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Egypt’s Occupation: Colonial Economism and the Crises of Capitalism

Author(s):Aaron G. Jakes
Reviewer(s):Johan Mathew, Associate Professor of History, Rutgers University

Published by EH.Net (September 2021).

Aaron G. Jakes. Egypt’s Occupation: Colonial Economism and the Crises of Capitalism. Stanford: Stanford University Press, 2020. xvii + 352 pp. $30 (paperback), ISBN 978-1-5036-1261-7.

Reviewed for EH.Net by Johan Mathew, Department of History, Rutgers University.

 

The British occupation of Egypt is well-trod ground for scholars. The impact of colonialism in Egypt has been fodder for historical debate since before we could speak of occupation in the past tense. When other regions of the Middle East or Africa or Asia are woefully neglected by scholars, there must be a high bar to justify yet another monograph on colonial Egypt. Thankfully, Aaron Jakes’s Egypt’s Occupation clears that bar with room to spare.

Egypt’s Occupation: Colonial Economism and the Crises of Capitalism masterfully weaves together intellectual history, global history, financial history, and political economy to interrogate the ways that colonial rule was justified and the ways it was contested. It is also, perhaps most potently, a history of capitalism as it coursed up the Nile River, across the fields and through the minds of Egyptians and their occupiers. In eight densely argued chapters, the book moves from the beginning of British occupation in 1882 through to 1914 when the veiled protectorate is sundered with formal colonization at the onset of the First World War. Through this analytic/chronological narrative we see how colonial policy and economic development unfolded in tension with local challenges and global crises.

It would be impossible for me to do justice to the many subtle insights and arresting details that Jakes provides to bolster his arguments so I will limit myself in this review to what I understand as the main conceptual contributions of this work. Egypt’s Occupation convincingly details how colonial officials represented Egyptian peasants as a caricature of homo economicus: able to rationally calculate their economic self-interest but unable to comprehend the collective public good and thus incapable of self-government. This caricature justified indefinite colonial rule, but over several decades it also materially transformed Egypt such that those peasants were now inescapably entangled in the web of global capital flows and forced to constantly react and respond. But in this gloomy narrative, Jakes finds a glimmer of hope in the economic thought of Egyptian nationalists, who were able to diagnose this convoluted predicament and offer possibilities for escaping it. Thus the book as a whole is a powerful argument for intellectual history as economic history.

Another important thread that runs through the work is Egypt’s location in a global process of economic transformation. This is not simply about Britain’s occupation of Egypt, but rather how Egypt served as a laboratory whose experiments were circulated and reproduced in the Philippines, India, and elsewhere. Moreover, the capital wielded by the City of London roamed the globe looking for the highest returns. Egypt became a preferred destination for financial investment because it offered some of the highest returns and imperial power mitigated most of the risks. Egypt, in all its diversity and complexity, was thus reduced to a rate of return easily comparable to India, Ireland or Iowa.

Jakes’s unique take on this important story is to follow the ways that this commensurability was harnessed by critics of colonial rule. The 1907 financial crisis became a moment of stark clarity in which the underlying realities of colonial capitalism were exposed in the Egyptian press. We see how the easy appraisal of Egypt against other sites of investment made it possible for Egyptian intellectuals to appraise the comparative failures of colonial economic policy. A financial crash initiated by an earthquake in San Francisco had crushed the Egyptian fellahin (peasantry) because of the misguided colonial economism of their British rulers. The very commensurability of Egypt as a financial security thus became the whetstone on which anti-colonial critiques could be sharpened. In the process, Egypt’s Occupation shows that the seemingly derivative ideas of anti-colonial thought, held the seeds of innovative economic frameworks that would come to flower decades later in the Soviet Union or Latin America.

Certain readers of this review may find it frustrating that there is little in the way of quantitative analysis of the issues presented. However, I hope that more quantitatively inclined readers will appreciate Jakes’s argument that statistics on the Egyptian economy were created to justify colonial rule and instantiate colonial economism. That being said, there is a possibility that creative statistical analysis, or even traditional modes of labor history might have mitigated an absence of which Jakes is only too aware. For all the power of intellectual history, it ultimately renders the Egyptian fellah at the center of this study a mute object for English and Egyptian elites to ponder. Subaltern studies has demonstrated the acute challenge of recovering the intellectual life of such peasants. Nevertheless, one longs for a better sense of how these new ideas and momentous changes were experienced in the fields of the Nile Delta.

One should not fault a book for not being a different kind of book, but I am pushed to do so because there is so little within these arguments to critique. The laser focus on this carefully defined period of Egyptian history means that there are few holes to poke in the argument or the evidence. But in the sheer precision of the argumentation one wonders whether Jakes is selling some important ideas short. The concept of colonial economism would seem to have tremendous value for understanding post-colonial Egypt, or the contemporary efforts of international institutions and authoritarian rulers to manufacture political consent through economic development. Such claims would be messier, subject to greater qualms, and require a more accessible style of argumentation. Yet in getting churned through wider debate these ideas might gain the kinds of attention they deserve beyond the ivory tower.

Like the finest Egyptian long-staple cotton, Egypt’s Occupation is an ideal union of strength of argumentation and beauty of prose. It should be required reading for anyone interested in the history of Egypt or the history of economic thought. It will be of great interest to intellectual historians, colonial historians, and scholars of Middle East Studies and political economy. It deserves to be read by anyone concerned with the inequities and contradictions of global capitalism.

 

Johan Mathew is Associate Professor of History at Rutgers University. His publications include Margins of the Market: Trafficking and Capitalism across the Arabian Sea (University of California Press, 2016) and “On Principals and Agency: Reassembling Trust in Indian Ocean Commerce” (Comparative Studies in Society and History, 2019).

Copyright (c) 2021 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 (September 2021). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):International and Domestic Trade and Relations
Geographic Area(s):Middle East
Time Period(s):19th Century
20th Century: Pre WWII

Germany 1871: Nation Building and the Transition to Modern Economic Growth

Editor(s):Pfister, Ulrich
Hesse, Jan-Otmar
Spoerer, Mark
Wolf, Nikolaus
Reviewer(s):Guinnane, Timothy

Published by EH.Net (September 2021)

Ulrich Pfister, Jan-Otmar Hesse, Mark Spoerer and Nikolaus Wolf, editors. Deutschland 1871: Die Nationalstaatsbildung und der Weg in die moderne Wirtschaft. (Germany 1871: Nation Building and the Transition to Modern Economic Growth). Tübingen: Mohr Siebeck, 2021. xix + 454 pp. €99 (hardcover), ISBN: 978-3-16-160068-5.

Reviewed for EH.Net by Timothy Guinnane, Department of Economics, Yale University.

 

January of 2021 marked the 150th anniversary of the first unified state in modern German history. For political and diplomatic historians the 1871 Empire (Reich) has long served as a milestone. For economic historians 1871 has held less significance. Some major institutions of German economic integration preceded the Reich. The Customs Union (Zollverein), which included nearly all of the states that later formed the Reich, dates to 1834. Most German states had adopted a common business code in 1861. Other institutions important to economic integration came long after 1871; for example, Germany lacked a common (civil) law code until 1900.

Prussia’s role within the 1871 “small German” Reich (“small” meaning it excluded Austria) poses a second issue. Prussia dominated the North German Confederation (1866-70), which served as the institutional model for the Reich. The new Reich had about 41 million inhabitants, of whom some 25 million were Prussians. Prussia alone was larger than all but a handful of other European countries at the time. France had about 36 million people (1872), the United Kingdom 31 million (1871), and Italy 27 million (1871). Prussia dwarfed other relatively-developed countries such as Belgium (4.8 million in 1866) or the Netherlands (3.6 million in 1869).

The collection under review here treats 1871 in two ways. Most contributors stress longer continuities rooted in pre-1871 history as well as the slow process by which the Reich advanced new forms of economic integration. Others push the significance of 1871 a bit harder, stressing that the Reich adopted some policies that would have been hard to imagine without it. The thoughtful editors’ introduction lays out four channels that could link the Reich to improved economic performance. The first is national identity; the nation-building that followed 1871 could awaken in Germans a “buy German” sentiment that would have meant less to someone who thought of herself as a Hessian or Saxon. Market integration, a second channel, features today in many studies in economic history, economic geography, and related fields. A third channel presumes that under the Reich, the state and federal governments developed new capacities to deliver services that might promote growth. The final channel runs through better economic institutions, including compulsory social insurance and better patent law.

The collection has nineteen chapters plus the editors’ introduction. The twenty-seven authors represent most of the active economic historians of Germany today, while the comparative chapters bring in leading scholars of other countries. The authors are major authorities in their own areas but do a good job of summarizing other views and pointing the reader to a range of literature. There is little technical material that would challenge interested readers from other disciplines. The collection has a “handbook” feel, albeit a handbook that is unusually comprehensive and scholarly.

Felix Kersting and Nikolaus Wolf begin with a fascinating discussion of the role nationalism played in German state formation, stressing the connections to economic and technological developments. This is well-trodden ground, but they offer new perspectives by bringing in insights from the recent literature on the economics of identity and culture. Readers will appreciate their stress on the way states and the movement for national unification used each other to advance often conflicting goals.

Alfred Reckendrees discusses cooperation among state officials before 1871. The states had long traditions of working together both formally and informally to address issues of common concern. Reckendrees stresses informal networks of officials who met and worked together in many different contexts. These networks laid the foundation for the Reich’s ability to coordinate the state offices responsible for executing important policy initiatives.

Gerold Ambrosius discusses the federal structure created in 1871. At one level, the Reich had sole competence for legislation in economic areas. On the other, the new entity at first had little of the requisite bureaucratic apparatus. The federal chancellor (Kanzler) began (with staff, of course) as the only real Reich functionary. The chancellor relied on the Prussian state’s ministries in the absence of Reich equivalents: thus the details of economic policy for the Reich were developed by officials in the Prussian trade ministry. This arrangement suited Otto von Bismarck, who served as both Reich chancellor and the Prussian equivalent (Ministerpräsident) until relieved by the Emperor in 1890. By the late 1870s the Reich had created some of its own ministries (such as Justice and Finance) and acquired a more direct role in policy after Bismarck’s departure.

Ulrich Pfister stresses significant developments in German economic growth starting in the 1870s, but explicitly sets aside the question of the Reich’s causal role in this change. The growth of both GDP per person and real wages was faster in the later nineteenth century than earlier. The industrial sector became relatively (much) larger and more heterogeneous than it had been during the early years of industrialization. One interesting finding notes that marriage rates became less dependent on short-term economic fluctuations later in the century. He interprets this (and other evidence) as reflecting a transition from an agrarian to an industrial economy.

Mark Spoerer explores the fiscal implications of the Reich’s federal character. By design, the Reich had little taxation power: the member states insisted on this provision to constrain the central government’s powers. This feature also limited the Reich’s ability to engage in costly nation-building. Major initiatives such as social insurance were largely self-funded. Towards the end of the nineteenth century, city and other local governments (Kommunen) assumed responsibility for many new functions, including clean water and sewage and later, provision of gas and electricity. By the 1880s, Prussia’s local governments took in more total tax income than the state itself.

Sebastian Braun and Jan-Otmar Hesse consider the Reich’s impact in an area where one would think a national government could make the most difference: developing and integrating the post, a telegraph system, and the railroad. Considerable effort prior to 1871 had resulted in only partial integration of these services across state boundaries. The Reich quickly created an all-German post office (1871) and, later, a telegraph system, but the railroad network remained largely uncoordinated until after World War I.

Michael Schneider describes the statistical services for the several states and their cooperation under the leadership of the Reich office created in 1872. Larger states such as Saxony and Prussia had long funded services that published often detailed reports on population, the economy, government operations, and other matters. These offices had coordinated to provide some common information such as the Customs Union censuses. But the main story was heterogeneity: smaller, poorer states could not afford the costs of the material churned out by Prussia and others, and different offices adopted conflicting definitions and approaches that reflected, in part, differences in local economies. The Reich office’s initial role was to persuade state offices to collect information in a standard way. Schneider focuses, quite usefully, on the difficulties involved in the census of enterprises (Betriebzählung).

Matthias Morys describes the adoption of the gold standard (1873) and the formation of the first all-German central bank, the Reichsbank (1875). Currency was one area for which the Reich had exclusive authority. Prior to 1871 the German states had, by agreement, simplified their many silver-based monetary systems into two. Morys argues that public opinion broadly favored shifting to the gold standard prior to the Reich, but the new federal entity’s sole legislative competence in this area made the process much easier. The Reichsbank, as Morys notes, was essentially a re-foundation of the Prussian central bank. The central bank at first was one of thirty-three note-issuing banks in the Reich (although the largest by far). As others failed or lost this authority, the Reichsbank’s unique all-German reach made it dominate even more than its purely legal role would imply.

Alexander Donges and Jochen Streb consider an area where the Reich had one of its greatest immediate impacts: patent law. Prior to 1871 the states had different attitudes towards patents. Prussia allowed patents but construed the novelty requirement quite narrowly. Once issued, Prussian patents had a short duration and were rarely renewed. Other states such as Saxony were more liberal in their interpretation of what deserved a patent. While there was widespread agreement on the need for an all-German patent law, the drastically conflicting views required serious compromise. The Reich patent law (1876) reflected Prussia’s narrow interpretation of what could be protected, but permitting repeated renewals.

Carsten Burhop and Felix Selgert take a different approach to the question of 1871, focusing sharply on the years just before and the years just after. By the turn of the twentieth century Germany’s firms could acquire finance from large universal banks or tap extensive equity markets. Burhop and Selgert trace the key steps in this financial system’s development to a process of deregulation in the years just before the Reich’s creation. The North German Confederation adopted general incorporation in 1870. This change, carried into the Reich, resulted in both many new banks organized as corporations, and many new corporations that wanted to access markets for their equities and bonds. Later moves amounted to a partial re-regulation and put remaining large banks at the center of the financial system.

Eva-Maria Roelevink and Dieter Ziegler take a historiographical approach to the question in their title: “How Organized was Capitalism in the Reich?” Their theme harks back to a literature from the 1960s and 1970s that viewed the late-nineteenth century German economy as run by various combinations of firms: lobbying groups (Verbände) that pushed for tariffs and other preferential treatment; cartels that raised prices above competitive levels; and inter-locking directorates and other, less formal connections among firms. The earlier literature argued that competition among firms under these conditions was largely illusory. The authors stress that these views pre-dated the opening of major archives (governmental in the former East Germany, businesses in the former West) and have not held up well to new evidence. In their view, the lobbies, cartels, and interlocking directorates were real and influential, but less so than earlier work claimed.

Tobias Jopp and Jochen Streb discuss social insurance. Bismarck’s complex of health, workplace accident, and old-age insurance (introduced in steps 1883-1891) reflects the specific political considerations of the Reich, but followed older models and reacted in part to unsatisfactory, earlier reform efforts. This chapter also considers the recent literature on how Bismarck’s social insurance affected emigration (German workers became less likely to emigrate, suggesting they valued social insurance); fertility (probably not at all); and savings (for which there is evidence of crowding out).

Thilo Albers and Charlotte Bartels address the evolution of income and wealth distribution during the nineteenth and early twentieth centuries. This chapter faces an especially severe version of the data constraints that shape all economic history, and the authors carefully explain their sources and what those sources can say. They detect three phases: (1) slowly increasing equality into the early 1870s, reflecting both the “grain invasion” and industrialization; (2) more rapid increases reflecting a quicker pace of industrialization to roughly 1890; then (3) a more modest pace of rising inequality. The authors stress the essential role of inequality in the Reich’s politics and economic policies.

Sascha Becker, Francesco Cinnirella, and Erik Hornung describe the growth of the German educational system from the early nineteenth century. The strong role of religious institutions in education meant that even in the early nineteenth century, Germany’s Protestant areas had higher levels of schooling than its Catholic areas. Protestant areas also enjoyed smaller male/female gaps in educational attainment. By the mid-nineteenth century, several German states had enrollment figures meeting or exceeding most other countries in the world, and the system improved still more later in the nineteenth century. The authors argue that Germany’s well-educated workforce played an important role in the economic development of the higher-tech sectors of the “second industrial revolution.”

Wolf-Fabian Hungerland and Markus Lampe provide a rich overview of Germany’s international trade in this period. (“International” means “crossing the borders of the Customs Union.”) The data become much better after 1871, making the Reich’s direct impact on trade hard to study. Important policies such as tariffs and non-tariff barriers were important tools after 1871, but they had been before, as well. Hungerland and Lampe do a valuable service in stressing aspects of Germany’s international trade that get lost in simple tales. Germany’s most important trading partners were the United Kingdom and other developed areas of western Europe. Most trade was intra-industry.

Four final chapters offer comparative perspectives. Jean-Pierre Dormois stresses strong similarities in the motivations for the relatively high tariffs introduced in 1879 (Germany) and France (1892). Dormois argues that tariffs in this period reflect revenue concerns at least as much as efforts to protect particular sectors, a claim supported by the targets of these tariffs: Germany had no banana producers to protect. His claims that tariff protection was ultimately futile, however, may over-state his case.

Giovanni Federico’s account of Italian unification offers a clear account of the political history of unification and the institutional changes that followed. His comparative remarks on German unification stress differences. Italy had no Prussia; Sardinia-Piedmont, the closest thing to an Italian Prussia, had only 3.2 million people in 1860. While Italians had discussed a customs union inspired by Germany’s Customs Union, the proposals never led to action. One reason may have been the relatively weak incentives to trade within Italy. The newly unified Italian state adopted many new laws and institutions by adopting what existed already in Sardinia, and instead of a federal structure, moved to a highly-centralized, unitary state more like France than the Reich. Federico argues that any economic effects from unification per se reflect a long-term process of change brought about by institutional changes and other indirect effects such as better internal transport.

Max-Stefan Schulze provides a comparison from the Dual Monarchy. This discussion focuses on growth of economic aggregates and growth accounting exercises. Schulze stresses recent findings that rehabilitate Austria-Hungary from an older view that its economic performance was always weaker in the nineteenth century; Hungary, less developed than either Austria or the Reich, enjoyed faster productivity growth 1870-1910 than either. The chapter concludes with a brief discussion of regional issues covered in more detail in the author’s other publications (for example, Max-Stephan Schulze and Nikolaus Wolf, “On the Origins of Border Effects: Insights from the Habsburg Empire,” Journal of Economic Geography 9, no. 1 (2009): 117-136).

Nicholas Crafts compares the economic performance of the British and German economies in the period 1870-1914. The great theme is Britain’s putative “entrepreneurial failure,” a comparison that is apt because the literature usually stresses Britain’s performance relative to Germany. Crafts is the undisputed master of this and related material; for a recent overview, see his Forging Ahead, Falling Behind, and Fighting Back (Cambridge University Press, 2018).

So what did 1871 mean to the German economy? A natural way to consider 1871 is to consider an explicit counter-factual. For example, we could imagine a region dominated by a Prussian-led North German Confederation with independent, smaller states such as Bavaria remaining aloof. Curiously, only a few chapters even nod in this direction. Morys, for example, notes that in the absence of the Reich, the Prussian central bank would have enjoyed the dominant position in all of the German states that the Reichsbank actually acquired. While little more than a remark here, this kind of thinking raises the question of whether Prussia’s size and weight would have led to similar economic integration through the looser ties of the Customs Union and other inter-state agreements. This kind of thinking arises in many earlier discussions of German unification and deserves more attention than it receives here. None of the authors here ventures to say that the Reich had a particular overall impact, but it would have been nice to see some discussion of what was really just Prussian (for example).

This review reflects the German-language text cited above. An English version will appear soon in the Routledge series “Explorations in Economic History.” Anyone interested in modern German economic history will want to read this collection. Those interested in the comparative history of related topics will find these chapters both a great overview and an introduction to the research literature. Instructors in advanced undergraduate or graduate courses will want to use it to supplement the growing journal-article literature. Federico’s contribution on Italian unification will be especially valuable in teaching. In either language, this collection deserves a wide readership and the editors our gratitude.

Timothy W. Guinnane is the Philip Golden Bartlett Professor of Economic History in the Department of Economics at Yale University. Recent publications include “The Introduction of Bismarck’s Social Security and System and its Effects on Marriage and Fertility in Prussia” (with Jochen Streb) Population and Development Review, 2021, and “Creating a New Legal Form: the GmbH,” Business History Review, 2021.

Copyright (c) 2021 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 (September 2021). 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
Government, Law and Regulation, Public Finance
Geographic Area(s):Europe
Time Period(s):19th Century

World War II and Southeast Asia: Economy and Society under Japanese Occupation

Author(s):Huff, Gregg
Reviewer(s):Dick, Howard

Published by EH.Net (September 2021)

Gregg Huff, World War II and Southeast Asia: Economy and Society under Japanese Occupation. Cambridge: Cambridge University Press, 2020.  xxx + 523 pp. £90 (hardcover), ISBN: 978-1-107-09933-3.

Reviewed for EH.Net by Howard Dick, Faculty of Business and Economics, University of Melbourne.

 

Notwithstanding a library of books on the military conflict in Southeast Asia between December 1941 and August 1945, little has been written on the welfare of the civilian population during the three and a half years of Japanese Occupation, despite the massive economic and social dislocation. Most of what has been written deals with the situation in one country or colony. Although Japan perceived of Southeast Asia as a region, it seldom comes into focus.

This masterful work of scholarship by Gregg Huff (Oxford University) tackles the problem head-on by asking the big questions, forensically collating the data and, if not quite able to transcend the limitations of national records and localized impacts, putting forward a plausible synthesis. It immediately becomes an essential reference for any research on the twentieth-century history of Southeast Asia.

It is not a book to be read as narrative, at least not beyond the Introduction and the next two chapters with overviews of wartime strategy and civilian administration. The following seven chapters cover Finance; National Product and Trade; Transport, Utilities and Industrialization; Shortages, Substitutes and Rationing; Food and Famine (rural); Food and Living Standards (urban); and Labor. In each case the data are collated by nation, then aggregated to a sub-regional and regional level. There is also a very detailed chronology, a comprehensive bibliography, and a good index.

In essence, Japan invaded Southeast Asia to secure strategic commodities (oil, bauxite, tin, rubber, etc.) needed to sustain the war against China that had been ebbing and flowing since mid-1937. The conquest was swift and probably cost less than 10,000 Japanese lives. Ironically, the loss of shipping to Allied submarines meant that commodity flows from Southeast Asia soon slowed to a trickle and the economic benefits to Japan evaporated while the costs of military occupation rose from an initial 6 percent of Japan’s GDP to 16 percent by 1944.

Arguably Southeast Asia received no benefit beyond the destruction of colonial empires. Loss of shipping and the consequent shortage of fuel also meant that this globalized and trade-specialized region was suddenly reduced to autarky and with catastrophic effect, especially on food supply and distribution. No figure more starkly encapsulates the scale of the deprivation than Huff’s conservative estimate of around 4.5 million civilian deaths, 50 percent more than the 3 million military and civilian deaths suffered by Japan itself. The actual number of deaths in Southeast Asia could have been as high as 6 million. Records fail. Of that 4.5 million, 3.4 million were attributable to the 1944 drought famine in Java and Vietnam. At least another 0.4 million were casualties of forced labor (romusha), more than 0.5 million died in the Philippines through war, hard labor and famine, and a mid-point estimate of 23,000 is attributed to the terrible sook ching atrocity in Singapore. The value of Huff’s research lies not just in such summary tabulations but also in the three-dimensional matrix of effects by sub-region, industry and rural/urban areas.

Although Southeast Asia gradually reintegrated with the global economy, the long-run effects of the Occupation were pernicious. Agriculture reverted towards a subsistence mode with more reliance on inferior crops, notably maize and cassava. Vaunted industrialization efforts through ad hoc import substitution were very modest compared with the destruction of capital through war, removal, and cannibalization and established no sound basis for development. Except for railways and small sail and motorized craft, transport systems collapsed. Roads were not maintained and petrol-driven vehicles gave way to bicycles and pedicabs. To escape rural famine, people crowded into cities, where ramshackle housing and black markets proliferated. By the late 1950s Japan was rapidly reviving its industrial economy, not so most of Southeast Asia. Indonesia, Indo-China and Burma would stagnate for much longer.

The book’s longish Epilogue and Conclusion weighs the long-term consequences of the Occupation and explores the counterfactual of what might have happened had Japan not gone to war but peacefully extended its influence in Southeast Asia. Was the Japanese Occupation a turning point or, as Huff prefers, “a catalyst for accelerating change”? The political watershed is clear. From an economic perspective, Huff argues that the Occupation merely interrupted the natural order of integration with the world economy. Perhaps, but the post-war mode of integration differed markedly from pre-war colonial bilateralism and was much more oriented towards Japan and East Asia.

This synthesis raises a bigger question that Huff does not address and is really for others to ponder. If the Occupation were to be summarized in one word, it would be “trauma.” Apart from the obvious political dislocation, the terrible deprivation among civilian populations caused not only millions of deaths but also, as Huff documents, widespread malnutrition and misery. As we now better understand from genetics, malnutrition and trauma damage not only the living but also two generations as yet unborn. Entwining with the physical, genetic, mental and psychological effects are the revolutionary impacts of the destruction of political institutions (peace and order) and the erosion of social norms (including a new tolerance of black markets). Mass trauma makes subsequent trauma more likely. In Indonesia the Japanese Occupation was followed by four years of revolutionary war, then civil war and the anti-communist bloodbath. Vietnam remained a war zone until 1975. Burma still is a war zone. In Indonesia in the 1970s, the elderly looked back on the colonial era with mixed feelings as a “normal time” (zaman normal), a phrase that resonates in our current time of COVID with existential longing for a “new normal.”

Huff opens a pathway to a more imaginative perspective on twentieth-century Southeast Asia that should transcend the arbitrary boundary between politics and economics. People seek stability and freedoms (politics) together with material comforts and prosperity (economics). It is academics who struggle with complexity beyond their accustomed disciplinary constraints.

 

Howard Dick is the author of Surabaya, City of Work: A Twentieth Century Socioeconomic History (Ohio University Press, 2002), with P.J. Rimmer of The City in Southeast Asia Press (NUS Press, 2009) and Cities, Transport and Communications: The Integration of Southeast Asia since 1850 (Palgrave, 2003), and with V. Houben, J. Th. Lindblad and Thee Kian Wie of The Emergence of a National Economy: An Economic History of Indonesia, 1800-2000 (University of Hawaii Press, 2002).

Copyright (c) 2021 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 (September 2021). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Military and War
Geographic Area(s):Asia
Time Period(s):20th Century: WWII and post-WWII

Religion and the Rise of Capitalism

Author(s):Friedman, Benjamin M.
Reviewer(s):Frey, Donald E.

Published by EH.Net (August 2021)

Benjamin M. Friedman, Religion and the Rise of Capitalism. New York: Knopf, 2021. xv + 534 pp. $37.50 (cloth), ISBN: 978-0-593-31798-3.

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

 

Benjamin Friedman is William Joseph Maier professor of political economics at Harvard. He is well known for his economic policy writings.

This book develops two major topics, each spanning several chapters. Friedman first delineates major intellectual transitions, particularly in theology, that paved the way for Adam Smith’s writings (p. 1-196). The second major section examines “progress,” as a worldview, in nineteenth-century America (p. 197-358). Friedman argues that the biblical millennium heavily influenced the American sense of progress. The book’s remainder (about 60 pages long) describes the fusion of conservative Protestantism with conservative economics in the twentieth century.

Section one, on the changing intellectual terrain, pre-Smith, emphasizes the erosion of Calvinism in the UK and the American colonies; to a lesser degree it also covers science and philosophy. Friedman argues that the victory of Arminian (“free-will”) ideas over Calvinism’s religious determinism was a prerequisite for Smith’s economics. Arminianism rehabilitated belief in humans’ innate goodness and moral agency; and it re-conceptualized God as a utilitarian, who valued human happiness. (The Calvinist alternative was that humans existed to glorify God.) Friedman sums up: “Depravity versus innate goodness, predestination versus human agency, glorification of God versus human happiness as the divine intent” (p. 197). The Arminian option, second in each of these pairs, was the new soil in which Smith planted.

Friedman makes his case well, including use of telling quotations from primary sources and a nice explanatory narrative. That said, the book’s title speaks of religion and the rise of capitalism, not merely of Smith’s theory. If capitalism includes practice, Friedman’s focus on Smith seems too narrow. Historian Mark Valeri (2010) has documented how merchant capitalism existed (sometimes uneasily) in Calvinistic New England from the very first. The earliest New England Puritans suspected capitalists’ motives, and regulated them more than any capitalist would like; nevertheless, a form of capitalism existed in that time and place without the benefit of Arminian belief. Valeri is clear that Puritan clergy over decades slowly adopted the kinds of Enlightenment ideas that supported Adam Smith’s paradigm. Even so, the New England clergy seem to have yielded more to pressure from a Puritan capitalism rather than from Arminian theology. I wish Friedman had considered whether this New England anomaly weakens or somehow helps confirm his main thesis.

The book then shifts to nineteenth-century economic progress — as a lived reality for many Americans (but not all) and as their worldview. Friedman argues that, as a worldview, progress bore a religious interpretation, specifically millennialism. Millennialism (of a specific type) promised that human progress would bring in the biblical thousand years of righteousness (Arminianism with new embellishments). Coupled with nationalism, this brand of millennialism boasted of America leading the world into a great future.

This may have been the outlook of some Americans, but even Friedman concedes that, by mid-century, people who read millennial texts allegorically and were not biblical literalists “no longer believed in anything that could be called a millennium, as such” (p. 212). One might think that millennialism-without-a-millennium would be inherently ambiguous; and so it would be a poor lens through which to view nineteenth-century thought. And Friedman has left me still thinking so (despite an otherwise excellent description of the thought of the era).

Friedman uses case studies of well-known economists and clergy (many of whom were both) to explore the theme of progress. For example, Francis Wayland, a major antebellum economics textbook author and clergyman, taught an optimistic laissez-faire. He rationalized away the lingering suspicion about self-interest among his fellow New England Protestants. And he invoked a utilitarian God in the service of progress. Wayland also popularized the modern idea of technical change (not anticipated by Smith), which allowed for unending economic growth.

Wayland’s enthusiasm for laissez-faire blazed the way for theologically moderate Protestants, like himself, to become, or remain, economic conservatives. He disparaged government, blamed the poor for their own plight, denied that economic ills had systemic causes, and so on. These ideas also showed a way to keep progress on track — avoid meddling with the market.

Toward the end of the nineteenth century, economic ills could no longer be ignored. Reformers, religious or not, soundly rejected the notion of economic determinism rooted in classical economics (for instance, Malthusian population growth, or Smith’s claim that a changed income distribution would have no significant social benefits). This determinism made economic ills inevitable (unless, of course, caused by government “interference” with markets). If ills are inevitable, reform is futile. Against this, reformers adopted views similar to that of the German historical school — that economic institutions are human inventions, conditioned by time and place. Such human institutions, of course, could be reformed by humans, for the better.

Friedman acknowledges the centrality of this in the reformers’ thought, stating that “laissez-faire thinking [to reformer Richard Ely] was just as opposed to moral freedom as predestination. It was a surrender to yet another kind of determinism — in this case, the determinism of the market” (p. 321).

Friedman does a good job covering in some depth key figures of the Social Gospel movement, both laymen and clergy. Contrary to Friedman, my reading of Richard Ely and Walter Rauschenbusch suggests that the expressed motive for reform was not millennialism. An anti-deterministic theory is needed to make reform possible; but reformers also needed a driving motive. For Rauschenbusch, the driving motive explicitly was the Hebrew prophets’ teachings on justice in this world and Jesus’s concern for the poor and afflicted. As if to reject millennialism as his motive, Rauschenbusch at one point denigrated millennialism as an excuse to put off social justice until some future time.

Opposed to the reformers, a Gospel of Wealth, broader than Andrew Carnegie’s book of that name, was preached by laissez-faire preachers, such as Henry Ward Beecher. Any response to social ills in this gospel amounted to private assistance to the “deserving poor” to make their way in an unchanged society. Despite the vast differences between the Social Gospel and the Gospel of Wealth, Friedman concludes that these very opposed groups “shared a robustly postmillennialist outlook toward human society” (p. 333). This statement, to me, appears to make millennialism a concept far too elastic to be persuasive.

Friedman dates the end of millennialism and laissez-faire to the Great Depression. And, Roosevelt’s New Deal might be viewed as a Social Gospel victory of sorts. But that did not mean a victory for the social-reform branch of Protestantism (which is not even all of mainline Protestantism). Starting before the Depression, and continuing after it, fundamentalist Protestantism challenged the religious moderates and liberals on theology, and also began to fuse conservative economics with their faith. (For example, they often resorted to accusing the National Council of Churches and state councils of churches, which advanced the social-reform part of mainline Protestantism, of being “communist.”) This fusing of conservative religion and conservative economics is covered through to the end of the book. The narrative is detailed and enlightening. But Friedman argues that the political influence of such religious support of conservative economics exceeded its influence on economics itself, a self-determining professional discipline.

Despite the qualifications I have expressed, I highly recommend this book to readers interested in either religion (in this book exclusively Protestant Christianity) or economic thought and history. Friedman’s explanation of the ideas, debates and significant thinkers, is excellent; he is at ease on both the religious and economic sides of the discourse.

Reference:

Mark Valeri, Heavenly Merchandize: How Religion Shaped Commerce in Puritan America. Princeton, NJ: Princeton University Press, 2010.

 

Frey’s book, America’s Economic Moralists, was published by SUNY Press in 2009.

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Subject(s):History of Economic Thought; Methodology
Geographic Area(s):Europe
North America
Time Period(s):18th Century
19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

Amaral, Luciano

First Name: Luciano
Last Name: Amaral

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  Subject: Economic Development, Growth, and Aggregate Productivity
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  Time Period: 20th Century: WWII and post-WWII

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  Subject: Financial Markets, Financial Institution, and Monetary History
  Geographic Area: Europe
  Time Period: 20th Century: WWII and post-WWII

  Additional Interest 2


  Subject: Macroeconomics and Fluctuations
  Geographic Area: Europe
  Time Period: 20th Century: WWII and post-WWII

Creanza, Pier Paolo

First Name: Pier Paolo
Last Name: Creanza

Email(s): pierpaolo.creanza@gmail.com
pcreanza@princeton.edu
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Clarke, Geoff

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Copeland, Conrad

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Travieso, Emiliano

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