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Migration and Inequality in Germany, 1870-1913

Author(s):Grant, Oliver
Reviewer(s):Wegge, Simone A.

Published by EH.NET (April 2009)

Oliver Grant, Migration and Inequality in Germany, 1870-1913. Oxford: Oxford University Press, 2005. vii + 406 pp. $199.50 (cloth), ISBN: 0-19-927656-0.

Reviewed for EH.NET by Simone A. Wegge, Department of Economics, College of Staten Island ? City University of New York.

In this impressive work, Grant explores the economic transition that Germany underwent during its period of industrialization. The Kehrite School, inspired by a doctoral thesis Eckart Kehr published in 1930, has argued that prior to 1914 Germany did not make necessary and important social changes that would have modernized German democratic society and made government more accountable and accessible to non-elites, the vast majority of the German population.

Here, Grant presents an alternative view, namely that Germany was not that different or special in the challenges it faced in moving from an agricultural economy to a more industrial one. The country faced many of the typical problems that a developing country goes through when industrializing, including a surplus of labor, shifting demographics, a migrant population, and changing land tenure systems. Throughout the book, the author applies the Lewis model of labor surplus from development economics and finds again and again that it is very suitable for describing the evolution of the German economy and specifically how internal migration can fit in a stage-of-growth story.

While Grant?s main objective is to counter the Kehrite view and convince the reader that Germany faced ?normal? problems over which its politicians had little control, the largest part of the book, eight of the ten chapters, is not about political history but instead about how agriculture, industry, income inequality, and demographics changed over the course of four decades or so. Only the first and last chapters deal specifically with the sociopolitical economy of Germany. As such, the first and last chapters seem somewhat divorced from the middle eight chapters.

Grant?s work provides an explanation as to how the migration decisions of many Germans were related to the economic transformations taking place in the German economy. As the German economy expanded in the late nineteenth and early twentieth centuries, many workers had to make adjustments in leaving declining businesses and occupations and taking up better-paid ones in other parts of Germany or the world. By 1895 German emigration had decreased substantially from its heyday, and more Germans could find employment somewhere at home.

At the outset of Migration and Inequality, Grant suggests that Germany be considered among the group of late-stage developers like Russia, Italy and Spain, all of which adopted British technology. However, by 1890 Germany had a GDP per capita that was substantially larger than that of all three of these countries (Crafts, 1984, 440, Table 1). Using a Chernery-Syrquin framework, Crafts considers Germany to have industrialized later than Britain and Belgium but around the same time as France and well ahead of Italy, Russia and Spain (Crafts, 1984, 448-9). A bit more consideration of such findings would have been helpful.

In Chapter 3 Grant presents some of his main results on internal migration as it was affected by an economy on the path to industrialization. Here he provides a picture of who moved in and who moved out, and how the long-distance migration flows were related differentially to agriculture, industry and especially railroad building. He uses a number of sources, most of which are aggregated statistics previously published, but his key results in this chapter are based mostly on one city, Berlin. I would have preferred that he had examined more cities. He could at least have framed the results in light of other recent works on internal German migration such as Hochstadt (1999) on D?sseldorf and Jackson (1997) on the Ruhr Valley, a hotbed of industrial activity at this time. Both works are listed in the bibliography, but more effort towards placing his findings in the context of these works would have made this an even more valuable study.

Grant?s work also places a large emphasis on internal migration and less so on Germans who left for overseas destinations. Migration is analyzed at a macro and not at the micro level. This approach misses insights on selection patterns that could be gained from looking at how migrants differed from non-migrants. Of course, migration history is an enormous subject, and no single book on migration history can be all things to all scholars.

Chapter 4 expands on this work by describing what important variables influenced internal migration. Agricultural areas lost more than urban areas, as a significant amount of the internal migration consisted of classic rural-urban moves. Further, people were more likely to leave places with lots of large farms, a close proximity to cities and high rates of productivity growth in agriculture. Grant tackles demographic issues in Chapter 5. All sorts of demographic variables differed by region, with the upshot that after 1870, population growth was higher in the east than in the south: although both regions experienced sizable emigration flows the east still lost more people than the south, partly due to a much higher percentage of women who never married in the south.

With a heavy emphasis on eastern Germany, Chapters 6 and 7 discuss the popular view of nineteenth-century social scientists that there was something backward about the prevalence of large estates and a property-less agricultural labor force in the east when peasants in the rest of Germany tended to own their own holdings. Grant argues that higher wages in the urban centers convinced many young people in the east to abandon their parents? way of life, which prompted estate owners to seek seasonal laborers from Poland. Wages were low in the east partly because landowners had a substitute labor force.

Grant finds other evidence that migration in the decades after 1870 represented a release of surplus labor from conditions of underemployment, as the Lewis model predicts. Regions of high productivity growth in the agricultural sector were correlated with higher migration rates: as farmers became more productive they needed fewer workers. At the same time though, the product mix changed, towards more labor?intensive activities like root crops (sugar beets) and livestock. With suspected widespread underemployment across Germany many in agricultural areas could still be employed, and in the east a cheap seasonal labor force was available for such crops.

Grant also argues that in the 1870s and 1880s migration was more likely to take place from communities with high population densities, which validates the prediction of the Lewis Model he presents in Chapter 1. This result should be considered with some caution, as it is based on a regression with basically just one right-hand-side variable, population density. What else could be driving migration rates?

In Chapter 8, Grant finally discusses the process of industrialization in more detail, focusing on capital markets and Germany?s changing terms of trade as related to exports. ?Inequality,? part of what is promised by the book?s title, is finally tackled in Chapter 9, where Grant calculates Gini coefficients from Prussian tax statistics. Inequality was never that high in Germany but ironically it was higher in the urban sector than in the rural sector. Grant finds evidence for a Kuznets Curve and argues that his findings fit within the perspectives of Kuznets, Lewis and Weber.

Grant covers a lot of ground in his book. There are dozens and dozens of different tables and regression estimates spread throughout this work. Like a good detective he has dusted off many existing studies and sources of data from government and journal publications, many published more than a century ago and many of which have undergone little sophisticated treatment. By using modern statistical and regression analysis he sheds new light on these previously published sources. In fact there are so many tables and maps, I wish he had devoted a few pages to listing them in an organized fashion. He also goes out of his way to make this work user-friendly by placing most of the econometric results in the appendices and explaining their economic and social significance in the main body of each chapter. This feature makes the book very accessible to a variety of social and economic historians.

While he refers to long-standing debates stemming from the scholarship of Max Weber, Eckart Kehr and Kuznets, there could be more reference to the debates that economic historians are currently engaged in. As I mentioned above, comparison with Crafts? work would have been desirable. Using the insights of recent studies on internal migration within Germany would also have been helpful. Further, while Grant spends time comparing land ownership institutions between Britain and Germany, it would have been intriguing to know more about his thoughts on Britain?s own experience with a surplus of labor. Contrasting his findings with those of Baines (1985) would have been interesting, and perhaps this may provide Grant with an idea for further work.

In spite of these quibbles, Grant lays down piece by piece the argument that between 1870 and 1913, Germany was going through economic adjustment problems, and that these should be considered as a normal part of most industrialization processes, both historical and contemporary. This is the thesis of the book. Importantly, he argues that the Kehrite School, which viewed Germany as deeply flawed, has overlooked relevant economic realities and focused too much on internal political problems. Without trade, for instance, Germany could not have industrialized, as self-sufficiency would have entailed a higher agricultural labor force and allowed fewer for the factories. Here Germany needed food imports, which it supported with a moderate level of protection. Even the Kaiser acknowledged this.

Grant thus comes to reject the Kehrite School view that Germany suffered from internal socioeconomic flaws and could not make adequate political progress. Instead, he states on page 354 that ?the path to democracy was getting easier, not more difficult.? He goes further to conclude that ?The events of 1914 represented a derailment …? He thus provides his own particular views on the Sonderweg debate in German history, which attempts to trace the political-economic origins of the Nazi catastrophe. Luckily for him, his book ends in 1913. If we are to accept Grant?s view and reject the Kerite perspective that German sociopolitical evolution was misguided, we need a roadmap that takes us through World War I and further ? food for thought for future research.

For those interested in a case study of long-term economic development and transition, Grant provides a very interesting example in the form of Germany in the late nineteenth century. Germany industrialized inordinately quickly and came to dominate Europe not only economically but obviously politically in the twentieth century. Economic historians need to understand this particular case and compare it to others. Grant succeeds admirably in showing that it is relevant that we characterize historical processes accurately, both to understand the past and to examine carefully how socioeconomic evolution affects later periods. Lastly, Grant has provided a work that reminds economists and others of what insights they can gain on economic growth and political history by examining economic history.


Baines, Dudley. Migration in a Mature Economy: Emigration and Internal Migration in England and Wales, 1861-1900. Cambridge: Cambridge University Press, 1985.

Crafts, N. F. R. 1984. ?Patterns of Development in Nineteenth Century Europe.? Oxford Economic Papers 36 (3): 438-58.

Hochstadt, Steve. Mobility and Modernity: Migration in Germany, 1820-1989. Ann Arbor: University of Michigan Press, 1999.

Kehr, Eckart. Battleship Building and Party Politics in Germany 1894-1901: A Cross-Section of the Political, Social, and Ideological Preconditions of German Imperialism. Chicago: University of Chicago Press, 1973.

Kehr, Eckart (ed. by Gordon A. Craig). Economic Interest, Militarism, and Foreign Policy: Essays on German History. Berkeley: University of California Press, 1977.

Jackson, James H. Jr. Migration and Urbanization in the Ruhr Valley, 1821-1914. Atlantic Highlands, N.J.: Humanities Press, 1997.

Simone A. Wegge is an associate professor of economics at the College of Staten Island and at the Graduate Center, both of the City University of New York. Her research focuses on European and German economic history, especially emigration. Her most recent paper is titled ?Network Strategies of Nineteenth-Century Hesse-Cassel Emigrants.? History of the Family 13 (3): 296-314.

Subject(s):Industry: Manufacturing and Construction
Geographic Area(s):Europe
Time Period(s):20th Century: Pre WWII

The American Economic History Reader: Documents and Readings

Author(s):Malsberger, John W.
Marshall, James N.
Reviewer(s):Dighe, Ranjit S.

Published by EH.NET (December 2008)

John W. Malsberger and James N. Marshall, editors, The American Economic History Reader: Documents and Readings. New York: Routledge, 2008. xiv + 556 pp. $55 (paperback), ISBN: 978-0-415-96267-4.

Reviewed for EH.NET by Ranjit S. Dighe, Department of Economics, State University of New York College at Oswego.

Malsberger and Marshall, a historian and an economist at Muhlenberg College, have produced a different kind of course book. While supplemental readers of primary documents or recent scholarship are nothing new, this book combines the two and weaves them together with impeccably concise yet informative introductory essays on each topic. Although this book seems designed to be used in conjunction with a standard American economic history textbook, it could conceivably work well as a stand-alone text, especially for more advanced students who do not require a lot of background.

The book appears to have been organized for a one-semester course in American economic history from the colonial period to the present. Altogether, the book consists of 65 primary documents and 33 essays, grouped into 13 chapters, i.e., about one for each full week of the semester. Notably, just over half of the chapters cover post-1900 topics. The chapter topics are as follows: mercantilism and the colonial economy; the economy of the new nation; railroads; slavery; labor in industrializing America; the rise of big business; the New Era of the 1920s; the Great Contraction; the New Deal, World War II, and Keynes; the postwar Keynesian consensus; the collapse of that consensus in 1969-1980; Reaganomics; Clintonomics. (The book also contains Robert Whaples?s 1995 article ?Where Is There Consensus Among American Economic Historians?? as an appendix.) The average chapter is about forty pages long, so depending on one?s students? capacity for assigned reading, the instructor might be better off using the book as a stand-alone text or omitting some of the topics.

Indeed, considering the editorial choices that go into any economic history course, I am guessing the editors would expect and encourage other instructors to omit a topic or two and perhaps supplement the reader with favorite topics and readings of their own. For example, one might want to cover the economics of the Civil War and the Populist movement. Or one might want to spend more time on productivity growth, which receives scant mention here. (Neither the post-World War II productivity boom nor the post-1973 slowdown gets much more than a passing acknowledgment, and productivity does not appear in the book?s index.) The same goes for the great migrations of African-Americans and women into the nonagricultural work force in the twentieth century, and the great waves of immigration in American history. But the editors can hardly be criticized for omitting some vital topics, in view of the space limitations of a one-volume reader and the idiosyncratic nature of these choices.

The primary documents are generally well chosen. They include some familiar ones (such as the U.S. Constitution, Alexander Hamilton?s ?Report on Manufactures? and ?Plan for Supporting Public Credit,? and Ida Tarbell?s Standard Oil history); contemporary articles, including many by famous economists (such as Adam Smith on the colonies, John Maynard Keynes on the Great Depression, and Milton Friedman and Walter Heller on much of the twentieth century); statements by U.S. presidents (from Andrew Jackson to George W. Bush); and some obscure gems (such as two reward listings for runaway apprentices in the 1830s, which are oddly similar to reward listings for runaway slaves). Many of these documents have been excerpted for easier reading, and the editors further aid the reader with a half-page introduction to each chapter?s set of documents, providing needed context and explanation. With such a large number of primary documents, virtually all scholars will encounter at least a few that they have not read before.

The book?s greatest strength is probably the historiography it provides, especially as it moves from contemporary accounts in each chapter?s Documents section to classic and more current economic history research in the Essay section. For example, the chapter on the colonial economy includes Smith?s ?Of Colonies? as a Document and then, as Essays, Robert Paul Thomas?s 1965 article on the Navigation Acts and Larry Sawers?s 1992 article on the same. The chapter on railroads, instead of focusing on Robert Fogel and his critics, goes back further, beginning its Essays section with Leland Jenks?s 1944 article ?Railroads as an Economic Force in American Development,? Fogel?s original straw man. The chapter on the Great Contraction includes Irving Fisher?s classic 1933 debt-deflation article as a Document, then moves on in the Essays section to Milton Friedman?s monetarist account and then Christina Romer?s more eclectic account. As with the Documents, the Essays sections all begin with concise half-page introductions that provide a perfect road map for the reader.

The book is not so strong on cosmetics. There are a number of proofreading errors, especially in names (among the misspelled names are Jonathan Hughes and E. Cary Brown). One of the excerpted documents on the Great Contraction includes a passing reference to the untimely death of Governor Strong of the New York Fed, but it appears to have no antecedent in this book, leaving the inexpert reader to wonder who Strong was and what his policies were. Also, considering the large number of primary documents, a bit more attentiveness to dates and timelines would help. Case in point: Thomas Whately?s ?The Regulations Lately Made,? originally published in 1765 as a defense of the Stamp Act. The only date listed for it here is 1775, which may be correct as regards the particular reprint used but which could easily lead students astray if they assume it was written during the Revolution and that England was publicly talking about reviving that long-since-repealed act.

Another cosmetic problem is the less-than-user-friendly layout, a likely result of having to cram almost a hundred documents and essays, plus the editors? introductory essays, into a single volume. Even the paperback edition is heavy, and each page looks like a chore: tall, wide, small-font text, no pictures or graphs. Perhaps the publisher would be willing to try lighter, less dense, and cheaper split editions (say, one for pre-1900 and one for post-1900) in the future?

A cautionary note: Expect the vast majority of college students to struggle with the older primary documents, which reflect a different, more rococo style of writing. A humanities professor (whose students might have been expected to have some exposure to older writings) once tested his students? comprehension of the long opening sentence of the Declaration of Independence and found that it eluded the majority of them.[1] An economics professor (the reviewer) repeated this experiment and found an even larger majority that missed the gist of the sentence. Teachers should anticipate spending a good bit of time walking their students through these primary documents.

With these caveats in mind, the book is a godsend to American economic historians and their students. For the right group of students and the right course, it offers a great way to organize the material. Even for professors who would not assign the book, it is an excellent desk reference and a helpful source of background and color for one?s lectures. As a tool for beginning literature reviews, the book is an outstanding reference. Its strength in historiography makes it a must for virtually any academic library.

Reference: 1. David Mulroy, The War Against Grammar. Portsmouth, NH: CrossCurrents, 2003.

Ranjit S. Dighe is associate professor of economics at the State University of New York College at Oswego. His research interests include wages and Keynesian economics in the Great Depression, monetary populism, and the political economy of Prohibition. He is the author of ?The U.S. Business Press and Prohibition,? Social History of Alcohol and Drugs 22(2): 6-20 (Spring 2008).

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

The Race between Education and Technology

Author(s):Goldin, Claudia
Katz, Lawrence F.
Reviewer(s):Lindert, Peter H.

Published by EH.NET (November 2008)

Claudia Goldin and Lawrence F. Katz, The Race between Education and Technology. Cambridge, MA: Harvard University Press, 2008. vii + 488 pp. $40 (hardcover), ISBN: 978-0-674-02867-8.

Reviewed for EH.NET by Peter H. Lindert, Department of Economics, University of California ? Davis.

Claudia Goldin and Lawrence Katz have produced a definitive economic history of American education. This reviewer?s high hopes for their book project have not been disappointed. The final product is tightly reasoned and easy to grasp by anyone who cares about the country?s educational history. Even those who are shy of mathematics can simply slip past the occasional show of regressions and equations, guided by the authors? trouble-free prose. Those of you who have seen several Goldin-Katz papers from this project are assured that the whole is greater than the sum of those parts.

Two featured insights tie the whole book together, with the first of these leading logically to the second. The first insight: It?s home grown education that has mattered, not technology or immigration. That is, contrasting historical movements in American wage inequality are explained mainly by revolutions in education, not by shifts in technology or by waves of immigration. Goldin and Katz make this argument persuasive by wisely choosing to focus on the task of explaining contrasts in wage movements between long periods. Wage inequality, by occupation or by educational level, rose in the late nineteenth century, fell dramatically in the first half of the twentieth, and then rose in most decades of the second half (though not in the 1970s). In any one period, all three of those forces ? home grown education, technology, and immigration ? shared in determining the width of the pay gaps. Similarly, trends in all three shared in the task of explaining trends in the pay gaps. Yet the key insight emerges from contrasting those long trends, a temporal contrast analogous to economists? ?differences in differences? analysis. What made periods of rising inequality different from periods of falling inequality is that the rate of advance in education was stronger in the latter periods. In the title roles, technology has been the steady tortoise, while education has raced like the erratic hare. At times it ran ahead, at times it fell asleep, and now it races to catch up.

The first featured insight introduces their search for the second. How did America achieve those revolutions in education, and what explains their timing? The second insight is that American education had a unique set of egalitarian virtues, which weakened or were subverted later. The six original virtues were public funding, public provision, the separation of church and state, fiscal decentralization, forgiveness of youthful errors, and gender neutrality. Some of these virtues waxed and waned, though not because of any unifying dynamic. Three of them ? public funding, public provision, and secularization ? rose across the middle and late nineteenth century and never retreated, for better and for worse. Two others – forgiveness and gender equality ? have been permanent American strengths, with a couple of wrinkles in the mid-twentieth century. Fiscal decentralization has the most complicated dynamic of all.

The opening part of the book (Introduction and Chapters 1-3) previews everything, especially the first key insight about the technology-education race. Its factual summaries deserve to be worked into our reading lists and lectures. For an overview of the distinctive history of American educational progress across the data-rich twentieth century, see Chapter 1. Chapter 2 fixes our attention on earnings inequality, the dependent variable that dominates the book. Reading lists could well combine this chapter?s summary of wage inequality in the twentieth century with the Piketty-Saez overview of what happened up at the very top of the distribution. Chapter 3 on skill-biased technological change debunks the notion that the computer era is a radical departure, and drives home the point that skills bias has advanced more evenly over the decades than most people think. It ends with the key pivot point that ?It?s not technology,? which turns us toward the second key insight, namely that fluctuations in educational progress play the leading role in explaining inequality movements.

The second part of the book dwells on the unevenness of that progress. This country went through three great waves. In the nineteenth century America?s (and Canada?s) public primary schooling became the envy of the world. Chapter 4 on the ?origins of the virtues? sketches this wave, with definitive coverage of the six egalitarian virtues. Chapters 5 and 6 explain the second great wave, in which America became the world pioneer in public high schools with its own egalitarian emphasis on a wide menu of courses for all. Goldin and Katz show that several economic forces explain why the timing of this grass-roots movement differed across regions. Their quantitative accounting downplays compulsory school laws and child labor laws, which they find had only small, though statistically significant, effects. Rather, the analysis hints at a political economy in which some regions developed high schools faster than others because their political structures were more egalitarian. In the high school wave, as in the earlier primary school wave, the willingness to raise taxes for school unquestionably raised total schooling, and did not just crowd out private schooling.

Chapter 7 on the evolution and current state of America?s private and public colleges and universities is jam-packed with useful information. It belongs on everybody?s reading list in education economics. The main theme here is triumph: The Americans did a better job than any other country at financing higher education, and at making its institutions compete against each other. Only at the end of the twentieth century have other countries caught up in high-education enrollments, though the United States continues to dominate in research.

Two subplots in the twentieth-century advance of higher education relate to gender and to regions. The gender story exposes one of the main wrinkles in the triumph of gender equality in American education. With higher education, as with careers in teaching, women lost ground at one point in the twentieth century, though they overtook males later. Their college education fell behind a bit in the Great Depression of the 1930s, and especially in the postwar quarter-century when the GI Bill did so much for males? higher education. This wrinkle was ironed out in the 1970s, when male graduation rates stagnated and females soon became the majority of college graduates, as they continue to be in this and several other countries.

The regional story includes some reverse crowding out: The Northeast has remained behind in its tax support for higher education because it has always been so well endowed with private universities. That might not have been so remarkable if the overall attendance rate had been higher in the Northeast. Yet Goldin and Katz show us the opposite: Overall attendance remains higher in the vast North and West from Minnesota to the Pacific. In other words, something about the presence of excellent private universities actually lowered college attendance in the Northeast, other things equal. Might this quantity difference have outweighed the quality advantage of private institutions in the Northeast? Did influential ivy alums in northeastern states suppress public higher education enough to hold back regional growth?

In the final part of the book Goldin and Katz return to the race between technology and education in explaining twentieth-century movements in earnings inequality, this time with Chapter 8?s tidy quantitative analysis. The early wage compression and the later wage widening were driven by the supply and demand for the skills tied to educational attainment, with a little help from institutional movements in the power of unions and wartime wage controls. As we were warned in Part 1?s preview, the wage movements were dominated more by swings in the supply of education-related skills than in the demand for them. And on that supply side, the swings in home grown educational attainment were more important than the swings in immigration.

In Chapter 9?s finale on ?How American Can Win the Race for Tomorrow,? the authors tread warily in the minefields of current policy debates. They do not take clear sides in the war over whether extra money will improve education, despite citing Krueger?s evidence that paying for smaller class sizes does seem to help. They also refrain from judging No Child Left Behind, though they note that testing and accountability is an important issue. On local school choice mechanisms, such as vouchers and charter schools, they take a cautious position shared by this reviewer: the evidence is mixed, but school choice ?could improve the situation? for low-income families. The idea of school choice is also supported, of course, by its success in raising the productivity of higher education, covered back in Chapter 7. They also seem to accept the evidence that the country has underinvested in infant education.

Where next for research in the economic history of American education? This is the perfect time to ask, now that Goldin and Katz have achieved closure on so many questions. The view from their shoulders reveals two key areas to explore.

First, who was it that under-invested in education? Did private individuals pass up money lying on the sidewalk, or was it the political process failing to realize high social rates of return that took into account both fiscal effects and knowledge externalities? For the purposes of their book, Goldin and Katz are able to finesse these tough questions. By focusing on contrasts between American epochs, they successfully explain the contrasts in ?returns? in terms of movements in wage ratios that were dramatic enough to drive movements in all definitions of the rate of return on education. Yet we still need to explore the separate levels of the private versus ?social? (private and fiscal only) versus overall rates of return, the last being the one that draws on the recent literature on externalities. Only then can we distinguish private irrationality, or private capital constraints, from a failure of policymakers to capture high societal returns to extra years of education. The new research will have to proceed on different levels for different time periods. For the present day debate, scholars will have to jump the higher econometric hurdles imposed by Heckman, Lochner, and Todd in their rejection of the convenient Mincer return analysis. For earlier periods, it should suffice to make rougher contrasts between the likely private and fiscal returns for different eras and different places.

A related frontier is the political economy of education finance. Who voted for or against taxes for schools, in which states, and why? Goldin and Katz have advanced the political economy agenda with econometric evidence on the determinants of high school and college attendance, and the funding for public state universities. Yet there is much more to be done.

On both these research frontiers, our progress will be accelerated because Goldin and Katz have paved the way.

Peter H. Lindert is Research Professor of Economics at the University of California – Davis. His latest book is Growing Public: Social Spending and Economic Growth since the Eighteenth Century, two volumes, Cambridge University Press, 2004.

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

The New Comparative Economic History: Essays in Honor of Jeffrey G. Williamson

Author(s):Hatton, Timothy J.
O'Rourke, Kevin H.
Taylor, Alan M.
Reviewer(s):Bogart, Dan

Published by EH.NET (May 2008)

Timothy J. Hatton, Kevin H. O’Rourke, and Alan M. Taylor, editors, The New Comparative Economic History: Essays in Honor of Jeffrey G. Williamson. Cambridge, MA: MIT Press, 2007. ix + 417 pp. $40 (cloth), ISBN: 978-0-262-08361-4.

Reviewed for EH.NET by Dan Bogart, Department of Economics, University of California, Irvine.

It is a testimony to Jeffrey Williamson that so many influential scholars have contributed to a book honoring his career. The list of contributors reads like a ‘who’s who’ in comparative economic history. In the opening chapter, Timothy Hatton, Kevin O’Rourke, and Alan Taylor summarize the ‘the New Comparative Economic History’ and Williamson’s contribution to it. In a nutshell, this line of research analyzes the sources of economic growth, the importance of institutions, and the impact of globalization by making comparisons between actual economies. An illuminating contrast is made with early cliometrics, which addressed questions by constructing counterfactuals with the help of theory and calibration. There is no doubt that comparative research is making contributions to core questions in economic history. As a survey of the chapters reveals, comparative economic historians have an incredible amount of data at their disposal and when combined with modern empirical tools much can be learned. Still there are some problems or challenges that need to be kept in mind. One complication is that much cross-country or cross-regional variation cannot be meaningfully accounted for with standard variables. Another is that few variables can be taken as exogenous in the long-run, making identification quite complicated. Lastly, more theory is needed to understand how economic and political processes evolve over the long run.

The main contribution of the book is to offer a sample of the latest research in comparative economic history. The sample is not random to be sure, but the chapters do cover a wide range of issues ? migration, income convergence (and divergence), inequality, international trade, and international finance ? all of which have been central to Jeffrey Williamson’s research. Most of the contributions are fairly specialized and address a particular issue. William Collins (chapter 7) uses micro-census data from 1940 to 2000 to document that the educational convergence of the southern U.S. was largely driven by the higher education attainment of southern-born children and supplemented by the absorption of high human capital in-migrants. The chapter makes several contributions to the literature on migration and education in the “New South.” Leah Platt Boustan (chapter 11) shows that the nineteenth century migration of Russian Jews to the U.S. can be explained by the U.S. unemployment rate and the stock of the Jewish population in the U.S., while religious violence in Russia had modest long-run effects. Her chapter would be of interest to scholars studying the Jewish Diaspora and the estimation of immigration flows.

Several chapters are devoted to income convergence, divergence, and inequality. Robert Allen (chapter 1) compares real wages in India and Europe over the long-run and finds they were similar until the seventeenth century, when a divergence began, particularly in comparison to England. The chapter offers new insights on the timing of the Great Divergence. Greg Clark (chapter 2) uses a calibrated model of the British economy to argue that population growth accounts for the structural differences between Britain and its European competitors, not the productivity growth associated with the Industrial Revolution. The chapter makes a contribution to recent literature on the formal modeling of the British economy from 1780 to 1860. Leonardo Prados de la Escosura (chapter 12) presents new estimates of inequality and poverty in Latin America since 1850. They show that inequality increased steadily from the late 1800s to the 1970s, while poverty counts declined, largely due to economic growth. This chapter will be of interest to those who study the dynamics of growth, inequality, and poverty over the long-run. George Boyer (chapter 13) shows there was significant convergence in non-income measures of living standards across the Atlantic economy from 1870 to 1930. He argues that improvements in the 3 l’s ? longevity, learning, and leisure ? helped to slow emigration from northwestern Europe to the New World in the 1900s. The results suggest the need for broader measurements of welfare in the first era of globalization. Cormac O Grada (chapter 14) examines the divergence and convergence of welfare measures in Britain and the Netherlands from 1500 to 1850 and Ireland and Italy from 1950 to 2000. The chapter quantifies the higher welfare gains from rapid initial growth followed by slower subsequent growth compared to slow initial growth followed by rapid growth. His chapter makes a contribution to the literature on the welfare consequences of “economic miracles.”

Several more chapters are devoted to commodity market integration, international trade, and protection. Suleyman Ozmucur and Sevket Pamuk (chapter 3) find mixed evidence for commodity market integration across Europe between 1500 and 1800. Tests based on coefficients of variation and cointegration show no evidence of integration for rice, sugar, honey, and butter, and partial support for integration in wheat and olive oil. Their findings have relevance for the “When Did Globalization Begin” debate. Giovanni Federico and Karl Gunnar Persson (chapter 4) revisit the issue of integration in world wheat markets by studying the variance in prices from 1800 to 2000. They find that much of the cross-national variance was due to differences in wheat prices between free-trade and protectionist countries and among protectionist countries. Their findings will be of interest to the growing literature on the determinants of market integration. Kevin O’Rourke and Alan Taylor (chapter 8) provide evidence that in land abundant economies greater democracy raised tariffs, and in labor abundant economies greater democracy lowered tariffs. They also find that in countries with high capital to labor ratios greater democracy lowered tariffs. Their chapter contributes to the literature which confronts historical data with trade and political economy models. Timothy Hatton and Jeff Williamson (chapter 9) investigate why trade was more restricted compared to immigration in the first era of globalization and trade was less restricted compared to immigration in the second era of globalization. They argue that tariffs were a more important revenue source in the nineteenth century than today and that policy backlashes against immigration were more muted in the nineteenth century because of the limited franchise, developmental coalitions, and party politics. Their chapter suggests that the first era of globalization can offer some interesting insights on the modern immigration debate.

Two chapters deal with international comparisons of productivity. Alan Olmstead and Paul Rhode (chapter 5) study how improvements wheat breeding in the nineteenth century prevented yields from significantly declining as production shifted to colder and drier places. Using case studies from several countries, they show how wheat breeding became a global enterprise with an exchange of ideas between every continent. Their analysis emphasizes a somewhat forgotten aspect of the first globalization: international knowledge transfers. Using cross-country regression analysis, Gayle Allard and Peter Lindert (chapter 15) find evidence that employment protection legislation and product market regulation reduced employment and productivity since the 1960s. They also find that coordinated wage setting and welfare state transfers either increased employment and productivity or did little to reduce them. This chapter contributes to the broader literature on the efficacy of Anglo-American institutions versus Continental European institutions.

Finally, there are two chapters analyzing financial markets from a comparative perspective. Richard Grossman (chapter 6) shows that bank capital to asset ratios declined in most countries from 1840 to 1940. Cross-country regression analysis reveals that banking crises increased capital to asset ratios, but government regulations, like minimum capital requirements, had little influence. This chapter shows convergence in a key variable across banking systems, and suggests the benefits of comparative research in banking history. Holger Wolf and Tarik Yousef (chapter 10) examine the timing of exit from the Gold Standard during the Great Depression. They find that greater deflation or recession hastened exit, as did the exit of trading partners. Interestingly, greater political instability slowed exit from the Gold standard. Their results should be of interest to scholars studying the determinants of monetary policy in the Great Depression.

Dan Bogart is an assistant professor of economics at the University of California, Irvine. His research focuses on government policies towards the infrastructure sector in Britain and throughout the world in the eighteenth and nineteenth centuries. Recent publications include “Nationalizations and the Development of Transport Systems: Cross-Country Evidence from Railroad Networks, 1860-1912″ (forthcoming, Journal of Economic History); “Turnpike Trusts and Property Income: New Evidence on the Effects of Transport Improvements and Legislation in Eighteenth Century England,” (forthcoming in the Economic History Review); and “Inter-modal Network Externalities and Transport Development: Evidence from Roads, Canals, and Ports during the English Industrial Revolution” (forthcoming in Networks and Spatial Economics).

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

Economics in the Shadows of Darwin and Marx: Essays on Institutional and Evolutionary Themes

Author(s):Hodgson, Geoffrey M.
Reviewer(s):Mongiovi, Gary

Published by EH.NET (March 2008)

Geoffrey M. Hodgson, Economics in the Shadows of Darwin and Marx: Essays on Institutional and Evolutionary Themes. Cheltenham, UK: Edward Elgar, 2006. viii + 265 pp. $100 (cloth), ISBN: 1-84542-497-2.

Reviewed for EH.NET by Gary Mongiovi, Department of Economics and Finance, St John’s University.

Charles Darwin and Karl Marx, each in his own way, radically transformed our understanding of human history. Marx developed a powerful theory of how economic systems change over time. But Darwin’s theory of natural selection has become the preferred metaphor of social scientists who want to understand how institutions emerge, take root and evolve. One recent example of this “evolutionary turn” is the hypothesis put forth by Gregory Clark in A Farewell to Alms (Princeton University Press, 2007), that England’s industrialization in the early nineteenth century can be explained by the high fertility of the medieval nobility, who, through a process of natural or cultural selection, infused the country’s population with traits conducive to economic growth. In another recent book, Niall Ferguson draws upon Darwinian principles to account for, and justify, the modern financial system (see The Evolution of Financial Services , Oliver Wyman, 2007). In the book under review, Geoffrey M. Hodgson, Research Professor in Business Studies at the University of Hertfordshire, argues in the same vein that Darwin rather than Marx provides the appropriate model for making sense of socio-economic change.

Marx read On the Origin of Species in late 1860. His initial reaction was positive; he wrote to Ferdinand Lassalle in January 1861 that “Darwin’s work is most important and suits my purpose in that it provides a basis in natural science for the historical class struggle” (K. Marx and F. Engels, Collected Works, Vol. 41, p. 246; International Publishers, 1985). But Marx’s enthusiasm began to wane as soon as it dawned on him how much Darwin owed to Malthus. In June 1862 Marx commented to Engels that “Darwin rediscovers among the beasts and plants, the society of England with its divisions of labour, competition, opening up of new markets, ‘inventions,’ and Malthusian ‘struggle for existence.’ It is Hobbes’ bellum omnium contra omnes …” (Collected Works, Vol. 41, p. 381). Marx anticipated that reactionaries would appeal to Darwin’s theory as “a conclusive reason for human society never to emancipate itself from its bestiality” (Collected Works, Vol. 43, p. 217). By 1866, Marx was championing Pierre Tr?maux’s Origine et Transformations de l’Homme et des autres ?tres (Paris, 1865) ? now justly forgotten ? as a “significant advance over Darwin.” For Marx, Tr?maux’s great improvement was that he placed progress at the center of his conception of evolution, whereas “Darwin regards [progress] as purely accidental …” (Collected Works, Vol. 42, p. 304).

Marx’s endorsement of Tr?maux over Darwin was a serious lapse in judgment. But the misstep is explained by the affinities between Tr?maux’s theory and Marx’s project to expose a set of forces that drive socio-economic development. Opposition to this idea that history has a “logic” is at the heart of Hodgson’s coolness toward Marx. Whereas Darwin recognized that biological systems are open ? subject to external forces like climate change or species migration ? Marx, Hodgson charges, explains capitalism’s historical trajectory almost entirely in terms of internal mechanisms. Hodgson further contends that Marx ascribes to these mechanisms a teleological character that is incompatible with the open-endedness of Darwinian evolution: they propel the system toward collapse, and set the stage for the next phase of human history, socialism. In biological systems, new traits originate as random mutations, and proliferate if they confer some survival advantage on an organism or population in the prevailing environmental conditions; these new traits may in turn react back on the natural environment. Because the biological system is open, and its constituent elements interact with one another in complex ways, the outcome of the process is not susceptible of prediction: there is no determinate end-point. In this respect, Darwin’s perspective is closer than Marx’s to the “old institutionalist” tradition that has inspired Hodgson’s work over the past two decades.

Hodgson wrongly asserts that Marxism overlooks the indispensable social functions of customs and institutions as repositories of collective knowledge. Marx knew that institutions evolve as solutions to problems that individuals and groups encounter in going about their business; in his account of how capitalism develops, custom is a crucial element of the superstructure that reinforces the underlying economic basis of society. Marx saw also that institutions exhibit inertia: they persist long after the circumstances that gave rise to them have disappeared. As often as not, the new institutions themselves helped to bring about the transformation of the material conditions of society. This disjunction between institutions and the evolving mode of production, Marx hypothesized, generates tensions, or contradictions, that lead eventually to the withering of old institutions and their replacement by new ones: a socio-economic system is pushed forward through history by the tensions generated by the production relations which form the system’s institutional core. Hodgson does not consider whether this bold hypothesis is a fruitful way to approach the analysis of socio-economic change; he simply dismisses it as “teleological” and moves on.

Social Darwinists like Herbert Spencer, William Graham Sumner and, in our own day, Charles Murray maintain that natural selection accounts for the misery that market economies inflict on large numbers of people: the poor are poor because they are inferior or unfit in some objective sense. This is not an application of a metaphor, but a claim about actual social and biological processes. Though its environmental niche is small, Social Darwinism, now generally regarded as morally repugnant and empirically vacuous, poses something of a difficulty for anyone who wants to argue that the theory of evolution provides an apt template for the explanation of social processes. In Chapter 3 Hodgson rescues Darwinism from this ditch. He points out that the term “Social Darwinism” was rarely used before the mid-1920s, and when it was used it was usually deployed by progressives against free-market fundamentalists. We learn also that the writers conventionally labeled Social Darwinists were in fact not genuine Darwinians. But the misapplication of allegedly Darwinian ideas in support of “an ethics of rapacity and greed” (p. 47; the words belong to the sociologist Erville Woods) ? a development that, as we have noted, Marx foresaw ? led to a reaction among social scientists, particularly sociologists, who sought to purge their disciplines of all traces of biological causality. Talcott Parsons plays a malign role in Hodgson’s story. Parsons, who wanted to carve out a secure and influential professional niche for sociology, strategically broadened the definition of Social Darwinism to encompass “anyone who applied biological ideas in the social sciences” (p. 54). He then distorted the views of those who fell within the definition, demonized the distorted views, and erected a barrier between the social sciences and biology.

Hodgson makes a persuasive case that the history of the term “Social Darwinism,” in particular its transformation into an epithet, contributed to the disappearance of biological reasoning from the social sciences. But a few loose ends remain. For a start, Hodgson doesn’t explain why Parsons thought a full-throttle attack on Social Darwinism would advance the professional interests of sociologists. Nor is it clear how Veblen and the American institutionalists fit into the argument. They recognized the evolutionary character of social phenomena, were never tarred with the Social Darwinist brush, and were an influential presence in American economics into the 1950s, long after Parson’s crusade had succeeded in marginalizing the ideas of Spencer and Sumner. The near-demise the Veblenian tradition owes little to the assault on biological approaches that Hodgson describes. In economics the dominant metaphors had, from early on, been drawn mainly from physics. The institutionalists showed that a “biological” outlook might be more appropriate for understanding a large class of human activities; but they were swimming against the current.

In Chapter 4 Hodgson elaborates his critique of Marx. The charge that Marx’s theory is teleological is here connected to another criticism ? that he lacks an adequate theory of human agency, of why people behave as they do. While a Marxian theory of agency would be useful to have (and a good deal of work, ignored by Hodgson, has been done in that direction), the fact that Marx did not himself provide one doesn’t invalidate his general approach. Marx was primarily interested in how the system as a whole reproduces and evolves, and at that level of analysis, some degree of abstraction about individual behavior is not only permissible but necessary. To be sure, class interests and material conditions do not compel people to behave in ways that bring about some inevitable path of social development. Marx knew this, even if he was confident that capitalism would eventually collapse under the weight of its internal contradictions. He knew too, though, that those material conditions have ramifications for what people believe about the world, for how they make choices, and consequently for how society evolves. Hodgson’s remarks on these matters were initially made in 2001, as the opening contribution to a debate with Alex Callinicos, whose rebuttal, presented here as the second part of the chapter, makes short work of Hodgson’s caricature of Marx’s views.

The book loses its thematic focus after Part 1. Readers looking to find direct engagement with the ideas of Darwin and Marx can put the book aside once they have gotten through Chapter 4. Darwin recedes into the background, and Marx receives no attention at all after Chapter 6. This is not to say that the remaining sections of the book lack interest.

In Part 2 Hodgson scores some hits against the critical realist school. He begins by dismantling the claim often made by critical realists that their methodological tenets support an emancipatory left-of-center politics. He then moves on in Chapter 6 to critique several concrete analytical applications of critical realism ? its utilization in defense of Marx’s theory of the tendency of the profit rate to fall; and the attempt to explain Britain’s late-twentieth century industrial decline as the result of trade union resistance to technological change and workplace reorganization. In these chapters Hodgson delivers a penetrating dissection of critical realism’s vulnerabilities, though the effect is marred by the occasional cheap shot, as when he writes that critical realism “is a means for Marxist academics to make political postures while simultaneously earning their crust doing serious academic work” (p. 93).

Chapter 7 is an insightful assessment of “The Problem of Formalism in Economics.” Hodgson identifies two extreme positions on mathematical formalism: (1) rejection of formalism out-of-hand, a view which is close to the critical realist stance; and (2) the treatment of formalism, in itself, as the criterion of scientific legitimacy, without due regard to whether the formal techniques utilized in a particular argument cast light on the real world ? an attitude that is all too evident in modern economics. Hodgson advocates a middle-of-the-road approach: formalism can be useful if we are attentive to the interpretative context in which any given formal model is developed and applied. This sensible view, however, then raises the question, left unaddressed by Hodgson, of what other criteria are necessary to gauge the usefulness of a model.

The third part of the book is concerned mainly with taxonomic issues: how are institutions, habits, rules, routines, customs and norms different from one another, and how are they connected? Much of the ground covered here is familiar, and there is a good deal of hair-splitting on display. These chapters flunk the MEGO test (“My Eyes Glazed Over”).

Hodgson has less to say than one might expect about how new institutions originate, or why they take this or that particular form. Marx provides a potential answer to such questions, but Hodgson consigned Marx to the dustbin of history in Part 1, and wants to leave him there. When, in Chapter 10, Hodgson does take a stab at the problem of how institutions and rules come into existence, his analysis lets us down. With coauthor Thorbj?rn Knudsen, he approaches the issue via a technical exercise that has become common in the new institutionalist literature, a game-theoretic computer simulation aimed at showing how a particular rule ? in this case, the convention about whether cars are to be driven on the left or right side of the road ? might emerge from the undirected choices of atomistic agents. It is a curious exercise for Hodgson to undertake because it seems to be fundamentally at odds with the “old institutionalist” injunction not to treat social actors as atomistic entities. If institutions really do matter, our default setting ought to be skepticism toward any attempt to explain even a simple rule in terms of a model that abstracts from social and political context. Hodgson’s simulation results undermine the view that habits must be grounded in given individual preferences; but I’m not sure we need this sort of analysis to tell us there’s something fishy about the crude reductionism of utility-maximization models. That the convention under examination involves no issue of conflict also limits its interest.

The book’s central message is that “Explanations of socio-economic phenomena [ought not to be] reduced … to individuals [or] to institutions alone” (p. 201). Few would disagree. In elaborating this message, Hodgson overstates the differences between his own methodological approach and Marx’s; herein lies the book’s principal flaw. Hodgson presents Darwin and Marx as mutually exclusive alternatives, when they are in many respects complementary to one another. Darwinian evolution is indeed “random” in a way that Marx’s capitalist dynamics are not. There’s a good reason for this. Social systems are different from biological systems, and the Darwinian metaphor can carry us only so far. One has the impression that Hodgson wants to shield institutionalism from being tarnished by too close an association with Marxism. Yet his perceptive and careful reflections on social transformation would be considerably enriched by a more liberal assimilation of Marxian insights.

Gary Mongiovi teaches economics at St John’s University. He and Steve Pressman co-edit The Review of Political Economy.

Subject(s):History of Economic Thought; Methodology
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII

Food and the City in Europe since 1800

Author(s):Atkins, Peter J.
Lummel, Peter
Oddy, Derek J.
Reviewer(s):Perren, Richard

Published by EH.NET (February 2008)

Peter J. Atkins, Peter Lummel and Derek J. Oddy, editors, Food and the City in Europe since 1800. Aldershot, Hampshire: Ashgate, 2007. xvi + 260 pp. $100/?55 (hardcover), ISBN: 978-0-7546-4989-2.

Reviewed for EH.NET by Richard Perren, Department of History, University of Aberdeen.

This book has been published as a result of the ninth themed symposium of the International Commission for Research into European Food History (ICREFH) held in Berlin in 2005. The first of these symposia was held in 1989 and the first of its volumes was published in 1992. This latest addition to the series is divided into four sections (Parts A to D) and has nineteen short articles on various aspects of urban European food history since the industrial revolution, plus a general introduction and a brief conclusion, both of them by two of the editors, Peter Atkins and Derek Oddy. The introduction provides a good overview of the whole book and also indicates where there is a need for further research, but the conclusion mainly summarizes the ICREFH’s work to date.

The first part called “Feeding the Multitude” focuses on supply and has five chapters. In this Hans Jugen Teuteberg presents a general survey of urban food history research; Peter Atkins compares the food supplies of London and Paris in 1850; Roser Nicolau-Nos and Josep Pujol-Andreu discuss urbanization and dietary change in Mediterranean Europe, using as their example Barcelona between 1870 and 1935; Corinna Treitel covers the contribution of the German nutrition scientist Max Rubner to that country’s thinking on the feeding of the urban poor; and J?rgen Schmidt discusses how the Allies fed the three million inhabitants of West Berlin in the years immediately after World War II.

The second section, which has four pieces of work on “Food Regulation,” deals with food adulteration and health issues. It begins with Peter Scolliers who outlines various food frauds and the city authority’s attempts to eradicate them in nineteenth century Brussels; it is followed by Derek Oddy’s study of food quality in London and the attempts of the public analyst to enforce the British laws against adulteration between 1870 and 1939; next, Alessandro Stanziani focuses on similar attempts by the Paris Municipal Laboratory between 1878 and 1907; and finally Vera Hierholzer looks at the role of municipal food monitoring and citizen self-help associations in Germany’s ‘war against food adulteration’ in the 1870s and 1880s.

The third section has six articles covering “Food Innovations – the Product Perspective”; Adel P. den Hartog discusses the links between nutrition science and the attitudes of Dutch producers of skimmed sweetened tinned condensed milk to health warnings about this product between 1890 and 1940; Jukka Gronow details the emergence of first-class restaurants and luxury food stores in Soviet Russia in the 1930s; Martin Franc’s article concentrates on attempts to present Prague as a shop window of the Czechoslovak communist regime in the 1950s and 1960s by the preferential direction of food supplies to the city in order to impress foreign visitors; Peter Lummel switches to the free world with a survey of the development of the supermarket in West Germany between 1949 and 1970; Anneke H. von Otterloo charts the various effects of immigration in increasing consumption of exotic foods in postwar Amsterdam; and Pnikos Panayi ends the section with a similar exercise for London since 1850.

In the final part four authors explore “Eating Fashions – the Consumer Perspective.” Ulrike Thoms examines the menus of scientists’ festive meals in Berlin between 1830 and the Second World War; Alain Drouard discusses diet reformers (as well as one or two food cranks) in fin de si?cle Britain, Germany and Switzerland; Virginie Amilien writes about changing working-class and middle-class food habits in the Norwegian capital from 1860 to 2000; and Isabelle T?choueyres bring the section to a close with an anthropological study of the food markets of Bordeaux since the 1960s.

It is inevitable that this collection of conference papers written by over twenty scholars drawn from different disciplines, with a variety of funding arrangements, often working independently, and covering such a wide geographical area over two centuries deals with some time periods and some aspects of urban food history in greater detail than others. In addition the sources that are available to the authors have imposed their own constraints. As Peter Atkins and Derek Oddy say in their conclusion (p. 252), the amount of archival material varies between states and in some cases has been reduced by wartime destruction. The uneven focus is also a question of numbers as more than half of Europe’s 500 food historians are currently working in Germany, France and Britain, which is reflected in the geographical coverage of the papers of the current volume. The great majority are about Northern and Western Europe and only one of them (the paper by Roser Nicolau-Nos and Josep Pujol-Andreu on Barcelona) is on the Mediterranean region. It also helps to account for the lack of comparative studies which the editors suggest may be helped by collaborative research teams. Although this excellent suggestion would be the logical way to fill the gaps in our knowledge of the development of the European urban food industry, this reviewer thinks that the logistical challenges this could present could well be formidable.

Nevertheless, important themes and topics do emerge in spite of the culturally diverse range of subjects from which they are drawn. For example, the increasing consumption of animal proteins which is a feature of rising incomes seems to be apparent from places as far apart as Barcelona and Oslo (pp. 47 and 235). But this has not been the only agent of change. Technology has brought new products like condensed milk into being, and also increased their consumption, although in this case it was one of the earliest technology-based junk foods and as such did not improve the health of all of its consumers, particularly infants (pp. 136-38). But this was countered by the development of food inspection and regulation, covered by the papers in the second part of the book. However, as the four papers in this section all deal with Northern Europe the reader is left wondering what progress in this direction was like in Southern Europe where the pace of industrialization and economic growth was less. One is tempted to assume that it was slower, but given the regional coverage of the papers on food inspection one has no way of knowing this. The papers that touch on changes occurring after 1945 also highlight some intriguing cultural changes. Firstly, there is the introduction of supermarkets from the U.S. and the profound effects their development has had on food supplies and retailing. And secondly, the impact of migration in introducing new food products and diversifying European diets seems to have been particularly strong after 1945.

All in all, despite the uneven coverage there is much in this book that gives some fascinating insights into nineteenth and twentieth century European history. It also indicates how the valuable work on food and dietary history prompted by the ICREFH and its tradition of interdisciplinary research promises to provide much more information about the cultural, economic and social history of food.

Richard Perren’s most recent publication is Taste, Trade and Technology: The Development of the International Meat Industry since 1840 (Ashgate 2006). His next piece of work, “Filth and Profit, Disease and Health: Public and Private Impediments to Slaughterhouse Reform in Victorian Britain,” is due to appear as a chapter in Paula Young Lee, editor, Meat, Modernity, and the Rise of the Slaughterhouse (University Press of New England) in July 2008).

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

Sustainability or Collapse? An Integrated History and Future of People on Earth

Author(s):Costanza, Robert
Graumlich, Lisa J.
Steffen, Will
Reviewer(s):Coelho, Philip R. P.

Published by EH.NET (October 2007)

Robert Costanza, Lisa J. Graumlich, and Will Steffen, editors, Sustainability or Collapse? An Integrated History and Future of People on Earth. Cambridge, MA: MIT Press, 2007. xvi + 495 pp. $38 (cloth), ISBN: 978-0-262-03366-4.

Reviewed for EH.NET by Philip R. P. Coelho, Department of Economics, Ball State University.

This book consists of an introduction and twenty-two essays and reports with an overall focus on an “Integrated History and Future of People on Earth” (IHOPE). The authors are primarily sociologists and environmentalists with representation from earth sciences (climatology, geology) and history. In spite of its pretentious title and acronym there are some worthwhile essays. In history, a very good chapter is John R McNeill’s essay on the twentieth century, “Social, Economic, and Political Forces in Environmental Change: Decadal Scale (1900 to 2000).” While I have some quibbles with it (the discussion of decolonialization is fuzzy at best), there are insights that make it worth reading and repeating. McNeill correctly states that the economic growth that occurred in the last half of the twentieth century “… is the most unusual in the history of economic growth, although many people, having experienced nothing else, now imagine it is as normal” (315). This is emphatically true; the human race has never experienced such a widespread and rapid rate of economic growth encompassing the majority of the globe’s inhabitants. If it continues through the mid twenty-first century the world will have been transformed in a myriad of ways, some predictable others unpredictable. A possible prediction can be derived from McNeill’s discussion of urbanization. McNeill states that: “[The low birth rate in cities] if it persists, means that cities are resuming their historic role as demographic black holes. Before 1880 they consumed population because their death rates were so high; after an interval of growth by natural increase they began to consume population because their birth rates were so low. London today, as in 1750, would shrink without in-migration.” This essay is worth reading and assigning to undergraduates/graduates.

There are other good, more specialized essays in this volume. Timothy F. Flanney has a brief but comprehensive chapter (“The Trajectory of Human Evolution in Australia: 10,000 B.P. to the Present”) on (the lack) of human evolution in Australia. Richard H. Grove’s chapter (“Revolutionary Weather: The Climate and Economic Crisis of 1785-1795 and the Discovery of El Nino”) correlating crop failures, famines and revolutions with shifting ocean currents is an intriguing hypothesis. His hypothesis is that the French Revolution, the Napoleonic Wars and the turbulence associated with the late eighteenth and early nineteenth centuries can be traced back to crop failures and weather patterns attributable to changes in El Nino, the Pacific Ocean current. He marshals evidence well and he is persuasive, but I reserve acceptance until I see the hypothesis more widely debated and examined. Nevertheless Grove’s chapter is well worth reading for an imaginative, well-researched and intriguing hypothesis.

In contrast to an essay with a novel hypothesis, is Nathan J. Mantua’s data driven essay (“A Decadal Chronology of Twentieth Century Changes in Earth’s Natural Systems”). He emphasizes and presents data throughout his paper, saving speculations for presentation in his summary. Mantua details the various consensus estimates for data series ranging from temperatures to nitrous oxide, to the North Atlantic Oscillation. Whether the juxtaposition of these series makes sense is a question for climatologists/meteorologists. However he does seem to attribute too much to natural forces, while ignoring economic forces. He credits (293) the, “[r]apid declines in large predators” in the oceans of the world to changes in the chemical composition of the atmosphere and oceans. However cod fishery of the Grand Banks did not collapse because of climatological/oceanographic changes, but because of over-fishing. The over fishing was a predictable result of the lack of property rights in the Grand Banks cod fishery. Climatic change may have been occurring, but the Grand Banks cod fishery collapse could have been easily avoided by rigidly enforcing catch limits and/or assigning property rights to the fishery.

Another relatively good essay that could be improved by introducing economic analysis is that of Christian Pfister (“Little Ice Age-type Impacts and the Mitigation of Social Vulnerability to Climate in the Swiss Canton of Bern prior to 1800″). The essay is marred by the misuse of economic data. He uses eighteenth century data to calculate the percentage change in prices within localities and to assess relative scarcity among localities. For example, if the price of grain rose by 60 percent in London and 300 percent in Lwow, the difference is indicative of greater scarcity in Lwow relative to London. But if Lwow is an inland area (true) with high-transport costs (true) then it could be indicative of either scarcity in Lwow or scarcity elsewhere. Imagine that the price of transport is so high that in normal times Lwow is not an exporter of grain even though its prices are very low compared to the export markets of London and Amsterdam; the low prices are not sufficiently low enough to compensate for the high transport costs given the “normal” price of grain in the export markets. If the price of grain outside of Lwow rises sufficiently beyond the threshold where it becomes profitable to export grain (the additional price compensating the high transport costs) from Lwow, the price in Lwow will rise penny for penny with the market (non-Lwow) price. Whether this was the case, I do not know; however if it is not true, then were there grain imports into Lwow? If there were no grain imports into Lwow, what is the explanation? Regardless Pfister should be wary of criticizing Robert Fogel for “questionable statistical manipulation” (204) and completely rejecting the claims that famines are man-made catastrophes. Appealing to authority is not a strong argument, but when Nobel Laureates and other eminent economists claim (with evidence) that famines are typically not the result of natural phenomena, it would be wise to tread cautiously. Pfister has one citation (204) to buttress his case against Fogel, and Karl Gunnar Persson (and by extension Amartya Sen). More modesty in the presentation of his hypothesis and less hubris in his claims would avoid potential embarrassments.

The essays I have mentioned are outliers because they are acceptable scholarly exercises; the other essays are not. The worst that this book has to offer is that by Dennis L. Meadows (“Evaluating Past Forecasts: Reflections on One Critique of The Limits to Growth“). This essay is an extended attack on a book review of The Limits to Growth that appeared in the New York Times on April 2, 1972. What can we say about an author placing in a collected volume an essay that is devoted to attacking reviewers thirty-five years after the review? Well self-indulgent, monomaniacal and bizarre are some adjectives that come to mind. Meadows’ main complaint of the review is that the authors (P. Passel et al.) did not read his book. To ascertain the truth of his complaint I dutifully read the original review, and then checked out The Limits to Growth. I cannot say whether Meadows’ claim is correct, but I believe it may be because the book is truly unreadable. In Meadows’s (et al.) book there are charts of time series that have multiple simultaneous outcomes, impenetrable flow diagrams, numerous unquantified feed back effects, and, all-in all, the diagrams and prose are impenetrable. The passage of time has not been kind to The Limits to Growth ? literally, empirically, and figuratively. In the distant future, given past behavior, there is a non-trivial probability that Meadows will savage me for these comments; so be it.

I will stop my comments on the individual essays following parental injunctions about not saying anything if unable to say anything nice. The basic problem with the remainder of the essays and the book itself is captured in its title: “Sustainability or Collapse?” The hubris evident in the title infects the remaining essays. They are typically self-indulgent, jargon-ridden, confused and confusing, replete with self-citations, and dogma. The dichotomy in the title is false; it is supported by neither science nor history. Entropy is continually reducing complexity to uniformity. To maintain civilization (complexity) humans have to utilize dense packets of energy to offset entropy. What is “sustainable” is a function of how effectively humanity can discover and manipulate the resources available to combat entropy. What is “sustainable” now, was not sustainable two centuries ago. There is a possibility that humanity’s ability to find new and more productive ways to manipulate the material world will cease in the near future, but that possibility is dwarfed by the chance that the Earth will be negatively affected by an asteroid, and that is a remote, albeit real, possibility. Inherent in any prediction of “collapse” are necessary corollary predictions on the basic limits to human knowledge. There will be no fusion, fission energy will remain costly and politically difficult, nanotechnology will be fruitless, genetic engineering will never produce organisms that reduce the carbon dioxide content of the atmosphere, and so on, and on. I suspect that most predictions that today’s futurologists make about future technology will prove to have been overly modest given what we have seen happen to humanity’s knowledge and control of the material world over the past quarter century. So, when we talk about “sustainability,” what level of technology are we specifying and what margin of error is “reasonable” for that specification? These questions are not considered.

With the exceptions noted, the essays in the volume are also innocent of economic principles. Considerations of costs and benefits are tertiary; what discount rate to apply to future cost/benefits is of no concern. Critics of catastrophic environmentalism are completely ignored. The majority of the essays contained in this volume are simply normative exercises in du jour environmentalism. If you are a believer and want to reinforce the faith, read it; but if you want a serious discussion of the issues, by and large, it is to be avoided.

Philip R. P. Coelho is Professor of Economics at Ball State University. His current research is on the effects of morbid diseases on economic productivity, and economic methodology and ethics.

Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

State, Peasant, and Merchant in Qing Manchuria, 1644-1862

Author(s):Isett, Christopher Mills
Reviewer(s):Vries, Peer

Published by EH.NET (August 2007)

Christopher Mills Isett, State, Peasant, and Merchant in Qing Manchuria, 1644-1862. Stanford: Stanford University Press, 2007. xiv + 418 pp. $65 (hardcover), ISBN: 0-8047-5271-0.

Reviewed for EH.NET by Peer Vries, Institute for Economic and Social History, University of Vienna.

Christopher Mills Isett is associate professor of history at the University of Minnesota and a specialist in the economic history of Manchuria, Taiwan, and China during the Qing dynasty. His book consists of three parts. The first one deals with the ideological, political and economic interests of the Qing rulers in their ‘homeland’ and with their actual policies. The second one shows what property and labor relations evolved in the region. The third part presents an analysis of the way in which those relations limited possibilities for economic development. By Qing Manchuria Isett basically means the provinces Heilongjiang, Jilin and Liaoning, especially the southern parts of these last two provinces. The period covered is from 1644, the establishment of Qing rule in most of China Proper, to 1862, the opening of the Manchurian port at Niuzhang.

The underlying, I am almost tempted to say ‘real,’ subject matter of the book, in my view, is how to characterize the economy of China ? for which Manchuria by and large simply functions as a pars pro toto ? as compared to that of Britain. Two models of economic (non)development act as points of reference, one that is called ‘Smithian’ and one that is called ‘Malthusian’ or rather ‘Malthusian-Ricardian.’

In line with a long tradition, Isett claims that the economy of early modern Britain operated according to Smithian principles. That means that it could and did grow via extension of the market and increasing specialization. Quite recently some historians, in particular Kenneth Pomeranz, have toned down this optimist view by claiming that Britain’s growth was not very impressive and certainly finite, and that Britain on the very eve of its industrialization was heading for a Malthusian cul-de-sac just as much, if not more so, than China. When it comes to characterizing the economy of China in early modern times, authors like, again, Pomeranz, Wong and Li Bozhong, have also urged for revision. In the case of early modern China too there is a long tradition, in this case to consider its economy as a clear example of a Malthusian economy in which a sustained increase of the population was bound to lead to over-population and crisis. While not denying that in the end China was heading for a Malthusian crisis, Pomeranz cum suis claim that its economy was just as ‘Smithian’ as Britain’s and in that way opt for a more optimist perspective on China’s pre-industrial economic history. According to them, the increase in its population, at least until the end of the eighteenth century, overall, had no negative effects on China’s wealth. If the revisionists are right, the two economies would have been strikingly similar in the early modern era, the only difference being that Britain had the ‘luck’ to be saved by its Industrial Revolution.

Isett clearly does not agree. For him the Smithian model, as he defines it, is a model of development, and English. The Malthusian-Ricardian model, as he defines it, in the end stands for non-development and it nicely fits most of the characteristics of the economy of early modern China, including Manchuria. In his approach he clearly is inspired by Robert Brenner. That means that he thinks the dynamism associated with a Smithian economy does not occur in a vacuum but only in specific social and political settings in which, in particular, the existing property relations are essential. To have a Smithian market economy, as he interprets it, the sheer presence of buyers and sellers does not suffice. When it comes to analyzing Malthusian dynamics one has to be aware that those too are not simply the result of the ratio between available resources and population, but have to be placed in a broader social and political context as well.

But let us first discuss the actual empirical content of the text. How did things actually work out in Manchuria? Basically the Qing wanted to keep Manchuria to themselves as a place that provided land, income and a ‘home’ for Manchu aristocrats and banner men. Their livelihood was supposed to be taken care of by a labor force primarily consisting of bonded labor. In an extensive and detailed analysis Isett shows that and how this policy failed: by far the biggest part of Qing land in Manchuria came in actual possession of commoners who worked it. The Qing state’s presence in the villages was not strong enough to maintain the agrarian regime it initially implemented. The bailiffs in charge of the manors did not heed official policy very much, and although the region from 1689 onwards was officially closed to permanent settlement, new settlers kept on coming in. What emerged was a peasant-dominated agriculture in which wage labor was quite exceptional. Manchuria in that sense became a replica of Northern China.

Manchurian peasants, buying and selling products and, very occasionally, services, clearly and increasingly were integrated in markets. In absolute terms we are talking about a substantial amount of exchange. But for Isett that does not suffice to call Manchuria’s economy ? and for that matter the economy of China Proper ? a real Smithian market economy or to claim it would have known real Smithian growth. Firstly, this is because for him commercialization is a matter of relative and not of absolute amounts and his analysis of the main trade of Manchuria, that in soy beans, has convinced him that, relatively speaking, market exchange was fairly small and much less relevant in Manchuria than in Britain. Even a superficial reading of existing literature suffices to show that China Proper too was far less commercialized than Britain.

Secondly, however, quintessential to withholding the adjective ‘Smithian’ is the fact that Manchuria’s agricultural producers did not depend on the market. They were not forced to maximize their price-cost ratios and could ‘afford’ to think in terms of risk aversion. Manchurian peasants did not, to loosely paraphrase Smith, need to continually exert themselves to find out the most advantageous employment for what capital or labor they could command. The reason is simple: they were not, or at least not completely, deprived of means of subsistence. It therefore, according to Isett, need not surprise us that before long in Manchuria, as in most of China Proper, a process of ‘involution’ set in, with labor inputs by households increasing and the productivity of their labor decreasing.

Such a ‘peasant’ strategy of intensifying production as a rule is associated with small farms. In Manchuria, however, at least for Chinese circumstances, plots continued to be fairly big. Again, the broader context has to be taken into account. In the footsteps of Philip Huang, Isett claims that opting for intensification was not just, and not even necessarily, a matter of the land to labor ratio. It also was a result of a specific rationality of the peasant and his household. Overall, peasants tend to not systematically regard extra input of household labor in terms of calculable extra costs. When, as was the case in Manchuria, there simply are no opportunities to earn income outside the household, they are even less likely to behave in a ‘calculating’ way. But that is not all. What according to Isett also played a role, is the fact that, in Manchuria as well as in China, there was no primogeniture. This tended to diminish the size of the existing farms and, with state support, actually precluded the formation of big estates.

In the end, Manchurian peasants were integrated into the market under conditions that facilitated merchant extraction of their surplus instead of promoting ways of increasing their labor productivity. Capital costs were too high for the peasants. Direct investment in agriculture by people with capital was very scarce. The return on their capital was rather unsafe. It was easier to earn money by providing loans to peasants. In contrast to the tiny group of well-informed ‘monopsonistic’ merchants, peasants lacked sufficient knowledge and information to make the most of market conditions. Merchants were increasingly used by government to provide all kinds of services. In return they received significant powers over the market, which further weakened the position of the small producer and made the entire setting in which he operated even less ‘Smithian.’

Having read Isett’s book, no one can doubt that in Manchuria, as in China Proper, the elimination of the subsistence peasant ? which Marxist and ‘Marxisant’ historians like Isett and Brenner tend to regard as conditio sine qua non for the emergence of modern, full-blown capitalism ? did not take place. Britain, where the peasantry no longer existed as a major social class, developed in a completely different direction. Just think of its commercial farms whose survival as productive units depended on their success on the market; its massive proletarianization; the very substantial increase of labor productivity in the agricultural sector; the relative decrease of the number of people working in it; and the big increase in specialization. According to Isett, Smithian mercantile capitalism in Britain ‘worked': at the end of the eighteenth century the country still was not even near a Malthusian crisis.

Let us come to a general evaluation and start on the positive notes. Isett is quite explicit, not to say somewhat repetitive, about his goals and results. His description and analysis of developments in Manchuria are detailed, clear and convincing. He clearly is keener on confirming his and Brenner’s points of view than on falsifying them. Reading this book, one would not suspect that ‘the Brenner thesis’ has engendered a fierce ‘Brenner debate.’ All this, however, does not detract from the fact that he clearly shows the existence of major differences between the relations of production and exchange in Britain and in China and offers a sensible explanation for those differences. His claim that the actual development of an economy along Smithian lines requires a very specific and persistent kind of behavior, that of the homo oeconomicus of (neo) classical economics, certainly is to the point. In all these respects Isett’s book simply is a good book.

But Isett clearly wants more in his book: he wants to engage the ‘California School.’ I cannot help thinking, however, that in a way he is fighting a bit of straw man. Much hinges on the concept ‘Smithian growth’ and how it is interpreted. The Californians use the term ‘Smithian’ in a much less strict sense than he does. For them, so it seems, the term refers to any situation where legally free people engage in substantial market exchange in conditions of (fairly) free and fair competition. In the specific context they are discussing, i.e. the organic economies of the pre-industrial world, they add the very important caveat that this market exchange as such, without technological breakthroughs and without a new energy-regime, can only lead to finite growth.

In both Britain and China market exchange between legally free people was the rule and in both this exchange was substantial, though relatively speaking much smaller in China than in Britain. When it comes to the kind of competition, the term Smithian becomes much more problematic … in particular for the British case! Let us only refer to the role of the state. After all the first word in the title of Isett’s book is ‘state.’ In the part of book dealing with migration policies and property rights in Manchuria that role is analyzed in detail. But considering the fact that Isett is so keen on comparing Smithian Britain and Malthusian China, opportunities are missed here. When one takes on board the role of the state, the use of the term ‘Smithian,’ by Isett as well as by members of the Californian School, is highly problematic for China and simply wrong for Britain.

All the talk about Britain’s Smithian growth not-withstanding, Britain’s government policies were fiercely mercantilist. Government interference in the market, in particular but not only in sectors of the economy that were relevant to foreign trade, was the rule rather than the exception. Even in agriculture, the sector that Isett focuses upon, there was tampering with the market, e.g. when it comes to the rules of strict settlement and entail. Britain at the time was a fiscal-military, highly interventionist state. The differences with China, where government policies can best be described as ‘agrarian-paternalist,’ were enormous, as for example shows in the fact that China’s government did hardly anything before 1862 to exploit the huge economic potential of Manchuria. But neither of the two governments can be described as a principled defender of the kind of ‘laissez faire’ that Adam Smith pleads for.

The California School focuses on (certain parts of) China Proper. The empirical research of Isett’s book deals with Manchuria. That also at least gives the impression Isett has a strange way of engaging with it. Is not all the information on Manchuria in that respect something of a detour? Personally I found the permanent switching from Manchuria to China and vice versa not always convincing and not always helpful. On top of that and finally, the ‘Californians’ focus on the ‘Great Divergence’ ? that is, the emergence of modern economic growth. In that respect Isett ought to have been more specific about the exact impact of the differences he has found. It would have been helpful had he distinguished between development, growth, and modern economic growth.

For Isett Smithian dynamics mean development and growth without any further specification. As such it is not difficult to imagine that a Smithian economy has more ‘potential’ than a Malthusian one. I think that nevertheless two comments are in order here. The first one is that, compared to Isett, Smith himself, with good reason, was much more of a pessimist and much more ‘Malthusian,’ as shows in his various references to the ‘stationary state’ of highly developed economies. Smithian development and growth, even in Isett’s definition, do have structural limits. In the long run they will inevitably peter out and hit a ceiling, as long as one is dealing with an organic economy. Both pre-industrial China-Manchuria and Britain were organic economies and both in that sense were ‘Malthusian.’ In that respect the Californians are right.

My second comment would be that in being so insistent that China’s economy was not ‘Smithian,’ it would have been natural for Isett to inquire – Consumption being the sole end of production, to put it in Smith’s own words ? whether that meant that China was poorer. This question is not extensively addressed, but everything in Isett’s texts suggests the answer must be yes. Neither is the question addressed of the connection between Smithian dynamics and so-called modern economic growth, i.e. the sustained and substantial increase, in real terms, of per capita income that is regarded as the product of the Industrial Revolution. Interestingly enough, Smith thought such growth to be impossible and in any case had no clue that an ‘Industrial Revolution’ was about to fundamentally change Britain’s economy. He, and most present-day economic historians, clearly would not claim such a revolution simply evolves out of commercialization. Isett is too optimist when he writes (on page 286) that England was already breaking free of Malthusian constraints in the early modern era. He may be right in claiming against the Californians that eighteenth-century Britain was not (yet) in a Malthusian cul-the-sac. But that does not imply that Britain had got rid of Malthus: it only had managed to keep him at some distance. Until industrialization its economy continued to operate according to a ‘Malthusian,’ organic logic.

The challenge ahead for Isett and other historians who are interested in the Great Divergence and who think its explanation resides in Smithian dynamics, is to look for the exact mechanisms by which these dynamics could have brought about a transition from a pre-industrial to an industrial economy. This is a major challenge, as that transition is not smooth or natural as Isett seems to suggest, while knowing that, for example, it did not occur in the Dutch Republic, nor a matter of sheer ‘luck’ as Californians claim. Isett has proven to be very qualified to take up that challenge.

Peer Vries is professor of global economic history, in particular for the early modern era, at the University of Vienna. Apart from various articles dealing with global economic history in that era, he published Via Peking back to Manchester: Britain, the Industrial Revolution and China (Leiden 2003). In the spring of 2008 his A World of Surprising Differences: State and Economy in Early Modern Western Europe and China will appear on the market. He is one of the editors of the Journal of Global History and one of the founders of the Global Economic History Network

Subject(s):Markets and Institutions
Geographic Area(s):Asia
Time Period(s):19th Century

Globalization and the Poor Periphery before 1950

Author(s):Williamson, Jeffrey G.
Reviewer(s):Pamuk, Sevket

Published by EH.NET (June 2007)

Jeffrey G. Williamson, Globalization and the Poor Periphery before 1950. Cambridge, MA: MIT Press, 2006. xii + 189 pp. $28 (cloth), ISBN: 0-262-23250-2.

Reviewed for EH.NET by Sevket Pamuk, Department of Economics, Bogazi?i University.

In the last decade Jeffrey Williamson (Harvard University) has been studying the history of globalization and drawing some important lessons for the current era. This volume can be seen as another project belonging to that broader agenda. It is a revision of the Ohlin lectures he gave at the Stockholm School of Economics in 2004 based on a series of studies undertaken with different collaborators. Williamson examines the impact of globalization on the Third World in two sub-periods, rapid market integration and globalization from 1820 until 1914 and the emergence of inward-looking policies and economies from 1914 until World War II..

A large part of the story Williamson tells so masterfully is presented in terms of the analysis of price changes caused by the industrial and transport revolutions. Williamson pursues the global trends and their implications for growth and distribution in the periphery with some of the best examples of analysis using the economic historian’s toolbox. He is always theoretically well informed and brings in a wealth of new evidence, often creating new series, new data bases as he goes along.

The book begins with an overview of the impact of the transport revolution. Williamson emphasizes that even though the term “global economy” is often used for the earlier period, prices had not converged in the world markets between 1492 and 1820. In contrast, the transport revolution of the nineteenth century created commodity price convergence between all world markets and facilitated the rapid expansion of the trade between the core and the periphery. The result of rapid productivity increases in manufacturing in the core and the transport revolution was sharp improvements of the terms of trade for the periphery which Williamson documents in Chapters 3 and 6 better than anyone else to date.

For Williamson the relative price changes also hold the key to understanding changes in income distribution in the periphery during this period. Through a series of regressions based on the Heckscher-Ohlin hypothesis, he shows in Chapter 4 that rapid expansion in trade and the convergence of relative factor prices benefited the abundant factor, raising the wage-rental ratio in labor-abundant and land-scarce countries and lowering it in the land-abundant and labor-scarce countries of the periphery during the century until World War I.

In Chapter 5 Williamson emphasizes that the consequences of improving terms of trade for the periphery were not all positive. Improving terms of trade encouraged the shift towards export-oriented agriculture and accelerated the decline of manufacturing activities or de-industrialization. For countries whose terms of trade improved more strongly, de-industrialization was especially strong, as was the case in India. Technological improvements and productivity increases in agriculture remained weak, however. In fact, technological advances and human capital accumulation occurred mostly in the core during this period. As a result, rates of growth of per capita incomes in the periphery lagged far behind those of the center, substantially increasing the disparities in income around the globe until after World War II.

These global trends were reversed after 1914, however. The revolution in transport slowed down, demand for primary products fell and the terms of trade turned sharply against the primary producers of the periphery. What Prebisch, Singer and many others observed after World War II as a secular trend was in fact the second leg of what Williamson calls the boom-and-bust cycle of global trade and relative prices.

Rising disparities in incomes between the core and the periphery and the reversal of the terms of trade after World War I thus shifted the focus to the glaring asymmetry in the benefits from globalization and intensified the backlash against it. Williamson shows in Chapter 7 that tariffs in the periphery, especially in the politically independent countries of the periphery, rose sharply in the interwar years signaling the beginning of the shift towards ISI policies. He argues, however, that the most important single reason for the rising tariffs in the periphery was strategic, a response to the same trend in the core countries.

At the end of the volume, Williamson asks whether the anti-global backlash of the interwar period can be repeated during the current era of globalization. Once again, his answer remains close to the Heckscher-Ohlin-based political economy framework that he employs so fruitfully throughout the volume. In the first era of globalization, he argues, trade and politics were dominated by immobile, sector-specific factors such as land and unskilled labor. In contrast, labor is a lot more mobile between the manufacturing sectors today and any global backlash is unlikely to be equally strong, he insists.

It may be worth pursing the theme of labor mobility further. In an earlier study undertaken with O’Rourke and Hatton, Williamson had shown that a large part of the wage convergence involving the two sides of the Atlantic during the half century before World War I was due to migration. Labor mobility is mostly absent in this book probably because it was not as important for the poor periphery, but I wonder whether it should have been included for the sake of the contrast. After all, the degree of labor mobility is one big difference between the last century and the current era of globalizaton. Labor may be more mobile between sectors within a country but international migration is mostly illegal today. With greater international mobility of labor, the benefits from globalization in the present era would have been much more evenly distributed and the potential of political opposition to globalization probably much less significant.

Perhaps the key questions that the volume leaves with the reader are why technological progress and human capital deepening rates remained so different between the core and the periphery, and ultimately, why the benefits were so unevenly distributed during the first century of globalization. Were these asymmetries due to the inherent nature of agriculture vs. industry or should we (also) look elsewhere for the answer? For example, how important was the role of institutional differences between the core and the periphery in this outcome? Williamson does not offer answers but he is well aware of the significance of the questions he is raising not only for the last era of globalization but also for the present one.

This highly original volume by a leading economic historian provides an excellent analysis of global trends and the impact of globalization on the periphery until 1950. The questions it raises can provide an attractive research agenda in years to come. It is strongly recommended reading for economic historians and can be easily used as a supplementary text in more advanced courses.

Sevket Pamuk is Professor of Economics and Economic History at Bogazi?i (Bosphorus) University in Istanbul. He is the author of A Monetary History of the Ottoman Empire (Cambridge University Press, 2000, also reviewed at this website). Recently, he has been working on economic growth in southeastern Europe and the Middle East since 1800.

Subject(s):Transport and Distribution, Energy, and Other Services
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: Pre WWII

Global Migration and the World Economy: Two Centuries of Policy and Performance

Author(s):Hatton, Timothy J.
Williamson, Jeffrey G.
Reviewer(s):Keeling, Drew

Published by EH.NET (June 2007)

Timothy J. Hatton and Jeffrey G. Williamson, Global Migration and the World Economy: Two Centuries of Policy and Performance. Cambridge, MA: MIT Press, 2006. xi + 471 pp. $50 (cloth), ISBN: 0-262-08342-6.

Reviewed for EH.NET by Drew Keeling, Department of History, University of Zurich.

For decades, scholars of modern cross-border migration and its history have noted the desirability of broad comparative perspectives, as frameworks for more numerous studies of particular locales and ethnicities. In recent years, economists have led development of a “big picture” approach to the history of international migration, and Jeffrey Williamson and Timothy Hatton have been at the forefront of those economists.

Global Migration and the World Economy, the latest and most exhaustive joint study of this duo, builds on their prior work together and independently, but also breaks important new ground. For instance, most of this new book is not duplicated either in their Age of Mass Migration (1998) or in Williamson and Kevin O’Rourke’s collaboration, Globalization and History (1999).

The book is divided into four sections by time period: the nineteenth century rise of global migration, the early twentieth century fall, the late twentieth century “rise again,” and a final section examining contemporary migration trends and future alternatives. Ten of eighteen chapters concern the period since 1914, and among the book’s strengths are its many insightful comparisons between the post World War II period and the “first global century” that ended with World War I.

Using an impressive combination of original theory, statistics, and logic, and incorporating a broad array of findings from other scholars, the authors dissect the economic fundamentals underlying international mass migration. They deploy their multi-pronged analysis across the vicissitudes of the modern migratory age: through shifts in origin countries, the transformation from industry to services in destination country economies, the growing importance of asylum-seeking and illegal migration, and the emergence of policy regimes that have become more restrictive, more sophisticated, and more difficult to effectively administer. A solid historical perspective informs a thorough examination of contemporary issues: from the importance and limitations of immigration regulations in shaping the magnitudes and character of migration, to democratic disconnections between public opinion and public policies on migration, to the complex offsets and feedbacks between education and mobility, skilled and unskilled labor, and the “brain drain” and remittances. Global Migration and the World Economy is chock full of precise and salient questions, and takes at least a stab at most of them, although it is often a challenge for the reader to keep track of which among a shifting multitude of open issues is being addressed, or where it has already been addressed.

A tour de force summation of economic history literature on migration will make this an excellent reference source for future researchers. The coverage is particularly thorough on recent publications, through about 2004, which lends this volume an impressive “cutting edge” character, but also makes its conclusions tentative in a number of places. This suggests the possibility of an eventual second edition, which would also provide an opportunity to correct ambiguities in a few of the otherwise generally helpful “supply and demand” graphs or “box diagrams” and to redress overstatements such as “the labor market effect of immigration has always been the key focus in debate over immigration policy.” That remark, on page 289, is difficult to reconcile with the finding, on page 359, that “prejudice against those of a different race and culture is the most important influence on attitudes towards immigrants.”

The topical coverage is very wide, although less so than the title might suggest. Migration’s overlaps with international trade are treated more extensively, for instance, than its impacts on economic growth or its interactions with demographic and environmental factors. A more functionally descriptive title might be “the economic causes and consequences of global migration since 1815,” and in that important category this significant book has few peers, if any.

While an impressive work overall, some parts of Global Migration are problematic. The authors appropriately stress the importance of labor markets, which have been underappreciated in most of the migration historiography, but apply an incomplete corrective. They say little about labor demand, stressing labor supply instead, and attributing even more significance to factors exogenous to labor markets (such as travel costs, famines, wars, and government policies). At the core of their historical explanation for “what drove migration” is a model in which potential migrants in poorer countries are stuck in a “poverty trap” until they can find a way to “escape” it, with the help of higher wages, government subsidies, foreign remittances or lower ticket prices. Undoubtedly, relocation costs have always been a consideration in long-distance cross-border migration decisions, and were, in general, a more serious constraint the further back in time one looks, but the Hatton and Williamson model imputes to them a centrality beyond that established by their data. Rising wages across the nineteenth-century Atlantic basin lowered the real costs of travel, new travel technologies reduced travel times, the sources of Europe’s overseas emigrants shifted southward and eastward to regions more remote from New World destinations, and there was a long term secular shift towards lower average labor market “skills” amongst transatlantic migrants. All of this is consistent with a declining cost barrier to migration. But how big a role did that barrier play to begin with, at the outset of the “first global century,” e. g. circa 1830? The truth is, no one seems to really know for sure yet, including Hatton and Williamson. There is no model here explicitly assessing the relative importance of factors, including travel affordability, which distinguished stayers from leavers, there is no clear distinction between wanting to migrate and being able to migrate, and the cost data presented are quite incomplete.

The authors’ claim that “during the great transition from trickle to flood, it was the decline in steerage rates and in the time in passage that mattered most,” but there are at least two problems with this theory as they present it. Firstly, most nineteenth century overseas migrants left from Europe, most of those European emigrants moved to the United States, and the all-time peak in U.S. immigration relative to population was in the early 1850s, a time when very few migrants yet reached America on the steamships which cut oceanic travel times by two thirds or more. Steamships did not take more steerage passengers to the U.S. than sailing ships until 1865. Secondly, the supporting passage cost data presented in Global Migration do not include most available sources of such figures, such as the fares compiled by Kristian Hvidt (1971) or Arnold Kludas (1986) showing an increase in North Atlantic transit fares after 1900 that coincides with an even sharper rise to the second highest all-time peak in the U.S. immigration rate.

Hatton and Williamson deal authoritatively with the expected net benefits of migration, but have little to say about how the variance and uncertainties of such net benefits also have been important to voluntary international migrants. Uncertainties and fears ? of mass amnesty, or of millions forced to live outside the law ? have played a role in recent U.S. immigration policy debates. Long-distance transnational migration itself has long and rightly been regarded as a great gamble. Smuggled migrants crossing Arizona’s deserts or the waters between Africa and Europe clearly confront substantial risks. Risk considerations have been convincingly suggested as contributing factors to past mass migration trends, such as the record high rate of Irish emigration in the early 1850s, for example, or the strong and persistent drop in German emigration after 1890. The causal role of pitfalls and anxieties, about leaving or staying or both, receive little attention in this book, however.

The discussion on pre-World War I economic “convergence” between immigrant-sending and immigrant-receiving countries is not entirely clear-cut. Williamson’s path-breaking international real wage comparison data set, gathered in the early 1990s and focused on 1870-1913, apparently still lacks coverage of two immigrant source countries which were major contributors to the massive migration “peak” of 1900-1913, Russia and Austria-Hungary. Many of the convergence examples actually cited, moreover, are comparisons within Europe rather than between Europe and the New World. This important distinction is often blurred.

The authors nonetheless do make a persuasive case (for the nineteenth century and today) that chain migration, demographic transitions, travel costs relative to source incomes, and government policies are more significant than wage gaps in “driving” migration, but that international labor market migration, if sufficiently massive, has generally reduced global economic inequality between poor and rich countries. This migration-induced convergence has tended to come at the cost of rising inequality within richer destination countries, however. Subject to some notable distinctions and qualifications, the authors also reach similar conclusions regarding “south-to-south” migration, e.g. movement between less-developed countries.

The chapter on the early twentieth century “backlash” against immigration suffers from a conflation of attitudes and intentions (on the one hand) with effective policies (on the other). Based on a model quantifying “policy stance” rather than “policy impact,” Global Migration plausibly indicates that “labor market fundamentals,” e.g. the negative effect of immigration on wages of the native-born were, after all, more important than xenophobia or racism in producing a gradual shift in favor of restricting European migration to the New World by the early twentieth century. Contrary to the assertions in this chapter, however, (although not the immediately following chapter on the impacts of the” backlash”) the decade 1915-24 saw dramatic changes in the policies actually adopted in the U.S., the destination of most transatlantic migrants in the century before World War I.

On the eve of that war, gradually increasing exclusion of limited categories of arriving Europeans had raised the debarment rate at U.S. entry ports to a still near negligible 2%. During the war, in contrast, U.S. immigration dropped by over 75%. The 1920s quota laws which soon followed were explicitly and successfully designed to eliminate most of the influx from Southern and Eastern Europe which had accounted for a large majority of the 15 million American immigrants of 1894-1914. As the authors rightly observe, American immigration quotas were largely redundant during the Great Depression and World War II, but nonetheless did have major restrictive effects in the 1920s and 1950s. The shifting constellations of political party strategies and interest groups which enabled significant fulfillment of growing popular sentiment against immigration to the U.S. by the 1920s, but not before, was chronicled in John Higham’s Strangers in the Land half a century ago. It remains a useful study still today, but is not mentioned in Global Migration. The counterfactual question of whether ? absent the world wars, the 1930s depression, and the U.S. quotas ? immigration from Europe might have dwindled anyway after 1920, is one of many examples of provocative and interesting issues raised by the book, but not resolved, due to unavoidable space limitations.

Hatton and Williamson do not, however, duck complicated and controversial concerns about labor migration negatively affecting native employment and wage levels. In several different historical contexts, they unravel the often indirect ways this occurs (such as inflows of foreigners helping to stimulate regional relocations of natives). Nonetheless, the authors also make a convincing case that the net overall effect of cross-border migration has tended to be economically beneficial: not just for migrants but also for the countries they move out of and into.

The potential receptivity of contemporary policymakers and opinion-shapers to these judicious conclusions is another matter. The authors’ stated desire to reach that set of audiences might have been more effectively served had there been a bit more attention devoted to how labor migrants import language, culture, ideas, and so forth, along with their job skills. Migrants come for work, but then often also become neighbors, taxpayers, users of public services, parents of school children, citizens and voters, and these developments, in turn, have economic impacts well beyond the fiscal impacts (which are treated authoritatively here). The cogent final section, on contemporary policy issues, has much to recommend it, but it is questionable how much of the preceding 340 pages policy formulators might read en route to it. Complex historical insights and practical politics do not mix easily in any case, however.

A more avoidable shortcoming is the relative absence of questions addressed by migration historians. This book is loaded with material casting doubt upon non-economic historians’ often implicit assumptions that narrow slices of the migration picture suffice to illuminate the whole. But, the argument for the big picture rather than the narrow case study is never quite engaged.

Scholarship from outside of economic history but addressing migration history broadly is also given little weight. One cannot expect a book of this scope to cover all bases, but not mentioning Markus Hansen, Philip Taylor or Daniel Tichenor, for example, somewhere in four hundred pages suggests a lost opportunity. Dirk Hoerder’s nine hundred page Cultures in Contact, published in 2002, has several references to Wallerstein, but none to Williamson, or Hatton. Global Migration and the World Economy talks at some length about Heckscher, but makes no mention of Hoerder. This divergence of History and Economics is undoubtedly yielding gains from specialization, but also implies unrealized potential gains from trade. A better appreciation of the inherently interdisciplinary and historical nature of this deeply personal and interpersonal, psychological, cultural, and even biological phenomenon would enrich models and analyses built around economic aggregates. A firmer and more nuanced understanding of migration’s economic fundamentals, and a greater awareness of their central role, would enhance historians’ investigations of international human relocation.

Historians should read Global Migration and the World Economy, because sooner or later, they are likely to be called upon to more directly confront some of the crucial issues it raises. An interconnected world of demographic challenges, resource limitations and increasing climate disruptions, for example, is going to be a world where cross-border mass migration will be about much more than ethnic identities, culturally diffusing diasporas, or even elegantly contingent narratives. Even if ? as Hatton and Williamson realistically conclude ? the historical record offers no “easy solutions to the world migration problems” of the near future, it seems a reasonably safe bet that coming global migration challenges, whatever else they do, will also stoke desires for geographically broad historical insights.

Notwithstanding its unevenness, and sometimes overstated conclusions, the sweep and incisive power of this book make it likely to remain a point of reference for years to come. It will probably receive more attention within the fields of economics and economic history than outside of them, but the long run prospects for interdisciplinary “convergence” on the causes and effects of global migration are improved by this ambitious and far-reaching scholarly contribution.

Drew Keeling received his Ph.D. in History from the University of California, Berkeley in 2005, and is now an instructor in the History Department at the University of Zurich. His dissertation, “The Business of Transatlantic Migration between Europe and the USA, 1900-1914″ was awarded the 2005 Gerschenkron Prize of the Economic History Association. Two related publications are forthcoming later this year: “Costs, Risks, and Migration Networks between Europe and the United States, 1900-1914,” in Research in Maritime History, and “Transport Capacity Management and Transatlantic Migration, 1900-1914,” in Research in Economic History.

Subject(s):Living Standards, Anthropometric History, Economic Anthropology
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII