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The Worst Tax? A History of the Property Tax in America

Author(s):Fisher, Glenn
Reviewer(s):Wallis, John Joseph

EH.NET BOOK REVIEW

Published by EH.NET (June 1997)

Glenn W. Fisher, The Worst Tax? A History of the Property Tax in America. Lawrence, KS: University Press of Kansas, 1996. x + 244 pp. $35.00 (cloth), ISBN: 0700607536

Reviewed for EH.NET by John Joseph Wallis, Department of Economics, University of Maryland.

From the question mark in the title one might expect that this book would try to answer the question: is the property tax a good or a bad tax? And from the remainder of the title one might expect a general history of the property tax throughout the nation and throughout the nation’s history. This very interesting book does not deliver on either of the implicit promises in its title, but it is worth a closer look in any event.

Fisher begins with a general discussion of the property tax and fiscal policy in late 18th and early 19th century America. The focus then shifts to Kansas. An intensive study of the property tax in Kansas makes up the bulk of the book. In the last chapter and conclusion, the discussion shifts back to more general questions and a wider focus.

It is hard to fault the approach, however, since there is no “American property tax,” there are only property taxes in the individual states and, as Fisher makes clear, there are really thousands of local property taxes administered under an umbrella of state supervision. The nature of state administration varies widely from state to state and over time. Making generalizations is, as a result, a hazardous business.

Fisher focuses on the implication of two common changes in the property tax structure in the middle part of the 19th century, and, by example, how those changes played out in Kansas. These are constitutional or legislative provisions mandating uniformity and universality in property taxation. Uniformity means that all property that is liable to the tax is taxed at a uniform rate. Universality means that all valuable property in the state is subject to taxation. Uniformity combined with universality implies that all property in a state, tangible and intangible, land, buildings, inventories, animals, equipment, etc. must be assessed and taxed at the same rate.

Uniformity and universality are important both as a reflection of the political climate of the mid-19th century, and for the confusion and difficulties they ultimately created in the administration of the property tax. After the debt crisis of the early 1840s, when state governments began moving toward rather than away from the property tax as their main source of revenue, the property tax became the fiscal mainstay of both state and local governments. It was at that point that uniformity and universality provisions were widely enacted as reform measures. The essential idea behind them was that the wealthy and the privileged escaped property taxation through unfair assessment (uniformity) and their ability to transform their wealth into untaxed assets (universality).

The reforms opened up another can of worms, perhaps one bigger than the universe. For uniformity and universality to work, there had to be a system of state-wide assessment on all property. In most states, assessment was a function of local governments with some state cooperation and supervision. Full implementation of the reforms would have required complete centralization of the revenue system at the state level, which nobody wanted. This federalism issue was further complicated by the intractable difficulties in assessing many types of intangible property.

Ultimately, the general uniform and universal property tax was replaced by a more specific and well defined property tax, which in most states became a tax on real estate. The real estate tax was easier to define and administer and easier to equalize across local governments, although it is still plagued with problems of assessment. The change occurred in the 20th century at the same time that state governments were moving away from property taxes towards sales and income taxes. The shift was underway before the 1930s, picked up speed during the depression, and was complete by the middle years of the 20th century. Today, state governments collect a very small share of property taxes and property taxes are a very small share of total state revenues.

Fisher’s study illuminates clearly how these forces were at work in Kansas. Whether Kansas accurately mirrors what happened in other states it unclear. This book makes an important step in the right direction. It awaits another 40 or so similar studies on property taxation in other states.

John Joseph Wallis Department of Economics University of Maryland

John Wallis is a student of the history of America. Recent publications include (with Jac Heckelman) “Railroads and Property Taxes,” Explorations in Economic History, 34 (1), January 1997; “The Impact of the New Deal on American Federalism,” (with Wallace Oates), forthcoming in The Defining Moment, Michael Bordo, Claudia Goldin, and Eugene White, editors, NBER, University of Chicago Press; “Early American Federalism and Economic Development, 1790-1840,” Public Finance and Environmental Economics: Essays in Honor of Wallace E. Oates, Robert Schwab, editor, forthcoming, Edward Elgar.

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Subject(s):Government, Law and Regulation, Public Finance
Geographic Area(s):North America
Time Period(s):19th Century

The Dynamic Society: Exploring the Sources of Global Change

Author(s):Snooks, Graeme Donald
Reviewer(s):Clark, Gregory

Graeme Donald Snooks, The Dynamic Society: Exploring the Sources of Global Change. New York and London: Routledge, 1996. xvii + 491 pp. $84.95 (cloth), ISBN: 0415137306. $24.95 (paper), ISBN: 0415137314.

Reviewed for EH.Net by Gregory Clark, Department of Economics, University of California- Davis .

For most of the time in any discipline the mundane dominates, and the subject seems to advance at a glacial pace. Old disputes are chewed over, small concessions gained and conceded. There are no sweeping visions, no sustained programs of discovery. The subject is maintained almost as much by institutional inertia as by intellectual passion. Economic history in the eyes of many is firmly stuck on just such hard and unyielding terrain. No one has published a paper yet entitled “The Heights of Norwegians Inferred from a Sample of 23 File Clerks, 1906-1908: A Quantile Bend Estimate,” but given enough time they will.

There is thus always an incipient demand for bolder conjectures, for the big idea that can inject excitement and remake the subject. But pursuing the big idea, seductive as it is, has its dangers. The big idea is inevitably at the beginning ill-formed, and weakly supported. Thus those who venture the big idea need strong egos and selective blindness – they have to withstand the carping of the Lilliputians, and the rejection of the journal referees. But at the same time the ego cannot be too strong, the vision too selective. Therein lies a kind of madness. The innovator has to be able to respond to criticism, but not be overwhelmed by it, to connect with the audience yet not become its servant. The pursuer of the big idea has to walk the thin line between hearing too well and being deaf to reason.

It was thus with some trepidation that I read early in Graeme Snooks’ new book “we need a simple but robust model that can explain the emergence and development of life over the last 4 billion years” (p. 7). It was with even more fear that I noted at the end of the book on page 431 a ten page glossary of “Snookspeak,” including “great linear waves of economic change,” “existential models,” “funnel of transformation,” “strategic- crisis hypothesis” – the new language we need to express the “simple but robust” theory. There was going to be no middle ground for the reviewer of this book – no “a solid contribution to the literature on developments in animal husbandry, which perhaps focuses a little too much on sheep.” Snooks has reached for the big prize. He is either an innovative visionary, or he has crossed over the line into self delusion. For what Snooks attempts in this book, aided only by pen, paper and frequent trips to the glossary, is to produce a theory of life that encompasses and surpasses all of economics, biology, history, psychology, and sociology. To raise the stakes even further this improbable concoction is emblazoned with warm commendations from no less than Douglass North, Nobel Laureate, Baron Herman van der Wee, and Stanley Engerman.

What is Snooks’ new post-Darwinian theory of life and everything? There is at maximum one person who knows, and if he does know, he is unable to communicate it. This is not a case where I can outline the theory, and then ask how well it corresponds to what we know. What the theory is is the central mystery. For example, the theory, Snooks states, employs existential as opposed to deductive models.

“Existential models are empirical models of reality – or models of existence – and can be contrasted with the logical or deductive models of physics and economics, which are merely constructs of the mind….As existential models are based upon dynamic timescapes, they can liberate us from the limitations of deductive thought. They set free the imagination to range over the actual patterns of existence. And in these patterns we can see the dynamic processes of reality” (pp. 433-4).

In California we have many examples of people liberated from the limitations of deductive thought, and often they too have important ideas they need to tell us. So it turns out that Snooks not only wants to rewrite the history of the last 4 billion years, he also, en passant, is introducing entirely new modes of thought, which should, maybe after some refinement, be able to effect a substantial reformation of the physical sciences.

The above example is the book at maximum wackiness. There are many parts, even whole pages, where the exposition is clear: the discussions of crustal formation (yes, the crust of the earth), Hitler’s aims (irrational), the oxygen content of the atmosphere, aggression in men and women (as evidenced by auto accidents), the walls of Jericho, blue-green algae, Henry Thomas Buckle (1821-1862), sea level changes, the Holy Roman Empire, post Keynesians, the ice age, linear time, volcanic eruptions, the nuclear family, Frederick Nietzsche, Joel Mokyr, dinosaurs, dolphins, and the Domesday Book, to name a few examples. The only problem is what the connection of the episode at issue is to the big idea. I know the theory is dynamic, which is why the front cover has charging horses on it, whereas Darwin was static. Dynamism is everywhere – more than one page of the index alone is devoted to dynamism in all its varieties, including “dynamics of the earth: formation of crust.” Change we learn occurs because of dynamism. I also learned that the theory is “economic,” and that it involves “paradigm shifts,” but the theory itself remains hidden from the view of a reviewer trapped in the prison of deductive logic.

To take a specific example, Snooks argues, with some persuasion to someone whose knowledge of the subject is limited to the New York Times, that the attempt by many scientists to explain the extinction of dinosaurs by natural catastrophes is unconvincing. But what is Snooks’ alternative explanation? Dinosaurs were doomed, he assures us, by “having exhausted their dynamic strategies” and further dinosaurs “suffered from over-expansion owing to the exhaustion of their dynamic opportunities” (pp. 77-78). And that’s it. With those trenchant observations, Snooks having dispatched the dinosaur issue between pages 76 and 78 as rapidly as an asteroid impact, marches quickly on to tackle the bigger problems. The survival of some organisms, largely unchanged, from long before the era of the dinosaurs is, I presume, because they did not exhaust their dynamic opportunities to not change. Aristotle, who claimed that objects fell towards the earth because it was in their nature to fall, looks like a model of positivist science compared to Snooks.

Another example, closer to the workaday concerns of economic historians, is “technology as a dominant dynamic strategy.”

“The technological paradigm shift is a widespread human response – occurring in both the Old and New Worlds – to critical episodes in the relationship between population and natural resources owing to the exhaustion of the prevailing technological paradigm. A paradigm shift involves a technological transformation that provides, in a relatively short space of time – when looking forwards rather than backwards – a quantum leap in access to the resources of a niggardly natural world” (pp. 239-240).

Leaving aside the interesting metaphysical claims about time, what is the content of this view? Snooks claims there have been only three technological paradigm shifts: the shift from scavenging to hunting in the Paleolithic, the shift from hunting to agriculture in the Neolithic, and the shift from agriculture to industry in eighteenth century England. He argues that each shift is created by changes in relative factor prices. Now of course, for the first two shifts we know nothing of factor prices. Indeed, again based only on the authority of the New York Times, it has just been discovered that the shift from scavenging to hunting occurred about 100,000 years ago, much earlier than previously thought. Does this matter to Snook’s theory? Not as far as I can tell. When the shift occurred it was undoubtedly the result of population pressure and a stagnant scavenging technological paradigm.

So the only paradigm shift for which we have any evidence on relative scarcities is the Industrial Revolution, the cause of which was “with the growing pressure of population on natural resources, as the old technological paradigm was progressively exhausted, came a rise in prices: of natural resources relative to labour; of labour relative to capital; and of organic relative to inorganic natural resource” (p. 265). This claim is at least clear, but is both theoretically and empirically implausible. Why should population pressure raise the price of labor relative to capital? Why didn’t population pressure in the high middle ages spark an Industrial Revolution? Why wasn’t the Industrial Revolution in China? And empirically the substitution of inorganic for organic resources in Britain before 1850 was a trivial element of the Industrial Revolution, as the work of von Tunzelman, McCloskey, and Crafts clearly shows. But as with the demise of the dinosaurs, Snooks can only allocate about three pages of the book to his discoveries about the Industrial Revolution paradigm shift before he has to rush on to bigger things.

I could go on, but this is enough to convey the point. As we go about the mundane tasks of economic history, trying to prise the occasional nugget of knowledge from hard and stony ground, I am sure we will hear periodically from Graeme Snooks. He will come zooming past, gesticulating wildly and shouting excitedly about new marvelous discoveries made from the comfort of his armchair: discoveries that only he, and possibly Doug North, Herman van der Wee and Stan Engerman, can see and share.

Gregory Clark Department of Economics University of California- Davis

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

Economics and the Historian

Author(s):Rawski, Thomas G.
Reviewer(s):Kiesling, Lynne

Thomas G. Rawski, ed., Economics and the Historian. Berkeley: University of California Press, 1996. xiv + 297 pp. Bibliography and index. $45.00 (cloth), ISBN 0-520-07268-5; $17.00 (paper), ISBN 0-520-07269-3.

Reviewed for EH.Net by Lynne Kiesling, College of William and Mary

Economic historians fill a peculiar, and sometimes uncomfortable, intellectual gap in the social sciences. In an ever-fracturing and increasingly compartmentalized scholarly environment, the economic historian may not find a welcoming, collegial home with either historians or economists; the notion of a truly interdisciplinary analysis is more rhetoric than reality for many scholars.

This volume of essays seeks to bridge the gap in the direction of historians. Arguing that economic analysis contributes a useful set of tools to historical scholarship, the eight economic historians writing these essays attempt to negate the stereotype of economic analysis as false quantification and so much mathematical esoterica. These chapters are well written, tightly argued, and should be of value both to the historian looking to learn more about the economic approach to history and to the economist looking for a clear presentation of the general methodological foundations of “historical economics.”

In his introductory chapter Thomas Rawski starts by observing how pervasive economic factors are, and were, in everyday situations, and that economists and historians ignoring each other is a two-way street:

“Even if man does not live by bread alone, economics lurks beneath the surface of any historical inquiry. The economist who hesitates to peek outside the confines of his models can overlook cultural influences on markets. Likewise the historian of labor, of agriculture, of trade policy, of elite politics, of the church, of international conflict, of the arts, of migration, ideas, industrialization, universities, technology, demography, or crime ignores the economic approach at the risk of losing important lines of explanation” (p. 1).

After noting the apparent enthusiasm of economists for the benefits of history, Rawski goes on to discuss briefly the ideas underlying basic economic models; by doing so he lays a foundation of understanding in the reader for the more sophisticated analyses presented in the subsequent chapters.

Rawski also wrote the second chapter, in which he discusses the analysis of economic trends. Historical analysis is especially suited to studying long-term changes in factors such as “economic welfare, distribution of income and wealth, degree of commercialization, patterns of cropping, organization of economic activity, [and] significance and functioning of various economic institutions” (p. 15). Getting to the heart of a common misperception that historians often hold concerning economic modeling, Rawski clearly points out that examining long-term changes in such factors is meaningless without putting the trend in its relevant economic context. Rawski then refers to the most common way to explore aggregate trends across time and across countries, national income accounts, and briefly explores the three areas of economic activity that national income accounts miss: household production, underground activity, and unrecorded costs. However, when we look at broad trends we are looking for general tendencies across time, and national income accounts give us an imperfect, but rather consistent, indication of these tendencies or trends. After a useful explanation of how national income accounts are derived, on both the expenditure and the output sides, Rawski also examines economic cycles and trends within them.

Jon Cohen then provides an interesting discussion of the role of institutions in economic analysis, a currently fruitful area of research in some fields of economics. Cohen defines institutions as “efficient ways of organizing human activity where markets alone will not suffice” (p. 60), such as the firm or the family. In the most basic, most restricted economic model of human behavior, all resources in the economy find their highest value use through the market, without any need for relationships beyond those stemming from market activity. Clearly, this simplistic model abstracts too far from the real relationships of life, all of which do have some economic component (even friendship does–when we spend time with friends and do things for and with them, we forego opportunities to do other things that might also be of value to us). Cohen focuses on the family, the farm, and the firm as institutions that work in conjunction with the market, in a more realistic model of human behavior. In the course of discussing why such institutions exist and what benefits they provide, Cohen highlights the property rights literature building on Coase’s work analyzing the existence of the firm.

Exploring labor economics and labor history, Susan Carter and Stephen Cullenberg creatively construct a dialogue between “Clio” and “Hades,” two professors of history and economics, respectively, on the relative merits of their methodologies. They first discuss social norms and market forces as determinants of female labor-force participation, subsequently covering the individual choice between work and leisure as the basis for most economic models of labor. Carter and Cullenberg reinforce what I perceive as the essential elements of this book: economic models are tools, nothing more, but they are useful tools because they may highlight relationships that might otherwise not have been obvious; these tools, as well as the tools of historical analysis, need to be used in context.

The fourth chapter, written by Donald McCloskey, focuses on the basic model of neoclassical economics and its emphasis on choice. Because economists emphasize resource scarcity, they look at human behavior in the context of individuals making choices facing a set of alternatives. McCloskey argues that (neoclassical, but I would argue all) economists “would urge the historian not to jump hastily to a diagnosis that peasants follow their plows by custom alone or that traders trust each other on grounds of solidarity alone…. Neoclassical economics, in other words, completes sociology and anthropology, because it studies a motivation unattractive to those fields: choice under constraint” (p. 123). Choice transcends markets and permeates nonmarket institutions, as Cohen’s chapter suggested. McCloskey’s articulation of the choice basis of economics also enables him to address a common misperception of economics–economics is not about money alone. Choices made and profits garnered need not be pecuniary. This focus on choice complements other historical approaches emphasizing, for example, culture.

Richard Sutch’s chapter provides a concise survey of macroeconomics, peppered with historical examples that highlight some benefits of aggregate economic analysis. He concludes that thinking in terms of a macroeconomic approach could be useful to the historian, even if he or she is not using aggregate economic data. Sutch clears up another problem area for non-economists–what exactly are inflation and unemployment, and how can we tell if they are present in our historical situation? Sutch also addresses the potential pitfalls of aggregation, fruitfully discussing the benefits of, for example, micro studies of real wages in 1830s Britain by region and by occupation, but reminding the reader not to commit the fallacy of composition. Just because handloom weavers in Lancashire suffered large declines in their incomes does not mean that all British workers fared poorly during the 1830s. Sutch also uses the tools of macroeconomic analysis to understand wartime destruction and postwar economic activity after the Civil War and World War II.

Next Hugh Rockoff tackles the thorny topic of money, banking and inflation. He structures his discussion as the tale of the development of money in a hypothetical economy, using examples from history to illustrate issues that arise as an economy becomes more commercial. He starts in medieval times with a gold-based money, moving on to explain how new discoveries of gold caused inflation. His subsequent explanation of the quantity theory of money and Hume’s price-specie flow mechanism is valuable to non-monetary economists as well as to historians interested in monetary history. Rockoff then discusses the rise of banking, usually starting with individuals “depositing” gold coins with their local goldsmith for safekeeping. As goldsmiths discovered that not everyone wanted all of their money back at the same time, they found that they could make money by lending out some of the deposits they held: thus the birth of fractional reserve banking. This development also meant that the goldsmith had an incentive to pay the depositor interest on his deposit, thereby creating a dimension on which goldsmiths compete for business. Rockoff also explores banking panics, fiat money and central banking, which require more sophisticated economic models and some attention to institutional detail.

The final chapter, by Peter Lindert, highlights the role of international economics in understanding the evolution of trade relationships through history. In the context of discussing international relations, Lindert emphasizes one of the basic tenets of economics–trade creates value, and both parties benefit. But that value is not distributed equally among the trading partners, and Lindert addresses the implications of that fact in terms of the development of trade restrictions (tariffs and quotas) and the evolution of trading relationships. In the final section of his chapter Lindert provides a discussion of the determination of exchange rates that I found extremely valuable, and much clearer than any other I’ve seen on the subject.

Every chapter in this collection provides valuable insights on the use of economic logic and modeling in explaining historical phenomena. I sensed no condescension from the authors toward the methodology of the historians among their readers; I sensed only respect and appreciation for good economic methodology, and an interest in sharing that enthusiasm with historian colleagues.

Lynne Kiesling Department of Economics College of William and Mary

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Subject(s):Development of the Economic History Discipline: Historiography; Sources and Methods
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

The Evolution of International Business: An Introduction

Author(s):Jones, Geoffrey
Reviewer(s):Taylor, Graham D.

H-NET BOOK REVIEW Published by H-Business@cs.muohio.edu (July 1996)

Geoffrey Jones, The Evolution of International Business: An Introduction . London and New York: Routledge, 1996. xii + 360 pp. Bibliographical references and index. Cloth, ISBN 0-415-10775-X; paper, ISBN 0-415-09371-6.

Reviewed for H-Business by Graham D. Taylor, Professor of History/Dean of Arts and Social Sciences, Dalhousie University, Halifax, Nova Scotia

During the 1960s multinational enterprises emerged as a focus of interest (and much controversy) both for economists and for the general public. Much of the literature of that era (leaving aside the important pioneering works of Raymond Vernon, Charles Kindleberger, and John Dunning) provided a very time-bound perspective on this phenomenon. Economists tended to treat multinationals as byproducts of post-World War II international financial integration and improvements in communications and transport technologies. To the broader public, in the United States and elsewhere, they were associated with U.S. economic expansion and indeed were perceived as reflecting a particularly “American” form of business organization.

Since that era, the international economy has changed dramatically: multinational enterprises became truly “multinational” as East Asian and European firms expanded (or, perhaps more properly in many instances, reappeared) in global markets and new cross-national “strategic partnerships” of firms emerged. During the same period, the historiography of multinational enterprise was vastly enriched by scholars such as Mira Wilkins, D. K. Fieldhouse, Peter Hertner, Shin’ichiYonekawa, and many others, who not only probed well into the pre-twentieth-century origins of multinational activities, but also linked their work with broader reinterpretations of the dynamics of business evolution and organization.

Geoffrey Jones has been very much a part of that international community of scholarship on multinationals, and in this book he has undertaken to synthesize that literature. Jones far too modestly designates the study as a “text book” or “introductory survey.” It is in fact a substantial contribution to our understanding of the historical significance of multinational business, broadly defined to encompass more than the conventional category of “foreign direct investment” (FDI). His book provides a needed overview of the global dimensions of this phenomenon and a coherent framework for analysis of major historical trends and central issues emerging from the literature.

Jones’s study opens with a review of the major interpretive approaches to analyzing multinationals, including concepts of ownership advantage, internalization/transaction cost, and Dunning’s “eclectic model,” all of which are well integrated into the historical chapters that follow. He also links the study of multinational evolution to the themes of organizational development associated with Alfred Chandler and the literature on the firm and national competitiveness.

This section is followed by a general overview of the major trends in multinational operations since the mid-nineteenth century, highlighting the distinctiveness of different periods in that evolution (1880-1914; the interwar period; the 1940s to 1960s; and the period since 1971). This periodization indicates both the continuities of growth of international business and the volatility of that history, reflecting shifts in external factors (“the business environment,” encompassing the impact of wars, shifts in global trade and monetary arrangements, nationalizations and other governmental regulatory measures) and consequent changes in the strategies of firms.

The next chapters review the role of multinationals in specific industrial sectors: natural resources, manufacturing and services. There is a certain degree of repetition in these sections, as Jones works through each period for the different sectors. But it is also clear that very different patterns can be discerned in the forms and motivations underlying international direct investment in each sector, as well as in the internal dynamics of firm organization, relations among firms, and between multinationals and governments.

The final chapters focus on particular issues that have emerged in the literature. These include: the variations among nations and cultures in the propensity of their business enterprises to engage in foreign investment; the relationship between foreign direct investment and economic development, in terms of both home economies (of the multinationals) and host economies; and the relationships of multinationals and governments.

Despite its relative brevity, this is a dense book that covers a wide range of topics relating to the history and theory of multinational business, each in a balanced but succinct manner. Consequently, it would be an oversimplification to suggest that it embraces a particular set of themes or line of argument. But there are certain general characteristics of the history that emerge from the study.

From the late nineteenth to well into the twentieth century, most foreign direct investment was focused on the development of natural resources, with some spinoff growth of ancillary services. Latin America and Asia were particularly notable recipients of this investment. FDI in manufacturing expanded slowly through the early twentieth century and more dramatically in the period after World War II, and the geographic center for such investment shifted to Western Europe. This trend in turn was overtaken by developments in the service sector (particularly in finance) in the past two decades, with East Asia and Western Europe, along with the United States, as major areas of investment activity.

Although there have been periods of single-country dominance in outward investment (the United Kingdom between the 1880s and 1914, and the United States in the 1950s and 1960s), perhaps more significant has been the consistent growth of multinational operations over the past century. As noted earlier, Jones’s approach embraces a range of international business activities. During the pre-World War I era, investment flows were tied to some extent to the “imperial” territories of various European nations (with regions such as Latin America becoming a battleground for European and American investors), and occurred through a peculiar (and primarily British) form called “free-standing companies” (local enterprises owned by foreign syndicates) as well as the more familiar home-and-branch operations.

In the interwar period, as national governments imposed a variety of constraints on international trade and capital flows, international cartels flourished, in part as a means of circumventing them. In the period since the 1970s, a new form of “strategic partnership” among firms of different nationalities has emerged, reflecting both the diverse origins of enterprises in global markets and the effects of financial integration coupled with the growth of regional trade blocs. In each era multinational businesses have altered their forms of operation to suit contemporary conditions, while sustaining a general trend toward growth and integration.

The strength of the book lies in its coherence, its ability to provide a clear framework for a complex process of development over a fairly long time-span. Some of this coherence might have been lost had Jones extended his analysis even further back in time, but it might have been a useful exercise to provide a broader historical perspective on the evolution of international business (as opposed to the evolution of multinational enterprise). Jones does devote a section of his chapter on “Multinationals and Services” to a discussion of the large international trading companies of the seventeenth and eighteenth centuries; but generally he focuses on the period after 1880, with an emphasis on improvements in technology (enhancing the internal management of firms in international markets) and financial integration, accompanied by nationalistic trade policies, in shaping a business environment congenial to multinationals.

But, as studies by Larry Neal (on international capital markets), James Tracy and Jonathan Israel (on the Dutch and British “merchant empires”), and Ann Carlos and Steve Nicholas (on the internal organization of trade companies) indicate, by the eighteenth century the international economy had developed strong financial and logistical links, and businesses such as the Hudson’s Bay Company and the East India companies were developing mechanisms for internal communication and management.

Jones’s chapter on multinationals and natural resources understandably gives pride of place to the “nonrenewable” resource sector (mining and petroleum) and does not ignore the “renewable” area. But a review of multinationals in the forest products industry could reinforce some of the points he makes in other contexts. As a capital-intensive industry, forest products (especially pulp and paper) has been a field with a number of multinational actors, such as the British firm Bowater, the Swedish Stora, the U.S. Weyerhaeuser, and Canada’s MacMillian-Bloedel. The intricate links between publishing companies and paper manufacturers in international markets provide another interesting feature of this industry, ranging from direct-investment ventures (such as the Chicago Tribune‘s Canadian pulpmills) to Bowater’s “strategic partnerships” in the 1920s-1940s (not without endless friction) with the British newspaper barons, Rothermere and Beaverbrook, to exploit the forestry resources of North America.

These are minor caveats, however, and do not detract from the general quality and significance of Jones’s study. As noted earlier, the book represents a well-organized synthesis of the state of the historiography of international business today, which at the same time can provide a basis for future research in the field, by identifying major lines of argument and the areas of uncertainty and controversy that still must be addressed.

Graham D. Taylor Dalhousie University

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

Who’s In Charge? Workers and Managers in the United States

Author(s):Liebhold, Peter
Rubenstein, Harry
Reviewer(s):Lichtenstein, Nelson

An Exhibit Review

WHO’S IN CHARGE?: WORKERS AND MANAGERS IN THE UNITED STATES February 10, 1996 – April 7, 1996 An Exhibit at the National Museum of American History Washington, D.C.

Reviewed by Nelson Lichtenstein for H-BUSINESS, March 1996 University of Virginia nnl3w@darwin.clas.virginia.edu

Smithsonian curators Harry Rubenstein and Peter Liebhold have braved the chilly ideological winds blowing across the Mall to mount this timely and provocative traveling exhibition in the National Museum of American History. The space devoted to the exhibition is relatively small, but the subject is huge: nothing less than a class analysis of the labor process from the nineteenth century industrial era to the contemporary world of computer consoles and just-in-time production techniques.

Rubenstein and Liebhold have assembled some striking artifacts: an ominous set of nineteenth-century iron gates from the Bobson Textile Mills of Philadelphia, which guards the exhibit entrance; a set of the wooden tobacco molds that did so much to deskill turn-of-the-century cigar workers; an early set of time and motion sheets, with stopwatch, used by Frank and Lillian Gilbreth; and a contemporary keyboard from a McDonalds cash register, upon which the dollars and cents numbers have been replaced by “words” like FUDG SUND.

This traveling exhibit, on display at the NMAH through April 7, is well grounded in the spirit of Harry Braverman, perhaps far too much so. Indeed, its first third is an unrelenting exposition of the ideology and praxis of nineteenth-century industrial management, whose quest for industrial hegemony through workplace regimentation and deskilling is starkly explicated. Given the calculated ignorance of the rest of the museum world on this subject, the creators of “Who’s In Charge?” deserve our considerable gratitude, but there is a heavy-handed didacticism here that is most off-putting. No panel invokes the resources upon which the working class itself mobilized a turn-of-the-century resistance: there’s no hint of the communal, republican world first celebrated by Herbert Gutman, or even of the craftsman’s fierce pride and autonomy so well evoked by David Montgomery and the generation of labor historians who followed his lead. No artifacts from either the Knights of Labor or the Industrial Workers of the World are shown.

Historians of technology will find this early section of the exhibit flat-footed as well: a quotation from Karl Marx–who is identified only as an “economist”–encapsulates both the admirable political boldness and the reductionism of the exhibit: “It would be possible to write a history of inventions … made for the sole purpose of supplying capital with weapons against the revolts of the working class.” Driving home the point is an epigram from Frederick Taylor: “In the past workers have been first. In the future the system must be first.”

A short section on the New Deal and the classic era of mid-century collective bargaining stands at the exhibit’s midpoint. Here the focus shifts rather abruptly to discussions of trade unionism, strikes, and the new labor legislation. All this is important, of course, but the resolute focus on the relationship between workers and their immediate bosses, which was the signal virtue of the exhibit’s first section, is missing. A union contract book, a shop steward’s badge, or an actual seniority list posted on a factory bulletin board might well have exemplified the shift in shop-floor power relations so notable in the New Deal era.

The exhibit’s dramatic final section is dominated by an Andon Board taken right out of the jointly operated Toyota-General Motors assembly plant in Fremont, California. With its blinking red, yellow, and green lights revealing the status of each work station, the Andon Board is the physical embodiment of Japanese just-in-time production techniques. Workers have the formal right to stop the line by pulling a cord–in which case their green light turns first to yellow and then, after a pause, to red–but management has quickly learned to process this worker-generated information on labor intensity to “stress” the line in order to achieve relentlessly higher levels of individual productivity.

This exhibition room also displays a series of wonderful posters and advertisements, touting everything from foreman training and employer-employee unity to the virtues of cheap labor in Haiti and the rest of the Caribbean. Although the advocates of the new “team production” schemes are given their due, this final exhibit space is undoubtedly one of the most forthright critiques of contemporary capitalism to appear at taxpayer expense. The glowing set of tributes to the exhibition that appear in the comment notebooks at the exit demonstrate that, whatever the project’s limitations, Liebhold and Rubenstein have tapped an exposed nerve in the way Americans feel about the contemporary world of work.

Nelson Lichtenstein nnl3w@darwin.clas.virginia.edu

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Subject(s):Labor and Employment History
Geographic Area(s):North America
Time Period(s):General or Comparative