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Civilization and Capitalism, 15th-18th Century

Author(s):Braudel, Fernand
Reviewer(s):Heston, Alan

Fernand Braudel, Civilization and Capitalism, 15th-18th Century, in 3 volumes, New York: Harper and Row, 1981-84, original editions in French, 1979.

Review Essay by Alan Heston, Departments of Economics and South Asia Regional Studies, University of Pennsylvania.

Fernand Braudel’s Civilization and Capitalism

Fernand Braudel is associated with the influential Annales School (La nouvelle histoire) that advocated a major break from the dominant narrative paradigm of the early twentieth century embracing an approach to history integrating the social sciences with a problem-focused history. Braudel is uniformly praised as one of the most influential historians of the twentieth century, but a hard act to follow. Braudel immersed himself into masses of materials and emerged with plausible broad-brush stories to tell, teaching others how to replicate this approach is problematic. While the Annales School has made only a small dent in the economic history curriculum in the United States, it has had much more influence on social history worldwide and on economic history in France, Europe and the rest of the world. Rondo Cameron (1989, p. 406) in speaking of Civilization and Capitalism says, “it contains a wealth of factual information, mostly correct, but the brilliance of its author’s rather idiosyncratic interpretation has been exaggerated by the popular press.” Whether one buys the whole quotation, one can certainly agree with Cameron that Braudel builds very idiosyncratic interpretations based upon a wealth of information, often very imaginatively used.

This essay will not pretend to cover the three volumes of Civilization and Capitalism but rather touch on some broad themes that have had influence on our understanding of world economic history. These themes include Braudel’s emphasis on the economic condition of every-man, on a global approach to economic and social history, and on the process of capitalism and its geographical spread. This essay will begin with Braudel’s uses of capitalism, and then take up themes from the volumes of Civilization and Capitalism.

Before dealing with capitalism, some background on Braudel’s career is needed. Many consider The Mediterranean and the Mediterranean World in the Age of Philip II (1966 English translation) published in France in 1949 as his defining work. Braudel began this research in 1923 at age twenty-one and it was envisaged as his doctoral dissertation and was to concentrate on the policies of Philip II in the form of a conventional diplomatic history. Braudel taught secondary school in Algeria from 1923 to 1932 and then lived in Brazil where he taught at the University of Sao Paulo from 1935 to 1937. During this period he kept up with developments in Paris including establishment of Annales in 1929 by Marc Bloch and Lucien Febvre. The long gestation period of this impressive work undoubtedly had much to do with how different was the final product from the original design. Braudel says that he began to see the sense of writing a history of the Mediterranean world in discussions with Febvre circa 1927 but that he did not find models upon which to build. And then in 1934 he began to find quantitative data on ship arrivals and departures, cargoes, prices and other economic data that he felt would be the bricks and mortar of an economic and social history of the Mediterranean. By 1939 he had an outline of what he wished to say, but he was captured by the Germans in 1940 and was imprisoned for the next five years where amazingly he wrote the first draft of The Mediterranean totally from memory. The Mediterranean focuses on the history of one world region in a wide-ranging intellectual breakthrough, involving the geographic setting, transport and communications, urban and hinterland developments, trade, empires and more political themes.

In 1950 his mentor, Lucien Febvre, asked Braudel, who was then teaching at the College of Paris, to contribute a volume to a series on world history. This series was to feature a volume on “Western Thought and Belief, 1400-1800,” that Febvre would prepare while Braudel would focus on the development of capitalism over the same period. Febvre died before he could complete his volume. Braudel succeeded Febvre in 1956 at the Ecole Pratique des Hautes Etudes where he headed the Sixth Section, history. Braudel took responsibility for preparation of what became a three-volume series and was sole editor of the Annales during its most influential period. Braudel published the first volume of Civilization and Capitalism in 1967, and it was translated as Capitalism and Material Life, 1400-1800 in 1973. Volume II, Les Jeux de l”Echange and volume III, Le Temps du Monde, were published in France in 1979; volume II was translated and published as The Wheels of Commerce in 1982 and volume III as The Perspective of the World in 1984, a year before his death. (When the three-volume set was prepared, Volume I, Les Structures du Quotidien: Le Possible et L’Impossible, was a substantially rewritten version of the 1967 edition and was published in France in 1979. The English translation, The Structures of Everyday Life: The Limits of the Possible, was published in 1981. That translation followed the form of the original translation, Capitalism and Material Life, 1400 – 1800, incorporating new materials and changes. In the text, Volume I will be referred to as Capitalism and Material Life.)

A number of centers that focus on aspects of his work were begun during Braudel’s lifetime. Immanuel Wallerstein was instrumental in establishing the Fernand Braudel Center at Binghamton University (SUNY) in 1976. Their journal, Review, begun in 1977, explores a variety of issues relating to the evolution of capitalism, and the study of world systems, about which more below. The Fernand Braudel Institute in Sao Paulo is a think tank that has a strong social dimension to its studies. The economic history emerging from these centers is likely to emphasize the impact of capitalism on the social structures of society and the dependencies involved in the evolution of a worldwide economy over the past five hundred years.

1. Capitalism

Braudel emphasizes that capitalism is something different from the market economy, a distinction that should be kept in mind in understanding Civilization and Capitalism. In lectures in 1976, he said, “…despite what is usually said, capitalism does not overlay the entire economy and all of working society: it never encompasses both of them within one perfect system all its own. The triptych I have described–material life, the market economy, and the capitalist economy–is still an amazingly valid explanation, even though capitalism today has expanded in scope.” (-Afterthoughts on Material Civilization and Capitalism, p. 112) Whether or not one agrees with Braudel, this is his explanation of the order of the three volumes moving from the lower level of the daily material life of everyman to the market economy to the highest level of capitalism. It is a structure of thinking that is rather alien to trends in economic research that seek to explain the behavior of households, markets and business firms using similar economic models, a point discussed further below.

What is capitalism? For Wallerstein capitalism is a system built upon the international division of labor in which the core of the resulting world system prospers, if not at the expense of the others, at least relative to others. A familiar enough theme from the recent Seattle World Trade Organization protests. While Wallerstein took inspiration from Braudel, this is not what Braudel means by capitalism. Braudel viewed the capitalist economy as in the above paragraph, namely as something above everyday material life and the operation of markets. Capitalism takes advantage of high profit opportunities generated by linking markets into a world economy. Braudel distinguishes between the world economy and a world economy, a distinction that is not felicitous, but as one searches for alternatives, such as “regional economy” for a “world economy,” it seems better to stay with his language.

For Braudel a world economy features a core capitalist city whose commercial and financial spread may be well beyond national political boundaries. However, for Braudel there may be several world economies operating at the same time, and for each there will be a dominant core city. Capitalism may utilize an international or larger spatial division of labor but the hegemony of any particular core city for a world economy will wax and wane over time. Further, Braudel believes there have been capitalist worlds from the Italian city states or earlier, whereas Wallerstein’s analysis relies more on a Marxian progression from feudalism to capitalism. Further, Wallerstein treats the political empires like Rome, the Ottomans or the Mughals as non-capitalist systems while Braudel would be inclined to see in them some capitalistic features. He says, “…I am personally inclined to think that even under the constraints of an oppressive empire with little concern for the particular interests of its different possessions, a world-economy could, even if rudely handled and closely watched, still survive and organize itself, extending significantly beyond the imperial frontiers; the Romans traded in the Red Sea and the Indian Ocean, the Armenian merchants of Julfa, the suburb of Isfahan, spread over almost the entire world; the Indian Banyans went as far as Moscow; Chinese merchants frequented all the ports of the East Indies; Muscovy established its ascendancy over the mighty periphery of Siberia in record time” (Perspective of the World, p. 55). Braudel’s position would clearly find support in Mancur Olson’s work.

One further point on capitalism concerns its origins. Wallerstein seeks the origins of the capitalist world system in the feudal breakdown of the agrarian society of Northern Europe in the sixteenth century. Braudel is less concerned with questions of origins, but would certainly place a European world economy much earlier, perhaps in fourteenth-century Italy. Braudel is equally uncomfortable with Max Weber and any attempt to tie capitalism to the Protestant reformation (see Stanley Engerman’s essay in this project). Again, his first line of attack would be to point to all of the developments in the Italian city states that long pre-dated Luther and Calvin.

One point deserves further mention, namely the emphasis that Braudel gives to the ebb and flow of world economies over time and space. There is an element of Joseph Schumpeter’s creative destruction in Braudel’s view of the process but with a spatial spin. Schumpeter saw new innovations involving new entrepreneurs replacing older businesses along with their technologies and labor force. For Braudel the slowly shifting boundaries of world economies have two important implications. First, some areas never become involved with a world economy and their economic level remains very low. And second, some areas that were in a world economy, and were perhaps a core city, lose their place as boundaries of world economies change over time.

2. Capitalism and Material Life

Braudel and the Annales School represented a reaction to traditional narrative history with its emphasis on major actors, usually political or economic elites. More problem-oriented social and economic history has been mainstream for such a long period that present-day readers are unlikely to see anything revolutionary in Braudel’s work. However, in Volume I the chapter headings at that time were themselves a statement, beginning at the lowest level of economic and social organization.

Braudel begins Volume I of Civilization and Capitalism with a discussion of world population during the fifteenth to nineteenth centuries, including an evaluation of the reliability of the numbers and a description of the balance of peoples around the world. Beginning his study with counting all of humanity, Braudel starts off with a global view, involving the rich and the poor, and all regions of the world. He takes on social classifications, like civilized and barbaric, providing an overview of global social divisions. Public health receives major emphasis throughout but certainly the importance of the education of mothers on the health of children does not find its way into Braudel’s treatment. It is a man’s world and although his wife, Paule, was an important contributor to his research, one has to look hard in Braudel for that half of humanity.

Braudel follows population in Capitalism and Material Life with chapters on the major categories of consumer expenditure, bread and cereals, other foods and drink, and clothing and housing. These chapters, enriched with appropriate illustrations, include the diets of the poor, food fashions of the rich, the lack of furnishings of the homes of the poor and middle classes, and the increasingly elaborate interiors of the more affluent. The treatment of fashion and necessity in clothing is wide ranging. While much of this is based on the research of others, it is an extraordinary synthesis of materials from many sources and it is good reading.

The focus on everyday life in Capitalism and Material Life represents a concern shaping many areas of study after 1950, a movement from the study of elites to those of more ordinary people. This entered archaeology, as excavations moved from the palaces and temples to remains of foods, bones, and the dwellings of the poor, or lack thereof. Braudel’s emphasis thus fit very well into much Marxian history and with a view that capitalism grew at the expense of the lower classes. The following quotation referring to Naples is in his chapter Towns and Cities, and is from one of several sketches of cities of the era. It gives the tone of Braudel’s treatment of income inequality.

“Both sordid and beautiful, abjectly poor and very rich, certainly gay and lively, Naples counted 400,000, probably 500,000 inhabitants on the eve of the French Revolution. It was the fourth town in Europe, coming equal with Madrid after London, Paris and Istanbul. A major breakthrough after 1695 extended it in the direction of Borgo de Chiaja, facing the second bay of Naples (the first being Marinella.) Only the rich benefited, as authorization to build outside the walls, granted in 1717, almost exclusively concerned them. As for the poor, their district stretched out from the vast Largo del Castello, where burlesque quarrels over the free distribution of victuals took place, to the Mercato, their fief, facing the Paludi plain that began outside the ramparts. They were so crowded that their life encroached and overflowed on to the streets. ? These ragged poor numbered at the lowest estimate 100,000 people at the end of the century” (Volume I, p. 532).

Here in the midst of a description of impoverishment in Naples we also have imbedded an estimate of the homeless as 20 to 25 percent of society, a typical quantitative illustration that Braudel uses to great effect. He also tells us that the rich have the political power to live in more desirable locations, nothing new there. It is not surprising that Marxist historians would find much to like in Braudel, but there is very little ideological in his writings.

In fact, Braudel is much more interested in putting the everyday life of all peoples in perspective by comparisons of 1400 to 1800 and to contemporary levels of living. Braudel admired Simon Kuznets’ work on national income but does not appear familiar with concepts like urban versus rural versus national growth rates, and his career predates the development of poverty weighted growth rates. But one senses from his discussions of material life that Braudel would have found these comfortable constructs with which to work. He also suggests that he would have liked to use cliometrics in the analysis of his period but that there were not adequate data. However, Braudel would have probably wanted to build up social and national accounts rather than deal with behavioral models.

3. The Wheels of Commerce

It is curious that Volume I devotes chapters to Money and Towns and Cities, which seem much more the subjects of Volume II, The Wheels of Commerce. However, Braudel looks at money as an indicator of the degree of monetization of societies and the complexity of their economies. And as we have noted, the increase in towns and cities during the 1400-1800 period meant an increasing number of poor making their material life in urban areas. On the other hand, this curious treatment may only reflect the evolution of Civilization and Capitalism, in which Capitalism and Material Life was fairly self contained and appeared thirteen years earlier than the remaining volumes.

Wheels of Commerce moves from markets to capitalism and society. Although Braudel does not use the language, he is concerned with the development of institutions, ideology and social norms. He offers a justification for employing the term capitalism, noting that it was not a term used by Marx, only his followers. Capitalism for Braudel involves not only the use of capital but also its position at the apex of material life. As discussed, it is this aspect of Braudel that has had a large influence on those associating the expansion of capitalism and world systems as necessarily intertwined. The first chapter of Wheels of Commerce is called the Instruments of Exchange, by which Braudel means the types of markets in which exchange took place; it is followed by a chapter on Markets and the Economy. The two may only be separate because together they are the length of an average book. Braudel deals with local commodity markets serving surrounding villages and market towns serving their hinterland, as well as wholesale and financial markets. Markets for financial instruments including bourses and exchanges, as well as credit institutions like banks, are also discussed. Bourses, after the Hotel des Bourses in Bruges where early meetings of merchants took place, also dealt in wholesale commodity trade, especially for articles like pepper, cotton, tea and the like. For Europe the 1400-1800 period sees the development of exchanges in Amsterdam and London that while subject to bubbles, also provided a basis for financial intermediation for even small investors.

In treating the development of markets Braudel gives emphasis to the geography of markets, and his treatment is often imaginative, though not terribly systematic. He analyzes the frequency and density of fairs and markets in England and France. He gives more cursory treatments of other parts of the world, though both India and China receive their fair due. G. William Skinner’s treatment of Chinese market towns and cities is discussed in terms of the hexagons of Walter Chrystaller and August Losch. Here Braudel argues that the size of the hexagon embracing different size market towns varies inversely with the density of population (II, pp.118-19). He then applies this to puzzles in French history about the varying boundaries of pays, which he argues may well have been due to changing population densities over time–a rather nice cross-section, time-series application.

Braudel asks questions about markets that are fundamental but often not treated systematically. When do wholesale markets emerge? What leads to the establishment of year-round shops versus occasional markets and fairs? Why did the number of shops proliferate during the 1400-1800 period? When are peddlers really agents of wholesalers and when are they petty traders? Braudel concludes that the expansion of markets was stronger in England than in France, though he does not probe further into why this may have been so. And he argues in terms of his view of hierarchy, that the development of capitalism was interdependent with the expansion of exchange. He also notes that France and particularly China had administrations that constrained the expansion in markets and hence the amount of capitalistic development.

How do markets relate to each other? One way they are integrated is through the activities of the same firm, most typically in this period, an extended family firm. Braudel examines these connections mainly in Europe. The extended family firm was a common practice of merchants from India, China and the Middle East, some of which are discussed by Braudel. While he recognizes the importance of business families in extending the boundaries of any world economy, this also poses a puzzle in some of the diasporas that Philip Curtin has described so well.

For example, in Asia, which in 1400 contained more than half of world population, income and wealth, there was an established pattern of trade prior to European incursions involving intersections of an East Asian world economy that was linked to an Indian world economy stretching from Malacca in the Malaysian Peninsula to Calicut and Cambay in Western India. This in turn joined with what Braudel terms an Islamic world economy extending from the East Coast of Africa through the Arabian Peninsula, Egypt, Turkey and Persia. However, when Vasco da Gama arrived in Calicut in 1498, it was not the core city of an Indian world economy, nor is it obvious that there was such a core city. Vijayanagar was a major South Indian empire at this time but its ability to expand northward was constrained by the presence of the five hostile Bahami kingdoms. The Mughal empire only emerges after 1526. Calicut is itself ruled by the Zamorin, a Hindu ruler whose state was physically quite small, and who did not have territorial ambitions. As Braudel notes, the proportion of Arabs, Indian Muslims, Hindus, and Chinese among the actual merchant groups and shippers varied over the centuries. Diasporas like Malacca and Calicut were home or branch office to Arabs, Armenians, Chinese, Hindus, Bohras, Khojas and similar Muslim groups, Jews, Malays and others. The activities of these traders seem to fit Braudel’s model of high profit seekers linking smaller markets. However, the claim that these Asian world economies of the fifteenth and earlier centuries involved core cities seems strained. Even after the Mughal, Ming, Ottoman and Persian empires were established, it is problematic.

The remaining chapters of Wheels of Commerce deal with the development of capitalism and the role of the state in markets and in establishing monopolies including a lengthy treatment of the activities of the merchant trading monopolies in Africa, Asia and the Americas. Braudel’s treatment of society is a wide-ranging social and political analysis including discussions of hierarchies, revolts and the state and social order. Braudel does not use the terminology, “social norms,” but in a section “Civilizations do not always put up a fight” (II, p. 555) he certainly explores their importance. He says, “When Europe came to life again in the eleventh century, the market economy and monetary sophistication were ‘scandalous’ novelties. Civilization, standing for ancient tradition, was by definition hostile to innovation. So it said no to the market, no to profit making, no to capital. At best it was suspicious and reticent. Then as the years passed, the demands and pressures of everyday life became more urgent. European civilization was caught in a permanent conflict that was pulling it apart. So with a bad grace, it allowed change to force the gates. And the experience was not peculiar to the West.”

4. The Perspective of the World

In his very ambitious last volume, Braudel deals with long cycles, the emergence of various world economies, historical problems in measuring GDP per person, the colonial economies and the industrial revolution. It is certainly successful in one of its aims, to treat the economic history of the 1400-1800 period as a story of the world, not simply Western Europe. There are rich discussions of Africa, the Americas, and Asia balancing well the perspective of the colonizer and the colonized. In his essay on Max Weber, Engerman (p. 5) places Weber and Braudel, along with David Landes, Joel Mokyr, Douglass North, Nathan Rosenberg and others as scholars dealing with the “perceived uniqueness of the Western European economy.” Let me close this essay by arguing that while Braudel has a lot to say about developments in Western Europe, he did not see a simple explanation of the causes of growth in the West, nor did he think this was the most interesting question to explore.

The uniqueness of Western European experience has certainly been taken as the phenomenon to be explained by many economic historians. Writers like Weber not only looked at European evidence in the Protestant Reformation but also offered explanations of why the religions of other societies, such as India, were less conducive to growth. Braudel is not at home with Weber, nor does he seem to give great importance to institutions like private property, contract, and the like. In fact, he does not seem to accept even the premise that there is something unique to be explained about the development of capitalism in Europe.

It might be argued that this is because of Braudel’s idiosyncratic view of capitalism. Let me again quote Braudel;

“Throughout this book, I have argued that capitalism has been potentially visible since the dawn of history, and that it has developed and perpetuated itself down the ages. (III, p. 620) … It would however be a mistake to imagine capitalism as something that developed in a series of stages or leaps–from mercantile capitalism to industrial capitalism to finance capitalism, with some kind of regular progression from one phase to the next, with ‘true’ capitalism appearing only at the late stage when it took over production, and the only permissible term for the early period being mercantile capitalism or even ‘pre-capitalism’. In fact as we have seen, the great ‘merchants’ of the past never specialized: they went in indiscriminately, simultaneously or successively, for trade, banking, finance, speculation on the Stock Exchange, ‘industrial’ production, whether under the putting-out system or more rarely in manufactories. The whole panoply of forms of capitalism–commercial, industrial, banking–was already employed in thirteenth century Florence, in seventeenth-century Amsterdam, in London before the eighteenth century”(III, p. 621).

Here Braudel strongly sees in his period and earlier the same business forms that exist today and to which others attribute the uniqueness of Western European experience.

However, the following quotation perhaps illustrates where Braudel imparts his own special view of capitalism. He says,

“The worst error of all is to suppose that capitalism is simply an ‘economic system,’ whereas in fact it lives off the social order, standing almost on a footing with the state, whether as adversary or accomplice: it is and always has been a massive force, filling the horizon. Capitalism also benefits from all the support that culture provides for the solidity of the social edifice, for culture–though unequally distributed and shot through with contradictory currents–does in the end contribute the best of itself to propping up the existing order. And lastly capitalism can count on the dominant classes who, when they defend it, are defending themselves.

Of the various social hierarchies–the hierarchies of wealth, of state power or of culture, that oppose yet support each other–which is the most important? The answer as we have already seen, is that it may depend on the time, the place and who is speaking” (III, p. 623).

Braudel has a number of elements of Schumpeter in his view of world economic history, in particular long cycles and creative destruction. One of his important insights shared by many others who stress uneven or unbalanced growth is that world economies have changing borders and that there are often areas not included in any world economy. Indian software programmers are writing for Oracle in Bangalore while other areas of India (and many other world areas) are as yet unaffected by the information technology revolution. Most large countries have special development programs for backward areas, of which many have had flourishing histories, such as natural resource-rich Bihar and Eastern Uttar Pradesh in India, the seat of the Mauryan Empire and the birthplace of the Buddha.

However, Braudel departs sharply from Schumpeter in how he views the capitalist entrepreneur. For Braudel the monopolistic character of capitalism is the key element of privilege and the link between the state and society. He says,

“The rise of capitalism in the nineteenth century has been described, even by Marx, even by Lenin, as eminently, indeed healthily competitive. Were such observers influenced by illusions, inherited assumptions, ancient errors of judgement? In the eighteenth century, compared to the unearned privileges of a ‘leisured’ aristocracy, the privileges of merchants may perhaps have looked like a fair reward for labour; in the nineteenth century, after the age of the big companies and their state monopolies (the Indies companies for instance) the mere freedom of trading may have seemed the equivalent of competition. And industrial production (which was however only one sector of capitalism) was still quite frequently handled by small firms which did indeed compete on the market and continue to do so today. Hence the classic image of the entrepreneur serving the public interest, which persisted throughout the nineteenth century, while the virtues of laissez-faire and free trade were everywhere celebrated. The extraordinary thing is that such images should still be with us today in the language spoken by politicians and journalists, in works of popularization and in the teaching of economics, when doubt long ago entered the minds of the specialists…”(III, pp. 628-9).

These closing quotations from Braudel restate his view that everyday material life and operation of markets proceed at one level while capitalism carries on at a higher level above the others. Further Braudel sees capitalism as closely related to the political elites of the world economy in which they are operating. While Braudel’s view of the world economy is shared by many Marxist historians it is also consistent with the writers like John Kenneth Galbraith and Mancur Olsen, with whom I sense more affinity.

5. Conclusion

One cannot write an economic history of the world of the last five hundred years and not at least list Fernand Braudel in your bibliography. But how well does Braudel stand up today? My answer would be very well indeed at several levels. Landes (1998, xvii) introduces his recent book with an account of the inability of contemporary medicine in 1836 to save Nathan Rothschild, the richest person in the world at the time, from death by blood poisoning. Braudel put medical advances and public health practices up front in Capitalism and Material Life as critical to the improvements in economic well being of the world in the early modern period, clearly a theme shared with Landes and many others. He likewise saw the importance of historical demography to our understanding of development of the global economy.

Related to these demographic themes is Braudel’s concern with how health and material well being were distributed. He saw the great inequalities generated in world economies, and thought it important to describe them. He documents inequalities in both the distribution of private and public goods and services and sees systems of privilege as part of past and present economies. And while he would have liked a more equitable world, this is not a major theme in Capitalism and Civilization. A major theme that has contemporary resonance is the uneven development of different geographic regions of the world, and the lack of convergence of world economies, and more particularly the persistence of regions that have never been part of a world economy, or were part of a world economy in the past, but not at present.

Braudel’s distinction between markets and capitalism is probably least likely to make it into mainstream economic history, yet in many ways it also has a very contemporary ring as we move towards becoming one world economy. It is not hard to imagine Braudel finding analogies in this period for phenomena like “not in my backyard” or the internet. In today’s world of mega-mergers that need support by one or more nation states, of Airbus-Boeing battles and of Microsoft anti-trust actions, the Braudel perspective of the world fits surprisingly well. The importance of being first when there are declining costs, learning by doing, or other scale factors that provide barriers to entry into markets are not foreign to the world that Braudel describes. Often, as in the case of the trading companies, monopoly was based upon government support as in the cable industry today, and much of the capitalism that Braudel describes is related to retaining government support or preventing government interference.

References:

Braudel, Fernand. 1966 (English translation, 1972-73). The Mediterranean and the Mediterranean World in the Age of Philip II. New York: Harper and Row.

Braudel, Fernand. 1977. Afterthoughts on Material Civilization and Capitalism. Baltimore: Johns Hopkins University Press.

Cameron, Rondo. 1991. Economic History of the World. New York: Oxford University Press.

Curtin, Philip. 1984. Cross-Cultural Trade in World History. London: Cambridge University Press.

Galbraith, John Kenneth. 1967. The New Industrial State. Boston: Houghton-Mifflin.

Landes, David S. 1998. The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor. New York: W.W. Norton.

Olson, Mancur. 2000. Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships. New York: Basic Books.

Schumpeter, Joseph. 1942. Capitalism, Socialism and Democracy . New York: Harper and Brothers.

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Fernand Braudel’s Civilization and Capitalism

Fernand Braudel is associated with the influential Annales School (La nouvelle histoire) that advocated a major break from the dominant narrative paradigm of the early twentieth century embracing an approach to history integrating the social sciences with a problem-focused history. Braudel is uniformly praised as one of the most influential historians of the twentieth century, but a hard act to follow. Braudel immersed himself into masses of materials and emerged with plausible broad-brush stories to tell, teaching others how to replicate this approach is problematic. While the Annales School has made only a small dent in the economic history curriculum in the United States, it has had much more influence on social history worldwide and on economic history in France, Europe and the rest of the world. Rondo Cameron (1989, p. 406) in speaking of Civilization and Capitalism says, “it contains a wealth of factual information, mostly correct, but the brilliance of its author’s rather idiosyncratic interpretation has been exaggerated by the popular press.” Whether one buys the whole quotation, one can certainly agree with Cameron that Braudel builds very idiosyncratic interpretations based upon a wealth of information, often very imaginatively used.

This essay will not pretend to cover the three volumes of Civilization and Capitalism but rather touch on some broad themes that have had influence on our understanding of world economic history. These themes include Braudel’s emphasis on the economic condition of every-man, on a global approach to economic and social history, and on the process of capitalism and its geographical spread. This essay will begin with Braudel’s uses of capitalism, and then take up themes from the volumes of Civilization and Capitalism.

Before dealing with capitalism, some background on Braudel’s career is needed. Many consider The Mediterranean and the Mediterranean World in the Age of Philip II (1966 English translation) published in France in 1949 as his defining work. Braudel began this research in 1923 at age twenty-one and it was envisaged as his doctoral dissertation and was to concentrate on the policies of Philip II in the form of a conventional diplomatic history. Braudel taught secondary school in Algeria from 1923 to 1932 and then lived in Brazil where he taught at the University of Sao Paulo from 1935 to 1937. During this period he kept up with developments in Paris including establishment of Annales in 1929 by Marc Bloch and Lucien Febvre. The long gestation period of this impressive work undoubtedly had much to do with how different was the final product from the original design. Braudel says that he began to see the sense of writing a history of the Mediterranean world in discussions with Febvre circa 1927 but that he did not find models upon which to build. And then in 1934 he began to find quantitative data on ship arrivals and departures, cargoes, prices and other economic data that he felt would be the bricks and mortar of an economic and social history of the Mediterranean. By 1939 he had an outline of what he wished to say, but he was captured by the Germans in 1940 and was imprisoned for the next five years where amazingly he wrote the first draft of The Mediterranean totally from memory. The Mediterranean focuses on the history of one world region in a wide-ranging intellectual breakthrough, involving the geographic setting, transport and communications, urban and hinterland developments, trade, empires and more political themes.

In 1950 his mentor, Lucien Febvre, asked Braudel, who was then teaching at the College of Paris, to contribute a volume to a series on world history. This series was to feature a volume on “Western Thought and Belief, 1400-1800,” that Febvre would prepare while Braudel would focus on the development of capitalism over the same period. Febvre died before he could complete his volume. Braudel succeeded Febvre in 1956 at the Ecole Pratique des Hautes Etudes where he headed the Sixth Section, history. Braudel took responsibility for preparation of what became a three-volume series and was sole editor of the Annales during its most influential period. Braudel published the first volume of Civilization and Capitalism in 1967, and it was translated as Capitalism and Material Life, 1400-1800 in 1973. Volume II, Les Jeux de l”Echange and volume III, Le Temps du Monde, were published in France in 1979; volume II was translated and published as The Wheels of Commerce in 1982 and volume III as The Perspective of the World in 1984, a year before his death. (When the three-volume set was prepared, Volume I, Les Structures du Quotidien: Le Possible et L’Impossible, was a substantially rewritten version of the 1967 edition and was published in France in 1979. The English translation, The Structures of Everyday Life: The Limits of the Possible, was published in 1981. That translation followed the form of the original translation, Capitalism and Material Life, 1400 – 1800, incorporating new materials and changes. In the text, Volume I will be referred to as Capitalism and Material Life.)

A number of centers that focus on aspects of his work were begun during Braudel’s lifetime. Immanuel Wallerstein was instrumental in establishing the Fernand Braudel Center at Binghamton University (SUNY) in 1976. Their journal, Review, begun in 1977, explores a variety of issues relating to the evolution of capitalism, and the study of world systems, about which more below. The Fernand Braudel Institute in Sao Paulo is a think tank that has a strong social dimension to its studies. The economic history emerging from these centers is likely to emphasize the impact of capitalism on the social structures of society and the dependencies involved in the evolution of a worldwide economy over the past five hundred years.

1. Capitalism

Braudel emphasizes that capitalism is something different from the market economy, a distinction that should be kept in mind in understanding Civilization and Capitalism. In lectures in 1976, he said, “…despite what is usually said, capitalism does not overlay the entire economy and all of working society: it never encompasses both of them within one perfect system all its own. The triptych I have described–material life, the market economy, and the capitalist economy–is still an amazingly valid explanation, even though capitalism today has expanded in scope.” (-Afterthoughts on Material Civilization and Capitalism, p. 112) Whether or not one agrees with Braudel, this is his explanation of the order of the three volumes moving from the lower level of the daily material life of everyman to the market economy to the highest level of capitalism. It is a structure of thinking that is rather alien to trends in economic research that seek to explain the behavior of households, markets and business firms using similar economic models, a point discussed further below.

What is capitalism? For Wallerstein capitalism is a system built upon the international division of labor in which the core of the resulting world system prospers, if not at the expense of the others, at least relative to others. A familiar enough theme from the recent Seattle World Trade Organization protests. While Wallerstein took inspiration from Braudel, this is not what Braudel means by capitalism. Braudel viewed the capitalist economy as in the above paragraph, namely as something above everyday material life and the operation of markets. Capitalism takes advantage of high profit opportunities generated by linking markets into a world economy. Braudel distinguishes between the world economy and a world economy, a distinction that is not felicitous, but as one searches for alternatives, such as “regional economy” for a “world economy,” it seems better to stay with his language.

For Braudel a world economy features a core capitalist city whose commercial and financial spread may be well beyond national political boundaries. However, for Braudel there may be several world economies operating at the same time, and for each there will be a dominant core city. Capitalism may utilize an international or larger spatial division of labor but the hegemony of any particular core city for a world economy will wax and wane over time. Further, Braudel believes there have been capitalist worlds from the Italian city states or earlier, whereas Wallerstein’s analysis relies more on a Marxian progression from feudalism to capitalism. Further, Wallerstein treats the political empires like Rome, the Ottomans or the Mughals as non-capitalist systems while Braudel would be inclined to see in them some capitalistic features. He says, “…I am personally inclined to think that even under the constraints of an oppressive empire with little concern for the particular interests of its different possessions, a world-economy could, even if rudely handled and closely watched, still survive and organize itself, extending significantly beyond the imperial frontiers; the Romans traded in the Red Sea and the Indian Ocean, the Armenian merchants of Julfa, the suburb of Isfahan, spread over almost the entire world; the Indian Banyans went as far as Moscow; Chinese merchants frequented all the ports of the East Indies; Muscovy established its ascendancy over the mighty periphery of Siberia in record time” (Perspective of the World, p. 55). Braudel’s position would clearly find support in Mancur Olson’s work.

One further point on capitalism concerns its origins. Wallerstein seeks the origins of the capitalist world system in the feudal breakdown of the agrarian society of Northern Europe in the sixteenth century. Braudel is less concerned with questions of origins, but would certainly place a European world economy much earlier, perhaps in fourteenth-century Italy. Braudel is equally uncomfortable with Max Weber and any attempt to tie capitalism to the Protestant reformation (see Stanley Engerman’s essay in this project). Again, his first line of attack would be to point to all of the developments in the Italian city states that long pre-dated Luther and Calvin.

One point deserves further mention, namely the emphasis that Braudel gives to the ebb and flow of world economies over time and space. There is an element of Joseph Schumpeter’s creative destruction in Braudel’s view of the process but with a spatial spin. Schumpeter saw new innovations involving new entrepreneurs replacing older businesses along with their technologies and labor force. For Braudel the slowly shifting boundaries of world economies have two important implications. First, some areas never become involved with a world economy and their economic level remains very low. And second, some areas that were in a world economy, and were perhaps a core city, lose their place as boundaries of world economies change over time.

2. Capitalism and Material Life

Braudel and the Annales School represented a reaction to traditional narrative history with its emphasis on major actors, usually political or economic elites. More problem-oriented social and economic history has been mainstream for such a long period that present-day readers are unlikely to see anything revolutionary in Braudel’s work. However, in Volume I the chapter headings at that time were themselves a statement, beginning at the lowest level of economic and social organization.

Braudel begins Volume I of Civilization and Capitalism with a discussion of world population during the fifteenth to nineteenth centuries, including an evaluation of the reliability of the numbers and a description of the balance of peoples around the world. Beginning his study with counting all of humanity, Braudel starts off with a global view, involving the rich and the poor, and all regions of the world. He takes on social classifications, like civilized and barbaric, providing an overview of global social divisions. Public health receives major emphasis throughout but certainly the importance of the education of mothers on the health of children does not find its way into Braudel’s treatment. It is a man’s world and although his wife, Paule, was an important contributor to his research, one has to look hard in Braudel for that half of humanity.

Braudel follows population in Capitalism and Material Life with chapters on the major categories of consumer expenditure, bread and cereals, other foods and drink, and clothing and housing. These chapters, enriched with appropriate illustrations, include the diets of the poor, food fashions of the rich, the lack of furnishings of the homes of the poor and middle classes, and the increasingly elaborate interiors of the more affluent. The treatment of fashion and necessity in clothing is wide ranging. While much of this is based on the research of others, it is an extraordinary synthesis of materials from many sources and it is good reading.

The focus on everyday life in Capitalism and Material Life represents a concern shaping many areas of study after 1950, a movement from the study of elites to those of more ordinary people. This entered archaeology, as excavations moved from the palaces and temples to remains of foods, bones, and the dwellings of the poor, or lack thereof. Braudel’s emphasis thus fit very well into much Marxian history and with a view that capitalism grew at the expense of the lower classes. The following quotation referring to Naples is in his chapter Towns and Cities, and is from one of several sketches of cities of the era. It gives the tone of Braudel’s treatment of income inequality.

“Both sordid and beautiful, abjectly poor and very rich, certainly gay and lively, Naples counted 400,000, probably 500,000 inhabitants on the eve of the French Revolution. It was the fourth town in Europe, coming equal with Madrid after London, Paris and Istanbul. A major breakthrough after 1695 extended it in the direction of Borgo de Chiaja, facing the second bay of Naples (the first being Marinella.) Only the rich benefited, as authorization to build outside the walls, granted in 1717, almost exclusively concerned them. As for the poor, their district stretched out from the vast Largo del Castello, where burlesque quarrels over the free distribution of victuals took place, to the Mercato, their fief, facing the Paludi plain that began outside the ramparts. They were so crowded that their life encroached and overflowed on to the streets. ? These ragged poor numbered at the lowest estimate 100,000 people at the end of the century” (Volume I, p. 532).

Here in the midst of a description of impoverishment in Naples we also have imbedded an estimate of the homeless as 20 to 25 percent of society, a typical quantitative illustration that Braudel uses to great effect. He also tells us that the rich have the political power to live in more desirable locations, nothing new there. It is not surprising that Marxist historians would find much to like in Braudel, but there is very little ideological in his writings.

In fact, Braudel is much more interested in putting the everyday life of all peoples in perspective by comparisons of 1400 to 1800 and to contemporary levels of living. Braudel admired Simon Kuznets’ work on national income but does not appear familiar with concepts like urban versus rural versus national growth rates, and his career predates the development of poverty weighted growth rates. But one senses from his discussions of material life that Braudel would have found these comfortable constructs with which to work. He also suggests that he would have liked to use cliometrics in the analysis of his period but that there were not adequate data. However, Braudel would have probably wanted to build up social and national accounts rather than deal with behavioral models.

3. The Wheels of Commerce

It is curious that Volume I devotes chapters to Money and Towns and Cities, which seem much more the subjects of Volume II, The Wheels of Commerce. However, Braudel looks at money as an indicator of the degree of monetization of societies and the complexity of their economies. And as we have noted, the increase in towns and cities during the 1400-1800 period meant an increasing number of poor making their material life in urban areas. On the other hand, this curious treatment may only reflect the evolution of Civilization and Capitalism, in which Capitalism and Material Life was fairly self contained and appeared thirteen years earlier than the remaining volumes.

Wheels of Commerce moves from markets to capitalism and society. Although Braudel does not use the language, he is concerned with the development of institutions, ideology and social norms. He offers a justification for employing the term capitalism, noting that it was not a term used by Marx, only his followers. Capitalism for Braudel involves not only the use of capital but also its position at the apex of material life. As discussed, it is this aspect of Braudel that has had a large influence on those associating the expansion of capitalism and world systems as necessarily intertwined. The first chapter of Wheels of Commerce is called the Instruments of Exchange, by which Braudel means the types of markets in which exchange took place; it is followed by a chapter on Markets and the Economy. The two may only be separate because together they are the length of an average book. Braudel deals with local commodity markets serving surrounding villages and market towns serving their hinterland, as well as wholesale and financial markets. Markets for financial instruments including bourses and exchanges, as well as credit institutions like banks, are also discussed. Bourses, after the Hotel des Bourses in Bruges where early meetings of merchants took place, also dealt in wholesale commodity trade, especially for articles like pepper, cotton, tea and the like. For Europe the 1400-1800 period sees the development of exchanges in Amsterdam and London that while subject to bubbles, also provided a basis for financial intermediation for even small investors.

In treating the development of markets Braudel gives emphasis to the geography of markets, and his treatment is often imaginative, though not terribly systematic. He analyzes the frequency and density of fairs and markets in England and France. He gives more cursory treatments of other parts of the world, though both India and China receive their fair due. G. William Skinner’s treatment of Chinese market towns and cities is discussed in terms of the hexagons of Walter Chrystaller and August Losch. Here Braudel argues that the size of the hexagon embracing different size market towns varies inversely with the density of population (II, pp.118-19). He then applies this to puzzles in French history about the varying boundaries of pays, which he argues may well have been due to changing population densities over time–a rather nice cross-section, time-series application.

Braudel asks questions about markets that are fundamental but often not treated systematically. When do wholesale markets emerge? What leads to the establishment of year-round shops versus occasional markets and fairs? Why did the number of shops proliferate during the 1400-1800 period? When are peddlers really agents of wholesalers and when are they petty traders? Braudel concludes that the expansion of markets was stronger in England than in France, though he does not probe further into why this may have been so. And he argues in terms of his view of hierarchy, that the development of capitalism was interdependent with the expansion of exchange. He also notes that France and particularly China had administrations that constrained the expansion in markets and hence the amount of capitalistic development.

How do markets relate to each other? One way they are integrated is through the activities of the same firm, most typically in this period, an extended family firm. Braudel examines these connections mainly in Europe. The extended family firm was a common practice of merchants from India, China and the Middle East, some of which are discussed by Braudel. While he recognizes the importance of business families in extending the boundaries of any world economy, this also poses a puzzle in some of the diasporas that Philip Curtin has described so well.

For example, in Asia, which in 1400 contained more than half of world population, income and wealth, there was an established pattern of trade prior to European incursions involving intersections of an East Asian world economy that was linked to an Indian world economy stretching from Malacca in the Malaysian Peninsula to Calicut and Cambay in Western India. This in turn joined with what Braudel terms an Islamic world economy extending from the East Coast of Africa through the Arabian Peninsula, Egypt, Turkey and Persia. However, when Vasco da Gama arrived in Calicut in 1498, it was not the core city of an Indian world economy, nor is it obvious that there was such a core city. Vijayanagar was a major South Indian empire at this time but its ability to expand northward was constrained by the presence of the five hostile Bahami kingdoms. The Mughal empire only emerges after 1526. Calicut is itself ruled by the Zamorin, a Hindu ruler whose state was physically quite small, and who did not have territorial ambitions. As Braudel notes, the proportion of Arabs, Indian Muslims, Hindus, and Chinese among the actual merchant groups and shippers varied over the centuries. Diasporas like Malacca and Calicut were home or branch office to Arabs, Armenians, Chinese, Hindus, Bohras, Khojas and similar Muslim groups, Jews, Malays and others. The activities of these traders seem to fit Braudel’s model of high profit seekers linking smaller markets. However, the claim that these Asian world economies of the fifteenth and earlier centuries involved core cities seems strained. Even after the Mughal, Ming, Ottoman and Persian empires were established, it is problematic.

The remaining chapters of Wheels of Commerce deal with the development of capitalism and the role of the state in markets and in establishing monopolies including a lengthy treatment of the activities of the merchant trading monopolies in Africa, Asia and the Americas. Braudel’s treatment of society is a wide-ranging social and political analysis including discussions of hierarchies, revolts and the state and social order. Braudel does not use the terminology, “social norms,” but in a section “Civilizations do not always put up a fight” (II, p. 555) he certainly explores their importance. He says, “When Europe came to life again in the eleventh century, the market economy and monetary sophistication were ‘scandalous’ novelties. Civilization, standing for ancient tradition, was by definition hostile to innovation. So it said no to the market, no to profit making, no to capital. At best it was suspicious and reticent. Then as the years passed, the demands and pressures of everyday life became more urgent. European civilization was caught in a permanent conflict that was pulling it apart. So with a bad grace, it allowed change to force the gates. And the experience was not peculiar to the West.”

4. The Perspective of the World

In his very ambitious last volume, Braudel deals with long cycles, the emergence of various world economies, historical problems in measuring GDP per person, the colonial economies and the industrial revolution. It is certainly successful in one of its aims, to treat the economic history of the 1400-1800 period as a story of the world, not simply Western Europe. There are rich discussions of Africa, the Americas, and Asia balancing well the perspective of the colonizer and the colonized. In his essay on Max Weber, Engerman (p. 5) places Weber and Braudel, along with David Landes, Joel Mokyr, Douglass North, Nathan Rosenberg and others as scholars dealing with the “perceived uniqueness of the Western European economy.” Let me close this essay by arguing that while Braudel has a lot to say about developments in Western Europe, he did not see a simple explanation of the causes of growth in the West, nor did he think this was the most interesting question to explore.

The uniqueness of Western European experience has certainly been taken as the phenomenon to be explained by many economic historians. Writers like Weber not only looked at European evidence in the Protestant Reformation but also offered explanations of why the religions of other societies, such as India, were less conducive to growth. Braudel is not at home with Weber, nor does he seem to give great importance to institutions like private property, contract, and the like. In fact, he does not seem to accept even the premise that there is something unique to be explained about the development of capitalism in Europe.

It might be argued that this is because of Braudel’s idiosyncratic view of capitalism. Let me again quote Braudel;

“Throughout this book, I have argued that capitalism has been potentially visible since the dawn of history, and that it has developed and perpetuated itself down the ages. (III, p. 620) … It would however be a mistake to imagine capitalism as something that developed in a series of stages or leaps–from mercantile capitalism to industrial capitalism to finance capitalism, with some kind of regular progression from one phase to the next, with ‘true’ capitalism appearing only at the late stage when it took over production, and the only permissible term for the early period being mercantile capitalism or even ‘pre-capitalism’. In fact as we have seen, the great ‘merchants’ of the past never specialized: they went in indiscriminately, simultaneously or successively, for trade, banking, finance, speculation on the Stock Exchange, ‘industrial’ production, whether under the putting-out system or more rarely in manufactories. The whole panoply of forms of capitalism–commercial, industrial, banking–was already employed in thirteenth century Florence, in seventeenth-century Amsterdam, in London before the eighteenth century”(III, p. 621).

Here Braudel strongly sees in his period and earlier the same business forms that exist today and to which others attribute the uniqueness of Western European experience.

However, the following quotation perhaps illustrates where Braudel imparts his own special view of capitalism. He says,

“The worst error of all is to suppose that capitalism is simply an ‘economic system,’ whereas in fact it lives off the social order, standing almost on a footing with the state, whether as adversary or accomplice: it is and always has been a massive force, filling the horizon. Capitalism also benefits from all the support that culture provides for the solidity of the social edifice, for culture–though unequally distributed and shot through with contradictory currents–does in the end contribute the best of itself to propping up the existing order. And lastly capitalism can count on the dominant classes who, when they defend it, are defending themselves.

Of the various social hierarchies–the hierarchies of wealth, of state power or of culture, that oppose yet support each other–which is the most important? The answer as we have already seen, is that it may depend on the time, the place and who is speaking” (III, p. 623).

Braudel has a number of elements of Schumpeter in his view of world economic history, in particular long cycles and creative destruction. One of his important insights shared by many others who stress uneven or unbalanced growth is that world economies have changing borders and that there are often areas not included in any world economy. Indian software programmers are writing for Oracle in Bangalore while other areas of India (and many other world areas) are as yet unaffected by the information technology revolution. Most large countries have special development programs for backward areas, of which many have had flourishing histories, such as natural resource-rich Bihar and Eastern Uttar Pradesh in India, the seat of the Mauryan Empire and the birthplace of the Buddha.

However, Braudel departs sharply from Schumpeter in how he views the capitalist entrepreneur. For Braudel the monopolistic character of capitalism is the key element of privilege and the link between the state and society. He says,

“The rise of capitalism in the nineteenth century has been described, even by Marx, even by Lenin, as eminently, indeed healthily competitive. Were such observers influenced by illusions, inherited assumptions, ancient errors of judgement? In the eighteenth century, compared to the unearned privileges of a ‘leisured’ aristocracy, the privileges of merchants may perhaps have looked like a fair reward for labour; in the nineteenth century, after the age of the big companies and their state monopolies (the Indies companies for instance) the mere freedom of trading may have seemed the equivalent of competition. And industrial production (which was however only one sector of capitalism) was still quite frequently handled by small firms which did indeed compete on the market and continue to do so today. Hence the classic image of the entrepreneur serving the public interest, which persisted throughout the nineteenth century, while the virtues of laissez-faire and free trade were everywhere celebrated. The extraordinary thing is that such images should still be with us today in the language spoken by politicians and journalists, in works of popularization and in the teaching of economics, when doubt long ago entered the minds of the specialists…”(III, pp. 628-9).

These closing quotations from Braudel restate his view that everyday material life and operation of markets proceed at one level while capitalism carries on at a higher level above the others. Further Braudel sees capitalism as closely related to the political elites of the world economy in which they are operating. While Braudel’s view of the world economy is shared by many Marxist historians it is also consistent

Subject(s):Markets and Institutions
Time Period(s):Medieval

From Mutual Aid to the Welfare State: Fraternal Societies and Social Services, 1890-1967

Author(s):Beito, David T.
Reviewer(s):Emery, J. C. Herbert

Published by EH.NET (August 1, 2000)

David T. Beito, From Mutual Aid to the Welfare State: Fraternal Societies

and Social Services, 1890-1967. Chapel Hill: University of North Carolina

Press, 2000. xv + 320 pp. $55.00 (cloth), ISBN: 0-8078-2531-x; $24.95 (paper),

ISBN: 0-8078-4841-7.

Reviewed for EH.NET by J. C. Herbert Emery, Department of Economics, University

of Calgary.

David Beito’s From Mutual Aid to the Welfare State is an impressive

examination of North American fraternalism and the extent of mutual aid

provided by fraternal orders over much of the twentieth century. Readers will

be struck by the range and scale of social services and types of insurance

provided by these organizations. In contrast to earlier studies of fraternalism

that have emphasized the exclusionary bases of these societies and that have

concluded that fraternal methods of insurance were failed methods, Beito

(History, University of Alabama) presents fraternal social insurance

initiatives as successful in covering much of the needy (poor) population in an

efficient manner. In the end, Beito argues that these successful fraternal

methods of dealing with economic need wilted beneath a growing web of

government regulation and were crowded out of the insurance markets by the rise

of government social insurance.

The strength of Beito’s work is the detailed case studies of the histories and

social service activities of several organizations. For example, the

examinations of children’s homes built and operated by the Loyal Order of the

Moose (Chapter 3) and the Security Benefit Association (Chapter 4) present the

diversity of fraternal approaches to aiding the “orphans” of their unfortunate

members. Despite the differences across fraternal children’s homes, both

contrasted sharply with character of publicly-run orphanages, and in this sense

provide examples of progressive approaches to social services. Beito then

provides some fascinating data on the economic outcomes of “alumni” of the

homes suggesting that fraternal orders were successful in providing for their

members’ orphans.

Similarly, Beito’s examinations of fraternal hospitals and sanitariums in

Chapters 9 and 10 provide a fresh perspective on how voluntary action could

provide needed hospital services. Given the perception of fraternalism as

largely a relatively well off, white man’s movement, Chapter 10’s examination

of hospitals built and operated by black fraternal orders provides a challenge

to some of the prevailing views of fraternal organizations. Clearly fraternal

mutualism was effective for meeting some of the economic needs for many

non-whites and poorer members of American society.

If there is a weakness with Beito’s book it is that he presents a peculiar view

of American fraternalism that is a product of his primary sources for evidence,

which are largely drawn from the post-World War I period for life insurance

fraternal orders. A primary example of the peculiar picture of American

fraternalism that Beito paints is his repeated claim that American and British

fraternal organizations differed substantially in that the British friendly

societies “focused almost exclusively on sick and funeral benefits and medical

services.” While the sick and funeral benefits were found in American

societies, Beito maintains that the “provision of insurance (life) was the most

visible manifestation of fraternal and mutual aid” (p. 2). Further, Beito’s

evidence reveals that the American organizations (to varying degrees) expended

a great deal of resources on hospitals and homes for orphans and the aged.

Beito’s description of the difference between British and American mutualism is

definitely accurate when comparing the American life insurance orders with the

British Friendly Societies that by definition provided only sick and funeral

benefits. It is probably true when comparing American fraternal organizations

generally with British friendly societies for the post-WWI period, but it is

still a very misleading general characterization of American fraternalism.

Beito provides little or no information on the American “friendly societies”

like the Independent Order of Odd Fellows or the Knights of Pythias that were

the two largest fraternal organizations providing sick and funeral benefits

before WWI and which had limited provisions of life insurance. Clearly these

two organizations were very much like the British societies in their focus on

sick and funeral benefits. Ignoring the IOOF and KP is not necessarily a minor

oversight. The IOOF had a membership 2.5 times the size of the Loyal Order of

the Moose and 4 times the size of the Fraternal Order of Eagles, two of the

larger organizations that Beito emphasizes in his study. The conclusion that

American fraternalism was not so exclusively focused on sick and funeral

benefits after WWI is largely more true because the IOOF and KP were

dismantling their sickness insurance arrangements and operating homes.

Reflecting these changes, the IOOF had considered the sick benefit as its

defining feature in the nineteenth century. By the 1920s, many Odd Fellows saw

the home program as the IOOF’s “crowning achievement” and the “brightest jewel

in its diadem.” Thus, if there is a distinction between British and American

fraternalism it is likely after WWI once the British friendly societies were

official sickness/health insurance providers under the Approved Societies

system and once the American fraternal orders were busy getting out of the

benefits business and into homes for orphans and the aged.

Beito’s focus on homes, hospitals, health insurance and life insurance also

leads to a misleading explanation for the decline of fraternalism. Beito

highlights the negative impact of insurance regulation on the fraternal

insurers and the “crowding out” of fraternal insurance by government insurance

activities and tax treatment of commercial insurance premiums. As such, in his

view most of the decline in fraternal insurance dates from the late 1920s,

through the 1930s and into the 1940s and 1950s. Once again, this may be an

accurate description for the life insurance orders, and for the case of homes

and other fraternal services, but it fails as an explanation for fraternal

benefit activities more generally. Fraternal sick benefit arrangements, which

were the hallmark of the largest orders in North America, were in decline as

early as the 1890s when the Knights of Pythias eliminated the requirement that

all subordinate lodges had to provide a stipulated sick benefit. The IOOF,

which in 1863 declared its stipulated sick benefit to be the order’s

“distinguishing characteristic,” had by 1925 declared that its stipulated sick

benefit was a “vitiation” of Odd Fellows’ principles and called for the

abolition of the benefit. In 1925 the IOOF’s supreme body eliminated the

compulsory requirement that IOOF subordinate lodges pay sick benefits following

at least three decades over which the generosity of the benefit had been

allowed to erode, and in many cases was reduced by limiting lengths of time the

full stipulated benefit could be claimed. In both the IOOF and KP examples, the

decline of the sick benefit arrangement looks identical to that described for

the Loyal Order of the Moose in 1953 in Beito’s final chapter “Vanishing

Fraternalism.” The difficulty for Beito’s explanation for the decline of

fraternal benefits is the fact that common developments across orders differed

in timing by several decades. The IOOF and KP withdrawals from the sickness

insurance market pre-date the rise of government regulation of fraternal life

insurance and the rise of government and other non-profit sources of health

insurance and hospital insurance.

Overall, Beito’s book is a worthwhile read for anyone interested in pre-Welfare

State social insurance, life insurance and fraternalism. For those readers

interested in the history of life insurance Beito clearly lays the foundation

for an important study into the interaction of fraternal and commercial

providers of life insurance. At the same time, readers should heed the cautions

that Beito gives in his book; first just as he suggests that “any quest to find

a ‘typical’ fraternal orphanage is probably fruitless” (p. 87) so too is any

quest to find a ‘typical’ fraternal order. Second, as he cautions on page 225

(in relation to the interpretation of a table which pertains to his study

generally), a reader may get an “inadequate picture of the general state of

fraternalism because it does not include information on the leading orders

supplying sick and funeral benefit.”

Herb Emery is Associate Professor of Economics at the University of Calgary.

He is the co-author (with George Emery) of the recently published A Young

Man’s Benefit: The Independent Order of Odd Fellows and Sickness Insurance in

the United States and Canada, 1860-1929 (Montreal & Kingston:

McGill-Queen’s University Press, 1999).

Subject(s):Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

Essays on the Great Depression

Author(s):Bernanke, Ben S.
Reviewer(s):Margo, Robert A.

Published by EH.NET (July 1, 2000)

Ben S. Bernanke, Essays on the Great Depression Princeton: Princeton

University Press, 2000. vii + 310 pp. $35.00 (cloth), ISBN 0-691-01698-4.

Reviewed for EH.NET by Robert A. Margo, Department of Economics, Vanderbilt

University.

For many years, economic research on the origins and persistence of the Great

Depression bore a striking resemblance to historical research on the causes of

the American Civil War. Both sides to the respective debates talked past one

another, and little, if any, intellectual progress was made. Beginning in the

1980s, the situation began to change, at least in case of the 1930s, because of

a simple methodological innovation. That innovation was to look beyond time

series aggregates for a single country, either at dis-aggregated evidence

within countries or at aggregate outcomes across countries. Both types of

evidence are examined in Ben Bernanke’s new book, a collection of (mostly)

previously published articles. (Currently, Bernanke is the Howard Harrison and

Gabrielle Snyder Beck Professor of Economics, Professor of Economics and Public

Affairs, and Chair of the Economics Department, at Princeton University.)

Essays on the Great Depression is divided into three parts, made up of

nine substantive chapters in total, plus an index. Following a very brief

preface, Chapter 1 (“The Macroeconomics of the Great Depression”) presents the

basic themes of the book. Using a cross-country panel data set, Bernanke argues

that monetary factors, along with the Gold Standard, should be according

primary responsibility for the Depression. Adherence to the Gold Standard

resulted in monetary “meltdown” — the declines in the money stock,

accordingly, were non-neutral, because of negative effects of financial crisis

and sticky nominal wages on output growth. Countries that remained on the Gold

Standard did far worse than countries that abandoned it, and a case can be made

that staying on the Gold Standard was more or less an exogenous event – that

is, a “natural experiment.”

Part Two is made up of three chapters. Chapter 2 (“Nonmonetary Effects of the

Financial Crisis in the Propagation of the Great Depression”) is justly famous.

The paper argues that the US financial crises of the early 1930s had (negative)

effects on the real economy, essentially by driving up what Bernanke calls the

“cost of credit intermediation.” One of two chapters in the book to rely on

aggregate time series data for a single country, Bernanke shows (p. 58) that

including deposits of failed banks and liabilities of failed business in an

otherwise standard time-series regression helps to (negatively) predict output

growth. Chapter 3 (“The Gold Standard, Deflation, and Financial Crisis: An

International Comparison,” written with Harold James) reports a similar finding

using the international panel, while Chapter 4 (“Deflation and Monetary

Contraction in the Great Depression: An Analysis by Simple Ratios,” written

with Ilian Mihov) uses very simple methods (an identity linking the price level

to the nominal money supply, the monetary base, international reserves, and the

quantity and price of gold reserves) to decompose the sources of world-wide

deflation before and after 1931

Part Three, on labor markets, is made up of five chapters. Chapter 5 (“The

Cyclical Behavior of Industrial Labor Markets: A Comparison of the Prewar and

Postwar Eras,” written with James Powell) introduces the second major data set

examined in the book, pre-war monthly data on output, employment, hours, and

average hourly earnings for eight US manufacturing industries. Among its many

findings is the striking observation (p. 175) that prewar employers used

shorter hours to reduce labor during a business cycle downturn, while postwar

employers have relied on layoffs. Chapter 6 (“Employment, Hours, and Earnings

in the Depression: An Analyses of Eight Manufacturing Industries”), perhaps the

most influential of the lot, argues that nominal average hourly earnings did

not decline as much as one might expect during the downturn (that is, nominal

wages were sticky) because average weekly hours fell as well, and workers were

unwilling to accept drastic declines in the former given the declines in the

latter. Chapter 7 (“Unemployment, Inflation, and Wages in the American

Depression: Are There Lessons for Europe?” written with Martin Parkinson), the

shortest in the book at eight pages, examines whether the experience of the US

in the 1930s can shed light on certain features of recent European

macroeconomic behavior; namely, the persistence of high unemployment, and the

apparent lack of any influence of high unemployment on either the rate of

inflation or real wage growth. Bernanke concludes that, while there are some

useful lessons, “there are also large enough differences to make inferences

about policy treacherous” (p. 253). Chapter 8 (“Procyclical Labor Productivity

and Competing Theories of the Business Cycle: Some Evidence from Interwar

Manufacturing Industries,” also written with Martin Parkinson) uses the US

industry data to investigate “short run increasing returns to labor” (SRIRL)

during the interwar period. The key finding is that the degree of SRIRL appears

to have been similar in magnitude to the postwar period, which Bernanke claims

is “troubling for the technology shocks explanation of procyclical productivity

(and thus for the real business cycle hypothesis).” Chapter 9 (“Nominal Wage

Stickiness and Aggregate Supply in the Great Depression” written with Kevin

Carey) considers several econometric refinements to Eichengreen and Sach’s

well-known 1985 Journal of Economic History article on the gold standard

and the Great Depression. It concludes that the refinements do little to alter

Eichengreen and Sach’s findings, and concurs with Eichengreen and Sachs that

nominal wage stickiness was an important mechanism for propagating monetary

declines in the early 1930s.

Overall, Essays on the Great Depression is a mixed bag. Two of the

papers — “Non-Monetary Effects” and “Employment, Hours, and Earnings” — are

certifiable classics, and all the chapters are worth reading (or re-reading, as

the case may be). The quality of the prose is several notches better than the

usual fare in professional economics journals. The empirical analysis

demonstrates a practiced eye for what is important and what is not, attention

to historical and institutional detail, and a willingness to explore

alternative explanations. Conditional on when they were written, the

statistical analyses are state-of-the-art, an order of magnitude beyond what

passed for econometric sophistication in economic history journals at the time.

On the other hand, the value-per-dollar ratio is not particularly high. Eight

of the nine chapters are essentially copied (the type-setting is new and

consistent throughout) from their original sources, and six of these, being

from the American Economic Review, Journal of Political Economy,

and the like, are easily available (indeed, I bet most economists who

considering buying this book will have the originals, or most of them, on their

shelves already). The other two chapters were originally published in NBER

volumes, hardly less accessible except to the most library-challenged. That

leaves the three-page preface, the previously unpublished Chapter 4, and an

index as the new material — not much for the reader’s $35.00. I’m not

questioning Bernanke’s right to reprint his admittedly influential articles,

nor Princeton University Press’s decision to package them in a handsome volume

complete with a striking period photograph on the cover and laudatory blurbs

from Peter Temin, Barry Eichengreen, and Randall Kroszner on the back cover.

However, in the long run, scholarship on the Great Depression, along with

readers’ pocketbooks, would have been better served had these essays been

re-written into real chapters; with a real introduction and conclusion;

regressions re-estimated taking into account new data and new econometric

techniques; and new textual material interwoven throughout — in brief, if

Bernanke had written a real monograph. Even with a proper introduction and

conclusion, such a book, I suspect, would be a good deal shorter than this

volume’s 301 pages of rather small print — there is much unnecessary

repetition, indeed confusion, across the various chapters.

As a case in point, consider the treatment of wage stickiness throughout. In

Chapter 2, using his international panel, Bernanke (p. 31) concludes that

“countries in which nominal wages adjusted relatively slowly toward changing

price levels experienced the sharpest declines in manufacturing output.” Table

9 of Chapter 3 reports first-difference regressions of industrial production

(in logs) using evidently the same data set, noting that (p. 101) “only when

the PANIC variable [the dummy variable for financial distress] is included does

nominal wage growth have the correct (negative) sign … but it is not

statistically significant.” In Chapter 6, Bernanke (p. 236) simulates his US

industry model assuming “perfect wage adjustment to the cost of living.”

Remarkably, this assumption “had virtually no effect on the ability to track”

employment and hours, suggesting that “the importance of lagged adjustment for

explaining observed real wage behavior” during the Depression “may not have had

great allocative significance.” Then, drawing again on the international

evidence, Chapter 9 notes (p. 300) that “the correlation across countries of

high nominal wages and low output is interpretable as an allocational effect of

sticky wages.” Exactly what is going on here? Bernanke clearly views wage

stickiness in the 1930s as an economic puzzle, since few of the standard

post-WW2 institutional stories (e.g., unions, efficiency wages, and the like)

seem to have explanatory power. While I don’t disagree with Bernanke on this

point, greater familiarity with the economic history literature would have

alerted him to the stylized fact that wage stickiness long-predated the 1930s,

in the United States and other countries.

While I applaud Bernanke’s willingness to move beyond the standard US time

series, readers should keep in mind that all of the US data come from

conventional, if somewhat neglected sources, as do the international data.

Other than occasional asides, not much attention is paid to data quality, and

only rarely do readers get any sense of the sort of archival work that might

improve matters for future research. Some of the regressions (for example, in

Chapter 7) were estimated prior to Christina Romer’s revisions to the standard

(that is, Lebergott) labor force series, and thus invite re-estimation.

Finally, in a book of essays about the Great Depression, one might have

expected more attention paid to unemployment, particularly its uneven incidence

across the workforce, and the strikingly high levels of long-term unemployment

prevailing in the US and elsewhere.

Criticisms aside, Essays on the Great Depression displays one of the

great contemporary masters of applied macro-econometrics at work. In the grand

scheme of things, I am glad that Ben Bernanke is fascinated by the Great

Depression. Hopefully his personal obsession will translate in an expanded

audience for the work of economic historians. In any case, his book will more

than do as a fine and ready example of why the past continues to have useful

macroeconomics.

Robert A. Margo is Professor of Economics and of History at Vanderbilt

University, Nashville, TN, and a Research Associate of the National Bureau of

Economic Research. He will be on leave during the 2000-01 academic year as

Visiting Senior Scholar and Visiting Research Professor of Economics at Bard

College in Annandale-on-Hudson, NY. His most recent books are Wages and

Labor Markets in the United States, 1820-1860 (University of Chicago Press,

2000) and Women’s Work? American Schoolteachers, 1650-1920 (with Joel

Perlmann, forthcoming, University of Chicago Press, 2001).

Subject(s):Macroeconomics and Fluctuations
Geographic Area(s):North America
Time Period(s):20th Century: Pre WWII

A History of Banking in Antebellum America: Financial Markets and Economic Development in an Era of Nation-Building

Author(s):Bodenhorn, Howard
Reviewer(s):Moen, Jon

Published by EH.NET (July 1, 2000)

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Howard Bodenhorn, A History of Banking in Antebellum America: Financial Markets and Economic Development in an Era of Nation-Building. New York: Cambridge University Press, 2000. xxi + 260 pp. $59.95 (cloth), ISBN: 0-521-66285-0; $22.95 (paper), ISBN: 0-521-66999-5.

Reviewed for EH.NET by Jon Moen, Department of Economics and Finance, University of Mississippi.

Almost all economic historians have read the classic articles by Lance Davis (1965) and Richard Sylla (1969) on the integration and efficiency of postbellum US capital markets. In them we learn that it took quite a while for interest rates to converge and that the National Bank Acts may have introduced some monopolistic elements into banking. If capital market weren’t always efficient after the Civil War, it is tempting to believe that they must have been even worse during antebellum times. Howard Bodenhorn attempts to erase such beliefs with A History of Banking in Antebellum America. I think he is successful, for the most part.

Bodenhorn focuses on how effective the antebellum banking system was at creating credit, linking borrowers and lenders, and moving capital to its most valuable use. He also attempts to address the issue of how critical banks were to economic growth. He finds that banks provided credit to a broad range of businesses, not just to the wealthy. Banks also encouraged capital formation (and saving), capital market deepening and integration, and regional interest rate convergence. He does not try to analyze money creation, the effectiveness of the antebellum system of private banknotes, or the stability of the free-banking system. These issues have been analyzed by Hugh Rockoff (1975) and later by Arthur Rolnick and Warren Weber (1983). They find that things worked pretty well.

In Chapter 2, Bodenhorn provides a survey of regional banking structure, showing, for example, how New England banking differed from banking in the South, where branching was common. Next, he examines the links between economic growth and financial development. Several tables calculate money or credit per capita and provide correlations between these monetary variables and per capita income growth, suggesting that the correlation is not strong. However, regression analysis of the determinants of growth (in the spirit of Robert Barro) shows that the initial level of financial depth was positively related to subsequent economic growth.

The third chapter examines who was supplied with credit by antebellum banks. With an admittedly small sample (n = 4) of banks from New York, Tennessee, Virginia, and South Carolina, Bodenhorn suggests that antebellum banks were willing to lend to small borrowers as well as large ones and that they were motivated to a great extent by the search for profit. They didn’t just lend to their friends.

The next chapter builds on Bodenhorn’s earlier research dealing with the integration of short-term capital markets and the convergence of regional interest rates. The main conclusion is that even if there were regional differences, interest rates moved in close enough harmony to suggest that capital markets had been integrated for much of the antebellum period.

Chapter 5 is useful for the questions it raises in addition to the conclusions it presents. This chapter analyzes how banks developed correspondent relationships to move capital across a large but developing nation. It then presents a brief outline of how legal developments proceeded to make the bill of exchange a more liquid and widely accepted financial instrument. Perhaps the most interesting item in this chapter is Bodenhorn’s discussion of how, after the demise of the Second Bank of the United States in 1836, state banks, private banks, and exchange brokers stepped in to keep the markets for bills of exchange and interbank payments functioning. I got the impression that its demise really did not affect markets much and that the private sector responded quite effectively. This is an issue that could be examined in more detail, as it raises the question of just how important a central bank is.

The Epilogue returns to the role of banks in the growth of the antebellum American economy. The type of evidence presented by Bodenhorn doesn’t really allow for much more than the suggestive answer that banks certainly helped things along, and it also points out that Americans were resourceful in creating a banking system. The discussion prompted me to wonder how large were the social savings from having banks — were they “indispensable?” Were substitutes for banks conceivable or possible, given the legal frameworks in the various states? In other words, would moneylenders that were not banks have appeared? The postbellum South as described in the Epilogue shows what happened when a banking system was decimated, but it also reveals that new institutions — efficient or not — would spring up to take the place of banks. A History of Banking in Antebellum America is an important work and sets the stage for more research on antebellum capital markets.

Jon R. Moen is author of “Clearinghouse Membership and Deposit Contraction during the Panic of 1907,” Journal of Economic History, Vol. 60, no. 1 (March 2000), pp. 145-63.

References:

Lance Davis, “The Investment Market, 1870-1914: The Evolution of a National Market,” Journal of Economic History, Vol. 25, no. 3 (September 1965), pp. 355-99.

Hugh Rockoff, The Free Banking Era: A Re-Examination. New York: Arno Press, 1975.

Arthur Rolnick and Warren Weber, “New Evidence on the Free Banking Era,” American Economic Review, Vol. 73, no. 5 (December 1983), pp. 1080-91.

Richard Sylla, “Federal Policy, Banking Market Structure, and Capital Mobilization in the United States, 1863-1913,” Journal of Economic History, Vol. 39, no. 4 (Dec. 1969), pp. 657-86.

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):North America
Time Period(s):19th Century

Market Education: The Unknown History

Author(s):Coulson, Andrew J.
Reviewer(s):West, Martin

Published by EH.NET (July 1, 2000)

Andrew J. Coulson, Market Education: The Unknown History, New Brunswick,

NJ: Transaction Publishers, 1999, x + 471 pp. $24.95 (paperback),

1-7658-0496-4, $24.95, $54.95 (cloth), 1-56000-408-8.

Reviewed for EH.NET by Martin West, Worcester College, Oxford University.

Each year more evidence is published indicating the persistence of vast

inequalities within the American public education system and the poor overall

performance of its schools relative to those in other countries. Mounting

frustration with the lack of progress towards solving these problems has

produced a broad consensus regarding the urgency of reforming the

administration and governance of public education, while recent economic

expansion has increased the amount of resources available for this task.

Unfortunately, there remains little agreement among scholars and policy-makers

about the direction reform should take.

One of a large number of recent works attempting to provide guidance on this

issue, the book under review is distinguished both by its unique approach and

its challenging conclusions. Andrew Coulson, a former software engineer with

Microsoft Corporation, is currently a Senior Research Associate at the Social

Philosophy and Policy Center at Bowling Green State University. In an attempt

to identify the key characteristics of successful school systems, Coulson has

turned to the history of education, with the hope that the lessons of the past

will provide new insight into the best way forward. The conclusions he draws

will not be encouraging to those who remain convinced that the American public

education system is essentially on the right path, requiring only minor

adjustments. Distinguishing between the ideals of public education and its

practice, Coulson argues that free markets in education have consistently been

more successful in terms of both efficiency and equity than systems funded and

operated exclusively by the government; any hope of substantive improvement

therefore lies in the wholesale abandonment of government and non-profit

schools in favor of private, for-profit alternatives.

Coulson’s use of international historical evidence to analyze contemporary

debates typically driven by ideology is refreshing, and represents a major

contribution to the field of educational policy. The obvious benefit this

strategy offers is the opportunity to compare the performance of a wider

variety of methods of educational provision and governance than is possible

using data from the twentieth century, in which state-provided mass education

has emerged as a universal feature of developed countries. The societies

Coulson has chosen to present as case studies, which range from Ancient Greece

and Rome to contemporary Japan, allow the consideration of a diverse range of

alternatives. As he is ultimately concerned with identifying the common

elements of successful educational systems across different cultures and time

periods, the large amount of variation in the social and economic conditions in

the contexts he has selected is a clear asset. And crucially, given the nature

of his eventual conclusions, Coulson has not avoided addressing those periods,

such as nineteenth-century England and United States, cited in the standard

literature as prominent examples of the success of state education.

The first cases Coulson considers, Athens and Sparta, conveniently offer the

chance to compare two contemporary societies with diametrically opposed models

of school governance. Their educational systems serve throughout the remainder

of the book as extreme examples to which subsequent systems can be compared.

The complete lack of government regulation of education in Athens meant that

anyone could establish a school, setting whatever curriculum he considered

appropriate. The need to attract enough students to remain profitable, however,

forced potential instructors to tailor their offerings to reflect parental

demands and also required that they keep their fees competitive. The success of

Athenian education, as reflected in its impressive literacy rates, economic

prosperity, and immense contribution to the Western cultural tradition, can

thus be attributed to the prudential behavior of its citizens in an open market

for knowledge.

Education in Sparta, in contrast, was entirely the prerogative of the state.

Boys were removed from their families at the age of seven and placed in

state-run boarding facilities in which they received an education designed

exclusively to prepare them for military service. In Coulson’s view, Sparta’s

low levels of literacy, negligible contributions to science, literature, and

art, and eventual economic decline are all directly related to the

ineffectiveness of the state’s totalitarian approach to the socialization of

its young.

Moving forward chronologically, Coulson uses the experience of education in

democratic nations in the nineteenth century to test two prominent claims made

by conventional historians and defenders of state-run schooling: “that

government education helped unite people of diverse backgrounds and thus forged

stronger communities and nations; and that it brought literacy and learning to

a wider segment of the population than would otherwise have been possible” (p.

73). Unsurprisingly, he finds both claims wanting. A brief examination of the

origins of public schools in the United States and France reveals the manner in

which they have been used repeatedly to exclude various religious, ethnic, and

racial minorities. Rather than encouraging social harmony, he claims, state-run

education is a consistent source of social conflict, as parents are forced

either to accept that their children will be taught objectionable ideas or to

force their own views on other people’s children. Meanwhile, the English case

is used to demonstrate that widespread popular literacy was commonly achieved

prior to significant government intervention in education.

The discussion of Victorian England, however, provides a telling example of

Coulson’s disappointing tendency to present oversimplified and partially

misleading accounts of complex chapters in the history of education in order to

support his overall argument concerning the relative efficacy of educational

markets. While correct in his assertion that the exaggerated claims made by

conventional histories of state education are no longer tenable, Coulson fails

to acknowledge that the state may nevertheless have had an important role to

play in the expansion of mass education. He asserts that even the poorest and

least-educated English parents in the pre-compulsory era reliably discharged

their responsibility for their children’s education, a fact used later in the

book to support his contention that modern parents would prove equally

competent if that responsibility were returned to them.

While it is certainly true that “virtually all children were receiving some

schooling” (p. 94), there remained a small but substantial minority in many

regions who had no contact with school at all, a consequence of the lack of a

clear economic return for the acquisition of literacy as well as what the

Newcastle Commission described as the “indifference, thriftlessness, and

recklessness of their parents” (pt. II, p. 57). Furthermore, although the vast

majority of working-class parents were willing to make considerable sacrifices

to provide a basic education for their children, a combination of myopia,

self-interest, and financial necessity meant that the schooling most children

received was irregular and brief, a pattern obviously detrimental to

educational progress (Smelser, p. 257).

As Coulson is eager to point out, reliance on for-profit schooling serves to

tune the supply of education precisely to parental demand. This implies,

however, that if demand for education is sub-optimal, this fact will be

reflected in the quality of the schools that emerge to meet that demand. In the

case of Victorian England, the deficiencies of parental demand were directly

reflected in the nature of the working-class private schools that emerged in

large numbers throughout the nineteenth century, a fact Coulson categorically

denies. Although he acknowledges that conditions in Victorian private schools

were frequently far from ideal, Coulson contends that “what little evidence is

available on the comparative effectiveness of subsidized versus entirely

private schools tends to favor the private schools” (p. 95). This unique claim

is apparently based on evidence compiled by David Mitch in his comprehensive

1992 study of the growth of popular literacy in nineteenth-century England.

Strangely, however, Mitch’s interpretation of his own data is precisely the

opposite, leading him to conclude that the subsidized schools were in fact

modestly more effective in teaching students to read and write. While Mitch’s

reservations about the quality of the data force him to acknowledge that “it

would be rash to dismiss the ability of Mid-Victorian private schools to

transmit literacy”(Mitch, p. 149), it is difficult to understand how they can

be made to support Coulson’s interpretation.

The history of education indeed holds important lessons for contemporary

policy-makers, but I would contend that these lessons are more complex than

Coulson has acknowledged. Educational markets, while offering certain benefits,

are also deeply flawed. And yet there is no guarantee that the political

control of the provision of education will in practice produce superior

results. The ideal balance between political and market control of schooling in

a democratic society is an empirical, rather than ideological issue with a

unique resolution for each particular time period, nation, and level of

education. Restoring the virtues of market competition in education while

minimizing the associated vices is the task currently confronting education

policy-makers around the world. The development of a balanced historical

understanding of the role the state has played relative to the market in

education during various periods has the potential to contribute greatly to

this task.

The strength of Coulson’s sweeping historical survey in this respect is its

acute awareness of the problems associated with the dominance of education by

the state and their implications for the quality of education. He offers

concrete examples of the ways in which these problems, which include

bureaucratic inefficiency, the excessive influence of special interest groups,

and the potential for social conflict have combined to hamper educational

progress. The unfortunate result is the pattern of stagnant or declining

academic performance with which modern societies are so familiar.

Coulson proceeds in the final segment of the book to examine several recent

proposals for reforming American education on the basis of the extent to which

they succeed in restoring what he identifies as the five beneficial

characteristics of educational markets: choice and financial responsibility for

parents, and freedom, competition, and the profit motive for schools. It is in

addressing these contemporary policies that Coulson is at his best. With the

same clear, engaging style that characterizes the entire book, he provides a

thorough analysis of each of the most prominent market-based reforms. His

criteria allow him to account for the modest positive results they have

achieved thus far, but also suggest they are essentially half-measures which

will ultimately fail to achieve the level of success proponents promise. As

Coulson points out, history provides countless examples of states increasing

their control over the provision of education, yet none of the reverse. In

their attempts to restore market dynamics to education, therefore, contemporary

policy-makers are essentially on their own.

Martin West is a graduate student in Economic and Social History at Worcester

College, Oxford. His paper “State Intervention in English Education, 1833-1891:

A Public Goods and Agency Approach” will be published in August as an Oxford

University Discussion Paper in Economic and Social History (available in print

from Nuffield College, Oxford and online at

http://www.nuff.ox.ac.uk/Economics/History/).

References:

“Report of the Commissioners Appointed to Inquire into the State of Popular

Education in England.” Parliamentary Papers, 1861. Vol. 21, pts. I-VI. [2794].

Mitch, David, The Rise of Popular Literacy in Victorian England: The

Influence of Private Choice and Public Policy (Philadelphia, 1992).

Smelser, Neil J., Social Paralysis and Social Change: British Working-Class

Education in the Nineteenth Century (Berkeley, 1991).

Subject(s):Education and Human Resource Development
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

Austerity in Britain: Rationing, Controls, and Consumption 1939-1955

Author(s):Zweiniger-Bargielowska, Ina
Reviewer(s):Singleton, John

Published by EH.NET (July 1, 2000)

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Ina Zweiniger-Bargielowska, Austerity in Britain: Rationing, Controls, and Consumption 1939-1955. Oxford and New York: Oxford University Press, 2000. xiii + 286 pp. $65.00 (cloth), ISBN 0-19-820453-1

Reviewed for EH.NET by John Singleton, School of Economics and Finance, Victoria University of Wellington, New Zealand.

Zweiniger-Bargielowska’s readable study of rationing and austerity in mid-twentieth century Britain is a mixture of economic, social, and political history. Her principal conclusion is political rather than economic. British housewives’ disgust after 1945 at the continuation, and indeed intensification, of certain aspects of rationing was successfully exploited by the Conservative Party, and contributed materially to Labour’s defeat at the 1951 general election. In stressing the deep division between Labour and the Conservatives over austerity, Zweiniger-Bargielowska strengthens the case against the popular thesis that postwar British political life was marked by cross-party consensus. Along the way, she provides a thorough account of the rationing mechanism, the intricacies of the black market, and the effects of rationing on the health, welfare, and morale of different groups of the British population.

Rationing, price controls, and subsidies were introduced during World War Two to ensure that supplies of food, clothing, and certain other consumer products were distributed on an equitable basis at fair prices. To a large extent, this policy was successful. Although people grumbled at the monotonous wartime diet of bread, potatoes, and vegetable pies, it was both nutritious and adequate in terms of bulk. In fact, the poor were better fed during the war than they had been in the 1930s. The war and early postwar years witnessed significant improvements in physical health, especially among children in poor urban areas. The consequences, if any, of austerity for mental health are not mentioned.

After the war, most people could not understand why rationing could not at least be relaxed. The world food crisis, balance of payments difficulties, and the need to feed the starving Germans were used by ministers as justifications not only for the retention of controls, but for the introduction of bread rationing which had not been considered necessary during the war itself. Housewives generally bore the brunt of austerity, giving up some of their rations for the sake of their husbands and children. Pets also suffered disproportionately. It was an offence to feed wild birds with breadcrumbs, as well as to give pets food that was fit for human consumption. Men were more tolerant than women of rationing, perhaps because they had more opportunities to buy non-rationed meals at works canteens, and did not have to do the family queuing, shopping, and cooking.

Throughout the 1940s there was a thriving black market. One of the simplest scams was to claim to have lost one’s ration book. Officials suspected that 90 per cent of claims for new ration books were fraudulent but, as it was difficult to prove dishonesty, the authorities usually provided a replacement. Forgers took full advantage of the fact that ration coupons were easier to copy than bank notes. However, the black market in Britain, unlike that in the USA, was not dominated by organized crime. Zweiniger-Bargielowska suggests that administrative procedures were tighter in Britain than in the USA. Britain also lacked the American tradition of organized crime.

Public attitudes towards the black market were ambivalent. People condemned others who engaged in illicit dealing, but saw no reason why they should not occasionally indulge in ‘under the counter’ transactions themselves. My grandfather, who was a stonemason in Lancashire, used to receive fresh meat in partial payment for supplying headstones to farmers. The activities of farmers, who often held food back from official channels, were among the main concerns of the rationing authorities. As Zweiniger-Bargielowska points out, the black market undermined, but did not negate, the egalitarian purpose of rationing.

Zweiniger-Bargielowska does not go into the microeconomics of rationing, although contemporary economists had plenty to say on this theme. Nor, more importantly, does she really tackle the question of whether the austerity of the late 1940s was unavoidable. Would the British economy have collapsed in the late 1940s if meat or butter rations had been increased? Paraphrasing the title of Roy Harrod’s tract on austerity, were these hardships really necessary? On the face of it, it seems unlikely that a few extra rashers of bacon would have led to national disaster, whatever ministers may have said. A more searching analysis of the extensive literature on the economic policies, both internal and external, of the 1945-51 Labour government would have helped Zweiniger-Bargielowska to find an answer to Harrod’s question.

Draconian food rationing was not absolutely essential after the war. Savings could have been made in other areas of the external accounts. For instance, tobacco was prominent in Britain’s imports from the USA at the height of the dollar crisis. This poison was not rationed, apparently because of its morale boosting and revenue raising qualities. Clearly, if less had been spent on importing tobacco, the British would have been able to enjoy a slightly more appetizing diet. There were other highly questionable drains on the balance of payments after 1945, such as the cost of occupying Palestine, Greece, Germany, and those parts of the empire that did not produce a dollar surplus. Certain uncontrolled outward capital flows, for instance to South Africa and Australia in 1947, also put strain on Britain’s capacity to import basic foodstuffs. In other words, rationing was necessary because the government and its supporters preferred to allocate resources to the maintenance of tobacco supplies and Britain’s status as a world power than to the provision of a wider choice of food. Whether or not this ordering of priorities was in the best interests of ordinary people is a matter of opinion.

While comparatively weak on the rationale for the persistence of austerity after 1945, Zweiniger-Bargielowska supplies a wealth of information on the administration of rationing, the struggle against the black market, the effects of rationing on morale, and Churchill’s manipulation of housewives’ frustration with austerity. I strongly recommend this book to anyone interested in British history of the mid-twentieth century.

John Singleton is currently working with Paul Robertson, University of Wollongong, on a study of postwar trade and development policy in Australia and New Zealand, which will be published by Macmillan.

Subject(s):Household, Family and Consumer History
Geographic Area(s):Europe
Time Period(s):20th Century: WWII and post-WWII

Debating Slavery: Economy and Society in the Antebellum American South

Author(s):Smith, Mark M.
Reviewer(s):Irwin, James R.

Published by EH.NET (July 1, 2000)

Mark M. Smith, Debating Slavery: Economy and Society in the Antebellum

American South. Cambridge: Cambridge University Press, 1998. xii + 117 pp.

$39.95 (hardback), 0-521-57158-8; $11.95 (paperback), ISBN: 0-521-57158-8.

Reviewed by James R. Irwin, Department of Economics, Central Michigan

University.

This book is something between a textbook and an interpretative monograph. It

is part of the Economic History Society’s series, “New Studies in Economic and

Social History.” As the back cover explains, “This series provides a concise

and authoritative guide to the current interpretations of key themes in

economic and social history. Each book in the series summarizes the significant

debates and advances in a major field of study. … The books … are intended

for students approaching a topic for the first time, and for their teachers.”

Based on my own experiences as both student and teacher, I must confess that I

am not a fan of this sort of book. I suppose that giving students just a small

taste of the historical feast could whet their appetites and entice them to dig

in heartily. But I suspect that for most students and many teachers, such books

are a substitute for reading and thinking about history. To summarize my

personal bias: if history is a banquet, then books like this are Spam (at best)

or Olestra (at worst). Having acknowledged that bias at the outset, I’ll try to

put it aside and review Debating Slavery on its own terms.

The book has seven chapters, as well as a preface and bibliography. The first

chapter offers an overview of some of the history and historiography of

Southern slavery. The final chapter attempts a synthesis. Each of the middle

five chapters summarizes and discusses an aspect of antebellum southern

society. The book would have been more accurately titled Debating the Slave

South, rather than Debating Slavery. It does not have a narrow focus

on slavery, but instead covers competing views on many of the big issues in the

social and economic history of the Antebellum South. One major field it does

not deal with is “political” history, thus Whigs and Democrats are not in the

index, nor are Potter, Cooper, Thornton, and Barney (to name just a few who

excited students in decades past). Instead, the chapters lay out debates in

social history and economic history. The social history tends to revolve around

Genovese’s work, and the economic history tends to revolve around Fogel and

Engerman’s. Especially with the social history, Smith demonstrates an admirable

command of the vast literature from which he samples.

In many ways, the Preface and Chapter 1 provide a strong introduction to the

book. The Preface might get students thinking about the nature of freedom and

differences between democracy and capitalism. Chapter 1 starts with a useful

overview of the history of the slave South from colonial times to the Civil

War. However, there follows an effort to suggest that most views of the slave

South can be can be assigned to one of two camps. One, which Smith associates

with Genovese and others, sees the South as “a non-capitalist, unprofitable,

and largely inefficient society.” The other, which Smith associates with Fogel

and Engerman, Oakes and others, “argues the opposite.” I think this a misstep,

because two camps cannot contain the rich variety and subtlety in the

scholarship on the antebellum South.

Chapter 2 addresses competing views of slaveowners, with an emphasis on

planters (typically, those with twenty or more slaves). The key issue Smith

tackles here is whether planters were “non-capitalist” (Genovese) or

“capitalist” (Fogel and Engerman, Oakes). Much of the discussion here turns on

competing perspectives on the economics of slavery which are developed more

fully in Chapter 5 and 6. Students would have been better served if those

chapters had come first, introducing students to two key questions: “Was

slavery profitable to planters?” and “How did it affect economic development?”

Then they could learn that everyone now agrees that the answer to first

question is “usually” (subject to geographic and temporal variation), and that

most of us are still arguing about the second. Then students could tackle the

implications of those economic questions for the more slippery questions of

planter mentalite and the nature of southern white society. Thus, before

working on the question of “capitalist or not?” students would know that

slaveowners got rich off of their slaves and that the southern slave economy

did not industrialize. Then they could grapple with the interpretive questions

such as the distinction between “acquisitive” and “capitalistic.”

With the different organization, students would have an easier time figuring

out that Genovese’s fundamental insights are consistent with evidence that

slaves worked hard and masters profited thereby. Paternalism can help us to

understand why the people worked hard. As it is, Smith attributes to Genovese’s

Roll, Jordan, Roll the view of the slave South as “a plantation society

headed by masters anxious to make money from their investment but unable to do

so because of the paternal relationship they had created with their slaves” (p.

22). Each of us is free to read Roll, Jordan, Roll as she/he sees fit;

but I don’t recall that the planter aristocrats described there were “unable to

make money” from their slaves. More generally, I think Smith makes a strategic

mistake by adopting the dichotomy capitalist or not, because although the term

capitalist may be rich in connotation, there is no agreement on what it means.

The very question “capitalist or not?” can easily distract us from the

fascinating similarities and contrasts between the South and North. This is not

to suggest that Smith invented the debate, but to lament that he did not

reformulate it at the start.

Chapter 3 (“Yeoman and nonslaveowners”) follows the convention in southern

social history (since the 1980’s) that treats small-scale slaveowners (with as

many as five slaves) and non-slaveowning farmers as a single class, the

“yeomen.” Faithful to that literature, Smith does not question whether the

distinction between slaveowner and non-slaveowner really was less important

than that between planter and less affluent white farmers; and he does not

attempt to assign them to the two camps identified in Chapter 1. Smith gives

the impression that there is a consensus that the yeomanry had and preserved

aspects of a “traditional, premarket mentality.” I cannot dispute that, but it

will lead me to revisit the literature and see for myself. Finally, Smith

shares a valuable insight when he notes that “much of the work on the southern

yeomen tends to cast the southern planter class in a market-oriented light” (p.

40).

Chapter 4 (“Slaves”) explores various views on slave work and culture. This

chapter returns to the capitalist non-capitalist dichotomy, sometimes usefully.

There is interesting attention to the links between work and culture, and to

variations over time and across space. On my reading, there is surprisingly

little attention to some major issues, for example, the slave family, African

carry-overs, and religion. There is also surprisingly scant attention to the

material conditions of black life (but there is some attention to slave diets

is the chapter that follows). I do not recall any attention to Fogel and

Engerman’s repeated claims that slaves’ material conditions were “better than

what was typically available to free urban laborers at the time” (as Fogel put

it in Without Consent or Contract, New York: Norton, 1989, p. 391). Nor

to the opposing perspective suggested by Steckel’s arresting finding that the

infant mortality rate of antebellum slaves was as ‘dreadfully’ high as in the

poorest urban slums of India in the twentieth century. There is much attention

given to relatively recent scholarship on the “slave’s economy,” fostering the

view that slaves had significant amounts of “time to call their own” when they

could produce goods (of their own) for consumption or sale. Faithful to the

literature, Smith does not dwell on the scanty empirical basis of studies of

the “slave’s economy,” nor on the extent to which masters were simply making

slaves provision themselves. The chapter includes a misleading rendering of an

example from Fogel and Engerman (p. 53). They describe incentive bonuses that

were given to entire families, but Smith’s account implies that such sizable

bonuses were given to individual slaves.

As noted above, Chapter 5 (“The profitability of slavery as a business”) and

Chapter 6 (“The profitability of slavery as a system”) tackle the economics of

slavery. These are not the strongest chapters in the book. Chapter 5 looks at

slavery at the level of the individual farm and plantation. It takes much too

long to come to a conclusion on the profitability issue, and then, it fails to

clarify the consensus that exists: typically, Southern slaveowners made money

off of their slaves (and to be more precise, they could expect to earn about as

much from investing in slaves as in alternative assets). There is too much

attention to long-outdated sections of Genovese’s Political Economy of

Slavery, and virtually no attention (i.e. too little) to key debates

between Fogel and Engerman and their neoclassical critics. Arguably, the single

most important finding of Fogel and Engerman was that a given amount of labor,

capital, and land produced about one-third more income when it was it was

organized in a single slave plantation than when it was organized in a number

of smaller farms (put technically, that the relative efficiency of plantation

slavery was about one-third greater than smaller scale farms). In their view,

the greater efficiency of plantation slavery resulted from the intense,

arduous, and coordinated labor-effort that could be forced from slaves working

in gangs. Other neoclassical economists have disputed these views, with gusto.

The failure to take up this issue leaves a huge gap in the presentation of this

aspect of the economics of slavery. That said, I think that the responsibility

for the gap lies more with economic historians, than with historians; and more

with all of us, than with Smith. Probably Smith’s omission of the issue is

faithful to the history literature, but not to the economic history literature.

Chapter 6 finds Smith on more solid ground. He cites much of the relevant

literature to identify the crucial questions that are still unresolved: why

were industrialization and urbanization so limited in the South compared to the

North? He falters a bit in his discussion of Fogel and Engerman’s evidence of

growth in southern per capita incomes in the period 1840-60. Smith relies on

Ransom to suggest that the numerous non-slaveholders “who were only marginally

involved in cotton” did not experience economic growth (p. 85). Ransom’s

argument implies a major shift in the distribution of southern income in the

period 1840 to 1860; this is an interesting possibility, but currently there is

not much evidence for it. Also, Smith makes a common mistake when he says (p.

85) that world cotton demand “dropped after 1860.” It was the “growth rate of

cotton demand” that dropped (according to Wright). More generally, the chapters

on the economics of slavery would have been better if they had included some

international comparisons, and some attention to the economic consequences of

emancipation.

The last chapter offers a sort of synthesis, identifying points of potential

consensus, and suggesting “New directions” for future research. It offers

perhaps the most contentious claim in the book; Smith states “an important but

rarely articulated truth: the need and the way to reconcile the apparently

competing schools of thought is probably best achieved not through more

empirical research but through greater theoretical consideration” (p. 89).

Coupled with the claim (at the start of the chapter) that “we know an awful lot

about virtually every aspect of slave culture, the southern economy, and

planters’ ideology” (p. 87), a reader might accuse Smith of calling for a

retreat from the archives. More generally, the last chapter may be a problem

for many students. It finds some common ground among competing perspectives,

focussing mostly on Genovese and Oakes. However it draws heavily on Marx and on

Marxian theories which may not be comprehensible to most students.

The bibliography is wide-ranging and interesting to peruse, but referring to it

while reading was inconvenient, because the entries are grouped according to

chapter. Generally, it is a well-crafted work, even if computer spell-checking

is evident at times (e.g. “none the less” (p. 11), Barrington “Hoore” Jr. (p.

112)). An index also is provided, which will help students to zero in on

authors of interest. As is often the case, perusing the index can be

interesting. For example, I was reminded of both the competence of Smith’s

coverage and the inevitability of omissions when I noticed that the index (and

bibliography) includes Cashin, but not Cash.

In closing, I speculate that writing such a book is an unenviable task; it just

invites criticism. First, there are people like me who think it will just

reduce the number of students who actually read and get engaged in southern

history. Second, every other historian of the South will have her/his own take

on most of the many works that are covered, and most will dispute or dismiss

some aspect of the book. On the other hand, most historians don’t get to write

books for Cambridge University Press. And, I suspect the author enjoyed

feasting at the banquet of scholarship that he drew on for Debating

Slavery.

James R. Irwin’s research concerns the economics of slavery and emancipation

in Virginia and the rest of the South, among other things.

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

Wages and Labor Markets in the United States, 1820-1860

Author(s):Margo, Robert A.
Reviewer(s):Rosenbloom, Joshua L.

Published by EH.NET (July 1, 2000)

Robert A. Margo, Wages and Labor Markets in the United States,

1820-1860. Chicago: University of Chicago Press, 2000. xii + 200 pp. $28.00

(cloth), ISBN: 0-226-50507-3.

Reviewed for EH.NET by Joshua L. Rosenbloom, Department of Economics,

University of Kansas.

The antebellum period in the United States has sometimes been described as a

“statistical dark age.” With the publication of this book, however, such a

characterization seems less appropriate. Drawing on two significant bodies of

archival data–the manuscripts of the Censuses of Social Statistics for 1850

and 1860, and payroll records of civilian employees at military installations

throughout the country–Robert A. Margo (Vanderbilt University) constructs new

series of nominal and real wage estimates for the years 1820 through 1860.

Based on both the quantity of evidence Margo has assembled and the care with

which it is used, his series are sure to become the standard sources for

scholars interested in the economic history of this period.

The argument of this compact volume unfolds in a logical and easy to follow

manner. In chapter 2 Margo begins by establishing the need for new antebellum

wage series. Carefully reviewing the existing data, he demonstrates that

despite the efforts of a number of scholars, the commonly accepted wage series

are pieced together from a variety of different sources in a fashion that makes

them potentially unreliable. Moreover, there are troubling discrepancies in the

behavior of the existing series that cannot be resolved without resort to more

data. Having established the need for a new data, he then offers a description

of the data sources that he will use.

The first of Margo’s sources, and the more novel, is the “Reports of Persons

and Articles Hired” that were made by the quartermasters of military

installations. These reports contain over 59,000 monthly wage observations for

civilian workers employed at forts in all parts of the country between 1820 and

1860. It should be noted that this figure is likely to overstate the number of

independent observations in the data set, however, because some individuals may

have been employed for more than one month. Nonetheless these data are a

substantial addition to our stock of knowledge about antebellum labor markets.

One might, of course, be suspicious of how well wages paid by the military

reflect conditions in the civilian economy, but Margo goes to some lengths to

demonstrate that the wages recorded in the “Reports” accurately reflected labor

market conditions in areas surrounding the forts. A second problem, about which

Margo has less to say, is the uneven coverage of the data. This unevenness is

especially pronounced for the frontier regions. In the Midwest, for example, of

9,525 observations, 7,394 are from Kansas, and another 1,180 are from Missouri.

As one might expect from this geographic emphasis, most of the midwestern data

(6,794 observations) come from the 1850s.

The second of Margo’s sources, the Censuses of Social Statistics, are more

familiar to economic historians, and the published returns from these censuses

have been used before. But Margo’s use of the manuscript schedules is novel,

and allows him to exploit considerably more detail than previous scholars,

though at the expense of narrowing the geographic coverage to a set of eight

states for which the manuscripts have survived. In chapter 3 Margo describes

procedures he employs to construct annual wage series, both nominal and real,

for three occupation groups–common laborers, artisans, and white-collar

workers–in four regions. For artisans and common laborers the census of social

statistics data is used to establish benchmark wage levels in 1850 that are

then extrapolated using estimates of year-to-year movements derived from the

military payroll data. Because the census data do not cover white-collar

workers, the level of wages for this group is fixed using the military payroll

data alone. To convert nominal to real wages, Margo uses region-specific

indexes of wholesale prices. To estimate annual movements in wages from the

military payroll data Margo employs a hedonic wage regression framework to

aggregate information from different locations, occupations, and skill levels.

That is, for each region and occupation group, Margo regresses wage

observations on dummy variables for location, indicators of worker skill,

specific occupations, season of the year, and individual years. Implicitly this

approach assumes that within each region, after controlling for fixed effects

of location and other characteristics, wage movements over time at one location

will be the same as those at any other location. This seems at least plausible

for more settled areas in the East, but I am less convinced of the stability of

wage rates within more recently settled areas. For example, one must wonder if

the relationship between wages in Kansas and Missouri and other parts of the

Midwest was the same in the 1830s and 1840s as it was in the 1850s.

The next three chapters make use of the wage series constructed in chapter 3 to

examine a variety of important questions relating to labor market performance

and economic growth in more wide-ranging terms. Chapter 4 examines wage gaps

between farm and non-farm employment. Antebellum economic growth was associated

with the movement of labor out of agriculture and into non-agricultural

employment, and recent research has raised the question of whether this

movement occurred as quickly as would have been optimal, or if frictions

prevented labor from moving to its most efficient uses. Using data from the

census of social statistics, Margo shows that in 1850 wage gaps were small

within counties, and, after adjusting for the cost of living, they were also

small within states. Thus it appears that farm and non-farm labor markets were

relatively tightly integrated.

In chapter 5, Margo turns to the issue of geographic integration, comparing

real wages by occupation group across the Northeast, Midwest, South Atlantic,

and South Central regions of the country. Consistent with the geographic

redistribution of labor from east to west in this period, he finds that wages

in Midwest and South Central regions were persistently higher than they were in

the Northeast and South Atlantic. Although the differentials were initially

quite large between the two northern regions–over seventy-five percent for

artisans and thirty percent for common laborers–there was a clear tendency

toward wage convergence over time. In contrast wage gaps were smaller in the

South, but showed no clear trend. Of particular note, Margo finds evidence that

the North-South wage gap that became prominent after the Civil War had its

origins in the antebellum period.

Margo continues his investigation of market integration in chapter 6 through a

case study of one important episode: the California Gold Rush. Using data on

wages at California forts, he offers a new series of wage estimates for the

period surrounding the discovery of gold, and California’s entry into the

Union. This series clearly captures the sharp spike in wages occasioned by a

massive new resource discovery. But interestingly it also reveals that the Gold

Rush had a lasting effect on the California economy, leaving wage levels in the

state permanently higher than they had been before.

Margo outlines a new interpretation of antebellum labor markets in Chapter 7.

First, the evidence he has assembled indicates that real wages grew at about

one percent per year on average, a rate strikingly close to that of per capita

GDP over the same period. This suggests, as Margo puts it “that economic growth

did ‘trickle down,’ on average, to members of the antebellum working class” (p.

143). While this finding would seem to defuse the pessimists’ case that the

working class did not share in the benefit of antebellum growth, there were

shorter periods during which real wages did decline–especially the late 1830s

and the late 1840s and 1850s. Comparing the dynamics of wages and prices in

these episodes it appears that much of the reason for this is that wages tended

to adjust with a lag to price movements. As Margo notes, these episodes of

declining wages might explain some of the decline in the height of cohorts born

at these times. But since overall real wage levels were rising between the

1820s and 1860s, economic explanations of the antebellum decline in stature

must rely upon channels of influence other than a decline in the standard of

living. Second, as much of the evidence on spatial and sectoral wage

differences indicates, antebellum labor markets appear to have performed quite

well, responding to both sectoral and geographic shifts in demand.

Notwithstanding the limitations of the data, this is an important contribution

to the statistical and quantitative underpinnings of our understanding of the

economic history of the United States. Through extensive archival research and

careful analysis Robert Margo has added significant detail and clarity to our

understanding of the antebellum period.

Joshua L. Rosenbloom is author of “Strikebreaking and the Labor Market in the

United States, 1881-1894,” Journal of Economic History 58 (Mar. 1998),

and “Was There a National Labor Market at the End of the Nineteenth Century?

New Evidence on Earnings in Manufacturing,” Journal of Economic History

56 (Sept. 1996). He is currently working on a project estimating the rate of

economic growth in North America before 1800.

Subject(s):Macroeconomics and Fluctuations
Geographic Area(s):North America
Time Period(s):19th Century

Nonzero: The Logic of Human Destiny

Author(s):Wright, Robert
Reviewer(s):Long, J. Bradford De

Published by EH.NET (July 1, 2000)

Robert Wright, Nonzero: The Logic of Human Destiny. New York: Pantheon

Books, 2000. x + 435 pp. $27.50 (cloth), ISBN: 0-679-44252-9.

Reviewed for EH.NET by J. Bradford De Long, Department of Economics, University

of California-Berkeley.

Back in 1794 the Enlightenment philosophe Marie Jean Antoine Nicolas Caritat,

Marquis de Condorcet wrote his Sketch for a Historical Picture of the

Progress of the Human Mind — the boldest of the eighteenth-century

declarations that humanity had and was destined to see Progress with a capital

P. Condorcet was a powerful and convincing advocate– Malthus wrote his

Essay on Population explicitly against Condorcet. But that was the high

water mark of belief in Progress. By and large the past two centuries have seen

the reaction, and confidence in human Progress — technological, political,

humanistic, and moral — fell out of intellectual favor.

Now comes Robert Wright, previously author of Three Scientists and Their

Gods and The Moral Animal, with an excellent book accompanied by an

enthusiastic blurb by William McNeill. Wright’s purpose is to set out the

gospel of progress anew, this time using the language of game theory as his

principal mode of rhetoric. At its most basic level Wright’s point is that

interactions are positive-sum: there are gains from cooperation. Thus human

cultural evolution has an arrow and a direction: toward greater complexity,

toward higher civilization.

The direction arises at two levels. First, individual humans seek out things

that increase their own powers and capabilities. Cooperation tends to do this,

so people find ways to cooperate. But the most important form of cooperation is

one that is almost impossible to stop: the simple sharing of knowledge. Two

heads are better than one. The denser the population (and the better the means

of communication) the more ideas will be generated, the larger the number of

ideas that turn out to be useful, and the faster will be progress. People are,

Wright argues — in my view correctly — naturally acquisitive in that they

want useful things, and will eagerly copy new technologies they hear about.

Thus Wright sees inventions such as agriculture as inevitable — not as a lucky

accident.

Second, at the level of human societies, the societies that are more powerful

– have better technologies, more effective social arrangements, greater

population densities, and so forth — either swamp their neighbors or force

their neighbors to copy them in order to maintain their autonomy. In Eurasia,

where contact was constant from an early age — as Wright points out, in 200 on

one could travel from Gibraltar to the Yangtze River and cross only three

borders (p. 117) — a good innovation at one end would diffuse all the way to

the other in a matter of centuries. He believes that the wide spread of

religion in agricultural civilizations proves that its productivity-boosting

and division of labor-enhancing effects outweigh its exploitative side (p. 86):

those societies that did not have temples and priests did not flourish.

Wright dismisses gloomy talk of barbarian invasions and the fall of empires by

asserting that one goes from furs-and-swords to linen-and-pens in three

generations: “The Romans weren’t exactly hailed by the Greeks as cultural

equals when they happened on the scene…. Yet they were massively infiltrated

by classical Greek memes, which they then spread across the wider world. In

Horace’s phrase, ‘The Greeks, captive, took the victors captive’. And, anyway,

who were the Greeks to look down on intrusive barbarians? … The early Greeks

had a title of honor, ptoliporthos, that meant ‘sacker of cities’…. But

whether these ‘barbarians’ sack cities, or hover on the periphery and trade …

or ally with them in war or ally against them, one outcome is nearly certain:

win, lose, or draw, the ‘barbarians’ become vehicles for advanced memes…” (p.

131). For what truly matters are the basic technologies of agriculture and

craft, not the products of high civilizations. And even when you do have

significant regression — in the post-Mycenean Dark Age, in the post-Roman Dark

Age, or in the wake of the Mongols – Wright reminds us that “the world makes

backup copies.”

Wright also dismisses gloomy talk of the stagnation of Ming and Qing China, the

fall of the Mughal Empire, and the technological and organizational stasis of

the Ottoman Empire by arguing that the key unit is not Europe vs. Asia but is

instead Eurasia. Sooner or later, Wright argues, some part of Eurasia — it did

not have to be Europe – would have hit upon a superior social and technological

recipe to that of the mid second millennium empires, and when it did the rest

would have copied it. Wright is of the school that holds that China almost

broke through to modernity, writing of how paper and woodblock printing were

used to distribute useful texts — Pictures and Poems on Husbandry and

Weaving, Mathematics for Daily Use, and the Treatise on Citrus

Fruit (p. 159). The recipe that ultimately proved successful — what Wright

calls the economic logic of freedom — was stopped in many places: “indeed, on

balance, in the centuries after the printing press was invented, European

governments grew more despotic” (p. 185). But it only had to succeed once. And

given sufficient cultural variation, sooner or later a breakthrough was

inevitable.

But even if you buy all of Wright’s argument that forms of increasing returns

– non-zero-sum-ness, as Wright calls it — impart an arrow of increasing

complexity and division of labor to human social, cultural, and economic

evolution, this does not necessarily amount to Progress — at least not to

anything we would see as progress in human morality or human happiness. For why

should organizational complexity be Progress? As Wright puts it: “… it would

be hard to argue that there was net moral gain between the hunter-gatherer and

ancient-state phases of cultural evolution. The Egyptians had slaves — which

virtually no known hunter-gatherer societies had — and their soldiers returned

from wars of conquest proudly brandishing the severed penises of their slain

foes” (p. 206).

So in the end Wright is forced to play a game of three-card monte to reach

conclusions that support his belief in Progress. The card labeled “complexity”

must be switched for the card labeled “Progress” without our noticing. In the

industrial core, at the end of the twentieth century, we are inclined to

tolerate this switch — to say that it is obvious that a highly complicated and

productive civilization will have widely-distributed individual wealth, lots of

individual freedom, and soft forms of rule, and that social complexity is

civilization. But back in the middle of the twentieth century this switch could

not have been accomplished at all: “complexity yes,” people would have said,

“but progress no.” And who knows how things will look in a hundred more years?

Marie Jean Antoine Nicolas Caritat, Marquis de Condorcet (1743-1794), was an

aristocrat, a mathematician, an official of the Academy of Sciences, and was a

friend of Voltaire (1694-1778). He strongly supported the revolution of 1789 as

an example of human progress. But the Committee of Public Safety turned on him:

he was arrested, and died in prison before he could be executed.

————————————————————————

*The above review covers only the first two-thirds of the book. At that point

Wright asks the question: “Aren’t organic evolution and human history

sufficiently different to demand separate treatment?”

I think the answer to this question is “yes,” and that the book should stop at

that point. Wright thinks that the answer is “no,” and so the book continues.

He goes on to draw analogies between human cultural evolution toward greater

complexity and biological evolution toward greater complexity.

Wright’s argument that biological evolution has an arrow as well — tends to

produce animals with big brains that think — runs roughly as follows:

Life starts out simple. It then evolves, with variation and with the

conservation and spread of successful variations. Thus evolution generates

increasing diversity, and increasing diversity generates increasing complexity:

it is hard for a one-celled organism to become less complicated (although

viruses have managed), and easy for it to become more complicated.

But wait! Most of your environment is made up of other living creatures. Hence

the environment becomes more complicated over time too. And because the

environment becomes more complicated over time, there is increasing adaptive

value in information acquisition and information processing organs: better eyes

(and ears) and bigger brains. Random evolution creates increasing diversity and

complexity of life. Increasing diversity and complexity of life make for a more

complicated environment. And a more complicated environment generates strong

evolutionary pressure for eyes, hands, and brains.

Maybe his biological argument is right — I’m inclined to think it probably is

– but maybe not. Big eyes and big brains are expensive in terms of energy. Why

not go for bigger teeth or stronger legs? And large complicated animals seem to

be (so far) at a disadvantage in species survival when the asteroids hit.

J. Bradford De Long is a professor of economics at U.C. Berkeley, and is the

author of the forthcoming “America’s Historical Experience with Low Inflation”

(Journal of Money, Credit, and Banking), and the recently published

“Some Speculative Microeconomics for Tomorrow’s Economy” (First Monday)

and “The Triumph[?] of Monetarism” (Journal of Economic Perspectives).

Subject(s):Economic Development, Growth, and Aggregate Productivity
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

Advances in Agricultural Economic History, Vol.1, New Frontiers in Agricultural History

Author(s):Kauffman, Kyle D.
Reviewer(s):Bogue, Allan G.

Published by EH.NET (July 1, 2000)

 

Kyle D. Kauffman, editor, Advances in Agricultural Economic History, Vol. 1, New Frontiers in Agricultural History. Stamford, CT: JAI Press, 2000. xiv + 252 pp. $78.50 (cloth), ISBN 0-7623-0612-2.

Reviewed for EH.Net by Allan G. Bogue, Department of History, University of Wisconsin, Madison.

This book is the first volume in an annual series that is designed, Kyle D. Kauffman explains, to “provide the center stage” for one of the numerous subdisciplines in the “overarching tent of economic history”–the “hybrid field” of agricultural economic history. This, he argues, is a “dynamic field” in which there is a “growing research output” (pp. xiii-xiv).

Eight authors or author teams have contributed to this volume. Each of the chapters relates or overlaps in subject matter or method with at least one other essay. In their lead chapter, Lee A. Craig and Thomas Weiss reconsider “Hours at Work and Total Factor Productivity Growth in Nineteenth-Century U. S. Agriculture,” a subject that is of considerable interest to all those interested in the historical development of American agriculture. Craig and Weiss present new estimates of hours worked by agriculturalists in the nineteenth century United States and evaluate their implications for the calculation of total factor productivity in agriculture. They conclude that “a view of the mid-to late nineteenth century as an era of technological revolution probably cannot be sustained” (p. 23). Rather, they suggest, agricultural development during that period primarily reflected an increase in inputs, particularly of labor. In answering the question “Did the Black-White Income Gap Close during the Late Nineteenth Century?” Anthony Patrick O’Brien confronts analogous analytical problems in estimating the income of black workers during the second half of the nineteenth century. After developing new estimates, primarily for 1860, O’Brien suggests that the improvement in black income between that date and 1860 was substantially less than Robert Higgs argued in his monograph Competition and Coercion: Blacks in the American Economy, 1865-1914. O’Brien’s contribution is also somewhat related to Jay R. Mandle’s concluding chapter of the collection in which he describes “The Social Prologue to the Civil Rights Movements.” Surveying the place of the Afro-American population in the American economy from the slavery era to the 1960s, he maintains that by the latter date, the Afro-American population of the United States, “for the first time … found itself in an environment in which successful political mobilization … had become feasible” (p. 249).

Three authors investigate the Hawaiian sugar industry: Sumner J. La Croix and Price Fishback examined the place of “Migration, Labor Market Dynamics, and Wage Differentials in Hawaii’s Sugar Industry, 1901-1915″ in a long and impressively documented analysis of the efforts of sugar planters to attract workers and the wage rates paid to various ethnic groups. Despite the divergent goals of employers and workers, planters succeeded in maintaining ethnic wage gaps among their workers because they “constantly found new low-wage immigrants to work in the Hawaii market”(p. 66). Allan Dye introduces cross-national comparisons in his chapter “Factor Endowments and Contract Choice: Why Were Sugar Cane Supply Contracts Different in Cuba and Hawaii, 1900-1929?” In the latter country the production units were for the most part plantations drawing most of their cane for processing from fields under their own management whereas outside contractors produced most of the cane processed in the Cuban sugar industry. The contrast between the two national industries, Dye concludes, was explained by the considerable differences in the transaction costs involved in producing and harvesting cane in the two countries and he suggests as well that this cost factor was a universal element in accounting for global variations “in the use of the plantation or contracting out [system] in the twentieth-century cane sugar industry” (p. 167).

Two authors consider aspects of the European wine industry. In his essay, entitled, “Cooperation and Cooperatives in Southern European Wine Production, The Nature of Successful Institutional Innovation 1880-1950,” James Simpson explains that the development of cooperatives in the wine industries of France, Spain and Italy assisted landowners in obtaining labor in an era of declining prices, helped small and medium sized wine producers obtain access to scientific knowledge and expensive technology, and improved growers’ bargaining power in the wine market. Over time the French government came to use the cooperatives in its efforts to regulate the wine industry. Simpson credits the cooperative movement with slowing the exodus of workers from the wine regions and also with enhancing prices without unduly restricting competition.

Francesco L. Galassi entitles the second of these chapters, “Moral Hazard and Asset Specificity in the Renaissance: The Economics of Sharecropping in 1427 Florence,” and asks, why share contracts came to predominate in the tenure and administration of land in Tuscany during the Renaissance era and remained a major institutional arrangement until mass urbanization after World War II “emptied out the countryside” (p. 199)? In answer he argues that demographic growth at the end of the medieval period “intensified cultivation and brought about a redefinition of property rights in land” as the manorial system broke down and urban businessmen increasingly controlled the countryside (p. 178). Intensified agriculture and increased investment in agricultural processes, the potential costs of supervision, enhanced risk, and the need to tie the tenant’s remuneration to the success of the husbandry made share-cropping arrangements attractive to land owners in that era. Although the Black Death reduced population pressures significantly, continuing emphasis on the wheat crop and especially vine culture sustained these tendencies. Galassi successfully tests the hypothesis that “share tenancy was a way of controlling some dimensions of opportunistic behavior [by tenants] with high monitoring costs” by applying logit analysis to wage and rental contract data from the property registration and population census of Florence taken in 1427. He prefers the latter conclusion to the suggestion that the processes described here illustrate path dependency.

Karen Clay and Werner Troesken also discuss land tenure arrangements in their chapter dealing with “Squatting and the Settlement of the United States: New Evidence from Post-Gold Rush California.” Asserting that we are less well informed about the motivation and activities of squatters in California than in the Midwestern region of the United States, these economic historians have assembled data relating to squatting activity on the Spanish and Mexican land grants upon whose validity the American judiciary ruled. Using logit regression the authors conclude that the squatters “were acting in a way that is consistent with profit-maximization” (p. 208).

The contributors to this volume are economists and their work for the most part illustrates tools and approaches current in quantitative economic history. With perhaps only one exception they shed new light on important historical issues. From the standpoint of the discipline, it is particularly encouraging that several of the authors chose to pursue research that involved cross-national comparisons of agricultural development. One hopes that this trend will become increasingly evident in agricultural history because it promises to enhance greatly our understanding of agricultural history both in the United States and abroad.

In sum the essays in this volume promise that the series that it introduces will make an extremely useful contribution to our understanding of agricultural history. Economic historians have already used their special skills to make invaluable contributions to this field and the Advances in Agricultural Economic History series will be a factor in insuring that this trend continues. As a devoted fan of the genre, however, this reviewer hopes that this breed of researcher will always remember that many historians, including some who are interested in agricultural history, do not fully understand econometric methods and that an additional two or three sentences or a short appendix explaining the analytical methods in use or careful definition of terms may considerably increase the potential audience of a piece of research. For example, Thomas Weiss’s publications in his major field of research have been exemplary and the Craig and Weiss essay in this collection is an important one. However, the uninitiated reader will find no clear definition of total factor productivity until that person penetrates the explanatory material of Table 3 on the seventeenth page of the chapter. Care also is required in providing background in text and bibliography. Picking again upon Craig and Weiss, we find that they list among their references Paul David’s elegant and justly famous essay, “The Mechanization of Agriculture in the Antebellum Midwest.” Standing by itself, however, that paper leaves a reader with a much-distorted understanding of the way in which the reaper entered Midwestern grain technology. Alan L. Olmstead’s essential corrective does not appear in the Craig and Weiss bibliography.

In their interesting and ingenious chapter dealing with squatting in California, Clay and Troesken focus upon the economic motivation of California squatters citing various sources in support of their contention that scholars are still uncertain about the motivation of this type of individual, the “new themes” having failed to “tarnish the original vision of the squatter as a valiant yeoman farmer.” Although frequently used by historians the term, yeoman, is less often defined and definition in this case would have been appropriate. Surprisingly too these authors ignore a rather obvious tentative hypothesis. Since it has been shown rather convincingly that Midwestern squatters were profit maximizers and many Californian settlers were Midwesterners or Oregonians with Midwestern roots would it not be reasonable to assume that they carried this same cultural trait to California? In this research also we find the results of logit regression described so parsimoniously as to bewilder the uninitiated.

This plea for an econometric history that makes a better case for itself in the eyes of historians generally should not be viewed as disparagement of the quality or importance of the contributions to this volume. They promise a long and useful life for the new series of which it is a part.

Allan Bogue is the former president of the Economic History Association and the author of books on U.S. frontier money lending, land settlement, and legislative behavior, and, most recently a biography of Frederick Jackson Turner. The University of Nebraska Press is currently publishing his book on dairying in Ontario during the 1920s and 1930s.

Subject(s):Agriculture, Natural Resources, and Extractive Industries
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative