Project 2001: Significant Works in Economic History

North, Douglass C. and Robert Paul Thomas, The Rise of the Western World: A New Economic History. New York: Cambridge University Press, 1973. viii + 171 pp. ISBN: 0-521-29099-6.

Review Essay by Philip R. P. Coelho, Department of Economics, Ball State University. <00prcoelho@bsu.edu>

New or Old Economic History? Incentives and Development

This is a landmark book on the impact of property rights on European economic development. Published over a quarter of a century ago, its stated goal is “… to suggest new paths for the study of European economic history rather than … either [a detailed and exhaustive study or a precise empirical test that are the] … standard formats” (p. vii). North and Thomas attempt to identify the elements that allowed the Western European economy to rise to affluence. Their argument is made transparent in Chapter One (Theory and Overview): the key to growth was and is an efficient economic system. Efficient in the sense that the system of property rights gives individuals incentives to innovate and produce, and, conversely inhibits those activities (rent-seeking, theft, arbitrary confiscation and/or excessive taxation) that reduce individual incentives. They argue that property rights are classic public goods because: (1) once a more efficient set of property rights is discovered the marginal cost of copying it is low (compared to the cost of discovering and developing it); (2) it is prohibitively expensive to prevent other political jurisdictions from emulating a more efficient set of property rights regardless of whether they contributed to their construction; (3) and finally, the idea of a set of property rights, like all ideas, is non-rival — we can all consume the same idea and the “stock” of the idea is not diminished. These public good aspects lead them to conclude that there may be under investment in the attempts to create more efficient sets of property rights because the jurisdiction that invests in the development of property rights pays the entire cost of their development but receives only benefits that accrue to its jurisdiction, while other jurisdictions can get the benefits without any of the developmental costs. Thus, the problems of public goods and the “free riders.”

Chapter Two (“An Overview”) sets the historical stage for their analysis. North and Thomas begin with tenth-century Europe and an examination of the classic feudal system. They contend that relatively low population densities and the absence of security (both economic and personal) led to a retreat from market exchange to one of self-sufficiency and to the development of feudalism. Protection was valuable and had to be paid for, but in the absence of markets it was paid for in kind rather than money. Since agricultural output could not be exchanged in the market (land) lords demanded labor services (dues) rather than output shares. Labor dues could be used to produce a more desirable set of consumables than output shares. Lacking market exchange, manorial labor was more fungible than agricultural output. The authors argue that from kings down to peasants, the absence of markets was the mid-wife to feudalism. The second prong of their thesis is that in feudalism, as in any societal arrangement, there existed a myriad of details, known as the custom of the manor that allowed the system to function. Once established, these customs became the set of property rights that molded the economic and personal relationships of feudalism.

As the centuries progressed populations grew and manorial economies replicated themselves. North and Thomas contend that land was available at the constant marginal cost (the cost of clearing land) up to the thirteenth century. At the end of this period diminishing returns to labor employed in agriculture manifested itself. The growth of population densities and the establishment of political order allowed markets to emerge. Diminishing returns and emergent markets gave feudal lords incentives to convert their serfs’ labor dues into fixed money payments. The lords were better off receiving a fixed payment rather than labor dues because the market price for labor was falling due to Malthusian diminishing returns to labor in agriculture. The commutation of labor services into money payments could not be reversed when labor became more valuable during the plagues of the fourteenth century. Amending the custom of the manor was subject to severe transactions costs, consequently by the sixteenth century servile labor in Western Europe was not viable.

Part Two (Chapters 3-7) presents evidence to buttress this thesis. Chapter 3 explores property rights in humans and land, Chapters 4 and 5 develop the frontier movement and the settling of land. Chapter 6 explores diminishing returns to agriculture in the thirteenth century, and Chapter 7 the devastation associated with the fourteenth century. Part Three of the book deals with the period 1500 to 1700 and covers the “unsuccessful” national economies of Spain and France and the successful ones of Holland and England. North and Thomas argue that inefficient sets of property rights hindered economic growth in Spain and France, while more efficient sets promoted the economic growth of England and Holland.

The paragraphs above are a rough sketch of the North-Thomas thesis on the growth of Western Europe. How well have the last 25 years of the twentieth century treated it, and how much consideration should it be given? The first question is relatively easy to answer. Texts and books in European economic development and history generally cite The Rise of the Western World, with the notable exceptions of David Landes and Rondo Cameron. In the academic literature it is frequently cited: The Social Science Citation Index for the years 1986-1990 gives the book about fifteen citations per year (68 total citations in the entire five year period), and for the last decade of the twentieth century (and subsequent to North winning the Nobel Prize in economics) citations rose to about twenty per year.1 But how big is that? It is larger than most, but not in the league of scholarship that alters the way a subject is considered. A relevant example is Ester Boserup’s The Conditions of Agricultural Growth that, for the same period (1986-90), was cited 158 times, or more than twice as frequently as North and Thomas. I believe the citation count assessment of the significance of this book is relatively accurate. The Rise of the Western World is an addition to the historiography of property rights, but it does not accomplish its stated goal: to explain the rise of the West. Furthermore there are significant gaps in its argument.

First, its reliance on Malthusian population theory may be misplaced. In 1966 the aforementioned Ester Boserup published her work The Conditions of Agricultural Growth (not cited in North and Thomas). From empirical evidence she argued that increasing populations led to the intensification of economic activities: From hunting and gathering, to a long-cycle agricultural rotation mixed in with hunting and gathering, to settled agriculture. In Boserup’s analysis output per man-year rises in agricultural societies relative to hunting and gathering societies, but output per hour devoted to the acquisition of food may have fallen. Boserup’s thesis is much more sophisticated than (and contradictory to) the simple Malthusian framework that North and Thomas rely upon. She points out that it is extraordinarily difficult to compare outputs in societies with different levels of production intensity. Population densities lead to different modes of production and entirely different societies. An increase in population density increases the range of productive activities that can be produced for market exchange, and as Adam Smith explains increased specialization leads to increased output and the size of the market limits specialization. North and Thomas recognize this interdependency explicitly. They state that increasing specialization due to increasing population densities may have partially offset Malthusian diminishing returns. How do they know it was a partial offset? The evidence they offer on diminishing returns and a Malthusian crisis in medieval England is primarily derived from the works of James E. Thorold Rogers, who investigated six centuries of wages and prices in England.2

As a source, Rogers is an excellent compilation of manorial roles and other data sources, however he is not a transparent writer and he is difficult to interpret. In volume one of A History of Agriculture and Prices in England (1866) he states, “… we may… conclude that the price of the service [wage labor], in so far as it was affected by competition, represents fully the economical conditions of supply and demand, and is interpreted by the evidence of prices” (p. 253). This may be interpreted to mean that wages are an accurate representation of the laborers’ incomes, but that does not seem to be what Rogers meant. Two pages later he writes that: “In many cases the labourer or artisan was fed. In this case, of course, he received lower wages. … At Southampton, the various artisans are almost invariably fed, … [In 1385] we read … of an allowance instead of food. As a rule, however, the wages paid are irrespective of any other arrangement. Sometimes, but very rarely, and only in the earlier part of the period, the labourer is paid in kind.” And in Six Centuries of Work and Wages (1884), Rogers indicates that feeding workers was considered routine (pp. 170, 328, 354-55, 510, 540-541, etc.).

I interpret Rogers to mean that in the early centuries of his study day laborers did not normally receive family food allowances, but that they were typically fed on the job. Given the nature of work (agricultural labor from shortly after sunrise to sunset) and medieval food preservation and preparation technology, not feeding workers would have forced them to devote significant amounts of time away from working to food preparation and to feeding themselves (just getting bread would be a formidable task given their work hours and the work hours of bakers). Besides being fed on the job laborers frequently had other perquisites such as gleaning, allotments of beer, and small amounts of land for individual agricultural activities (kitchen gardens). All these in-kind payments are mentioned in Rogers (1866) and are considered normal. North and Thomas base their work not only on the wage data from Rogers, but also on his price data for agricultural products.3 In order to determine real wages, money wages are divided by an index of agricultural prices.4 Notice that the numerator typically ignores payments in kind and the denominator is exclusively a food index. Medieval workers’ consumption bundles had a heavy food component, but if one is being partially paid in food and resources devoted to food (kitchen gardens), then real wage indexes that focus solely on the costs of food may be seriously distorted unless the income (both in money and in kind) elasticity for food is one and the overwhelming preponderance of the budget is devoted to food. Mildly put, the data that North and Thomas rely upon to show Malthusian diminishing returns are not entirely adequate to the task.

Other sources question the use of the Malthusian paradigm. James Z. Lee and Wang Feng unequivocally deny that Chinese agriculture from 1300 to 1800 experienced Malthusian crises. Similarly, Julian L. Simon disputed the empirical validity of the Malthusian model. Others question the North and Thomas view of medieval English agriculture. Gregory Clark questions the view of a primitive English agriculture running into diminishing returns in the early fourteenth century.5 Certainly the fourteenth-century plague was a disaster to the European economy, but it does not follow that the plagues that devastated it were direct consequences of Malthusian diminishing returns. More likely it was, as William McNeill hypothesized, a result of an integrated Old World economy that led to the introduction of a “new” pathogen to a dense, flea-ridden European population.6

So there are difficulties with North and Thomas’s belief that the diseases of the fourteenth and fifteenth centuries are a manifestation of declining living standards (Malthusianism). They do not consider that the plague may have been exogenous, that pathogens are subject to their own dynamics and evolution and not necessarily a result of human intervention.7 North and Thomas simply assert that the plague was a result of over population, diminishing returns, and declining living standards. But if that is so, why did the plague reoccur after population had declined and (according to the data they rely upon) wages had increased? And why did plague occur earlier — in the mid-sixth century? North and Thomas do not have answers.

There is a straightforward explanation to these questions that is grounded in epidemiology: It is that the plague was a “new” disease to fourteenth-century Europe and its relatively dense population resulted in high rates of infection and mortality. These rates decreased as immunities (both acquired and genetic) became more predominant in the populations of Europe. What has this to do with Malthus and diminishing returns? Nothing: The simple Malthusian doctrine correlating high death rates with low living standards is suspect. It assumes that diseases are a function of poverty while there is evidence that the causation runs from diseases to poverty, and it is contradicted by data which show areas with high money incomes (cities) having higher death rates than those areas with low money incomes (rural areas). Consequently any line of reasoning that relies upon the Malthusian doctrine, as does The Rise of the Western World, is suspect.

There are other flaws in their thesis, some minor, some major. A minor omission is that they do not specify why the servile labor force accepted the original commutation of labor services to money payments. According to their high transactions cost model, “the custom of the manor” would have made the initial negotiations prohibitively costly. A simple observation that personal freedom to the individual was worth more than the value of the money payments would correct this omission. And, such an observation would reinforce their claim that when the purchasing power of a unit of money fell (inflation) the lords were unable to switch back to servile labor.

A more significant difficulty with their thesis is their claim that while diminishing returns to labor existed in the countryside, urban areas had constant returns. These are inconsistent with declining real wages, because migration from village to town will prevent agricultural wages from falling.8 Another difficulty is their lack of knowledge of antiquity: They seem to believe that institutional innovations such as insurance and bills of exchange were medieval innovations, but these were known and used at least by the Hellenistic era, and the ancients developed many contractual forms that were resurrected and used again during the European Renaissance.9

So North and Thomas’s book is not without its flaws, but blemishes and all it still makes significant contributions in its emphasis on an efficient set of property rights as a necessary condition for economic development to take place. In this emphasis North and Thomas returned to the fundamentals of economics and its founding father, Adam Smith, who said: “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes and a tolerable administration of justice; all the rest being brought by the natural course of things.”

The Rise of the Western World is right to echo these sentiments. Since its publication in 1973 the modest increases in economic and personal freedom that the Chinese have experienced have led its population to a degree of affluence entirely unanticipated a quarter of a century ago. Similarly, the decline in law and order has bought economic and personal disasters to many in parts of Asia and Africa. The lesson seems a hard one to learn: the protection of the liberties of people to both their persons and properties is the most effective way to promote the general welfare in the long run. Short-run policies that restrict these liberties inevitably reduce welfare in both the short and long run. By focusing on this lesson in The Rise of the Western World, North and Thomas have done the profession and humanity a meritorious service.

Endnotes:

1. Counting citations is a tricky business because a slight change in the citation can result in an entry separate from the main one. Thus D.C. North and R.P. Thomas may be counted differently from D. North and R. Thomas.

2. North and Thomas cite other evidence, but much of this is ultimately derived from Rogers’s work. For example E.H. Phelps Brown and Shelia Hopkins’s works on wages and prices are based on data gathered from Rogers.

3. North and Thomas rely on the Phelps Brown and Hopkins works (1955, 1956, 1957) on real wages whose data are derived from the wage and price data of Rogers.

4. “Index” may not be a completely accurate term because the index frequently contains only one commodity; then, to be specific, it is a wage series expressed in wheat units.

5. Clark (1991) using labor inputs in harvesting as a proxy for wheat yields finds little change in output per acre over the medieval era. He observes that: “Interestingly the labour input on reaping wheat from 1250 to 1450 seems to have risen little, implying a constancy of yields over this period. This is consistent with the work of Titow and of Farmer on the Winchester and Westminster estates over the medieval period. … Wheat yields were fairly constant over the medieval period, the population losses of the Black Death having little impact on yields” (p. 454, footnotes omitted).

In another article, Clark (1988) observes that relatively low yields per acre in medieval England could be attributed to the relatively high interest rates. Taken together these observations do not lend support to the thesis that medieval Europe was in a Malthusian crisis because, if it were so, we would expect to see declining mean output per unit of labor and increasing mean output per unit of land as diminishing returns makes labor relatively abundant and land relatively scarce. The opposite would occur if, as a result of the Black Death, labor became relatively scarce.

6. North and Thomas do not recognize that the plague may have been the result of increasing living standards. As incomes rose trade increased and disease pools in different regions became integrated. Mortal diseases newly introduced to an area frequently have a devastating impact on the native population. For more on this see McNeill.

7. Exogenous in the sense that the plague was not a disease endemic to fourteenth-century Europe, although, most likely, it had appeared in Europe in the first millennium CE; see J. C. Russell for further information.

8. For a complete specification of this model see Chambers and Gordon.

9. Edward F. Cohen argues and presents persuasive evidence that these institutional forms were abundant in fourth-century BC Athens.

References:

Boserup, Ester. The Conditions of Agricultural Growth: The Economics of Agrarian Change under Population Pressure. Chicago: Aldine, 1965.

Cameron, Rondo. A Concise Economic History of the World. New York: Oxford University Press, 1989.

Clark, Gregory. “Yields per Acre in English Agriculture, 1250-1860: Evidence from Labour Inputs,” Economic History Review 44 (1991): 445-60.

Clark, Gregory. “The Costs of Capital and Medieval Agricultural Technique,” Explorations in Economic History 25 (1988): 265-94.

Chambers, Edward J. and Donald F. Gordon. “Primary Products and Economic Growth: An Empirical Measurement,” Journal of Political Economy 74 (1966): 315-32.

Cohen, Edward E. Athenian Economy and Society: A Banking Perspective. Princeton: Princeton University Press, 1992.

Lee, James Z. and Wang Feng. One Quarter of Humanity: Malthusian Mythology and Chinese Realities, 1700-2000. Cambridge, MA: Harvard University Press, 1999.

Landes, David S. The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor. New York: Norton, 1998.

McNeill, William H. Plagues and Peoples. New York: Anchor Books, 1976.

Phelps Brown, E. H. and Shelia V. Hopkins. “Seven Centuries of Building Wages,” Economica 22 (1955): 195-206.

Phelps Brown, E. H. and Shelia V. Hopkins. “Seven Centuries of the Prices of Consumables, Compared with Builders’ Wage-Rates,” Economica 23 (1956): 296-314.

Phelps Brown, E. H. and Shelia V. Hopkins. “Wage-Rates and Prices: Evidence for Population Pressure in the Sixteenth Century,” Economica 24 (1957): 289-306.

Rogers, James E. Thorold. Six Centuries of Work and Wages. New York: G.P. Putnam’s Sons, 1884.

Rogers, James E. Thorold. A History of Agriculture and Prices in England. Oxford: Clarendon Press, 1866.

Russell, Josiah C. “That Earlier Plague,” Demography 5 (1968): 174-84.

Simon, Julian L. The Economics of Population Growth. Princeton: Princeton University Press, 1977.

Simon, Julian L. Population and Development in Poor Countries: Selected Essays. Princeton: Princeton University Press, 1992.

Simon, Julian L. The Ultimate Resource 2. Princeton: Princeton University Press, 1998.

Simon, Julian L. and Herman Kahn (editors). The Resourceful Earth: A Response to Global 2000. New York: Oxford, 1984.

Philip R. P. Coelho has written on long-run economic growth (“An Examination into the Causes of Economic Growth,” Research in Law and Economics 1985) and is currently working on the impact of morbid diseases on economic history and growth (see: “Biology Disease and Economics: An Alternative History of Slavery in the American South,” with Robert A. McGuire, Journal of Bioeconomics Vol. 1, 1999; “Epidemiology and the Demographic Transition in the New World,” Health Transition Review, Vol. 7, 1997; and “African and European Bound Labor in the British New World: The Biological Consequences of Economic Choices” with Robert A. McGuire, The Journal of Economic History, Vol. 57, 1997.)

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Published by EH.Net (September 2022).

Adam Tooze. Shutdown: How Covid Shook the World’s Economy. New York: Viking, 2021. 368 pp. $28 (hardcover), ISBN 978-0593297551.

Reviewed for EH.Net by Robert Peckham, Department of History, University of Hong Kong.

The title of Adam Tooze’s latest book, Shutdown: How Covid Shook the World’s Economy, is in some sense misleading in that it downplays the author’s ambitions. Shutdown is not so much a tome about a pandemic-shaken global economy as an exploration of how Covid has played into geopolitical and ideological struggles, both historical and new, and how, in so doing, it has disclosed fundamental structural and institutional flaws. The future as viewed from 2020, Tooze argues, looks worrying. “We ain’t seen nothing yet,” he concludes.

Written for a non-specialist readership, there’s an urgent, often giddy reaching for the facts, perhaps inevitable in a book written in the heat of the moment. The tone is set in the first chapter, where we’re given overviews of health disparities, infectious disease threats, the securitization of health, Trump America, and China. It’s a complicated story, to say the least, and Tooze provides a cogent and useful historical context to many of the key issues in 2020, rightly stressing how Covid has foregrounded the entanglement of economic concerns with shifting domestic and global politics. The pandemic, he notes, is a convergence and layering of biological, social, economic, and political risks, which makes interventions in any one domain challenging. Tooze frequently stresses the exceptional nature of the Covid crisis as—in the words of the IMF— “a crisis like no other”. As he asserts at the beginning of the book, “2020 turned out to be history with a capital H, something quite different from anything we had ever seen before.”

Because there are so many sub-arguments braided into Tooze’s multifaceted plot line, some are inevitably dropped before they are fully developed. The links between financial modeling and epidemiological projections, so central to the Covid pandemic–particularly during the phase Tooze is writing about–could have been expatiated on. As Adam Kucharski notes in his 2020 book, The Rules of Contagion, many infectious disease epidemiologists at the forefront of their discipline come from backgrounds in risk modeling for financial institutions. What kind of assumptions get transferred in this reorientation?

There are benefits but also challenges in rushing out a book about a crisis that’s still unfolding. Tooze acknowledges as much when he discusses his 2018 book Crashed, an account of the 2008 financial crisis. “Crashed”, he writes, “was itself a history that had been overtaken by events. I had set out to write a ten-year anniversary book and ended up, in the wake of Brexit and Trump’s victory, in the middle of a crisis that refused to end. At the time, a wise friend joked that I was laying myself open to the demand to write a never-ending new edition.”

Over two years since March 2020, when the WHO declared a global pandemic, the issues Tooze identifies have transmogrified, with the viral threat now embroiled in a war in Ukraine, an energy crisis, and spiraling inflation—not to mention the many unanticipated global ramifications that these disruptions have produced, such as the ousting of Sri Lanka’s president, Gotabaya Rajapaksa, in July 2022. Like Crashed, this is a book that could have never-ending new editions.

While China was viewed by many as a success story in 2020, in contrast to the belated, half-hearted, piecemeal, or frankly bungled interventions in the West, today China’s zero-Covid policy—its drive to eliminate the virus at all costs—is manifestly failing. Aside from the economic consequences of mass testing and isolation and the lockdown of cities such as Shanghai and Chengdu (where in early September 2022, the city’s population of 21 million were ordered to remain at home), there’s now a real crisis of trust. China’s belligerent stance on Taiwan and its muscle-flexing in the South China Sea could be seen as a disingenuous attempt to distract an increasingly frustrated citizenry from the social and political fallout of Covid.

Although he repeatedly alludes to global interdependence and draws on an essay by the Chinese politician Chen Yixin for insights on the nature of convergent risks, this is fundamentally a book about the shaky foundations of a Western-led global order exposed by Trump and Brexit, both symptoms and catalysts of decay, viewed against China’s rise as a global superpower. In some respects, then, it’s a familiar story of rise and fall framed by a familiar question: “Was this the death knell of neoliberalism?” The answer Tooze gives, while equivocal, suggest that it may be. Or at least, it’s another nail in the coffin.

To frame Covid in this way, as a neoliberal crisis, does several things. First, it tends to perpetuate a Western and largely US-centric view of the ongoing crisis as their crisis, which necessarily entails a Western-formulated critique to tackle. Therapeutic agency is one-sided, since only Westerners can put right a world that they’re primarily responsible for constructing. Second, and relatedly, it lets authoritarian regimes off the hook too easily, unwittingly aligning neoliberal critique with the liberal-loathing politics of Xi and Putin, who in a 2019 interview with the Financial Times, crowed that “the liberal idea” has “outlived its purpose.”

Third, viewing the pandemic as a neoliberal crisis precludes any in-depth discussion of the vulnerabilities that Covid has exposed within other regimes, as well as the opportunities it has furnished them with. Russia’s invasion of Ukraine and the radical extension of the surveillance state in China, so poignantly captured in documentaries on Wuhan and Hong Kong by the dissident artist Ai Weiwei, have been enabled, or at least facilitated, by Covid. “The rigor of China’s countermeasures was easily typecast as totalitarian,” Tooze writes. Yes, and perhaps with some reason.

In Hong Kong, draconian quarantine and isolation measures were mobilized to do Beijing’s work. “The pandemic provided the excuse for a crackdown,” Tooze concedes. However, his brief account of events there, which hardly captures the anti-protest violence on the city’s streets and the brutal dismantling of civil liberties, quickly moves on to the Trump administration’s anti-China campaign. Of course, Tooze is right to call out Western xenophobia and there may well “be something deeply wrong with America,” but in Hong Kong, where freedom is being lost as part of a concerted and brutal clampdown on basic rights, the battle has other fronts.

Shutdown is nonetheless a bold pitch for a blended genre of history that combines an immersion “in the immediate flow of events,” as Tooze calls it, with a big-picture view. The Covid crisis, he suggests, has not only brought to the fore inherent structural weaknesses in the world’s economic system, and placed unprecedented stress on existing institutions across sectors from health to finance; it has also pointed to new challenges ahead. This is ultimately a plea for a novel kind of joined-up thinking and collaborative action to ensure economic and societal resilience and help build the “standing capacities necessary to meet fast-moving and unpredictable crises.” What is refreshing, here, and especially heartening for a historian, is the central importance Tooze places on historical analysis as a tool in building this sustainable future.

Robert Peckham is Honorary Professor of History at the University of Hong Kong, where he was previously Chair of History, MB Lee Professor in the Humanities and Medicine, and Director of the Centre for the Humanities and Medicine. His research focuses on epidemic disease and the history of crisis, and his book FEAR is forthcoming from Profile Books in 2023.

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Published by EH.Net (August 2022).

Scott Reynolds Nelson. Oceans of Grain: How American Wheat Remade the World. New York: Basic Books, 2022. 368 pp. $32 (hardback), ISBN 978-1541646469.

Reviewed for EH.Net by Paul Sharp, University of Southern Denmark, CAGE, CEPR

The title of this book is somewhat misleading. When I received it for review, I expected another US-centric account of how America made the world what it is today. I was therefore somewhat surprised to begin reading, and found that a large part concerns Russia, Turkey, and Ukraine. In fact, reading this book while at the same time witnessing the horrors coming out of Ukraine made an impression, as I will come back to at the end of this review. The author, Scott Reynolds Nelson, is the UGA Athletics Association Professor of the Humanities at the University of Georgia. He has won both academic and literary awards for his writing. It is therefore no surprise that this book is an excellent read. Nelson has the historian’s enviable skill (which many of us from the more economics side of economic history could surely learn from) of making serious analysis come to life through vivid descriptions of people and places. You will most likely come out of reading this book far more knowledgeable than when you started, whether or not you believe the central hypothesis.

Nelson presents a bold theory of what made the modern world. Where Jared Diamond saw “Guns, Germs, and Steel”, Nelson sees the perhaps somewhat less sexy trinity of mold, futures contracts, and dynamite. The potato blight, phytophthora infestans, of the 1840s forced open European markets for grain. The American Civil War led to financial innovations in how grain was traded; and dynamite, invented in Germany in 1867, transformed geography as new deep-water ports were created, and canals and railroads connected continents. In other words, policy, finance, and technology created the globalized world. This is not really news to the economic historian, but Nelson puts it within a framework inspired by the Russian Marxist, activist, and grain trader, Alexander Lvovich Parvus (born Israel Lazarevich Gelfand or Helphand). He postulated the role that “invisible lines,” the “Black Paths” of grain trading routes, have played for the making and breaking of empires, which he argued exist to control and extract rents from them. Rosa Luxembourg was to take his “invisible lines” to create a new way of understanding trade which we now call world systems theory. But Parvus’ influence went far beyond theory. He was able to convince Lenin of the power of these lines and that revolution in Russia was possible.

The introduction provides a great summary of Nelson’s hypothesis. His 2012 book A Nation of Deadbeats: An Uncommon History of America’s Financial Disasters (Knopf) explained that financial panics had much to do with drastic changes in commodity prices. Accordingly, the story here starts in Odesa, Ukraine, which he visited in 2011 to research international financial crises. Nelson sees connections between booms and busts in the wheat market for everything from the French Revolution to the Arab Spring. He notes parallels between different settings based on connections to wheat. For example, Ukraine has some of the richest soil in the world, and it was captured by Russia in 1768 under Catherine II. At the same time, he notes, similar expansionism was going on in the Americas. Then, the French Revolution (over the price of bread, of course, as Nelson notes), and the French and Napoleonic Wars led to Odesa becoming a grain-exporting boomtown. European landlords in turn faced Ricardo’s paradox, as rents dropped as food became cheap. The initial response was protectionist barriers to trade, but then a water mold caused the potato harvest to fail, and European trade opened following 1846.

This, Nelson explains, led to century-long contest between Russia and America to feed Europe’s working class. In the 1860s both empires ended serfdom and slavery respectively. America then gained the upper hand, when the Union Army during the Civil War created futures contracts that allowed grain to be bought and sold without the costly and time intensive process of pricing based on samples. This, combined with the transatlantic telegraph, steam shipping, and the new opportunities brought by dynamite, led to what Kevin H. O’Rourke has termed the “Grain Invasion.” European prices fell, and the ships which brought grain returned with migrants to the New World. As European workers in cities became better off, Odesa, and other grain exporting regions, faced ruin, and the combination of the agrarian crisis and the bursting of estate bubbles ushered in what was known as the Great Depression until the 1930s. The powerful agricultural Austro-Hungarian and Ottoman Empires declined. Russia, for its part, responded in 1884 with state-supported railroads and a plan to plant grain in Siberia and Central Asia. This brought in capital from largely French investors, but Russia’s expansionary plans were checked when it lost in war to the Japanese Empire in 1905. Then, in 1914 Russia’s anxiety that Turkey might halt Russian grain shipments on the Black Seas helped start World War I: “a war over nothing less than foreign bread.” Thus, as Parvus, who grew up in Odesa during the 1873 crisis and coined the term “Agrarian Crisis” in 1895, claimed, the paths of grain made and destroyed empires.

Chapter 1 covers an impressive span of time, 10,000-800 BC and explains the origin of the “black paths” that so fascinated Parvus. Ancient oxen trails connected the Ukrainian plains with the Black Sea ports. Geographers and historians have claimed that these paths, and the trading cities known as emporia (themselves the source of the word “empire”) were created by empires, which in turn were defined by their control of trade lines. Folklore, backed up by new archaeological evidence suggests a far more ancient origin. The first wheat “farmers” might have been travelers or traders, who after decades of migration remained at way stations which formed the first settled communities. Empires then emerged based on establishing protection rackets along the pathways, and in a few generations imposed formal imperial rule. Thus, empires imposed a tax on the black paths, but so too did disease, and the rise and fall of both determined the volume of trade. Nelson explains that historically bread was extremely expensive, involving three stages: 1) planting and harvesting; 2) storing and shipping to the bread eaters, in the emporium; and 3) producing flour, mixing with yeast and water, and baking, which took place in the cities. For at least fifty centuries considerable human labor was devoted to the second stage, and empires emerged to engross and centralize it.

Chapter 2 covers 800 BC-AD 1758. Nelson explains how Byzantium enforced a monopoly control of the Bosporus Strait and the Dardanelles. Constantinople rose and fell as the black paths expanded and contracted, but grain emporia were nodes for infection, and the Plague of Justinian in 541 ended the ancient world. With depopulation, important knowledge about the storage of grain was lost, and its rediscovery centuries later was to play an important part for making long distance trade possible. Constantinople became increasingly dependent on Slavic peoples, and as the grain flowed in, Byzantian culture and the Orthodox religion flowed back. In medieval western Europe, which was often cut off from trade with the East after 542, serfdom arose to compensate for the loss of trade, and control of mill and bakery meant control of people. Nelson is brilliant at finding anecdotes to illustrate the centrality of grain for understanding the world. Thus, the word lord comes from an old word meaning loaf-ward, and the word lady from loaf-kneader, although one wonders if similar etymologies exist for the same words in different languages.

The years 541-1100 were the age of robber barons, for example the Hanseatic League. Absolutist states emerged to break their monopoly, and in 1453 the Byzantine Empire, increasingly starved of grain, collapsed and the Turks took over. A long struggle then emerged with Russia, which wanted to take Constantinople to monopolize the Bosporus themselves. Thus “… at its deepest level an empire may be a monopolizer of food along ancient grain pathways that it never fully understands. Empires survive only as long as they control the sources of food needed to feed soldiers and citizens; they fund themselves by taxing those who sell it.” This is further explored in Chapter 3, covering 1760-1844, where it is explained how Catherine II, inspired by the physiocrats, believed that grain exports properly managed could be the source of an empire’s wealth. To this end she transformed serfdom into something more akin to New World slavery, and enacted extensive military and fiscal reforms. She then set about seizing land where wheat could grow, although she never managed to capture Constantinople. But as the Ottoman Empire shrank, in part due to a less sophisticated grain-tax system, European princes tore grain-producing Poland to pieces to appease Catherine. Moreover, as with US expansion, thousands of native peoples were persuaded to ally with Russia in order to dispossess others. Having taken Ukraine, Catherine founded Odessa (renamed in Ukrainian as Odesa) as a free port, and invited in foreigners to farm land as she aimed to feed Europe and thus make Russia rich. Meanwhile the United States, before the Civil War, offered no real competition. The American port cities were not “visionary physiocratic cities” but “simple adjuncts to plantation slave regimes” where landowners blocked foreign imports. However, the French rediscovered Roman techniques of grain storage, allowing for silos and American “elevators”, thus making long-distance trade increasingly feasible. Trade remained protected, however, and to an extreme degree following the Napoleonic Wars.

Chapter 4 provides the first of Nelson’s trinity of explanations. Barriers to trade crumbled with the failure of the potato crop in the 1840s. As trade expanded, bread replaced potatoes and living standards surged, although health often suffered as Europeans preferred highly processed white bread. Thus emerged what Parvus described as the European consumption-accumulation city. Labor and capital accumulated where food was cheapest and the cities with the deepest docks thrived. Prosperity allowed workers to save, freeing up capital for industrialization. Nelson explains, “European industrialization and urbanization had little in the way of European roots. It was fueled by foreign food.” Chapter 5 demonstrates how the conflict between the Russian and Ottoman Empires came to a head with the Crimean War 1853-56 which saw Russia fail to capture Constantinople, in part because France and Britain feared a Russian monopoly on the Black Sea. This was a humiliating defeat, but also left the Ottoman Empire in heavy debt to Britain and France. Serfdom was abolished in Russia in order to expand grain production, leaving former serfs heavily indebted, but with land, and new political structures, the mir and the zemstvo, were implemented to govern these areas.

A different story played out in the United States, where slavery was abolished around the same time, but land was not redistributed, part of the origins of inequality in the US today. At the same time, the US expanded grain production into the interior using Black Sea varieties of wheat, and the Republican Party campaigned against slavery based on a belief in physiocratic expansion, and a desire for incentives to put family laborers onto wheat farms. Migrants purchased land along new railroads whose monopoly power they came to hate. Then in Chapter 6 Nelson gives the second part of his explanation. The Civil War created a necessity for breaking the power of merchants to supply food for the army, and this was done with a novel financial innovation. Bills of exchange were divided into hundreds of enforceable contracts, which would be called futures contracts, obviating the necessity for buying and selling based on a sample. Although in 1863 only the US Army was using this, with the introduction of the Transatlantic telegraph trade became completely reorganized. Ships could take the place of storage facilitates, redirected at port to wherever the grain was needed. America could now compete with Russia.

The final part of Nelson’s trinity is presented in Chapter 7, appropriately entitled “Boom.” Trade costs were again slashed with the invention of dynamite, which allowed railroads to run through mountains, canals, such as the Suez Canal, to link continents, and for the creation of new deep ports. The increased trade came with additional innovations such as grading, specialized insurance, and Hungarian milling techniques. As the price of food plummeted, workers found more time to educate and organize themselves, as Chapter 8 explains. New economic theories, including Marx’s, emerged to calculate the causes and limits of the new agricultural plenty. Much of the remainder of the book explains Parvus’ contribution to socialist theory and his direct influence on the course of events during his life, including the emergence of the Young Turks and the revolutions in Russia. He argued that although cheap grain benefited everyone, the main threat to the world was the alliance between capitalists and empire which would lead to imperialism, and pointless and costly wars. Agricultural empires such as the Ottoman and Austro-Hungarian empires suffered, while other empires gorged on cheap grain and became great powers. The US share of the grain trade declined as increasing shares of its production went to feed its own large cities. New conflicts emerged as others sought to capitalize on the demand from elsewhere, as Turkey again became a key battleground. World War I itself was “a World War over bread” with for example the closing of the Bosporus and Dardanelles Straits a key event. As Russia starved, revolutions eventually toppled the old Tsarist regime, and the Soviet Union, by quickly incorporating grain producing areas in Ukraine for example, took its place.

One is left with the feeling that we should be surprised about the importance of wheat for world history, which the layperson might indeed be. But from the perspective of an economic historian, one cannot really argue that wheat has been underappreciated. My own PhD thesis, from 2009, was entitled “Wheat, Globalization and Economic History,” and my career as a researcher began with reading the great works by Fairlie, Harley, Williamson, O’Rourke, Jacks, Brunt, and of course my own former supervisor, K.G. Persson (some references are given below). Certainly, there are many more I have forgotten to mention. One could argue that Russia’s role in this story is underexplored, with a few notable exceptions such as Goodwin and Grennes (1998), but more and more scholars are working on Russian economic history these days, so this will improve. Other large countries such as China and India take up relatively little space in Nelson’s account, while references to Parvus alone take up half a page in the index. One can of course argue against the somewhat physiocratic idea of the world where everything starts with the soil. In history this might have been truer, but Engel’s Law and technological progress have changed that, present concerns about food supplies notwithstanding. Regarding the first globalization, Nelson explains that economists and contemporaries have emphasized the importance of the elimination of tariffs, the introduction of the gold standard, and steamships. But, he believes, they have missed the ecological and political background: how the potato famine opened trade, dynamite opened ports, and futures markets increased liquidity. This is a powerful and convincing argument, but this is not a quantitative study. The only graph is of imports of wheat and flour into UK, but this only goes back to 1820. Before this, he explains in an appendix, there was a lot of smuggling and the data is underreported, meaning that historians have overstated the role of cotton and understate wheat.

Given my geographical location and research interests I am looking for Scandinavian connections everywhere, and I apologize for that! But it might be mentioned that, although Nelson dedicates the book to his maternal grandmother and explains that his grandparents left Sweden in 1887, the book somewhat neglects Europe outside Russia and Turkey (and indeed the world beyond), despite the obvious point that dynamite was invented in Germany by a Swede. Copenhagen’s role as a major Baltic trading hub is mentioned in passing, but the somewhat famous Danish exception during the backlash against the American grain invasion before the First World War deserves at least a sentence. Sticking to free trade, Denmark imported cheap grain, which helped feed a booming Danish industry in butter, bacon, and eggs, allowing this small country to feed the large industrializing cities of northern England. Danish exports were to play a crucial role in establishing industrialized dairying around the world, including the United States and Russia. Food is after all not only grain, particularly not as countries become richer. On a more trivial note, at one point the Danish ruler of England, King Canute, is described as a “legendary fool,” but as a historical figure he arguably was neither legendary (although the famous story about him might be) nor foolish for trying to demonstrate the limits of his power and in the process getting his feet wet.

Nelson is not afraid of using dramatic language to demonstrate the relevance of his work for the present, for example in chapter 14: “Now, just as ten thousand years ago, producers and consumers are bound together in a common world ecology that viruses, empires, and states have only ridden upon, bits of foam on a vast, invisible deep.” But sometimes he over-eggs the pudding, such as in the conclusion: “Whether to regard empires as symbiotes or parasites depends on one’s perspective. I tend to see empires as parasites, but one could make the argument that imperially sponsored universities… try to prevent starvation… in ways that promote ‘growth’ inside the empire. Physics, biology, chemistry, economics, and history are all, in their way, data-processing systems for empires hoping to keep their subjects – us – alive so that they can rule another day.” I like to believe that knowledge creation has value beyond allowing our present rulers to survive.

In sum, I would certainly recommend reading this book. I learned a great deal, and his thesis is fascinating and provocative. Moreover, it is a highly engaging read. But be prepared to feel somewhat unsettled as well. Nelson chillingly concludes that “modern Russia’s relative weakness as a great power now (in 2021) may still ultimately depend on its separation from Ukraine… Ukraine has always been the greatest prize, as Catherine the Great well knew.” Economists and economic historians are always being asked to provide policy implications of their work these days. Here is one that President Putin seems to have taken to heart.

References

Brunt, L. (2004). Nature or Nurture? Explaining English Wheat Yields in the Industrial Revolution, c. 1770. Journal of Economic History, 64(1), 193-225.

Fairlie, S. (1969). “The Corn Laws and British Wheat Production, 1829-76.” Economic History Review, 22(1), 88-116.

Goodwin, B. K., & Grennes, T. J. (1998). “Tsarist Russia and the World Wheat Market.” Explorations in Economic History, 35(4), 405-430.

Harley, C. K. (1978). “Western Settlement and the Price of Wheat, 1872–1913.” Journal of Economic History, 38(4), 865-878.

O’Rourke, K. H. (1997). The European Grain Invasion, 1870–1913.” Journal of Economic History, 57(4), 775-801.

O’Rourke, K. H., and Williamson, J. G. (2001). Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy. Cambridge, MA: MIT Press.

Olmstead, A. L., & Rhode, P. W. (2002). “The Red Queen and the Hard Reds: Productivity Growth in American Wheat, 1800–1940.” Journal of Economic History, 62(4), 929-966.

Persson, K. G. (1999). Grain Markets in Europe, 1500–1900: Integration and Deregulation. Cambridge, UK: Cambridge University Press.

Paul Sharp is professor of economics at the University of Southern Denmark, where he heads the Historical Economics and Development Group (HEDG). He is the author, with Karl Gunnar Persson, of An Economic History of Europe: Knowledge, Institutions and Growth, 600 to the Present (Cambridge University Press, 2015) and, with Markus Lampe, of A Land of Milk and Butter: How Elites Created the Modern Danish Dairy Industry (University of Chicago Press, 2018).

Copyright (c) 2022 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 2022). All EH.Net reviews are archived at https://www.eh.net/book-reviews.

Published by EH.Net (July 2022).

Mark Koyama and Jared Rubin. How the World Became Rich: The Historical Origins of Economic Growth. Cambridge, UK: Polity Press. x + 259 pp. $24.95 (paperback), ISBN 978-1509540235.

Reviewed for EH.Net by Joel Mokyr, Departments of Economics and History, Northwestern University.

Full disclosure: this reviewer’s name appears on the back cover of this book having written an endorsement, known as a blurb. Given that in the 40 words of an endorsement one can say very little, this book merits a more detailed discussion.

Any scholar teaching economic history and wishing for an up-to-date survey of a large and important literature will find it useful to read this book to bone up on the recent research listed in the long and encompassing list of references. Furthermore, they should seriously consider having their students read it for their class. The book is a wide-ranging yet remarkably complete and accessible survey of the Great Enrichment, the emergence of modern and prosperous economies that provide us with a material standard of living that our ancestors could not have dreamed of. How and why modern economic growth occurred when and where it did, and how economists have tried to understand this phenomenon, is the theme of this book. It is written by two of the finest young senior scholars in our field, both with important contributions to the subject matter of this book.

Many of the issues this book raises are highly contentious in our profession, and for good reason: these are hard questions on which learned scholars can disagree and interpret the evidence in different ways. How much did institutions really matter? What was the role of culture in economic growth? Was geography destiny? What was the role of craft guilds in the economic development of early modern Europe? How to think about the role of imperialism and slavery in the Industrial Revolution and the subsequent growth of industrial powers? Were high wages good or bad for technological progress? Was war a positive factor in economic growth? Was the European Marriage Pattern a positive factor in the economic development of the Continent?

The ecumenical and balanced approach the authors take to these questions is much like the Rabbi in a famous Jewish story. According to the legend, a rabbi is holding court in front of a large audience of his pupils. A husband and wife appear before the rabbi, to discuss their troubled domestic life. First the husband gets to lay out his case, and he lists all the sins and vices of his wife. The Rabbi listens carefully and pronounces his verdict: the husband is in the right. Then his pupils appeal to him: you should hear the wife’s case as well. The Rabbi consents and listens to the woman lays out her powerful case against her lazy and violent husband. He then announces his second verdict: the wife is in the right. His best pupil protests: but Rabbi, how can they both be in the right? The Rabbi listens and pronounces: the pupil is right too.

Rubin and Koyama present balanced and fair surveys of made in the literature, but they are reluctant to take strong positions. Such an ecumenical approach sets them apart from Clark’s Farewell to Alms and McCloskey’s Bourgeois Dignity, where the authors take up similar issues but in a much stronger opinionated mode. That thoughtful and measured approach of the survey, its elegant and crystal-clear style, and the authors’ impressive knowledge of a large and complex literature make this book nothing short of ideal for teaching advanced courses on global economic history to economics students.

It is especially refreshing to see a book such as this that pays explicit attention to institutions and culture, two themes that until not so long ago were taboo in our field but now seem to play increasingly central roles. The book contains full chapters on each, and while the discussion is naturally far from exhaustive, the authors do an excellent job summarizing some of the best work in these areas. What remains, of course, unsolved is why different nations develop different institutions and how and why such institutions change over time and how exactly cultural beliefs help determine the institutions that society ends up with.

The one issue on which the book takes a relatively strong position is on the issue of European imperialism and the importance of slavery and the slave trade to the Industrial Revolution and the origins of Western technological leadership (chapter 6). In recent years the “new history of capitalism,” in its zeal to blame the West and Capitalism for all the ills of the world, has argued that the West grew rich largely at the expense of the Africans and Asians whom Europeans mercilessly enslaved, sold, and exploited. As more sophisticated and economically literate scholarship has shown, the famous thesis by Eric Williams and recent proponents (e.g., Berg and Hudson, 2021) that somehow the Industrial Revolution depended on European imperialism and the Atlantic slave trade cannot be seriously defended. While Atlantic ports have been shown to have been crucial for subsequent economic development (Acemoglu, Johnson and Robinson, 2005), the exact causal chains are still unclear, and Koyama and Rubin stress sensibly that without institutional support for technological progress, without a rule of law and constraints on the executive, and without a comparatively inclusive society, no amount of colonialism and oppression of non-Europeans would have triggered modern economic growth.

The insight that economists have brought to this literature is that economic growth is fundamentally a positive-sum game: on a global level, the economic success of the West did not — on average — impoverish the Rest. In the long haul it made the entire world much richer than before — just not quite as rich as Europe and its offshoots (with some major exceptions such as Japan and Singapore). The causality is more complex. Whatever it was that made Europe learn to control energy and materials as well as run their economic systems better, also allowed them to manipulate and exploit Asians and Africans. But if anything was causal here, it was not that Imperialism caused the Industrial Revolution but the reverse: as Daniel Headrick in his classic work on the topic (1981) showed decades ago, what made western Imperialism possible above all was better technology (see also Hoffman, 2015).

Moreover, it is striking how poorly the historical fit between Imperialism of any kind and economic growth really is. The Roman Empire was the mother of all predatory empires, yet it did not industrialize and experienced only limited technological change. Eighteenth century China and Russia both added enormous stretches of land to their realms, with no noticeable effects on economic growth. The British Industrial Revolution coincided with the loss of the North American thirteen colonies. While Britain was a successful commercial and maritime nation, the Smithian gains from trade with its Empire — as Deirdre McCloskey (2010) has persuasively argued — were by themselves never enough to trigger the Industrial Revolution, much less create the Great Enrichment. In per capita terms, one of the largest colonial empires was the Dutch one in the East Indies, yet it did not help the Dutch industrialize until late in the nineteenth century. Belgium initiated its lamentable adventure in the Congo only after it had industrialized. Perhaps most strikingly, the European imperial venture collapsed after World War II, yet those were exactly the years during which economic growth in Europe was most rapid — with the exception of Russia (which maintained its colonial empire until 1991). In short, Koyama and Rubin conclude that colonialism and the slave trade “played a large role in the making of modern world” (a suitably vague statement) but that evidence is “mixed” on whether it was responsible for the world becoming rich (a polite pronouncement of a Scottish verdict: not proven).

Where the book truly shines is pointing out why the Great Enrichment was relatively late in coming and why the pre-1750 world — with a few exceptions — remained poor. The authors admirably survey the consensus that has emerged on the subject. Three major factors held the economies back. First, as neo-Malthusians such as Galor and Clark have maintained, before 1750 population growth in many cases wiped out the fruits of productivity growth, such as they were. Second, predators of various kinds and extractive institutions (North-Wallis-Weingast’s “natural state”) not only pillaged and plundered the riches of the few places that had been economically successful, they extinguished incentives to invest and innovate. Finally, until institutions had been established to govern and control the accumulation and dissemination of useful knowledge, the opportunities for sustained technological progress remained too limited. As the authors point out in admirable detail, the Industrial Revolution meant that these three brakes on economic progress slowly dissolved to create the Great Enrichment, first in a few economies in the West, then in more and more places around the world.

At the end of the day, as the authors sum up in chapter 11, in 2022 “the world is rich.” Almost anywhere one lives in this world, material life is in all likelihood better that it was a century, let alone a millennium, ago. A rising tide lifted most ships on the planet, but rather unequally, and while global poverty and famine are a fraction of what they were in 1800, they are still with us — mostly because of incompetent or tyrannical governance. What is perhaps worth noting, however, is that while technology keeps advancing, with novel breakthroughs opening new horizons in material sciences, molecular genetics, energy physics, and much more, there seems to be little if any long-term progress in the institutions that underlay the economic miracles of the past two centuries. Not only do countries with weak institutions such as Russia seem to lack the capability to adopt more inclusive and open governance, but even in nations long committed to the Enlightenment visions of freedom, human rights, and democracy, the institutions that helped make us rich seem ever more fragile. The conflict between ever-more powerful technology and the brittle polities that deploy it may be the greatest challenge to our future.

References

Acemoglu, Daron, Simon Johnson, and James A. Robinson. 2005. “The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth.” The American Economic Review 95 (2005), pp. 546-579.

Berg, Maxine, and Pat Hudson. 2021. “Slavery, Atlantic Trade and Skills: a Response to Mokyr’s ‘Holy Land of Industrialism’” Journal of the British Academy, Vol. 9, pp. 259–281.

Clark, Gregory. 2007. A Farewell to Alms. Princeton, NJ: Princeton University Press.

Galor, Oded. 2011. Unified Growth Theory. Princeton, NJ: Princeton University Press.

Headrick, Daniel R. 1981. The Tools of Empire. New York: Oxford University Press.

Hoffman, Philip T. 2015. Why Did Europe Conquer the World? Princeton, NJ: Princeton University Press.

McCloskey, Deirdre. 2010. Bourgeois Dignity: Why Economics Can’t Explain the Modern World. Chicago: University of Chicago Press.

North, Douglass C., John Joseph Wallis, and Barry Weingast. 2009. Violence and Social Orders. Cambridge: Cambridge University Press.

Joel Mokyr is the Robert H. Strotz Professor of Arts and Sciences and Professor of Economics and History at Northwestern University, and Sackler Professor, (by special appointment) at the Eitan Berglas School of Economics, Tel Aviv University. His most recent book is A Culture of Growth (Princeton University Press, 2017).

Copyright (c) 2022 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 (July 2022). All EH.Net reviews are archived at https://www.eh.net/book-reviews.

Published by EH.Net (April 2022).

Deirdre N. McCloskey and Art Carden. Leave Me Alone and I’ll Make You Rich: How the Bourgeois Deal Enriched the World. Chicago: University of Chicago Press, 2020. 232 pp. $25.00 (hardback), ISBN: 978-0226739663.

Reviewed for EH.Net by Joel Mokyr, Northwestern University.

For half a century Deirdre McCloskey has been a member of the starting lineup of economic history. The author of numerous books and hundreds of research papers and essays, her magnum opus is the monumental “Bourgeois Trilogy” that appeared between 2006 and 2016 and laid out her view of economic history and much else in about 2,000 pages. The slim volume here, co-authored with Art Carden, summarizes her views of what she has termed the “Great Enrichment” and makes it accessible to a wider public. In every way, this comparatively slim volume is vintage McCloskey: written in a rather informal conversational style, she states her views in her inimitable crystal-clear prose. She is relentless in her dismissal of other scholars she disagrees with and concepts she finds misleading, often with devastating bon mots. Thus the concept of capitalism is “a scientific mistake compressed in a single word” and the mistaken historians who elevated new-world slavery to a first-order cause of the Great Enrichment are told that “slavery was bad enough without ornamenting it with bad history and bad economics.” Indeed.

The book makes a powerful case for a classical liberal society: what accounts for economic success and growth is liberty. Other elements such as institutions, science, trade, resources and so on may have a mattered a bit, but the indispensable element that did it all was freedom from coercion, from regulation, and from oppression. That freedom was absent for most of human history, and it emerged only in Britain and the Low Countries in the seventeenth century. The Bourgeoisie, a group much maligned by the “left-wing clerisy,” are really the heroes of our prosperity and the “bourgeois deal” as they call it and as reflected in the well-chosen title of the book was the main driver that led to modern prosperity. The deal was simple: give us our freedom and we’ll make the economy grow. We’ll take the risks, but if we succeed, we’ll be rich and so will (almost) everyone else. The idea was so powerful and successful that it spread worldwide and has lifted up most economies on the planet. Hence, the majority of humanity is immensely richer than ever before and material life is better than ever before. That is the economic history of the modern world in a nutshell.

The explanandum, of course, is familiar to every undergraduate student of economic history. But the explanans may not be. The first sentence of the book’s preface is “The theme of our book is simple and true. But controversial.” Perhaps one might wonder, if this is all so self-evident, and the evidence so overwhelming, why is it still controversial? The message should be very attractive: freedom is obviously an attractive concept, something people are willing to die for. If an additional benefit is that it also makes us rich, what’s not to like? Why do not more people embrace the libertarian account that McCloskey and Carden tell here? Moreover, academics are also members of the bourgeoisie: why resist the idea that they are the heroes of the tale?

Much of the book — derived from Volume 2 of the McCloskey Trilogy — consists of the demolition of alternative explanations of the Great Enrichment. These interpretations are viewed not so much as completely wrong as inadequate: too small, too late, too early. Only the Bourgeois Deal, concluded in the centuries before the Industrial Revolution, will do. The logic is powerful: people are entrepreneurial, they are ingenious, they are acquisitive. Give them a chance, let them loose, and they find opportunities to enrich themselves, and in the positive sum of economic development they will make everyone richer as well (even if not as rich as they are — but that does not bother the authors).

McCloskey and Carden clearly have no sympathy for the idea that what drove the Great Enrichment was something called state capacity, the ability of nations to create governments that helped create law and order, provide public goods, and solve coordination problems. Its importance has been stressed by both economic historians such as the late Larry Epstein and economists such as Tim Besley and Torsten Persson. It is striking that the regions that the authors point to as the birthplace of the Bourgeois Deal were actually areas in which economic regulation was tight and taxation was heavy. To be sure, after 1825 many of the most onerous coercive measures in Britain were abolished (the Corn Laws only in 1846), but the first century of the Industrial Revolution took place in a rather oppressive political environment where “liberty” may not have been the best characterization of the state of society. The apex of the British laissez faire economy took place after, not before the Industrial Revolution. In later cases, industrialization and growth occurred in economies such as Russia and Japan in the first half of the twentieth century, where individual liberty was not a priority.

This book makes a strong argument for ideational history. The idea of unfettered economic activity, as expressed so powerfully by Locke and his followers (above all, of course, Adam Smith), is the “engine” that drove the economies of the West into the Great Enrichment. Yet there is something odd in the argument as presented here: while the authors, like all liberal writers, are firmly committed to the wisdom and power of the market, and while this book presents a strong case for the historical importance of ideas, it does not dwell on the market for ideas. There is little here that explains how the idea of freedom and unfettered markets actually caught on. After all, as the book notes, there was powerful resistance from many corners, and the victory of liberalism was by no means assured. It was driven, they say, by successful revolutions (in sixteenth century Netherlands and seventeenth century England), the printing press, and the reformation. Had these not taken place, the Enrichment may not have occurred. Europe was not better, it was lucky. But ideas do not just catch on because of their future benefits: they have to be debated and sold in a market for ideas, in which its proponents persuade their audience based on the evidence, the logic, or the ethics of the idea. Yet surprisingly the market for ideas makes no entry in a book devoted to the praise of markets and the power of ideas. Indeed, it could be argued that in their account liberalism’s success was precisely due to what happened in the market for ideas. Intellectuals from Locke and Smith down persuaded the people that mattered of ideas that led to economic growth.

The emphasis on ideas leads to the other question that the book raises. The period they describe as crucial to the emergence of the main elements of the Great Enrichment corresponds with the Age of Enlightenment. Yet the Enlightenment, arguably one of the most powerful cultural movements in history, plays no role in their account despite its commitment to ideas. Writing the economic history of modern economic progress without the Enlightenment is the ultimate prince-less Hamlet. Historians have recently rescued it from the dismissive attitudes of a misguided revisionist historiography, as exemplified by Ritchie Robertson’s recent tour de force (though it ignores economic history). Which precisely were the enlightenment ideas that mattered? A belief in liberty, free markets, and small government surely was part of it, although a disturbing number of philosophes felt that growth was too important to be left to the private sector and needed help from a friendly government. What the French called dirigisme was basically an attempt to recruit the government to help entrepreneurs in their endeavors. Britain was exceptional in its laissez faire approach to economic development — and even there the government was not altogether absent.

Above all, what is missing in this book is any serious acknowledgment of the role of what people at the time called “useful knowledge” — an understanding of natural phenomena and regularities. In many places of the book, the author invoke ingenuity as the force for progress. But how is ingenuity to lead to sustained growth without knowledge? Ingenuity and technological progress do not drop down from heaven as soon as liberty is declared. Skills, technical savoir faire, and dexterity have to be produced and created in the system. Increasingly it was realized that such skills needed to be augmented by an understanding of the natural regularities of mechanics, energy, and materials. The Enlightenment realized that natural philosophy could be harnessed to material needs, from fighting smallpox to finding longitude at sea to pumping water out of coal mines. McCloskey and Carden will have none of it. Science, they say, was unimportant as the driver of growth, because so many advances were made without it.

This assessment hinges on a somewhat narrow definition of what we mean by useful knowledge. The basic idea was one of progress, and progress was to be achieved because knowledge — both propositional and prescriptive — was cumulative. Progress occurred because in a well-functioning market for ideas, better insights about nature would beat out inferior opponents. Lavoisier’s chemistry replaced phlogiston and caloric, and vaccination pushed out the antiquated resignation that smallpox was a divine punishment for our sins. None of those triumphs, and countless others, were accepted without fierce resistance, and their victory was never assured. But this is why the story cannot be told without placing the Industrial Enlightenment on center stage. What the Industrial Revolution needed was knowledge: science, when appropriate, augmenting and supporting the often tacit knowledge of workmanship and materials, but also many other things: practical arithmetic (as shown in a brilliant forthcoming article by Kelly and Ó Gráda), the use of better tools and equipment, an understanding — often instinctive — of mechanics, heat, and chemical processes.

In short, a society that was free but ignorant would not grow. Unlike what Carden and McCloskey imply, ingenuity was not an automatic and passive link between freedom and prosperity. The sense that a systematic cataloguing and understanding of natural phenomena and regularities was needed to achieve progress permeated the thinking of the people who brought it about — including those who had no science themselves. As scientific knowledge expanded, people latched on to it and drew from it to come up with new ideas that made life better. Uneducated tinkerers, by themselves, could not have turned the Industrial Revolution into sustained growth. Inventions can be made serendipitously, without the faintest understanding of why and how they work; but such advances soon bog down. What we need now, then, is a serious discussion of how the elements of the Enlightenment interacted, that is, how personal freedom and the right incentives helped create the surge of practical knowledge and ingenuity that actually created the means for the Great Enrichment.

Liberalism, as it emerged in the West and as described in this book, was part and parcel of the European Enlightenment — though (like everything else in the writings of the eighteenth-century philosophes) it was disputed and doubted. Yet the Enlightenment was much more than liberalism, and if all that it had created was a belief in personal freedom and less restrictive government, its effects on the Great Enrichment may have been more modest. What counted was a belief in progress — material as well as social and political. Not all the prescriptions toward the perfection of society worked equally well — and perhaps that may be why the Enlightenment became something of a whipping boy for some writers influenced by the lamentable “Frankfurt School.” But on the matter of economic growth, the eighteenth-century intellectuals basically got it right. Material progress, the philosophes felt, was driven above all by knowledge and its accumulation, its testing in the market for ideas, and its application by engineers, mechanics, and entrepreneurs. These were the real causes of the Great Enrichment. Everything else — trade, politics, literacy, imperialism, and a host of other factors enumerated and dismissed by McCloskey and Carden — depended on that.

What, then, should we think of the role of “freedom” in economic growth? The question will be debated for generations and McCloskey has done our profession a great service by setting the terms of the debate. A large number of scholars would argue that rather than “laissez faire” policies, enlightened and competent governments could support and drive economic growth. As the late Alice Amsden has shown in her The Rise of the Rest, such governments existed. Without sufficient state capacity to guide and support development, many of the conditions for a Great Enrichment may not be there. Could there be such a thing as “too much liberty” just as there clearly was a thing such as too much coercion? In a forthcoming book, The Rise and Fall of Laissez Faire, Walker Hanlon shows how over the course of the nineteenth century Britain slowly retreated from a rather extreme form of laissez faire and introduced elements of regulation, coercion, and the welfare state to correct for some of the most undesirable consequences of the Industrial Revolution. So did every industrialized nation, some more, some less. Even the individualist and freedom-loving United States was dragged into a (partial) retreat from extreme liberalism, not just because most people demanded it, but because it was the right thing to do.

Perhaps the authors should consider this: liberalism depends on markets, and markets can fail. Part of liberty should therefore consist of society’s right to choose a certain amount of coercion and regulation by the state, to avoid such unacceptable outcomes as child labor, toxic chemical pollution, millions of people without medical insurance, and the poisoning of considerable portions of the population by pharmaceutical firms selling addictive substances. Somewhere between a libertarian free-for-all economy, and the horridly coercive worlds of Stalin and Mao, there is a goldilocks-like middle ground, far from optimal perhaps, but more livable than the alternatives. It is that middle ground that the Enlightenment strove for. In an imperfect world, that is the best we can do.

References

Amsden, Alice H. The Rise of “The Rest”: Challenges to the West from Late-Industrializing Economies. Oxford University Press, 2001.

Besley, Timothy, and Torsten Persson. Pillars of Prosperity: The Political Economics of Development Clusters. Princeton University Press, 2013.

Epstein, S.R. Freedom and Growth: The Rise of States and Markets in Europe, 1300–1750. Routledge, 2000.

Hanlon, Walker W. The Rise and Fall of Laissez Faire. Princeton University Press, forthcoming.

Kelly, Morgan, and Cormac Ó Gráda. “Connecting the Scientific and Industrial Revolutions: The Role of Practical Mathematics.” Journal of Economic History, forthcoming.

Robertson, Ritchie. The Enlightenment: The Pursuit of Happiness, 1680–1790. New York: Harper Collins, 2021.

Joel Mokyr is the Robert H. Strotz Professor of Arts and Sciences and Professor of Economics and History at Northwestern University, and Sackler Professor (by special appointment) at the Eitan Berglas School of Economics, Tel Aviv University. His most recent book is A Culture of Growth (Princeton University Press, 2017).

Copyright (c) 2022 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 (April 2022). All EH.Net reviews are archived at http://www.eh.net/Book-Reviews.

Published by EH.Net (April 2022).

Deirdre N. McCloskey and Art Carden. Leave Me Alone and I’ll Make You Rich: How the Bourgeois Deal Enriched the World. Chicago: University of Chicago Press, 2020. 232 pp. $25.00 (hardback), ISBN: 9780226739663.

Reviewed for EH.Net by Joel Mokyr, Northwestern University.

For half a century Deirdre McCloskey has been a member of the starting lineup of economic history. The author of numerous books and hundreds of research papers and essays, her magnum opus is the monumental “Bourgeois Trilogy” that appeared between 2006 and 2016 and laid out her view of economic history and much else in about 2,000 pages. The slim volume here, co-authored with Art Carden, summarizes her views of what she has termed the “Great Enrichment” and makes it accessible to a wider public. In every way, this comparatively slim volume is vintage McCloskey: written in a rather informal conversational style, she states her views in her inimitable crystal-clear prose. She is relentless in her dismissal of other scholars she disagrees with and concepts she finds misleading, often with devastating bon mots. Thus the concept of capitalism is “a scientific mistake compressed in a single word” and the mistaken historians who elevated new-world slavery to a first-order cause of the Great Enrichment are told that “slavery was bad enough without ornamenting it with bad history and bad economics.” Indeed.

The book makes a powerful case for a classical liberal society: what accounts for economic success and growth is liberty. Other elements such as institutions, science, trade, resources and so on may have a mattered a bit, but the indispensable element that did it all was freedom from coercion, from regulation, and from oppression. That freedom was absent for most of human history, and it emerged only in Britain and the Low Countries in the seventeenth century. The Bourgeoisie, a group much maligned by the “left-wing clerisy,” are really the heroes of our prosperity and the “bourgeois deal” as they call it and as reflected in the well-chosen title of the book was the main driver that led to modern prosperity. The deal was simple: give us our freedom and we’ll make the economy grow. We’ll take the risks, but if we succeed, we’ll be rich and so will (almost) everyone else. The idea was so powerful and successful that it spread worldwide and has lifted up most economies on the planet. Hence, the majority of humanity is immensely richer than ever before and material life is better than ever before. That is the economic history of the modern world in a nutshell.

The explanandum, of course, is familiar to every undergraduate student of economic history. But the explanans may not be. The first sentence of the book’s preface is “The theme of our book is simple and true. But controversial.” Perhaps one might wonder, if this is all so self-evident, and the evidence so overwhelming, why is it still controversial? The message should be very attractive: freedom is obviously an attractive concept, something people are willing to die for. If an additional benefit is that it also makes us rich, what’s not to like? Why do not more people embrace the libertarian account that McCloskey and Carden tell here? Moreover, academics are also members of the bourgeoisie: why resist the idea that they are the heroes of the tale?

Much of the book — derived from Vol. 2 of the McCloskey Trilogy — consists of the demolition of alternative explanations of the Great Enrichment. These interpretations are viewed not so much as completely wrong as inadequate: too small, too late, too early. Only the Bourgeois Deal, concluded in the centuries before the Industrial Revolution, will do. The logic is powerful: people are entrepreneurial, they are ingenious, they are acquisitive. Give them a chance, let them loose, and they find opportunities to enrich themselves, and in the positive sum of economic development they will make everyone richer as well (even if not as rich as they are — but that does not bother the authors).

McCloskey and Carden clearly have no sympathy for the idea that what drove the Great Enrichment was something called state capacity, the ability of nations to create governments that helped create law and order, provide public goods, and solve coordination problems. Its importance has been stressed by both economic historians such as the late Larry Epstein and economists such as Tim Besley and Torsten Persson. It is striking that the regions that the authors point to as the birthplace of the Bourgeois Deal were actually areas in which economic regulation was tight and taxation was heavy. To be sure, after 1825 many of the most onerous coercive measures in Britain were abolished (the Corn Laws only in 1846), but the first century of the Industrial Revolution took place in a rather oppressive political environment where “liberty” may not have been the best characterization of the state of society. The apex of the British laissez faire economy took place after, not before the Industrial Revolution. In later cases, industrialization and growth occurred in economies such as Russia and Japan in the first half of the twentieth century, where individual liberty was not a priority.

This book makes a strong argument for ideational history. The idea of unfettered economic activity, as expressed so powerfully by Locke and his followers (above all, of course, Adam Smith), is the “engine” that drove the economies of the West into the Great Enrichment. Yet there is something odd in the argument as presented here: while the authors, like all liberal writers, are firmly committed to the wisdom and power of the market, and while this book presents a strong case for the historical importance of ideas, it does not dwell on the market for ideas. There is little here that explains how the idea of freedom and unfettered markets actually caught on. After all, as the book notes, there was powerful resistance from many corners, and the victory of liberalism was by no means assured. It was driven, they say, by successful revolutions (in sixteenth century Netherlands and seventeenth century England), the printing press, and the reformation. Had these not taken place, the Enrichment may not have occurred. Europe was not better, it was lucky. But ideas do not just catch on because of their future benefits: they have to be debated and sold in a market for ideas, in which its proponents persuade their audience based on the evidence, the logic, or the ethics of the idea. Yet surprisingly the market for ideas makes no entry in a book devoted to the praise of markets and the power of ideas. Indeed, it could be argued that in their account liberalism’s success was precisely due to what happened in the market for ideas. Intellectuals from Locke and Smith down persuaded the people that mattered of ideas that led to economic growth.

The emphasis on ideas leads to the other question that the book raises. The period they describe as crucial to the emergence of the main elements of the Great Enrichment corresponds with the Age of Enlightenment. Yet the Enlightenment, arguably one of the most powerful cultural movements in history, plays no role in their account despite its commitment to ideas. Writing the economic history of modern economic progress without the Enlightenment is the ultimate prince-less Hamlet. Historians have recently rescued it from the dismissive attitudes of a misguided revisionist historiography, as exemplified by Ritchie Robertson’s recent tour de force (though it ignores economic history). Which precisely were the enlightenment ideas that mattered? A belief in liberty, free markets, and small government surely was part of it, although a disturbing number of philosophes felt that growth was too important to be left to the private sector and needed help from a friendly government. What the French called dirigisme was basically an attempt to recruit the government to help entrepreneurs in their endeavors. Britain was exceptional in its laissez faire approach to economic development — and even there the government was not altogether absent.

Above all, what is missing in this book is any serious acknowledgment of the role of what people at the time called “useful knowledge” — an understanding of natural phenomena and regularities. In many places of the book, the author invoke ingenuity as the force for progress. But how is ingenuity to lead to sustained growth without knowledge? Ingenuity and technological progress do not drop down from heaven as soon as liberty is declared. Skills, technical savoir faire, and dexterity have to be produced and created in the system. Increasingly it was realized that such skills needed to be augmented by an understanding of the natural regularities of mechanics, energy, and materials. The Enlightenment realized that natural philosophy could be harnessed to material needs, from fighting smallpox to finding longitude at sea to pumping water out of coal mines. McCloskey and Carden will have none of it. Science, they say, was unimportant as the driver of growth, because so many advances were made without it.

This assessment hinges on a somewhat narrow definition of what we mean by useful knowledge. The basic idea was one of progress, and progress was to be achieved because knowledge — both propositional and prescriptive — was cumulative. Progress occurred because in a well-functioning market for ideas, better insights about nature would beat out inferior opponents. Lavoisier’s chemistry replaced phlogiston and caloric, and vaccination pushed out the antiquated resignation that smallpox was a divine punishment for our sins. None of those triumphs, and countless others, were accepted without fierce resistance, and their victory was never assured. But this is why the story cannot be told without placing the Industrial Enlightenment on center stage. What the Industrial Revolution needed was knowledge: science, when appropriate, augmenting and supporting the often tacit knowledge of workmanship and materials, but also many other things: practical arithmetic (as shown in a brilliant forthcoming article by Kelly and Ó Gráda), the use of better tools and equipment, an understanding — often instinctive — of mechanics, heat, and chemical processes.

In short, a society that was free but ignorant would not grow. Unlike what Carden and McCloskey imply, ingenuity was not an automatic and passive link between freedom and prosperity. The sense that a systematic cataloguing and understanding of natural phenomena and regularities was needed to achieve progress permeated the thinking of the people who brought it about — including those who had no science themselves. As scientific knowledge expanded, people latched on to it and drew from it to come up with new ideas that made life better. Uneducated tinkerers, by themselves, could not have turned the Industrial Revolution into sustained growth. Inventions can be made serendipitously, without the faintest understanding of why and how they work; but such advances soon bog down. What we need now, then, is a serious discussion of how the elements of the Enlightenment interacted, that is, how personal freedom and the right incentives helped create the surge of practical knowledge and ingenuity that actually created the means for the Great Enrichment.

Liberalism, as it emerged in the West and as described in this book, was part and parcel of the European Enlightenment — though (like everything else in the writings of the eighteenth-century philosophes) it was disputed and doubted. Yet the Enlightenment was much more than liberalism, and if all that it had created was a belief in personal freedom and less restrictive government, its effects on the Great Enrichment may have been more modest. What counted was a belief in progress — material as well as social and political. Not all the prescriptions toward the perfection of society worked equally well — and perhaps that may be why the Enlightenment became something of a whipping boy for some writers influenced by the lamentable “Frankfurt School.” But on the matter of economic growth, the eighteenth-century intellectuals basically got it right. Material progress, the philosophes felt, was driven above all by knowledge and its accumulation, its testing in the market for ideas, and its application by engineers, mechanics, and entrepreneurs. These were the real causes of the Great Enrichment. Everything else — trade, politics, literacy, imperialism, and a host of other factors enumerated and dismissed by McCloskey and Carden — depended on that.

What, then, should we think of the role of “freedom” in economic growth? The question will be debated for generations and McCloskey has done our profession a great service by setting the terms of the debate. A large number of scholars would argue that rather than “laissez faire” policies, enlightened and competent governments could support and drive economic growth. As the late Alice Amsden has shown in her The Rise of the Rest, such governments existed. Without sufficient state capacity to guide and support development, many of the conditions for a Great Enrichment may not be there. Could there be such a thing as “too much liberty” just as there clearly was a thing such as too much coercion? In a forthcoming book, The Rise and Fall of Laissez Faire, Walker Hanlon shows how over the course of the nineteenth century Britain slowly retreated from a rather extreme form of laissez faire and introduced elements of regulation, coercion, and the welfare state to correct for some of the most undesirable consequences of the Industrial Revolution. So did every industrialized nation, some more, some less. Even the individualist and freedom-loving United States was dragged into a (partial) retreat from extreme liberalism, not just because most people demanded it, but because it was the right thing to do.

Perhaps the authors should consider this: liberalism depends on markets, and markets can fail. Part of liberty should therefore consist of society’s right to choose a certain amount of coercion and regulation by the state, to avoid such unacceptable outcomes as child labor, toxic chemical pollution, millions of people without medical insurance, and the poisoning of considerable portions of the population by pharmaceutical firms selling addictive substances. Somewhere between a libertarian free-for-all economy, and the horridly coercive worlds of Stalin and Mao, there is a goldilocks-like middle ground, far from optimal perhaps, but more livable than the alternatives. It is that middle ground that the Enlightenment strove for. In an imperfect world, that is the best we can do.

References

Amsden, Alice H. The Rise of “The Rest”: Challenges to the West from Late-Industrializing Economies. Oxford University Press, 2001.

Besley, Timothy, and Torsten Persson. Pillars of Prosperity: The Political Economics of Development Clusters. Princeton University Press, 2013.

Epstein, S.R. Freedom and Growth: The Rise of States and Markets in Europe, 1300–1750. Routledge, 2000.

Hanlon, Walker W. The Rise and Fall of Laissez Faire. Princeton University Press, forthcoming.

Kelly, Morgan, and Cormac Ó Gráda. “Connecting the Scientific and Industrial Revolutions: The Role of Practical Mathematics.” Journal of Economic History, forthcoming.

Robertson, Ritchie. The Enlightenment: The Pursuit of Happiness, 1680–1790. New York: Harper Collins, 2021.

Joel Mokyr is the Robert H. Strotz Professor of Arts and Sciences and Professor of Economics and History at Northwestern University, and Sackler Professor, (by special appointment) at the Eitan Berglas School of Economics, Tel Aviv University. His most recent book is A Culture of Growth (Princeton University Press, 2017).

Copyright (c) 2022 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 (April 2022). All EH.Net reviews are archived at http://www.eh.net/Book-Reviews.

Published by EH.Net (February 2022).

Stephen Broadberry and Kyoji Fukao, eds. The Cambridge Economic History of the Modern World: Volume II, 1870 to the Present. Cambridge: Cambridge University Press, 2021. xv + 566 pp. £120 (hardcover), ISBN 978-1-107-15948-8.

Reviewed for EH.Net by Albert Carreras, Full Professor, Department of Economics and Business, Pompeu Fabra University.

The book edited by Stephen Broadberry and Kyoji Fukao is the second volume of The Cambridge Economic History of the Modern World (CEHMW).  It covers 1870 to the present. In title and format this two-volume set bears a strong similarity to 2010’s Cambridge Economic History of Modern Europe (CEHME), also co-edited by Stephen Broadberry and in two volumes divided between 1700-1870 and 1870-present. In both cases, there is an explicit desire to cover all countries, not just the major ones, and double or triple authorship is used to ensure familiarity with geographically or thematically very broad literatures.  Unlike the second volume of the CEHME, the CEHMW volume itself is not organized into major subperiods (1870-1914, 1914-1945, 1945-2000). It is divided into two parts, the first with eleven chapters and the second with eight. The first part covers “regional developments,” and the second covers “factors governing performance differentials in the global economy.” The effort to treat Europe as a single unit of analysis has had to give way to the recognition of the deep regional diversity of the world. The major historical stages are treated in each and every chapter, both regional and thematic.

The quest for universal coverage is the first and perhaps the main success of the work. A group of top-level contributors cover, in a well-integrated and cohesive manner, eleven major regions: “North America: The Rise of US to Technological and Economic Leadership” (Paul Rhode); “Western Europe: Convergence and Divergence” (Paul Sharp); “The Socialist Experiment and Beyond: The Economic Development of Eastern Europe” (Tracy Dennison and Alexander Klein); “Japan: Modern Economic Growth in Asia” (Kyoji Fukao and Tokihiko Settsu); “Economic Change in China: The Role of Institutions and Ideology” (Debin Ma); “From Free Trade to Regulation: The Political Economy of India’s Development” (Bishnupriya Gupta);  “Growth and Globalization Phases in South East Asian Development” (Gregg Huff); “The Middle East: Decline and Resurgence in West Asia” (Mohamed Saleh); “Latin America: Stalled Catching Up” (Pablo Astorga and Alfonso Herranz-Loncán);  “African Economic Development: Growth, Reversals, and Deep Transitions” (Ewout Frankema), and “Australia: Prosperity, Relative Decline and Reorientation” (Gary B. Magee). North Africa is in the Middle East one. Coverage is systematic, and where the text does not go, tables and graphs provide missing information. As an indication of the radical nature of the experiment and the absence of bias (as seen from peripheral Europe), I can attest that the only large and wealthy country not specifically covered is Canada, although it appears on several occasions in the second part. All the world’s economies of large and medium demographic and economic size – and many small – are covered, and all with comparable indicators and issues.  The volume and the first part are not organized around distances from the initial leader, the United Kingdom, but from the leader for most of the period – the United States. This approach provides a consistent and compact view of a wide array of different experiences. Of course, the better known the region in economic historiography, the fewer the surprises in the chapter, regardless of the quality – always very high – of the authors. But there is no doubt that there are chapters that represent a more innovative or inspiring approach, such as those on China, India, Southeast Asia, the Near East and North Africa, and Africa. Less prior knowledge or fewer previous syntheses or less well fit regions into world economic historiography provide opportunities for their authors to shine.

While the first part is built on firm foundations –as firm as the available statistical data can be- and on previous historiographies almost as diverse in degrees of development as the experiences of the regions themselves, the second part is different. It deals with immense topics, which have been studied in a regionally irregular way, but for which there are, in all cases, brilliant overall approaches.  The editors have forced pairs or trios of authors to fit together vast and diverse literatures. In the first part, there are more individual authorships (eight out of eleven) and there are fourteen authors in total. In the second part, there are no individual authorships, and for good reasons. With only eight chapters there are eighteen different authors. Thus we have two chapters on the proximate sources of growth: “Healthy, Literate and Smart: The Global Increase of Human Capital” (Latika Chaudhary and Peter Lindert) –a whole world of hot academic issues- and “Proximate Sources of Growth: Capital and Technology” (Rajabrata Banerjee, Robert Inklaar, and Herman de Jong). There are two more on the ultimate sources of growth: “Underlying Sources of Growth: First and Second Nature Geography” (Paul Caruana-Galizia, Toshihiro Okubo, and Nikolaus Wolf) and “Underlying Sources of Growth: Institutions and the State” (James Foreman-Peck and Leslie Hannah), both as fashionable as durable. There is one special chapter bringing together the economic history answers to all those critical of the very concept of growth: “Living Standards, Inequality, and Human Development” (Leandro Prados de la Escosura and Myung Soo Cha). The last three chapters are devoted to the global economy: “Trade and Immigration” (David S. Jacks and John P. Tang); “International Finance” (Barry Eichengreen and Rui Pedro Esteves) and “War and Empire” (Jari Eloranta and Leigh Gardner). Perhaps the one that seems more conventional in title is “International Finance”, but it is a masterful innovative view of the whole period. Most of the others have had to build their arguments and fit together their parts, often from scratch.  No major issues are absent. The territorial coverage is always broad. The major historical stages are well covered. Where possible, temporally continuous visions are provided that help the readers form chronological interpretations. Each chapter puts together quite different strands of literature in a suggestive manner. The result is a series of chapters that contain, each of them, the full potential of a book – or an entire library.

The work is always well interwoven. The cohesive action of the editors is visible. The “Introduction” is a proper one, displaying the main argument.  The volume is a breakthrough that could have seemed impossible to achieve ex ante.  The second volume of the CEHMW is a set of masterful, synthetic and inspiring texts.  But this reviewer feels a sense of longing for a more explicit chronological organization of the evolution of economic history. Can we think of the world economy without breaking down the last century and a half into periods that are intensely marked by truly global historical episodes, such as World War I, World War II and the collapse of the Soviet bloc?  I miss it and I encourage new attempts to reconstruct this historical approach, which could have taken the form of a distinct part and four more chapters or of a conclusive chapter or of a longer introduction or, now that the project is finished and published, a new, short book –a nice challenge for the editors. In the meantime, I encourage all economic historians and social scientists at large to enjoy the well-researched and intelligent feats of synthesis in the second volume of the CEHMW, which offer us a front row view of the best that the economic historiography of the modern world has to offer.

Albert Carreras is Full Professor in the Department of Economics and Business at Pompeu Fabra University in Spain. With Xavier Tafunell, he is the author of Between Empire and Globalization: An Economic History of Modern Spain (Palgrave Studies in Economic History, 2021) and editor of Estadísticas Históricas de España, Siglos XIX-XX, 3 vols. (2005).

Copyright (c) 2022 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 2022). All EH.Net reviews are archived at https://www.eh.net/book-reviews.

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.

Published by EH.Net (December 2020)

Denis Babichenko, The Debit and Сredit оf War, or How Stalin Made a Trillion Dollars: The Unknown Economic History of the USSR before, during and after World War II (1940–1953). Moscow, 2020.  xi + 379 pp. ISBN: 9798610423784.

Reviewed for EH.Net by Mark Harrison, Department of Economics, University of Warwick.

The official reckoning of Soviet material losses arising from the war with Germany makes grim reading. A state commission, established in 1942, reported in September 1945: “During the war, the German fascist invaders completely or partially destroyed and burned 1,710 cities and towns, more than 70 thousand villages and settlements, over 6 million buildings, displaced around 25 million people; and destroyed 31,850 industrial enterprises.” Agricultural losses are said to have included more than 70 million head of livestock large and small, killed, looted, or taken to Germany. A hundred thousand schools, colleges, hospitals, clinics, and so forth were also destroyed. The total was valued at 679 billion rubles at official prices of 1941 (FSGS 2020: 278-279). Semi-official sources (cited by Harrison 1996: 315n) later put this figure at around 30 percent of “national wealth.”

While a few western authors have expressed skepticism about the reported scale of losses (Moorsteen and Powell 1966: 72-77; Harrison 1996: 158-159), the findings of the state commission have never been audited. Nor has there been any comprehensive account of possible Soviet economic gains from the war, which might extend from the value of territories and assets annexed in 1939/40 and 1945 to postwar reparations from former Axis countries.

The Debit and Сredit оf War is a first attempt to strike an informed balance of Soviet losses and gains from World War II. The author, Denis Babichenko, is an independent scholar and writer based in Moscow and earned his PhD in history at Moscow State University. He has previously written about the history of censorship in the Soviet Union.

After a short introduction, the book is divided into four parts. In Part I, chapter 1 reviews the Russian and Soviet national economic statistics of the period from 1913 to 1941. On that basis, Chapter 2 evaluates the size and condition of the Soviet economy on the eve of the German invasion. Both evaluations are very unfavorable.

Part II is concerned with Soviet economic losses arising from the war. While these took place almost entirely on territories that saw fighting and temporary German occupation, Chapter 3 notes that much destruction arose from Soviet, not German actions — apparently, anyway. During retreat, Stalin’s orders were to evacuate what could be saved and destroy the rest. Babichenko argues that less was evacuated than was officially claimed and that more of the capital stock survived occupation than was claimed. With that in mind, Chapter 4 turns to the damage attributable to German war actions and occupation policies, the basis of the 679 billion rubles already mentioned. It is argued that official reports were grossly exaggerated. Rather than being based on reports from the ground, they were thrown together to match a predetermined target for postwar reparations that Stalin had fixed from above in 1943, long before the war’s end (p. 167). Babichenko shows that the reported losses from enemy occupation in physical units, which should have formed the building blocks for valuation of the aggregate loss, were implausibly large: some of them equaled or exceeded the total stocks claimed before the war on the occupied territories, and sometimes the claimed stocks for the entire country (pp. 256-57).

Part III examines Soviet economic gains from the war. Chapter 5 is devoted to “gains from allies,” finding that Allied wartime aid exceeded the mere “4 percent” of the value of Soviet wartime industrial production claimed after the war by a factor of five (p. 268). Chapter 6 considers postwar “gains from wartime enemies,” in which the most important element was reparations. From 1944 through 1953, these alone are put at nearly two trillion rubles at current prices (p. 329), or three times the value of the material losses from German occupation.

In Part IV, Chapter 7 strikes the balance, throwing together an assortment of real and financial, current and capital items to reach a net surplus to the Soviet economy of two trillion rubles of the time or, in today’s values, 1.3 trillion dollars (pp. 331-32). An afterword concludes.

The project of The Debit and Credit of War is a brave one. Today, Russian law criminalizes the denial of facts established by the international war crimes tribunal held in Nuremberg in 1945/46, where the figure of 679 billion rubles was written into the indictment of major German war criminals (IMT 1947: 60). The project is also necessary. In Russia today the scale of Soviet war losses remains a painful subject, powerfully charged with negative emotions. The forty years of Soviet obfuscation of the numbers of civilian and military war dead give no reason to accept official claims of property losses at face value. The political decisions and statistical methodologies that produced the figures are largely unknown and unexplored. This book opens up the subject. The way it does so balances important strengths and weaknesses.

In Part I, Babichenko outlines his approach to Soviet official statistics and archival documents. The dilemma for all researchers in this field is this: you know the published statistics are often deceptive, sometimes intentionally so. You go to the archives and what you find is . . . more of the same. So, what do you do? Babichenko advocates reliance on three things (p. 39). First, look for detail, which is less easily fabricated than broad aggregates and round numbers. Second, look for evidence of methodology; if there is bias in the underlying method, there is a chance you can compensate for it. Third, look for cross-checks across the documentation, which can offer confirmation or expose inconsistences.

These are sensible rules. They resemble the habits that all Western scholars of the Cold War generation (including me) had to learn in order to use Soviet official publications. The same approach continues to be useful for understanding the far more voluminous official documentation left in the secret archives.

In these respects, Babichenko’s revelations are welcome. Not all is done well, however. The tone is often angry, with many digressions. The animosity is directed against the perpetuation of Soviet-era lies and the naïve foreigners who go along with them. Translated for Western readers, the passion appears misdirected. A cooler approach with more focus on presenting and explaining the findings might have been more persuasive.

Much of the argument of Part I is distracting and irrelevant. Chapter 1 notes, correctly, that the economic information found in Soviet archives is generally of low quality. Babichenko explains this as follows: Stalin feared penetration by spies and was interested in disinformation; perhaps he had the archives seeded with fake documents designed to mislead the adversary about the true state of the Soviet economy. So far, this is conjecture. At the same time, Babichenko maintains, truthful documents were deliberately weeded out and destroyed. Here he brings evidence, but the evidence means less than he thinks. The Soviet bureaucracy had a procedure for discarding excess documentation. The procedure has left plentiful traces in the archives (Harrison 2013). In the process, important documents were sometimes destroyed. But this does not support the hypothesis. When documents were produced in multiple copies, one copy was typically assigned to the archive. If another copy was destroyed, it does not mean that the archive copy had disappeared. If the intention behind destruction was to destroy all copies, it is hard to explain why it was meticulously recorded. If the archives were so thoroughly weeded of reliable economic records, it is hard to explain why detailed records of mass killings and other abuses were carefully conserved.

Babichenko notes, again correctly, that Soviet official growth measures were greatly overstated. This is not new; it was the basis of the long Western project to reevaluate Soviet economic data that began with Colin Clark (1939). In Chapter 2 Babichenko rejects nearly all these efforts, preferring the “alternative” growth estimates of Grigorii Khanin (1991). Ironically, for the period 1950-80, the results of Khanin’s efforts differ little from those of Western scholars. For the period 1928-41, all-important for this study, Khanin’s sector components of national income follow a mix of Western and Soviet official series, but his national income measure, which should average them, falls below them by far more than can be explained by any weighting scheme (Harrison 1993). The reasons are not evident. Relying on this, however, Babichenko’s estimates of the level and growth of Soviet output between the wars fall well below those adopted by the Maddison Project (Bolt and van Zanden 2020) and currently in general use among economic historians.

A feature of the analysis, introduced in Chapter 2, and particularly important in Chapters 5 to 7, is the U.S. dollar as the standard of value. Recent decades have seen largescale collaborative efforts to improve cross-country comparisons in real terms (i.e. at purchasing power parity), represented by the International Comparisons Project of the World Bank, the Penn World Tables, and (for historical data) the Maddison Project. Babichenko conducts much of his book’s argument in dollars, but without the benefit of these efforts. That is, ruble values of various years are converted to dollars at the market exchange rate (for 1913), or (for the Soviet period) at purchasing power parity, before being updated to dollars of 2019. The PPPs, which are Khanin’s (1991) “alternative” ruble/dollar rates for selected years, give two problems. One, they are guesses. Two, even if they were roughly right for traded goods, they would then be wrong for aggregates (such as national income) that include non-tradeables. The likely direction of the biases is to overstate the value of foreign relative to Soviet resources.

Another feature of Chapters 5 to 7 that serves to swell the final sum is the aggregation of stocks and flows and of real and financial items into the balance sheet of war. Ideally, these should be separated (e.g. Harrison 1996: 156; Broadberry and Howlett 1998: 66-71). For example, while Babichenko correctly excludes defense costs and foregone output from the debit side, he adds Lend-lease supplies as a credit. But most Western aid was consumed in the war period. Even if some minor fraction of Lend-lease goods was diverted into postwar reconstruction, the greater part should be excluded.

In weighing up the book’s findings, I am swayed in different directions. This is a subject about which we need to know more. I have learned a lot from the author’s investigations, and I am grateful for that. At the end, however, I am skeptical of many findings. At times it is hard to avoid the sense that Babichenko is in pursuit of the control figure set by his own subtitle: one trillion dollars. There are too many grand claims and short cuts. The author is less critical of the potential biases that favor his thesis than of any that would work against it. Nonetheless this book opens up important questions and indicates lines along which scholarship can advance.

References:

Bolt, Jutta, and Jan Luiten van Zanden. 2020. “Maddison Style Estimates of the Evolution of the World Economy. A New 2020 Update.” University of Groningen, Groningen Growth and Development Centre, Maddison Project Working Paper no. 15.

Broadberry, Stephen, and W. Peter Howlett. 1998. “The United Kingdom: Victory at all Costs.” In The Economics of World War II, 43-80. Edited by Mark Harrison. Cambridge: Cambridge University Press.

Clark, Colin. 1939. A Critique of Russian Statistics. London: Macmillan

FSGS (Federal’naia sluzhba gosudarstvennoi statistiki). 2020. Velikaia Otechestvennaia voina. Iubileinyi statisticheskii sbornik. Moscow: Rosstat.

Harrison, Mark. 1993. “Soviet Economic Growth since 1928: The Alternative Statistics of G. I. Khanin.” Europe-Asia Studies 45(1): 141-167.

Harrison, Mark. 1996. Accounting for War: Soviet Production, Employment, and the Defence Burden, 1940-1945. Cambridge: Cambridge University Press.

Harrison, Mark. 2013. “Accounting for Secrets.” Journal of Economic History 73(4): 1017-1049.

IMT (International Military Tribunal). 1947. Trial of the Major War Criminals before the International Military Tribunal, Nuremberg, 14 November 1945-1 October 1946. Vol. I, Official Text in the English Language. Official Documents. International Military Tribunal: Nuremberg.

Khanin, Grigorii I. 1991. Dinamika ekonomicheskogo razvitiya SSSR. Novosibirsk: Nauka.

Mark Harrison is Emeritus Professor of Economics at the University of Warwick. He is currently writing about secrecy and the Soviet state. His most recent book is The Soviet Economy and the Approach of War, 1937-1939 (with R. W. Davies, Oleg Khlevniuk, and Stephen G. Wheatcroft), published by Palgrave Macmillan in 2018.

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

Published by EH.Net (October 2020)

Joseph Henrich, The WEIRDest People in the World: How the West Became Psychologically Peculiar and Particularly Prosperous. New York: Farrar, Straus and Giroux, 2020. xxv + 680 pp. $31.50 (hardcover), ISBN: 978-0-374-17322-7.

Reviewed for EH.Net by Hilton Root, School of Policy and Government, George Mason University.

Harvard anthropologist Joseph Henrich’s latest book, The WEIRDest People in the World: How the West Became Psychologically Peculiar and Particularly Prosperous, differs from most contemporary scholarship in one big way. It tackles a cross-disciplinary topic and makes giant claims. Henrich asserts that the West became Educated, Industrialized, Rich, and Democratic owing to traits that have their genesis in a little appreciated tenet of early Christianity, that it is wrong for cousins to marry each other. Through “accidental genius,” the Church dismantled kin-based power networks in order to spread its own norms and institutions.

The book comprises three sections. The first describes the traits of WEIRD people; the second, how societies have always used religion to scale up, which builds on another book of his, The Secret of Our Success; the third, how the Catholic Church and its offshoot, Protestantism, shaped early institutions and psychology, paving the way for modernity.

Henrich claims that starting in the fourth century, the Roman Church assumed control of marriage by making the institution dependent on its blessing and banning cousin marriages. In great synods, it proclaimed the ban 88 times into the twentieth century.

What Henrich calls the Church’s “Marriage and Family Program” restructured medieval populations and directed the evolution of European society along a pathway no other society in world history has ever traveled. In another unforeseen consequence, it fertilized the West’s responsiveness to individualistic religious faith and eventually opened the doors for the Reformation, which split the Church and accelerated still more cultural changes that created modernity.

With its emphasis on personal responsibility for one’s salvation, the Reformation stressed literacy and the need to know the Bible, leading the Reformed states of Northwestern Europe to promote education. This was to have unintended consequences as well. As Henrich explains, recent clinical discoveries relate reading to alterations to brain tissue and connectivity that expand the capacity for analytical reasoning.

Henrich emphasizes that the Church did not foresee the long-term cultural changes its actions were to have, and he reiterates throughout the book that much of the downstream transformations the Church initiated — representative government, universal law, and democracy — were “accidental.” So why did the Church persist in defining incest, even up to the sixth cousins and widowed in-laws, pushing it far beyond other major religious denominations? Self-interest, he speculates. The Church competed for influence against tribal loyalties and intensive kin-based networks and institutions. It used the relentless taboos and punishments to weaken the traditional patriarchal authority and dissolve clan affinities, creating more opportunity for believers to devote themselves, their children, and their estates to the Church.

Henrich thus aligns himself with other scholars of Christianity, which sees the early Church as self-serving and aggressive in its pursuit of power. William Jack Goody (1983), a leading figure in cultural anthropology, makes this very point about the Church’s heirship policies.

If Henrich is correct, he is onto something big. His major discovery draws upon the research of two German historians, Karl Ubl (2008) and Michael Mitterauer (1991), along with papers that he worked on with other colleagues, and especially the econometric verification of George Mason economist Jonathan Schulz (2020).

The most widely known books on early Christianity place little emphasis on incest bans when discussing Church contributions to Western civilization. The proscriptions are also passed over by historians as being more aspirational than effectual. Late antiquity, which lasted into the seventh century, was a world in which monasteries were often owned by founding families; the sons of married priests followed them into office; and divorce and illicit marriages were rife. Christianity’s greatest impact was in its written laws that eventually took precedence over the oral diffusion of tribal customs on marriage and inheritance. Even so, it took centuries of Church influence to establish that the legality of marriage required ecclesiastical blessing. During the Early Medieval Period (500–1000), the supervision of an episcopate was not even sufficient to ensure celibacy of the priesthood. The ban forbidding divorce or the marriage between persons within prohibited degrees required repeated reaffirmation, suggesting that the Church faced a long uphill battle to enforce its rules.

Nevertheless, even if the incessant marriage and family campaign were merely aspirational, Henrich’s findings suggest that we need to change our thinking of the early Church. The aggressive pursuit of the marriage program cannot be explained as solely a result of narrow self-interest and self-aggrandizement, which Henrich explains as the absorption of Church leaders in their own institutional ambitions. It seems instead that its ideological zeal aimed to stem the polarization of the European population and the constant breakdown of order due to frequent war among the barbarian tribes and to ensure the very survival of Christendom as a kingdom, or society, of Christians. This interpretation of the cousin marriage ban would be more consistent with the research of Ubl and the synthesis of St. Augustine.

One of the great intellectual achievements of early Christianity addressed this polarization. St. Augustine’s City of God, was written in the early fifth century and links Church and state with war and peace, and with sex and marriage. It is an entreaty to the Catholic Church for a state that can act as an instrument of justice. In the fractured political reality of his era, the fourth and fifth centuries, a state built on top of kinship was not stable. A just state, Augustine reasoned, is a community bound by caritas, or agapē in Greek, love that is selfless and directed toward humankind.

Exogamy extends the scope of caritas Augustine (354–430 AD) writes: “Because siblings cannot marry … the separation of relationships extended universal love (caritas) to a greater number and enhanced the social life of human beings, among whom concord should be useful and honorable.” He advocates impediments on marriage to keep familial relationships separate from each other: “because of both the expansion of charity and the beauty of the church, it was instituted that marriage should not take place where there is already natural love, as among blood relations and people sharing a common parent, but only between non-kin” (Reynolds 2016, 340, 342).

Henrich’s genius and the source of his methodological originality reside in his application of contemporary social science to uncover universal laws, and to classify and categorize social reality in a context-free approach. He often works backward from outcomes to causes — for example, describing what European society might have been if the Church had not undertaken its marriage and family program. He draws comparisons with contemporary non-European societies that have retained more kinship-intensive ways of organizing. With cross-cultural empirical data, he illustrates these differences in terms of corruption, violence, obedience, business ethos, contributions to public goods, impersonal fairness, and receptivity to tradition, guilt, shame, and democracy. With this approach we can identify correlations not previously observed. The evidence strongly supports the importance of repressing “kinship intensity” in trajectories toward modernity.

Yet tracing causality without locating the mechanisms of transmission — the nuts and bolts of political history — is problematic. In the case of the marriage ban, it will take further research to resolve the question of intentionality and the ban’s diffusion across the continent. What we do not get from Henrich’s approach is the larger-system context or architecture that also defined Europe. We must understand how the Church as one network connected with other key actors and networks in European society and statecraft. It is not enough to know that the Church published edicts and proclamations unless we know how, when, where, and by whom they were put into practice all the way down to the parish level — another puzzle that seems well suited for Henrich’s consideration.

The Western Church from the fourth century found itself in a fragile geopolitical environment; the Roman empire was split between two capitals, and Church in the West was beset with political machinations from within and tension with the Eastern Church. Invading heathens made constant incursions from the north, east, and south. What made the Church-state dynamics of western Europe unique was its great wealth dating from the fourth-century, when the Emperor Constantine (306–337), hoping to unify the empire, transferred to the western Church the wealth of the pagan temples, making it the greatest landed proprietor in the world.

Nevertheless, Christendom needed an enduring partnership of Church and state to survive. In 800 Pope Leo III crowned Charlemagne (Charles I) as Emperor of the Holy Roman Empire. With Charlemagne both Europe’s most powerful ruler and the Church’s protector, the Church now gained great leverage over education, monastic life, and a large role in the management of civic relationships at the parish level. This alliance was to become the cultural scaffolding of the Middle Ages and from it the Church gained support in its campaign against incest. Charlemagne, Ubl tells us, wanted to diffuse the power of regional aristocracies by forcing them to marry out and thereby reduce the centrifugal forces causing divisiveness within the empire.

Feudal knights constituted another essential actor on Europe’s path to modernity. The knights, along with the monks and country friars, consumed a large portion of Europe’s surplus production. Feudalism, Europe’s nascent system of governance, sprang from the political arrangement designed to sustain the knights’ services to the monarch, which affected the economy as well as morality and aesthetics. This alliance was so critical that starting in the eleventh century, the Church developed special ceremonies to sanctify knighthood. A warrior girded with the belt of knighthood entered the church and placed his sword upon the altar as an offering. The promise to God of services of the sword bound the knight to perpetual service to the Church.

Moreover, Germanic society did not have to wait for the Church marriage ban to develop bonds beyond kinship. Among the Germanic tribes, loyalty to a chief was personal not tribal; chiefs attracted followers from many tribes, and when the claims of the lord conflicted with those of the kindred, duty to the lord would come first. Rather than opposing the Germanic principle of loyalty, the western Church willingly asserted that the binding force of duty was owed to a man’s lord and added sanctity to that oath (Whitelock 1952).

With Church support, the knights evolved into a noble class separated by blood ties from the rest of the population. In every country, the highest positions in the Church typically were preserved for the nobility, and great lords filled the church councils. Strengthening the hereditary rights of kings and knights, the Church embedded greater inequality into the system, the traces of which marked European social history until the early twentieth century. Only in passing does Henrich note that the Church did not apply the marriage rules on elite lineages with the same rigor as it did on peasant communities (p. 180). Elites remained embedded in intensive kin-based institutions. It took two centuries of absolutism and one of revolution to weaken the power and prestige of the aristocracy that the Church had reinforced.

The main shortcoming of Henrich’s analysis is its reliance on linear causality. Tracing an outcome, e.g., the distinctive psychology of Western society, to an original cause, the Church ban on cousins wedding, is in itself WEIRD. And his perspective is written for other WEIRD-minded folk who interpret causal pathways in history as proceeding in a straight line.

A different way to understand the Church’s role in European history is to view it as a social network that interacts and coevolves with other complex social networks. As a subsystem among other important subsystems (secular powers, towns, civil law, and royals, for example) that made up the larger system of the medieval West, it was the constant subject of the pull of those social forces around it, co-adapting within a changing environment (Root 2020), exerting sufficient influence, as events called for it, among the exalted monarchs or the most vulnerable village folk, to ensure its own continuity.

What makes the Church-state dynamics of Western Europe unique in world history is the considerable autonomy the former enjoyed because of its immense wealth. Its administrative capacity far exceeded that of the barbarian kings as it had become the repository of knowledge of Rome. This gave it great stature in a distributed system among other important subsystems, The Church had organizational capacity to mobilize and intellectual capacity to inspire, but it did not act alone. To succeed it needed to cooperate with Europe’s intermarried elites, especially the royal families. Being anointed by the episcopate, monarchs could claim eminence above all other lay leaders, and both the clerical and royal realms depended on the landed nobility to act locally and to recruit foot soldiers from the peasantry, from which the Church drew monks and parish priests.

As a chronicle of history, the narrative falls short, jumping from the fifth century to the High Middle Ages. Even so, the book makes a significant contribution to the study of what makes the West unique and will be a landmark of early twenty-first-century social science. It is persuasive that social psychologists have underestimated the degree to which western behavior once assumed to be universal is actually parochial. It illustrates the need for social psychologists to start to include people living in non-modern environments in their experiments — something Henrich has been doing since early in his career.

Henrich ambitiously tries to reunite economic anthropology with its cousin disciplines, economics and sociology, and places culture and social psychology on center stage. The bold claims he makes will keep a generation of historians busy running back to the archives to prove, disprove, or amend them. This could bring new attention to Church history and contribute to a renewed appreciation of religion’s formative role in making the modern world. It should also fertilize the study of economic history by giving researchers a reason to further explore the role played by the Church in long-term cultural change.

Now that we know how WEIRD Westerners really are, we might question the utility of using its experience to benchmark policy that is designed to help modernity happen in the rest of the world. What if you are the leader of a country that is not filled with culturally WEIRD people? How do you modernize? The book also leaves open the question of what happens when you have met one of the criteria of modernization and are only partially WEIRD — China and East Asia’s high-performing economies, for example, succeed on education and industrialization, but fall short on democracy. What kind of world order and governance of international relations will be possible when kinship intensity causes such significant variation in the performance of institutions?

There is one clear conclusion: the study of social networks will be essential if we are to understand and motivate long-term cultural change.

References:

Goody, Jack. 1983. The Development of the Family and Marriage in Europe. Cambridge: Cambridge University Press.

Mitterauer, Michael. 1991. “Christianity and Endogamy.” Continuity and Change 6 (3): 295–333.

Reynolds, Philip L. 2016. How Marriage Became One of the Sacraments: The Sacramental Theology of Marriage from Its Medieval Origins to the Council of Trent. Cambridge: Cambridge University Press.

Root, Hilton L. 2020. Network Origins of the Global Economy: East vs. West in a Complex System’s Perspective. Cambridge: Cambridge University Press.

Schulz, Jonathan F. 2020. “Kin-Networks and Institutional Development.” Working Paper. SSRN.

Ubl, Karl. 2008. Inzestverbot Und Gesetzgebung. Die Konstruktion Eines Verbrechens (300-1100). Berlin: Walter de Gruyter.

Whitelock, Dorothy. 1952. The Beginnings of English Society. Baltimore: Penguin Books.

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