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The Cambridge Economic History of Latin America, Volume 2: The Long Twentieth Century

Author(s):Bulmer-Thomas, Victor
Coatsworth, John
Cortes-Conde, Roberto
Reviewer(s):Fishlow, Albert

Published by EH.NET (April 2007)

Victor Bulmer-Thomas, John Coatsworth, and Roberto Cortes-Conde, editors, The Cambridge Economic History of Latin America, Volume 2: The Long Twentieth Century. New York: Cambridge University Press, 2006. viii + 755 pp. $150 (hardcover), ISBN: 0-521-81290-9.

Reviewed for EH.NET by Albert Fishlow, International Affairs, Columbia University.

This is virtually the final volume in a series of important contributions to the economic history of Latin America within the last decade or so. Four contributions stand out. There is Leslie Bethell’s multi-volume Cambridge series, now about to be completed, and despite its more comprehensive nature, a most relevant source for economic history. Additionally, Rosemary Thorp has completed a new text focusing on the twentieth century, and with her associates, has produced three volumes of background material. Victor Bulmer-Thomas, one of the editors of the volume here reviewed, has recently completed a second edition of his text, The Economic History of Latin America since Independence. And now we have the second volume of the Cambridge Economic History of Latin America. Several of the contributors to this book also appear in the other edited collections.

While a long article undertaking a comparative analysis would very much be welcome, my task is limited to a single part of this great revival. That alone is daunting. There are fourteen chapters, sixteen authors, more than 750 pages and something like a hundred tables and diagrams. Additionally, there are bibliographic essays providing informed references to additional research materials. Finally, what is really different about this collection is its emphasis upon topics, rather than countries, leaving to the particular authors a greater freedom to expand upon their own definitions of the relevant. That is, for the most part, advantageous, although one might have hoped for an additional quantitative appendix comparing more fully, say, the different estimates of regional national income over the period coming from Angus Maddison, the Oxford compendium (linked more closely to the data developed by the Economic Commission on Latin America), Andre Hofman, and the efforts by Leandro Prado de la Escosura to put together various national estimates.

The book is a rich source for this long century of development. Its particular strength, not surprisingly, is the historical rather than the contemporary. That, after all, is the great virtue of the authors. Trying to bridge more than a century-long experience, over many countries as well, is really too much to ask. Most of the authors are more comfortable with the political economy of the past than the present. As a consequence, in many of the essays, the treatment of the last decades of the twentieth century is too limited and, on occasion, verges on the incorrect. Perhaps, it might have been better consciously to conclude the volume with the debt crisis of the 1980s, prior to the emergence of a region geared, for the first time since the Great Depression, to respond to globalization and its special challenges. One would still have had a century, but one overlapping the nineteenth and part of the twentieth century.

These last twenty-five years, with their richer quantitative data bases, and much greater volatility, have been treated in great detail by individual researchers in the Inter-American Development Bank, the IMF and World Bank, applying extensive econometric techniques, not to mention the contributions from research centers within the region. We get a good sample of this different style in the last chapter, “Poverty and Inequality,” by Miguel Szekely and Andres Montes

What are the principal conclusions that seem to emerge about the Latin American development process? I will limit myself here only to four, although many more could be constructed from the abundant text.

A first proposition seems to be the adverse consequence of resource richness. Despite high rates of early tariffs ? not entirely for revenue purposes as Bertola and Williamson seem to suggest, but also explicitly for industrial protection ? a surge of import-substituting activity before 1914 failed to provide an adequate base. Nor, alas, did import substitution led by CEPAL in the 1950s. Many Latin American governments opted in favor of subsidizing industrial expansion for the internal market, instead of opting for greater external participation. That might have led to greater domestic efficiency as well as a more diversified export sector. It also was a contributor to high rates of inflation that flared in the 1960s and 1970s and led to tragic military interventions in many countries.

Another is the irregularity of foreign capital inflows, traced by Alan Taylor historically, and continuing through the 1990s. What one sees is a series of debt cycles through the nineteenth century until the 1980s, where the character of international flow alters from bond indebtedness to bank lending to, more recently, direct foreign investment. What clearly changes is the length of exclusion. Argentina has even been able to impose a radical reduction of its obligations, to dispense with the IMF, and to accumulate reserves in the midst of the last three years. Additionally, that external constraint is now lesser in the midst of a favorable shift of the terms of trade. Will continuing globalization eliminate this central factor affecting the region?

A third element in the story is that of inadequate investment in education. The chapter by Fernando Reimers covers this deficiency. There is clearly a very late Latin American commitment to universal enrollment, and a still continuing, and large, inadequacy in the quality of public, as opposed to private, instruction at the primary and secondary levels. On the other hand, university public education is of high quality, as well as virtually free. Unequal income distribution is one result; another is a lack of skills capable of assuring continuing upgrade in the distribution of production and exports abroad. Nonetheless, it proves difficult to change. Effects take a generation adequately to be felt; governments have a more limited horizon over which they are seeking success.

Still another determinant of economic growth, now given much weight in contemporary discussion, is institutional change. A great credit to the volume is the inclusion of a chapter by Alan Dye on the subject. He incorporates much that is relevant, including the differences between the civil and the common law, as well as giving special attention to property rights. But the treatment fails to extend to the present, and to incorporate the many current problems posed by the lack of an independent judiciary, or fully to examine the inadequacies of representation within the legislative branch. There is much more to be brought to bear in this area historically. But this is a welcome start.

There are many other contributions than have already been mentioned. The editors have opted for a four-way classification: chapters on historical cycles of globalization, on the onset of modernization, on factor endowments and on sectoral development and equity. As a consequence, they include materials not usually found in other treatments.

For example, Otto Solbrig’s chapter on environmental change ? a wise choice in view of the present accelerating concern with global warming ? appears. However, there is inadequate focus upon the Kyoto Treaty and its forthcoming implications for national governments in the region. And as sometimes occurs, his later reference to the utter failure of the Brazilian ethanol program seems more than a little doubtful at the present moment.

Equally, the editors have resisted a separate chapter focusing on the State, and its variable role over time and sub-region. Stephen Haber, in his chapter on political economy, seems to argue against its relevance when he assures that post-1930 industrial development was not “state-led,” and always ad hoc, just as it was in the earlier period. His reading of the contemporary period is highly at variance with the view of many others. Such a treatment would have provided a useful opportunity for contrast with the collection of essays put together by Rosemary Thorp, where CEPAL receives much greater attention.

Finally, the politics are virtually entirely missing. This, after all, is the period of Vargas, Peron, Cardenas, as well as other, and important post-war leaders. They too had an impact, and not merely during their periods in power. Groups organized in behalf of particular policies. The military consciously sought to impose their own. It becomes difficult to understand fully the economic development process of the region in the post-war period without a more comprehensive framework. And it is not only the internal politics that is absent. Equally absent is foreign relations, which emerged more and more significantly after the Great Depression.

But perhaps too much that seems to be critical has been registered. This second volume, like the first, will take its place in many a scholar’s personal library, and will influence a new generation of economic historians involved in the region. Not at all least, the bibliographical comments accompanying the chapters will direct the diligent reader to related sources carefully selected by the individual authors. So in many ways, it really represents a wonderful beginning to, rather than the end of, study of the economic history of Latin America in the long twentieth century. I suspect that is exactly how the very distinguished editors and participants would like it to be.

Albert Fishlow is the director of the Columbia Institute of Latin American Studies and director of the Center for the Study of Brazil at Columbia University.

Subject(s):Markets and Institutions
Geographic Area(s):Latin America, incl. Mexico and the Caribbean
Time Period(s):20th Century: WWII and post-WWII

Natural Resources: Neither Curse nor Destiny

Author(s):Lederman, Daniel
Maloney, William F.
Reviewer(s):Engerman, Stanley L.

Published by EH.NET (February 2007)

Daniel Lederman and William F. Maloney, editors, Natural Resources: Neither Curse nor Destiny. Stanford, CA: Stanford University Press, 2006. xx + 369 pp. $30 (paperback), ISBN: 0-8047-5709-7.

Reviewed for EH.NET by Stanley L. Engerman, Departments of Economics and History, University of Rochester.

This collection of eleven essays is published in a series sponsored by the Inter-American Development Bank, the United Nations Economic Commission for Latin America and the Caribbean, and the World Bank. The manuscripts selected were to “represent the highest quality in each institution’s research and activity output,” and these include papers authored by scholars at universities in the United States, Europe and Latin America. All essays are concerned with answering questions about the so-called curse of natural resources — the presumed effect of rich resource endowments in lowering rates of economic development, particularly for Latin America. The essays employ different analytical methods, different samples of countries, and different sets of independent and dependent variables.

There are several explanations offered for the argued-for putative negative correlation between resources and growth. One with a long intellectual history relates to the question of whether it is better for growth if things are easy, based on the presence of ample resources and favorable climate, or are difficult, because of limited resources and thus the need to labor hard to get adequate output. Does the easy availability of food- stuffs make for a limited labor input and does a relative absence of resources lead to the drive for labor-saving innovations, so that lower incomes at first lead, in the long-run, to higher incomes and more rapid growth? More recent arguments concerning the negative relation between resources and growth present more specific economic relations — the relatively slower advances in productivity for resources and agriculture, compared to manufacturing and services, and the relative long-run price declines in agriculture relative to manufacturing. At issue, also is the ability of resource-based economies to diversify over time, due either to public policy or to the behavior of private firms, and their ability to develop the necessary complementary capital stock, physical and human.

The volume is divided into three sections, primarily on the basis of method. After the introduction by the two editors, the next three essays entail the use of econometric evidence. The next section has four essays described as “lessons from history,” which involve less quantitative and statistical evidence than those in the first section; and the third section is similarly also less statistical, and deals with some broader theoretical issues of trade theory and public policy. All told the essays include considerable quantitative material, with some 105 table and figures. There are extensive bibliographies. Works such as Sachs and Warner (1995, 1997, 2001), Prebisch (1950), and Auty (1998, 2001) are generally the main centers of attack. The general conclusion of most essays is that there is no evidence that natural resources provide an economic curse. This is, in part, because of the specific relationships tested, which relate economic growth to resources as well as the levels of human capital and the capacity to innovate. Resources in conjunction with human capital and appropriate technology will generally lead to rapid economic growth, whereas resources without human capital and technology will produce only limited growth. And, as earlier argued by Kuznets and others based on the case of Japan, the absence of resources with the appropriate institutions and high levels of human capital and technology can generate modern economic growth. Several studies point to the changes in the empirical basis of the “curse” argument. In recent years the developments in technology and the rate of productivity change in the agricultural and mineral sectors have been greater than in the manufacturing and service sectors, while there has been no strong evidence of a relative decline in prices in the resource sectors. Their findings, plus the successful past experience of several economies during times of resource expansion cast some doubt on the traditional arguments.

Detailed econometric analysis by Lederman and Maloney and by Manzano and Rigobon use the data from the Heston-Summers database to estimate the effects of trade structure and of resource production on growth. Both conclude that there is no direct evidence of a “resource curse.” Manzano and Rigobon argue for an indirect effect, via borrowing when resource prices are high, attributing problems found in cross-section estimates (but not in panel data) to debt overlay. These problems they attribute to “credit market imperfections,” not to resource-associated difficulties as usually argued. On the basis of some historical examples and with the use of over ninety nations from the Heston-Summers database, Bravo-Ortega and de Gregorio conclude that natural resources are a “hindrance” to growth only “in countries with very low levels of human capital,” (p. 92) and that “abundant human capital” can offset any problems due to natural resources (p. 93). This essay by two Chilean economists is perhaps the clearest presentation of the central message of these studies.

A detailed econometric analysis of resource price data for the twentieth century by Cuddington, Ludema, and Jayasuriya draws upon the numerous studies undertaken by the World Bank and others. The authors conclude that there has been no clear downward trend in natural resource prices, with there being only a break in 1921. There are three detailed historical studies of different parts of the world to examine the impact of natural resources on growth. Maloney argues that the failure of Latin America to develop as rapidly as others reflects difficulties in human capital and innovative capacity and the failures resulting from protectionist policy. He notes the impact of immigrants upon the industrialization of Latin America, and the importance of engineers and technical education in Sweden, Australia, and the United States. Wright and Czelusta provide more historical detail in studying the cases of the United States, Australia, Chile, Peru, Brazil, and Botswana, indicating the many examples of “successful resource-based growth” (p. 207). They argue against accepting a belief in the resource curse to preclude a growth policy based on taking advantage of the resource endowment. Blomstrom and Kokko demonstrate Swedish success based upon exporting natural resources (mainly from the forest industry), accompanied by an expansion of education, human capital, and technological and institutional changes. Sweden also benefited from an open economy which led to higher level of exports, to lower-priced imports, and to more foreign direct investment.

In the final part, Venables describes the endogenous characteristics of comparative advantage, with the roles of transport costs, externalities, and agglomeration effects. It is a useful survey of the geographic approach to international trade and development, and he comments that “natural resource endowments are not an important part of the story in the context of the theoretical models discussed” (p. 283). Lederman and Xu, using the Heston-Summers dataset, argue that economic growth is positively related to exports, except for tropical agricultural exports. The key point is, again, the crucial role of “endowments of human capital, knowledge, and infrastructure” (p. 314). Martin shows that over the last thirty years of the twentieth century the share of merchandise exports from developing countries that were manufactured goods rose sharply, while the shares of agriculture and mineral goods declined. He advocates an open economy, as well as encouragements to technological change and human capital investment to promote growth.

This volume in the Latin American Development Forum Series, a co-publication of Stanford Economics and Finance, the Stanford University Press, and the World Bank, represents a very high-quality publication of essays that all generally point to the same policy conclusions. Works pointing to different conclusions are frequently cited, but there is nothing included by those scholars who argue in a different direction. The basic arguments that the key variables for growth are education, innovation, and human capital remain critical for understanding the nature of, and prospects for, economic development. Resources alone cannot necessarily lead to success, but in appropriate circumstances, they do not provide a “curse” limiting the achievement of success.

Stanley L. Engerman is the John H. Munro Professor of Economics and Professor of History at the University of Rochester.

Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):Latin America, incl. Mexico and the Caribbean
Time Period(s):20th Century: WWII and post-WWII

The Development of Mexico’s Tourism Industry: Pyramids by Day, Martinis by Night

Author(s):Berger, Dina
Reviewer(s):Crites, Byron

Published by EH.NET (December 2006)

Dina Berger, The Development of Mexico’s Tourism Industry: Pyramids by Day, Martinis by Night. New York: Palgrave Macmillan, 2006. xvi + 164 pp. $65 (cloth), ISBN: 1-4039-6635-4.

Reviewed for EH.NET by Byron Crites, Department of History, University of Texas.

Out of the Mexican Revolution, a new elite sought to promote a stronger nationalism while rebuilding a broken economy. To accomplish the latter, Mexico required foreign investment. The new political class needed a way to reconcile these seemingly contradictory goals and Dina Berger’s insightful monograph analyzes how the development of international tourism helped the regime accomplish both of them. Laying out the industry’s institutional evolution and the images it produced, Berger (Assistant Professor of History at Loyola University, Chicago) offers an important well-written portrait of the many tensions between politics, business, national and international interests in a critical industry.

While most research on Mexico’s tourism begins after the 1940s, this study locates its foundation in the 1920s. Mexico’s revolutionary elite in 1928 formed the Mixed Pro-Tourism Commission, which brought together governmental officials and the business community. Studying the successes and difficulties of tourism development in Canada, the U.S. and Cuba, Mexican bureaucrats crafted their own plans and initiatives. Though the government started the dialogue on tourism, private organizations like the Mexican Tourism Association (MTA) and the Mexican American Automobile Association (AAMA) soon took the leading role. In a prolonged economic slump, the federal government simply lacked the funds to actively promote the incipient tourist industry. Thus, private groups filled the gap. Advertisements and lectures in the United States paid for by the AAMA helped more positive images of Mexico to emerge in United States. In spite of the Great Depression, foreign tourism actually increased five fold between 1930 and 1934. Rather than a leviathan state dictating the economy, Berger emphasizes how private initiative largely helped achieve these early gains.

The author provides several examples that suggest a more nuanced picture of the policy process than typical descriptions of the Mexican government’s corruption. For instance, when a New York Times reporter met with the Mexican government, he asked for a bribe to write favorable reviews of country. Officials declined the offer. Moreover, government planners realistically considered investment recommendations. National Railways, a potential investor in hotels, wanted the planners to scale back a hotel building plan because they did not believe demand existed for the size of the project.

Personal contacts, of course, mattered but Berger’s account emphasizes the many other elements of Mexico’s policy making. Have scholars placed too much weight on prominent politicians getting hotels in the 1930s and 1940s? Edward Beatty’s Institutions and Investment: The Political Basis of Industrialization in Mexico before 1911, critiqued stereotypes of Mexican corruption and incompetence in his study on Porfirian Mexico. Examples from Berger’s work hint at similar reconsiderations. Although she provides an extremely interesting and elaborate portrait of the relationship between business and politicians, unfortunately some of these larger questions and issues remain unexplored.

Furthermore, since Berger, for a good portion of the book, deals with business leaders and ultimately policy decisions, a more explicit commentary on the debates concerning institutions and economic growth seems necessary. For example, Nobel Prize economist Douglass North wrote that in comparison to the U.S. and Britain, Latin America’s institutions failed to create an environment in which entrepreneurs would invest. In contrast, Berger’s description of business planning raises critical questions about these well-accepted labels in the Atlantic World. Not only did Mexicans learn from Canadians, Europeans and Americans, but this reviewer noticed how Mexican industry developed in a strikingly similar fashion. British Columbia, for instance, went through many of the same phases at the same time, with a comparable mixture of private boosters, local elites and public agencies. A more detailed comparison to other countries besides Latin America could have complicated North’s dichotomies.

After examining the policy process, Berger shifts to the cultural aspects of the Mexican tourism industry. International tourism interests did not overwhelm or destroy local culture but rather gave the revolutionary elite a way to merge a constructed national culture with cosmopolitan concepts of a modern nation. Berger notes that some of the proponents of Mexico’s tourism wanted to avoid Cuba’s model of tourism in which foreign culture overwhelmed local society. But at the same time, leading intellectuals, politicians and businessmen ultimately argued that a tourism industry with an international market meant that Mexico gained respect as a modern country. Attracting U.S. tourists signified that Mexico had equaled their standards. Furthermore, the National Tourism Committee, formed in 1938, maintained that promoting regional fairs for tourists would strengthen local culture. Consequently, international tourism could promote Mexican identity and revolutionary goals.

Mexico’s tourism boosters faced similar contradictions as they advertised abroad. While the tourism leadership wanted to portray the unique cultural heritage of Mexico, they also needed to advertise the nation’s modernity to dispel the racist stereotypes of potential U.S. visitors. They fashioned Anglicized images of mestiza women, conveying controlled but still exotic images of Mexico. To complement these foreign representations, promoters also marketed photos of women enjoying the cosmopolitan nightlife of Mexico City. These efforts also benefited from a policy shift in the United States. As World War II began, the Roosevelt administration especially worked hard to improve U.S. perceptions of Mexico. Principally, FDR wanted the American public to accept Mexico as a critical ally in the war. While Berger refers to the conflict between nationalism and international tourism, the author could have elaborated on debates concerning cultural policy. How did the Mexican public view these changes and the greater foreign influence? Did collaboration with U.S. generate greater criticism and conflict? A larger examination of such conflicts would have enlivened the author’s point on the central intellectual tension between the local and foreign.

This interesting and well-researched, but brief (120 pages of text), book ends with the explosion of tourism in 1940s. Another chapter dealing with the 1950s would have rounded out this book. What kind of reaction did the explosion of tourists receive? How did a more established government shape industrial development? Still, this monograph provokes and questions fundamental concepts concerning Mexico’s culture, institutions and development on an important but understudied industry.

Byron Crites is a graduate student of history at the University of Texas at Austin. His dissertation is on international investment and policy alternatives in post-revolutionary Mexico.

Subject(s):International and Domestic Trade and Relations
Geographic Area(s):Latin America, incl. Mexico and the Caribbean
Time Period(s):20th Century: Pre WWII

A History of Mechanical Invention

Author(s):Usher, Abbott Payson
Reviewer(s):Grantham, George

Classic Reviews in Economic History

Abbott Payson Usher, A History of Mechanical Invention. New York: McGraw-Hill, 1929. xi + 401 pp. (Revised edition, Cambridge, MA: Harvard University Press, 1954, 450 pp.)

Review Essay by George Grantham, Department of Economics, McGill University.

How Economic Change Happens: Usher’s History of Mechanical Invention

Among the seminal works in economic history fewer are more perplexing than Abbot Payson Usher’s History of Mechanical Invention. The bland title offers no suggestion of a great ambition, which is nothing less than to establish logical foundations for an empirically based explanation of economic change, the prose is stern and unrelenting, and like a car that runs out of gas just before reaching its destination, the book simply comes to a stop with no conclusion,. Few historians consult the work today. Once ransacked for information on the early history of clocks, windmills, textile machinery, steam engines and machine tools, its encyclopedic function has been superseded by more accessible and up-to-date compilations. So why should we be tempted to study it now? What gain repays the effort required to master the technical minutia of several branches of mechanics and the erudite byways of classical and medieval scholarship? The main reason is that, along with Kuznets’ studies in historical income statistics, The History of Mechanical Invention is a founding text of a science dedicated to explaining economic change, what Usher called the “mutual transformations taking place between human societies and their environment.”

We begin with the pesky problem of how to tell that story. At the time Usher was composing the first edition of Mechanical Invention (1929), the narrative of general economic history was dominated by the “stages” approach, according to which the development of individual economies is displayed in a chronological sequence of conceptually distinct types. Conceiving economies as identifiable types goes back to generalizations proposed by the ancient Greeks to interpret the customs of the strange peoples they encountered in Asia and the European hinterland. In the eighteenth century the notion received a fillip from speculations attributing the evident segregation of human societies by type to adaptation to different geographical conditions. Adam Smith’s four-fold classification of societies into hunting and gathering, pastoral, agricultural and commercial economies is an unexceptional instance of this reasoning. As individual types were considered to reflect static environmental constraints, the typology contained no chronological implications, so that although Montesquieu, Smith and Turgot certainly believed that commercialized societies represented an “advanced” state of civilization, they held no strong view that it represented the latest phase of an historical sequence. Indeed, the conviction that men are physically and psychologically similar and the great prestige of Roman civilization stood in the way of a progressive narrative of social states. Reason is timeless.

In the hands of early nineteenth-century philosophers exalted by the Romantic concept of becoming, that static conception of social types acquired a temporal dimension. To position societies on the thin line of Time’s Arrow, however, implied that they are discrete entities historically expressing ontogenetic development that is independent of the particular environment. But exactly what force causes such entities to cohere and persist, and drives their historical development? The cause could not be definitely stated, any more than one could then explain ontogenetic development of living organisms.[1] Whatever it was — life-force, God’s will, the national Geist, it was ineffable. It could be felt, appreciated and asserted, but not explained. All that could be declared with any degree of confidence was that each society develops through a sequence of stages marked by increasing complexity of organizational forms, methods of production, degrees of regional and occupational specialization, and movement from small to large units of social and economic organization.

In the different versions supplied by successive generations of German historical economists and American Institutionalists the stages approach provided a serviceable framework for characterizing the range of societies revealed by geographical discovery and the general trend of European development since the early Middle Ages. It was a capacious tent within which several generations of economists and historians were able to get on with the business of investigating the evolution of the myriad institutions and activities that constitute an economy without having to worry much about what it all meant.[2] Yet despite conjectures that recall elements of the New Institutional Economics, the stages “theory” offered little in the way of a systematic interpretation of how particular societies interact dynamically with their environment. It did not explain how things change.

Much the same can be said of the empiricist tradition exemplified by Clapham’s Economic History of Modern Britain (1926). Making abundant use of contemporary statistical sources, Clapham aimed at correcting catastrophic accounts of Britain’s industrial revolution concocted from impressionistic sources by asking the quantitative questions, how much, how often, and for how long. The overall impression left by this monumental exercise in error correction was that one can draw few generalizations beyond the fact of the geographic diversity of England’s nineteenth-century economic experience. To the question, what happened in history, Clapham answered, many things to many people in many places. A thoughtful reviewer characterized the work as a tour book laced with numbers.[3] As Usher observed in a second review, that criticism was unfair. Clapham had an implicit model of England’s industrial transformation, but left it to the reader to parse it out for himself.[4] Yet, although honest enough, this leave-it-to-Beaver approach to historical synthesis was hardly the stuff of a science capable of building on past achievements. As Darwin had observed sixty years earlier, a fact is not neutral; it is either for or against an argument. Clapham refused to argue.

Neither Clapham’s sprawling narrative nor the ethereal holism of the stages approach adequately addressed the main question of how things change. Kuznets eventually resolved the problem posed by Clapham by reducing quantitative indicators of output to a scalar measure of economic activity that tracks the flows connecting income with aggregate saving and expenditure. That synthesis rests on well-understood accounting principles permitting one to speak intelligibly of an economy in time. It utilizes a measure that can be statistically decomposed to its proximate causes and even unto the causes of those causes. By contrast, synthesis offered by the stages vision of economic change achieved only an aesthetic coherence, where the significance of particular facts depended on their relation to an a priori compositional scheme. As Usher noted, the rhetorical persuasiveness is generally secured by “discreet omissions.” The notion that “history,” economic or otherwise can be described as the movement of a holistic entity implies the existence of an immanent principle determining the whole course of events, which makes it little more than a thinly disguised Natural Theology, where, as the Austrian novelist Robert Musil once said of allegory, “everything takes on more meaning than it honestly ought to have.”[5]

Particular Systems of Events

Usher’s answer to holistic history was to restrict analysis of historical causation to sequences of events for which temporal connections can be empirically demonstrated.

We ought not to say that the present is derived from the past and the future from the present. The proposition must be formulated in much more specific terms: every event has its past. The principle of historical continuity does not warrant any presumption about the relations among events occurring at the same time. This assumption is very frequently made, but it will be readily seen that it is not warranted (1954, p. 19).

Usher termed the sequences for which historical continuity can in principle be verified “particular sequences of events.” Such sequences are distinct from series of events resulting from similar responses to similar situations, such as the predictable responses of economic agents to changes in the environment, because a narrative adds nothing to our understanding of them. As Paul Veyne observes,

If the revolutions of people were as entirely reducible to general explanations as physical phenomena are, we would lose interest in their history; all that would matter to us would be the laws governing human evolution; satisfied with knowing through them what man is, we would omit historical anecdotes, or else we would be interested in them only for sentimental reasons, comparable with those that make us cultivate, alongside great history, that of our village or of the streets of our town.[6]

Objects of historical thinking acquire meaning from their place in a plot that explains them. Usher held that innovation was the critical element of such plots, because it adds something that could not be predicted from initial conditions and therefore has to be explained by links to events preceding it in time.

A particular system of events must therefore be shown to be a truly genetic sequence. It must rest upon one or more acts of innovation that have been preserved by tradition and developed by further innovations (1954, p. 48).

Invention, then, makes up an intrinsically historical element in a series of events. It cannot be predicted with certainty ex ante, but it can be explained ex post as a narrative of verified acts. The History of Mechanical Invention proposed just such a narrative.

How does one identify a particular sequence? What principles make them distinct objects of empirical investigation? Several alternatives suggest themselves. One might distinguish events by their goal or purpose. Usher doubted that this principle could be applied to technological sequences because there are too many ways to skin a cat. The boomerang, bow and arrow, and blow-gun all kill game at a distance, but because they do not belong to the same technological system of events, none could plausibly have evolved out of any of the others. The presence of a common scientific principle suggests a better defining principle, but general principles may be too broad to define relevant boundaries identifying the particular sequence. Steam engines and steam turbines both exploit the expansion of steam to transform heat into mechanical energy, but they employ radically different mechanical means of doing it. Reciprocating piston engines descend from a pneumatic technology that originated in the hand pump; the genealogy of the turbine starts with the horizontal water wheel. The same is true of the transmission of motion by gear trains. While the devices invoked common mechanical principles in watches, clocks, and heavy equipment, the particular problems facing inventors differed so much from one application to another that the historian needs carefully to specify the context to explain the path of invention in each class of application. The boundaries of particular systems of technological events are thus narrower than their underlying scientific principles might suggest. Usher believed that the determination of those boundaries is ultimately an empirical question, as the boundaries have clearly widened over time as a consequence of advances in pure and applied science.

Systems of events consume time. Economists are not much concerned about the logical status of time except insofar as it serves as the metronome for growth theory. Not everything happens at the same time, however, and particular systems of events unfold at different speeds. One does not see that bicameralism, coitus interruptus, the mechanics of central taxation, the detail of rising lightly on one’s toes when uttering a subtle or strong sentence (as M. Birotteau did), and other events of the nineteenth century must evolve with the same rhythm.[7]

Usher held that intelligible history is necessarily pluralistic. Particular sequences, which we currently call paths of temporal dependence, demand separate treatment to track down cause and effect. A subtler problem concerns the historian’s temporal perspective. Usher insisted that particular events should not be conceived as constituting the “end” of a sequence.

Historical sequences do not have terminal points. To understand the significance of Watt’s engine is to place it in a series of events that extend backward to sixteenth-century investigations into the vacuum pump and forward towards the Corliss engine.

The Emergence of Novelty

The heart of the matter is how new things happen. By what intellectual and social processes do new methods of production, new products, and new patterns of behavior become objects of choice in the stream of economic and social life?

Historians traditionally answered this question in two ways. The first was that inventions are inspired intuition given to exceptionally gifted persons. This approach stressed the discontinuity of inventions and the importance of a small number of inventors in creating the modern world. Usher deemed it “transcendental,” because in taking invention to be what amounts to a miracle, it puts the event logically outside time, so that it can have no mere historical explanation. The second approach took the opposite tack of holding that inventions occur continuously in small steps induced by the stress of necessity, somewhat like Darwinian evolution.[8] Usher termed this approach “mechanistic,” because it relegated the inventor to the status of “an instrument or an expression of cosmic forces.”[9] Neither the transcendental nor the mechanistic account of invention, then, was historical in the sense that explanation necessarily takes the form of a narrative. To the transcendentalist, inventions just happen (and we should all be grateful they do); to the mechanist, they occur automatically in the fullness of time. Neither explains how inventions happen.

Invention is an event in the mind, so an empirically grounded model of invention should be based on its cognitive properties. The properties that Usher found most useful in this respect are drawn from the findings of Gestalt psychology, which in the 1920s was a thriving field of experimental research. Gestalt psychology proceeds from the observation that the mind commonly perceives things as wholes rather than as a chaotic flux of sensory stimuli. That perception or gestalt, however, is not an ex post “interpretation” of the stimuli; it is how they are literally “seen,” what Wittgenstein called a “particular organization” of sensory (visual) experience.[10] The physiological basis of this well-documented phenomenon stems from evolutionary adaptations in neural circuitry that enhanced the capacity of early hominids to quickly extract signals from a perceptually noisy environment. As those adaptations took place prior to acquisition of language, gestalt perception does not obey the cognitive constraints of propositional logic embedded in language, but conforms to the spatial logic of pictorial composition, in where things take meaning from their “fit.”[11] Because of this a given stimulus can generate more than one true perception. For example, in the classic “figure-ground” form, we may see a black goblet against a white ground, or alternatively two white heads staring at each other across a black field, but never both at the same time. As the philosopher Russell Hansen put it, “There is more to seeing than meets the eyeball.”[12]

Usher contended that invention is seeing a “particular organization” of data present in the inventor’s mind. The gestalt paradigm opens the door to an historical treatment of invention, because what we see is influenced by our past experience, which is to say, our history. Darwin confessed that he saw the “plainly scoured rocks, the perched boulders, the lateral and terminal moraines” on his geological rambles through the mountains of North Wales, but he did not see what Agassiz had seen in Switzerland: that the eskers and eccentric boulders were the product of glacial transportation. [13] What we know limits what we are able to “see” at any point in time. That constraint imparts directionality to discovery because in time we come to know more things. But that directionality raises a further question. What happens when we see something no one has ever seen before, which by definition we do not know? In the figure-ground experiment, could we recognize the goblet rather than the faces if we had never before seen a goblet?[14] The inventor “sees” something no one has ever seen before; it has no referent. What exactly does the inventor recognize? What forces the data in his mind into a “particular organization” that makes sense?

Usher proposed that the inventor “sees” a solution to the specific problem occupying his mind at the instant of insight. The problem serves as a focal point for organizing bits of information into a pattern that potentially resolves it. Drawing on a graphical device used by gestalt theorists to illustrate the “law of closure,” Usher compared the moment of insight to mentally arranging a set of broken arcs into a circle, thereby satisfying the desire for completion stimulated by the problem. The event is emotional, which accounts for the common denial by cranks that their finding doesn’t work. Looked at in this way, invention is necessarily contextual, because in order to be solved the problem has to be specific enough to support a solution. When Watt was struck by the lightening bolt on Glasgow green, he was not pondering the general problem of conservation of heat; he was deliberating the concrete problem of its conservation in a specific Newcomen engine.[15] That specificity puts dates on the causal history of invention. Watt could not have posed his specific problem the way he did before 1760 because an adequate quantitative concept of heat had not yet been achieved. The balance cranes invented by Brunelleschi to hoist materials for the dome of Florence cathedral and that so impressed the young Leonardo solved the specific problem of how to safely lift stone, brick and bronze objects to the unprecedented height of 300 feet without knocking down the walls of the building it rested on. The use of pullies and counterweights goes back to antiquity; but their combination was something new made possible by a more complete mathematical analysis of the lever.[16]

In the instant of insight the elements of a potential solution to a problem come into a new relation. Extrapolating from K?hler’s experiments on cognition in higher primates, Usher posited that the elements must be actively present in the inventor’s mind for insight to occur. In the experiments, K?hler placed fruit just beyond a caged ape’s reach, placing a baton near the animal with which it could capture the prized object. In repeated trials he found that the ape solved her problem only when fruit and baton simultaneously lay within her visual field; otherwise she remained baffled and frustrated.[17] The experiment suggests that achieving a satisfactory solution depends on serendipitous concatenation of its elements. That condition imparts significant unpredictability to the achievement of an invention, as nature rarely arranges the elements to in a form revealing a satisfactory pattern.[18] There was a large measure of luck in Edison’s nervous fiddling with compressed lampblack while reflecting on his frustrated efforts to find a satisfactory filament for a light bulb.

Except in the rare instances in which inventors have left an autobiographical account of their work, the historian can rarely observe the actual moment of insight. What can be obtained from the documentation are the problems that were posed and the presence or absence of elements needed for their solution. This is usually enough to construct an explanatory narrative. Usher noted that “even at a level of incomplete verification, the historian can proceed to develop the techniques of analysis that will reveal the grosser features of the processes by which man makes himself.” The invention of printing provides a good, though complex example. The elements needed to resolve the general problem of “mechanical writing” included a suitable support (paper), suitable ink (oil-based), a press (the woolen cloth calender) and moveable type. All of these elements were available by the early fifteenth century, and were being combined to make inexpensive wooden block prints by the 1430s and 1440s. The general impediment to the using of this technique to print books commercially was its inferior cost-effectiveness as compared with that of books currently being produced in specialized workshops by hand. The specific obstacle arose from the need to produce type in large numbers, which meant casting metal pieces in molds capable of holding matrices of variable size, and finding suitable materials for the matrix and metal punches. To judge from an incomplete documentation, the synthesis of the various elements that solved this problem was a drawn-out affair lasting from the early 1440s to the 1470s, of which the decisive invention was the adjustable type mold. The invention of printing was not the product of a single mind or even a single firm, but can be seen as a collective effort stretching over a whole generation. Its timing seems to be dictated not so much by an overwhelming demand for printed material, which until the price of books fell was satisfied by the output of workshops, but by the convergence of independent strands of technological know-how that suggested the possibility of substituting machinery for men in making letters.

The gestalt experiments indicate that the process of invention is strictly sequential, in that a problem must be adequately posed and the materials for its solution assembled before insight can occur. Usher identified a fourth stage in the process. Just as a new scientific finding has to be integrated into the existing stock of knowledge, so technological insight has to be translated into a working model and scaled up (or down) to the size needed to perform the desired task. Not every insight is workable. It took Watt nearly a decade to transform his insight into a commercially viable steam engine, and had it not been for the skills of Matthew Boulton’s machinists and Wilkinson’s boring machine, the effort probably would have failed. Usher termed that stage “critical revision.” Like the other stages, it consists of many acts of problem-solving.

Because of the necessary sequencing of its events, invention uses up calendar time. At each stage problems arise that require to be solved by insight, making the system inherently indeterminate. At best, the historian can evaluate rough probabilities from objective constraints imposed by the definition of the problem and the availability of appropriate materials for its solution at a given point of time. Usher stressed that because it is drawn out invention is by nature a social process; nothing logically requires successive stages to be achieved by a single individual or within a single epoch. The idea of applying the principle of the Archimedean screw to propulsion of vessels through water was first raised by a scientist in 1729, but it took four decades of intense and expensive effort finally to bring the screw propeller to fruition in the 1840s.[19] Usher regarded such delays as the consequence of temporally definable “resistances.” In general, the resistances are not social or economic, but reflect difficulties with respect to adequate formulation of the problem, the absence of one or more of the essential elements to its solution, failure to achieve the insight, and difficulties of its implementation. All of these elements are in some measure subject to verification, and thus narrated. Each makes invention time-consuming and time-dependent.

Usher’s approach also supplied the means to explain the history of the economy. As noted above, optimizing adjustments by agents to preferences and material constraints do not represent fundamental change, because change comes ultimately from the introduction of novelty into a social system. Usher situated that introduction in man’s capacity for problem-solving, thereby linking narrowly economic history to the broader evolutionary history of mankind. That history is not ruled by a timeless algorithm, but like the history of biological evolution rests on specific events that can in principle be identified.

[[T]he act of insight does not rise above the contingency of our knowledge upon specific contexts. Because these activities are conditioned, analysis is possible; but because they are conditioned they must be conceived as contingent upon the relevant contexts. Acts of insight seek particular modes of action or thought as a means of achieving specific ends. They do not seek absolutes or eternal verities.

Problem-solving covers most spheres of life. Usher was particularly interested in the technological sphere; but the general approach applies to the more complex area of social problem-solving, of which the construction of economic and social policy are the most important examples. That history, however, is intrinsically more complicated and harder to pin down than the history of invention. Like most pragmatists of his day, Usher believed that the problems posed in this sphere were largely created by the technological changes that he regarded as having an autonomous history. They were not less important, for all that, just more difficult

The Proof of the Pudding

A model is only as good as its implementation. Usher implemented his model of invention through a chronological account of mechanical invention in Europe from classical antiquity to the mid-twentieth century. The selection of the mechanical band of the technological spectrum was strategic, in that the decisive technological breakthroughs driving falling transport costs and productivity growth from the seventeenth through the mid-twentieth century were mainly due to mechanization of operations previously carried out by hand and the invention of new ways of generating power. It was strategic for another reason: machines combine different techniques for transmitting and controlling motion. A study focusing on the history of specific syntheses held out the possibility of identifying the circumstances that led to the combining of “the simple but relatively inefficient mechanisms of early periods into the complex and more effective mechanisms of today” (1929, p. 67). A final practical reason was the comparative abundance of documentation.

The substantive chapters begin with a discussion of the difference between scientific and technological knowledge. Until the seventeenth century, science was, as it remains, an interpretation of the physical world.[20] But outside celestial mechanics, where the Ptolemaic system was used to calculate celestial positions, that interpretation was either too broad to identify technological opportunities, or too flawed to be of practical use. Drawing on Pierre Duhem, Usher argued that the chief impediment to scientific treatment of mechanics arose from the belief that the principles of force and motion are self-evident. “Attention was thus drawn towards logical demonstrations and mathematical theorems that involved pure reasoning rather than towards experimental study of the phenomena.” Invention of devices for transmitting rotary motion and lifting heavy objects thus rested on knowledge of the strength of materials apprehended through practical experience, just as in ceramics and metallurgy. It was only from the middle of the fifteenth century that computational methods began to be applied to these problems, and it was only from the middle of the seventeenth that they acquired the power accurately to predict moments of force. From that point on, progress in mathematical analysis of mechanical problems was rapid. By the eighteenth century mathematicians and engineers were applying Newton’s third law of motion and Hooke’s law of elasticity to calculate the strength of materials, and using the embryonic science of fluid mechanics to compute the pressure of water on water wheel paddles and turbine blades.[21] Fulton’s work on the application of steam power to water craft is an outstanding example of this work.[22] The contribution to invention was situated mainly in the stage of critical revision.

The next chapter inventories the state of mechanical technology in classical antiquity. Although classical scholarship has revised Usher’s understanding of draft animal harness, the diffusion of water power, and the extent of geographical and occupational specialization, his assessment of the possibilities for invention remains sound.[23] At the end of the fourth century BC, classical civilization knew the five basic machines: lever, pulley, wedge, winch, and screw, and by the Christian era understood how gear trains translate and transmit rotary motion. As noted above, scientific analysis of these devices was not much help in designing new devices, which meant that the opportunities to combine the elemental machines into more complex devices depended on opportunities that manifested in the more immediate perceptual field. The classical presses are a good example: the beam press utilized pulleys to raise the weighted beam, while the screw press combined beam and screw. These simple combinations were closely tied to an immediate economic context setting the problem to be solved. Thus, displacement of hand mill by the rotary quern and the beam by the screw press to in the second century BC responded to the immediate problem of efficiently meeting the demand for large amounts of processed foods created by the growth of cities and trade. One can see the same dynamic at work in the invention of equipment for transporting and shaping exceedingly heavy ornamental stones.[24]

The transition to greater input of conceptual knowledge in the inventive process explains the tectonic shift in the complexity of mechanical inventions between 1500 and 1700. Early machines synthesized information obtained by visual and tactile perception (and in the case of foods, by taste and smell). Such perceptual insights are typically apprehended at low levels of generality and have been achieved many times in many places. Parallel development of lithic technology in the prehistoric world is explained by the repeated discovery that siliceous stones flake predictably enough to shape into useful forms.[25] The same was true of crafts based on manipulation of physical materials. Getting beyond that immediate level of insight, however, usually required the input of more generalized knowledge. As machines grow more complex, the physical and conceptual elements involved in achieving solutions to particular problems multiply, but as general concepts in mechanics are not immediately perceived by the senses, they are less likely to be conceived, and thus culturally idiosyncratic.[26] At this point it makes sense to compare concepts specific to civilizations as an explanation of the divergence in technological development. Usher regarded formulation of generalized scientific concepts as part of a “round-about” process of invention, in which the problems addressed are not immediately directed towards achieving a practical result. Huygens analysis of the pendulum as a means of timing the escapement mechanism in clocks is a good example.

Chapters 7 and 8 document the medieval history of two distinct branches of mechanical invention dominated by the perceptual element. The first harnessed the power of water and wind to mechanize the operations of grinding, crushing, stamping, sawing and fulling; the other captured the potential energy of gravitational force to drive and time clockwork. Both developments worked out mechanical principles mostly implicit in machines present in classical antiquity. The development of water mills and wind mills is the best documented, the critical element being the gear train translating vertical rotation of the wheel to the horizontal plane of the millstones. Gearing had been used in devices employed to measure distance and angles, but its extension to heavy-duty work was something new. One can imagine, but never demonstrate, that the idea of the water mill was taken from the gear train utilized in the cyclometer. Following an argument advanced by Lefebvre des No?ttes, and since shown to be erroneous, Usher supposed that the diffusion of water power was retarded by the deadening effect of slavery on incentives to save labor. Archaeological evidence has since demonstrated widespread diffusion of water-powered grain mills by the second century AD, which speaks volumes to the value accorded to economizing labor in the most burdensome tasks.[27] It also speaks to the wide distribution of requisite carpentering skills. The smaller horizontal and generally larger vertical mills diffused simultaneously, their geographical distribution depending on the nature of the stream and the economic advantage of high volume milling. The increased incidence of vertical wheels after 1000 AD is best explained not by technological innovation, but by opportunities for scaling up milling operations created by the growing commercialization of corn farming.[28]

Growing commercialization in the twelfth and thirteenth centuries provided incentives to apply water power to other industrial activities. The most important uses required translating the rotary motion of the water wheel into reciprocal motion used to drive bellows, stamping devices, and saws. Although Usher considered the crank and cam to be medieval inventions, Ausonius’s fourth-century description of a water-powered device for sawing marble blocks in the Rhineland indicates its presence in Antiquity. As in other areas, the surviving documentation suffers from severe selection bias against evidence for its early use. Gear trains were adapted to other power sources where running water was unavailable or inconvenient. Of these the most complicated mechanism was the gearing for the windmill, which pivoted with the sail as it turned towards the wind. The most revealing aspect of the windmill, however, illustrates how purely perceptual knowledge produced inventions that achieved high levels of technical efficiency. When Euler, MacLaurin and Coriolis undertook mathematical and experimental studies of the optimal angle and shape of windmill sails in the eighteenth and early nineteenth century, they found that Dutch craftsmen had solved the problem as a practical matter by the seventeenth century.[29] As in the case of the watermill, the path of invention seems to have mainly reflected the accretion of experience under conditions of expanding demand for the apparatus.

Clockwork presents a different chronology. Timing devices controlled by the flow of water through a self-regulating float valve were more accurate than clocks whose timing was controlled by an escapement mechanism and remained in use down to the eighteenth century because they were cheaper to build and repair than the by then more accurate mechanical clocks.[30] While the invention of the escapement mechanism is obscure, its presence in clockwork is securely dated to the third quarter of the thirteenth century. Subsequent development of what was originally a massive mechanism exploited momentum of weighted bars or wheels to time the escapement and damp the recoil. Usher’s discussion of these points is highly technical and directed at questions of dating. In the broader history of mechanical invention the importance of clockwork resulted from its complexity, and demands for greater accuracy giving rise to a sequence of problems that were gradually resolved by scientists and craftsmen of the highest order. An important by-product of the construction of the early tower clocks was the transfer of knowledge of how to cut and design gears from the millwrights to blacksmiths. In the seventeenth and eighteenth centuries the demand for greater accuracy created opportunities to develop gear-cutting machines that gave solutions on a small scale and for work in softer metals to problems that were to emerge on a larger scale and in iron and steel.

The next chapter considers the place of Leonardo da Vinci in the development of mechanical invention. Leonardo’s role is both symbolic and real. As a symbol he marks the shift towards scientific analysis of mechanical problems (as an adult he taught himself geometry), and the use of scale models to test the apparatus (a procedure pioneered by Massacio to study pictorial composition). Of the 18,000 sheets he bequeathed to his pupil Francesco Melzi, only 6,000 have survived, and as they are not dated, it is impossible to determine the representativeness of the sample and the sequence of his thought. He invented a centrifugal pump, anti-friction roller bearings, a screw-cutting machine, and a punch to make sequins for ladies’ dresses. He conceived a machine to make needles, and in 1514 was given a room in the Vatican to construct a machine for grinding parabolic mirrors to capture solar energy for boiling dyestuffs. He expected to get rich from his inventions, and was alert to potential opportunities to substitute machines for labor. He was not confident in his Latin, and of Greek he had none. He sensed that mechanisms were subject to common principles, but did not have the training to bring the abstract concepts of force and movement into focus. His workshop method of jotting down rough notes and cases was not suited to sustained trains of abstract thought. But his capacity to imagine three-dimensional mechanical connections, which his artistic training permitted him visually to describe, was unequalled. His papers circulated widely after his death, and provided ideas and inspiration to inventors for nearly a century. Usher viewed Leonardo as embodying the shift from perceptual to conceptual invention in the practical sphere of mechanics.

Save for relatively isolated cases, mechanical innovation was empirical, realistic, and practical. Achievements of great consequence had been realized, but by a process in which the immediate end was ever in the foreground. It is only with Leonardo that the process of invention is lifted decisively into the field of the imagination; it becomes a pursuit of the remote ends that are suggested by the discoveries of physical science and the consciously felt principles of mechanics (1954, p. 237).

The remainder of the book, with the exception of the chapter on printing discussed above, traces out that subsequent history through a chronology of the development of textile machinery, clocks and watches, steam power, machine tools, and the development and exploitation of the turbine. As these developments are well-known there is no need here to review them here. In his account of particular inventions, often in eye-glazing and occasionally impenetrable detail, Usher was primarily concerned with showing the cumulative nature of mechanical achievement, much of it by unknown or relatively little known inventors. The development of textile machinery provided a well-documented case in point. While the increasing complexity of the material makes it difficult to reduce to an intelligible story following the lines set out in his model of invention, his broad conclusion was that the acceleration of invention in textile machinery was conditioned more by the nature of the mechanical difficulties to be overcome than economic factors. By the early eighteenth century the technical capacity and craft skills needed to overcome those difficulties were well in hand, as any visit to a well-appointed museum of technology will demonstrate. From that point on, progress depended on the way specific problems came to be posed, or not posed, and how the stage was set for insight. By the mid-eighteenth century, the increasing indirectness of invention and its rising cost made securing and protecting intellectual property rights increasingly important.

These factors are all evident in the development of the steam engine. Caus’s discovery that steam is evaporated water made it possible to conceive the possibility of extracting power from atmospheric pressure by condensing steam in a closed vessel. Exploitation of that insight raised a series of technical problems associated with positioning and controlling the valves regulating the flow of steam and water. Watt’s invention of the separate condenser was critical revision of Newcomen’s atmospheric engine. Translating that insight into a commercially viable machine raised new problems the solution of which largely depended on the skill and experience of Boulton’s craftsmen. The role of conditioning factors is illustrated by the serendipitous appearance of Wilkinson’s boring machine, which machined a cylinder four feet in diameter to tolerances no thicker than a dime. The development and diffusion of the steam engine in turn led to greater use of metal gears connecting increasingly powerful engines to increasingly heavy machinery, and as the speed and force of the engines increased, the resulting stress and friction induced intensive theoretical and practical study of the optimal shape and position of toothed wheels and pinions. The sequence thus illustrates Usher’s general model of mechanical invention as a sequence of problems raised and solved. We see in these developments a comprehensible narrative of how one thing led to another in the most critical region of the new technology.

The history of tools for shaping metal to high tolerances has a parallel history. The basic elements of the mandrel lathe, slide rest and lead screw were present by the end of the sixteenth century. In the eighteenth century the wooden parts were replaced by metal, increasing their accuracy and making it possible to machine heavier pieces of metal. Senot’s screw-cutting lathe (1795) displayed at the Mus?e du Conservatoire des Arts et M?tiers is an outstanding example of this development, and attests its international scope.[30] Usher argued that after the substitution of iron for wooden headstocks, the principal obstacle to the development of heavy-duty machine tools was the difficulty of obtaining accurate lead screws. Here the problem was well-specified, but achieving a solution required years of painstaking work. Maudslay invented a device to correct errors of one-sixteenth of an inch in a seven-foot screw, tested the result with a micrometer, and made further corrections until he achieved the desired result. Such accuracy was essential to achieve mass-produced metal parts at low cost, though as Usher noted, the applications were initially confined to narrow fields, most notably in the manufacture of wooden pulley blocks, and firearms. Of more initial importance was use of heavy machine tools to shape large pieces of metal to the fine tolerances demanded by working parts of steam engines and locomotives. By the middle of the nineteenth century that capacity was available to be applied to a widening range of mass-consumed products like agricultural equipment, sewing machines, typewriters and bicycles. By that date the process by which specific mechanical problems were posed, the stage set and critical revision of the resulting insight carried out had become largely autonomous. It is difficult to imagine what plausible reconfiguration of relative factor endowments could have significantly affected the ensuing wave of labor-saving innovation.

The final chapter sketches out the history of the turbine, of which the applications range from more efficient exploitation of the power in falling water to the exploitation of the energy in expanding steam and gasses. Although it runs parallel to the development of the reciprocal steam engine, the story of the contemporary development of the turbine is a “particular system of events” that is entirely distinct from it. As with machine tools, investigation of impulse motors can be traced back to the early sixteenth century. The technical problems to be resolved, however, were of the highest order of difficulty, involving the invention of materials capable of withstanding extremely high temperature and rotational friction, finding optimal shapes and positions of the tubes and vans for the different media that propelled them. All this took time. Mathematical studies of turbulence relevant to the performance of turbines date to the eighteenth century; the basic breakthroughs in design by Fourneyron and Burdin date to the 1820s and 1830s. By the 1840s the accuracy of machine tools was high enough to produce a tight fit between the rotor and its casing. Parts rotating at ten to thirty thousand rpm required grades of steel that became available only towards the end of the nineteenth century; in the case of gas turbines, the materials became available only in the 1930s. The history of turbines, then, encapsulates the general trend in mechanical invention from problem-solving directed at an immediate solution with means assembled in the perceptual field to problem-solving based on scientific analysis and assembly of materials from a wide range of sources. The point is that all of this took time, and although the rough outlines of a solution might be fleetingly glimpsed, the timing of its achievement could not be predicted. The first patent for a gas turbine was taken out in 1791; a practical solution to the problem of exploiting the expansive power of heated gas in jet engines was achieved only in the 1930s.

The development of the turbine leads the discussion to the generation and transmission of electric power. The potential of large heads of water and great heads of steam could not be exploited as long as it had to be employed in situ, because no establishment could take more than a small proportion of the total power available. The invention of the dynamo and means of long-distance transmission relieved that constraint. The early development of that technology was achieved between 1830 and 1880, by which time the crucial problems had been resolved. That history, too, represents a particular system of events. The history of internal combustion engines illustrates the same pattern. An early recognition of the possibility of using the explosive power of gas in a piston (Huygens, 1680, Papin, 1690), followed a century later by patented engines (Street, 1794; Lebon (1799), lack of success for an extended period of time due to the inaccuracy of machining, difficulties of controlling the timing of the ignition and opening and closing of the valves, followed by a successful inefficient engine leading to closer analysis of the sources of that inefficiency. The sequence plays itself out as a narrative. Usher observed that from a broad perspective the history of the individual sources of power revealed a tendency to develop all possible forms of application of a general principle. The result was that by 1950 the world possessed a set of power-generating devices that spanned the gamut of weight and power capacity.

The History ends with that observation. Over the course of more than 300 pages of substantive discussion, it gives an overview of the development of what was the central strand of technological development through the early twentieth century. It explains within the limitations of the documentation and the level of detail appropriate to a general overview how novelty emerged in the sphere of mechanization and the generation of power. Usher offered no conclusion to this work. Indeed, in the introduction to the second edition he noted that he deliberately avoided forcing the narrative into a preconceived mold. The History was not a test of the theory of emergent novelty, only an illustration. In his later work Usher returned to the question of how to combine the insights of economics with an empirical treatment of time. He argued that “any consistently empirical interpretation of history must find some adequate explanation of the processes of change.”[32] The great enemy to a rational understanding of the past in his time, as in ours, was radical idealism, which seeks to explain events by their presumed final ends or purpose.

Usher’s work raises a number of problems that have been imperfectly addressed. His insights on the nature of mechanical invention are generally accepted and have been extended by historians of technology and economic historians, but the model has not been generally applied to other spheres.[33] A significant obstacle to its implementation is the extremely high degree of technical detail required to give an adequate account of any particular technological development. While detail at that level is common in the fields of political and institutional history, the desire to read such accounts is an acquired taste, though perhaps no more so than in the arcane corners of art history. As a consequence, the deployment of Usher’s method by economic historians has tended to be illustrative rather than narrative and probative. The rhetorical difficulties turn on the audience to be addressed, and the level of generality required by the narrative. On the broader question of the role of time in economic processes, the picture is equally discouraging. The debate over the nature and significance of path-dependence touched analytical issues raised by Usher, but it was deflected by questions relating to dynamic optimality, which as Usher had anticipated, originate in a transcendentalist obsession with final ends. As a result, the question of what happened and how it happened got pushed aside by the question why it happened. “Why” questions are intrinsically non-empirical.

Usher’s focus on explaining the emergence of novelty as the special province of economic historians is nevertheless worth preserving. Bill Parker organized his lectures on economic history around the framework of challenge and response, which is just a broader way of identifying the history as a history of problems posed and resolved (or not). The problems are not just technological. The analysis of organizational and political responses to economic change can be carried out on lines similar to those that Usher considered workable for the study of scientific and mechanical invention. Some responses are comparatively easy to model using standard tools derived from the calculus of optimization; others require more contextual detail. A workable history, however, requires limiting the field to a “particular system of events” that permits a narrative account. An outstanding example of this type of economic history is Wright’s account of American slavery.[34] Since the early 1960s the main thrust of economic history was directed away from Usher’s concept of explanation by narration. The power of Kuznets’ categories to organize numerical data provided nearly two generations of economic historians with productive work filling in the gaps and running down the tangled chains of quantifiable explanation. But Kuznets took the technological revolution as a given; the modern economic epoch was its consequence. Yet in the end, to quote one of the less illustrious figures in American history, “stuff happens.” Part of the task of economic history is to find out exactly what that stuff was, and how it happened. Usher’s work is a model of that type of economic history, and also shows how difficult it is to successfully pull off.


I was distractedly browsing through my alumni bulletin this evening — checking the latest mortalities and other alumni affairs — when I came across the following passage in an article on Leland C. Clark (Antioch College 1941), who received the Frit J. and Dolores H. Russ Prize (the nation’s stop award for scientific engineering) in 2005 shortly before his death.

Here’s the story of his oxygen electrode invention.

Late one night, Clark — then in his thirties — was opening a pack of cigarettes while relaxing with colleagues after assisting in a by-pass surgery using his prototype heart-lung machine. Although the surgery had been successful, Clark knew that such procedures require precise monitoring of oxygen levels in the blood. But the platinum electrode he had originally designed wasn’t working well; red blood cells were blocking the oxygen molecules near the electrode.

What happened next was one of many shining moments in Clark’s career. “He was fiddling with his cigarette pack and suddenly got the idea that oxygen might permeate cellophane.” Soon thereafter, Clark tried moving the two electrodes close together, protected inside a glass tube by a cellophane membrane. The innovation allowed oxygen to enter and be measured with no interference from the red blood cells. To test the new oxygen sensor he needed to find a way to pull the oxygen out of a control solution to calibrate the sensor settings. He added glucose and the enzyme glucose oxydase, as a catalyst, and the oxygen was quickly removed.

Before long, however, he realized that by equipping his oxygen sensor with a thin film of the enzyme, he could read the decrease in the oxygen recorded in the presence of glucose. Suddenly Clark had a simple device for measuring glucose, also inventing the first biosensor for that purpose. Today, electrochemical biosensors have been designed to measure lactate, cholesterol, lactose, sucrose, ethanol and many other compounds.[35]

One sees here all of Usher’s stages in exceptional relief: the posing of the problem, the setting of the stage, the insight and critical revision, followed by extension into new problems and new solutions.


1. Perhaps no better example of that vision can be found than in following passage composed by the aged Friedrich Meinecke in its wreckage. “Behind the growing pressure of increased masses of population … stands the struggle for the way of life of the individual nations. By way of life we mean here the totality of the mental and material habits of life, the institutions, customs and way of thinking. All of these seem to be bound together by an inner tie, by some guiding principle from within, to form a large, not always clearly definable but intuitively understandable, unity.” The German Catastrophe: Reflections and Recollections. Boston (1950), p. 87.

2. Erik Grimmer-Solem, The Rise of Historical Economics and Social Reform in Germany, 1864-1894, Oxford (2001).

3. T. H. Marshall, English Historical Review 42 (1927), 624.

4. “The Application of the Quantitative Method to Economic History,” Journal of Political Economy 40 (1932), 186-209.

5. Cited by Veyne, Writing History: Essay on Epistemology, Middletown, CT (1984), 119.

6. Veyne, Writing History, 63

7. Veyne, Writing History, 26-27. The literary reference is to Balzac’s Grandeur et d?cadence de C?sar Birotteau.

8. Mokyr appears to adopt this perspective in his evolutionary interpretation of technological change. “Like mutations, new ideas, it is argued, occur blindly. Some cultural, scientific, or technological ideas catch on because in some way they suit the needs of society, in much the same way as some mutations are retained by natural selection for perpetuation. In its simplest form, the selection process works because the best adapted phenotypes are also the ones that multiply the fastest.” The Lever of Riches, New York (1990), 276. The proposition is defensible with respect to economic factors conditioning the diffusion of inventions. It does not explain, as Usher surely would have observed, how inventions happen. Mokyr’s concept of a unit technique or idea subject to selection bears an obvious resemblance to Leibniz’s monad, and the sufficient reason that generates in the fullness of time the “best of all possible worlds.”

9. Explaining technological change by Malthusian population pressure is an example of this kind of approach. For a recent example, see Oded Galor and David Weil, “Population, Technology and Growth,” American Economic Review 90 (2000), 806-28.

10. Ludwig Wittgenstein, Philosophical Investigations, Oxford (1972), 196.

11. See Norbert Russell Hanson, Perception and Discovery, Cambridge (1958), and more generally Wittgenstein, Philosophical Investigations.

12. Hanson, Patterns of Discovery, 7. A celebrated instance of dual perception was the inability of researchers to identify the cause of the potato blight, in which the fungus Phytophthorus infenstans was alternatively believed to be a cause and consequence of the disease.

13. The Autobiography of Charles Darwinz edited by Francis Darwin, New York: Dover Publications (1958)z 26.

14. Locke reports a conjecture made to him by a French correspondent who suggested a man cured of blindness might not be able to distinguish between a box and a sphere. That conjecture has been experimentally confirmed.

15. “I was thinking of the engine at the time, … when the idea came into my mind that as steam was an elastic body it would rush into a vacuum and might there be condensed without cooling the cylinder” (cited in Usher (1954; 71)).

16. Salvatore di Pasquale, “Leonardo, Brunelleschi, and the Machinery of the Construction Site,” in Montreal Museum of Fine Arts, Leonardo da Vinci: Engineer and Architect, Montreal (1987), 163-81.

17. In another set of experiments with chickens food was placed outside a rectangular enclosure having an opening on one side. The hens “solved” the problem of obtaining the food only when the food and the doorway were in their line of sight.

18. The one major exception may be the “invention” of agriculture in the Near East, which most likely occurred through an improbable sequence of climatic changes that induced incipient domestication in a handful of small grains and pulses harvested in naturally occurring stands. The term invention is inappropriate in this context. See David Rindos, The Origins of Agriculture: An Evolutionary Perspective, Orlando FL: Academic Press (1984), and Donald O. Henry, From Foraging to Agriculture: The Levant at the End of the Ice Age, Philadelphia: University of Pennsylvania Press (1985).

19. The chief obstacles were intellectual, one being disbelief that a device as small as a propeller could drive a large ship, and the other concerning the optimal shape of the device in the context of extremely complex issues with respect to fluid mechanics. The history is reviewed by Maurice Daumas, ed., A History of Technology and Invention, Vol. 2, New York (1972).

20. Prior to the seventeenth century it also interpreted the non-physical world, as the medieval enquiry into the physics of the Eucharist amply demonstrates. On this and other topics relevant to the present discussion, see Edith D. Sylla, The Oxford Calculators and the Mathematics of Motion, 1320-1350, New York (1991).

21. Maurice Daumas, ed., A History of Technology and Invention, Volume III, New York (1979), 25-27, 81-89.

22. Fulton made countless experiments calculating the resistance to paddlewheels of varying design and to the form of the hull in relation to the weight and velocity of the engine. His work was based on Colonel Mark Beaufoy’s experiments testing Euler’s theorems on the resistance of fluids. This was critical revision. H. W. Dickson, Robert Fulton: Engineer and Artist, London (1913).

23. See my manuscript, “Prehistoric Origins of European Economic Integration.”

24. J.B. Ward-Perkins, “Quarries and Stone-working in the early Middle Ages: The Heritage of the Ancient World,” Artigiano e tecnica nella societ? dell’alto medioevo, Spoleto (1971), 525-44; Valery A. Maxfeld, Stone Quarrying in the Eastern Desert with Particular Reference to Mons Claudianus and Mons Porphyrites, in David Mattingly and John Salmon, eds., Economies Beyond Agriculture in the Classical World, London (1991), 143-70.

25. Brian Cotterell and Johan Kamminga, Mechanics of Pre-industrial Technology, Cambridge (1991), 127-30.

26. Within restricted ranges of perception many mechanical concepts are indistinguishable. Where friction is present, the Aristotelian theory that constant force is needed to keep an object in uniform motion is observationally equivalent to Newton’s principle of inertia.

27. The archaeological evidence, which was not available to Usher, is abundant. For a compilation of European finds, see Orjan Wikander, “Archaeological Evidence for Early Watermills: An Interim Report,” History of Technology (1985), 151-79, and Richard Holt, The Mills of Medieval England, Oxford (1988). North African evidence is surveyed by David Mattingly and R. Bruce Hitchner, “Roman Africa: An Archaeological Review,” Journal of Roman Studies (1985), 165-213.

28. A similar transformation around the same time can be seen in the substitution in northern France of naked wheat (triticum aestivum) for spelt (triticum spelta), which being a bearded cereal costly to transport and difficult to mill was less suited to commerce. The displacement and the appearance of the vertical mill went hand in hand. See Jean-Pierre Devroey, “Entre Loire et Rhin: Les fluctuations du terroir de l’agriculture au moyen ?ge,” in J.-P. Devroey and J.-J. van Mol, L’?peautre (triticum spelta): Histoire et ethnologie, Bruxelles (1989), 89-105.

29. Daumas, History of Technology and Invention, Volume III, 20-22.

30. Galileo used water clocks in his experiments on falling objects.

31. Maudslay’s all-metal bar lathe is dated to the same year.

32. Usher, “The Significance of Modern Empiricism for History and Economics,” Journal of Economic History (1949), 149.

33. I made a preliminary stab in “The Shifting Locus of Agricultural Innovation in Nineteenth-century Europe: The Case of the Agricultural Experiment Stations,” in Gary Saxonhouse and Gavin Wright, eds., Technique, Spirit and Form in the Making of the Modern Economies: Essays in Honor of William N. Parker, Research in Economic History, Supplement 3, Greenwich, CT (1984), 91 214.

34. Gavin Wright, Slavery and American Economic Development, Baton Rouge (2006).

35. “Leland C. Clark Leaves a Medical Legacy,” Antiochian (Autumn 2006), 31.

George Grantham teaches economics and economic history at McGill University. He is the author of several works on the productivity of French agriculture in the nineteenth century, the macroeconomics of pre-modern agricultural societies, and the economic history of prehistoric Europe. He is presently applying Usher’s concept of a “particular system of events” to reconstruct the pre-modern history of European agricultural productivity.

Subject(s):History of Technology, including Technological Change
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

John Kenneth Galbraith: His Life, His Politics, His Economics

Author(s):Parker, Richard
Reviewer(s):Boettke, Peter J.

Published by EH.NET (November 2006)

Richard Parker, John Kenneth Galbraith: His Life, His Politics, His Economics. New York: Farrar, Straus and Giroux, 2005. x + 820 pp. $35 (cloth), ISBN: 0-374-28168-8.

Reviewed for EH.NET by Peter J. Boettke, Department of Economics, George Mason University.

During my undergraduate days I was taught to despise John Kenneth Galbraith as the arch-enemy of those who believed in the free market economy and limited government. In fact, Galbraith embodied everything that was wrong with the “eastern establishment” of academics and intellectuals. But while my main economics professor in undergraduate school left no doubt about his judgment on Galbraith’s contribution to the field, he did encourage us to read Galbraith. My library to this day has almost a complete set of Galbraith’s paperbacks that were purchased as an undergraduate. Besides my basic education in the classics in free market thought such as Smith, Bastiat, and Mises, I read Galbraith. I must admit that I read works like The Affluent Society and The New Industrial State with an intent to indict rather than to learn. But I did study them.

When I headed off to graduate school I was asked immediately to prepare a paper responding to recent discussions in the professional journals. I headed off to the library and looked through the AER, JPE, and QJE but nothing caught my imagination. Just as I was about to leave the library, I looked at the Journal of Economic Issues and there was a long essay in it on John Kenneth Galbraith and in the article the claim was made that Galbraith had clearly defeated the economic ideas of F. A. Hayek. I was captivated by the argument in that paper, and though certainly not equipped to be a scholar of economics yet, I was in lawyerly mode and I decided to take on Hayek as my defendant and to make his case against the prosecution of Galbraith. After many revisions, and an entire shift in focus, this paper eventually became my paper assessing the commonalities and divergences between the Austrian School and the Old Institutionalists that was published in Research in the History of Economic Thought and Methodology.

I respect Galbraith’s ability to write, and I respect his desire to see economic policy as a force for good in society, but I do think that his economics and his politics are about as wrong-headed as an intellectual can produce, except to be completely bonkers. I am telling the reader this upfront because Richard Parker’s biography of Galbraith is both outstanding and hagiographic. There is no doubt that Galbraith lived a fascinating life, far more exciting than any other economist of his generation except perhaps Milton Friedman, and even there Galbraith’s brush with politics in the Kennedy Administration gives him a dimension to his life story that Friedman does not have. Even if we include Friedman’s intellectual sway in both the Nixon and then Reagan administrations, he did not hold a public office the way Galbraith did.

Galbraith’s ability to write as an economist, again only rivaled by Friedman, put him at the cutting edge of policy discourse from 1950 through the 1970s. So he lived a fascinating public life that touched on the major debates in public policy during the post-World War II period and through the social change of the 1960s and the crisis of confidence in the political system in the 1970s. But by the 1980s, Galbraith’s influence was waning and that of Friedman’s was on the ascendancy. When the real-existing socialist system collapsed in 1989 and then in 1991, Galbraith’s influence as a policy economist was relegated to the past.

Parker makes the case, actually quite persuasively, that many of Galbraith’s analytical ideas in economics are making a comeback in the name of behavioral economics. Men are not lightning calculators of pleasure and pain (as Veblen pointed out), but instead are caught between alluring hopes and haunting fears, susceptible to pressures from peers and the institutions within which they act, and confused over the options they face and the best course of action which presents itself. The rarified neoclassical model of utility maximization and the mode of perfect competition cannot explain how man really acts or how markets function in modern society. Galbraith’s work, Parker suggests, anticipated these modern criticisms of the model of man, and the model of the market.

That may, in fact, be so. Galbraith combined a smoothed-over Marxism with a watered-down Veblenism, to produce a wonderfully readable critique of a certain rendering of the market society and offer a mild form of Keynesian socialism as a solution to the instability and inhumanity of modern finance capitalism. But there are alternative critiques of that neoclassical rendering of market society which neither Galbraith nor Parker consider in any detail. The dreaded F. A. Hayek, for example, did not rely on a model of man engaged in relentless maximizing nor of the market as ruthlessly efficient. But Hayek’s work is nowhere engaged in a subtle way by either Galbraith nor Parker in this biography. It is Hayek who was haunted by Galbraith, certainly not the other way around (despite the gratuitous slaps at Hayek that one can read in Galbraith).

Parker writes his biography from the point of view of Galbraith’s obvious intellectual victory and thus the political tides turning against his form of Progressivism in the 1980s is a reflection of the world gone mad rather than Galbraith’s arguments (and those of Marx, Veblen and Keynes on which his arguments were based) being proven wrong analytically and empirically. With such confidence of ultimate vindication, Parker writes a biography that sees Galbraith’s contributions as unassailable and the ebbs and flows of his intellectual influence as being an issue of politics and never one of the force of the argument.

Clearly Galbraith possessed a great skill to write essays in persuasion. These essays were especially persuasive to those untrained in economic reasoning, yet desiring to offer opinion on economic policy. The claim that his ideas will have a lasting influence in economics must be judged to be dubious. First, his originality as an economic thinker is not obvious. His ideas are derivative of Marx, Veblen and Keynes and in a fundamental sense he did not advance the argument beyond where he inherited it from them. Second, his writings were directed at the general public more than they were his peers in the academy so that his economic history as well as his intellectual history work is quite suspect as exercises in scholarship and cannot withstand scrutiny.

Galbraith’s lasting legacy will be in the idea of the economist as public intellectual. Perhaps no economist has ever been able to write better than Galbraith. Moreover, he was an extremely charming man. Several years ago, when the HES meeting were held at Babson College, Lawrence Moss arranged for me to sit next to Galbraith at dinner. I was a young upstart Austrian economist and I think Larry got a kick out of the idea of me sitting next to Galbraith for the evening. I have never been more taken with an individual over dinner conversation that the great John Kenneth Galbraith. I was regaled with stories of FDR, the Kennedy family (especially Jacqueline) and his debates with William Buckley and Milton Friedman. At the end of the evening it was me who was running to get coffee and Boston cream pie for Galbraith. He was a phenomenal dinner partner. However, it is important to remember that when he rose to address the History of Economic Society that evening, he didn’t address a concern with the intellectual history of economics, but instead the importance of economic history as a discipline. I understand that Galbraith was a very old man at this time, but in a fundamental sense he just never got the idea of economic scholarship throughout his career. He got the idea of economic persuasion, and economic policy — and with that political struggles in a democratic society. But he did not understand economic argument, institutional analysis, and empirical examination at a standard that would be acceptable to his peers. He was an economic journalist who happened to teach at Harvard. Galbaith was an extremely talented journalist, and obviously a very brilliant public intellectual. But he was a literary figure, not a scientific one.

Parker has written a biography of Galbraith without acknowledging this fact. So while Parker’s biography is fantastic and comprehensive, it is ultimately flawed from the point of view of critically assessing Galbraith’s life as an economist. Galbraith as a subject is outstanding because he was so involved with the history of American liberalism from FDR’s “New Deal” to Johnson’s “Great Society” — and we cannot forget his fundamental place within the Camelot years of the Kennedy Administration. Galbraith’s personal story is also fascinating — how a man from rural Canada could become perhaps the symbol of the urbane liberal intellectual in America in the twentieth century is a fascinating tale to tell. But the ideas of American liberalism ran afoul of a refractory reality. The ideas of Marx, Veblen and Keynes were wrong when they were first articulated by those thinkers, and they were wrong in the derivative formation in the hands of Galbraith. The intellectual paradigm of Marx-Veblen-Keynes cannot understand why markets work the way they do, and they cannot understand why the policies of social control they inspire don’t work as planned. The Marx-Veblen-Keynes agenda not only provides a bad framework for analysis and a poor tool for a policy of social control, but when utilized as an interpretive framework it produces a distorted view of history. Galbraith embodied all three intellectual failings.

Despite the charm, despite the skill at writing, and despite his stature as a professor at Harvard, Galbraith must be judged to have been a brilliant intellectual failure. Parker is unable to see that. He has written as good a biography of Galbraith as any follower of Galbraith could have hoped for. It is well-written, deeply researched, and full of information which any reader will benefit from. What it isn’t is a critical assessment of Galbraith the economist and his place in the discipline of political economy.

Peter J. Boettke is a Professor of Economics and Director of Graduate Studies in Economics at George Mason University. Boettke recently was the 2006 Hayek Fellow at the London School of Economics. His list of books and journal publications can be found at:

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

Economists in Parliament in the Liberal Age (1848-1920)

Author(s):Augello, Massimo M.
Guidi, Marco E.L.
Reviewer(s):Barnett, Vincent

Published by EH.NET (October 2006)


Massimo M. Augello and Marco E.L. Guidi, editors, Economists in Parliament in the Liberal Age (1848-1920). Aldershot, UK: Ashgate, 2005. xviii + 315 pp. $100/?55 (cloth), ISBN: 0-7546-3965-7.

Reviewed for EH.NET by Vincent Barnett, Centre for Russian and East European Studies, Birmingham University.

This book is a major part of the results of a long-term project on the academic institutionalization of economics as a discipline. According to the editors, the period chosen for investigation — 1848-1920 — represents a period of crucial change in the subject under consideration, witnessing for example the spread of classical economics and the founding of associations devoted to propagating free trade ideas. In particular, they argue that classical economics implied a precise program of institutional reforms aimed at transforming the attitudes of government vis-?-vis economic regulation. It also involved the spread of economic ideas and the attempted enlightenment of public opinion on relevant topics. With these particular points highlighted, the emphasis on the role and effect of economists in parliament is explained as following naturally from the themes that are selected for examination. In terms of goals, the editors explain that their aim was to stimulate more detailed research on the relationship between economics and politics and on the consequences of the political commitments displayed by economists.

One aspect of the book worthy of praise is the wide range of national case-studies that forms the bulk of the book. Most are European (Spain, Britain, Italy, Germany, Portugal, Belgium, Greece and France) but two are not (Japan and the U.S.). Each chapter is brimming with detailed information about the particular economists who played a role in their respective parliaments, which will be of significant use to those investigating related issues in more detail. For example, Roger Backhouse charts twenty-five economists who entered the British parliament between 1848 and 1920, including thirteen as Whigs and Liberals, three as Radicals and six as Conservatives and Liberal-Unionists. Backhouse notes that, with the exception of J.S. Mill, prominent theorists were conspicuous by their absence in this area of activity. Explaining the observed decline in the number of economists in the British parliament in the second half of the nineteenth century, Backhouse cites the poor quality of raw materials on the supply side, with few quality candidates passing through the Cambridge route. Economic theory itself underwent significant change, with the ‘marginal revolution’ coinciding with increased emphasis on the investigation of individual behavior. Backhouse concludes that the role of economists in Parliament was greatest when political economy itself chimed with political and religious arguments for desired economic policies such as free trade.

The introduction by the editors brings out various national contrasts to good effect. Reading through the chapters, the contrast between Britain and Germany is particularly striking, albeit not that unexpected. As outlined by Harald Hagemann and Matthais Rosch, prominent historical political economists in Germany like Bruno Hildebrand were openly hostile to the British classical school, and Hildebrand played a significant role in the foundation of governmental statistical offices. However, in this chapter the reader also learns that at the University of Munich, F.B.W. von Hermann laid the foundations for a German brand of classical economics. Hermann represented the electoral district of Munich in the Frankfurt National Assembly. On a different plane of contrast, the chapter on the American anomaly by Bradley Bateman asks why there were no economists in the U.S. Congress in the nineteenth century (with the single exception of F.A. Walker). Possible answers provided include lack of interest and the dominance of a liberal ‘stand back’ conception of the state. The chapter by the two editors (from the University of Pisa) on the Italian case stresses the importance of the political commitments of economists to their perceived roles in parliament, and explores the idea of political economy as a ‘science of the statesman or legislator’ that arose after Italian unification. In general the importance of national context comes through in all the case-studies that are presented.

In evaluation it is possible to say that this book is an excellent contribution to understanding the role played by economists in the parliaments of more developed countries. The scholarship is impressive and the comparative approach yields many insights. However, the book is weighted more towards the empirical documenting of the topic, rather than an in-depth exploration of the influence of currents of economic theory on the policies adopted within governmental institutions. Hence historians of economics with a penchant for the ‘internal’ history of the evolution of doctrines might be a little disappointed. Similarly the relationship between the political beliefs of economists and their economics is not fully investigated on the intellectual plane, more in terms of tracing policy links and party affiliations. But in terms of exploring the context of the role of economists in the wider world, this book can be recommended as a valuable contribution to the field.

Vincent Barnett is the author of A History of Russian Economic Thought (London: Routledge, 2005).


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

The Merchants of Zigong: Industrial Entrepreneurship in Early Modern China

Author(s):Zelin, Madeleine
Reviewer(s):Shiue, Carol H.

Published by EH.NET (September 2006)

Madeleine Zelin, The Merchants of Zigong: Industrial Entrepreneurship in Early Modern China. New York: Columbia University Press, 2006. xxiv + 404 pp. $45 (cloth), ISBN: 0-231-13596-3.

Reviewed for EH.NET by Carol H. Shiue, Department of Economics, University of Colorado.

The considerable fortune accumulated by the famed salt merchants of China has often been attributed to their privileged access to government licenses that limited salt sales through quotas. In this volume, Madeleine Zelin, Professor of History and East Asian Languages and Cultures at Columbia University, uses source materials based on municipal archival documents of case records of legal suits; business accounts and contracts; local gazetteers; memoirs and transcribed oral histories; and other primary and secondary materials to evaluate the economic history of the salt industry. Among the many substantial findings that emerge in her study is that the industry was built on much more than the government’s regulations on salt.

The “Merchants” of the title refer to the entrepreneurs of Zigong, in the western hinterland province of Sichuan, who dealt in the business of producing and trading salt. Salt production was a multi-step process that began with raising the salty brine. This required pumping and well drilling, a costly venture that could potentially take five or ten years. Afterwards, furnaces were needed to evaporate the salt. Because the tasks involved in processing were invariably larger than anyone could undertake alone, production ultimately relied not only on advances in new technologies, but just as importantly, on organizational structures that allowed groups (such as corporate groups and lineages) to finance the drilling, to create profit sharing arrangements, and to allow a rental market in productive assets. The first chapters of the book describe the technology used in salt production. Using the example of two saltyards, Chapter 2 discusses the structure of investment contracts in well drilling. Chapter 3 shows how partnerships (e.g. contracts for renting a well or for renting a furnace and leasing brine and gas) were used to organize fragmented resources and to merge smaller amounts of capital. Zelin provides important new evidence of an active industrial sector where property rights and contracts were recognized and enforced by the existing legal framework, but commercial laws governing limiting liability and the effects of bankruptcy did not exist until the turn of the twentieth century.

For acquiring the necessary capital, banking and credit services were not critical to the early development of the salt industry. Instead, assets were often brought together through kin and the establishment of lineage trusts, with little outside sources of financing. Chapter 4 focuses on the role of the lineage in structuring the management of the firm, taking as examples several families that had accrued large fortunes as salt developers.

In addition to capital, processing the salt required a sizable labor force, and the possibility of shipping the goods to potential buyers. Large vertically integrated firms could ensure not only their own supplies of brine and gas, but establish contacts in merchant networks for the sale of their goods. Chapter 5 considers working conditions in the salt industry, which was the largest employer outside of agriculture in Sichuan. Chapter 6 considers the question of the impact of government regulation on producers.

The remaining chapters, Chapters 7-10, turn to the changes in the twentieth century, when the prosperous salt empires of the previous century faced decline, mainly as a result of political instability and the lower profitability of processing brine. In addition, increasingly over the late-nineteenth century and twentieth century, the state sought to tax salt in transit. Chapter 7 surveys the impact of technological changes. Chapter 8 details the family histories of the salt magnates in the later period. Chapter 9 brings the implications of politics to bear on the business of merchants, and Chapter 10 addresses the question of the long-term implications of the industry on Zigong’s economic development.

The text assumes some familiarity with the institutional background of early modern China, and most chapters are packed with carefully teased out analysis from original sources, but Zelin also provides brilliant summaries in the introductory and concluding sections of each chapter that tend to be targeted to a wide audience in business history. The book’s glossary compiles an excellent list of more than 750 names and terms used in the text in both pinyin and in Chinese. If this sounds specialized, it is — but the writing is so clear and engaging that even the general reader will want to know more about the uses of bamboo piping in pumping or the intra-familial spats of the merchant clans.

A recurrent theme of the book is that the business arrangements seen in the Chinese salt industry belie not only previous perceptions about the predatory influence of the “feudal” state on entrepreneurial incentives in China, but also the purported uniqueness of Western business practice. On both fronts, this book breaks important new ground and will have a major influence on the future research agenda. The Merchants of Zigong, however, is fundamentally not a comparative study, and as such its comparisons are based mostly on secondary sources from the business history of the United States. Nevertheless, it is at these points that some of the more provocative observations emerge. For example, Zelin observes, “On a much more limited playing field, the chengshouren then played much of the same role of informed ‘honest broker’ performed by investment bankers like J.P. Morgan” (p. 48). In another analogy, Zelin finds that the advantages of vertical integration in the Chinese salt industry “match in importance the organizational breakthrough made by the great American oil and steel companies?” (p. 96). The implication of the analogies is that despite differences in institutional environments, similarities in business practice between China and the United States arose out of underlying similarities in “opportunities and constraints” (p. 292). For those who see more differences than similarities between oil and salt, the correspondences may seem to be too broad brush. How far should the similarities be taken, and what is the significance of the differences? It may take another book to answer these questions, but the undertaking would be well worth it.

The Merchants of Zigong is a microeconomic case study that expands our knowledge of business practices in the nineteenth and twentieth centuries by leaps and bounds while shedding light on the institutions in which the Chinese firms operated. It is a work that shows just how good historical scholarship on China can be and the volume is one that researchers will refer to time and time again.

Carol H. Shiue is Associate Professor of Economics at the University of Colorado at Boulder, a Research Affiliate at CEPR and a Research Economist at the NBER. She is the author of “Transport Costs and the Geography of Arbitrage in Eighteenth-Century China,” American Economic Review, December 2002, and co-author (with Wolfgang Keller) of “Markets in China and Europe on the Eve of the Industrial Revolution,” NBER and CEPR Working Papers. Additional details on her work can be found at

Subject(s):Markets and Institutions
Geographic Area(s):Asia
Time Period(s):20th Century: Pre WWII

Planters’ Progress: Modernizing Confederate Georgia

Author(s):Morgan, Chad
Reviewer(s):Adams, Sean Patrick

Published by EH.NET (July 2006)

Chad Morgan, Planters’ Progress: Modernizing Confederate Georgia. Gainesville: University Press of Florida, 2005. xii + 163 pp. $55 (cloth), ISBN: 0-8130-2872-8.

Reviewed for EH.NET by Sean Patrick Adams, Department of History, University of Florida.

Do we need another case study of the American Civil War? While the public demand for the beards and bullets side of America’s Iliad appears insatiable, many historians have wondered if every single aspect of this struggle has already been thoroughly chronicled. For those interested in questions of political economy, however, the American Civil War offers some tantalizing and yet unexplored possibilities, as wartime conditions can trigger dramatic changes in societies. The peculiar demands of a prolonged military struggle on a nation can erode longstanding institutional practices once considered as solid as bedrock. War can also thrust new actors to the forefront of a society; not just in military venues, but in the civilian realm as well. Fissures created by the unique demands of wartime, moreover, allow new entrepreneurs to blossom where they previously had no succor. Thus, there is still a great deal to learn about the intersection of political, military, and economic policies during this well-traveled period.

Chad Morgan’s slim volume entitled Planters’ Progress: Modernizing Confederate Georgia offers a new perspective on the impact of the Civil War upon southern industrialization. Morgan, a Triangle Research Libraries Network Fellow at North Carolina State University, takes issue with the longstanding argument that military exigencies forced the South to industrialize. He argues that Confederate industrialization was not a “clean break with the past” but “instead an elaboration and acceleration of existing tendencies” p. (2). As such, Morgan finds more continuity than change among planters’ conceptions of industrial growth at the same time that the Civil War years placed an unprecedented strain on Georgia’s economy. While his argument is not without its faults, Planters’ Progress is a valuable contribution to the burgeoning field in nineteenth-century political economy.

Morgan begins with an overview of Georgia’s antebellum industrial sector and attempts to challenge the prevailing wisdom about the antebellum southern state. After chronicling the rise of cotton mills in antebellum manufacturing centers like Athens, Augusta, and Columbus and the concurrent expansion of railroads in Georgia, Morgan reminds us that the South compared quite favorably with other nations in terms of industrial growth. He also makes a case for Georgia’s economic prowess by the eve of the Civil War. Here Morgan follows in the footsteps of Milton Sydney Heath, whose Constructive Liberalism still resonates a half-century after its publication.[1] Heath argued that Georgia’s public officials vacillated between laissez-faire and “constructive liberal” policies in the antebellum decades and drew upon an avalanche of statistical evidence to demonstrate that point. Morgan, on the other hand, asserts that Georgia witnessed a steady increase of state power and that planters did not oppose industrial development, but merely wanted to control it. “If industrialization ever took off in earnest, as happened during the Civil War,” Morgan claims, “slaveholders could bring state power to bear on industrialists to block their ascendance while preserving jurisdiction over manufacturing for the government” (p. 17)

Restoring agency to the South’s public policymakers makes sense, but Morgan’s main body of evidence for this trend comes from a close read of the writings of proslavery ideologues George Fitzhugh and Henry Hughes rather than a systematic exploration of Georgia’s political economy. By focusing on intellectual trends at the expense of political battles, Morgan avoids the sloppy world of legislative policymaking altogether. Yet this leads him to assign a great deal of prescience to Georgia’s planters, to whom, “Secession finally gave … an opportunity to pursue a modernity they had long sought” (p. 31). Was the goal of economic “modernity” so clear cut in nineteenth-century America? The work of historians such as Colleen Dunlavy, Robin Einhorn, Richard John, John Larson, William Novak, and Heather Cox Richardson — all of whom have restored contingency and conflict to nineteenth-century political economy — certainly questions that premise.[2] In fact, Morgan’s claim that the Civil War “was a fight over how the South would modernize — with or without slavery” (p. 109) evokes the same assumption that Planters’ Progress attacks throughout the text; namely that the South was a “pre-modern,” “pre-industrial,” and “pre-statist” society that needed to catch up to the North’s more advanced status in these categories. Whiggish conceptions of economic development thus undermine the argument at points, particularly when Morgan attempts to place Georgia’s case within the broader context of nineteenth-century political and economic history.

Planters’ Progress is much more effective in its discussion of Georgia’s wartime economy. Josiah Gorgas, the head of the Confederate Ordnance Bureau, made Georgia the hub of Confederate military production and the state’s industrial sector thrived as a result. The Civil War also saw the rise of Atlanta as a significant rail and manufacturing center, a process that Morgan attributes to the state-sponsored production of war materials. In areas where antebellum industries were established, wartime demand pushed production levels even higher. Morgan’s depiction of the “seemingly overnight creation of a government manufacturing establishment” (p. 44) and the heavy-handed Confederate oversight in running it is a compelling story of how rapid industrialization can occur out of necessity.

The story of labor relations in Georgia during the Civil War is an important one for Planters’ Progress. Here the strong presence of the Confederacy in Georgia’s manufacturing sector muted the labor unrest that often accompanies rapid industrialization. More specifically, Morgan argues, the presence of government officials allowed industrialists to employ a variety of black and white, male and female, and free and enslaved labor in ways that a civilian economy would find unpalatable. Of course, at the same time that a “combination of repression, segregation, and outright luck” in Confederate Georgia “defused a potentially explosive situation,” this style of industrial development resulted in “reprehensible conditions for workers” (p. 86). As the fortunes of the war shifted in the Union’s favor by 1864, this overwhelming state presence shifted from a managerial role into a more humanitarian one, as Georgians from all castes and classes drew upon public resources to survive the deprivations triggered by General Sherman’s invasion of the state.

In the end, Planters’ Progress provides an instructive case study of a state’s economic transformation during wartime conditions. Although Morgan’s wider arguments about Georgia’s “modernity” are less convincing, his concise account of rapid economic development during the Civil War is a model of efficient and effective prose backed by evidence. In a field often overburdened with duplication, Planters’ Progress is recommended reading for economic and political historians grappling with the complex nature of southern industrialization during the turbulent decades of the mid-nineteenth century.


1. Milton Sydney Heath, Constructive Liberalism: The Role of the State in Economic Development in Georgia to 1860 (Cambridge: Harvard University Press, 1954).

2. While not a formal school or organization, these historians are commonly cited as good examples of the “new institutionalist” approach that has revitalized the study of political economy in the nineteenth-century United States. See Colleen Dunlavy, Politics and Industrialization: Early Railroads in the United States and Prussia (Princeton: Princeton University Press, 1994); Robin Einhorn, Property Rules: Political Economy in Chicago, 1833-1872 (Chicago: University of Chicago Press, 1991); Richard John, Spreading the News: The American Postal System from Franklin to Morse (Cambridge: Harvard University Press, 1995); John Larson, Internal Improvement: National Public Works and the Promise of Popular Government in the Early United States (Chapel Hill: University of North Carolina Press, 2001); William Novak, The People’s Welfare: Law and Regulation in Nineteenth-Century America (Chapel Hill: University of North Carolina Press, 1996); Heather Cox Richardson, The Greatest Nation on Earth: Republican Economic Policies during the Civil War (Cambridge: Harvard University Press, 1997).

Sean Patrick Adams is the author of Old Dominion, Industrial Commonwealth: Coal, Politics, and Economy in Antebellum America (Baltimore: Johns Hopkins University Press, 2004).

Subject(s):Servitude and Slavery
Geographic Area(s):North America
Time Period(s):19th Century

Technology Matters: Questions to Live With

Author(s):Nye, David E.
Reviewer(s):Szostak, Rick

Published by EH.NET (June 2006)

David E. Nye, Technology Matters: Questions to Live With. Cambridge, MA: MIT Press, 2006. xiv + 282 pp. $28 (cloth), ISBN: 0-262-14093-4.

Reviewed for EH.NET by Rick Szostak, Department of Economics, University of Alberta.

In this book, David Nye (Professor of Comparative American Studies and History at Warwick University) devotes a chapter each to ten important questions regarding the causes and effects of technological innovation. Most of these questions — including the effects of innovation on the environment, employment, and culture — are subjects of contentious public discourse. The book seems aimed at clarifying these issues for a general audience, though Nye notes that scholars are often guilty of misunderstanding the course of technological change.

The first chapters are the most satisfying. While Nye could have been a bit more precise in answering “what is technology?,” the first chapter does a good job of describing the phenomenon of technological innovation as well as some of the other phenomena to which it is closely linked. The second chapter provides a very good critique of both technological determinism and the idea that the course of technological innovation is inevitable, and the third discusses the severe limitations of technological predictions.

The fourth chapter asks how historians understand technology. Nye may underestimate the size of the minority that fails to follow the set of good practices he suggests. Historians should eschew determinism and predictability. Nye suggests that historians of technology give roughly equal weight to technology, politics, the economy, and society (by which he largely means ‘culture’) in their analyses. He applauds the complementarity between ‘internalist’ (focused on technical developments) and ‘contextual’ history, but does not note that the field of history of technology has swung sharply between these two orientations in the postwar period. He applauds historians for increasingly focusing on incremental innovations and the long process of development, and thus downplaying the role of the ‘heroic inventor.’

At times in the early chapters Nye is too strident in his anti-determinism. In chapter 4, he finally appreciates, following Thomas Hughes, that technological systems once in place constrain further technological and social choices. Only in later chapters does he recognize in passing that even individual innovations provide both constraints and incentives: they do not determine but certainly exert causal influence on a range of individual and societal decisions.

While Nye strives in the first four chapters to provide answers to his questions, the latter chapters tend to provide conflicting arguments regarding the effect of technology on various other phenomena. Though the information provided is useful and accurate, many readers may wish that Nye had more clearly attempted to weigh the relative importance of these arguments. Nye relies throughout the book on powerful examples rather than a careful attempt to delineate the typicality of these, and thus the reader has little guidance in choosing which examples to place greatest confidence in. The lack of subtitles in any of the chapters exacerbates the difficulty of comparing one line of argument to another.

Yet I do not wish to be harsh. Nye’s goal, it seems, is to debunk some strongly held but simplistic views of technology. As noted above, the earlier chapters strive to convince readers that technology is not some inevitable force inexorably shaping our lives (whether to good or evil effect) but rather that human actors shape innovation in a host of ways. Later chapters then provide counter-examples against simplistic beliefs that technology necessarily destroys local cultures, ruins the environment, causes unemployment, and reduces human security. Nye notes that some technologies such as the personal computer work against cultural conformity, while consumers shape the effects of other technologies such as mass production in ways that preserve autonomy. (Again a more careful statement of how technology may limit but not determine choices would have been helpful.) Likewise, technological innovation can at times aid the environment (though most of the chapter on the environment addresses the question of whether humans should lessen their wants rather than expand their production). Nye details how the idea of technological unemployment has been around for centuries but unemployment rates have not risen secularly (he skips over the question of whether medium-term technological unemployment was observed during the Great Depression and 1970s). And Nye notes that technology has freed many humans from the insecurities associated with hunger and disease while creating new sources of insecurity.

A book that covers such a wide scope lends itself to inevitable quibbles. The unwary reader may be needlessly confused in the first chapter between the essence of technology and the causal relationships of which it is part. Nye’s discussion of predictability clearly distinguishes between major and incremental innovations, but leaves the impression that the latter are virtually as unpredictable as the former. Nye’s discussion of culture largely misses the key question of how strong the link is between the available range of consumer goods and the beliefs and attitudes that lie at the heart of culture: those who decry cultural homogenization are often guilty of implying that what one wears and eats defines who one is. The chapter on the environment skips the entire debate between optimists and pessimists. The chapter on employment discusses (uncritically) how work effort has increased in some ways in recent years, but largely ignores the amazing decline in the length of the workweek in previous centuries. And the chapter on whether technology should be regulated fails to suggest any criteria for distinguishing cases such as new pharmaceuticals where some sort of oversight may be a good idea from other technologies where markets can best adjudicate.

This is a handy book to recommend to students (or colleagues) who need an antidote to the more simplistic versions of technological determinism, environmentalism, or cultural decline that circulate on university campuses. The range of detailed historical examples utilized by Nye is quite impressive. Many students will be encouraged by the book to a more nuanced perspective, and guided to further reading. Others, unfortunately, may find it hard to integrate the information provided into a coherent understanding of the issues at stake.

Rick Szostak is Professor of Economics at the University of Alberta, and will be visiting the Department of History and Civilization at the European University Institute in Florence during 2006-7. He intends to write a book, Exogenous Growth: Interdisciplinary Perspectives. Recent publications include Technology and American Society: A History (with Gary Cross, second edition, 2004), Classifying Science: Phenomena, Data, Theory, Method, Practice (2004); “Evaluating the Historiography of the Great Depression: Explanation or Single-Theory Driven?” (Journal of Economic Methodology, 2005); “Allocating Scarce Shoreline: Institutional Change in the Newfoundland Inshore Fishery” (with Ken Norrie, Newfoundland and Labrador Studies, 2005) and “Economic History as It Is and Should Be” (Journal of Socio-Economics, 2006). He has recently completed a book manuscript, Restoring Human Progress: Transcending the Postmodern Condition.

Subject(s):History of Technology, including Technological Change
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

Alanson B. Houghton: Ambassador of the New Era

Author(s):Matthews, Jeffrey J.
Houghton, Alanson B.
Reviewer(s):Westerman, Thomas D.

Published by EH.NET (June 2006)


Jeffrey J. Matthews, Alanson B. Houghton: Ambassador of the New Era. Lanham, MD: Rowman and Littlefield, 2004. xxii + 263 pp. $27 (paperback), ISBN: 0-8420-5051-5.

Reviewed for EH.NET by Thomas D. Westerman, Department of History, University of Connecticut.

When done well, biography provides insights into history that monographs often lack. Jeffrey J. Matthews’s “diplomatic biography” of Alanson B. Houghton, the United States’ first post-Word War I ambassador to Germany, offers a helpful entr?e into the background of U.S.-European interwar diplomacy. Matthews, an associate professor of cross-disciplinary studies at the University of Puget Sound, tells the personal and professional story of Houghton, whom Matthews calls “the most influential ambassador in Europe” in the 1920s (p. xi). Matthews’ study of Houghton is not only a biography but also an argument about the complexity and dangers of interwar U.S.-European economic and diplomatic relations. Matthews argues that U.S. relations with Europe should not be characterized as “independent internationalism” but rather as “a conservative and frequently reactionary form of internationalism” and that Houghton “became not only its leading diplomat abroad but also the chief policy critic within the Harding and Coolidge administrations” (p. 4).

Matthews presents Houghton as a perceptive and farsighted diplomat who, before such a view was fashionable, advocated a coherent U.S. policy promoting European recovery, reconstruction, and stability. Houghton received his appointment to Berlin (and later London) through political patronage. He was educated at Harvard and in Germany. He inherited and expanded the family business — the Corning Glass Works — and served two terms as a congressman from New York. While in Congress from 1918 to 1922, he served on the foreign affairs committee and then on the powerful Ways and Means Committee. Houghton, it seems, was a good progressive Republican and “[d]uring his two terms, Representative Houghton proved less concerned with the division of federal authority and more interested in creating an effective and efficient national government” (p. 33). His appointment by President Warren G. Harding in 1922 was received positively by the Senate and the German government.

Matthews positions Houghton as the lynchpin in U.S.-German-European relations. Time and again, Matthews argues, Houghton served as an advisor, facilitator, and confidant to those in higher positions. This is especially evident in the discussion of the Dawes Plan of 1924-25 that sought to break the impasse over of German reparations. Indeed, Matthews titles one chapter “America’s Honest Broker” and tells us that upon Houghton’s appointment to London in 1925, he was “the most powerful ambassador in the world, and he meant to exercise his influence” (p. 117).

Houghton’s power derived from the confidence the White House had in him, the sober knowledge he had of German politics, and the friendships he formed in Berlin. He continued to advise on German matters even during his posting in London. Houghton was even rumored to be a possible nominee for secretary of state in the Coolidge administration. Though Europe was certainly a crucial focus for U.S. foreign policy, it was not the only important area of concern. Matthews’ thesis of a “conservative internationalism” may work well when applied to Houghton’s ambassadorship, but it would be interesting to see how well it would work when applied worldwide.

Though other politicians sought to restrain the emergence of U.S. power on the international stage, Houghton wanted to help implement that power in a responsible and efficient manner, particularly in Europe. This outlook did not simply stem from American vanity. Matthews writes that Houghton “meshed hardheaded realism with optimistic idealism” (p. 6) and that he understood “the integration of the global economy through raw material and capital exchanges, trade competition, and technology transfers … [and] he came to appreciate America’s changing position within the international system” (p. 41). Matthews positions Houghton as the main internal critic of the reactionary conservatism that seemed dominant in U.S. diplomacy, hampering European recovery and stability.

For instance Houghton criticized Secretary of Commerce Herbert Hoover’s plan in 1926 to “develop ‘the potent weapon’ of independent rubber supplies” (p. 160). The British had a monopoly on rubber and, Matthews asserts, Houghton feared such a policy would force the U.S. to “embark on a colonial policy that would ‘put us head on with England'” (p. 161). The so-called independence that Hoover advocated ran counter to the global (or, at least, U.S.-European) interconnectedness that Houghton perceived profitable. Rhetoric and policies such as Hoover’s harmed the United States’ standing as a leader for reconstruction because they antagonized European nations in the narrow hope of securing domestic favor. This is just one example of how Matthews uses Houghton’s ambassadorship as a way to illuminate the complexities of U.S. foreign relations in the 1920s and the difficulties related to the emerging global economy.

Matthews’s biography is the eleventh in the “Biographies in American Foreign Policy” series published by Rowman and Littlefield’s SR Books. His study of Houghton fulfills the series’ mission to “humanize and make more accessible those decisions and events that sometimes appear abstract or distant.” Matthews gives a human face and voice to the tense and complicated economic, business and political relations between the United States and Europe in this period. The author not only scoured the traditional source base of diplomatic historians — presidential libraries, newspapers, memoirs, and institutional archives — but he also had unrestricted access to Corning Incorporated’s store of family records in Corning, NY. Matthews was also able to glean remembrances from one of Houghton’s grandsons and conduct an interview with Andrew Elder, who worked for Houghton immediately after his ambassadorial work.

Thomas D. Westerman is a Ph.D. student at the University of Connecticut, Storrs where he is working on a history of the Commission for Relief in Belgium and its effect on the development of international institutional humanitarianism.

Subject(s):International and Domestic Trade and Relations
Geographic Area(s):North America
Time Period(s):20th Century: Pre WWII