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Network Origins of the Global Economy: East vs. West in a Complex Systems Perspective

Author(s):Root, Hilton L.
Reviewer(s):Yang, Clair Z.

Published by EH.Net (October 2021)

Hilton L. Root, Network Origins of the Global Economy: East vs. West in a Complex Systems Perspective. New York: Cambridge University Press, 2020. xxxi + 306 pp. $40 (hardcover), ISBN: 978-1-108-77360-7.

Reviewed for EH.Net by Clair Z. Yang, Jackson School of International Studies, University of Washington, Seattle.

 

How can we systematically compare the structures of economies and societies from different historical periods and in disparate parts of the world? Are there any universal rules by which history shapes the present and, if so, how can they help us predict the future? This book, Network Origins of the Global Economy by Hilton L. Root, offers a new perspective on the study of historical political economy. It applies the tools of complex system and network science to investigate three major transitions in world history and two in the contemporary period, with a special focus on Europe and China. This social network approach helps bridge the gap in the micro-macro dichotomy that we economists are most familiar with, and offers a powerful new tool to conduct truly comparative studies in political economy and economic history.

Despite being deeply rooted in the theories of complex systems, the book is very accessible for newcomers to the field. The first three chapters introduce the concepts and a range of structural network properties that are applied later. Chapters 4 to 6 examine the first great transition: the gradual formation and sudden demise of kingship networks in historical Europe and China. The argument builds on the conventional debate of centralization versus decentralization in the Great Divergence literature, and moves beyond it by utilizing social network topology to contemplate its implications on stability versus resilience, efficiency of information flow, and the regions’ long-term developmental trajectories. It maintains that the hub-and-spoke structure of China was the outcome of one single process of optimization by the ruling dynasty, while Europe’s scale-free network derived from the independent decision making of numerous decentralized nodes. Hence, the former led to dramatic dynastic cycles of prosperity and chaos, while the latter endured throughout the medieval era with localized modifications and helped determine the borders of modern Europe.

Chapter 5 discusses the formation of the Western legal system through a confluence of Germanic customs and Roman codification. It points to the contractual nature of the Germanic tradition of fealty as the root of a Western legacy of limited government. This reasoning echoes that of many scholars, which emphasizes the importance of feudalism and parliamentary systems in constraining the predatory behavior of the monarch and promoting economic development. Root also stresses the other side of the story: the top-down rationalist imperative taken by the crown, which was aided by the rediscovery of the Justinian Code in the eleventh century, brought otherwise disconnected regions together on a common legal ground. Thanks to compromises on both sides, strong and limited governments emerged throughout Western Europe. Chapter 6 concludes the first part of the book with a thorough review of the commercialization, the innovation, and the industrialization processes that eventually led to the Great Divergence. The historical analysis culminates in the assertion that the global network structure is a key determinant of innovation incubation, information diffusion, and system-wide resilience.

The book then moves to the present day. Leveraging these lessons from history, Root first examines China’s recent emergence as a global power and the challenges that it brings to the global governance structure. When the centuries-old kingship networks of Europe started to collapse following World War I, the United States, then a peripheral player, proposed a new global order premised on democratic universalism. Based on level of conformity with this ideology, the world was divided into two camps, each with its own hierarchy. To bring the discussion to the present, Root provides quantitative evidence of a new decentralization trend in global networks since the end of the Cold War, using data on diplomatic voting, military arms transfers, and international trade. He demonstrates that a jump in network density, as peripheral countries increasingly connect with each other, is driving down global hegemony and giving birth to a new multipolar order.

A theme that surfaces many times throughout the book is that power cannot be understood as a feature of an individual; it rises through an interaction between the individual and the overall network structure. When the global network transitions from a traditional hierarchy to a decentralized structure, multiple alternative flows develop and traffic reroutes. The central node loses its exclusivity even though its own features remain the same. In Root’s own words, “the concept of actor centrality is an incomplete measure of power within the system, and an incomplete framework for building global order. The degree of system centralization is paramount” (p. 234).

Root’s discussion opens up multiple avenues for future empirical research. To mainstream economics and political science, the paper points to social networks as a convincing foundation for history-dependence. There is increasing interest and bourgeoning evidence in the field of political economy that history matters. Most of these studies rely on the persistence of formal institutions or cultural inheritance, thus utilizing this perspective of social networks has the potential to bridge the two approaches and to promote new insights.

For example, world history has obviously witnessed a coevolution of political structures and social networks. But for social scientists, is it possible to distinguish the two directions of causality? Can we identify conditions under which political structures mold the topology of social networks, and vice versa? Could this line of reasoning lead us to factors even more fundamental?

The book also provides a useful analytical perspective on the dynamic evolution of the state-society relationship. The boundary between state and society becomes increasingly blurred the further back we travel in history. A few aristocratic families dominated the political arena in Europe for centuries, while the core of Chinese politics had shifted from family connections to state bureaucratic structures by the tenth century. At what point can we start calling an interconnected web of power a state? And how did multilateral bargaining shape the capacity, efficiency, and priorities of such a state?

The empirical directions pointed out by Root’s work are promising in light of recent developments in historical databases and big data methods. We have arrived at a stage where serious empirical analysis of social networks in historical contexts has become feasible. Detailed micro-level historical datasets are hard to obtain. It is thus of much empirical interest to know whether there exists a universal relationship between the behaviors of a society and the network structure of its elite, as well as under what conditions we can employ network structures of the elite as an indicator of more profound social and cultural changes.

 

Clair Yang is Assistant Professor of Economics at the Jackson School of International Studies at the University of Washington, Seattle. Her most recent paper is “A Longevity Mechanism of Chinese Absolutism,” with Yasheng Huang, forthcoming in the Journal of Politics.

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 (October 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
Geographic Area(s):Asia
Europe
Time Period(s):General or Comparative

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

Subject(s):Economywide Country Studies and Comparative History
Government, Law and Regulation, Public Finance
Geographic Area(s):Europe
Time Period(s):19th Century

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.

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

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

Risk and the Insurance Business in History

Editor(s):Pons, Jerònia
Pearson, Robin
Reviewer(s):Kingston, Chris

Published by EH.Net (May 2021)

Jerònia Pons and Robin Pearson, editors, Risk and the Insurance Business in History. Madrid: Fundación Mapfre, 2020. 290 pp. ISBN: 978-84-9844-753-8.

Reviewed for EH.Net by Chris Kingston, Department of Economics, Amherst College.

 

The history of insurance, as many authors have noted, has been relatively neglected by historians, including economic historians; but in recent years, with a steady growth of interest from scholars across a range of disciplines, the field has been expanding in geographic, historical and methodological scope.

In June 2019, two leading pioneers in the field, Jerònia Pons (University of Seville) and Robin Pearson (University of Hull) organized an international conference on “Risk and the Insurance Business in History” at the University of Seville. The conference brought together scholars of insurance and risk from a wide variety of academic and professional perspectives, with the explicit goal of creating a forum to encourage interdisciplinary dialogue. For insurance scholars, as this reviewer can attest, it was a rare and valuable opportunity to network, and a remarkably fertile, stimulating and enjoyable gathering. Hats off.

This collection of nine papers presented at the conference, edited by Pons and Pearson, is published with the support of the Mapfre Foundation, which also supported the conference itself. In a valuable and wide-ranging introduction, the editors weave together some of the disparate strands of the fragmented literatures on risk and insurance. Their survey takes in cultural theorists’ studies of how perceptions of risk, liability, and insurance vary across cultures; behavioral economists’ studies of the psychological anomalies that arise in decision-making under uncertainty; and sociologists and legal scholars’ approach to the insurance industry as a source of a kind of governance over risk-taking behavior among the insured. They also emphasize the omnipresent role of “the state” in multiple roles: as a provider of various kinds of insurance, as a source of risk through warfare, and as a fount of regulation that has the potential to constrain or encourage the development of insurance markets, organizations, and practices. The overarching point is to underscore the editors’ motivation for organizing the Seville conference: the diversity of approaches to the study of risk and insurance in history, and their belief in the potential for beneficial collaboration and cross-pollination.

While the quality of the contributions varies, and some might have benefited from more intensive editing, there are several very valuable papers in this collection that stretch the boundaries of the discipline and deserve to be widely read by those interested in insurance history and related fields.

Timothy Alborn tells the fascinating tale of how nineteenth-century British life insurers wrestled with the question of how to insure the lives of missionaries, soldiers and Victorian adventurers as they ventured to remote and frequently pestilential corners of the world and the Empire — areas about which the companies had only very scattered and incomplete information. These companies also made hesitant and frequently racially prejudiced forays into the business of insuring non-white colonial subjects of the Empire, even as it gradually became clear that the “civilized” locals often experienced better health and lower mortality in their native climes than did their European expatriate masters. In contrast, for the late nineteenth century American insurers whose efforts to expand into Latin America are adroitly described by Sharon Ann Murphy, the whole point was to insure the locals. Their efforts were however hampered by agency problems, ultimately collapsing as they abandoned the field to emergent domestic firms in the face of restrictive legislation, political uncertainty, and scandal.

Leonardo Caruana de las Cagigas and André Straus survey the legal development and the increasing role of state regulation of the insurance industry in France and Spain from the late eighteenth to the early twentieth century, as new forms of insurance and organizational innovations emerged. Development in Spain generally lagged behind France, enabling Spanish companies and regulators to take advantage of the lessons learned elsewhere, but divergent political histories ensured that paths of development remained distinct. Christofer Stadlin contrasts the development of employer accident and liability insurance as it was shaped by the regulatory environments in Germany and France in the late nineteenth century up until World War I, as seen through the eyes of the Zurich Insurance Company which was active in both markets.

José García-Ruiz presents a company history of the “bancassurance” relationship between the Spanish Banesto bank and Luyefe, Spain’s leading insurance company for much of the twentieth century, as the closely connected firms navigated a turbulent political landscape and ventured into new areas of business. Mikael Lönnborg, Peter Hedberg and Lars Karlsson describe how the Swedish insurance law of 1948 deliberately favored larger firms under the belief that the industry would become more efficient through economies of scale. Yet the resulting increase in concentration in the Swedish insurance industry failed to yield the hoped-for improvements in consumer welfare.

Other chapters consider the South African regulatory response to the 2008 global financial crisis (Greitjie Verhoef); the evolution of the legal and regulatory framework underpinning the development of fire insurance in nineteenth-century Canada, influenced by both French, British and American precedents (David Gilles and Sébastien Lanctôt); and how the valuation of American insurance companies’ assets was fudged, with the approval of the authorities, to enable them to satisfy solvency requirements during the financial crisis of the early 1930s (Luca Froelicher).

With such a wide breadth in focus, scope, and methodology, it is debatable whether this collection amounts to more than the sum of its parts. Pearson and Pons, seeking for a unifying theme in their introductory essay, draw attention to the congruence in time periods (most contributions deal with the nineteenth and early twentieth centuries) and to the influence of state regulation on decision-making by insurance companies; and certainly “the state,” in one way or another, looms large in all of these pieces, as it must in any study of modern insurance. The real significance of the volume is as a milestone for a field of study that is progressing vigorously, and that holds the promise of important and potentially fruitful interdisciplinary research questions that have barely begun to be explored. In this regard at least, the vision of the conference organizers, the editors of this volume, is fully vindicated.

 

Chris Kingston is the Richard S. Volpert ’56 Professor of Economics at Amherst College. He has published several papers on the history of marine insurance in eighteenth-century Britain and America and is working on a book provisionally entitled In Peril on the Sea: Institutional Change in Marine Insurance, 1720-1844.

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

Subject(s):Business History
Geographic Area(s):General, International, or Comparative
Time Period(s):19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

Economists at War: How a Handful of Economists Helped Win and Lose the World Wars

Author(s):Bollard, Alan
Reviewer(s):Bossie, Andrew

Published by EH.Net (March 2021)

Alan Bollard, Economists at War: How a Handful of Economists Helped Win and Lose the World Wars. Oxford: Oxford University Press, 2020. xxi + 321 pp. $25 (hardcover), ISBN: 978-0-19-884600-0.

Reviewed for EH.Net by Andrew Bossie, Department of Economics, New Jersey City University.

 

The economists profiled in Alan Bollard’s Economists at War were all cursed to live in interesting times. All of them were active participants in history as agents of states emerging and collapsing during the violent rending of the 1930s and 40s that birthed modern industrial governance. For those of us who find important echoes in today’s world in which global fascism is again on the rise and the only political force with any energy or will to oppose it has proudly resurrected the “Socialist” label, Bollard provides us with compelling models — both positive and negative — for how economists operated within and with governments to manage the rolling crises that built the twentieth century state.

Economics in our own era have inherited an ideological regime brought about by economists of the baby boomer generation. This intellectual regime has centered around the failures of collective action: the cynicism of public choice theory and the rational callousness of game theory. Within macroeconomics, the great intellectual project of the baby boomers — and Gen X, who came of age when nothing but the neoliberalism of the Great Moderation seemed possible — was to marry Friedman’s centrality of money with micro-founded models of technology and capital that are always in equilibrium. In the New Keynesian consensus that emerged from this project the modern state, even flattened-out as “fiscal policy,” played no role. Multipliers were assumed to be less than one, public debts were assumed to always come due, markets were assumed best deregulated and conservative central bankers were the equilibrium condition.

Since the financial crisis of 2008, caused by a refusal of states to regulate businesses, the ship of this intellectual regime had been increasingly battered against the rocks of reality. Then the COVID recession came, like a great tsunami, and sank the ideology of neoliberalism. Not only do we now have ample evidence that debilitatingly higher interest rates and inflation are not an inevitable consequence of profligate government spending and money printing, but the profession’s proletariat (Temin, 2013) has also risen up in a Credibility Revolution. Empirical economists have chipped away at many ideas that were obviously true twenty years ago. Multipliers are often more than one. The minimum wage does not obviously cause unemployment. The money printer not only can but must go brrr. We find ourselves, much like during the crises of the 30s and 40s intellectually adrift in uncharted waters. For those of us with a historical bent, a major navigation point has been the caldron that formed the modern welfare state in the first half of the twentieth century. Bollard offers and excellent and compelling map of this sea.

Bollard profiles economists operating under all of the emerging, consolidating, and collapsing political-economic systems of the era: capitalist, fascist and communist. Within these systems Bollard provides us with a number of models for how economists interacted and supported their states through depression and war, with an equally compelling epilogue devoted to the roles these men played during the Cold War. Herein lies the first strength of Bollard’s book: its inclusivity. This inclusivity takes three forms. First, as stated, Bollard takes the plurality of political and economic systems engaged in the war seriously. Secondly, Eastern economists are profiled along with Western. While the book is intended to be chronological, it feels like a deliberate decision to open the book with the murder of Takahashi Korekiyo — former Prime Minister and Finance Minster of Japan — by the Japanese military. In doing so Bollard establishes the stakes of the global political drama while also reminding the reader that it was not simply a Western drama. Bollard then segues from Takahashi’s story to that of the unscrupulous Kung Hsiang-hsi, who aided in his family’s rise to riches holding various positions as an economic manager for the Kuomintang’s military kleptocracy in China.

The third way in which Bollard’s inclusivity is evident in his definition of “economist.” I had my initial skepticism of his choices of who to label as an “economist” but as with many of my prior’s going into this book Bollard offers a convincing case for his decisions. Takahashi and Kung are economic policy makers who are joined by Hjalmar Schacht in Germany as profiles in navigating economic policy making during depression and war. These men open the book and provide profiles of the economist as a civil servant. The relationship between these economists and the states they worked for is explicit and obvious. As the book moves on Bollard moves into profiles of economists as academics, and the relationship between these men and their respective governments is more fluid but no less clear.

In this respect, the profile of J.M. Keynes is a useful bridge between the types of economists Bollard profiles, though Keynes was more successful as an academic given that his policy advice was generally ignored or overruled. As someone quite familiar with this period and suffering a bit from “Keynes fatigue,” I went into this book wishing Bollard had picked some other British economist to profile. However, Keynes — as a world historical figure — serves as a central node in the network of relationships between the economists profiled in the book, overlapping with many of them personally and professionally. Even the fact that Keynes had in-laws in Leningrad is used as a transition device. The result is a usefully targeted biography of Keynes that will surely be on the syllabus should I ever decide to teach a class on Keynes again.

Within his exploration of academic economists during the war, Wassily Leontief is a great example of the typical origin stories of the various academics profiled. Forced, like all the other European Jews profiled in the book, to make decisions about how to ride through the instability of the first half of the twentieth century that as often as not targeted them directly, Leontief found his way to the United States and settled into a quiet and productive life following a research program parallel to that of Leonid Kantorovich in the Soviet Union. Though, unlike the comfortable Leontief, Kantorovich’s quiet life was one of suffocation under Stalinism.

Bollard offers a compelling parallel between Kantorovich and American polymath John Von Neumann. Kantorovich was stymied and isolated by the worst impulses of Stalinism while Von Neuman thrived under the worst impulses of American political culture. In a book that features Nazi collaborators, Bollard remains relatively detached with no real villains, except for Stalin. The injustice and irrationality of the claustrophobic intellectual environment that Kantorovich had to survive is palpable in the book. As is the post-Stalin emergence of Kantorovich into the light.

Kantorovich’s first time leaving the USSR on a world tour that started with his accepting the Nobel Prize underscores a theme throughout the book that I felt deeply in this world where the best we can manage are awkward Zoom seminars. Throughout the book Bollard highlights various encounters, seminars and conversations among academics and policy makers. This reminds us that science is collective and participatory, and while the men profiled in this book are all standalone geniuses, the magnifying externalities of that genius are most evident in conversations over a couple glasses of wine or a lunch with a colleague in a seminar room. Kantorovich is a case study in how genius is diminished in both political and physical isolation.

The parallels between Kantorovich and Von Neumann, whose genius floats through his profile as pollen in spring, are striking. Both men made important contributions to economics, nuclear physics, and computer science. Where they diverge, though, leaves me disliking Von Neumann as much as I am sympathetic towards Kantorovich. While Kantorovich’s relationship with his country’s military industrial complex was largely one of survival, Von Neumann’s involvement with the military industrial complex in the U.S. seems to be one in which he thrived. I find it very difficult, even in historical context, to understand how a scientist could see with his own eyes the destructive capabilities of nuclear weapons and then champion their use. Imbibing all the worst impulses of game theoretic thinking, Von Neumann created and then championed the proliferation of nuclear weapons and the strategy of “Mutually Assured Destruction.” Von Neumann’s final days are depicted particularly powerfully: screaming in terror of death and in resentment at his own lost potential. Bollard is right to follow up this scene by reminding the reader that Von Neumann was likely slowly murdered by the same nuclear weapons he advocated using to murder so many other people.

Bollard’s nuanced depiction of Von Neumann is illustrative of another strength of his book: an excellent writer, he presents the economists under consideration as complex and complete figures. This is most clear in his sympathetic depiction of Schacht who was both President of the Reichsbank and Minster of Economics under the Nazi government in the 1930s. Bollard, who has had a rich career as a civil servant in New Zealand — he served at both his country’s Treasury and Reserve Bank and is currently the chair of the New Zealand Infrastructure Commission — portrays Schacht as a civil servant trying to do what he can under conditions he has very little control over. The depiction is probably too sympathetic, but it is nonetheless compelling. The depiction also serves an important purpose in that it forces readers to confront their own complicities and hubris that they would never slide down the slippery slope Schacht did. Further, the ultimately prosperous Schacht is a useful foil to Takahashi’s martyrdom at the hands of his own myopic and militaristic fascist government.

The one exception to Bollard’s general balance between admiration and criticism is H.H. Kung. While all the other economists are portrayed sympathetically and complexly, Bollard seems to outright dislike Kung. Kung is an exception among the economists in the book, the rest of whom were motivated by some kind of higher ideal. The other men were dedicated to their own conception of good governance or motivated by discovery and science. Kung, on the other hand, was simply an opportunist and solely motivated by accruing wealth for himself and his family. A creature of pure corruption, he stands out in a book profiling men devoted to higher ideals than economic accumulation. These higher ideals of governance and science are necessarily collective and cooperative ideals.

Economists at War offers us a diverse series of case studies in men who were thrust into an epic collective struggle by history and employed their energy and genius in that struggle imperfectly. This makes it an important work for economists trying to reimagine a world where there are collective solutions to collective problems. Hopefully, though, we can imagine collectively managing our own global structural shifts adequately enough so that when future historians of economic thought write about our own period we can be portrayed as economists at peace.

Reference:

Temin, Peter (2013). The Rise and Fall of Economic History at MIT. MIT Department of Economics Working Paper Series. https://dspace.mit.edu/handle/1721.1/79063

 

 

Andrew Bossie is Chair of the Economics Department at New Jersey City University. His research focuses on the short- and long-run economic effects of World War II on the U.S.

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

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

Schooling under Control: The Origins of Public Education in Imperial Austria 1769-1869

Author(s):Cvrček, Tomáš
Reviewer(s):Cohen, Gary B.

Published by EH.Net (February 2021)

Tomáš Cvrček, Schooling under Control: The Origins of Public Education in Imperial Austria 1769-1869. Tübingen: Mohr Siebeck, 2020. xi + 301 pp. €59 (hardcover), ISBN: 978-3-16-159267-6.

Reviewed for EH.Net by Gary B. Cohen, Department of History, University of Minnesota, Twin Cities.

 

In 1774 the Austrian government under Empress Maria Theresa issued a general school ordinance (Allgemeine Schulordnung), which introduced a requirement of six years of primary schooling for children across the realm. Historians of the Habsburg Monarchy have typically praised this as one of the more progressive measures of enlightened absolutist rule, which spurred the advance of literacy, strengthened the state, and aided economic development. Scholars have also noted, though, sharp limits on the further development of education until the 1850s and 1860s, the meager funding and poor general conditions of many schools during the intervening decades, and the persistence of high rates of illiteracy in territories such as Dalmatia, Galicia, and Bukovina. Many voices in the polyglot Habsburg realm and later the successor states criticized the favoring of German-language instruction after the initial grade levels and the privileging of the German-speaking population in the educational system across the Austrian half of the empire through much of the nineteenth century.

Until now, though, hardly any scholars have examined with quantitative rigor the advance of elementary schooling in the Habsburg territories, enrollment levels in various regions, the extent of popular demand for schooling, or the financial calculations for public authorities and parents. In this welcome book Tomáš Cvrček, a lecturer in economics at the School of Slavonic and East European Studies of University College, London, offers new vistas on the economic, social, and political dynamics of elementary education in the Austrian lands of the Habsburg Monarchy. A native of the Czech Republic, he earned a doctorate in economics at Vanderbilt University in Tennessee. Cvrček demonstrates a strong grounding in the history of Habsburg Central Europe, great skill in assembling a range of statistical sources, and an impressive command of sophisticated analytic methods.

Cvrček identifies two broad categories of causal factors for the general advance of mass schooling in modern societies: the pressure of economic and social development and the impact of government policies and political and ideological purposes. Since, as he notes, the socioeconomic and political drivers are typically linked, how have they interacted? Cvrček organizes his examination of the Austrian experience in a hybrid chronological-topical scheme. The first chapter offers a chronological treatment of institutional developments with subsequent chapters addressing the expansion of the school network and its reach in the population; the political economy of primary schooling; the size, character, and costs of the teaching staff; the costs of attending and the enrollment and attendance rates compared to the total school-age population; the learning process, its effectiveness, and general outcomes; and finally, the end of the Theresian system with the liberal reforms of the 1860s. Wherever possible, Cvrček marshals statistical sources to analyze developments quantitatively, including among other aspects the costs of school operations and the revenue sources; the growth, density, and accessibility of the school network in different regions and socioeconomic milieux; and the changing levels of literacy in various regions and among different generations.

Gathering and analyzing evidence for all this is no mean feat. The statistical sources needed vary greatly in extent and quality across the imperial Austrian territories before the 1870s, and for few of the most important measures of school operations can one find time series data to cover adequately the whole period from the 1770s to the 1860s. Cvrček demonstrates notable ingenuity in assembling usable sources from various regions and extrapolating from what he has. To flesh out the analysis, he applies statistical tests of significance and variance, including regression analysis, and generates sophisticated indices at various points. Readers unschooled in such quantitative analysis may find some of this daunting, but in every instance, Cvrček presents the calculations transparently and explains what estimations and extrapolations have been necessary. Scholars with more expertise in advanced statistical analysis than this reviewer will need to judge the validity of Cvrček’s methods and findings for themselves, but I find the argumentation plausible overall.

Not only economic historians but readers interested in the broader social and political development of modern Habsburg Central Europe will find much of value in the findings here. The primary school network grew highly unevenly from the 1770s to the 1860s, both in its extension across the Austrian territories and in the pace of expansion. Rapid growth in the 1780s gave way to either stagnation in some regions or a return to the slower but steady growth rates that were typical before 1775. Elementary education as a whole stagnated in the 1830s and 1840s, but the central government expressed no dissatisfaction with that until the upheavals of 1848. When the imperial authorities initially mandated the provision of six years of required primary education, they imposed a curriculum of only two years’ duration which was then to be repeated in the subsequent years. At the same time, the government closed a number of secondary and higher educational institutions which it saw as unnecessary. Later, from the end of the Napoleonic Wars until after 1848, the central government opposed curricular and pedagogic innovations, and it tended to resist calls in cities and towns for opening more practically oriented Realschulen. Cvrček finds that from the late 1820s until the late 1860s, the overall enrollment ratio never exceeded 60 percent of all five to twelve-year-olds. School coverage of the eligible population throughout the period was lower than the regulations stipulated and, in fact, lower than the officials thought it was, thanks to their inadequate and faulty data collection.

Cvrček sees two underlying reasons for the limited development of primary education before a new round of reforms came in the 1860s. From the outset the central government, which perennially faced budget stringency, committed few financial resources to primary education and left the great bulk of the operating costs for the basic schools (Trivialschulen) to local communities and parents and the cost of facilities to local school patrons or communal councils. The other main factor was the sharp limits on how much schooling the fundamentally conservative government wanted for the general population. The authorities expected a basic grounding in religion, reading, writing, and some arithmetic but little more. The basic goal was to produce a populace that could function adequately in society and the economy with obedience to state and religious authorities and respect for one’s social superiors. Cvrček supports well these arguments with the evidence presented on the framing of the Theresian educational system and the limits on the expansion of primary schools up to the 1860s.

One must register some objections, though, when Cvrček concludes rather simply that the whole system expressed the socially conservative values of a government of the 1770s that were grounded in a “milieu of the gradually fading but still lingering serfdom.” It was “an imposition by a feudal ruler on her serfs to further her, not their, interests” (p. 280). Certainly, the Theresian educational system embodied expectations of a strict social hierarchy and submissive lower orders, but those assumptions applied to a variegated body of subaltern social elements which included free small peasant farmers and herders, servants, craft apprentices, and laborers along with the many serfs. Cvrček, in fact, shows his awareness elsewhere in the book that Austrian society in the era of Maria Theresa and Joseph II already showed considerable dynamism and included increasingly diverse middle and lower strata before the abolition of serfdom, the first waves of the industrial revolution, and the French Revolution had any deep impact.

Gary B. Cohen is Professor Emeritus of modern Central European history at the University of Minnesota, Twin Cities. He has published monographs, edited volumes, and numerous journal articles and book chapters on social and political development in modern Habsburg Central Europe. Currently he is preparing a contribution to a new Cambridge History of the Habsburg Monarchy on the monarchy’s legacy to governance, political culture, and society in the successor states.

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

Subject(s):Education and Human Resource Development
Geographic Area(s):Europe
Time Period(s):18th Century
19th Century