Economic Evolution and Revolution in Historical Time

Published by EH.Net (January 2012)

Paul W. Rhode, Joshua L. Rosenbloom, and David F. Weiman, editors, Economic Evolution and Revolution in Historical Time. Stanford, CA: Stanford University Press, 2011. xx + 461 pp. $60 (hardcover), ISBN: 978-0-8047-7185-6.

Carolyn M. Moehling, Department of Economics, Rutgers University.

A recent review in this series described festschrifts as ?an honored tradition? but ?also a somewhat antiquated and awkward form of scholarly communication.?? That awkwardness has been increasing in recent years.? More and more young scholars are being told that book chapters will receive little, if any, weight in tenure reviews, and many citation indices ? which are fast-becoming the ?summary statistics? of scholarly productivity ? ignore such contributions.? Given these trends, it is becoming more and more difficult to produce a collective volume that is relevant for current scholarship.? However, in the volume under review, Paul Rhode, Joshua Rosenbloom and David Weiman have proved that this can be done.? They do start with a tremendous advantage in that the scholar they honor, Gavin Wright, is one of the true greats in our profession.? Wright?s research is remarkable for both its scope and its diversity of method, and the editors have put together a volume that shares these qualities.? Several of the chapters are review essays which take a particular area of Wright?s research and place it in the context of the broader economic and historical literature.? These essays are more than just genuflections on the work of a beloved scholar and teacher; they discuss the challenges to Wright?s conclusions posed by other scholars and propose directions for future research.? Other chapters report the results of new or on-going research projects, many of which were inspired by Wright?s work.? For the most part, these essays make substantive and provocative contributions to the literature.? The editors achieve this feat by soliciting papers from well-established scholars who are no longer tormented by the ticking of the tenure clock.? The end result is a hefty volume of 17 chapters and over 400 pages.

Given space constraints, this review cannot adequately discuss the merits of each of the essays included in the volume.? The goal, instead, is to provide an overall sense of the volume by highlighting some of the more notable contributions.? Strong entries in the review essay category are the chapters by Karen Clay, Robert Fleck, and Joshua Rosenbloom and William Sundstrom.? Clay reviews Wright?s work on the role of natural resources on the development of the U.S. economy.? In a seminal paper published in the American Economic Review in 1990, Wright challenged conventional wisdom by claiming that the success of American manufacturing before 1940 was due to its intensive use of natural resources.? He went further to argue that this natural resource abundance was due less to the size of America’s geological endowment than to the ability to exploit that endowment.? Clay discusses the factors that led to this successful exploitation: federal and state geological surveys, the development of American mining and engineering colleges, and incentives for private agents to search for and extract natural resources.? Clay draws upon her own research with Wright on the Gold Rush to argue that these incentives existed even when the government could not effectively guarantee property rights.? Mining communities, building on cultural conceptions of fairness, created private-order institutions to secure such rights.? Clay then turns to the $64,000 question: why didn’t the U.S. suffer from the “resource curse?”? Clay believes that it was the strength of American political institutions and the high transportation costs of the period that made natural resources facilitate rather than hinder growth.? She then proposes a framework for future research to test this hypothesis.

Fleck situates Wright’s research on the New Deal and the transformation of the Southern economy in the broader political economy literature.? He provides a nice overview of the empirical studies of the politics of New Deal spending and re-interprets the findings to emphasize their more general implications for the interplay between policy and institutions.? Fleck goes on to connect this work to the very recent research on the role of institutions and economic development.? He focuses, in particular, on theoretical models of the extension of voting rights and how these models draw upon and complement Wright’s much earlier work on the South.

Rosenbloom and Sundstrom take on an even more ambitious agenda: using Wright’s concept of institutional regimes to provide a history of American labor markets from the colonial period to the present.? In this framework, political and economic institutions evolve to be complementary and mutually reinforcing, hence making them stable over long periods of time.? Only a shock or crisis precipitates change and then change can happen rapidly, as it did in Southern labor markets in response to the Civil War and then again in the mid-twentieth century.? The overarching theme of Rosenbloom and Sundstrom’s narrative is that changes in labor market outcomes cannot be interpreted simply in terms of shifts of supply and demand.? Instead, they must be examined in the context of the prevailing labor market institutions and how those institutions change and evolve over time.

Frank Levy and Peter Temin follow up on the theme of institutional regimes in their study of trends in income inequality in the second half of the twentieth century.? They argue that the declining position of the average worker reflects more than just the effects of globalization and skill-biased technological change.? They place the blame instead on the political and economic changes in the late 1970s and early 1980s that led to the erosion of organized labor’s bargaining power.? The institutional regime changed in a way that disadvantaged the average worker.

Leonard Carlson’s chapter also focuses on how outcomes are shaped by institutions.? Carlson contrasts the experiences of the aboriginal peoples of North America and Australia.? As he notes, there are many parallels in the settlement and development of these two areas.? Yet, they dealt very differently with their native populations.? In Australia, settlers developed a new legal concept, “terra nullius,” which asserted that the land belonged to no one prior to the arrival of the English in 1788.? In North America, native peoples were viewed as having “aboriginal rights” to the lands they occupied.? The result was that in North America, settlers had to negotiate land sales or treaties with natives in order to claim the land whereas in Australia, they did not.? Carlson presents a compelling case that the differences in these initial institutions can help to explain the very different experiences of these two native populations all the way up to the present.

Alan Olmstead and Paul Rhode return to the question of the productivity of slave agriculture.? Building on their previously published work, they argue that the expansion of cotton production into the New South and the increased labor productivity in cotton that generated, relied heavily on the continuing biological innovations in cotton varieties.? A nice feature of this essay is that Olmstead and Rhode provide a re-evaluation of the economics of slavery literature based on their new findings.?

Richard Sutch contributes a provocative essay linking the minimum wage to increases in education.? He argues that the minimum wage binds in the youth labor market.? Decreasing labor market opportunities for young workers could create what Sutch calls an educational cascade whereby teenagers stay in school longer both because of peer effects and the declining opportunity of schooling.? Using data from the Current Population Surveys and the decennial censuses, Sutch shows that birth cohorts which were in high school during periods in which the minimum wage was being increased, have higher than expected average years of schooling.? He proposes, therefore, that raising the minimum wage may be a way to lower high school dropout rates.

Stacey Jones offers an intriguing alternative explanation for the dramatic changes in women’s occupational choices starting in the 1960s: the declining demand for teachers.? The demographic changes in the 1960s led to a drop in the number of school children at the same time that the number of college-educated women was growing by leaps and bounds.? Educated women needed to find occupations outside of teaching, and as more and more of them did, they changed societal expectations about what was appropriate work for women.? Jones’ argument nicely complements the many recent studies that examine the effects of contraceptive technology on women’s career and educational choices.

The remaining chapters are remarkable for the variety of scope, data, and method.? George Grantham explores the history of science in Europe between 1650 and 1850.? Warren Whatley and Rob Gillezeau develop a theoretical model to consider how the effective demand for slaves in the New World affected the development of African economies.? Ta-Chen Wang compares the textile industries in Boston and Philadelphia in the early 1800s to examine how differences in state banking systems affected industrial development.? Jeremy Atack, Michael Haines, and Robert Margo present preliminary results from their large-scale research project on the impact of railroads on economic development.? Scott Redenius and David Weiman seek to explain the seasonality in financial markets in the South after the Civil War and then to examine its impact on the National Banking System.? Susan Wolcott studies rural credit markets in colonial India.? Susan Carter links the rise of Chinese restaurants in the U.S. to the Chinese Exclusion Act.

Finally, this volume contains a bonus chapter.? Wright himself provides an essay reflecting on the tradition of economic history research at Stanford.? This essay provides a rare glimpse at how a scholar and teacher evaluates his own body of work and those of his students and colleagues.

Carolyn M. Moehling is an Associate Professor of Economics at Rutgers University.? She is the author of ?The Political Economy of Saving Mothers and Babies: The Politics of State Participation in the Sheppard-Towner Program? (with Melissa A. Thomasson), Journal of Economic History (forthcoming).

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