (p. 169)

Larson’s obvious enthusiasm for his subject does not detract from the value of this book, however. On the contrary, Bonds of Enterprise is a beautifully written and superbly organized account of a pivotal time, and a pivotal person, in the history of American business. Historians of the 19th-century railroad industry, of business-government relations, and of entrepreneurship will not discover any startling revelations here. Certainly the work of scholars such as Naomi Lamoreaux and Colleen Dunlavy has done more to advance our knowledge of these issues. What the reader will find is an excellent overview of these issues in a form that is readily accessible to people lacking expertise in these areas, as well as to students in graduate-level, or even advanced undergraduate classes. At a time when the history profession seems inevitably destined for fragmentation, compartmentalization, and the study of minutiae, Larson is to be commended for this synthetic work.

Albert J. Churella is an assistant professor in the Social and International Studies Program at Southern Polytechnic State University in Marietta, Georgia. He is the author of From Steam to Diesel: Managerial Customs and Organizational Capabilities in the Twentieth-Century American Locomotive Industry (Princeton: The Princeton University Press, 1998).

Subject(s):Business History
Geographic Area(s):North America
Time Period(s):19th Century