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Divergent Paths: How Culture and Institutions Have Shaped North American Growth

Author(s):Egnal, Marc
Reviewer(s):Carlson, Leonard

Published by EH.NET (August 1998)

Marc Egnal, Divergent Paths: How Culture and Institutions Have Shaped North

American Growth. New York, Oxford University Press, 1996. xi + 300 pp.

$19.95 (paper), ISBN: 0-19-510906.

Reviewed for EH.NET by Leonard Carlson, Department of Economics, Emory Univers

ity.

This book is provocative, informative, and fun-to-read. In the preface,

Marc Egnal, an Associate Professor of History at the University of Toronto,

states that the book “. . . explores the impact of institutions (such as

slavery

and the seigniorial system) and culture (including religion,

literacy, and the entrepreneurial spirit, and intellectual activity) on

development” (p. vii). How institutions and culture shape economic growth are,

of course, important and controversial topics in economic history.

Egnal ventures into territory that is both novel and familiar. The work

compares the U.S. North, U.S. South, and Quebec. His single most important

contribution is his comparison of Quebec with the U.S. South and U.S.

North. Most comparative work has ignored Quebec and this has been a big

omission. An example of the familiar is Egnal’s use of Max Weber’s

“Protestant Ethic” hypothesis.

Egnal draws on the debates as to whether colonial British North America was

“pre-capitalist

” or not, and a similar debate about Quebec. In a nutshell,

his conclusion is that all three regions were similarly pre-capitalist in

outlook and had comparable standards of living in 1750. The North,

however, had a tradition of thrift and hard work that differed from the South

and Quebec. Drawing on these traditions in the century after 1750,

the North became truly “capitalist,” while the South and Quebec stayed

hierarchical and pre-capitalist. To Egnal, capitalism is distinct from

capitalists. Capitalists could operate in the South and Quebec without their

values dominating the social and economic life of either region. By contrast

he concludes that capitalist values favoring entrepreneurship,

risk taking, and profits dominated in the North, making it truly capitalist.

I am on the side of those who do not find it useful to draw a distinction

between capitalist and pre-capitalist societies, but Egnal is part of a large

tradition that sees this as important.

Chapter one, “the paths diverge,” sets

the stage for the arguments that follow. Egnal makes a good case that as of

1750 there was relatively little difference in the material standard of living

in Quebec, the North,

and the South. All three were traditional, agricultural, slow growing, and

pre-literate (although literacy was widespread in the Northeast, according to

Egnal, it was not important in the economic realm). The South, with its wealth

in slaves and export-oriented economy was something of a special case, but

still pre-capitalist and hierarchical. By 1840, however, per capita incomes

in the North (the eight original northern states) were much higher than either

the South (the five original southern states) or Quebec.

The North also led the other two regions in urbanization and manu facturing.

The fact that Egnal leaves out the western states at this point in the

comparison is important. As he discusses in later chapters, the North Central

states in 1840 had lower than average per capita incomes while states in the

South Central region had much higher per capita incomes.

Since there was a notable east-west pattern of migration, many scholars treat

the old northwestern states as an extension of the “North,” and the old

southwestern states as an extension of the “South.” Egnal might

be right in limiting his comparison to the same states in 1750 and 1850, but

since it is so favorable to his argument, he could do more to justify the

choice. Similarly, the use of per capita income in 1840 is important,

since the south was a slave society and slaves are both part of the population

and treated as a capital asset. Thus most scholars discuss both per capita

income and per capita income of free persons. Egnal does discuss the

distributional consequences of slavery, but his arrangement of

the data in a way most supportive of his argument is typical of the book’s

approach.

Egnal is building a case that culture and institutions matter, not trying to

reject the null-hypothesis that there is no difference.

Chapters two through four look at the eighteenth-century origins of the

differences among the regions. As Egnal sees it, even in the eighteenth

century, there was a ” . . . gulf separating the entrepreneurial North and the

other two regions that were less concerned with money making” (p. 21

).

Egnal supports his claims by citing evidence from sources ranging from the

writings of contemporary observers to examples of how people chose to be

depicted in family portraits. Contemporary observers described the French as

more luxury loving and less concerned with making money than New Englanders.

Similarly, contemporaries saw the southerners as more concerned with luxurious

living and “lazier”

than northerners. In paintings, wealthy northerners had themselves portrayed

as busy and prosperous, while wealthy southerners had themselves pictured as

idle aristocrats. Quebecois portrayed themselves as pious. In contrast to

more quantitative historians,

Egnal uses this type of “soft evidence” to illustrate his points.

Legal structures also differed

among the regions. French Canada had the seignorial system and property rights

that made it hard to sell land outside the family. These feudal vestiges and

the outlook that went with them persisted after the English takeover of Canada

in 1765. The South had bound labor and, in Egnal’s view, slave labor was

obviously less motivated and efficient than free labor (a claim that Robert

Fogel and Stanley Engerman would dispute). French Canadian society was based

on traditions and hierarchy in the eighteenth

century and remained so throughout the nineteenth. By contrast southern

colonies developed new institutions as fast as the north, but plantation

agriculture and slavery lead to a commitment to hierarchy and status missing in

the north. Egnal sees the shared commitment to a hierarchical society as

factors that united the South and Quebec and caused both regions to trail the

northeast for so long. It is important, however, to keep in mind that the

North had a higher per capita income than any other region in the world except

Australia in 1860, not just Quebec and the South (Fogel and Engerman,

Time on the Cross, 1974, p. 250).

In chapters five through eight, Egnal argues that the differences in attitudes

played out in the growing differences among the three regions.

He conducts an imaginary dialogue with an advocate of the view that the South

was as profit oriented and rational as the North, and he rejects that claim.

Intellectually, the North in the nineteenth century had entered an “age of

Emerson

. . . individualism, optimism, enthusiasm,

and reform.” (p. 120) These ideas helped make the North ready for the changes

needed to sustain modern economic growth. By contrast,

the southern intellectuals were closed off to new ideas, as the defense of

slavery became more intense. Similarly, Quebec saw the triumph of the Catholic

Church and a commitment to tradition.

This is not to say that Quebec and the South were identical. The French stayed

close to home, reflecting a desire to remain close to hearth and home that

Egnal traces back to the original unwillingness of the French to move to the

New World. Southerners were willing to move, but not to pursue manufacturing

and other risky activities in the same way as the northerners. In these

chapters

Egnal discusses the high rates of interstate migration of southern slaveholders

and high relative incomes in the southwest. From 1860 to 1940, incomes in the

South and Quebec remained low relative to both the North and English-speaking

Canada. Racism and

the politics of segregation may have held back the South, but what held back

Quebec? Gavin Wright (Old South, New South: Revolutions in the Southern

Economy Since the Civil War, 1986) emphasizes the isolation of the southern

labor market and the lack

of outside investment as key factors in the slow growth of the South. A

question for further research is whether Quebec was isolated in a similar way.

Chapter ten looks at the convergence of Quebec and the U.S. South to levels

close to the rest of the U

.S. and English-speaking Canada. Incomes in Quebec converged in the

mid-sixties, somewhat later than for the deep South. Egnal sees the narrowing

as based on the convergence of mind-sets. Southerners and Quebecois became

more entrepreneurial while New England businessmen became less aggressive and

more risk averse.

Again, adding Quebec changes the focus away from race. Did the Catholic

traditions and the active participation of the church lead to a lack of

entrepeneurship in Quebec in the first half of

the twentieth century? Did an increasing secularization change Quebec? Why

did New Englanders loose their edge (or did they?)?

In chapter 11, the author brings the story up to the present. This is,

perhaps inevitably, the weakest chapter. Egnal sees

the period since 1975 as the “Post-Industrial” economy. Fair enough, but it is

hard to use the tools of the historian to analyze the recent past, since it is

still too soon to know what will prove to be of lasting importance and what is

transitory.

In the end, the value of this book lies in the thought-provoking questions it

raises, not with the definitive answers it provides. I still don’t know how to

test whether many of the “cultural factors” that Egnal cites are a cause of

lower incomes, an effect,

or a mere coincidence. But if “culture and institutions” (however defined) do

not explain the differences among the North and the other two regions, what

does provide the explanation? If they do provide the answer, we need to refine

the concepts to exp lain how this process worked. It is to Marc Egnal’s credit

that he raises these issues in such an interesting way.

Leonard A. Carlson Department of Economics Emory University

Leonard Carlson is author of Indians, Bureaucrats, and Land: The Dawes Act

the the Decline of Indian Farming(1981), “The Economics and Politics of

Irrigation Projects on Indian Reservations,” in Linda Barrington (ed), The

Other Side of the Frontier (forthcoming), and other articles on U.S. and

southern economic history.

Subject(s):Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):North America
Time Period(s):General or Comparative

Landed Estates and Rural Inequality in English History: From the Mid-Seventeenth Century to the Present

Author(s):Jones, Eric L.
Reviewer(s):Broad, John

Published by EH.Net (September 2018)

Eric L. Jones, Landed Estates and Rural Inequality in English History: From the Mid-Seventeenth Century to the Present. Basingstoke, UK: Palgrave Macmillan, 2018. xi + 129 pp. $55 (hardcover), ISBN: 978-3-319-74868-9.

Reviewed for EH.Net by John Broad, Cambridge Group for the History of Population and Social Structure, University of Cambridge.

 
In the 1960s and early 70s, Eric Jones’s articles and book contributions on English landed society and agricultural history stood at the forefront of the discipline, combining a deep understanding of the sources and secondary literature with a creative mind and persuasive writing style. Jones then moved abroad to the U.S. and then La Trobe University in Australia and his interests also went global, using his fertile mind to incisively chart the role of risk mitigation in development of modern economies, and in The European Miracle (Cambridge University Press, 1981) to initiate debate on why Europe became economically dominant. When he and seven other historians came under broadside for their Eurocentric stance, his antagonist conceded that Jones’ revised edition successfully addressed most of perceived deficiencies of the original.

In retirement to rural England, Jones returns to his original interests in this short volume, providing a provocatively argued overview of the dominance of the landed elite in the countryside and its power over both local and national politics. Jones is quite explicit in his methodology. He uses apposite case studies and examples to illuminate his theories. Into this narrative are pitched a variety of high order generalizations about political and economic power, illustrated by micro-studies often drawn from less well known, not to say obscure, secondary literature. The landed elite is treated as a body for whom the countryside is not primarily an economic asset to be developed but instead a place where social power is applied and displayed.

He starts with a discussion of the place of the English Civil War and the “revolution” of 1688 in cementing the economic dominance of the landed classes. The book then devotes short chapters to a selection of illustrative features across the whole period rather than any attempt at a comprehensive discussion. It begins with a short study of how newcomers entered the world of the landed elite, using Lancashire cotton masters and their purchases in the west Midlands and the area around Bristol to make his case. A chapter on the lower orders follows, viewing them as engulfed by landed estates that created poverty and rural overcrowding as rural industry in southern England was stifled from the later eighteenth century onwards, thereby reinforcing deferential power relationships in the countryside. The much-discussed issue of English enclosure is considered in a rather off-beat way in two chapters focused on the remodeling of the landscape to make parks that demolished and reoriented existing villages, and on the manipulation of road and footpath links to enhance elite privacy at the expense of the customary well-worn ways used by working people — a story continued to the present.

Two further chapters consider the recreational use of the countryside by the landed elite for blood sports — particularly fox hunting and pheasant shooting — and the way in which the protection of these assets was used to cow and politically dominate the rural population. The two final chapters return to more abstract ideas about rural institutions and inequality in the countryside. The hierarchical structure of rural society became fossilized and its nature fostered increased inequality of both capital and income that outweighed the economic efficiency of the capitalist agricultural system of large farms that it created. For Jones the estate system should be viewed long-term as an example of market failure.

The book overall addresses big themes and introduces some theoretical concepts worth testing. There are only 123 pages of text, while each chapter begins with a one-paragraph abstract and a list of half a dozen keywords. This suggests that its intended audience is undergraduate students. If so, it serves the cause of good history teaching poorly. The narrative is one-sided and barbed. Previous historians of English estates and landed society are variously derided as nostalgic and lacking critical intent — a judgement which readers of Sir John Habakkuk, Lawrence Stone, F.M.L. Thompson, and John Beckett, to name but a few, might with English understatement regard as more than a trifle harsh. The short bibliography attached to each chapter is frankly bizarre: partial, eclectic, and certainly no adequate guide to further study by students and readers intrigued by the book’s themes.

Jones appears to work from a neoliberal economic outlook in which the economic potential of ordinary country folk was stifled by rural institutional structures and the economic and social power of a rural elite unable to look beyond their own narrow interests. But he does not appear to be immersed in the wider research portfolio of English rural history since the 1970s. Rural religion is treated purely in terms of the power relationships of the Anglican Church, but the village chapels proliferating across England from the eighteenth century onwards tell a different story. Most readers coming new to the topic might take from this book a view that a rural tyranny was exerted by lords and ladies alternating philanthropy with harsh punishments and sexual exploitation to a subservient rural population. Yet from the eighteenth century onwards the landed elite appears to have spent most of its time in London, pleasure resorts such as Bath, Tonbridge Wells, Cheltenham Spa and Scarborough, or travelling. Much of the tyranny (and directed philanthropy) of the countryside was carried out by the stewards and Anglican clergy who acted as magistrates as well as land agents, and — if they were lucky — were grudgingly admitted to the outer circle of fox hunters and pheasant exterminators. The over-arching narrative may have some applicability to the English countryside within a hundred miles of London, but the North was different, less landlord dominated except in certain enclaves. Overall it reminds us that an up-to-date understanding of English rural society is much more nuanced than the partial story told here by Jones.

 
John Broad most recent publications are “English Agrarian Structures in a European Context, 1300-1925” in James Bowen and Alex Brown, Custom and Commercialization (University of Hertfordshire, 2016) and “Joan Thirsk and Agricultural Regions: A Fifty-year Perspective” in C.C. Dyer et al. (editors), Farmers, Consumers and Innovators: The World of Joan Thirsk (University of Hertfordshire, 2016). He is currently completing a book on rural housing in England from the late medieval period to the present day and researching themes in the distribution of landownership and social welfare c.1800.

 

Copyright (c) 2018 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (September 2018). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Agriculture, Natural Resources, and Extractive Industries
Historical Geography
Geographic Area(s):Europe
Time Period(s):17th Century
18th Century
19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

Organizations, Civil Society, and the Roots of Development

Editor(s):Lamoreaux, Naomi R.
Wallis, John Joseph
Reviewer(s):Troesken, Werner

Published by EH.Net (July 2018)

Naomi R. Lamoreaux and John Joseph Wallis, editors, Organizations, Civil Society, and the Roots of Development. Chicago: University of Chicago Press, 2017. ix + 380 pp. $130 (cloth), ISBN: 978-0-226-42636-5.

Reviewed for EH.Net by Werner Troesken, Department of Economics, University of Pittsburgh.

 
Freedom of association has long been viewed as a tenet of individual liberty, and a prerequisite of any well-functioning social order. In this way, institutional rules protecting the individual’s right to voluntarily organize with others around friendship, shared beliefs, and economic goals, are not only bulwarks against political oppression but also sources of community, religious and creative expression, social and political change, and economic progress. Growing literatures among development economists and economic historians suggest the connection between freedom of association and economic progress is particularly relevant to economists. Perhaps the simplest way to appreciate this connection is to note the obvious: a state that suppresses the ability of economic agents to organize new business arrangements is also a state that is likely beholden to entrenched monopolistic interests hostile to innovations that would otherwise enhance consumer welfare and long-term growth prospects.

The history of freedom of association, and its relationship to political economy, runs throughout Organizations, Civil Society, and the Roots of Development, an NBER conference volume edited by Naomi Lamoreaux and John Wallis. In organizing the conferences and volume, the editors appear to have drawn much of their motivation from North, Weingast, and Wallis (2009). Consistent with this motivation, the editors write that “the central question of this volume is how societies transition to open access” (p. 10). Or more precisely, how do societies transition from closed (natural-order) states that limit access to markets and the political system to open-access orders that allow a broad range of individuals and groups to engage in market activities and organize politically to influence the state?

For much of history, states undermined the ability to freely associate and form voluntary organizations by refusing to formally incorporate groups that could potentially threaten the existing social order. This, in turn, hampered the ability of these groups to engage in collective action and affect change, whether political or economic. At the same time, the groups most likely to enjoy the protections and benefits of incorporation were those favored by the state, which helped to protect and perpetuate the status quo and suppress changes that were potentially welfare improving. It is unsurprising, therefore, that many of the essays in this volume use the history of incorporation law as a setting in which to explore the transition from natural states to open-access orders. Yet the assumption that state recognition of voluntary associations through formal incorporation is a defining feature of an open access order, might also have been worthy of circumspection.

In the first essay, Dan Bogart uses the decline of the East India Company to explore England’s transition to open access. Before 1750, the East India Company “was a privileged company with monopoly over all trade between England and Asia,” and as such, is an “excellent example of limited access.” First granted its charter in 1600, the company shared its rents with the monarch in return for special protections and privileges. A key move to open access occurred in 1813 when Parliament passed the Charter Act, revoking the company’s monopoly and allowing others to freely engage in Indian trade. Bogart suggests this move toward open access stemmed from a growing ideological commitment to free trade, the declining revenues and relevance of the East India Company, and the assassination of Prime Minister Perceval. Perhaps the central historical message to emerge from Bogart’s essay is that the fortunes of the East India Company waxed and waned with the company’s political influence, which is precisely what you would expect under a limited access order.

In the volume’s second essay, Barry Weingast recasts Adam Smith’s arguments about the centrality of violence in deterring economic growth. Liberally quoting Smith, Weingast explains that “given the risk of violence, rational investors will not” save or accumulate capital. The state has the potential to protect potential capitalists from plunder, but enforcing property rights itself requires a requisite level of growth and resources without which the state cannot act effectively. In this way, societies get caught in a violence trap: because there are no resources for the state to control violence and protect private property rights, there is no investment or growth, and because there is no investment and growth, there are no resources for the state protect private property. Escaping this trap requires a non-incremental change in either resources or in the relative capacity to do violence across players: once one player gains an advantage in violence it can prevent others from plundering the resources of the industrious while at the same charging (taxing) the industrious to provide such protection. On the heels of such a change, sustained growth can follow.

To highlight how the escape from the violence trap might proceed, Weingast follows Smith’s history of feudalism. Under feudalism, there was constant fighting among the feudal lords and little growth. Only when the King combined forces with local governments and merchants did these groups gain the upper hand, and replace the violence of feudalism with inter-city trade and long-term economic progress. The history Weingast and Smith recount brings to life Mancur Olson’s classic essay on roving and stationary bandits — the competition and fighting among feudal lords seems reminiscent of a world with roving bandits, while the alliance among the monarchy, municipal burghers, and merchants seems akin to world with a single bandit.

Two of the essays use the origins of general incorporation laws in the United States as a laboratory in which to explore the transition from closed to open access. Before general incorporation, businesses could only incorporate after lobbying for, and securing, a corporate charter from the state legislature. Corporate charters in this setting were most likely to have been granted to businesses with close political connections and firms without such connections would not have been able to incorporate. Because incorporation promotes access to capital markets, limiting access to corporate charters likely would have deterred market entry and economic growth. In “Corporation Law and the Shift toward Open Access in the Antebellum United States,” Eric Hilt gathers data on twenty-nine states and shows that states with large agricultural and commercial sectors were slower to adopt general incorporation. He also presents evidence that the introduction of general incorporation laws was often more a change in degree than in kind; the exact construction of general incorporation laws varied across states; and some states adopted general incorporation earlier than is often thought.

Similar to Hilt, Qian Lu and John Wallis explore the transition to open access in the chartering of banks in Massachusetts. Before 1812, banking and politics exhibited a close and unhealthy relationship, with more than 70 percent of all bankers in the state having been a legislator at some point in their lives. During this period, the Federalists in Massachusetts dominated banking in state. Critics complained that this domination was not only contrary to American values, but given the importance of credit to industry and commerce, also a burden on economic development. This domination broke down when a competing political party (the Democrat-Republican) gained control of the legislature and implemented reforms allowing for free entry into banking in the state. Although these reforms were not wholly successful in eliminating the connection between politics and entry into banking (as late as 1860 roughly 40 percent of the bankers in the state had been legislators at some point), non-elite banks without political connections were growing increasingly common.

In their essay, Victoria Johnson and Walter W. Powell use the concept of “poisedness” to explain when and why new organizations emerge, persist, and spread. Poisedness, they write, refers to “the availability or vulnerability of a social and historical context to the reception of an innovation and subsequent reconfiguration by it.” Their analysis then focuses on the history of botanical gardens in New York City during the nineteenth century.

One of the most compelling and important contributions to this volume is the Ruth Bloch and Naomi Lamoreaux chapter, “Voluntary Associations, Corporate Rights, and the State.” Challenging a large body of Tocqueville scholarship, they “contend that the voluntary associations so admired by Tocqueville never really operated independently of the state. Instead, nineteenth-century lawmakers systematically discriminated against certain groups by constraining their access to valuable entity and personhood rights” (p. 235). To make their case, Bloch and Lamoreaux show how throughout the early nineteenth century, state legislatures restricted access to corporate charters for groups that might threaten the status quo, such as antislavery organizations, labor groups, and women’s charitable groups.

In “The Right to Associate and the Rights of Associations: Civil-Society Organizations in Prussia,” Richard Brooks and Timothy Guinnane extend Bloch and Lamoreaux. They begin by noting that a 2012 survey of all the constitutions in the world found that 93 percent included a right to assembly and 94 percent a right of free association. Focusing mainly on Prussia but drawing many comparisons to the United States and other countries in Western Europe, they argue that it is a mistake to think that the West always had open access and protections for freedom of association. Much as Bloch and Lamoreaux, they suggest Western governments were reluctant to formally recognize associations that might pose a threat to existing political elites, even when the threat seems minor to historical observers. In the case of the United States, they uncover a South Carolina law that discouraged free blacks from associating with slaves during antebellum period, and show that even when African American citizens sought to organize for something as innocuous a park they could engender opposition from the state. They also suggest, however, that at least in Prussia the state was most concerned about social and political unrest and seems to have shown more openness in relation to business organizations.

Equally compelling is Jacob Levy’s “Pluralism without Privilege.” Social observers have long seen federalism and the devolution of power to state and municipal governments as a source of individual liberty and a check on the power of the state. Such a structure promotes competition across competing jurisdictions and the sort of oppositional politics that discourage agglomerations of economic and political power. This idea has been expressed and re-expressed in a myriad ways by scholars across the social sciences. Recent examples include the highly cited work of North, Wallis, and Weingast (2009) and Barnett’s (2013) notion that polycentrism might secure the consent of the governed. Levy is skeptical and suggests that jurisdictional competition by itself might by insufficient and that free societies can draw sustenance from privilege and entrenched institutional arrangements that exist outside the state. He begins by quoting Montesquieu’s argument that without the nobility, monarchy descends into despotism. He then turns to Smith, Constant, and Tocqueville. The central theme here is that while elites and privileged groups are odious in themselves, they can also help forestall more despotic regimes.

Absent Levy’s essay, nearly all the essays assume that free association is desirable because it promotes access to the state and the desirability of state access increases in a non-monotonic way: more is always better and unfettered populism is political bliss. Factions, the tyranny of the majority, and rent seeking are forgotten or secondary. While he never invokes rent seeking and only briefly mentions the Federalist, Levy’s suggestion that elite extra-legal institutions might help constrain the state, democratic or otherwise, serves to counter-balance the unqualified embrace of open access. More generally, throughout nearly all of the volume there is a quiet celebration of giving all comers equal access to the levers of state power. Amidst that celebration it would have been useful to at least consider the possibility that administrative independence, whether in the context of the judiciary, central banking, or scientific agencies, might serve to protect individual liberties and/or promote human welfare.

The final essay is “Opening Access, Ending the Violence Trap: Labor, Business, Government, and the National Labor Relations Act” by Margaret Levi, Tania Melo, Barry Weingast, and Frances Zlotnick. Here, Levi et al. argue that before the passage of the NLRA in 1935, the United States failed “two critical conditions” of a true open access order: the denial of access to labor (a variety of legal institutions inhibited the formation of labor unions), and the use of violence to suppress labor. In this setting, violence frequently emerged because it was impossible for all parties (labor, business, and government) to commit to non-violence. After the NLRA and the creation of the National Labor Relations Board, however, the law constrained actions and made it costly for any one of the players to engage in violence. According to Levi et al., with the passage of the NLRA and creation of the National Labor Relations Board, government became an impartial arbiter of the law, rather than an advocate and enforcer for business interests.

It is not clear me, however, that the state’s hostility to unions in the pre-NLRA era stemmed from an unholy alliance between business and the state as Levi et al. and others in this volume suggest. The common law had always been hostile to combinations that had the potential to restrain trade, and that hostility was not unique to unions (Hovenkamp 1991). Indeed, corporate charters frequently included provisions that if the chartered firms engaged in restraints of trade or otherwise acted monopolistically the state had the authority to revoke those charters, which states sometimes did through quo warranto proceedings (Troesken 1995). Moreover, during the late nineteenth and early twentieth century, state antitrust laws were unconstitutional if they exempted labor and agriculture from antitrust prosecution (Connolly v. Union Sewer Pipe Co., 184 U.S. 540 1902). The courts saw such exemptions as evidence of unequal treatment under the law (capital was being treated differently than labor) and a violation of the Fourteenth Amendment. One, of course, can challenge the underlying premise here and reject the idea that there is no fundamental difference between firms organizing than workers (Cox 1955). However, if one is willing to at least entertain the logic of nineteenth century courts, the reluctance of state governments to recognize unions appears similar (though not identical in terms of violence) to their reluctance to incorporate potentially monopolistic enterprises.

Despite these criticisms, my overall assessment is positive and enthusiastic. This well-done volume merits a wide ridership among economic historians and other readers that find North, Wallis, and Weingast (2009) a relevant framework. I found the contributions by Bloch and Lamoreaux, Levy, and Weingast especially important and thought provoking, independent of any connection to debates about open access and the origins of economic development.

References:

Barnett, Randy E. Restoring the Lost Constitution: The Presumption of Liberty. Princeton University Press, 2013.

Cox, Archibald. “Labor and the Antitrust Laws. A Preliminary Analysis.” University of Pennsylvania Law Review 104.2 (1955): 252-284.

Hovenkamp, Herbert. Enterprise and American Law, 1836-1937. Harvard University Press, 1991.

North, Douglass C., John Joseph Wallis, and Barry R. Weingast. Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History. Cambridge University Press, 2009.

Troesken, Werner. “Antitrust Regulation before the Sherman Act: The Break-up of the Chicago Gas Trust Company.” Explorations in Economic History 32.1 (1995): 109-136.
Copyright (c) 2018 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (July 2018). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Business History
Financial Markets, Financial Institutions, and Monetary History
Government, Law and Regulation, Public Finance
History of Economic Thought; Methodology
Labor and Employment History
Geographic Area(s):Europe
North America
Time Period(s):17th Century
18th Century
19th Century
20th Century: Pre WWII

Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective

Editor(s):Collins, William J.
Margo, Robert A.
Reviewer(s):Craig, Lee A.

Published by EH.Net (May 2018)

William J. Collins and Robert A. Margo, editors, Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective. Chicago: University of Chicago Press, 2015. viii + 287 pp. $110 (cloth), ISBN: 978-0-226-26162-1.

Reviewed for EH.Net by Lee A. Craig, Department of Economics, North Carolina State University.

 
This volume of essays, the product of a well-deserved conference celebrating the career of Jeremy Atack, covers a lot ground in nineteenth-century U.S. economic history. I learned something useful from every chapter, and, importantly, a few of them led me to unlearn some things I knew that, it turns out, are incorrect. The volume would be a good companion (for good students) in an upper-level undergraduate course.

The volume is organized into three sections. Following the editors’ introduction, the first section is entitled “Business Organization and Internal Governance.” In the first chapter, Naomi Lamoreaux reviews the legislative history of incorporation in Pennsylvania. She documents a messy process that produced the state’s general incorporation laws, which, frequently, were not all that general. The legislative process exposed tradeoffs between efficiency and other objectives. Running controlled experiments to test the merits of alternative arrangements was never a possibility, and efficiency was not necessarily the primary objective of the key players. In the big picture, this highly-micro story matters, because when economists analyze long-run growth rates across countries, they often find that common-law countries outperform civil-code countries. The complexity of Lamoreaux’s tale of common-law Pennsylvania suggests that we should not be too sanguine about such results. A variable, or two, might be missing from the relevant equations.

Since the seminal work of Adolf Berle and Gardiner Means, the advent of the modern corporate enterprise has been dated from “the turn of the twentieth century” (p. 8 and p. 73). Eric Hilt pushes that date back a bit in the volume’s second chapter. Employing a data set that matches the 1875 Massachusetts’ manufacturing census with firm-level data on ownership, he reveals and analyzes some of the key characteristics of the state’s corporations. He finds that rates of incorporation were high in industries in which average firm size was large. He also finds that, controlling for size, firms with large investments in fixed assets, such as steam engines, and those more likely to employ unskilled labor displayed higher rates of incorporation. In addition, the largest textile firms were “widely held” even by today’s standards, and, again controlling for size, the steam/unskilled labor combination was associated with more concentrated ownership. Overall, Hilt concludes that, at least in Massachusetts, “modern” corporate enterprises could be found by 1875.

In the third chapter, Howard Bodenhorn and Eugene White report on the evolution of bank boards in New York between 1840 and 1950. They focus on two key features: Timing the separation of ownership and control (essentially, Hilts’s question), and the trend in the number of directors on bank boards. With respect to the first question, like Hilt, they find that the “fraction of shares held by directors was smaller in larger banks” (p. 109), but they also find that, in the nineteenth century, bank directors owned, by any reasonable standard, a lot of stock in the banks they directed. As for average board size, they find that, over time, boards got smaller. The authors speculate that this trend might have been a response to regulatory changes, or changes in the business of banking, or both.

The second section of the volume is entitled “Bank Behavior and Credit Markets.” The first chapter in this section, by Jeremy Atack, Matthew Jaremski, and Peter Rousseau (henceforth AJR), documents and analyzes the positive correlation between local railroad access and local bank performance in the antebellum United States. AJR argue that access to a railroad may have contributed to a bank’s success in at least three ways: (1) Railroads enhanced overall economic activity by increasing bank liquidity and the returns on bank loans. (2) Railroad access increased the demand for a bank’s notes, while decreasing the discount on those notes. (3) The railroad may have created an inverted version of the “lemons problem;” specifically, the outside scrutiny that came with railroad access led to the self-selection of good bankers locating near a railroad. AJR’s econometric results also suggest that banks in existence before the railroad came to town improved their behavior following its arrival. Either way, the lemons, i.e. the wildcat banks, would have been more likely to locate in the hinterlands.

In the other chapter in this section, Mary Eschelbach Hansen sheds new light on an old topic: Bankruptcies during the Great Depression. Using a dataset that contains information on thousands of debts associated with 789 bankruptcies in Mississippi, between 1929 and 1936, Hansen analyzes the sources of credit employed by both consumers and businesses. She notes that much of the previous work on credit networks has “been biased toward banks and manufacturers” (pp. 194-95). She finds that, while the majority of the cases in her sample involved businesses rather than consumers, the modal reported type of business was “merchant,” and the majority of debts (roughly 60 percent) were owed to commercial rather than financial lenders. Loans for inventory seem to have played a particularly important role in the Mississippi economy.

The third, and final, section of the volume contains two chapters and is entitled “Scale Economies in Nineteenth-Century Production.” The first, by Robert Margo, addresses an issue familiar to anyone who has handled firm-level data from the era: How does one address the “entrepreneurial labor input?” In short the problem is that by omitting the labor of the owner-operator-entrepreneur, which census of manufacturing data tend to do, the denominator in output-per-worker measures is too small and thus productivity estimates are biased upwards. Space constraints prohibit a detailed explanation of Margo’s analysis, but the bottom line is that the findings of his chapter “can be seen as half empty (negative) and half full (positive)” (p. 240). On the negative side, the U.S. Census of Manufacturing data are flawed, and, without arcane adjustments, they probably cannot answer some of the key questions economic historians typically ask of them. On the positive side, the “rise of big business” narrative so common to nineteenth-century U.S. economic history misses a major point: Small firms were arguably quite productive, and there’s an important story to be told about that phenomenon.

The final chapter of this section, and the volume, is by Alan Olmstead and Paul Rhode. They address a specific question: Is it accurate to describe antebellum cotton plantations as “factories in the field?” To address this question, the authors employ several large data sets from the manufacturing censuses and the censuses of agriculture, for both northern and southern farms, to compare the operations of firms and farms from the era. After a detailed analysis of the relevant economic concepts, such as scale of operation and capital-labor ratios, Olmstead and Rhode conclude that the metaphor fits in some areas (e.g. professional managers overseeing large workforces), but, overall, the expression “factories in the field” is probably best thought of as a rhetorical device used by earlier authors to connote a degree of “modernity and efficiency” (p. 272) that obscures more about U.S. slave agriculture than it reveals.

 
Lee A. Craig is Alumni Distinguished Professor and Head of the Department of Economics at North Carolina State University. His most recent work in economic history is “The Impact of Mechanical Refrigeration on Market Integration: The U.S. Egg Market, 1890-1911,” with Matthew T. Holt, in Explorations in Economic History.

Copyright (c) 2018 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (May 2018). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Agriculture, Natural Resources, and Extractive Industries
Business History
Financial Markets, Financial Institutions, and Monetary History
Industry: Manufacturing and Construction
Transport and Distribution, Energy, and Other Services
Geographic Area(s):North America
Time Period(s):19th Century
20th Century: Pre WWII

The Singularity of Western Innovation: The Language Nexus

Author(s):Dudley, Leonard
Reviewer(s):Sasaki, Yu

Published by EH.Net (May 2018)

Leonard Dudley, The Singularity of Western Innovation: The Language Nexus. New York: Palgrave MacMillan, 2017. vii + 316 pp. $170 (hardcover), ISBN: 978-1-137-40317-9.

Reviewed for EH.Net by Yu Sasaki, Waseda Institute of Advanced Study, Waseda University.

 
In The Singularity of Western Innovation, Leonard Dudley of Université de Montréal seeks to identify a cause of “Western innovation,” the term that encompasses the industrial revolution of the nineteenth century and the military revolution of the twentieth century. For Dudley, a primary cause is what he calls the “language nexus,” or the degree to which the main vernacular of a society was standardized in the preceding centuries. He argues that language standardization was far more advanced in Western Europe before 1800 than in contemporaneous eastern empires of Turkey, India, and China. Europe’s cultural precocity eventually led to key inventions in the modern era, including the steam engine, telegraph, electricity, and submarines. Given that these emerged from select Western states, namely Britain, France, and the United States as a British offshoot, the substantive question that is explored in the book is: what enabled these countries to lead in innovation? Addressing this puzzle is important to economic history, because it helps understand why it was Western Europe that economically “took off” first and not other world regions.

Dudley sets out to investigate this question in fourteen chapters that are organized in three sections. Each chapter clearly identifies a thesis and discusses it in a schematic fashion: on each topic, the European (mostly English) experience comes first as the benchmark case, followed by the brief comparison of the Ottoman, Indian, and Chinese cases. After the introductory chapter, Part I traces the extent to which vernaculars were developed in each society in Chapters 2 through 5. Chapter 2 lays out the foundation of language development by examining the dynastic cycle of the seventeenth century. It points out that while the eastern empires continued to suffer from the dynastic cycle — the pattern of the rise and fall of empires through financial instability, internal rebellion or external attack, and regime replacement — this cycle ceased in England as the power of the Parliament grew stronger relative to that of monarchy. This transformation ultimately gave England stability not only in finance but also in daily lives among ordinary citizens, giving an impetus for trust and cooperation in the subsequent centuries.

Chapter 3 discusses the adoption of print technology. In Europe, the metal movable type, invented by Johannes Gutenberg circa 1450, became the standard tool until the twentieth century. Non-European empires had a distinct experience with print. Although Jews brought Gutenberg presses to the Ottoman domain by the end of the fifteenth century, Istanbul banned private printing in Turkish or Arabic until 1726 (private printing in other languages was allowed). The main rationale for the ban is that the Ottomans relied upon oral communications by religious leaders to broadcast and maintain political authority. Printing presses would leave written records and political adversaries might take advantage of any inconsistency between those records and oral transmission to challenge the authority. In India, it was westerners who led the development of vernacular printing to understand local languages (and aid the business for firms such as the East India Company). It seems that the Mughals preferred hand-written materials to printed forms, and only in the late eighteenth century did vernacular print start by the initiative of an Englishman. China was the birthplace of movable type in the eleventh century, but woodblock printing, a more labor-intensive form, became standard until the late nineteenth century.

Chapter 4 describes literacy rates in the seventeenth century whose variation across the cases comes partly from the availability of the printing press and the size of the book market. Dudley argues in Chapter 5 that another factor that affected literacy was the extent to which the main vernacular of a society was standardized prior to industrialization. He uses the first publication date of a monolingual dictionary to measure language standardization. According to this definition, English was codified by 1658 and French, by 1680. Only in the twentieth century were Hindi, Turkish, and Mandarin Chinese standardized (in 1929, 1932, and 1937, respectively). The difference in the timing of standardization played a critical role, because a standardized language would reduce transaction costs and make collaboration easier in the age of urbanization, automation, and mass production.

The rest of the book discusses the consequences of pre-modern language rationalization for innovations in industrial and military technology, drawing examples from the West. Part 2 describes industrialization. Following an overview of each state’s ability to raise revenue reliably (Chapter 6), steam engines (Chapter 7), machine tools (Chapter 8), and rifles (Chapter 9) are examined. Part 3 focuses on the military dimensions: Chapter 10 goes over geopolitics at the turn of the nineteenth century. Chapter 11 discusses steam ships; Chapter 12, major conflicts between European and Asian powers; and Chapter 13, Europe’s overwhelming force of rifled firearms over Asian rivals. The concluding chapter compares the conventional model of geopolitical competition on Europe’s rise to the language hypothesis explored in the book.

One important contribution that Dudley’s book makes is his insight that language standardization is never a “natural” outcome. One reason, I suspect, is that it is hard to imagine how the uniform use of a language can have a direct and positive impact on the desired outcome for political and economic actors — be it greater revenue or greater trade. The monograph makes it clear that few, if any, pre-modern leaders put priority on investing in language standardization, as seen in the case of the Mughal Empire. There was also wide variation in such incentive within Europe, because countries such as Spain, the Netherlands, Germany, and Italy did not quickly follow the examples of Britain and France. Given the high fixed costs required to standardize a vernacular, what provides an incentive for language standardization? This question does not receive sufficient attention in the monograph. Future research could examine it to provide a fuller conceptual framework and offer an empirical test of the role of culture in understanding the process of economic development.

Dudley is right to underscore the importance of considering cultural dimensions when one seeks to address big questions such as “Why did Europe — or a specific subregion of it — industrialize first?” Here “culture” refers to a broad term that captures patterns of behavior with regard to actors’ choices of technology, codified rules, and policies, which conventional institutionalist arguments have difficulty explaining. For example, the Chinese relied on woodblock printing (a labor-intensive technology) even though a superior technology, movable-type print (a capital-intensive technology), was available. Their choice may in part be based on their shared preference for time-consuming but cheap labor over an efficient yet expensive technology. Future work can build on Dudley’s insight to shed greater light on the origins of European industrialization.

 
Yu Sasaki is an Assistant Professor at the Waseda Institute of Advanced Study in Waseda University, Tokyo. His recent publications include “Publishing Nations: Technology Acquisition and Language Standardization for European Ethnic Groups,” Journal of Economic History, December 2017. He is currently working on how cultural consolidation within states affects political and economic development on the state level, drawing from early-modern Europe.

Copyright (c) 2018 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (May 2018). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):History of Technology, including Technological Change
Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):General, International, or Comparative
Time Period(s):Medieval
16th Century
17th Century
18th Century
19th Century

Commerce and Politics in Hume’s History of England

Author(s):Wei, Jia
Reviewer(s):Berdell, John

Published by EH.Net (October 2017)

Jia Wei, Commerce and Politics in Hume’s History of England. Woodbridge, UK: Boydell and Brewer, 2017. xi + 209 pp. $99 (hardback), ISBN: 978-1-78327-187-0.

Reviewed for EH.Net by John Berdell, Department of Economics, DePaul University.

 
Janet Wei brings David Hume’s accomplishments as a historian out of the shadows in this important investigation of Hume’s History of England. It is often remarked that Hume appeared in library card catalogue as “David Hume, the historian.” Also that he considered himself to be living in a time and place uniquely interested in history. (Hence, his purported aspiration to fill the vacant “post of honor” reserved for history in the English Parnassus.) According to Wei, Hume’s unique contribution to eighteenth century historiography lies in the interplay between his Scottish background and his cosmopolitan understanding of the emergence of commercial society across Europe. Wei finds it telling that unlike so many Scots historians of the time, Hume was not drawn to adumbrate a stages account of history, but rather to develop narratives that maintained a lively understanding of the role of chance and unforeseen events in human affairs. She underlines the fact that Hume’s history is so often paradoxical and ironic. This is part of Hume’s contribution to eighteenth century historiography, but Wei places great weight on the “innovative fabric of causation” that binds together Hume’s intertwined narratives of the rise of English liberty and commerce. Hume’s distinctive political economy informs his historical narrative of England’s emergence as a trading nation and it becomes intertwined with a narrative of the shifting balance between authority and liberty that originates in his political science.

Wei divides her book into two unequal parts. The first considers Hume’s historical account of England’s national character, or what Montesquieu called its “spirit.” The analysis centers on the interactions between the rise of English commerce and English liberty — and more particularly the proposition that for Hume the English state was largely the result of “a particular approach to colonial trade.” The second part focuses on public finance and the preservation of English liberty. Wei’s conclusion finds Hume increasingly pessimistic about that preservation because, rightly understood, England’s liberty rested upon a delicate balance between liberty and authority, which was increasingly destabilized by the fiscal demands of Britain’s empire.

Readers of Hume’s Essays will be familiar with his proposition that foreign commerce stimulated the economic development of England, indeed all of early modern Europe. Adam Smith popularized Hume’s thesis when he asserted that “For a pair of diamond buckles perhaps, or for something as frivolous and useless, they exchanged the maintenance, or what is the same thing, the price of the maintenance of a thousand men for a year, and with it the whole weight and authority which it could give them.” Wei shows us that what this gained in rhetorical flourish it lost in historical detail. While the growth of foreign commerce was essential to the erosion of noble power, the deliberate policy and legislation of Henry VII, amplified by the depredations of the War of the Roses, are central to Hume’s account of the formation of a centralized system of justice. Hume is shown to reject Harrington’s view that Henry was mistaken in his efforts to deliberately weaken noble power. Wei also emphasizes the fact that for Hume the growth of foreign trade was the product of considerably more deliberation and policy than the simple influx of luxuries found in his Essays. Hume approved of Henry VII’s and Elizabeth’s imposition of duties on foreign merchants and successfully encouraging English merchants and navigation to take their place. Although the contrast to Smith is not emphasized, Hume’s account of how foreign trade contributed to English liberty importantly includes the growth of its navy, and hence its ability to defend itself against its continental rivals. This was drawn from the strength of its colonial trade. These are not observations that sit easily with stale portrayals of Hume as the first great anti-mercantilist. There are innumerable interesting subthemes running through the first part of this book, but the central thesis must surely be Hume’s relentless attempt to undermine the Whig ideology that England’s freedoms had an ancient Saxon origin, while simultaneously undermining the Tory view that kings ruled by divine right. Contrary to the Tory view, it was commerce that slowly transformed feudal anarchy, and the jurisdiction of nobles, into a powerful Tudor monarchal absolutism. Contrary to the Whig view Parliament actively contributed to Tudor power since Tudor monarchs were the only feeble source of civil liberties in that dark age. All this would change under the Stuarts as the continued growth of commerce emboldened Parliament to rein in monarchal power, and to provide civil liberties an independent and more secure footing in an independent legal establishment.

The second part of the book focuses on the role of public finance in determining the balance between Parliament and monarch — between Hume’s great principles of liberty and authority. The balance hung upon control over tax revenues and the need to fund the navy. Here Wei makes good use of a burgeoning literature (from D.P. O’Brien among others) that puts Britain’s public finances, and imperial aspirations into European context. Istvan Hont, who tragically could only supervise the early phases of this thesis, has emphasized the fact that Hume was acutely aware of the instability lurking in England’s delicate political balance. Wei provides considerable new detail to Hont’s thesis by following the twists and turns of Hume’s account of English political “opinion,” and the increasingly uncompromising republican and monarchical “spirits.” Along the way she makes a short but powerful case that Hume should be seen as a supporter of unlimited religious toleration — rather than as an advocate for an established church as is usually taught. Her concluding thoughts on Hume’s increasing conservativism regarding the prospects for England’s public liberty should be contrasted with other accounts, such as those of Andrew Sabl and David Wootton, as Hume’s politics are notoriously difficult to situate on a anything resembling a liberal-conservative spectrum. When Hume was unable to simultaneously undermine both of the prominent party ideologies of his day, he would alternately adopt their positions: all in an effort to force his readers to think things through for themselves. Wei’s careful identification of Hume’s contributions to historiography certainly contributes a great deal to our understanding of how and why he did so.

References:

Sabl, A. (2012). Hume’s Politics: Coordination and Crisis in the History of England. Princeton,
Princeton University Press.

Wootton, D. (1993). David Hume, “The Historian.” The Cambridge Companion to Hume. Edited by D. Norton. Cambridge: 281-312.

 

John Berdell is the author of International Trade and Economic Growth in Open Economies: The Classical Dynamics of Hume, Smith, Ricardo and Malthus (Edward Elgar, 2002) and articles on Cantillon, Hume, Smith and most recently John Law: “The Structure and Stability of John Law’s early Land Bank Proposals,” forthcoming, Oeconomia.

Copyright (c) 2017 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (October 2017). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):History of Economic Thought; Methodology
Geographic Area(s):Europe
Time Period(s):18th Century

Rethinking Canadian Economic Growth and Development since 1900: The Quebec Case

Author(s):Geloso, Vincent
Reviewer(s):Emery, Herb

Published by EH.Net (October 2017)

Vincent Geloso, Rethinking Canadian Economic Growth and Development since 1900: The Quebec Case. New York: Palgrave Macmillan, 2017. xxi + 212 pp. $129 (hardcover), ISBN: 978-3-319-49949-9.

Reviewed for EH.Net by Herb Emery, Department of Economics, University of New Brunswick.

 

Vincent Geloso, Post-Doctoral Fellow at Texas Tech University, adds to the literature arguing against historical narratives that Quebec’s economic development and modernization only started after 1960 with the Quiet Revolution. For Quebec, the fifteen years after World War II, dubbed “La Grande Noirceur” or “the Great Darkness,” is associated with the Maurice Duplessis’s Union Nationale government supported by the Catholic Church and Anglophone business, prone to corruption, suppression of civil liberties and labor unions, and defense of traditional values and rural interests. While historians have acknowledged that the postwar economy of Quebec had strong growth, and elements of modernization like rural electrification, Duplessis is also considered to have been a leader that held modernization and the development of a secular, multi-cultural state back by at least a decade. Overall, the goal of the author is to spur a reconsideration of “La Grand Noirceur” as “The Great Catch Up” and to recast the leadership of Duplessis in a positive light. Perhaps more controversial, the author seeks to bolster that case that the Quiet Revolution was at best a continuation of an evolution and may have actually been a drag on growth.

Geloso contributes new evidence in support of a revisionist argument as to Duplessis’s legacy. He shows that after decades of no convergence between Quebec and Ontario, during Duplessis’ leadership from 1945 to 1960, Quebec’s economy boomed and incomes converged with those of Ontario, Canada’s leading provincial economy. He seeks to make a case that during the “The Great Darkness” the conditions for future growth, notably through the increased educational attainment of francophones, were sowed. The author describes how the forces underlying the Quiet Revolution, including the declining role of the church and populist, rural attitudes which resisted modernization, were underway well before the 1960s. In contrast, the era from 1960 to 1976 exhibited no break from the trend set from 1945 to 1960, and during the Quiet Revolution convergence with Ontario slowed to a halt and the gap with the rest of Canada has remained more or less constant since.

Geloso’s revisionist view of the Duplessis period is based on the convergence of Quebec’s income with that of Ontario rather than on absolute gains in income which occurred before and after the Duplessis period. Did Duplessis have anything to do with the income convergence of the 1950s? It could be that Quebec’s gains happened in spite of Duplessis as the author argues that Quebec’s later gains occurred in spite of the Quiet Revolution. Quebec’s economic gains during the time of Duplessis were not unique to Quebec and the lack of comparative work is a major shortcoming of the book. Economic modernization similar to what Geloso describes for Quebec was also underway in Alberta, Saskatchewan and New Brunswick under three ideologically different governments. All balanced their books like Quebec, all invested in rural electrification and other massive resource projects. Unlike those provinces, however, Quebec would have had a much greater boost following World War II because of the location of wartime industry favoring Quebec. Mary Mackinnon and Daniel Parent have shown that linguistic and economic assimilation of francophones in New England accelerated after World War II suggesting that the developments Geloso describes for Quebec francophones were not specific to Quebec.

Equating success with convergence with Ontario is curious. Relative incomes across Canada’s provinces have shown remarkable stability since at least 1870. That suggests that income differentials across provinces are equilibrium differentials perhaps reflecting differing industrial/sectoral compositions of the provincial economies. This perspective would have been clearer if the author had drawn on Alan Green’s (1971) Gross Value Added estimates with information on sectoral employment and incomes. John McCallum’s (1979) “Unequal Beginnings” posits that Quebec and Ontario had differing processes of industrialization due to differences between the productivity of agriculture in the two provinces. Quebec had low wages that attracted low value added manufacturing based on external capital while Ontario had internal sources of capital, high wages and high value added manufacturing. These differences could explain why Quebec had a lower level of income than Ontario and convergence could reflect changes in the industrial make up of Quebec, perhaps due to the wartime industries of World War II.

It may be that the importance of the Quiet Revolution was not about growth and modernization of the Quebec economy, but about the distribution of income and wealth towards Francophones which accompanied the majority population’s increasing economic power. Duplessis benefited from Anglophone business and external capital to develop resource industries. He used the Church employing priests and nuns at low wages for schooling and hospitals to keep taxes low. But, as the Canadian welfare state grew through the 1960s, spurred by federal government cost sharing in areas like health care, an increasingly educated Francophone population emerged as a middle class wanting jobs which the low paid priests and nuns held. The relative slowdown, if not decline, of Quebec’s gains against Ontario after 1976 must be related to the rise of Quebec nationalism and sovereignty referendum. The political uncertainty of the times resulted in capital and Anglophone business elites moving to Ontario which while reducing incomes in the province, shifted economic control to Francophones. There is not much in the book about this pivotal political development which would seem to be an obvious starting point for understanding post-1970s growth in Quebec.

Given Geloso’s work, one could interpret the Quiet Revolution as a rejection of growth as the top priority for Quebec’s society for a balance between growth and the redistributive goals that the Duplessis era had failed to address. Quebec may have failed to gain economically against Ontario after 1960, but the Francophone majority gained a greater share of the wealth that the province did produce.

 

Herb Emery is the Vaughan Chair in Regional Economics at the University of New Brunswick. He is co-author (with Ron Kneebone) of “Socialists, Populists, Resources, and the Divergent Development of Alberta and Saskatchewan,” Canadian Public Policy/Analyse de politiques 34 (4): 419-440 (2008).

Copyright (c) 2017 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (October 2017). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Economic Development, Growth, and Aggregate Productivity
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

Routledge Handbook of Global Economic History

Editor(s):Boldizzoni, Francesco
Hudson, Pat
Reviewer(s):Mitch, David

Published by EH.Net (September 2017)

Francesco Boldizzoni and Pat Hudson, editors, Routledge Handbook of Global Economic History. New York: Routledge, 2016. xv + 471 pp. $240 (cloth), ISBN: 978-1-138-83803-1.

Reviewed for EH.Net by David Mitch, Department of Economics, University of Maryland, Baltimore County.
Francesco Boldizzoni (University of Turin) and Pat Hudson (Professor Emeritus, Cardiff University) have compiled a fascinating collection of 24 historiographical surveys on the economic history of countries and regions from six out of seven continents of the world bookended by their introductory essay (“Global Economic History: Toward an Interpretive Turn”) and their concluding essay (“Culture, Power, and Contestation: Multiple Roads from the Past to the Present”). Antarctica is presumably excluded due both to the absence of indigenous economic historians and the paucity of scholarly literature on the region. (See however, Bjorn L. Basberg, “Perspectives on the Economic History of the Antarctic Region,” International Journal of Maritime History (December 2006): 285-304.) The focus of each of these essays is on the historiography or alternatively history of economic history including the institutional setting for the practice of economic history for the geographical area under consideration rather than a survey of economic history as such. For twenty of the essays, the geographical entity considered is the nation state. The other four essays include Huri Islamoglu’s survey of what she calls “Middle Eurasia,” Luis Bertola and Javier Rodriguez Weber’s survey of Latin America, Ayedoji Olukoju’s survey of West Africa and Patrick Manning’s survey of Africa as a whole

A central defining feature of the volume is that in selecting authors for these pieces, the editors are explicit about their preference for indigenous economic historians. Boldizzoni and Hudson offer the following definition of an indigenous economic historian (p. 9): “Whenever possible historians who were trained and/or had based their career within their indigenous culture were favoured.” They offer the following justification for this principle of selection: “A distinctive contribution of the chapters therefore comes from their privileged access to sources. This is an aspect overlooked by global historians who have got accustomed to interpretations based upon cherry-picked secondary materials and upon inadequate, partial and delayed translations. We are not suggesting that indigenous scholars are inevitably more qualified than others to interpret their native cultures although we do accept, other things equal, that they have the opportunity to be better informed and that indigenous and external perspectives are likely to differ.” By my rough and ready reckoning, only two of the contributors clearly do not meet the indigenous criteria, Patrick Manning, the author of the Africa survey mentioned already, and Prasannan Parthasarathi who completed his Ph.D. at Harvard and has been in the History Department at Boston College since 1998. At any rate, the overwhelming majority of the authors in the volume would seem to meet the indigenous criteria as just described.

An important consequence of this for the surveys is that less attention than might otherwise occur is accorded to work by foreign scholars on the relevant territorial unit and, it would appear as a consequence, by cliometricians. The extent of inclusion of foreign and/or cliometric scholarship actually varies considerably across these pieces. Some chapters give no mention whatever to work by cliometricians or foreign scholars while others do so quite extensively. Thus both Naomi Lamoreaux’s chapter on the U.S. and that of Inaki Iriarte-Goni on Spain do give extensive coverage to cliometric work.

At first blush, it struck me that many of the chapters were thus wildly imbalanced by their lack of coverage of recent cliometric contributions or of major works by non-indigenous non-cliometric historians. Having heard, this past April, Bishnu Gupta deliver what I considered a tour de force Tawney Lecture featuring recent cliometric contributions to the economic history of India at the annual Economic History Society conference and having recently read Richard von Glahn’s magisterial The Economic History of China as well as having a sense of the considerable impact of Kenneth Pomeranz’s The Great Divergence, I found it quite jarring to read the chapters on India and China and to find minimal mention of cliometric or foreign scholarship in either — including no mention of the contributions of Gupta, Pomeranz, or von Glahn. The chapter by Parthasrathi on India does mention the scholarship of Eric Stokes and Indian expat Amartya Sen, and Li Bozhong’s chapter on China does cite John Fairbanks and Angus Maddison. I do not find it obvious that any advantage associated with better access to primary sources or superior language skills should so fully outweigh other advantages associated with historical, social science and quantitative training in leading global academic centers as to either fully exclude or at least minimize the contributions of such perspectives.

It was only after I read Li Bozhong’s chapter on China that the case for economic history as done by indigenous scholars became compelling to me, although Boldizzoni and Hudson in their introduction indeed refer to an “interpretive turn” in history in which the perspective of the participant becomes central. Li makes the case that there is a 2000-year tradition of a genre that has been termed Shi Huo studies or food and money/commerce studies (p. 293-94). While not organized in terms of more modern concepts of economic history, these treatises did provide records and descriptions of “economic activities, events, and institutions” (p. 295). While this literature established a long tradition of Chinese antecedents for economic history, Li acknowledges that economic history in China was not indigenous but was introduced from the modern West in the first half of the twentieth century. However, he argues that the field developed in China in response to the distinctively Chinese self doubts of the time and an indigenous Chinese desire “to understand what was wrong with traditional Chinese society and economy and their failure to make China a ‘modern nation’” (p. 296). Similar arguments arise for the emergence of economic history in the Soviet Union and in Latin America in the early twentieth century and in South Africa in the mid-twentieth century. Indeed some of the most poignant passages in the volume are those by Leonid Borodkin and Li relating how Soviet and Chinese economic historians lost their lives — not to mention their career positions — for advocating approaches to economic history that were viewed by those in authority as not adhering to an orthodox line. Kaoru Sugihara in his chapter on Japan similarly relates how scholarly participants in debates in 1930s were subject to arrest and torture by the Special Thought Police (p. 316). The influence of political economy concerns broadly defined is also emphasized in Bill Freund’s chapter on South Africa.

Rather than seeing economic history as a field involving standard practices that have simply diffused from more advanced to less advanced societies of the world, the alternative view is that even if influenced by what at the time seem more advanced societies, the particular mix of issues and approaches to addressing them by economic historians develop indigenously. Thus the case for economic history in a given geographic area being practiced by indigenous scholars seems to me more one of awareness and responsiveness to distinctively local issues rather than readier access to primary sources. And the issue is less whether indigenous is intellectually superior to foreign but that in developing an intellectual history of the field, greater awareness of indigenous influences and driving factors gives an important advantage over either foreigner or practitioner of universal cliometric methods in providing an account of indigenous developments. Furthermore, it is useful to have accounts of how economic history has emerged in indigenous circumstances over and above whatever contributions to the economic history of a given geographical area have been made by foreigners. It is precisely in providing a compilation of such accounts that the contribution of this volume lies.

And despite my initial reservations, I do find this a quite worthwhile and successful volume. The scholarship in each of the chapters is excellent and the editors are to be saluted for their efforts in recruiting such strong scholars from all corners of the globe. Those with serious interests in economic history will want to consult this volume and at a minimum request it for their library’s reference collection.

However, some further limitations of the volume do warrant comment. First, the nation state emphasis at points becomes awkward insofar as relevant geographic units for coverage do not fall into current nation state categories and this may explain some of the exceptions to it. Thus, it seems odd that the chapters on the Czech Republic by Antonie Dolezalova, Slovakia by Roman Holec, and Hungary by Gyorgy Kover make only minimal reference to the extensive literature on the economic history of the Austro-Hungarian Empire and indeed no chapter is included on Austria. The compelling chapter on Middle Eurasia by Huri Islamoglu seems to acknowledge that much is lost by an exclusive focus either on nation states such as Turkey or Iran or empires such as the Ottoman. She alludes to the value of a civilizational perspective in doing economic history in mentioning the neglect of the work of Marshall Hodgson as a scholar of Islamicate civilization as a whole. And the Latin American and African chapters alternate between country foci and continent wide or regional foci presumably reflecting the larger vistas one can obtain from a more regional or continental perspective than just considering an individual nation state.

Second, an apparent follow-on consequence of the nation state focus is a focus on the modern period since roughly the onset of the British industrial revolution from the mid-eighteenth century. So no coverage is given the literature on pre-eighteenth century economic history. This makes sense if the emphasis is on indigenous present-centered issues. But one misses the issue of how awareness of ancient, medieval and early modern roots can inform more contemporary historical analysis.

Third, while overtly aiming at overcoming disciplinary boundaries, the emphasis is on the economic history tradition. Karl Marx figures prominently and to a lesser extent Max Weber. Many of the chapters refer to the work of Fernand Braudel and the Annales School as well as the work of Immanuel Wallerstein. However, associated traditions in other social sciences seeking to integrate the economic with more general dimensions, including political science and sociology, are given minimal attention. For example, the major intellectual tradition of historical sociology reflected in the work of such prominent scholars as Charles Tilly and Michael Mann is hardly integrated into the accounts at all. No consideration is given to larger social science influences through organizations such as the Social Science History Association in the U.S. or the European Social Science History Conference. However, informative coverage is provided in the Dutch chapter by Ulbe Bosma on the origins and influence of the International Institute of Social History, based in Amsterdam and a key sponsor of the ESSHC.

Returning to the greater sensitivity of indigenous scholars to local issues raises the question of the general versus the particular in economic history. As both social science and history, there is presumably a case to be made for the presence of both. One place where this tension arises but is not considered as fully as it could have been in this volume concerns the extent to which economic historians should take up issues which have significance for the present within which they are working. This is what Claudia Goldin has called “Exploring the Present through the Past.” (See Claudia Goldin, “Exploring the Present through the Past: Career and Family across the Last Century,” American Economic Review 87, no. 2 (1997): 396-399.)

And this is a factor has had an influence on cliometric work in U.S. economic history. Thus one factor contributing to the intensity of the debate over slavery among U.S. economic historians in the late 1960s and early 1970s was concerns about racial unrest in American cities at this time. Major strands of research have developed since on issues concerning black economic progress in the advent of the Civil Rights movement and Great Society programs and on the impact of urban renewal and housing policies in the U.S. Similarly, another major strand of research focusing on the role of gender in the economy can be seen as reflecting increasing contemporary concerns with this issue. Yet the concern can arise that this infuses a presentism and whigishness into economic history with a neglect of perspectives of historical actors or longer-term general issues.

Given their preference for indigenous scholarship and a desire to avoid privileging occidental, metropole approaches, Boldizzoni and Hudson appear to have hoisted themselves by their own petard with regard to the organization of chapters in the volume. The area coverage essays is grouped into four parts. It starts with a lead section on “Anglo-American Traditions,” which includes chapters on Britain, the U.S., Canada, and Australia. Then it proceeds to “West European Roots and Responses” (which includes chapters on Germany, France, Italy, Sweden, Spain, and the Low Countries). Part III is a “Turning to the East,” which is actually the second world of former Soviet Bloc countries including not only the Russian Federation but also Poland, the Czech Republic, Slovakia, and Hungary. Finally, Part IV ends with “The Wider World,” which consists of an undifferentiated set of ten chapters but proceeding from Asia to Latin America and ending with three chapters on African regions. No explanation is provided for this sequencing but what is conveyed — even if unintentionally through this grouping and ordering — is a sense of hierarchy and diffusion from more enlightened Anglo-American regions down to more backward eastern European and then Asian and Latin American regions with African regions at the very bottom. However, many of the indigenous issues regarding national identity in economic history come through especially forcefully in the African and Latin American cases as well as those in Asia. Given the indigenous theme of the volume, highlighting more fully these latter cases at the outset would seem to be warranted.

Finally, it should be noted that an important contribution of the volume’s chapters is to consider the infrastructure supporting research and teaching in economic history — including not just the academic location of faculty and research positions in economic history but also the presence of government statistical agencies in collecting the data that can be seen as foundational for economic history research. In their concluding assessment, Boldizzoni and Hudson do make useful observations on the mix of demand- and supply-side factors including the role of government and foundation support for economic history. While there is much more that could be done in generalizing these findings, the material assembled in these essays provide an important foundation for considering the role of infrastructure in supporting the development of economic history research.

I hope these comments convey some of the respects in which this volume is both stimulating and provocative. I have not attempted to convey the full richness of its various essays. While not systematically a handbook in the sense of comprehensively surveying a gamut of methodological issues, the variety of levels of analysis and approaches taken by contributors does provide a quite valuable overview of the approaches that can be taken to the history of economic history. Not many readers perhaps will end up reading the volume cover to cover. Nevertheless, the contrasting assessments even within given geographic areas make browsing through the volume intriguing. For example, Inaki Iriarte-Goni’s and Sandra Kuntz Ficker’s upbeat assessments for Spain and Mexico respectively regarding the vibrant blending of various historical methodologies for the economic historiography of their countries present striking contrasts with Boldizzoni’s depiction of a field in decline for the case of Italy or Luiz Felipe de Alencastro’s portrait of involuted tendencies in the case of Brazilian economic history. Even cliometrically inclined scholars could potentially benefit from reading about the perspectives of those who remain resistant to their methodologies.

 
David Mitch is Professor of Economics at the University of Maryland, Baltimore County. He is the author of “Economic History in Departments of Economics: The Case of the University of Chicago 1892 to the Present,” Social Science History (2011) and “A Year of Transition: Faculty Recruiting at Chicago in 1946,” Journal of Political Economy  December (2016)

Copyright (c) 2017 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (September 2017). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Development of the Economic History Discipline: Historiography; Sources and Methods
Geographic Area(s):General, International, or Comparative
Time Period(s):19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

Widows in European Economy and Society, 1600-1920

Author(s):Moring, Beatrice
Wall, Richard
Reviewer(s):Burnette, Joyce

Published by EH.Net (August 2017)

Beatrice Moring and Richard Wall, Widows in European Economy and Society, 1600-1920. Woodbridge, UK: Boydell Press, 2017. xiii + 327 pp. $120 (hardback), ISBN: 978-1-78327-177-1.

Reviewed for EH.Net by Joyce Burnette, Department of Economics, Wabash College.
While many books have been written on the role of women in economic history, few have focused on widows. Consistently ten to fifteen percent of adult women are widows. Moring (University of Helsinki) and Wall (University of Essex) examine widows, and encourage us to reassess our assumptions about them. The argument of the book is that the typical widow was not lonely and destitute, unable to find a man willing to marry her, but was in fact economically active and living with family. The book focuses on three main themes: poverty, property, and demography.

The book includes a wide variety of data. There are 67 tables in the main text, and an additional 17 tables in the appendices, presenting averages and percentages that describe the lives of widows. Sources include poor law, tax and court records, probate inventories, wills and censuses. Most of the primary data are from Britain and the Nordic countries, since Moring specializes in Finland and Scandinavia, and Wall specializes in Britain. The authors do a good job of supplementing their own research with secondary material from other countries, to provide comparisons across Europe. For example, the authors discuss what portion of property the widow had a right to inherit in France, Germany, Spain, and Italy as well as Britain and the Nordic countries, and they compare co-residence with children in Britain, Germany, Norway, France, and Italy.

While there certainly were poor widows, the typical widow was not poor. Poverty was slightly higher among widows than among men, but widowhood did not necessarily make a woman poor. Only a small minority of widows (less than 20 percent) were on poor relief, and those that were received only a minority of their household support from poor relief payments. Widows were not idle, but their earnings were low. In Britain widows on poor relief earned about two-fifths of their household earnings from their own work. Poor relief provided only about one-fifth of household income, and the remainder came from the earnings of their children. The authors note that poor relief was never meant to provide a widow’s entire income: “the intention was to augment the economy of the widow, not to support her” (p. 37). Often widows were not given money or food, but inputs that enabled them to be productive. For example, a Scandinavian widow received the “use of the field and potato patch she has been using until now. She can keep a cow and five adult sheep in the summer on the village grazing grounds” (p. 41).

Many widows had substantial assets. In most countries the widow was legally entitled to somewhere between one-third and one-half of the estate. Widows often inherited the family house. Many widows were wealthy enough to pay taxes; across Europe between 4 and 25 percent of taxpayers were women. While widows had on average fewer assets than men, the typical widow was not destitute. Nordic inventories suggest that the average widow held about half as much property at her death as her husband had at his death, a reduction which makes sense because children had a right to half of the property. Often the farm was not split, but the widow owned only part of the farm, and part was owned by her children.

In many parts of Europe, widows might have a “retirement contract” which gave ownership of the land to the son, but specified that the widow be given food, lodging, and other goods such as firewood, until her death. In Finland about one-fifth of widows lived under such contracts, and in parts of France up to 60 percent of couples had such contracts. Sometimes the contracts were quite specific, specifying the amount and quality of specific grains. The contracts were written so that even if the son were to lose the land to creditors, the new owner would still have to support the widow.

Most widows were economically productive. Inventories of widows’ property include goods that demonstrate economic activity, such as fishing boats, shoemaking tools, and shop merchandise. Most guilds allowed women to continue in their husbands’ trade, and typically around ten percent of urban traders were widows. Even widows living under “retirement contracts” received goods suggesting that they remained economically active. For example, a Scandinavian widow received “A quarter of the cowshed and the old stables for a barn, the right to use half the hayloft and half the storage shed” (p. 136), rights which would not have been particularly useful if she were not engaged in animal husbandry. Another widow received “a cabbage patch 5 yards long and 3 yards wide and the space to sow flaxen in suitable soil” (p. 137), which suggests not only gardening but also textile production.

Since census records are not sufficient to answer questions such as the typical length of widowhood, the authors use a technique called micro-simulation to estimate the age distribution of widows and the average duration of widowhood from known demographic data. The typical widow entered that state around age 50, and remained a widow approximately 18 years. About twelve percent had no children at the time they were widowed. The European Marriage Pattern of northern Europe is said to be characterized by nuclear families and limited inter-generational cooperation. Moring and Wall question this claim, noting that the majority of widows lived with their children in both northern and southern Europe.

This book leaves us with a picture of widows as active and empowered rather than lonely and dependent. Men were more likely to remarry than women, but we should not necessarily interpret this as a sign of the widow’s weakness; perhaps women enjoyed the autonomy that came with widowhood and did not wish to remarry.

 
Joyce Burnette is currently working on examining the gender gap and peer effects among Swedish workers c. 1900 and absenteeism among nineteenth-century U.S. workers.

Copyright (c) 2017 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (August 2017). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Business History
Household, Family and Consumer History
Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):Europe
Time Period(s):17th Century
18th Century
19th Century
20th Century: Pre WWII

Law and the Economy in Colonial India

Author(s):Roy, Tirthankar
Swamy, Anand V.
Reviewer(s):Hejeebu, Santhi

Published by EH.Net (August 2017)

Tirthankar Roy and Anand V. Swamy, Law and the Economy in Colonial India. Chicago: University of Chicago Press, 2016. x + 240 pp. $45 (cloth), ISBN: 978-0-226-38764-2.

Reviewed for EH.Net by Santhi Hejeebu, Department of Economics and Business, Cornell College.
Historical and developmental economists have been captivated by the interplay between institutions — from cultural values, beliefs, and norms to formal property rights and the rule of law — and economic growth. For the last three decades, researchers have blurred the traditional boundaries of economics to rigorously explore why the blessings of economic growth fall so unevenly across the world. What role did European imperialism play in this disparity? How might a nation’s history with European colonial rule shape its growth trajectory in its post-colonial era? Onto this vast intellectual canvas, Tirthankar Roy and Anand V. Swamy masterfully illustrate the evolution of legal institutions in British India from 1772 to 1947. With an eye toward evaluating the impact of this inheritance on today’s Indian economy, Roy and Swamy showcase the limits of imported institutions.

The first chapter frames “the problem”: Contemporary India’s legal infrastructure is in urgent need of reform. Today, many regard it as restrictive, cumbersome, backlogged and, according to the McKinsey Global Institute, a significant drag on economic growth. Roy and Swamy believe the system’s weaknesses originate, partly, in colonial law and legislation. They identify two hypotheses that link the economic quality of legal institutions with European colonial rule. The first conjecture, “extractive states,” correlates strong, growth-inducing institutions with mass European migration and settlement into the colony. The second hypothesis, dubbed “legal origins,” posits that economies importing British (common law) institutions would have stronger economic performance than those importing French (civil law) institutions. Both hypotheses, the authors demonstrate, fit the Indian case poorly.

The second chapter broadly narrates the evolution of British law on the subcontinent. Beginning with the period from the East India Company’s mayoral courts of the early eighteenth century to the creation of the cosmopolitan, Anglo-Indian legal codes of the late eighteenth century, the colonial codifiers’ perspective dominates the discussion of how values and norms were understood and characterized. The authors portray precolonial systems of law and justice as a “vacuum” (p. 16) in which the imperial authorities attempted to build an innovative, new system providing both access and due process to all litigants, while leaving alternative, local juridical practices in place. During the first half of the nineteenth century, this syncretic infrastructure grew in complexity. Presidency councils promulgated laws that varied with litigants’ local custom and religious practices, Parliamentary Acts (when specifying application to the colonies) remained in effect, Mughal civil and criminal courts operated in some regions, and everywhere English common law filled in the blanks. The second half of the nineteenth century witnessed a spirit of reform, a more integrated and hierarchical system of courts and legislatures, and the ascension of the idea “that lex loci could not be constructed on the foundation of Hindu or Islamic law” (p. 25).

The next six chapters focus on specific domains of law — both statutory and case law — that bear particular importance to private economic development and the fiscal health of the colonial state. These domains include land rights, property rights, labor law, contract law, and corporate law. Upon starting these sections, I marveled at the scope of the inquiry. Having dispensed with the broad hypotheses on imperial institutions and growth, could the authors make the whole cohere? How would Roy and Swamy synthesize and qualitatively evaluate colonial India’s changing legal infrastructure, given the breadth of legal domains under review, given their very long temporal horizon as well the significant variations in customary practices within the country and across industries? Each chapter corrals mature literatures and draws evidence from Victorian gazetteers, law commission reports, and case compendia. Each chapter describes how colonial legislative acts affected an area of economic relations. Throughout these chapters, contract theory often disciplines the discussion by identifying how law altered incentives between transacting parties and reconfigured the sharing of risk between them. The project is wonderfully ambitious.

In the two chapters on land, the authors, following the seminal work of the late Ratnalekha Ray, unpack the traditional land “ownership” terms of zamindari or raiyatwari. The authors deconstruct ownership as a set of use rights, or dimensions of control, over the asset. From an economic development perspective, these dimensions of control include 1) proprietorship, in other words liability for paying tax; 2) tenancy, the right to occupy land; and 3) transferability, the ability to alienate the land or use it as collateral in credit transactions. This characterization gives rise to a wider set of possible tenurial relationships than the traditional dichotomy. The discussion carefully integrates landmark legislation — the Permanent Settlement Act (1793), Bengal Tenancy Act (1885), Madras Estates Land Act (1908), Central Provinces Tenancy Act (1898), Deccan Agriculturists’ Relief Act (1879), Usurious Loans Act (1918) — and key court cases, many introduced to the literature for the first time. In each case, law recalibrated bargaining power between owners and tenants and between lenders and borrowers. In aggregate, did the Raj’s land regulations aid economic growth? The authors cautiously answer: it depends on when and where.

Chapter 5 examines the succession of property with particular emphasis on joint versus individual rights. Early British codifiers recognized that secure property rights, based on Hindu or Muslim religious codes, were already in effect. This chapter tells the story of colonial rulers unevenly incorporating Hindu and Muslim personal law into the new Anglo-Indian jurisprudence.

Chapter 6 explores labor law, beginning with the grim reality of slavery and bonded labor and delving more deeply to the case of penal contracting in the Brahmaputra and Surma Valleys. The authors maintain a clinical attitude toward penal contracting, explaining the persistence of legislation allowing such harsh labor contracts as a solution to a contractual problem. The chapter also addresses legislation aimed to regulating modern factory labor in Bombay and Bengal. The factory acts might well have created an industrial labor force, protected from internal competition, had the acts been enforced.

Chapter 7 examines contract law, the legal recognition and enforcement of privately-arranged agreements. As in earlier chapters, this one begins with the late eighteenth century exploration of a “Hindu law of contract” (p. 124) followed by the revealed inadequacy of this “artificial” legal inheritance. Prior to specific contract legislation, silk, hides, cloth and other indigenous trades flourished without resort to formal contracts through intermediaries who could exert social control along the supply chain. In the case of indigo, from roughly 1830 to 1860, the contract problems between peasant cultivators and indigo planters often devolved into coercion and oppression. According to the authors, a key legacy of the Blue Mutiny of 1860 was the Indian Contract Act of 1872. The authors doubt the Act’s contribution to economic growth, given the availability of informal and extralegal mediation and given the limited number of disputes that reference the Act.

Chapter 8 addresses laws affecting organizational forms including partnerships, the managing-agency contract, and joint stock corporate forms. Roy and Swamy describe Hindu partnerships as extensions of the Hindu joint family and governed by property and succession laws. Industrial firms in Bombay and Calcutta preferred the limited liability, joint stock organization form. Synthesizing both family partnership and the joint stock corporation was the popular, opaque, and uniquely Asian business form called the managing agency. The authors carefully analyze the shareholders’ opportunities and risks in managing agencies and the role of law in allocating rights between owners and agents. In both chapters 7 and 8, numerous legal cases effectively demonstrate the law in practice.

The final substantive section, chapter 9 provides a macro view of the evolution of law and litigation over the colonial period. The steady growth in judicial capacity, legislation, and litigation is illustrated in a series of time series graphs. The authors discover that in the early twentieth century, the majority of appellate civil suits were tried under procedural laws rather than laws pertaining to property, contract, or agency. Disputes over process gummed up the courts, a trend that has persisted to the present day. The brief conclusion notes five additional points of continuity or discontinuity between past and present.

This extraordinary synthesis of legal and historical scholarship should be read by anyone serious about the capacity and limits of law in shaping economic development. The Raj is portrayed here as improvisational, often slow and reactive, accommodating conservative impulses within India, while also embracing modernist trends from without. The recurring use of agency theory analysis and case law deliver analytical clarity and thick description. The work will be essential reading for future students of Anglo-Indian law.

While the project does a stellar job of characterizing formal institutions, the approach has its limitations. The framework largely ignores the informal economy and the multifarious, decentralized, informal systems of conflict remediation and heritable rights. To the degree that Anglo-Indian law failed to act as a centripetal force on the colonial economy, the study leaves critical institutions unnamed and unexamined. The variety of indigenous remediation systems — especially those that did not require literacy, travel to district courts, and payments to vakils — remains outside the scope of the study. It is a critical omission given that, in the study period and even seven decades after independence, the vast bulk of Indian employment remains in unorganized sectors, beyond governmental writ. As Rajalaxmi Kamath, of IIM Bangalore recently noted, the informal sector is “far from being ‘un-legislated’… [and] is very heavily regulated by social structures”[1]. A survey of such structures and their complex interactions with the legal infrastructure remains to be done. Future scholars will thank Roy and Swamy for an important point of departure.

Endnote:
1. Rajalaxmi Kamath (June 15, 2017), “India’s Informal Sector: The Vilified-glorified ‘Other’ Side of the Formal,” http://www.forbesindia.com/article/iimbangalore/indias-informal-sector-thevilifiedglorified-other-side-of-the-formal/47245/1. Retrieved July 30, 2017.
Santhi Hejeebu is Ringer Distinguished Professor of Economics and Business at Cornell College. Her recent publications include, Humanism Challenges Materialism in Economics and Economic History, Chicago: University of Chicago Press, 2017, co-edited with Roderick Floud and David Mitch.

Copyright (c) 2017 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (August 2017). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Government, Law and Regulation, Public Finance
Geographic Area(s):Asia
Time Period(s):18th Century
19th Century
20th Century: Pre WWII