is owned and operated by the Economic History Association
with the support of other sponsoring organizations.

False Economy: A Surprising Economic History of the World.

Author(s):Beattie, Alan
Reviewer(s):Jones,, Eric

Published by EH.NET (August 2010)

Alan Beattie, False Economy: A Surprising Economic History of the World.? New York: Riverhead Books, 2010.? xii + 353 pp.? $16 (paperback), ISBN: 978-1-59448-444-5.

Reviewed for EH.NET by Eric Jones, LaTrobe University.


This is a work of haute vulgarization by the world trade editor of the Financial Times, where Alan Beattie writes about economics, globalization, and development.? He does here, too, though concentrating on the historical background to an extent that presumably would not appeal to the everyday newspaper reader.? The book is framed around a number of contrasts and puzzles, including why the performance of the United States exceeds that of Argentina and how Washington, D.C. outclasses ancient Rome.? It asks why Egypt imports half its staple food; why asparagus is imported from Peru; why oil and diamonds can be more trouble than they are worth; why Africa does not grow cocaine; why Islamic countries sometimes perform poorly; why Indonesia prospered under a corrupt ruler whereas Tanzania stalled under an honest one; and why many situations are path-dependent.

This is a wide range of topics treated half as development issues and half as supposed lessons from the past.? Sometimes the selection is obscure, as when the United States rather than Australia is contrasted with Argentina.? But most of the material will be known to economic historians and the economist?s take on the problems involved will also be familiar, though this may not be true for the general reader and Beattie does possess a facility for finding piquant facts with which to illustrate his points.? I did not know, for instance, that one of Sir Robert Peel?s descendants has been battling protectionism as a policy director of the British Food and Drink Federation, though with less success than his illustrious forebear.? Nor did I know that the Bretton Woods conference was held in that remote place merely to buy off an isolationist New Hampshire senator.

In themselves such amusements do not take us far.? The motors of history, as Beattie seems to conceive them (he is always more definite-sounding than definite), are the choices made by governments and individuals.? He is dismissive of material constraints.? This approach, perfectly arguable though it may be, leaves unresolved the phase transitions between stultified and expansionary episodes.? Beattie tends to cut the Gordian Knots and forge ahead.? To cite a single case, he asserts that the difference between Islamic and Christian merchants was that the latter were powerful enough to overturn inconvenient laws.? Moreover, they were happy to alter the religious justifications for their behavior.? This emphasis on cultural malleability is a recurrent theme, and although I am happy to agree, it does leave hanging the question of the Christian merchants? special access to power.? Beattie does not investigate this but moves straight on to pull another rabbit out of another hat in a manner that is a tantalizing feature of his style.

The work is most successful when the author turns to his metier, world trade.? He notes that protection typically surrounds declining industries, exposes many of the ironies and absurdities of agricultural protection, and explains the success of small group lobbying in standard Olsonian terms.? The chapter on trade is followed by one on supply chains.? This introduces the disruptive technology of the shipping container and the more recent way in which mobile telephones have reduced information asymmetries.? Here, material factors somewhat mysteriously make an appearance, as when we are told that Africa does not grow the coca it re-exports in the form of cocaine because its transport and logistics are too poor.?

Bearing in mind the author?s job, I was reminded of the instructions supposedly given to journalists on the FT?s sister publication, The Economist: Simplify, then exaggerate.? Beattie over-fulfils these norms, skipping blithely from one topic and one anecdote to the next and larding them in passing with dogmatic interpretations.? An unexpected aspect of the book is that it is written in a jokey, slangy style quite unlike the sobriety of leading English newspapers.? At times the enfant terrible in Beattie?s make-up does make one laugh — his case for letting the Panda go extinct is effrontery writ large — but mostly it grates.?

The book lacks footnotes and lists only a very limited number of sources.? Though the range of topics covered often is interesting, False Economy fails to persuade the reader of its seriousness of purpose.? This is surprising in a work which claims to be offering poor countries the lessons of economic history and it misses a distinct opportunity to widen the reference base of non-specialists.? What is to be done about the market distortions that continue to beset us?? Beattie offers a paragraph of prescriptions that seems to me utterly empty, summed up in the stellar sentence, ?be aware when your country is getting stuck on the wrong path and be alert for opportunities to shift it.?? Will do.


Eric Jones, Emeritus Professor, La Trobe University, and former Professorial Fellow, Melbourne Business School, is the author of The European Miracle (Cambridge University Press, third edition 2003) and Locating the Industrial Revolution: Inducement and Response (World Scientific, 2010).

Copyright (c) 2010 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (August 2010). All EH.Net reviews are archived at

Subject(s):International and Domestic Trade and Relations
Markets and Institutions
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative
19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

The Political Economy of the Dutch Republic

Author(s):Gelderblom, Oscar
Reviewer(s):Coffman, D’Maris

Published by EH.NET (April 2010)

Oscar Gelderblom, editor, The Political Economy of the Dutch Republic. Aldershot, UK: Ashgate, 2009. xv + 329 pp. $125 (cloth), ISBN: 978-0-7546-6159-7.

Reviewed for EH.NET by D?Maris Coffman, Centre for Financial History, Cambridge University.

This long-awaited volume should be a starting point for anyone who requires a grounding in the fiscal history of the Dutch Republic and the so-called ?Dutch model? of public finance as understood in the Anglophone literature. Yet despite the unassuming title, this collection of essays should be seen as much more than just required reading for fiscal historians of early modern Europe. Gelderblom?s placement of political economy ? defined by Adam Smith as a ?branch of the science of a statesman or legislator … [that] proposes to enrich both the people and the sovereign? (p. 2) ? at the center of the project offers a compelling example of a ?new financial history? that integrates studies of fiscal and monetary history with contemporary economic thought, political culture, economic and social realities, and great power relations. The result is that rare collection of essays that delivers far more than it promises.

In keeping with most contemporary fiscal history, Gelderblom?s introduction uses North and Weingast?s (1989) model for Britain as a framework for considering the Dutch Republic?s fiscal and financial innovations. Yet he emphasizes the need to consider continuities with Burgundian-Habsburg practice, as well as the possibility that by the eighteenth century even the most impressive ?fiscal, financial and economic reforms [were] simply not sufficient in competition with larger powers? (p. 6). The chronological sweep of the work is as impressive as its methodological reach.

In the opening essay, Erik S. Reinert offers an original and refreshing discussion of contemporary economic thought, particularly as it bore on the way in which foreign observers analyzed the structural properties of the Dutch economy. Reinert?s observation that the ?context-specific? quality of ?mercantilism has some clear analytical advantages over neo-classical economics as a tool to understand the rise and fall of the Dutch Republic? is appealing given the failure of mainstream economics to anticipate, diagnose, much less remedy, our own current financial and economic crisis (p. 19). The mercantilists? recognition (by no means uncontested) that ?economic wealth was not a zero-sum game? (which Reinert ascribes to Giovani Botero) permitted a distinction between ?feudal rents? and ?manufacturing rents,? ?trading rents,? and ?raw-material based rents? (p. 24). Their analytical stance, recognizable in managerial economics today, was to ask how particular nations might emulate their more successful neighbors. Yet unlike Adam Smith, whose analysis of Dutch decline floundered at the level of abstraction, these authors were also concerned with ?England?s success in ?blowing the Dutch out of the waters?? (p. 35). In some sense, the remainder of this collection serves as an extended meditation on whether or not contemporaries had it right.

James Tracy?s chapter, entitled ?Holland?s New Fiscal Regime,? makes a penetrating point about contingency. Despite Holland?s success in developing funded long-term debt instruments in the middle of the sixteenth century, the province was forced to devolve fiscal responsibility onto the towns (whose burghers demanded that in return for access to lucrative excise revenues) and even resort to short-term borrowing to meet the demand for new military expenditure amidst the Dutch Revolt. As with mid-seventeenth century England, knowledge of, and success with, certain institutional practices was not sufficient to ensure their survival. Rebuilding Holland?s credit, as Tracy observes, was about more than sound institutions; it required the cooperation of local elites.

Wantje Fritschy?s chapter on fiscal efficiency in Holland takes up the story with the Union of Utrecht. This chapter, rich in empirical detail, will be valuable to specialist audiences. For the general reader, the most important conclusion is simply that those ?stylized facts? about the inefficiency of tax collection in the province do not bear up under close scrutiny. Fritschy argues that elites were convinced of ?the utility of the public goods paid for by taxation? (p. 82). Jan de Vries? essay on the municipal regulation of bread prices continues in a similar vein the collection?s exploration of institutional practices. The distinction between the fixed and variable costs of bread production led to a ?fully monetized allocation of costs? (p. 90). Since consumers who could afford wheat bread preferred it to rye, the authorities were able not only to back-shift the economic incidence of the excise onto producers of grain, but also to cross-subsidize the production of rye bread (p. 98-99). As a result, the Dutch Republic was the only fiscal regime in Europe to tax successfully a product as necessary as bread, that ?staff of life? (p. 114).

Marjolein ?t Hart turns her attention to the Dutch Republic?s relations with its creditors, which she puts in a comparative perspective with France and England. She finds that not only was the market for public bonds robust, mature and transparent, but also, and crucially, that there existed a high level of mutual trust between state and local levels (p. 141). Specialists will delight in her reconstruction of the family networks of the Amsterdam receivers, their role as ?semi-public banks? and the details of the various annuities. The general reader, however, will be able to see why the Dutch public loans enjoyed such a relatively low rate of interest.

Marteen Prak and Jan Luiten van Zanden?s intriguing essay on ?tax morale? and ?citizenship? takes up the ideological basis for Dutch taxation. For them, as for the others, the cardinal case was Holland. While their focus on citizenship seems, at times, a bit strained, the conclusion that compliance turned on both the quality of the public goods delivered and the stakeholder interest in ?community? is entirely convincing. By contrast, Bas van Bavel?s discussion of rural development and landowning patterns in Holland dates the structural changes to the sixteenth century. Consolidations of tenancy and the growth of burgher landownership encouraged capital investment in infrastructure (via the water management boards) and the development of rural capitalism (p. 193). As Milja van Tielhof argues in the succeeding essay, the financing of water management did not always involve a proportional division of costs (p. 220). By the eighteenth-century, the morgengeld system appeared to be collapsing under its own weight.

Gelderblom?s essay on long-distance trade shifts attention away from the internal dynamics of the Dutch economy to the international arena. His tight comparison of the Dutch Republic and England (1550-1650) is helpful. From a fiscal standpoint, the Dutch benefited from more efficient species of indirection taxation, which funded the sale of annuities and bonds on open markets. In this account, the trade in VOC shares plays an important but secondary role. Yet for the author, the story is largely one of changing factor costs and with them shifting comparative advantages. Once England began to emulate the Dutch Republic in earnest, the outcome could hardly be doubted.

Richard Yntema?s exploration of the interprovincial Dutch beer trade turns on provincial trade policies. Although the Union of Utrecht established free trade, by the 1620s and 1630s the principle had come under pressure from powerful provincial brewing interests. The resulting ?tariff wars? had all but killed off interprovincial trade in beer by the early eighteenth century (p. 288). For the general reader, Yntema?s case study suggests an exception to the conventional wisdom that the Dutch Republic enjoyed a well-integrated economy.

In the final essay, Thomas Poell recounts the last two decades of the Dutch Republic. As elsewhere in Europe, Dutch revolutionaries found it difficult to dismantle the corporate structure of the state (p. 319). Poell?s narrative of the contest between unitarists and federalists sheds considerable light on the challenges, as well as the nature of local allegiances with the French. In what seemed little more than a throwaway remark at the very end, Poell compares the French failure in the Netherlands with their failures in Switzerland and Northern Italy. Yet in many ways, the similarities run deep.

The very institutional innovations, which coupled with the flexibility of state practices and the ideological commitments of elites to their local communities made it possible for the Dutch Republic to exploit her comparative advantages so successfully in the sixteenth and seventeenth centuries, in turn, made the Netherlands less competitive, as greater powers came on stream in the late seventeenth and eighteenth centuries. Institutional reforms may not have staved off ?Dutch decline.? Both the general reader and the specialist alike will come away from this collection of essays with a much better understanding of why.

D?Maris Coffman is the Mary Bateson Research Fellow at Newnham College of Cambridge University. There she directs the Centre for Financial History, which was founded in July 2009 with a generous grant from Winton Charitable Trusts. At Cambridge, she supervises students in economic and social history and lectures in financial history for the MPhil course. Email:

Subject(s):Government, Law and Regulation, Public Finance
Geographic Area(s):Europe
Time Period(s):17th Century

The Rise and Fall of the American System: Nationalism and the Development of the American Economy, 1800-1837

Author(s):Ha, Songho
Reviewer(s):Wahl, Jenny

Published by EH.NET (March 2010)

Songho Ha, The Rise and Fall of the American System: Nationalism and the Development of the American Economy, 1800-1837. London: Pickering and Chatto, 2009. xiii + 184 pp. $99 (hardcover), ISBN: 978-1-85196-999-9.

Reviewed for EH.NET by Jenny Wahl, Department of Economics, Carleton College.

This slim volume is part of a series on American financial history edited by Robert Wright. Although little new information or analysis appears in the monograph (a revision of the author?s dissertation), it is a compact summary of the concept and history of the American System that gathers together useful statistics on roll-call votes, obligations of the Second Bank of the United States, white and slave populations, federal expenditures for internal improvements, and land sales during the early Republic and antebellum periods. The thrust of the book is fairly conventional, although Ha does draw attention to one alleged feature of the American System ? its emphasis on cultural improvement ? more than most commentators. But he de-emphasizes what I consider a crucial factor that led away from the American System in the 1830s ? the underlying sectional tensions over slavery.

The book begins by exploring the phrase that gives rise to the title. Conceived by Alexander Hamilton and midwifed by Henry Clay (and, to a lesser extent, John Quincy Adams), the ?American System? began as a vision of a politically united, self-sustaining nation independent of Europe and especially England. The idea expanded over time to include specific programs designed to achieve this vision, such as high tariffs, federal spending on internal improvements, a national bank, and methods to disperse public lands.

The remainder of the book follows a historical timeline, touching upon Jeffersonian policies, the Missouri compromise, various tariff acts, controversies over the First and Second Banks of the United States, the nullification crisis, the Second Great Awakening, the financial panics of 1819 and 1837, and the Maysville Veto. Ha highlights one fascinating historical about-face: John C. Calhoun, father of the nullification doctrine and rabid states?-rights advocate by the 1830s, had earlier staunchly supported a national bank, urged federal spending on transportation to bind the union together more tightly, and aggressively pushed for high protective tariffs.

Arguably, the new spin in the book is its underscoring of the cultural dimension of the American System. Ha claims that John Adams supported education but only had time and energy during his administration to create the Library of Congress. Likewise, Jefferson, Madison, and Monroe apparently advocated establishing a national university but occupied themselves with other endeavors while in office. John Quincy Adams argued strenuously for ?social improvement,? although Henry Clay advised him that a national university was a hopeless proposition. The American System may have given lip service to the nation?s cultural betterment, but Ha?s book does not leave me convinced that this was really a key element of the program.

Ha, currently an assistant professor of American History at the University of Alaska-Anchorage, is clearly a champion of the American System and its supporters. At times, he seems almost starry-eyed: he states that the ?supporters of the American System … tried to push what they believed was good for the union, rather than what was popular with their constituents? (p. 93); they ?were forward-looking and progressive people [whose] main issue … was how to improve the United States? (p. 132). He characterizes the main issue for Jacksonians, on other hand, as ?how to stop the federal government from meddling in their lives and economics? (p. 132). The underlying subtext for the rival factions, however, was slavery. Although Ha acknowledges that slavery and the cotton economy tended to isolate the South, I think he could have gone farther with this theme ? states?-rights advocates, at bottom, worried most about federal ?meddling? with the peculiar institution.

What is more, Ha fails to grapple with the thorny question of whether the American System at its heart was necessarily ?good for the union.? He includes a striking quote from a speech by John Tyler, who argued that protective duties would actually operate as a tax on farmers by increasing the prices of necessities (p. 66). Yet Ha does not explore Tyler?s prescient statement. Tariffs impede free trade, impair the workings of comparative advantage, and indeed raise prices for domestic consumers, ceteris paribus. The main beneficiaries of tariffs are import-competing domestic producers (and, to some extent, the Treasury). Whether this result was truly ?good for the union? is not adequately examined in Ha?s book.

Ha?s epilogue claims that the American System died during Jackson?s reign but rose again, Lazarus-like, during the Civil War. He lists the Morrill Tariff, the National Bank Act, the Pacific Railroad Act, and the Morrill Land Grant Act as evidence, saying that ?George Washington, John Adams, Thomas Jefferson, James Madison, James Monroe, Henry Clay, and John Quincy Adams would have been pleased to know that their dream of national improvement was on its way towards implementation, despite the tumults of the Civil War? (p. 133). This seems a slight mischaracterization ? federalists and anti-federalists, like the poor, were and are always with us. The Whigs picked up the nationalist banner in Jackson?s time and maintained a strong political presence until the formation of the Republican Party. And the recent Tea Party movement and antics by Texas Governor Rick Perry (who fervently believes his state still has the right to secede) suggest that opponents of the American System are certainly alive and kicking as well.

Jenny Wahl?s recent publications include ?Give Lincoln Credit: How Paying for the Civil War Transformed the U.S. Financial System,? Albany Government Law Review (forthcoming June 2010) and ?Blacks, Whites, and Brown: Effects on the Earnings of Men and Their Sons,? Journal of African American Studies (2009) (with Nathan Grawe). She can be reached at

Subject(s):Transport and Distribution, Energy, and Other Services
Geographic Area(s):North America
Time Period(s):19th Century

After Adam Smith: A Century of Transformation in Politics and Political Economy

Author(s):Milgate, Murray
Stimson, Shannon C.
Reviewer(s):Frey, Donald E.

Published by EH.NET (January 2010)

Murray Milgate and Shannon C. Stimson, After Adam Smith: A Century of Transformation in Politics and Political Economy. Princeton, NJ: Princeton University Press, 2009. x + 309 pp. $35 (cloth), ISBN: 978-0-691-14037-7.

Reviewed for EH.NET by Donald E. Frey, Department of Economics, Wake Forest University.

The ambitious goal of Milgate and Stimson is to demonstrate how classical political economy “sought to influence and alter the understanding of politics and political life,” especially in Britain (p. 1). They produce a very careful and detailed analysis of early economists’ ideas on issues shaping the modern concept of the political order, in the process displaying a rich array of competing ideas. Milgate and Stimson cast a wide net, catching in it thinkers around the edges of economics, especially the Utilitarian philosophers and a variety of other reformers. However, discussion of continental Europeans and Americans is sparse. Milgate and Stimson use Adam Smith as a benchmark for the developments they discuss, although later ideas often deviated significantly from Smith’s due to his eighteenth-century outlook. Indeed, Milgate and Simson are very systematic in exposing how various later writers, who sometimes cloaked their ideas in Smith’s authority, were simply attributing to Smith what wasn’t unambiguously there. Consider the authors’ approach on a few topics they examine.

A major early chapter addresses the uneasy relationship between the concept of civil society and economic society. Prior to Smith, feudal thinkers and mercantilists had interpreted both civil and economic developments through the lens of state, or government, actions. Their premise was that society operated only with intentional control from the top. However, if society had its own inner, independent dynamic, then any state role would be greatly diminished; further, any explicit public morality, or virtues, would become irrelevant.

It was precisely this latter view ? that society has its own inner dynamic ? that the political economists advocated, thereby revolutionizing the concept of civil society. For Smith, the market system, at the center of society, diminished the significance of “both the state and the direct influence of statesmen” (p. 48). In addition, public virtues were displaced; for Smith, morals reflected the highly particular and individual relationships that people developed with those closest to themselves. Yet, according to Milgate and Stimson, Smith did not go to the extreme in which “the concept of the self-regulating market … came to play the more politically constraining role” that eventually emerged with modern economics (p. 50). David Ricardo added a new element to the notion of the self-guiding market system, arguing that economic classes, not individuals, were the relevant locus of economic and social action. This sharply contradicted the harmonious individualism of many other early economists’ theories. Milgate and Stimson consistently demonstrate that classical economics opened the door to multiple interpretations of civil society.

This richness of possibilities, however, was killed by the ultimate arrival of neoclassical economics. Milgate and Stimson put it this way: “Economics moved from thinking of civil society composed of social classes, professional groups, corporate entities, trade unions, and cooperative societies, to a civil society of isolated individual utility maximizers” (p. 56; emphasis added). They quote Ronald Meek approvingly: “the new starting point became, not the socioeconomic relations between men as producers, but the psychological relation between men and finished goods” (p. 58). In short, civil society was reduced to a neoclassical oxymoron as the isolated castaway Robinson Crusoe became their favored model of what was worth understanding about society! Milgate and Stimson obviously find that true political economy died with the ascendancy of neoclassical economics. They are not any kinder to the various theories of society (e.g., public choice) that have lately emerged from the neoclassical perspective. Their conclusion on the neoclassical vision: no social values exist beyond efficiency, no moral or social obligation remains, only arbitrary individual preferences matter, and anti-institutionalism saturates the literature (p. 59). For Milgate and Stimson, classical economics is always seen in tension with neoclassical theory.

Another significant political issue (covered in two chapters) was extension of the franchise in early nineteenth-century Britain. Milgate and Stimson give major attention to James Mill and David Ricardo, who each favored widening the electorate, but for very different reasons. Because everyone’s individual utility mattered to Mill, government by the rich was intolerable from a Utilitarian perspective. Yet, equally intolerable would be a vote for the ignorant, or those with no stake in the community, thus leaving out the large poor and working classes. Mill, however, favored the vote for the (reliable and safe) middle classes. Before being enfranchised, workers and the poor would need to be educated to know their own true interests, which Mill blandly equated with those of the middle class. They should also acquire the middle-class propensity to accumulate, as property presumably was the most meaningful stake in society that one could have. Mill favored enfranchisement provided it created a bourgeois republic.

Ricardo, on the other hand, did not believe that workers needed conversion to a middle-class mentality, for workers correctly assessed their interests, which also tended to coincide with those of the larger community (p. 176). As defined by Ricardo, the interest of the nation was to increase its net product, and this depended on accumulation (from profits, not middle-class savings). In turn, this required ending the diversion of income to land rents, luxuries, and even general government, an agenda Ricardo believed the working class would accept as being in their interest. In short, Ricardo meshed his case for voting rights to his understanding of economics. Milgate and Stimson drop the subject at this point, leaving implicit some key questions: for example, whether the enfranchised workers would really have an affinity with Ricardo’s essentially capitalist agenda. Implicitly, the authors also expose how tentative and limited was the reasoning that passed for significant reform in the classical era. The very richness of this book’s scholarship sometimes leads the authors away from their main thread. For example, the entire chapter on nineteenth-century utopias and stationary states seemed to have little relationship to political philosophy, politics or statecraft. In general the early political economists (in line with Smith) disparaged reformers as “utopian” if reform ventured in directions that would change the status quo too much. For their part, the political economists predicted the coming of a stagnant steady-state future. The relation of this to the interface of economics and politics is not clear to this reader. However, an exception occurred when colonies, and government policies toward colonies, were debated as an antidote to the steady state. Provocatively, this chapter closes with an interpretation of neoclassical economics as the victory of a sort of utopianism, in which competitive efficiency defines the best world (subject to constraints imposed by the status quo, which lie outside economics of course).

As noted, the authors compare classical economics as much to neoclassical economics (at its endpoint) as to Adam Smith at the starting point. Ironically, according to the authors, neoclassical economics reflected Utilitarian philosophy more than the actual classical economics. Neoclassical economics reduced a variety of classical questions by considering them in merely two dimensions ? individualistic utility and competitive efficiency. This, argue the authors, destroyed the interplay of economics and politics by its narrow focus on the self-oriented individual. This judgment applies as well to more recent neoclassical developments such as public choice; the putative “citizens” populating public-choice “societies” are simply homo economicus of the neoclassical world. At the conclusion of the book the authors contrast Smith’s “tenuous, equivocal, and open-ended” views on the affirmative roles of government against the “quite otherwise” views of neoclassical economics (p. 267).

In short, this book provides a striking perspective on classical political economy. The reader will benefit from some prior familiarity with Smith, Malthus, Ricardo and J. S. Mill, along with the Utilitarians. Some digression from the main thread may be forgiven as it always explores interesting concepts. The book makes only rare references to American thinkers, some of whom could have added a dimension lacking among the British authors. Alexander Hamilton, for example, clearly possessed a philosophy of politics and government informed by economic ideas and pragmatic financial experience; and his outlook clearly differed from that of the major British figures. In addition, nineteenth-century American thinkers often provided a religious interpretation to their economic and political ideas, which could have provided a welcome counterpoint to the predominantly secular outlook of the British classical economists considered.

Donald Frey is author of America’s Economic Moralists: A History of Rival Ethics and Economics (Albany, NY: SUNY Press, 2009; paper 2010).

Subject(s):History of Economic Thought; Methodology
Geographic Area(s):Europe
Time Period(s):19th Century

The Political Economy of Argentina in the Twentieth Century

Author(s):Conde, Roberto Cortés C
Reviewer(s):Fritscher, André Martínez Fr

Published by EH.NET (July 2009)

Roberto Cort?s Conde, The Political Economy of Argentina in the Twentieth Century. New York: Cambridge University Press, 2009. xi + 388 pp. $85 (hardcover), ISBN: 978-0-521-88232-3.

Reviewed for EH.NET by Andr? Mart?nez Fritscher, Department of Economics, Boston University.

Most of the world’s wealthy nations have been so since the nineteenth century. However, while Argentina enjoyed standards of living similar to the most developed countries during the second half of the nineteenth century, this South American country has reversed its fortune and fallen behind over the course of the twentieth century. Currently Argentina has a GDP per capita closer to other Latin American countries than the group of the developed countries to which it belonged a century ago. In his new book Roberto Cort?s Conde, a professor of Economics at the University of San Andr?s, describes in detail the evolution of Argentina’s economy in the twentieth century. The exceptionality of the Argentinean experience has been a fertile ground on which to explore relevant questions within the literature of economic growth. Why was Argentina unable to grow in the twentieth century at the same pace as countries with similar economic characteristics and endowments, such as Australia and Canada? Is the very poor Argentinean economic performance explained by exogenous shocks or domestic policies? What was the institutional framework in which the economic policies were instituted? Cort?s Conde?s narrative addresses the last two questions in particular, arguing that domestic choices and a weak government explain Argentina’s economic fall.

The book is organized chronologically in six chapters; each covering a different phase of the Argentinean economy from 1880 to 1989. Chapter 1 addresses the period during which Argentina experienced the fastest growth rates around the world in the pre-World War I era (the GDP per capita growth rate was 6.6%, twice as high as the rates of many developed countries). The export of agricultural goods drove this impressive and sustained economic performance, as Argentina is endowed with extensive and very productive portions of land. The profitability of this sector attracted foreign capital for railroads and industries. Moreover, Argentina was host to millions of European immigrants, who were tempted by the high wages. Chapter 2 discusses the economic transformation that Argentina underwent from World War I to the Great Depression. Like many other countries, Argentina entered into a recession following the commencement of hostilities as international flows of goods, capital and labor declined. Additionally, the introduction of universal male suffrage in 1912 changed the balance of power in Argentina. Cort?s Conde argues that higher democratization increased the role of the government in the economy as it intervened more actively in the determination of prices and wages. Now economic policy was put under pressure from different interest groups. Chapter 3 is a detailed description of the exchange and monetary policies in the 1930s. After abandoning the gold standard, the devaluation of the peso increased the competitiveness of Argentinean exports and protected domestic production. The strategy of growth was based on import substitution in which tariffs and quotas for final goods were raised. This period was also marked by the use of exchange margins to finance government activities and the foundation of the Central Bank.

Chapter 4 describes the main economic policies and events during Juan Per?n?s government. Argentina’s inward growth strategy not only remained during Peronism but the period was also characterized by direct public intervention through subsidies and state ownership of certain key industries. In addition, Per?n used subsidies, price controls, and monetary, exchange and trade policies to increase capital formation and real wages and to ensure full employment. The economic policy thus set up a complex and persistent network of interests, manipulated the incentives of the agents and furthermore, inefficiently allocated the factors, hindering long term growth. Chapter 5 provides a description of the period between Peron’s two terms as President (1955-1973), during which political and social instability affected economic performance. This period was characterized by innumerable military coups, reflecting the Army?s fear of Per?n?s return and communism. Any attempt to change the economic model was blocked by interest groups (e.g. land owners, entrepreneurs, unions). As a consequence Argentina underwent a process of decapitalization, macroeconomic instability and limited productivity gains. The sixth chapter analyzes the economic and political conditions that led Argentina to experience negative growth in the period from 1974 to 1989. Despite several orthodox and non-orthodox attempts, civil and military governments failed to put the economy on track. In sum, the seventies and eighties were a continuation of the institutional, political and economic problems inherited from previous periods.

The book is an excellent resource for those who wish to learn about the Argentinean economy and its main limitations during the twentieth century and it is highly recommended for any course on the economic history of Latin America. One of Cort?s Conde?s principal contributions is his fabulous effort to compile historical data and create a narrative of the evolution of the main variables. Do not expect, however, any empirical analysis that would corroborate his main points, although the data he gathers may be an important source for future empirical work. Cort?s Conde proposes that the economic failure of the Argentinean economy is due to a variety of factors and choices accumulated across time. But the initial institutional framework in which the decision making process occurred remains unclear. For instance, the reader may wish to see a discussion of whether the quality of institutions by the end of the nineteenth century was better than the quality of institutions in the next century. Moreover, it would have been enlightening to contrast the Australian and Canadian experiences with that of Argentina. What did they do right compared to Argentina? How were the interest groups held in check during the twentieth century? Would it not be the case that, since the nineteenth century, both countries had better institutions than Argentina, which would have allowed them to overcome the international shocks of the first half of the twentieth century? Furthermore, a brief discussion of why Latin American countries with similar institutions and development strategies could grow faster would help clarify Argentina’s particular situation. Finally, the potential reader would like to know a little bit more about hypotheses, proposed by other authors, concerning Argentina’s economic failure, and how they differ from the one proposed by Cort?s Conde. Although the book aptly describes the changes in economic policies and their consequences, an analytical framework explaining the winners, the losers, and the players’ sources of bargaining power would have been very useful.

Andr? Mart?nez Fritscher recently completed his Ph.D. at Boston University and will be joining Banco de M?xico as a research economist in the fall. His work focuses on the public finances and regional development in Latin American at the turn of the twentieth century.

Copyright (c) 2009 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (July 2009). All EH.Net reviews are archived at

Subject(s):International and Domestic Trade and Relations
Geographic Area(s):Latin America, incl. Mexico and the Caribbean
Time Period(s):20th Century: WWII and post-WWII

The Industrious Revolution: Consumer Behavior and the Household Economy, 1650 to the Present

Author(s):Vries, Jan de
Reviewer(s):Voth, Hans-Joachim

Published by EH.NET (May 2009)

Jan de Vries, The Industrious Revolution: Consumer Behavior and the Household Economy, 1650 to the Present. Cambridge: Cambridge University Press, 2008. xii + 327 pp., $23 (paperback), ISBN: 978-0-521-71925-4.

Reviewed for EH.NET by Hans-Joachim Voth, Department of Economics, Universitat Pompeu Fabra, Barcelona.

This is an impossible book. Had someone told me a few years back that somebody ? anybody ? was trying to write a book so short, yet so ambitious in scope, I would have laughed and filed it under ?impossible and pretentious?– and I would have been wrong. In his latest book, Jan de Vries sets out to examine the “Industrious Revolution,” following on from his Economic History Association Presidential Address (published in the Journal of Economic History in 1994). The final result is closer to a comprehensive overview of work, consumption, and well-being in Europe and North America, from the early modern period to the present. It is written from a particular vantage point: that of the household. The book represents a tremendous accomplishment: it is staggeringly erudite, insightful, stimulating, and on all the main points, convincing.

De Vries examines how households interacted with the evolving opportunities in the labor market and the changing range of goods and services. The intellectual starting point is emphatically Beckerian: households first convert part of their available time into labor income. Money is then combined with more time in the household to produce “Z-commodities” that satisfy our wants. Enjoying these Z-goods is what leisure time is for. To take an everyday example: Labor income buys edible produce; then, the meal is cooked, using non-market time; consuming it claims more of the residual time available. Gradually, households accumulate Z-capital ? the ability to produce or appreciate Z-goods. Generating this kind of capital takes time, energy, and money ? think Sebastian and Charles in “Brideshead Revisited,” teaching themselves about wine while slowly emptying the dynasty’s cellar, or the discerning palates of EUI students and faculty after a few years under the Tuscan sun. From this point of view, the ultimate budget constraint facing us all is time, not money ? it’s literally all we have to spend.

Over the last five hundred years, total hours of work ? both in the household and outside ? have shifted dramatically. To Marx, it was in the nature of capitalism itself that the lower classes ended up working more and harder. De Vries traces the rise of industriousness, defined as a combination of long hours of market work for adult males, and wide-spread participation in the labor market by women and children, to its peak in the nineteenth century. Then, for a period of less than a century, the “male breadwinner household” took over. While men worked long and hard, women became homemakers. Children started going to school.

De Vries locates his Industrious Revolution in the long eighteenth century. In the first chapter, he summarizes the theory on how work and leisure combine to satisfy desires. The second chapter fuses observations from the history of economic thought with social history, and explains how ?luxury? became acceptable ? having long been regarded as suspect in many societies, and heavily curtailed through sumptuary laws banning conspicuous consumption. Holland led the way. The burghers of the newly independent state invented a new type of luxury. While Old Luxury had a distinctly aristocratic and somewhat decadent air to it, aimed at communicating grandeur and taste, the New Luxury emphasized usefulness in the form of domestic comfort.

The next two chapters explore the supply of labor, as well as the consumer demand into which the newly-acceptable desire for practical luxury was translated. Undoubtedly, annual working hours for fully employed males had become very long by 1850 or so ? some 3,500 or so ? scarcely imaginable for workers today who often work 1,600 to 1,900 hours in most developed countries. Women and children often worked side-by-side with the men. When did hours get so long? To say anything of substance about actual hours worked before 1800 is not for the faint-hearted; existing data is staggeringly scarce [Voth 2001]. De Vries does a good job surveying the existing literature, and making a strong case for a universal rise of hours among the middling and lower sorts in Northwestern Europe at some point during the early modern period.

Why did so many Europeans start working more regularly, perhaps harder, and definitely much longer, at some point in the early modern period? De Vries essentially argues that by 1800, there were many ?new goods? to work for. Consumption baskets for the sixteenth century show that beer and bread were consumed in staggering quantities (182 liters and 182 kg per annum according to Allen 1992). While we mostly evaluate consumption in later centuries with no more than a slightly modified consumption basket, there were many other things to spend one’s money on. De Vries details the interrelated rise of fashion and of “breakable” goods; the rise and fall of hard liquor consumption, such as the gin craze; and the growing use and availability of furniture, of cutlery, ceramics, bed linens, underwear, pokers, playing cards, etc. It is the striking difference between largely stagnant day wages on the one hand, and rising consumption as reflected in probate inventories on the other, that is one of the best bits of evidence in favor of the ?Industrious Revolution.? Thus, what I have elsewhere called the “sirens of consumption” (Voth 1998) lead households to work more, and harder.

The process did eventually go into reverse. Hours per full employee have fallen precipitously. Before that happened on a large scale, women and children exited the labor force. Having developed a taste of goods over home-made services, why did the industrious households of the seventeenth and eighteenth century give way to the male-breadwinner household of the Victorian period? De Vries? answer to some extent is health. As knowledge about what made people sick spread, cleanliness became more important. Wages rose, and much of the gain was transmuted into keeping wife and children at home ? the former making the beds, cleaning the stove, mending the socks, and the latter learning in school. Feminists and ?progressive? critics have long seen the women’s exit from the labor force (at least after marriage) as a sign of male domination ? ?patriarchy? in short. De Vries begs to differ. Far from a sign of male suppression, the male breadwinner household gave ample power to women. Men handed over their pay packets, and got a warm, clean home, well-behaved children, plus some pocket money in exchange. As De Vries argues: ?The contemporary vestiges of the breadwinner-homemaker household suffer the condescension of contemporary historians and other social scientists, who often suppose themselves to be liberated from a structure of Western society as long lasting as it was suffocating. It deserves a more serious scholarly treatment. Far from eternal, it was literally a moment in Western family history. Far from suffocating, it was, in its prime, a powerful vehicle of modernization and economic advance. It was the indispensable producer of many of the final consumption commodities that we … associate with the finest achievements of modern society.?

A reviewer of Gerald D. Feldman’s monumental history of the hyperinflation [Feldman 1997] compared the prodigious production of the author with the output of the Reichsbanks’ printing presses. (I think it was meant as a compliment, despite the obvious thought that Reichsbank paper by 1923 was almost completely worthless.) In a similar vein, I thought of calling Jan de Vries’ latest work a true Stakhanovite accomplishment, but then remembered that Alexey Grigoryevich Stakhanov’s widely-praised “production miracles” in Stalinist Russia were later found to have been staged. The sheer amount of hard work that went into every aspect of these chapters is hard to convey. Surveying the rise of consumer items through the prism of probate inventories shows the author confidently mastering the abundant historical literature in four or five languages. De Vries’ reconstruction of Europeans’ increasing consumption of ?colonial luxuries? ? sugar, tea, and coffee ? alone is going to be useful for all scholars working in the area. (While this phrase is beloved by reviewers, this one put his pen where his praise was ? and immediately re-wrote a draft of his paper called “Sweet Diversity” [Hersh and Voth 2009].)

The book will be an invaluable reference for anyone working in early modern economic history. I also expect to see it used as a textbook in advanced undergraduate classes. If there is a fly in the ointment ? and every conscientious reviewer is expected to find one ? it is the almost complete disconnect with behavioral economics. The households making decisions in De Vries? world are of the sturdy Dutch burgher type depicted on the cover; work and consuming is a sober, serious business for them. They have preferences, income, and a range of choices, and then make decisions without too many further complications. De Vries, by allowing for a bit of endogenous preference formation, is departing to some extent from the more rigid basics of household decision-making models. Yet there is no struggle here of ?present selves? with ?future selves,? no hyperbolic discounting, no perennially unfulfilled desire to start saving … tomorrow (for an overview, see Mullainathan and Thaler 2001). This is not quite how some early modern observers saw (in particular) lower class consumers. Sir Frederick Eden (1797), in his The State of the Poor, was highly critical of the dietary choices made by Southern English families. He argued that choosing the quick kick of sugar and tea over more substantial fare was welfare-reducing. From his point of view, the incomes of the poor were not the issue; it was their consumption patterns. Of course, rigorous economic analysis is on shaky ground already when we allow for changing tastes (Becker and Stigler 1977); perhaps, a more detailed analysis of consumers in their full, often self-contradictory glory would have made this a truly impossible book. The profession will be grateful for the one it got.


Robert C. Allen, 2001, ?The Great Divergence in European Wages and Prices from the Middle Ages to the First World War,? Explorations in Economic History 38(4): 411-47.

Gary Becker and George Stigler, 1997, ?De Gustibus Non Est Disputandum,? American Economic Review 67(2): 76-90.

Frederick Eden, 1797, The State of the Poor, London.

Gerald D. Feldman, 1997, The Great Disorder: Politics, Economics, and Society in the German Inflation, 1914-1924, Oxford: Oxford University Press.

Jonathan Hersh and Hans-Joachim Voth, 2009, ?Sweet Diversity: Colonial Goods and the Rise of European Living Standards after 1492?, Available at SSRN:

Sendhil Mullainathan and Richard H. Thaler, 2001, ?Behavioral Economics,? in N. J. Smelser and P. B. Baltes, editors, _International Encyclopedia of the Social and Behavioral Sciences, New York: Elsevier:1094?1100.

Hans-Joachim Voth, 1998, ?Work and the Sirens of Consumption in Eighteenth-Century London,? in: M. Bianchi, editor, The Active Consumer. Novelty and Surprise in Consumer Choice, London: Routledge.

Hans-Joachim Voth, 2001, Time and Work in England, 1750-1830, Oxford: Oxford University Press.

Hans-Joachim Voth is ICREA Research Professor of Economics at Universitat Pompeu Fabra, Barcelona, a Research Affiliate at CREI (Barcelona), and a Research Fellow in the International Macro Program at the CEPR, London. His latest publications include ?Betting on Hitler: The Value of Political Connections in Nazi Germany? [with Thomas Ferguson], Quarterly Journal of Economics (2008); ?Interest Rate Restrictions in a Natural Experiment: Loan Allocation and the Change in the Usury Laws in 1714? [with Peter Temin], Economic Journal (2007); and ?Why England? Demographic Factors, Structural Change and Physical Capital Accumulation during the Industrial Revolution? [with Nico Voigtlaender], Journal of Economic Growth (2006).

Subject(s):Markets and Institutions
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

Mass Migration under Sail: European Immigration to the Antebellum United States

Author(s):Carson, Scott A.
Reviewer(s):Cohn, Raymond L.

Published by EH.NET (May 2009)

Raymond L. Cohn, Mass Migration under Sail: European Immigration to the Antebellum United States. Cambridge: Cambridge University Press, 2009. xiii + 254 pp. $85 (hardcover), ISBN: 978-0-521-51322-7.

Reviewed for EH.NET by Scott A. Carson, Department of Economics, University of Texas ? Permian Basin.

Before the 1960s, most analysts concluded that willing and able nineteenth-century European immigrants could easily stake their claim and take advantage of a dynamic labor market in the United States. Research by Stephen Thernstrom, Dean Esslinger and Sally and Clyde Griffen called this optimistic view into question, finding that upward occupation mobility was fairly limited for first generation migrants. This revisionist view itself has come into question more recently. Joseph Ferrie, for example, presents evidence that the mid-nineteenth century U.S. was, rather, a place of considerable upward occupational mobility. Raymond Cohn weighs in on this important question in his latest contribution to the economic history of American immigration. However, where others devote considerable attention to conditions awaiting immigrants, Cohn evaluates conditions in the Old World ? Britain, Germany, and Ireland ? before mid-nineteenth-century migration, conditions during transit, and conditions after immigrant arrival. In the end, Cohn supports the optimistic view that the U.S. was, indeed, a place of opportunity for those willing and able to make the passage.

Organized into nine chapters, Mass Migration under Sail has three broad sections. Chapters two through five address immigrant origins, their pre-migration occupations, and factors motivating immigration. A second narrative that distinguishes Mass Migration from other like works is chapter six, in which Cohn considers migrant conditions during transit. The remainder of the book, chapters seven and eight, consider immigrant status after arrival, and like other research in this recent vein of the migration literature, considers how immigrants influenced nineteenth-century U.S. economic growth. Thus, readers are given a comprehensive examination of nineteenth-century Northern European immigration, a migration wave that radically transformed U.S. culture and labor markets.

Of interest to economic and immigration historians is the way in which Cohn places the immigration decision into push and pull factors and how these interacted with European economic conditions. European push factors included overpopulation and the Napoleonic Wars. Pull factors included U.S. economic growth and kin effects. However, other non-push and pull factors played an important role. Shipping costs fell; ship capacity and the number of passenger ships increased. Between 1815 and 1860, approximately 5.2 million Northern Europeans immigrated to the U.S. The increased flow of immigrants is frequently attributed to the onset of the Irish potato famine. Cohn, however, demonstrates the increase in mass migration began as early as 1815; immigration increased rapidly between the 1820s and 1830s, well before the outbreak of the potato famine. While Britain was a primary source of colonial era migration, Germany and Ireland sent comparatively more immigrants during the antebellum period. Two German and Irish geographic regions were responsible for pre-1840s migration: Southwest Germany and Northern Ireland.

Immigrants took a variety of pre-migration routes and transportation means before they embarked for the U.S. British and Irish immigrants embarked from London and Liverpool; Germans left from Le Havre, Bremen, and Hamburg. While high mortality rates were prominent on specific passages, the in-transit death rate was relatively low, around 1.56 percent of total migrants. Of the small share of immigrants who died during transit, the primary mortalities were typhus and cholera. Major ports of arrival were New Orleans, Philadelphia, Baltimore, and Boston; however, New York became the primary U.S. port of arrival. In response to diseases carried by immigrants on ships, the New York State government sent immigrants with contagious diseases to the Marine Hospital and Wards Island. In response to port runners, in-transit disease, and post-arrival health costs imposed on 1840s and 1850s U.S. populations and on local governments, government reforms on both sides of the Atlantic were enacted, which reduced many of the problems facing immigrants.

The final two chapters of Mass Migration under Sail offer additional evidence that the nineteenth-century U.S. was, indeed, a place where immigrants could stake their claims for a new life. After arrival, German and Irish immigrants settled regionally by nativity within the U.S. The Irish accounted for 68 percent of all immigrants to the Northeast; Germans accounted for 47 percent of all immigrants to the Midwest; British immigrants accounted for 19 percent of immigrants to the Northeast and 20 percent of immigrants to the Midwest. After arrival, the British, German, and Irish achieved success in U.S. labor markets, and the British and German immigrants found opportunity in skilled occupations. Irish immigrants did not fare as well as the other two groups, but still fared better than had they remained in Ireland. Moreover, all three cohorts improved their average skills in the U.S. after arrival.

The last issue Cohn addresses is possibly the most relevant to modern economics. Does immigration help or hurt native labor and will migration lead to long run economic growth? The answers, of course, vary widely, but if current migration is like the mid-nineteenth century, immigration will probably increase the long-run rate of economic growth. During the nineteenth century, immigration extended the U.S. product market and allowed labor in manufacturing and agriculture to specialize. Larger pools of unskilled labor after 1845 put downward pressure on wages. However, over time, labor markets adjusted, migrants assimilated, and the economy moved forward. In this sense, Mass Migration under Sail is a valuable contribution to economic and migration history and gives perspective on current migration issues.

Scott A. Carson?s recent publications include ?Indentured Migration in America’s Great Basin,? Journal of Interdisciplinary History (2002) and ?The Effect of Geography and Vitamin D on African-American Stature in the Nineteenth Century: Evidence from Prison Records,? Journal of Economic History (2008).

Subject(s):Historical Demography, including Migration
Geographic Area(s):North America
Time Period(s):19th Century

The Rise and Decline of Dutch Technological Leadership: Technology, Economy, and Culture in the Netherlands, 1350?1800

Author(s):Davids, Karel
Reviewer(s):TeBrake, William

Published by EH.NET (March 2009)

Karel Davids, The Rise and Decline of Dutch Technological Leadership: Technology, Economy, and Culture in the Netherlands, 1350?1800. Leiden: Brill, 2008. xxii + 633 pp. (two volumes) $199 (hardcover), ISBN: 978-90-04-16865-7.

Reviewed for EH.NET by William TeBrake, Department of History, University of Maine,

Karel Davids, Professor of Economic and Social History at the Vrije Universiteit (Free University), Amsterdam, has produced a thorough and well-reasoned study of the place of technology and technological innovation in the northern Low Countries during the late-medieval and early-modern eras. In his introduction, Davids makes clear that the term “technological leadership” is used to refer not to individuals but to “socio-geographical entities,” such as “a given country, region, town or cluster of towns” that played “an initiating role in the development of new technologies in a wide variety of fields.” During the late-medieval and early-modern periods, various entities played such a role at some time or another, including Nuremberg, Venice, and parts of France, but all also lost such leadership positions as others took over. According to Davids, the northern Netherlands, the territory encompassed by the Dutch Republic, was the technological leader during much of the seventeenth and eighteenth centuries, before relinquishing that role to England by 1800, and in the process of explicating the rise and fall of Dutch technological leadership, he has called into question a number of commonplace assumptions found in the historiography of the period in question.

After a brief survey in chapter one of the circumstances and events leading to the formation of the Dutch Republic by the late sixteenth century, Davids examines what contemporaries understood about technological leadership, how and when such notions first appeared, and when they began to be associated with the northern Netherlands in chapter two. For this he uses a broad range of sources, from private correspondence, travel accounts, and reports by representatives of foreign governments, to tracts on various topics from the period. In chapter three, Davids conducts a thorough analysis of the role that technological innovation played in the economic expansion of the northern Netherlands and Dutch Republic along with a consideration of the various methodological approaches available to examine that role. He makes clear that the term, “technology,” is used to refer to the “abilities of people to control or transform nature for productive ends.” Thus he is not concerned with “household technology” nor with “skills that relate to the manipulation of money or people (such as financial techniques, military tactics or the practice of administration).” What remains ranges from “agrarian practices and seafaring skills to industrial processes and building techniques.” He dates the first signs of accelerating technological innovation in the northern Netherlands to around the middle of the fourteenth century which resulted in a position of technological leadership at least in hydraulic engineering and ship construction during the sixteenth century. During the early seventeenth century, residents of the region had also begun to earn reputations as “designers and makers of tools and machines in industry” and by the middle of the eighteenth century as expert in a whole range of other fields as well.

Davids looks at the diffusion of technological knowledge into and out of the northern Low Countries in chapters four and five respectively. For this, he supplements the material he uses in the second chapter concerning contemporary “perceptions of leadership” with documented evidence of actual technological import and export. The result is a highly nuanced picture of the rise and fall of Dutch technological leadership which Davids compares to current views concerning the timing and transmission of technical innovation during the late medieval and early modern period for Europe generally and for the northern Netherlands in particular. For the entire period between 1350 and 1800, the northern Netherlands both imported and exported technical knowledge, though the inflow of such knowledge clearly exceeded the outflow in both size and scope before 1580, with a rough balance between inflow and outflow for the century thereafter. The Dutch Republic was the preeminent exporter of new technology between 1680 and 1780; by 1800, England had begun to displace the Dutch Republic in this regard. In chapters six and seven, Davids attempts to locate the causes for the rise and decline of Dutch technological leadership and he compares his findings to current views on the issue.

Davids is informative and persuasive throughout. His documentation is extensive and the material he presents, while copious, is very well organized. One of the most interesting features of his study is the attention he pays to the truly remarkable concentration during the seventeenth and eighteenth centuries of literally hundreds of industries powered by windmills in the Zaan district, just across the IJ/harbor from Amsterdam, forcing the reader to reconsider how revolutionary the English Industrial Revolution really was. Further, there are several important areas in which he has significantly revised current understanding of the course of technology, economy, and society during the late-medieval and early-modern periods. First of all, he challenges the old assumption that immigration from the southern Netherlands, France, and Iberia during the century after 1580 was the leading cause of technological advance in the Dutch Republic. Davids’ scrutiny and evidence essentially demolishes this notion. He is able to show that the importation of technological knowledge had been occurring at a significant rate since the mid-fourteenth century, peaking before 1580, and that the century after 1580 ? the time of the much-vaunted immigration ? was precisely the period during which imports began to decline and exports to climb. Further, Davids makes clear that technological leadership in the Dutch Republic was much less tied to economic advancement than is usually assumed. Indeed, the Republic’s technological leadership began to peak only when the economy of the Dutch Republic already had begun to decline, during the late seventeenth century, and such leadership continued for another century thereafter, before giving way to England only after 1780. Finally, Davids makes a compelling case for locating the causes of technological leadership (and its decline) not only in market forces but also in institutional and cultural conditions, including the relative openness or secrecy of economic, cultural, and political life.

All in all, The Rise and Decline of Dutch Technological Leadership is an impressive piece of work. Unfortunately, it is not a perfect work. My primary criticism of it is the apparent abrogation by the publisher, Brill, of all responsibility for copy editing and proofreading. The book’s faults range from misspellings, typographical errors, and inappropriate punctuation to many sentences with awkward word order ? clauses of various types inserted between elements of compound verbs, as in the refrain from that old Broadway show, “Throw mama from the train a kiss” ? while the meaning is clear, this is not the form of expression expected in formal, written English. Also, there are inconsistent and sometimes odd spellings of place names: both “Ghent” and “Gent” and both “Tournay” and “Tournai,” with only the former in each case appearing in the index. Further, “Rijssel” is found in the text but only “Lille (Rijssel)” appears in the index. And why not use Den Bosch instead of “Bois-le-duc” (no one outside the Francophone world uses this form), and why not “IJ” and “IJssel” instead of “Y” and “Yssel”? Also, for the majority of English speakers in the world, “corn” is reserved for Indian corn or maize and “grain” is used for wheat, barley, etc. Finally, this book perpetuates the silly (British?) practice of substituting “states” for “estates,” in reference to status groups and their institutionalized form, Estates General; anyone even vaguely familiar with Dutch knows that “states” is a mistranslation. In fairness to the author, all of these matters should have been addressed by the publisher, preferably, in this case, by employing a competent, Anglophone copy editor. The fact that Brill did not do so is a disservice not only to the author but also to anyone paying $199 for this work. However, such criticisms aside, this is an important study that should be read by anyone interested in late-medieval and early-modern European history, not only technological but also economic, political, and cultural.

William TeBrake is Professor of History at the University of Maine where he teaches medieval environmental and social history. His recent publications include ?Taming the Waterwolf: Hydraulic Engineering and Water Management in the Netherlands during the Middle Ages,? Technology and Culture 43 (2002): 475-99; and Hoogheemraadschap Rijnland [Water Board Rijnland], Registers OAR 11, 12, 13: 1253-1564 (Leiden: Vereniging Jan van Hout, 2006). URL:

Subject(s):History of Technology, including Technological Change
Geographic Area(s):Europe
Time Period(s):Medieval

L??conomie morale, pauvret?, cr?dit et confiance dans l?Europe pr?industrielle

Author(s):Fontaine, Laurence
Reviewer(s):Hautcoeur, Pierre-Cyrille

Published by EH.NET (January 2009)

Laurence Fontaine, L??conomie morale, pauvret?, cr?dit et confiance dans l?Europe pr?industrielle. Paris: Gallimard, 2008. 439 pp, ?20 (paperback), ISBN: 978-2-0707-8577-3.

Reviewed for EH.NET by Pierre-Cyrille Hautcoeur, Ecole des Hautes Etudes en Sciences Sociales and Paris School of Economics.

Economic history frequently suffers a tension between a purely economic approach that considers homo economicus as invariable through time and space, and a relativist approach that refuses any broad comparison because of the supposed incommensurability of human activities experienced in different settings. The influence of anthropologists, especially in the tradition of Karl Polanyi, has contributed in particular to the idea held by many historians that Ancien R?gime societies were qualitatively different from modern ones, and that their economies cannot be studied in the same terms because economic activity was embedded in social life. Furthermore, this statement is sometimes reintroduced in today?s policy debates in a more normative way, when it is argued that the markets should be submitted to social institutions and needs as was the case up to the Industrial Revolution.

Laurence Fontaine ? an economic historian at Centre national de la recherche scientifique in Paris ? helps us to clarify these questions in a particularly interesting way since, as a social historian, she insists on the importance of social relationships in the provision of credit in early modern Europe, but she also, and indistinguishably, emphasizes the role of the market as allowing the poor, and especially women, to escape the constraints and limitations that result from their social position. To that extent, her book is not only a good one for those wanting to better understand the economies ? and particularly the credit markets ? of early modern Europe, but it also provides a way out of that enduring epistemological debate.

Although I have chosen to open this review by insisting on that epistemological contribution, the book is not centered on these issues, which appear mostly in the conclusion. Most of the book actually discusses the provision of credit in the Ancien R?gime economy. It chooses to study it ?from below,? that is from the point of view of economic agents and not from that of institutions, governments or economic theorists (even if all of these appear sparsely). The focus is on the ordinary agents: the poor and lower middle class, in contrast to the most-studied bourgeoisie. Because of these choices, the book is based mostly on qualitative sources, such as diaries, letters, death inventories, small firms? accounting books, and prison records, with some attempts at quantifying the questions under study, but only at an individual or local level and for relatively short periods. A few chapters build on an insightful use of contemporary novels and theater. If unsystematic, the documentation is abundant: examples are taken from all over Europe from the fifteenth to the eighteenth centuries. The book is organized in a thematic order (with chapters on the poor, the peasantry, the elite, urban micro-credit, women, pawnshops, usury, mentalities, exchange practices and the construction of trust). This organization brings a strong sense of the fact that most economies inearly modern Europe faced similar problems, even if the variety of traditions or the different choices that were taken by governments when creating or regulating institutions are frequently mentioned. It downplays long-term change, even if some particular transformations are mentioned.

As is typical of any book dealing with such a large period and space, it is mostly based on a large ? indeed impressive ? bibliographical base (30 pages of references, mostly in English, French and Italian, with occasional Dutch, German and Spanish). It is, perhaps more importantly, based on Fontaine?s experience studying the poor and migrants (especially peddlers) of early modern Dauphin? and Savoie.

The first important result of the book is to show that credit was not only developed among the well-to-do in early modern Europe (as shown for example by Hoffman, Postel-Vinay and Rosenthal in Priceless Markets). It was a daily part of the ?survival strategy? of the poor, more important, indeed, than the help provided by charitable institutions. Most of the working poor needed credit in order to start or to keep their small businesses running in the face of accidents, delays, illness, and life-cycle events ? and this was true as much in the countryside as in the cities. Fontaine shows that the few remaining traces suggest that oral credit was ubiquitous, that written credit was much more frequent than what is observed in notaries? archives (because of the cost and delay of their certification), and that a majority in the population died with negative assets ? that is, unpaid debts superior to their belongings.

Credit was organized in various circles, starting from the closest relatives (the family and neighbors), social authorities (the lord, notables), institutions (guilds, pawnshops) and, lastly, foreigners ? as most moneylenders were considered (either Lombard, Savoyard or Jew). Except for very small amounts, credit among equals (or relatives) ? was rarely much of a resource for the truly poor … because their relatives were poor too, and also because even ?family solidarity is everything but natural? (p. 36). Actually, such solidarity could only result from a well-organized community, which was able to constrain the borrower. Therefore most of the credit to the poor came from notables, institutions and moneylenders.

Among these, the lords were probably those with the most specific behavior in the Ancien r?gime. They frequently lent substantial amounts to their vassals, especially to their farmers. These debts were seldom reimbursed, and mostly implied yearly payments (which could be in kind). They could be restructured when either the lender or the borrower left or died, and parts of them could even be abandoned gracefully in periods of hardship. Fontaine argues that these debts were part of a broader social relationship, which explain both that the lords had to lend in order to maintain status and reputation even when reimbursement was anticipated as almost impossible, and how they were able to force payments for long periods, thanks to their local power.

Aristocrats actually reciprocated downward the relationships based on political dependence they suffered towards the princes to whom they forcefully lent and asked for privileges or rents as payments. When in debt (and they were frequently so), they dismissed and ill-treated their moneylenders (who always suffered bad treatment if they tried to obtain payment through legal means), except those who had been able to access some personal secrets, as was frequently the case when wives pawned their jewelry to old women lenders (the marchandes ? la toilette made famous by novelists down to Balzac). On the other hand, aristocrats considered their gambling debts as the only serious ones because they were purely personal, among equals, and a symbol of their lives? dedication to risk and gratuitousness.

At the opposite end of the social spectrum, poor women had no power and a precarious status. Fontaine shows that the legal position of women mostly deteriorated in much of Europe in the early modern period, obliging them to participate in the most informal and unsecured credit markets. However, her conclusion is not that the market was dangerous to women, but quite the opposite, since where women started participating in markets, they ended up not only surviving, but even obtaining some recognition, as merchants if not as wives: ?Everywhere and since the Middle Ages, the development of markets boosted the legal autonomy of women? (p.144).

Credit was then not limited to the world of the merchants, as often described, but penetrated, although unevenly, all classes of society. As early as the first half of the sixteenth century, Rabelais could write that ?nature created man only to lend and borrow.? Usury laws were unable to restrict the ubiquity of credit, as the Church actually abandoned applying them as early as the sixteenth century. At that time, the states took over the issue and maintained or reinforced usury laws, but let develop a jurisprudence which allowed for many exceptions and by-paths.

Credit was ubiquitous and diverse, but Fontaine argues that its diversity can be better understood using a bipolar lens. Step by step, her book builds a representation of the credit market that distinguishes two ideal-types of credit relationships. These two ideal-types are clearly delineated in chapter 8 thanks to the use of Shakespeare (Timon of Athens and The Merchant of Venice), Moli?re and the Tableau de Paris by Louis-S?bastien Mercier. The first one is ?aristocratic? the second one ?merchant.?

In the aristocratic world, credit relationships are embedded in social relationships and religious imperatives: interest is frequently hidden or in kind, or even disguised in voluntary gifts, debts have no definite term or can be prolonged indefinitely, the relationship between debtor and creditor is statutory or personal. In the merchant world on the other hand, the contract is precisely defined and respected thanks to strong guarantees, and the relationship is impersonal or among equals thanks to a strong role of the law. If this distinction is similar to the one usual among anthropologists, Fontaine?s claim is actually very different: first because she argues both types of relationships co-existed permanently (even if their relative importance varied) and most people could enter both types of relationships, choosing with whom to contract. Second because the market was not intrinsically less humane than the personal relationship: if less open to credit restructuring for personal reasons, it was more rule-based and thus more protected against the creditor?s power. So individuals chose both what type of relationship they wanted to enter and with whom to enter it. They, usually, had some choice, and the social environment, although constraining, was also a space of opportunities.

Even more important, Fontaine shows that the aristocratic and the merchant economies not only conflicted but also penetrated each other. Chapter 6 is very illuminating in that respect, showing that pawnshops (monte di pieta) were invented in the early fifteenth century by Franciscans wanting credit to become a complement to charity, one through which the poor could get more autonomy and capacity to exert their talents, although escaping the dangers of usury and over-indebtedness.

The last chapter on the social construction of credit provides the reverse example: while Franciscans accepted the role of credit markets in helping the poor, merchants never entirely rejected some ?aristocratic? dimension of credit. Analyzing bankruptcies and the relationships among merchants in hard times, Fontaine shows that they appealed to the community to which they belonged, and obtained help as long as they were truly integrated into it, much like in the aristocratic economy.

The book then concludes that both market and personal relationships were always present in early-modern credit, but focuses mostly on the role of the market in allowing the emancipation of the poor and the development of their capabilities, in an explicit reference to Amartya Sen. Although I had great pleasure in reading this convincing and powerful book, a few critical remarks must be added. First, although the book?s approach encompasses many topics, some important ones are missing. The practices and culture of credit among merchants is given little place. This is certainly intended as a necessary correction in view of its excessive place in the previous literature, but the correction is probably also excessive. Public credit is also absent, to some extent in contradiction with the author?s very views on the relationships between princes and some of their aristocratic creditors. Maybe most importantly, this is a history with little historical change. As mentioned earlier, some changes are mentioned in various chapters, but no answer is given to the most important question: if there was a substantial change in the way credit markets worked from the sixteenth to the nineteenth centuries, what was that change and where did it come from? The author could have linked the emancipation towards the power element in aristocratic relationships with the development of legal and representative institutions; nevertheless, law is little present except in the chapter on women, and politics is altogether absent. Finally, contemporary economic thought and modern theory are absent. Both have nevertheless proved to be useful in order to understand early modern economies (see e.g. Grenier?s L??conomie d?Ancien R?gime as an attempt based on contemporaries). Fontaine actually uses some concepts from imperfect information theory, but quite clumsily. These remarks suggest that an even broader synthesis would be welcome in order to provide a truly comprehensive view of early modern credit.

Some of the book?s arguments are not well presented, and would have gained from better writing. The author frequently makes the point that personal debts were extended for long periods, but does not relate this clearly to the annuities model which was so dominant in farming and public debt in the period. Over-indebtedness is forcefully asserted, but insufficiently demonstrated in economic terms, since payment flows should be related to incomes rather than volumes of debts to assets. More seriously, the author argues that the fact that the poor invested all their income in clothes or jewelry reflected a ?preference for illiquidity? (e.g., p. 132), when actually these goods were chosen because they were highly liquid (thanks to the pawnshops the author describes so well), and were given preference over money because of the riskiness of money that could be stolen or be forcefully borrowed by relatives.

Other remarks are more formal. Although the book is quite beautiful, it is not well edited. Chapter two is somewhat repetitive of chapter one, some developments (e.g. on women?s legal status on pp. 134-56) are too long and are not well integrated into the general story. A more careful reading by the publisher would also have avoided the repetition of entire sentences (pp. 164 and 165, pp. 185, 186 and 189, pp. 244 and 265) or quotes badly cut (p. 172).

In spite of these small shortcomings, this book remains an impressive synthesis and a brilliant essay. One should hope that it will be rapidly translated into English in order to get the wider readership it deserves.

References: Jean-Yves Grenier, L??conomie d?Ancien R?gime: un monde de l??change et de l?incertitude, Paris, Albin Michel, 1996. Philip T. Hoffman, Gilles Postel-Vinay, and Jean-Laurent Rosenthal, Priceless Markets: The Political Economy of Credit Markets in Paris, 1660-1870, University of Chicago Press, 2001.

Pierre-Cyrille Hautcoeur is Professor of economics at Ecole des Hautes Etudes en Sciences Sociales and Paris School of Economics, Paris. His recent publications include Le march? financier fran?ais au 19e si?cle, Paris, Publications de la Sorbonne, 2007, the edition of a special issue of Histoire et Mesure on bankruptcies, “Bankruptcy Law and Practice in 19th Century France,” in Insolvency and Bankruptcy Laws: Issues and Perspectives (JAI University Press, 2008) and “Why Didn’t France Follow the British Stabilization after World War One?” (with M. Bordo), _European Review of Economic History, 2007.

Subject(s):Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):Europe
Time Period(s):Medieval

The Byzantine Economy

Author(s):Laiou, Angeliki E.
Morrisson, Cécile M
Reviewer(s):Gregory, Timothy E.

Published by EH.NET (October 2008)

Angeliki E. Laiou and C?cile Morrisson, The Byzantine Economy. Cambridge: Cambridge University Press, 2008. xii + 270 pp. $33 (paperback), ISBN: 978-0-521-61502-0.

Reviewed for EH.NET by Timothy E. Gregory, Department of History, Ohio State University.

As the authors point out, until recently the economy of the Byzantine Empire has not been the subject of many detailed studies. The reasons for this are many, including the continued bias against Byzantium even in historical circles and the perception that the economy of the empire was dominated by the heavy hand of an autocratic state and that its study has little to teach us. This small and quite readable book is likely to change all such scholarly assumptions. It is based squarely on the massive and detailed three-volume The Economic History of Byzantium from the Seventh through the Fifteenth Century, edited by Laiou and published in 2002, and its articles, many of which present completely new analyses of crucial facets of the Byzantine economy and revise many conclusions found in standard textbooks. The present book, of course, is much smaller in scale, but it makes up for that by a more concise focus and a treatment that is accessible to readers, from beginning students to scholars interested in the economy of the medieval West or the Islamic East.

The Byzantine Economy differs from most extant studies of Byzantium by insisting that modern economic theories and studies are relevant for Byzantium and by frequently making seamless use of archaeological and archival sources, as well as the more commonly utilized literary and numismatic material. The literary sources, they reasonably insist, are highly biased by the focus of their authors on the central government, a bias that had led most scholars to the conclusion that the state was the dominant element in the Byzantine economy, which emperors and administrators affected without any real economic interest or knowledge. Laiou and Morrisson do not, of course, deny the importance of government action, especially the successive fiscal institutions and policies over the thousand-year history of the empire. Rather, they argue throughout that, on the one hand, Byzantine statesmen frequently made decisions based on economic considerations, and, on the other, that political and non-economic factors (frequently from outside the empire itself) not uncommonly played crucial roles in the development of the Byzantine economy.

The book is arranged chronologically and it begins with a helpful consideration of the ?natural and human? resources available to the empire. Treatment of late antiquity (sixth-early eighth centuries) avoids what would otherwise be a necessarily long discussion of the situation in the third-fifth centuries, and analysis essentially begins in the period of Justinian. There is little new here and it is clear that the authors regard the period as a continuation of the ancient economy that forms merely an introduction to the economy of the seventh century and beyond. The Byzantine economy per se came into existence as a result of devastating depopulation in the aftermath of the plague of 542 and significant climate change. The labor shortage led to political and economic fragmentation, and a complete reorganization of the economic underpinning of the state. The loss of areas that had provided much of the raw materials of the empire caused severe contraction of manufacturing and a diminution of the money supply. Nonetheless, the meager sources suggest that, even in this period, trade continued and the economy was much more fully developed than has previously been thought. The latter part of the eighth century witnessed significant changes in the military power of the state and the beginning of a slow growth of the Byzantine economy and its gradual monetarization as well as the revival of urban life. Constantinople was the main economic center, and it was an industrial and trading power whose merchants engaged in long distance trade throughout the Mediterranean, Europe, and the Near East. Key in this revival was the state, its fiscal policies, and a complex economic ideology based on ideas of justice in interchange and possession of property.

By the eleventh century Byzantium reached its economic height and by the twelfth century Byzantine cities had developed some of the characteristics that could be seen in the contemporary West. At the same time, and for some of the same reasons, the Byzantine aristocracy had come to challenge the exclusive right to political and economic power that had been maintained by the state (i.e., by the emperor and the imperial bureaucracy). The authors discuss this struggle, that has long interested historians, but in the end they conclude that the victory of the aristocracy did not inevitably cause economic problems for the state or for the peasants. In addition, western (mainly Italian) merchants came to control greater and greater portions of long-distance trade, in part because of tax concessions given them by the Byzantine state and because of their increasing access to naval power. Throughout the twelfth century the Byzantine economy flourished and medium- and large-scale production (both agricultural and industrial) served local, regional, and ?international? markets. The cities, as well as the countryside and marginal lands, played important roles in this economy, contradicting the old theory that middle Byzantine cities were ?parasitic? in nature. The authors conclude that Byzantine merchants played a decreasing role in this trade. In the view of the authors, however, this was not an irreversible situation, but one that was affected negatively by the growth of western military power in the form of the Crusades and, ultimately, the conquest of Constantinople in 1204.

After that date and even after the recovery of Constantinople in 1261 the economy remained fragmented and the loss of areas with important resources, such as mines in Asia Minor and the Balkans, had important negative results. Nonetheless, the authors maintain that the Byzantine economy remained ?articulated? and population growth continued until the middle of the fourteenth century, when the combination of the Black Plague and the loss of most remaining territory to the Ottomans essentially put an end to anything resembling a unified Byzantine economy.

In a concluding chapter the authors make general observations about the Byzantine economy and discuss the value of comparing it specifically with the economy of the medieval West. They conclude that contemporary research shows the Byzantine economy, in virtually all periods, to have been sophisticated and flexible, able to respond to challenges and to change in the face of historical conditions. In most periods the state, in the person of the emperor and a large and well-trained bureaucracy, was the most important factor in the economy, but it was by no means the only one, and political, ideological, and fiscal considerations, as well as forces outside the empire, played significant roles. They note that recent research, in both East and West, has pointed to the importance of the linkage between production and distribution and has seen greater similarities than differences in the two economies. Finally, they strongly suggest that it is not reasonable to ?blame? Byzantium because it did not develop western-style capitalism, something that did not come about in the West until the eighteenth century. They conclude that Byzantium had a ?flexible and dynamic economy, which was successful in terms of growth but also provided some important needs of the people … that is, all the factors which today are recognized as constituting true economic development? (p. 247)

This book is a convenient, reasonably well written and carefully documented handbook that should be on the shelves of anyone interested in Byzantium or the medieval economy.

Timothy Gregory is Professor of History and Anthropology and Director of the Ohio State University Excavations at Isthmia; he is author of books such as Isthmia, Volume V, The Hexamilion and the Fortress (Princeton 1993) and A History of Byzantium (Oxford 2006). He has pioneered in the teaching of online courses in Classical Archaeology and Byzantine History.

Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):Europe
Time Period(s):Medieval