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An East Asian Challenge to Western Neoliberalism: Critical Perspectives on the ‘China Model.’

Author(s):Horesh, Niv
Lim, Kean Fan
Reviewer(s):Rawski, Thomas G.

Published by EH.Net (March 2020)

Niv Horesh and Kean Fan Lim, An East Asian Challenge to Western Neoliberalism: Critical Perspectives on the ‘China Model.’ New York: Routledge, 2018. viii + 171 pp. $165 (hardcover), ISBN: 978-1-138-92674-5.

Reviewed for EH.Net by Thomas G. Rawski, Department of Economics, University of Pittsburgh.

 
China’s remarkable growth spurt, now somewhat diminished as it navigates its fifth decade, has added a new chapter to long-standing international debates about the efficacy of industrial policy. A rising school of Chinese analysts, many with extensive experience in Western societies, has extended the scope of discussion by arguing that a “China model” may deliver better outcomes than the long-standing ideal of democratic politics and laissez-faire economics.

Niv Horesh and Kean Fan Lim cite “deep-seated suspicion” on the part of elites not just in China, but across East Asia, in the capacity “of free markets, or representative democracy … to pre-empt resource misallocation” (p. 3). They set out to “examine the historical framing of the China Model discourse, compared with perceptions of the broader East Asian and Western trajectories” (p. 2). Their broader objective is to investigate the extent to which postwar economic advances in East Asia, especially post-Mao China, have undermined worldwide adherence to the ideal of open markets and democratic politics.

The authors are well qualified to address these matters. Horesh, a professorial fellow at Durham University, has written several books and numerous articles; his work centers on Chinese economic history, but ranges widely across both time and space. Lim, an economic geographer based at Newcastle University, has produced a book and numerous articles focused mainly on contemporary China, but also encompassing regional and global issues.

Aside from brief introductory and concluding chapters, the book contains five loosely connected essays, three of which offer revised versions of previously published articles.

Chapter 2, “Restoring Tang Splendour?” offers a rambling account of “China’s new aspirational narrative of global leadership” (p. 12). The authors highlight the rhetorical U-turn that has transformed Confucius and his doctrines from Mao-era degradation into symbols of cultural continuity and historical exceptionalism.

Chapter 3, “CPC [Communist Party of China] Elite Perception of the US since the Early 1990s,” analyzes the writings of prominent “America watchers,” among them Wang Huning, a former college professor who has risen to the topmost echelon of China’s party hierarchy. The authors show how “a variety of voices compete for influence” within foreign policy circles, offering “divergent perceptions of the US” (p. 52), with younger, better-informed writers often adopting more critical perspectives on U.S. society than their older colleagues.

Chapter 4, “The Singapore Fever’ in China,” analyzes the People’s Republic’s “second overt attempt [following engagement with the Soviet Union during the 1950s] to learn from a particular country” (p. 59), which emerged from Deng Xiaoping’s 1978 visit to the island city-state. Engagement was intense: a 2014 essay noted that “More than 50,000 [Chinese] government officials” had received training in Singapore over the prior 20 years (p. 66). Nonetheless, Suzhou’s China-Singapore Industrial Park, the flagship bilateral cooperation project, faded into obscurity. This and other failed joint efforts reflect the complexity of China’s political economy, in which high-level endorsement of policy innovation may not suffice to ensure ground-level implementation unless reform initiatives are “aligned to local officials’ agendas” (p. 75).

Chapter 5, “The Chongqing vs. Guangdong ‘Models’ of Economic Development,” describes the very different strategies and policy mixes used to promote rapid growth in Guangdong, China’s most market-oriented region, and in Chongqing, the former wartime capital recognized as a province-level municipality (parallel to Beijing, Tianjin and Shanghai) in 1997, which relies on state-owned enterprises to drive development. The comparison highlights the difficulty of imposing uniform policies on a sprawling economy with wide regional variations in geography, incomes and production structures — features emphasized in recent historical work by National University of Singapore economist Tuan-hwee Sng.

Chapter 6, “China: An East Asian Alternative to Neoliberalism,” aims to consolidate and unify material from the earlier chapters. Here the authors’ failure to attach exact meaning to either “neoliberalism” or the “East Asian alternative,” coupled with their prolix style and propensity to digress, blurs their response to the sweeping issues with which they engage.

Despite these shortcomings, the authors’ wide knowledge of past and present East Asian economies and their fluent injection of historical as well as Japanese, Korean and Singaporean sidelights makes this volume a welcome addition to a literature that often portrays China’s contemporary economy as an autonomous entity whose past originates no earlier than 1949 or even 1976.

 
Thomas G. Rawski is Emeritus Professor of Economics at the University of Pittsburgh. Recent publications include Loren Brandt and Thomas G. Rawski, editors, Policy, Regulation and Innovation in China’s Electricity and Telecom Industries (Cambridge University Press, 2019).

Copyright (c) 2020 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (March 2020). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Economic Development, Growth, and Aggregate Productivity
Economic Planning and Policy
Geographic Area(s):Asia
Time Period(s):General or Comparative
20th Century: WWII and post-WWII

Globalization and the Rise of Mass Education

Editor(s):Mitch, David
Cappelli, Gabriele
Reviewer(s):Dupraz, Yannick

Published by EH.Net (March 2020)

David Mitch and Gabriele Cappelli, editors, Globalization and the Rise of Mass Education. Cham, Switzerland: Palgrave Macmillan, 2019. xx + 338 pp. $140 (hardcover), ISBN: 978-0-3-030-25416-2.

Reviewed for EH.Net by Yannick Dupraz, Department of Economics, University of Warwick.

 
When a global pandemic is not forcing school closures, the majority of the world’s children now go to school. In 2018, the global net primary enrollment rate was estimated at 90.5% (World Bank 2020). In the last two centuries, the rise of mass education occurred at different dates in different countries of the world, connected through trade, colonization, migration, and the circulation of ideas. Globalization and the Rise of Mass Education brings together a diverse team of scholars (economists, historians and educationists) to give a fresh, global perspective on the expansion of schooling. The book offers accurate accounts of the state of research in the history and economics of education. It is also stimulating for anyone trying to take some distance and think about future research agendas. Like many edited volumes, the book suffers perhaps from a lack of unity. I was also a bit disappointed by the lack of comparative data.

Globalization and the Rise of Mass Education is not a global history of the rise of mass education, but a history of the links between mass education and globalization. The introduction outlines the relationship between globalization and education, taking perhaps too literal a definition of globalization: “the integration of labor, goods and capital markets” (p. 3). This is the classical economist definition of globalization, but the book has, with a few exceptions, little to say on the relationship between education and trade or capital flows. It has, however, a lot to say on the role of colonization, religious missions, and cultural influences broadly speaking. Therefore, the book does in fact take globalization in a much broader sense, as the existence of interactions between countries, irrelevant of the presence of market integration.

The book is divided in four parts. The first is concerned with the role of religious missions in the expansion of schooling. Both contributors make an excellent job of summarizing the recent literature on the subject: Felix Meier zu Selhausen covers the African continent, and Felipe Valencia Caicedo covers Latin America and Asia. Both insist on the historical importance of religious missions in providing education. Valencia Caicedo’s contribution also insists on the persistent economic and cultural legacy of religious missions in Latin America and Asia. Meier zu Selhausen’s main message is that, in Africa, the success of the missions’ education enterprise depended crucially on local characteristics (local demand for education and local supply of African teachers), a message that might be important for the literature assessing the long-term impact of missions on present day outcomes. One thing perhaps missing from these chapters is a discussion of whether, how and why religious schools ended up losing their importance. Meier zu Selhausen writes “while mission schools were responsible for the initial rise in mass education, most educational progress was achieved by the modern African state” (p. 28). I wonder to what extent the same could be said of Latin America.

The second part of the book is entitled “Colonial Legacies, Local Elites and Schooling.” In a first chapter, Sun Go and Ki-Joo Park give a comparative account of the rise of primary education in South Korea and Taiwan during the Japanese colonization. This is particularly interesting considering the rapid growth of these two countries after independence, often attributed to their relatively high level of human capital. The authors used primary sources to produce new internationally comparable estimates of enrollment, class size, and education expenditure, in the spirit of Lindert’s (2004) chapter on the rise of mass public schooling in Western countries. In a second chapter, Irina España-Eljaiek studies school development in Colombia during the first globalization. It is one of the only chapters to directly tackle the question of race and inequality in the provision of education: according to España-Eljaiek, racism explains why the increase in primary education following the export boom during the first globalization was not equally shared. Interestingly, the vision of religious missions emerging from this chapter is very different from the vision emerging from part I: “the Catholic missions were expensive, limited the subnational autonomy and had little impact on education” (p. 138).

The third part is concerned with international migration. The first two chapters ask the same question: was migration during the first globalization responsible for a brain drain or a brain gain in the sending country? The answer is important for anyone concerned about the consequences of emigration for developing countries. The first chapter, written by Matteo Gomellini and Cormac Ó Gráda, studies Italy and Ireland, while the second chapter, written by Johannes Westberg, studies Sweden. Emigration could be responsible for a fall in average human capital if emigrants were positively selected on education, while it could be responsible for a human capital increase if emigration increased the perceived returns to education, or if remittances from migrants increased the income available for spending on education. Though both chapters are very nuanced in their conclusions, they find little evidence for a brain drain and some evidence for a brain gain. Particularly striking is Westberg’s example of the potential for technology transfers because of the migration and re-migration of technical engineers from Sweden to the U.S.: 40% of the graduates from technical institutes between 1880 and 1919 emigrated to the U.S. 70% of these re-migrated, and played a major role in the development of Swedish industry (p. 208-209). Finally, a last chapter by Bruno Gabriel Witzel de Souza studies the impact of migration on human capital in the receiving country, by carefully reconstructing, using a wealth of archival material, the history of German schools in Brazil

The fourth part is concerned with how different ideas about education and school systems travelled around the world and shaped the expansion of education in various places. Nancy Beadie studies the exportation of the American education system to the colonial territories of Hawaii, Puerto Rico, Cuba and the Philippines. According to her, the logic behind the federal support for education expansion after the Civil War was then exported to the colonies. Pei Gao studies the emergence of Western-inspired modern education in China between the end of the nineteenth century and 1949. The implementation of a national education system was decentralized and depended a lot on local political elites. This is reminiscent of the history of the emergence of mass education in Western Europe and the U.S. (Lindert 2004). The chapter brings together data on public and private school supply and enrollment rates. The final chapter by David Mitch studies Iran, a too often overlooked country. It is concerned with how Iran achieved nearly universal literacy in the space of few decades, with surprising continuity between the Pahlavi dynasty and the Islamic regime. Both the Shah and the Ayatollah used education as a policy lever to achieve political goals.

My only concern with this much needed volume is that it perhaps lacks a unifying question. Each chapter stands on its own and there is little discussion between the different chapters. I had the feeling that the book was hesitating between two forms: 1) a history of how globalization (transfers of ideas, migration of people, missionary expansion and colonization) mattered for the expansion of mass education, and 2) a global, comparative history of education systems. In the end, I think what the book wants to be is 1), which means there is still room for writing 2), perhaps with the same contributors. I was also a bit disappointed by the lack of comparative data. Though individual chapters display new data, there was no attempt to harmonize and bring together these data to present a global quantitative vision of the rise of mass education in the last two centuries.

References:

Peter Lindert, Growing Public: Social Spending and Economic Growth since the Eighteenth Century (Vol. 1). Cambridge: Cambridge University Press, 2004.

World Bank. 2020. World Development Indicators.  https://data.worldbank.org/indicator/SE.PRM.TENR

 

Yannick Dupraz is a teaching fellow at the University of Warwick. His research interests are development economics and the economic history of Africa. A recent publication of his “French and British Colonial Legacies in Education: Evidence from the Partition of Cameroon,” Journal of Economic History 79(3).

Copyright (c) 2020 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (March 2020). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Education and Human Resource Development
Geographic Area(s):General, International, or Comparative
Time Period(s):19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

Capital in the Nineteenth Century

Author(s):Gallman, Robert E.
Rhode, Paul W.
Reviewer(s):Margo, Robert A.

Published by EH.Net (March 2020)

Robert E. Gallman and Paul W. Rhode, Capital in the Nineteenth Century. Chicago: University of Chicago Press, 2019. xvi + 381 pp. $65 (hardcover), ISBN: 978-0-226-63311-4.

Reviewed for EH.Net by Robert A. Margo, Department of Economics, Boston University.

 
The late Robert Gallman (1926-1998) was one of the original cliometricians and, more generally, one of the leading scholars of social science in the twentieth century. We are all familiar with Deirdre McCloskey’s “Fifty-Year” Rule — will anyone read and/or cite Professor X’s work in 50 years? I predict our descendants will be reading and citing Gallman’s works, particularly those on the measurement of long-run economic growth in the United States, into the indefinite future. The volume under review is issued in the National Bureau of Economic Research’s on-going monograph series, “Long-Term Factors in Economic Development.” Gallman’s co-author, Paul Rhode, is Professor of Economics at the University of Michigan, and an NBER Research Associate.

Gallman worked on the subject matter of Capital in the Nineteenth Century — the growth of capital and national income in the United States during the “long” nineteenth century — his entire professional life. At death he left published articles, worksheets, partial and completed unpublished manuscripts. When alive Gallman would dole out copies of unpublished works to inquiring scholars, always with a polite but stern warning to limit uses of his numbers to those for which he deigned them worthy (your faithful reviewer was a recipient, as mentioned briefly on p. 104 of the book). Paul Rhode was Gallman’s colleague at the University of North Carolina. He has collected, reviewed and edited the various articles and manuscripts; written complementary text where necessary; and assembled the disparate parts into a coherent whole — this book. We are in Paul’s debt.

Capital is divided into a Preface, fourteen substantive chapters, and a conclusion (“Wrapping Up”). There are tables, usually many and often detailed, in every chapter — many more tables than figures (Gallman, Rhode tells us, preferred the former). The writing is not in one voice throughout — how could it be? — but it is easy to tell Rhode from Gallman; and, while I am sure that Gallman, were he still with us, would have wanted to polish some of the prose, it is more than serviceable throughout.

Chapter One, “Robert Gallman’s Capital Stock Project,” introduces the subject matter, recounts the origins of the volume, gives capsule summaries of each chapter, and outlines the major substantive findings. These major findings, all well known, are that the capital-to-output ratio rose sharply over the long nineteenth century, as did the savings rate. The rise in the capital-to-output ratio went hand in hand with a sharp fall in the relative (to output) price of capital goods. Industrialization per se does not explain capital deepening because agriculture was actually more capital intensive than other sectors, and agriculture’s share of output declined over time. Rather, one should interpret “industrialization” as a broader process including the transportation revolution and (especially) urbanization, both of which did mobilize large amounts of capital. Chapter Two (by Rhode, like Chapter One) brings together the first order numbers, census-style (and frequency) of the capital stock, and also those of national wealth.

The next four chapters elaborate on the implications of the first two. Chapter Three is essentially the same as Gallman’s 1986 chapter (“The U.S. Capital Stock in the Nineteenth Century”) in the Engerman and Gallman NBER volume, Long-Term Factors in American Economic Growth, with some reordering and slight revision by Rhode, and re-computation of growth rates from the original paper to make them consistent with those presented elsewhere in the book. The estimates in Chapter Three cover the period 1840 to 1900. Like Chapter Three, Chapter Four was also previously published (in the 1992 Gallman and Wallis NBER volume, American Economic Growth and Standards of Living Before the Civil War) and is also reordered, slightly revised, and has newly computed growth rates. It extends the analysis of the capital stock and associated growth backward to 1774, thus covering the early national period, and forward to 1980. For most readers, Chapter Five provides compelling reason alone to buy the book; it presents Gallman’s annual estimates of national income from 1834 to 1909. The last sentence of the chapter reiterates Gallman’s admonition: “[t]hese data were not constructed for analysis as annual series.” Chapter Six, which originally appeared in the 1987 volume (Quantity and Quiddity) honoring Stanley Lebergott, uses annual flow data cum perpetual inventory methods to generate capital stock estimates, which Gallman viewed as a useful check on his primary numbers.

Chapters Seven through Thirteen focus on particular sectors or components of the capital stock: Agriculture (Chapter Seven), Mining and Manufacturing (Chapter Eight), Nonfarm Real Estate and Trade (Chapter Nine), Transportation (Chapter Ten), Communication and Electric Utilities (Chapter Eleven), Inventories (Chapter Twelve), and Consumer Durables (Chapter Thirteen). For specialists, the chapters are a godsend (in my professional capacity as specialist in historical manufacturing as opposed to reviewer, I will be studying Chapter Eight word for word), and each provides much food for thought for the non-specialist. Regarding such food, I am especially fond of Chapter Thirteen, which demonstrates that the “consumer revolution” of the twentieth century began in the nineteenth, with the humble but ubiquitous cast iron stove as the iconic example. Chapter Fourteen provides further details on wealth in colonial America and the early nineteenth century, and Chapter Fifteen briefly concludes.

Gallman was a titan and his decades-long project on the American capital stock is one of the great wonders of the world of the economic history. Its status, though, should not cause economic historians to assume that Gallman is the last word. To the contrary, it is the deep and abiding obligation of every generation of economic historians to revisit earlier works, using better data and methods (if available) to revise and rewrite, if such proves necessary. Even a Robert Gallman occasionally got things wrong. In a recent article, Jeremy Atack and I (Atack and Margo 2019) revisited Gallman’s estimates of nineteenth century manufacturing output, arguing that it was incorrect to exclude, as he did, the output of the so-called “hand trades” — for example, blacksmithing. Correcting this has only a minor effect on the aggregates but including blacksmithing and the other hand trades in the narrative (and the numbers) illuminates the transition from small to large scale production and specialization of labor that was a key hallmark of early industrialization. Paul Rhode’s tireless and now completed effort to present Gallman’s project in a comprehensive whole makes this kind of re-evaluation much easier to accomplish. Capital in the Nineteenth Century belongs on the bookshelf of every economic historian interested in the processes of long run growth, which is to say all of us.

Reference:
Jeremy Atack and Robert A. Margo. 2019. “Gallman Revisited: Blacksmithing and American Manufacturing, 1850-1870,” Cliometrica 13 (January): 1-23.

 
Robert A. Margo is Professor of Economics at Boston University, a Research Associate of the National Bureau of Economic Research, and a former President of the Economic History Association (in 2014-15).

Copyright (c) 2020 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (March 2020). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Agriculture, Natural Resources, and Extractive Industries
Income and Wealth
Industry: Manufacturing and Construction
Transport and Distribution, Energy, and Other Services
Urban and Regional History
Geographic Area(s):North America
Time Period(s):19th Century

Escape from Rome: The Failure of Empire and the Road to Prosperity

Author(s):Scheidel, Walter
Reviewer(s):Temin, Peter

Published by EH.Net (March 2020)
Walter Scheidel, Escape from Rome: The Failure of Empire and the Road to Prosperity. Princeton: Princeton University Press, 2019. xvii + 670 pp. $35 (hardcover), ISBN: 978-0-691-17218-7.

Reviewed for EH.Net by Peter Temin, Department of Economics, MIT.

 
Walter Scheidel says in his acknowledgements that he proposed to write a short book on this topic, but he ended up with this long book. He seems to have written two books, as suggested by his subtitle: one about the fall of the Roman Empire and one about the Industrial Revolution. His aim is to connect these two events in a monocausal stream. In his words (p. 27): “Only Western Europe and its offshoots fit the bill: had our “Great Escape” [Industrial Revolution] not begun there, it would most likely not have happened at all.”

Many empires fell, but there was only one Industrial Revolution. It is hard to pin down the cause of unique inventions, such as the alphabet. Scheidel also claims that the modern cotton industry was caused by events almost two millennia earlier. This is a big book about “big” history; it is — as Scheidel freely admits — a hypothesis rather than a proof.

Scheidel’s ambition reminds me of another book by an ancient historian. Martin Goodman argued in Rome and Jerusalem (Random House, 2008) that a military mistake during the Roman siege of Jerusalem in 70 CE led to the Holocaust two millennia later. These interesting books are not proposing economic hypotheses that can be tested with big data. They instead are directing us to understand how history — even ancient history — affects the world we live in.

Scheidel summarizes his 500-page book as follows: “I wrote this book to establish … two simple points: that interlocking forms of productive fragmentation were of paramount importance and indeed indispensable in creating the specific set of conditions that gave birth to modernity, and that the divergences that precipitated this outcome in only one part of the world but not in others were highly robust (p. 27).” Alternatively, why did Europe rather than China have an industrial revolution?

Scheidel surveys Roman economic history in Part II of the book, to which he has contributed a great deal, particularly on demography. His sources are many, and his footnotes guide anyone who wants to know more. He concludes his survey with a foray into counterfactual history, where he asks if Roman dominance could have been thwarted by another ancient state. As usual in these intellectual exercises, it is hard to get away from the idea that the history we know was inevitable.

Scheidel asks why other European empires did not arise on the ruins of the Roman Empire in Part III. For example, he notes that a Frankish empire was prevented by the practice of dividing kingdoms among the king’s sons (p. 158). It sounds like the aftermath of Alexander the Great. And it contrasts with the Roman Empire where Vespasian, after seizing power in the chaos that followed Nero’s death, was succeeded in turn by his two sons, Titus and Domitian. Scheidel does not ask if the system of land-holding was determinative, long-lasting and the unappreciated secret of why empires rose and fell. He summarizes his position and his thematic approach to empire longevity at the end of Part III (pp. 212-15).

Scheidel finally gets to the West and China in Part IV, and he summarizes his position in two figures, Figures 8.1 and 8.2, on a single page (p. 262) which contrast the mountains of Europe with the fertile steppes of China. The fall of the centralized Roman Empire fades from view to be replaced the ephemeral Holy Roman Empire that succeeded it. Economic historians will recognize this as posing an identification problem. Did the failure of the Roman Empire cause the mountains to rise? Or did the mountains make it close to impossible for the Roman Empire to be duplicated later?

Scheidel appears to agree that the latter choice identifies his view. But Part III, as just discussed, presents all kinds of reasons why no empires grew on the ruins of the Roman Empire, but geography is not one of them. Was the absence of new European empires due to the mountainous geography — as suggested in Part IV — or to the legacy of Rome — as suggested in Part III? If we follow Part IV, why is Rome in the story at all? If we follow Part III, why isn’t European geography important in the narrative of medieval Europe? One way out of this apparent loss of focus would have been to stress the maritime activities of the Roman Empire and the gains from trade. Rome as an open economy only served as a model for other empires when the Atlantic trade opened up many centuries later.

Part V continues the story by presenting Scheidel’s synthesis of the literature on how early modern warfare and competition generated the cotton textile industry. (He fails to mention the steam engine.) He then turns to Chinese history that most Western economic historians do not know to sharpen the contrast between competitive European states and Chinese empires. His point is that the Chinese took good care of their citizens but did not encourage innovation.

Scheidel turns to trade and knowledge in Part V. He sings praises of trade and argues that China suffered from a lack of international trade. Then he outlines a short course on the Industrial Revolution by discussing what seems like the entire recent literature on the subject. Scheidel discusses the effects of an open society as opposed to the closed society of China in his last chapter. Finally, he discusses trade in the Roman Empire in an Epilogue, as I suggested earlier, arguing that trade increased incomes of ordinary people but did not lead to a Roman industrial revolution.

Escape from Rome is a well-written survey of an enormous literature on the history of the world. If you have time to read 500 pages, it is fun and interesting to read. Economic historians might want to start with Part IV to evaluate Scheidel’s thesis. My summary is that this is an admirable book that would have benefited from an additional edit which included the current Epilogue in Part IV. Whether Rome had to rise and fall before we could have an Industrial Revolution remains speculative and worthy of discussion after reading through Scheidel’s history and counterfactual speculations.

Peter Temin is Professor Emeritus of Economics, MIT, and the author of The Roman Market Economy (Princeton, 2013) and “Words and Numbers: A New Approach to Writing Ancient History,” Journal of Interdisciplinary History 50 (1), 31-58 (2019).

Copyright (c) 2020 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (March 2020). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Economic Development, Growth, and Aggregate Productivity
Economywide Country Studies and Comparative History
Geographic Area(s):Asia
Europe
Middle East
Time Period(s):Ancient

Response to Bateman’s Review of Dimand and Hagemann, eds., The Elgar Companion to John Maynard Keynes

Author(s):Tily, Geoff
Reviewer(s):Tily, Geoff

Published by EH.Net (March 2020)

Response to Bradley Bateman’s Review of Robert W. Dimand and Harald Hagemann, editors, The Elgar Companion to John Maynard Keynes — by Geoff Tily.

 
I am grateful to Bradley Bateman for his remarks on my essay in the Elgar Companion to John Maynard Keynes. My aim was to emphasize the over-riding importance of Keynes’s monetary initiatives, necessarily including the international as well as British perspectives. I did not address the details of subsequent academic and policy debate, and, as Bateman points out, I did not address the contributions of those who have departed from the conventional view of “Keynesianism.” However, elsewhere I have devoted a good deal of attention to the contemporary literature. Of most relevance are a review of The Return to Keynes (2010) and a review essay on the Cambridge Companion to John Maynard Keynes (2006), both edited by Bateman with others and published on each side of the “great recession” (Tily, 2013, 2011).

These reviews tackle contributions by a number of the scholars cited by Bateman. For example in the latter I devoted a good deal of attention to G. C. Peden, recognizing his important contributions on British policy and especially as one of the few who have addressed substantially Keynes’s monetary policy. I stand by my criticism that Peden portrays “… these matters as ad hoc, rather than as a permanent backdrop or preoccupation.”

Keynes’s theory and policy amounted to a great deal more than Bateman’s suggested “preference for low interest rates over fiscal deficits.” Keynes warned that permanently low interest rates (across the spectrum) were essential to the prosperity and stability of the economic system. For me, the ongoing economic (and political) crises of the twenty-first century are rooted in the loss of this practical conclusion and the dismantling of the associated policy and institutional infrastructure. A fuller and freely accessible take on these matters is in my “As If Keynes Had Never Lived,” which was originally given as a lecture at King’s College Cambridge at a conference celebrating the eightieth anniversary of The General Theory (Tily, 2016).

As an aside: this perspective gives me a very different take on outcomes, not least that Keynes should be judged against the successes of the golden age rather than the failures of chasing growth the 1970s. But I would not want the reader to have the impression that my essay is an empirical argument: the figures were intended simply to supplement and illustrate the story.

My fundamental concern with the approach of Bateman and those he champions is that Keynes is either contained in the past or deployed merely in support of the contemporary policy consensus (though any consensus has somewhat unraveled compared to the view in Bateman et al. 2010). In my book (Tily, 2006) I argue Keynesianism was a different and rival theory to Keynes’s own. A similar argument is made in the Cambridge Companion, where Keynesianism is found to originate in various “proto-Keynesian” contributions (a term attributed to Peter Hall). While I trace the origins of IS-LM to contributions by Dennis Robertson, the Cambridge Companion emphasizes widespread policy preferences for demand management and “deficit spending” (“in the interwar period in Sweden, Japan, the United States, France, Italy and Germany,” p. 284) and emerging preferences for formal mathematical models (e.g. p. 36). My review of the Companion betrays a serious frustration that having identified (or acknowledged) this intellectual sleight of hand — and moreover (partially) recognizing Keynes’s monetary policy initiatives — the opportunity for a material re-assessment of Keynes is immediately closed down. (Doubtless any frustration was exacerbated by my efforts to do the opposite almost in exact parallel.) Instead Keynes is renewed as an “activist,” willing creatively to deploy monetary and/or fiscal policy according to circumstance. And this approach is common to many of the scholars praised in Bateman’s review, not least D. E. Moggridge, Susan Howson and Peter Clarke. In his (2009) biography of Keynes, Clarke also finds the textbook interpretation incorrect. He harshly condemns any rethinking as “anachronistic ventriloquism.” Acceptable only is a “pragmatic Keynesianism,” which licenses “fresh approaches to the novel economic difficulties of our own era — to tackle them actively rather than take refuge in inert doctrinal purity” (180).

For me this is an absurd reaction to the realization that the textbooks got Keynes wrong. As global policymakers fall short in their efforts to resolve a global crisis of private debt akin to that which motivated The General Theory, the position appears reckless in the extreme. Though of course there is a certain convenience in Clark’s interpretation: with Keynes relevant only to the past, the crisis cannot be the fault of the economics profession getting it wrong. This is not to say that Keynes’s word is final, but I very much doubt we can make much progress without a proper understanding of the substance of his theory that has been denied by the Keynesian interpretation.

I hope these comments and the associated contributions convince Professor Bateman that my work is less “incomplete” than he judged from the essay in the Elgar Companion. But even more I hope to convince him to distance himself from attempts to close down any debate about “what Keynes really meant.”

References:

Clark, Peter (2009) Keynes: The Twentieth Century’s Most Influential Economist, London: Bloomsbury.

Tily, Geoff (2006) The General Theory, The Rate of Interest and ‘Keynesian’ Economics, Basingstoke: Palgrave Macmillan.

Tily, Geoff (2011) “Another ‘Useful Fiction’?” review essay on Roger E. Backhouse and Bradley W. Bateman, Eds. (2006) The Cambridge Companion to Keynes, Critique of Political Economy, 1, Autumn, 121-52. Online at http://copejournal.com/wp-content/uploads/2015/12/geoff-tily-another-e2809cuseful-fictione2809d.pdf.

Tily, Geoff (2013) Review of Bradley Bateman, Toshiaki Hirai and Maria Cristina Marcuzzo, Eds. (2010) The Return to Keynes, Cambridge, MA: Harvard University Press, Economica, 80, 190-4.

Tily, Geoff (2016) “As If Keynes Had Never Lived: The Second UK (and World) Crisis of Financial Globalization,” Paper for Conference at King’s College Cambridge: “Maynard Keynes in King’s College and The General Theory of Employment, Interest and Money (1936), October 2016. Online at https://static1.squarespace.com/static/541ff5f5e4b02b7c37f31ed6/t/57fbce3e197aead299c495c9/1476120128630/Tily+As+if+Keynes+had+never+lived+v2+%28003%29.pdf

 
Copyright (c) 2020 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (March 2020). All EH.Net reviews are archived at http://www.eh.net/BookReview.

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

The Lion’s Share: Inequality and the Rise of the Fiscal State in Preindustrial Europe

Author(s):Alfani, Guido
Di Tullio, Matteo
Reviewer(s):Pezzolo, Luciano

Published by EH.Net (March 2020)

Guido Alfani and Matteo Di Tullio, The Lion’s Share: Inequality and the Rise of the Fiscal State in Preindustrial Europe. New York: Cambridge University Press, 2019. xii + 232 pp. $40 (hardcover), ISBN: 978-1-108-447621-8.

Reviewed for EH.Net by Luciano Pezzolo, Department of Humanities, Ca’ Foscari University of Venice

 
Since protesters gathered in Zuccotti Park in New York in 2011 inequality has been one of the most debated issues at both the academic and the popular level. Thomas Piketty’s (2013) work, largely relying on tax data, has provided an apparently solid base to the claim that in the capitalist world inequality is the usual state of affairs. Economic historians have been concerned with this problem too. Following Simon Kuznets’ work (1955), Jeffrey Williamson and Peter Lindert (1976) dealt with American inequality over three centuries, and Jan Luiten van Zanden (1995) wrote a pioneering essay on inequality in early modern western Europe.

The work of Guido Alfani, professor at the Bocconi University of Milan, and Matteo Di Tullio, researcher at the University of Pavia, adds to this literature by analyzing the process of economic inequality in the Republic of Venice between the sixteenth and eighteenth centuries. To this aim, fiscal sources (132 tax registers compiled between 1409 and 1801), provide the fundamental material for measuring the degree of inequality in both urban and rural environments. The estimi (tax registers) were drafted by local authorities in order to distribute direct taxes on both land properties and “heads.” The ample sample on which the authors rely counts five cities, thirteen towns and villages and eight rural districts, which are located in the central part of Veneto and in the territory of Bergamo.

The structure of state revenues, which is the subject of chapter one, was primarily made up of duties on consumption and transactions, while direct taxation provided about one fifth of revenues. Like any tax system, the Venetian one also reflected institutional and power relations: taxpayers, as far as direct taxation was concerned, were divided into city dwellers, inhabitants of the contado (the rural district around the main cities), ecclesiastics, Venetians, and privileged households and communities. These categories were often inscribed in specific estimi and consequently it is difficult to include the entire body of taxpayers in the dataset.

Chapter two addresses the issue of the number of rich and poor in Venetian society. The authors define poor as a household or individual whose assessed wealth is below 25 percent of the median; the rich are at least ten times above the median wealth. The data confirm that the presence of poor people tends to grow throughout the modern age up to 1800, and that their number is larger in the city than in the countryside. As for the rich, they also tend to grow. In short, the Venetian mainland witnessed an evident process of social polarization over the period here considered.

The same phenomenon emerges in chapter three, dedicated to economic inequality in the long run. During the early modern age, the general trend was towards inequality in almost all the areas examined. The data show that this process was more evident in the countryside than in the urban world, where average household wealth was higher. The plague of 1630 smoothed the trend for a short period, but it resumed shortly afterwards.

The fourth and final chapter considers the redistributive effects of taxation, seen as one of the main causes of the growing inequality in the Venetian state. Most (70-80 percent) of state revenue came from indirect taxes, while direct taxation covered the rest. The authors estimate that the impact of this tax structure on the various sections of the population was proportionally more disadvantageous for the poorer classes than for the richer ones. The regressive nature of taxation, common to most of the old regime states, would therefore have favored the process of inequality. This phenomenon was also accentuated by public spending, which was largely earmarked to the defense and debt service, while over the last two centuries of the Republic social spending accounted as low as 0.2-1.3 percent of the budget. It must be considered, however, that social spending (assistance to the poor and orphans, education, public health) was mostly managed by local institutions.

The chapter also offers a wide and interesting comparison with other Italian states (Tuscany, Piedmont, Kingdom of Naples), the Netherlands and the Southern Low Countries. All the cases considered show, despite different phases of growth and stagnation, a common growing inequality over the modern age. The main culprit is identified by the authors in the fiscal-military state, and the consequent fiscal and economic inequality it generated. The emergence of what was once called the absolute state has been the subject of much debate among scholars, but no one has so far emphasized the effects it produced in terms of social (in)equality. The merit of this book is that it has tackled the problem by analyzing a vast area for three centuries. The concept of the fiscal-military state, however, does not always seem to be useful to explain the inequalities between different countries. Most states of the early modern age were more a mosaic of privileges and immunities than that mythical monolithic organism that was built by nineteenth century historiography. It is problematic, for example, to identify in the Grand Duchy of Tuscany the typical features of an aggressive state taxation system that manages to affect the distribution of the wealth of its subjects.

If the state of the old regime seems unable to significantly change the level of inequality of the population, perhaps it is useful to widen our gaze to the market and its mechanism. Recent models developed by statistical physicists (Li, Boghosian and Li, 2019) have hypothesized that a simple exchange, even among equal actors, generates a tiny inequality. Consequently, the growth of transactions is to favor the increasing accumulation of wealth much to the benefit of a small group. It is then likely that the dynamics of inequality in the past could be considered more as a “natural” phenomenon, inherent in the functioning of capitalist markets, than the effect of factors such as relatively weak governments as economic actors.

References:

Kuznets, Simon (1955). “Economic Growth and Income Inequality,” American Economic Review, 45, 1-28.

Li Jie, Boghosian Bruce, and Li Chengli (2019). “The Affine Wealth Model: An Agent Based Model of Asset Exchange that Allows for Negative-wealth Agents and its Empirical Validation,” Physica A: A Statistical Mechanics and its Application, 516, 423-42.

Lindert, Peter and Williamson, Jeffrey (1976). Three Centuries of American Inequality. Madison: University of Wisconsin, Madison Institute for Research on Poverty.

Piketty, Thomas (2013). Le capital au XXIe siècle. Paris: Le Seuil.

Van Zanden, Jan Luiten (1995). “Tracing the Beginning of the Kuznets Curve: Western Europe during the Early Modern Period,” Economic History Review, 48, 643-64.

 
Luciano Pezzolo is Professor of Early Modern History at the Department of Humanities of Ca’ Foscari University of Venice. His main fields of research are financial and military history of late medieval and early modern Italy, on which a book, entitled Mars and Pluto, is to be published by Oxford University Press.

Copyright (c) 2020 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (March 2020). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Government, Law and Regulation, Public Finance
Income and Wealth
Geographic Area(s):Europe
Time Period(s):Medieval
16th Century
17th Century
18th Century
19th Century

The Charity Market and Humanitarianism in Britain, 1870-1912

Author(s):Roddy, Sarah
Strange, Julie-Marie
Taithe, Bertrand
Reviewer(s):Gosling, George Campbell

Published by EH.Net (March 2020)

Sarah Roddy, Julie-Marie Strange and Bertrand Taithe, The Charity Market and Humanitarianism in Britain, 1870-1912. London: Bloomsbury, 2018. ix + 224 pp. £85 (hardcover), ISBN: 978-1-350-05798-2.

Reviewed for EH.Net by George Campbell Gosling, Department of History, University of Wolverhampton.

 
The central concern of this book is the extent to which late-Victorian and Edwardian charities adopted business practices. As such, it is fitting that theories and concepts borrowed from business and marketing studies feature throughout, whether in developing “brand identity,” the “franchising” of fundraising efforts or early forms of “social enterprise” and “ethical consumerism.” The authors consistently and convincingly present a view of voluntary organizations not only keeping up with developments in the business world, but in some cases even being ahead of the game.

The opening chapter uses the Salvation Army, Barnardo’s and Manchester’s Wood Street Mission as case studies to demonstrate the emergence of what is termed “charity enterprise” in the late-nineteenth century. All three were characterized by the dominant role of the founder, “entrepreneurs” who were personally and visibly involved in fundraising campaigns that reflected the innovative practices of commercial advertising and marketing that were taking shape at the time (p. 11). Creativity and sensationalism in the use of the press, leaflets and posters, celebrity and “speakers with depraved pasts” were matched by what was essentially Victorian crowdfunding through church collections, chain letters and collection boxes that increased “the social depth of the donor market” (p. 19). The second chapter shows how this innovation was applied to developing appealing ways of “consuming charity,” with Salvationists buying commemorative photographs or ethically-produced safety matches as a form of “purchase-triggered donations” (p. 44). Meanwhile, entertainment and sporting activities formed a sort of fundraising “experience economy” where feats of muscular Christianity served as a precursors of today’s charity marathons (pp. 53-54).

The third chapter presents the case for charities being ahead of their commercial counterparts when it came to the development of what we would today call their “brand personalities” (p. 66). This task was even more important to charities than businesses as “values had to be integrally inscribed into their brands from the outset” (p. 80). Policing “charity fraud” was both a means of brand protection through self-regulation and, the fourth chapter tells us, of asserting and ensuring a “virtuous market” (pp. 81-82). In practice this meant adhering to the Charity Organisation Society’s expectations for active committee oversight, audited and published accounts and low administration costs while avoiding duplication of other charities’ work. By introducing “normative, capitalistic approaches to what had often been considered a premodern form of exchange” (p. 96), the late-Victorian voluntary sector “operated in many significant respects as a market” (p. 81).

The final two chapters trace these developments in the field of international humanitarian aid. While the great and the good may have raised funds in a very traditional way for the Stafford House Committee, they also embraced change in terms of transparency, commercial networks and collaboration with other humanitarian organizations, for example during the 1877-78 Russo-Turkish War. All of which was outdone by the more explicitly professional and business-minded and hugely successful “franchise fundraising” of the Mansion House appeals discussed in the last chapter (p. 122). Here provincial lord mayors served as sub-agents to the Lord Mayor of London, fundraising amongst their local middle classes and elites for major national and international disaster relief collections in a similar fashion to local agents who sold Singer sewing machines.

It was, we are told, the demands of demonstrating legitimate charity management to donors and the wider public that effectively priced the smaller, more ad hoc charities out of the domestic and international markets they had dominated in the early-nineteenth century. This, along with an increasingly competitive charity market, is what drove the adoption of modern, professional and business-like practices already evident by the end of the Victorian period. Some readers may find this argument jarring, with the familiar characteristics of amateurism and altruism largely absent. However, the case is well made and the corrective much needed. Historians are inevitably skeptical of the claims of newness frequently made by advocates of the “new philanthropy” and “philanthrocapitalism,” but in charting the parallel and interwoven developments of business and charitable fundraising this book is an important substantive intervention.

The central thesis is that the world of British philanthropy and humanitarianism should, by the end of the nineteenth century, be clearly understood as a “charity market.” The sheer number and variety of illustrative examples drawn upon in this book makes for a convincing argument. The ways charities framed and conducted interactions with their (potential) donors, as well as with each other, is successfully shown to have operated according to a whole host of what are typically thought of as commercial practices and business principles. Future scholarship will need to engage, even if critically, with the notion that modern British philanthropy and business did not come into being as fundamentally different beasts.

Where the authors expertly identify emergent features of commercial practice in the voluntary field, it is noticeable there is no discussion of how “charity” might be defined until page 87, when the focus is on how contemporary critics identified illegitimate charities. Despite this, much of the discussion revolves around whether commercial practices undermined claims of fundraisers to be engaged in real or authentic charity. This oppositional frame is not one necessarily found in sociological work on the social meanings associated with money in modern life. We might wonder whether the view of business-savvy or even hard-nosed charity entrepreneurs is the result of focusing on fundraising, rather than the adoption of business-like practices in their social housing or retail operations which deliberately imitated commercial practices but often ran on a non-profit basis, deeply imbued with social and moral mindsets.

Regardless, the very fact that fundraising existed as such a fully-developed and commercialized sphere of voluntary activity at this time is a point worth making. The authors have done a fine job here of bringing together contemporary voluntary and business concerns with historical evidence, as well as the domestic and imperial histories. It will undoubtedly quickly become essential reading for anyone seriously interested in the development not only of modern philanthropy and humanitarianism but also modern business in Britain.

 
George Gosling is Senior Lecturer in History at the University of Wolverhampton. He is the author of Payment and Philanthropy in British Healthcare, 1918-48 (Manchester University Press, 2017) and is currently working on the British history of charity retail.

Copyright (c) 2020 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (March 2020). All EH.Net reviews are archived at http://www.eh.net/BookReview.

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