Published by EH.NET (September 1998)

Benjamin Kline Hunnicutt, Kellogg’s Six-Hour Day. Philadelphia: Temple

University Press, November 1996. x + 261 pp. $69.95 (cloth), ISBN: 1-566

39-447-3; $24.95 (paper), ISBN: 1-56639-448-1.

Reviewed for EH.NET by

Robert Whaples, Department of Economics, Wake Forest University.

Between the Civil War and World War II, the length of the American work week

decreased dramatically

. Since the end of World War II, the rate of decline has become positively

glacial. The five-day workweek with an eight-hour workday came to be seen as

the norm over a half a century ago and it is still seen as the norm today.

This development caught a

lot of attentive observers by surprise–for example, John Maynard Keynes in

1930 predicted that by 2030 a fifteen hour workweek would be sufficient for all

but the most extreme workaholics. The stabilization of the workweek at forty

hours continues to defy easy explanation. Benjamin Hunnicutt knows that the

explanation for this dramatic reversal is highly complex. In

Work Without End (1988), he offered a strikingly new and controversial

thesis that pinpointed the role of policy decisions during the

New Deal.

In Kellogg’s Six-Hour Day, he examines the question from a fascinating

new angle–that of a work force which eagerly adopted the six-hour workday

during the Depression, but which reverted back to the eight-hour workday during

the postwar period.

Kellogg’s shift to the six-hour workday occurred on December 1, 1930.

Hunnicutt calls the shift an “instant success” (p. 1) because it attracted the

attention of the national media and Herbert Hoover’s administration.

The shift was the product of an unusual time and two unusual men. The first

unusual man was Lewis J. Brown, the company’s president. An English immigrant,

he was greatly influenced by Lord William Leverhulme, the successful soap

manufacturer from Lancaster, founder of “Liberation Capitalism,” author of

The Six-Hour Day & Other Industrial Questions

(1919) and advocate of shorter hours as a sound business practice and

liberating force in the life of workers. The second unusual man was W.K.

Kellogg, the company’s owner. W.K. was the younger brother of John Harvey

Kellogg, who had transformed the Battle Creek Sanitarium from a small

Seventh-Day Adventist retreat into a world-famous institution. John Harvey

Kellogg cultivated the image of an indefatigable superman. Poor W.K. “was

caught in a rush. He had taken a job as factotum for John Harvey, who worked

him

nearly to death” (p. 40). After they discovered how to make flaked cereal, the

brothers separated rancorously, slugging it out in court, and W.K. built his

cereal empire. A psychiatrist friend characterized W.K. as “deeply unhappy

and frustrated. … Possibly by the time he gained success at middle age, the

capacity for enjoyment of a rich life had atrophied” (p. 39). W.K. complained

that he had “never learned to play,” (p.

39) but in old age turned his attention to helping others overcome the

situation in which he found himself. He donated considerable money to local

recreational projects and encouraged his employees to use their spare time in

“worthwhile” activities. The

Great Depression gave these two men the necessary inducement to launch the

six-hour experiment.

As the local unemployment rate shot upward, they cut the workday to six hours,

while eliminating breaks and terminating bonuses for unpopular shift times.

Workers were given a 12.5 percent hourly raise, so standard daily pay only

fell

by about 15 percent.

Workers were initially very receptive and willing to “share the work” with the

unemployed. Hunnicutt has interviewed many employees who worked at Kellogg

‘s during this period. Many of them reminisce about how they used their new

“free” time: visiting friends over beer or coffee, participating in amateur

sports, hunting and fishing, doing family things together–gardening, canning,

school projects. In 19 37, Kellogg’s became unionized, W.K. Kellogg withdrew

from an active role in the business, and a new management team arrived which

was not committed to the 6-hour workday.

As part of the contract negotiations, the union conducted a secret ballot

election,

in which two-thirds of workers registered their preference for the 6-hour

workday, with a few smaller departments opting to keep their 8-hour shifts.

By 1941, when the union struck Kellogg’s for the first time, a sizeable 8-hour

faction had emerged. During World War II, the company switched to a 48-hour

workweek, but promised to revert to 6-hour shifts after the emergency ended.

In mid-1946, employees reaffirmed their commitment to the short workday, with

87 percent of women and 71 percent of men voting for six hours. Over the

course of the next decade, however, the tide turned. By 1957 most departments

had opted to switch to the 8-hour shift, so that only about one-quarter of the

work force, mostly women,

retained the six-hour shift. Finally, in

1985, the last department voted to adopt an 8-hour workday.

What happened between the end of World War II and the late 1950s that caused

workers to change their minds about how much to work and how much to earn?

Hunnicutt points to a new approach by Kellogg’s management, part of a broader

trend in management during this period. Managers became coaches rather than

authoritarian drivers and tried to “sell” workers on the importance of doing

their jobs and seeing work as the center of their lives. Management began to

denigrate and “feminize” shorter hours.

National union officials were very willing to trade shorter hours for offers of

hourly wage increases. But most importantly many workers,

especially male employees, seem to have changed their tastes.

They became embarrassed by the short hours that they were working–shorter

than the shifts worked by men at other local jobs. They changed their

rhetoric,

down-playing the freedom that leisure gave, and asserting that they were

“unable to afford” a six-hour shift, that longer hours were needed to “‘keep

the wolf from the door,’ ‘feed the family,’ and ‘put bread on the table'” (p.

140). Hunnicutt confronted some of his interviewees who made these assertions.

“If the author dared to ask, ‘You don’t really mean that you

would have starved to death if you kept on working six hours?’ the typical

response was defensive, as if the author had accused the speaker of lying

rather than of making his point strongly” (p. 140). In the end, most of

Hunnicutt’s witnesses are incapable of telling us why they decided that

eight-hour workdays were preferable to six-hour workdays. Moreover,

hyperbole seems just as evident in the responses of those favoring six hours

and lamenting its demise. They exaggerate–saying

that eight-hour advocates are willing to work themselves “to death” and

claiming that workers on a six-hour shift produced as much as those on an

eight-hour shift. It seems that the historical record is incapable of

explaining this shift in tastes (if

indeed there was a shift in tastes) because the actors have reinterpreted their

own earlier decisions, exaggerating either the marginal costs or the marginal

benefits, so that their choices can be more readily rationalized. Only a few

workers profess that the choice was a close call.

Ultimately, most men during the 1950s needed little convincing that eight-hours

and higher pay were preferable. Six-hour workdays wouldn’t let them keep up

with the Joneses and many men did not receive much enjoyment from

their marginal leisure hours. “Like management, senior male workers were

concerned about the loss of status and control. Several men told about the

friction that resulted when the men spent too much time around the house: ‘The

wives didn’t like the men

underfoot all day.’ ‘The wife always found something for me to do if I hung

around.’ ‘We got into a lot of fights.’ Many of the men confessed that they

were at loose ends when they were working six hours” (p. 142). In Hunnicutt’s

interpretation, it was a

combination of outside pressures and the inability of men (but not women) to

learn how to use their leisure time, that caused the reversion to eight-hours.

An alternative interpretation emphasizes broader macroeconomic events. In the

1930s and again in

1946 when soldiers returned to take back their old jobs, workers were willing

to accept shorter hours as a way of minimizing their odds of becoming

unemployed and,

more altruistically, “sharing” work with unfortunates. During the 1950s,

the threat of unemployment evaporated and the moral condemnation for being a

“work hog” no longer made sense. In addition, the rise of quasi-fixed

employment costs (such as health insurance) induced management to push workers

toward a longer workday.

Although, Hunnicut t’s book is very thought provoking, it has some

disconcerting features. In many places, the author is overly

judgemental–painting six-hour advocates as enlightened heroes and eight-hour

advocates as selfish or unenlightened. He fails to grapple with the issue of

sample selection bias within his collection of interviews. He never discusses

broader changes in female labor force participation during this period and the

rise of part-time employment.

Nevertheless, this is an important book to be recommend ed to anyone interested

in the debate over the length of the workweek.

Robert Whaples Department of Economics Wake Forest University

Robert Whaples is Associate Director of EH.NET and author of “Winning the

Eight-Hour Day, 1909-1919,” Journal of Economic History, Vol. 50, no.

2,

June, 1990.

Published by H-Business@eh.net and EH.Net (August, 1998)

Allen J. Matusow. Nixon’s Economy: Booms, Busts, Dollars, and Votes.

Lawrence: University Press of Kansas, 1998. xii + 323 pp. Notes and index.

$35.00 (cloth), ISBN 0-7006-0888-5.

Reviewed for H-Business and EH.Net by David Stebenne ,

Ohio State University

Nixon’s Economic Policy:

Confused, Opportunistic and Unsuccessful

Scholars and journalists often give the Nixon presidency,

Watergate aside, a fairly positive review. The scandals

that drove Nixon and many of his closest advisors from office, the conventional

wisdom now holds, distract attention from their positive achievements, in the

realm of foreign policy especially. The keys to these successes, such accounts

tend to argue, we re Nixon’s vast knowledge of the political system,

based upon many years of experience before becoming president,

and his non-ideological flexibility. Allen Matusow’s new book about the Nixon

presidency’s handling of economic issues, both domestic and foreign, provides

a refreshing and persuasive challenge to that view of Nixon and his

administration.

In Nixon’s Economy: Booms, Busts, Dollars, and Votes, Matusow paints a

vivid picture of the intellectual confusion and crass opportunism that lay

behind

Nixon’s major economic policy initiatives. In the hands of another scholar

this could have been a fairly dry tale told in highly technical terms.

Matusow,

however, brings it alive with vivid and clear descriptions of the key decisions

and decision makers, based upon extensive research in the Nixon presidential

papers that was buttressed by journalistic and secondary sources.

At the center of the story is Nixon himself, and it is with respect to his

actions that this account is most interesting.

As Matusow makes clear, Nixon by the time he became president in January 1969

had been badly scarred by his setbacks in the late 1950s, traumas that greatly

influenced Nixon’s approach to economic policy as president. Eisenhower’s

decision to fight inflation in a moderate but firm fashion during the last

three years of his presidency was politically costly for the Republican party,

and especially for Nixon when he ran for president in 1960. Rather than blame

his vague, unconfident campaign and poor performance in the presidential

debates for his defeat that year, Nixon concluded that high unemployment, a

sluggish economy, and an alienated labor movement, all consequences of

Eisenhower’s anti-inflationary policies, were the key reasons for his very

narrow loss

to John F. Kennedy.

All of this began to matter in the realm of public policy once Nixon became

president. He clearly understood that fighting inflation in a moderate but

firm way had become vitally necessary by 1969, more so even than it had been a

decade earlier. And, at first, Nixon chose that path, as Matusow makes clear.

During 1969-70, Nixon and his key economic advisors,

Paul McCracken, who headed the Council of Economic Advisors,

Herbert Stein, McCracken’s successor, and Labor Secretary George Schultz,

pursued a course of gradual price and wage restraint.

But after the disappointing results of the 1970 off-year elections, Nixon began

to lose his nerve. Fearful of losing his bid for re-election, Nixon began to

push for inflationary policies in the summer of 1971. To implement this

change, he brought in a kindred spirit, former Texas governor John Connally, as

Treasury Secretary. These two men, with unwitting assistance from the Federal

Reserve Board, brought about inflationary policies that

helped Nixon win re-election, but made for an economic policy fiasco

thereafter.

What makes Matusow’s account especially attractive is his unwillingness to take

the simplistic tack of simply vilifying Nixon for this. The key reason for

Nixon’s loss of

nerve,

Matusow makes clear, was an inability (shared by many of his critics) to

understand how much economic conditions had changed since the 1950s. Keeping

prices fairly stable by the early 1970s required monetary and fiscal policies

that produced an unemployment rate significantly above the ’50s norm, so much

so that it would place incumbent officeholders in peril. As Matusow writes

with characteristic clarity, Nixon by the spring of 1971 “was producing a

success that looked like a failure” (p.

116).

A fairly secure and/or principled politician might have stayed the course, but

Nixon, as Matusow makes all too clear,

was neither.

Having devoted the first third of his book to explaining why Nixon abandoned

his inflation-fighting policies, Matusow devotes the remainder to the

disastrous results during 1973-74.

Disasters imply drama, and this account is no exception. The extraordinarily

high inflation and unemployment rates experienced during those years had

far-reaching and highly painful consequences

. Perhaps most tragically for Nixon, they seriously hurt the very people he

wanted most to help:

struggling middle class Americans living out in the heartland,

the people Nixon liked to call “the Silent Majority.”

Matusow’s book is not without flaws. His explanation of how and why the U.S.

economy changed during the 1960’s is disappointingly simplistic. A deeper

explanation of that change would have placed the behavior of Nixon and his

aides in a clearer context. The book also contains several typographical

errors, which this reader found distracting, and which a thoroughly

professional proofreader should have caught.

Despite these weaknesses, Nixon’s Economy is a fine book that makes an

important historiographical argument. Matusow’s book calls

into question the notion that Nixon’s administration should be judged, scandals

aside, in a favorable light. Matusow argues persuasively that in the realm of

economic policy,

arguably the most important of a president’s policies (and certainly so to most

voters), the Nixon presidency failed conspicuously, and in so doing opened the

door to more extreme and socially painful public policies during the 1980s.

This thesis is one that all serious students of Nixon’s presidency will have to

address in the years ahead.

EH.NET BOOK REVIEW

Published by EH.NET (August 1998)

Keith Poole and Howard Rosenthal, Congress: A Political-Economic History of

Roll-Call Voting. New York: Oxford University Press, 1997. x + 297 pp.

$85.00 (cloth), ISBN: 0-19-505577-2

Reviewed for EH.NET by Jac

Heckelman, Department of Economics, Wake Forest University.

Over the last decade and a half, Keith Poole and Howard Rosenthal have

published several papers analyzing congressional roll-call voting behavior.

In this new book, they pull together and extend this work, presenting their

methodology and findings, and covering every Congressional roll-call vote from

1789 to 1985. The authors express their desire to make their research useful

to economic historians. Fortunately, they have largely succeeded.

The main purpose of the book is to detail how roll-call voting is useful for

determining legislators’ ideological positioning in a spatial model.

Their main conclusions are that (1) ideology outperforms “economic” models of

voting; (2) ideology is low dimensional; (3) ideological positions remain

fixed throughout a legislator’s tenure; and (4) mass political realignments

among the voters are not matched by changes in roll-call voting except from the

new legislators.

After a brief introductory chapter that nicely outlines the structure and

highlights of the book, they present the basic methodology in chapter 2.

The spatial voting model they develop assumes that legislators will vote for or

against an issue based on which side of the roll-call midpoint they are on, as

expected by the Median Voter Theorem. Rather than rely on strict deterministic

voting, the model instead is based on probabilistic voting where those closer

to the option are more likely to vote for the option.

Their model is supported by the finding that errors on predicted voting are

primarily for those legislators close to the “cutting point” which identifies

the location of the split between supporters and opponents.

Although explicit details of the exact methodology may not be of particular

interest to historians, it should be stressed that the only variable used is

the actual roll-call votes. Poole and Rosenthal are correct to point out that

their methodology is not very useful for predicting voting outcomes,

rather it is designed for identifying the positions of each legislator and the

cut point along the spatial dimension.

The next chapter presents evidence that ideology can readily be captured in

only a single dimension and thus the simplest model can be estimated. A second

dimension is only required in a few instances (discussed below) when racial

issues are specifically involved. For those not interested in this finding, the

chapter can be skipped without impeding the rest of the book.

Chapter 4 is dedicated to the issue of party polarization. In this chapter the

authors present a lot of stylized evidence, which makes for interesting

reading. They conclude that Congress has been most polarized in the

post-Reconstruction through WWI period, and least polarized in the post-WWII

period, due to the North/South split in the Democratic Party.

Poole and Rosenthal suggest the second dimension of race came into play due to

civil rights issues in New Deal legislation which pushed the Southern Democrats

further right in their ideological leanings. This interpretation is

questionable since their analysis shows the first dimension movement actually

began at the turn of the century and thus New Deal movement may only be the

continuation of a prior trend. They also show that regional differences are not

limited to the twentieth century. For example, Northern Whigs were consistently

further right than Southern Whigs from 1827 to 1847, and the Whigs were further

right than Democrats. But on slavery issues, the second dimension shows the

southerners of both parties were more conservative than the northerners.

Although most of the evidence is presented graphically throughout the book,

this chapter is slightly marred by the inclusion of some ad hoc regressions

which do not add much to the analysis.

The chapter on realignment is likely to be the most controversial among

political historians. Political scientists typically refer to realignment as a

change in voting behavior among the mass electorate, whereas Poole and

Rosenthal define realignment as a change in roll-call voting. Their rationale

for this new definition is as follows: “If an issue is to result in sustained

public policies, we hypothesize that the policies must eventually be supported

by a coalition that can be represented as a split on the first, or major

dimension. Policy developed by coalitions that are non-spatial or built along

the second dimension is likely to be transient and unstable” (p. 112). Under

their definition, Poole and Rosenthal find that a legislative realignment

occurred only once in U.S. history, this being in 1851-2 due to the extension

of slavery to territories. This chapter is particularly strong on detailing the

sequence of voting on slavery issues by party and region. Contrary to

conventional wisdom, their analysis shows the realignment occurred before the

Republicans became a strong political force in Congress. The findings of

non-realignments are especially intriguing. Among many historians, the

realignment of 1896 is considered a political fact. Poole and Rosenthal claim

this to be a “false realignment” since only the importance of inflation

changed, but not voting patterns on monetary issues. A regional East-West split

remained but is captured in the first dimension and thus the model stays stable

throughout this period. Similarly, the authors show the supposed “New Deal

realignment” was simply a massive change in party composition in Congress,

and thus a differing voting agenda occurred, but again roll-call behavior

remained markedly stable among individual legislators. While I am certainly

sympathetic to their interpretation, I expect traditional political historians

are unlikely to be convinced and may cite this instead as evidence that

Congressional realignment is less important to determining the direction of the

nation than traditional analysis of the mass electorate. Finally, Poole and

Rosenthal uncover a slight “perturbation” in the 1950s as civil rights issues

split the Democratic party, but this is directly captured by including a second

dimension to voting and never dominates the first dimension voting on

traditional economic issues.

After the excitement of turning realignment theory upside-down, things return

to a more mundane level in chapter 6 where it is shown that the senators from a

given state (and party) do not typically vote the same way.

This is given as evidence that legislators vote based on their individual

ideology, and spatial ideology outperforms the purely economic median voter

models. Once ideology is included, there is weak correlation of the residuals

by state. Case studies are presented for food stamp programs in 1964 and 1967,

railroad regulation from 1874 to 1887, legislation on the minimum wage from

1937 to 1990, strip mines in 1974 and OSHA in 1975. These results are well

established in the literature, and their presence here serves only to reiterate

the findings (some of which are their own from earlier studies).

The issue of strategic voting is finally considered in Chapter 7 where we learn

that cases of strategic voting throughout history are extremely rare.

It is unfortunate that this important topic is relegated to its own chapter

toward the end of the book, as the interpretation of ideology would be altered

if legislators engaged in strategic voting. Furthermore, the authors

incorrectly argue that strategic voting should not occur in single dimensional

space, and therefore only consider the cases when race creates a second

dimension. This conclusion is valid only if legislators have single-peaked

preferences in their utility functions. If preferences are not single-peaked,

cycling and strategic voting are still possible even in a single dimension.

Although single-peaked preferences are an explicit assumption of their model,

this was presented at the start of the book and needs to be reiterated here. If

this assumption fails to hold, strategic voting may be more problematic than

they allow for. The chapter includes only brief discussions of strategic voting

in the political science literature, which includes (in order of presentation)

the 1965 School Aid Bill and Powell Amendment, the 1846 Wilmot Proviso, and the

1911 DePew Amendment.

Scholars often measure legislator ideology from various interest-group ratings,

which only consider a subset of votes in any year. Chapter 8 shows a high

degree of correlation between the most commonly utilized ratings and Poole and

Rosenthal’s predicted scores based on all votes. This is an important finding

since interest group ratings are not available prior to the 1960s.

The last two chapters on committee representation and legislator abstention,

are unlikely to be of specific interest to historians as they only present

broad trends and do not include the insightful discussions of individual

historical case studies of the previous chapters.

The flaws discussed above are minor compared to the great strengths of the

book. The book is highly recommended for anyone interested in the history of

roll-call voting and the careful analysis of legislator ideology.

Jac Heckelman Department of Economics Wake Forest University

Jac Heckelman studies issues in historical political economy. He is the author

of “The Effect of the Secret Ballot on Voter Turnout Rates,”

Public Choice 82, 1995; “Political Business Cycles Before the Great

Depression,” (with Robert Whaples) Economics Letters 51, 1996;

“Determining Who Voted in Historical Elections: An Aggregated Logit Approach,”

Social Science Research 26, 1997; “Employment and Gubernatorial

Elections During the Gilded Age,” Economics and Politics

forthcoming.

Published by EH.NET (August 1998)

Marc Egnal, Divergent Paths: How Culture and Institutions Have Shaped North

American Growth. New York, Oxford University Press, 1996. xi + 300 pp.

$19.95 (paper), ISBN: 0-19-510906.

Reviewed for EH.NET by Leonard Carlson, Department of Economics, Emory Univers

ity.

This book is provocative, informative, and fun-to-read. In the preface,

Marc Egnal, an Associate Professor of History at the University of Toronto,

states that the book “. . . explores the impact of institutions (such as

slavery

and the seigniorial system) and culture (including religion,

literacy, and the entrepreneurial spirit, and intellectual activity) on

development” (p. vii). How institutions and culture shape economic growth are,

of course, important and controversial topics in economic history.

Egnal ventures into territory that is both novel and familiar. The work

compares the U.S. North, U.S. South, and Quebec. His single most important

contribution is his comparison of Quebec with the U.S. South and U.S.

North. Most comparative work has ignored Quebec and this has been a big

omission. An example of the familiar is Egnal’s use of Max Weber’s

“Protestant Ethic” hypothesis.

Egnal draws on the debates as to whether colonial British North America was

“pre-capitalist

” or not, and a similar debate about Quebec. In a nutshell,

his conclusion is that all three regions were similarly pre-capitalist in

outlook and had comparable standards of living in 1750. The North,

however, had a tradition of thrift and hard work that differed from the South

and Quebec. Drawing on these traditions in the century after 1750,

the North became truly “capitalist,” while the South and Quebec stayed

hierarchical and pre-capitalist. To Egnal, capitalism is distinct from

capitalists. Capitalists could operate in the South and Quebec without their

values dominating the social and economic life of either region. By contrast

he concludes that capitalist values favoring entrepreneurship,

risk taking, and profits dominated in the North, making it truly capitalist.

I am on the side of those who do not find it useful to draw a distinction

between capitalist and pre-capitalist societies, but Egnal is part of a large

tradition that sees this as important.

Chapter one, “the paths diverge,” sets

the stage for the arguments that follow. Egnal makes a good case that as of

1750 there was relatively little difference in the material standard of living

in Quebec, the North,

and the South. All three were traditional, agricultural, slow growing, and

pre-literate (although literacy was widespread in the Northeast, according to

Egnal, it was not important in the economic realm). The South, with its wealth

in slaves and export-oriented economy was something of a special case, but

still pre-capitalist and hierarchical. By 1840, however, per capita incomes

in the North (the eight original northern states) were much higher than either

the South (the five original southern states) or Quebec.

The North also led the other two regions in urbanization and manu facturing.

The fact that Egnal leaves out the western states at this point in the

comparison is important. As he discusses in later chapters, the North Central

states in 1840 had lower than average per capita incomes while states in the

South Central region had much higher per capita incomes.

Since there was a notable east-west pattern of migration, many scholars treat

the old northwestern states as an extension of the “North,” and the old

southwestern states as an extension of the “South.” Egnal might

be right in limiting his comparison to the same states in 1750 and 1850, but

since it is so favorable to his argument, he could do more to justify the

choice. Similarly, the use of per capita income in 1840 is important,

since the south was a slave society and slaves are both part of the population

and treated as a capital asset. Thus most scholars discuss both per capita

income and per capita income of free persons. Egnal does discuss the

distributional consequences of slavery, but his arrangement of

the data in a way most supportive of his argument is typical of the book’s

approach.

Egnal is building a case that culture and institutions matter, not trying to

reject the null-hypothesis that there is no difference.

Chapters two through four look at the eighteenth-century origins of the

differences among the regions. As Egnal sees it, even in the eighteenth

century, there was a ” . . . gulf separating the entrepreneurial North and the

other two regions that were less concerned with money making” (p. 21

).

Egnal supports his claims by citing evidence from sources ranging from the

writings of contemporary observers to examples of how people chose to be

depicted in family portraits. Contemporary observers described the French as

more luxury loving and less concerned with making money than New Englanders.

Similarly, contemporaries saw the southerners as more concerned with luxurious

living and “lazier”

than northerners. In paintings, wealthy northerners had themselves portrayed

as busy and prosperous, while wealthy southerners had themselves pictured as

idle aristocrats. Quebecois portrayed themselves as pious. In contrast to

more quantitative historians,

Egnal uses this type of “soft evidence” to illustrate his points.

Legal structures also differed

among the regions. French Canada had the seignorial system and property rights

that made it hard to sell land outside the family. These feudal vestiges and

the outlook that went with them persisted after the English takeover of Canada

in 1765. The South had bound labor and, in Egnal’s view, slave labor was

obviously less motivated and efficient than free labor (a claim that Robert

Fogel and Stanley Engerman would dispute). French Canadian society was based

on traditions and hierarchy in the eighteenth

century and remained so throughout the nineteenth. By contrast southern

colonies developed new institutions as fast as the north, but plantation

agriculture and slavery lead to a commitment to hierarchy and status missing in

the north. Egnal sees the shared commitment to a hierarchical society as

factors that united the South and Quebec and caused both regions to trail the

northeast for so long. It is important, however, to keep in mind that the

North had a higher per capita income than any other region in the world except

Australia in 1860, not just Quebec and the South (Fogel and Engerman,

Time on the Cross, 1974, p. 250).

In chapters five through eight, Egnal argues that the differences in attitudes

played out in the growing differences among the three regions.

He conducts an imaginary dialogue with an advocate of the view that the South

was as profit oriented and rational as the North, and he rejects that claim.

Intellectually, the North in the nineteenth century had entered an “age of

Emerson

. . . individualism, optimism, enthusiasm,

and reform.” (p. 120) These ideas helped make the North ready for the changes

needed to sustain modern economic growth. By contrast,

the southern intellectuals were closed off to new ideas, as the defense of

slavery became more intense. Similarly, Quebec saw the triumph of the Catholic

Church and a commitment to tradition.

This is not to say that Quebec and the South were identical. The French stayed

close to home, reflecting a desire to remain close to hearth and home that

Egnal traces back to the original unwillingness of the French to move to the

New World. Southerners were willing to move, but not to pursue manufacturing

and other risky activities in the same way as the northerners. In these

chapters

Egnal discusses the high rates of interstate migration of southern slaveholders

and high relative incomes in the southwest. From 1860 to 1940, incomes in the

South and Quebec remained low relative to both the North and English-speaking

Canada. Racism and

the politics of segregation may have held back the South, but what held back

Quebec? Gavin Wright (Old South, New South: Revolutions in the Southern

Economy Since the Civil War, 1986) emphasizes the isolation of the southern

labor market and the lack

of outside investment as key factors in the slow growth of the South. A

question for further research is whether Quebec was isolated in a similar way.

Chapter ten looks at the convergence of Quebec and the U.S. South to levels

close to the rest of the U

.S. and English-speaking Canada. Incomes in Quebec converged in the

mid-sixties, somewhat later than for the deep South. Egnal sees the narrowing

as based on the convergence of mind-sets. Southerners and Quebecois became

more entrepreneurial while New England businessmen became less aggressive and

more risk averse.

Again, adding Quebec changes the focus away from race. Did the Catholic

traditions and the active participation of the church lead to a lack of

entrepeneurship in Quebec in the first half of

the twentieth century? Did an increasing secularization change Quebec? Why

did New Englanders loose their edge (or did they?)?

In chapter 11, the author brings the story up to the present. This is,

perhaps inevitably, the weakest chapter. Egnal sees

the period since 1975 as the “Post-Industrial” economy. Fair enough, but it is

hard to use the tools of the historian to analyze the recent past, since it is

still too soon to know what will prove to be of lasting importance and what is

transitory.

In the end, the value of this book lies in the thought-provoking questions it

raises, not with the definitive answers it provides. I still don’t know how to

test whether many of the “cultural factors” that Egnal cites are a cause of

lower incomes, an effect,

or a mere coincidence. But if “culture and institutions” (however defined) do

not explain the differences among the North and the other two regions, what

does provide the explanation? If they do provide the answer, we need to refine

the concepts to exp lain how this process worked. It is to Marc Egnal’s credit

that he raises these issues in such an interesting way.

Leonard A. Carlson Department of Economics Emory University

Leonard Carlson is author of Indians, Bureaucrats, and Land: The Dawes Act

the the Decline of Indian Farming(1981), “The Economics and Politics of

Irrigation Projects on Indian Reservations,” in Linda Barrington (ed), The

Other Side of the Frontier (forthcoming), and other articles on U.S. and

southern economic history.

Published by H-Business@eh.net and EH.Net (August, 1998)

David E. Nye.

Energies. Cambridge, Mass.: MIT Press, 1998. xii + 331 pp. Illustrations, notes, index. $25.00 (cloth), ISBN 0-262-14063-2.

Reviewed for H-Business by Martin V. Melosi , University of Houston

Energy in Big Gulps

In this synthetic work, David E. Nye not only expands his list of valuable works on energy and technology, but takes the logical step in the existing literature from studying the production of energy to examining the consumption of energy. Surprisingly, in a society like the United States that has always taken the use of energy in big gulps, scholars have most often chosen to focus on the development and growth of energy industries (oil companies, mining companies, lumbering), the technology of production, and the economic consequences of same. Few historians, with the exception of Mark Rose, Harold Platt, and now Nye, have given sufficient attention to how we consume energy and what this tells us about our culture. Nye views consumption of energy in three ways: (1) “the literal demand for energy”; (2) “the rising demand for more goods”; and (3) the possibility that energy demands “can be ecologically destructive” (p. 12). The third view is, however, more of a consequence of the first two than a descriptive category.

Nye intends to give attention to “ordinary activities”–creating businesses, home-making, living in communities, seeking pleasures, purchasing goods–and how they “changed as people constructed new energy systems, from Colonial times to the present.” He disavows the notion that “more energy is better” or that “more energy equals more civilization.” Instead, he intends to make clear that “as Americans incorporated new machines and processes into their lives, they became ensnared in power systems that were not easily changed” (p. 1).

As a good historian of technology, he avoids technological determinism, placing an emphasis on human choice and culture in the selection and use of energy systems. “Human beings select the machines they use and shape them to fit within different cultures” (p. 3). And like other historians before him, Nye accepts Thomas Hughes’s notion of “technological momentum” for large systems which suggests that while these systems have some flexibility in their initial phases, they become less so over time. Some economists call this “path dependance” which emphasizes the notion that choices made early–in the application of a technology in this case–become more difficult to alter over time. Nye also gives primary attention to large energy systems–water power, steam power, electricity, the internal combustion engine, atomic power, and computerization–and their individual technological momenta. The systems approach, shunned for several decades after the 1930s or so, has had a resurgence in recent years as a mechanism for understanding the intersection between technology and culture.

The chronology in the book is driven by a relatively conventional focus on a succession of energy systems–wood, coal, petroleum, electricity–without attempting to suggest discrete stages. Nye emphasizes overlapping series as opposed to an Age of Coal or and Age of Oil. Such a view is a realistic assessment of how energy sources are developed and used. He also makes the insightf ul observation that each energy system “has been used to shape distinctive domestic patterns, work routines, urban structures, and agricultural methods, imparting particular rhythms and contours to the everyday round” (p. 8). This reinforces the notion that energy systems become less flexible as they mature.

The first section of the book, “Expansion,” treats the period of European colonization or conquest in North America. Accepting a tenet of environmental historians, Nye views European settlement from the perspective of redefining nature as resources and then transforming them into commodities–lumbering and the manufacture of iron, for example. The application of energy technologies, such as water power, also disrupted food-producing activity, such as fishing and agriculture (a process of economic trade-offs benefitting the new settlers at the expense of Native-American peoples). These “energies of conquest” also transformed activities like agriculture from subsistence into market economies. While not going as far as Alfred Crosby in suggesting the development of a Neo-Europe in North America, Nye emphasizes how a shift in values the European conquest impulse used energy as a tool to remake the physical and economic environment of aboriginal Amer ica. The production of cotton cloth and woollen goods in the northeast United States through the use of water power in the nineteenth century was an extension of these initial impulses. Cotton cloth and woollen goods were the first mass-produced product s in North America, heavily dependent on an energy-intensive technology, notably the water wheel. This was a regional, as opposed to national, phenomenon, however. In the South, the slave economy continued to rely heavily on muscle power, and in Nye’s view, did not maximize production. He uses this regional dichotomy in the use of energy to reinforce the notion of “the centrality of culture in determining which technologies will be adopted and how they will be used” (p. 59).

In the central section of the book, “Concentration,” Nye turns to the Industrial Revolution. He is particularly interested in how steam power came to the city through transportation and then manufacturing. What begins as a relatively traditional recitation of the impact of the railroad, quickly turns to an examination of differences in regional transformation in the application of coal and steam. Whereas locomotives and other forms of steam power were closely linked to urban development in the North, in the southern states steam was primarily utilized in the countryside in rural sugar mills and sawmills, for example. This is a good observation, although somewhat generalized given the fact that urbanization in the South developed later than in the Northeast and cannot be treated as comparable in status. But Nye makes the point that the new energy technology served many functions and had several consequences. For example, the ability to concentrate factories through the application of steam power produced more destructive envi ronmental consequences than the dispersed waterpower uses of the cotton and saw mills. Of course, the impoundment and redirection of water and the use of rivers and streams as sinks produced their own kinds of environmental threat.

Much to his credit, N ye does not simply focus on the production of goods through the use of coal and steam, but turns attention to the home and to the amenities available in nineteenth-century America. He makes some brief remarks possibly too brief about energy becoming “inc reasingly a matter of social class” (p. 97), and the degree to which some products were most readily available to middle-class white Americans. It might have been valuable, however, to dwell a little longer on economic, as opposed to social, class struct ure as a determinant of energy use. He nonetheless makes a good case about the emerging high-energy society seen not only in the city, but on the farm. The farmer’s tools, his increasing dependence on the railroad, and the rising market economy connected agricultural America to the process of “consuming power.” Nye likewise links energy use to the rise of the corporation, although this argument seems a little strained. No one would doubt the transforming power of corporate concentration, and Nye falls in line with Alfred Chandler, Robert Wiebe, and all the rest in making this point. However, there is somewhat of a chicken-and-egg problem in singling out energy use and development as a core reason for business concentration. Nye seems on stronger ground when he relates the use of coal, steam, oil, and natural gas to the development of industrial systems. Electricity more than Nye’s substantial attention to Ford’s assembly-line technique was particularly influential in the development of sophisticated, complex industrial systems. It also revolutionized the household as Nye rightly contends.

In the third and last section, “Dispersion,” domestic consumption of energy in America’s modern era takes center stage. “Just as electrification transformed the possibilities for manufacturing, it energized the popular culture that was emerging at the end of the nineteenth century” (p. 157). Not only were Americans consuming telephones, radios, and motion pictures, but also attending Coney Island, a place much less effete in its conception of what people wanted than the Columbian Exposition in Chicago. In essence, Nye argues, the new popular culture “did not trickle down from above as a simplified version of elite culture, nor did capitalists and moralizing soc ial reformers impose it. It emerged in response to demands for lively entertainment” (p. 160). And it was made possible through the application of new and abundant sources of energy. The advent of the automobile seemed to have similar roots in popular taste, but not without the superstructure of an industry poised to provide mass-produced motorcars, of course.

Nye follows the consumption trail to present-day America. Along the way, he points to several important changes: Farm life became more comfor table in the high-energy society, but farmers were being marginalized in the food-production and delivery chain. The retail centers of consumption migrated from central cities to suburban malls. New energy sources, such as atomic power and the wider use of natural gas, made the United States “the most highly powered society in the world” (p. 202). Television became an “environment.” Computers were springing up everywhere. Even the much ballyhooed energy crisis of the 1970s faded in memory by the 1990 s. Energy consumption kept apace with the high-energy lifestyle of middle Americans despite changes in international patterns of oil production and transport.

None of these facts are particularly striking or new. But Nye is not attempting to shock us with factual revelations. He is concerned with reinterpreting the familiar, building an historical periodization around themes of energy consumption, and placing great emphasis on choices made “about how people shape technologies” (p. 255). In several re spects, he has succeeded in doing just that with this book. Nye is a talented synthesizer and an important commentator on American society and culture. That he recognizes the intimacy between how American culture evolved and its use of energy is an impo rtant theme too often ignored in more traditional renditions of American history as a political or economic saga. Consuming Power is well-balanced in its chronology, in its treatment of major economic and social changes, and in its efforts to capture the essence of the American consumer culture. The emphasis on “choice” as the central factor in applying and using energy technologies sits squarely at the core of recent thinking about the history of technology that discounts technological determinism and “autonomous technology” and applauds the social construction of technical systems. This is a laudable impulse, but it is one that needs more refining in the book under discussion. A basic question not well answered is “Whose choice?” Is there a percep tible distinction between the decision of the manufacturer who employs electrical power in his factory and the decision of the consumer who buys the product made at that factory? What are the realms of choices available to manufacturers, consumers, and governments when it comes to energy? How can we distinguish between choices? How does the regulatory apparatus of the nation affect energy choices?

Beyond determining the gradations of choice, Nye and indeed the rest of us who do research in this area of history need to balance our understanding of what “choice” means with the realities of path dependence, that is, the constraints placed on choice by imbedded systems not easily modified, removed, or discarded. If David Nye was intent on forcing us to think in different ways about energy, consumption, and society, he has succeeded. Consuming Power, however, should not be the last word on these subjects, but a starting point for additional reflection.

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EH.NET BOOK REVIEW

Published by EH.NET (July 1998)

Robert J. Barro, Determinants of Economic Growth: A Cross-Country Empirical Study. Cambridge, MA: MIT Press, 1997. xii + 145 pp. $22.50 (cloth), $12.50 (paper); ISBN: 0-262-02421-7 (cloth), 0-262-52254-3 (paper).

Reviewed for EH.NET by John W. Dawson, Department of Economics, Bellarmine College.

Robert Barro and his associates have been leaders in assembling a vast empirical growth literature during the past decade. This book summarizes many of Barro’s own findings in this area and provides a general overview of the empirical research on growth to date.

The text of the book is divided into three chapters which are based on Barro’s Lionel Robbins Memorial Lectures, delivered at the London School of Economics in February 1996. The first chapter briefly reviews the history of growth theory and, in particular, describes the convergence hypothesis associated with neoclassical growth theory. The discussion quickly turns to the regression framework to be used throughout the rest of the book, which is based on the neoclassical framework.

In Chapter 1, the regression framework is applied to a panel of data covering roughly a hundred countries over the years 1965-1990 in an effort to determine what factors are important in explaining long-run growth. In using panel data instead of a pure cross section, the approach differs from Barro’s early work in this area (e.g., see Barro (1991)), but is not unlike the analysis in his more recent studies (see Barro and Sala-i-Martin (1995)). The findings highlighted in this chapter are that the growth rate of real per capita GDP is enhanced by better maintenance of the rule of law, smaller government consumption, longer life expectancy, more male secondary and higher levels of schooling, lower fertility rates, and improvements in the terms of trade. The data also support the notion of conditional convergence; that is, for given values of these variables, countries with a lower initial level of real per capita GDP grow faster. The analysis also looks at democracy and inflation as potential factors determining growth rates, but their roles are the topics of Chapters 2 and 3. Finally, Chapter 1 concludes with projections of growth rates through the end of the century based on the empirical framework developed earlier in the chapter.

Chapter 2 looks at the role of political freedom in determining growth rates; that is, whether or not a more democratic form of government promotes long-run growth. The findings suggest that increases in political rights initially increase growth but tend to retard growth once a moderate level of democracy has been attained, but Barro states that “one cannot conclude from this evidence that more or less democracy is a critical element for economic growth” (p. 61). With this, the analysis turns to developing a framework for determining the level of democracy over time and across countries. While this has largely been a topic of interest to political scientists, the main finding is that levels of democracy are a function of economic factors. In particular, “the positive relation between democracy and prior measures of prosperity–the Lipset [1959] hypothesis–is well established as an empirical regularity” (p. 86). The chapter closes with long-run forecasts of the level of democracy across countries based on the empirical model developed in the chapter.

The third chapter considers the effects of inflation on long-run economic performance. Inflation has received relatively little attention as a potential determinant of long-run growth, but the issue is particularly timely given many central banks’ apparent preoccupation with price stability as a policy goal. The major result is that inflation is estimated to have a negative effect on growth, but “the clear evidence for adverse effects of inflation comes from the experiences of high inflation [annual rates in excess of 20%]” (p.117). Barro devotes a large part of this chapter to dealing with endogeneity issues; that is, ensuring that causation is running from inflation to growth and not in the other direction.

Barro’s approach to studying the determinants of growth is very much data-driven. However, economic historians will be interested in various aspects of the analysis that look at the role of institutions in the growth process. The analysis in Chapter 1 includes a “rule of law” index which is intended to “gauge the attractiveness of a country’s investment climate by considering the effectiveness of law enforcement, the sanctity of contracts, and the state of other influences on the security of property rights” (p. 27). The rule of law index is found to be statistically significant in explaining growth. Chapter 1 also introduces a democracy index into the empirical framework, but a detailed discussion of this relationship is postponed until Chapter 2. In that discussion, the role of other institutional and cultural issues such as ethnolinguistic fractionalization, colonial heritage, and religious affiliation are considered in the growth-democracy relationship.

There is no indication of the intended audience for this book, but it appears to be rather versatile. It provides a very general but useful overview of modern growth theory with particular emphasis on the convergence hypothesis, and provides a fairly complete statement of current methodology and conclusions in the empirical growth literature. All of this could be useful to students of growth at the graduate level and to economists who are not current in the growth literature. More importantly, in my opinion, is the book’s potential for use in the undergraduate classroom and among laymen. With very few exceptions, most of the terminology used in the text is accessible to undergraduates. Most of the exceptions fall in the area of econometrics, but the use of graphs throughout the book to illustrate key estimated relationships largely eliminates this potential problem. I have also found that a lecture or two on basic regression analysis makes even the large tables of regression results accessible to advanced undergraduates. The exposition keeps mathematical notational to an absolute minimum, and uses everyday terminology in many cases to describe the more difficult concepts. Only in the discussion of the debate over cross-section versus panel estimation in Chapter 1 and the choice of instruments in Chapter 3 does the text become sufficiently thick to hinder the interested undergraduate reader.

In several instances the author’s emphasis of the results may need to be qualified. For example, Chapter 2 states that “one cannot conclude from this evidence that more or less democracy is a critical element for economic growth” (p. 61). In the concluding observations following Chapter 3, however, the results concerning democracy are reported as a main result of the analysis: “Increases in political rights initially increase growth but tend to retard growth once a moderate level of democracy has been attained” (p. 119). In addition, the reader may well leave Chapter 2 questioning the direction of causation between democracy and growth, given that empirical models of both are considered in that chapter. Similarly, the results concerning inflation may not be appropriately portrayed, in the end, as being perhaps entirely driven by experiences of inflation in excess of 20% annually. Despite these minor shortcomings, I am confident in saying that the book succeeds in its overall goal of providing a useful summary of the empirical evidence on the determinants of recent economic growth.

References

Barro, R.J., 1991, “Economic Growth in a Cross Section of Countries.” Quarterly Journal of Economics 106, 2 (May): 407-433.

Barro, R.J. and X. Sala-i-Martin, 1995, Economic Growth (New York: McGraw-Hill).

Lipset, S.M., 1959, “Some Social requisites of Democracy: Economic Development and Political Legitimacy.” American Political Science Review 53: 69-105.

John W. Dawson Department of Economics Bellarmine College

John Dawson is author of “Institutions, Investment, and Growth: New Cross-Section and Panel Data Evidence,” forthcoming in Economic Inquiry.

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H-NET BOOK REVIEW Published by H-SHGAPE (April, 1998)

Lawrence B. Glickman. A Living Wage: American Workers and the Making of Consumer Society .Ithaca and London: Cornell University Press, 1997. xvi + 220 pp. Notes, bibliographical references, index $35.00 (cloth). ISBN 0-8014-3357-6.

Reviewed for H-Net by

Richard Schneirov, Indiana State University

This book has enormous implications for historians of the Gilded Age and Progressive Era. To understand precisely how first requires a capsule summary of nineteenth century labor historiography. From the 1960s through the early 1980s, U.S. labor historians sought to write a history of the making of the American working class much in the manner done so masterfully for the English working class by Edward P. Thompson. New labor historians located a nascent socialist critique of the wage labor system in a working class version of artisan republicanism grounded in the classical labor theory of value. Most of the new generation of labor historians found that the career of labor republicanism came to a halt in the late nineteenth century with the defeat of the Knights of Labor and rise of the pure and simple or business unionism, commonly associated with the American Federation of Labor. Other historians pushed back the “fall” of labor into the twentieth century, but in most cases a working class that was “made” throughout most of the nineteenth century was “unmade” at some point in the twentieth.[1]

For nonlabor historians of the Gilded Age and Progressive Era, the conclusions of the new labor historians tended to reinforce a much older view of American history as exceptionalist–that is, lacking sharp class divisions and a viable socialist or labor political presence as existed in Europe and Britain. In the newest version of the old story, exceptionalism was not inherent in American history but emerged historically out of working class failure.

A Living Wage is so important because it provides us with some of the conceptual tools required for resolving labor history’s impasse. Glickman grounds the fin de siecle crisis, whose resolution created the foundation for modern America, in the dissolution of a producers’ understanding of how value was constructed. With the sundering of the labor theory of value from the calculus determining prices and wages–the premise for neoclassical economic theory–the producers’ critique of the wage labor system lost its intellectual and ultimately its cultural force. One outcome which Glickman does not discuss is the marginalist revolution, which facilitated the acceptance of corporate administered prices and wages. Glickman’s book tells of a different outcome, one that emerged out of the late nineteenth century labor movement. Accepting the modern premise that wages no longer were determined by the cost of labor, trade union activists, inspired by the writings of eight-hour theorist Ira Steward, began to promote a needs theory of value, according to which human needs would have priority over market forces in determining wages. In the terms of the day, labor advocated a “living wage” whose value would be determined by the ever-expanding needs and wants of workers in their capacity as consumers. As Samuel Gompers’ associate Frank Foster put it, “It is not the value of what is produced which determines the wages rate, but the nature and degree of the wants of the workers” (p. 70). Whether labor leaders knew it or not, the new regulative principle was quite in accord with the thinking of Marx whose maxim of socialism was “from each according to his ability, to each according to his needs.”

The significance of this development has been largely ignored by labor historians because the doctrine of the living wage and its corollary, the need for a constantly rising (American) standard of living, necessarily entailed the acceptance of what was then called “wage slavery.” Many historians have viewed the abandonment of the goal of self-employment through producers’ cooperation and the acceptance of a consumerist consciousness as equivalent to a passive and narrowly apolitical acquiescence in the inevitability of capitalism. But, as Glickman shows, the living wage doctrine was actively constructed by workers themselves, partly out of the producers’ ideal of a moral economy as an alternative to the commodification of toil, but also out of an acceptance of those very relations. In Glickman’s view acceptance, rather than being equivalent to acquiescence, was the necessary condition for actively reshaping and regulating market relations according to an ethical standard external to those relations, viz. workers’ self-perceived needs.

Glickman traces the development of living wage thinking from its first flowering in the eight-hour movement of the late 1880s to the rise of the 1890s trade union label movement long associated with business unionism. Inherent in both movements, according to Glickman, was the vision of a “social economy” that abandoned the idea that wages should return to workers the full fruits of their labor. Though much of the old producerist vocabulary continued to frame labor leaders’ thinking, Glickman demonstrates that trade unionists tried to reshape and control market relations by making them subject to a socially determined standard of living emerging from the sphere of consumption and collective bargaining.

By the early twentieth century, reformers outside the ranks of labor picked up the living wage ideal and turned it into a Progressive reform, known as the minimum wage. Because the minimum wage was defined as a subsistence wage fit only for those, like immigrants and women, working below the American standard, AFLers pulled back from the movement. Yet, even the minimum wage challenged the prevailing legal doctrine of freedom of contract and the still powerful producerist ethical ideal that wages should be based on an equivalent of services rendered. The idea that wages should be based on consumers’ proliferating needs and wants eventually came into its own during the New Deal. In their understanding of the 1930s depression as due to underconsumption, New Dealers and progressive businessmen endorsed the idea that rising purchasing power, which in part depended on rising wages, was necessary for the successful functioning of a mass production economy. The 1938 Fair Labor Standards Act establishing a minimum wage is for Glickman a monument to the triumph of a nonproducerist and nonmarket criterion of value determination in regard to wages.

The implications of Glickman’s book are at least several. It strongly suggests that historians abandon a time-honored view of pure and simple trade unionism as “conservative” and circumscribed by “bread and butter” concerns. To the contrary, Glickman provides us with a way of understanding this consciousness as an integral part of an ongoing class formation that occurred simultaneously with an accommodation to wage labor. Moreover, by demonstrating that socialism could have both a consumerist and producerist foundation, this book furthers the understanding that socialist principles and relations were intermixed in twentieth century corporate capitalist society and in modern liberalism.[2] Finally, it provides a way in which a re-thought labor history can incorporate the history of women workers and feminists whose agency was often focused in the sphere of consumption rather than production.

The book does have several limitations that should be mentioned. First, by promiscuously mixing quotations from the 1880s with those from the early twentieth century, Glickman misses the opportunity to suggest in specific ways how and why this new consciousness developed historically. In this regard, some labor historians will be disappointed that the book does not directly confront the prevalent argument that the living wage was gained only by abandoning skilled workers’ control over the workplace. Second, there is a basic ambivalence in Glickman’s treatment of consumption. At some points, he argues that organized workers began to view the sphere of consumption as displacing the sphere of production. At other points, he suggests that workers merely understood that the two spheres were interrelated and of roughly equal importance in determining class identity, a more defensible position. Finally, there is an implication in the book that the labor movement was the sole or prime source in defining an American standard of living. This ignores the long nineteenth century history of Whig and Republican sponsored protective tariff proposals that party spokesmen argued were necessary to protect high American wages.

These qualms should not detract unduly from a provocative and important monograph. Glickman’s book is concise (162 pages of text), well written, and his argument is easy to follow, making it accessible to undergraduates as well as graduate students. It promises to become a major text for the next round of rethinking labor history in the Gilded Age and Progressive Era.

Notes

[1]. For example, see Kim Voss, The Making of American Exceptionalism: The Knights of Labor and Class Formation in the Nineteenth Century (Cornell University Press, 1993); for a survey see Larry G. Gerber, “Shifting Perspectives on American Exceptionalism: Recent Literature on American Labor Relations and Labor Politics,” Journal of American Studies, 31 (1997): 253-74.

[2]. Martin J. Sklar, The United States as a Developing Country: Studies in U.S. History in the Progressive Era and the 1920s (Cambridge, 1992); James Livingston, Pragmatism and the Political Economy of Cultural Revolution, 1850-1910 (University of North Carolina Press, 1994); and Richard Schneirov, Labor and Urban Politics: Class Conflict and the Origins of Modern Liberalism in Chicago, 1864-1897 (University of Illinois Press, 1998).

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EH.NET BOOK REVIEW

Published by EH.NET (June 1998)

Philip Scranton. Endless Novelty: Specialty Production and American Industrialization, 1865-1925. Princeton: Princeton University Press, 1997. xiv + 415 pp. $39.50 (cloth), ISBN 0-691-02973-3.

Reviewed by B. Zorina Khan, Dept of Economics, Bowdoin College.

Philip Scranton’s past research has illuminated our understanding of “proprietary capitalism,” or a mode of production based on small artisanal shops and domestic manufactures. His current book explores the history of the Second Industrial Revolution from the perspective of specialty production, and is to be recommended as essential reading for anyone who wishes to fully understand the progress of American manufacturing after the Civil War. It is a densely structured, exhaustively detailed discussion of the role of custom and batch production in American industrialization in the pre-World War II period. Exhibitions such as the Centennial Exhibition in 1876 and the World’s Columbian Exposition in 1893 served to showcase these examples of American creativity and excellence in manufacturing. Scranton is persuasive in his view that useful business history requires the analysis of the enormously complex network of transactions that linked technology, marketing and employment, and that this objective is best achieved through the study of businesses in the “putative periphery”.

He argues that, although many consumers clearly value differentiation, uniqueness and quality, it is still necessary to emphasize the role of “Endless Novelty” for the benefit of students of industrial organization. American dominance in manufacturing is typically traced from the factories of Lowell, through the assembly lines of Ford, to the boardrooms of giant corporations that are held to be dependent on the mass production of standardized products. In the process, the implicit assumption is made that organizations evolve linearly from small scale, inefficient modes of production, to large productive enterprises that benefit from economies of scale and scope. Scranton argues that the relentless glare of the spotlight on the rise of the modern corporation has blinded researchers to the role of specialty manufacturing. Part of their myopia is, he charitably concedes, due to the lack of systematic data and tidy modes of analysis that economists weight so heavily when deciding which topics are worthy of analysis. Scranton suggests that this area of industrial organization is more suited to the talents of historians, with their reverence for description and attention to details. This contention may be true, and one cannot refrain from admiration at the creative use of biography as metaphor, the masterly weaving of myriads of diverse examples to illustrate the main theme, the apt quote from a file extracted from a remote and hitherto unexplored archive. At the same time, this work likewise illustrates the danger of information overload that may arise in the absence of a cohesive theoretical superstructure of the sort that economic analysis provides.

Scranton does provide a coherent conceptual framework, by distinguishing between custom, batch, bulk and mass production methods. Custom and batch modes were flexible and directed towards changeable market demand; bulk and mass production arguably involved more routinized methods in stable markets. Scranton analyzes regional differences in the strategies and outcomes of specialty firms and contends that their importance increased over time, especially in the older trade centers of the Eastern Seaboard. The book also includes 23 tables drawn primarily from the manufacturing censuses that attempt to distinguish between classifications of specialty or mass production. But these data are not entirely informative because, as the author points out, his categories relate more to approaches than to specific institutions or sectors; for instance, specialty and mass production could be combined in a single firm. He contends that it is still possible to identify sectors that were dominated by one or other approach, such as cigars, kitchen accessories, sewing machines and cheap watches (bulk and mass production), or carpets, leather goods, tools, hats and women’s clothing (specialty). Historians of individual industries and firms are certain to contest these divisions. Because census divisions don’t match Scranton’s conceptual boundaries, the tables are of limited utility in assessing the quantitative importance of specialty production relative to other sectors of the economy, and how this changed over time. Nevertheless, one can hardly fail to be impressed with an account that ranges over ninety three industries, and yields insights into the operations, functions, and characteristics of lace and carpet weavers, furniture-makers and jewelers; as well as assessing the activities of metalworkers in Connecticut, apparel designers in New York City, and fine chemicals in Philadelphia.

The book also includes numerous individual case studies, such as an account of George Corliss’s career in the postbellum custom and machinery trades. Corliss, a skilled machine designer, used family connections to finance and market his inventions and patents. Many transactions depended on mutual trust between suppliers and clients. As a sole proprietor, Corliss did not delegate authority, and was a demanding but fair employer, who was able to ensure the quality and precision that specialty machine building required. Through the experiences of small machine-shop owners who created networks that intersected both the social and economic spheres, Scranton convincingly delineates the advantages of small scale production. Specialists adopted diverse modes of operation and, through innovative pricing and product differentiation, achieved both profitability and efficiency in input and output markets. For instance, tool builders in Cincinnati, although they accounted for only a small fraction of national output, provided a highly reputable product in a trade where reliability was paramount, and were thus able to extract higher returns than their size might warrant. Still, specialty producers were not averse to fixing prices or acting collectively to increase their influence, so their profitability does not necessarily signal efficiency.

Scranton finds that even firms which entered the mass production market retained their specialist capabilities. Thus, mass production has never been fully achieved, for firms like Armour and American Tobacco employed specialist inputs. Rather than merely peripheral historical artifacts, the latter were critical to the process of industrialization. In the modern economy standardization may even be decreasing in relative importance as the business world becomes more complex and changeable. Making to order and eschewing large inventories, these firms are responsive to market demands and technological change. Technological change itself enhances the ability to tailor outcomes to individual tastes, such as software that can generate a wide variety of individualized musical compilations that can be recorded to disks. Now as much as then, American dominance in manufacturing depends on the individualism and creativity which Scranton’s impressive book celebrates.

(Scranton is a professor in the School of History, Technology, and Society at the Georgia Institute of Technology.)

B. Zorina Khan Department of Economics Bowdoin College.

Professor Khan’s research is primarily on patenting in the antebellum U.S. and Britain. She has also written articles on married women’s property rights, patent litigation, civil litigation in Australia, and women inventors. She is currently working on a project relating to patent and antitrust conflicts. At Bowdoin she teaches courses in American Economic History, Law and Economics, and Financial Economics.

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EH.NET BOOK REVIEW

Published by EH.NET (June 1998)

Stephen F. Frowen, ed., Hayek: Economist and Social Philosopher A Critical Retrospect. New York: St. Martin’s Press, 1997, xxvi + 324 pp. $59.95 (cloth), ISBN: 0-312-12902-5.

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Reviewed for EH.NET by Steven Horwitz, Department of Economics, St. Lawrence University, Canton, NY.

HAYEK: ONCE OVER LIGHTLY

Reviewing an edited collection is always difficult, mainly because the range of contributions, in both content and quality, is often so vast. In the case at hand, the challenge is even greater because the work of Hayek that serves as the basis for these papers is itself so broad. The papers and comments are mostly by European scholars and are taken from a conference memorializing the first anniversary of Hayek’s death. Collected by Stephen Frowen, an Honorary Research Fellow in the Department of Economics at University College London, the papers in Hayek: Economist and Social Philosopher span the range of Hayek’s contributions, from his work in technical economics, to his social philosophy, to his work on the philosophy of mind. Although the main papers vary in their quality, what emerges from the best of them is a fairly consistent picture of the main themes of Hayek’s work, and perceptive suggestions about where work in the Hayekian tradition could go next. I will approach the contents thematically.

The contribution by Barry Smith looks at Hayek’s work on theoretical psychology. Hayek’s 1952 book The Sensory Order has been the subject of renewed interest in the last few years as Hayek scholars have examined the relationship between his view of the mind and his economics and political philosophy. Smith’s paper nicely explicates Hayek’s “connectionist” view of the mind and contrasts it with the “symbolic” approach employed by many in artificial intelligence who are attempting to model the human mind. For Hayek, the mind is a spontaneous order, analogous to those of the social world that have long interested him, that emerges out of the particular patterns of neural firings that take place in the brain. Of particular importance in this view is that we are unable to be consciously aware of all that we “know.” Several of Hayek’s well-known contributions to economics in the 1930s and 40s focused on the role of knowledge in economic theory and as several contributors to this volume note, the roots of that epistemological stance can be found in Hayek’s work on the structure of the mind, which began in the early 20s.

The papers by Manfred Streit and Steve Fleetwood show the relationship between the concern with tacit knowledge and the way in which we understand social action and social order. Streit concisely lays out the connections between our “constitutional ignorance,” the role of spontaneous order, and the view of humans as rule-followers. Our ignorance prevents us from designing social orders, such as a market economy, whole-cloth. The same ignorance prevents us from understanding all of the possible causes and consequences of our individual choices. Thus, as individuals we must rely on rules, social conventions and norms as substitutes for detailed explicit knowledge, and, as a society we must rely on broader social rules and institutions to coordinate the choices made by those individuals. Those rules and institutions embody the tacit knowledge of tradition. Streit nicely applies this Hayekian approach to basic issues in competition policy, industrial policy, and the transition from “plan” to market. Of particular interest is his comparison of Hayek to Eucken and the “strong state” view of the German ordo-theorists.

Fleetwood’s excellent paper argues that Hayek’s work on “social rules of conduct” is best understood as an extension of his earlier work on the price system as a telecommunication device. Social norms and institutions supplement the communicative role of prices. Fleetwood is clear to show how these broader institutional considerations derive from Hayek’s work on the nature of knowledge and ignorance. We need these non-price institutions because neither our own minds, nor prices alone, are sufficient to ensure economic coordination. Mark Perlman’s paper in the volume also argues that Hayek’s emphasis on the market as an institution sets him apart from the strict neoclassical tradition and finds him in the company of many American institutionalist economists.

Several of the papers in the volume take up various issues in Hayek’s contributions to monetary theory and macroeconomics. Hansjorg Klausinger looks at the evolution in Hayek’s thinking on monetary policy by contrasting his early commitment to “neutral money” to his later proposals for competitive currencies. Klausinger rightly notes that Hayek was always concerned to find that monetary policy which would eliminate inflation, and that his eventual move to competitive currencies was based on his empirical observation that, mostly due to seigniorage considerations, central banks would be unable to resist the temptation to inflate. Klausinger does not point out that even with properly-motivated actors, centrally directing the money supply faces the same sorts of epistemological barriers as Hayek saw confronting attempts at centrally directing economic resources in general. Klausinger also does not ask the question of whether a system of competing currencies would be an effective way of reaching the neutral money policy norm that Hayek so clearly favored in his early work. I would argue that the answer to that question is “yes,” if “competitive currencies” is understood as a “free banking” system as found in Selgin (1988) rather than competing, fiat currencies.

G. R. Steele’s “Hayek and Keynes on Capital” does a good job in exploring the role that capital played in the Hayek-Keynes debate of the 1930s. In particular, he notes that Keynes’s unfamiliarity with the German language tradition blinded him to the Bohm-Bawerkian foundations of Hayek’s capital and monetary theory. This point is central, I would argue, to any attempt to reassess those debates. From a Hayekian perspective, Keynes might best be read as taking Wicksell’s core insights and yanking them off of their Bohm-Bawerkian foundations.

Ray Richardson on Hayek and the trade unions and Otmar Issing on currency competition both raise the issue of whether particular policy pronouncements or broad historical interpretations one finds in Hayek have sufficient empirical support. Richardson nicely shows how Hayek’s wholesale condemnation of the coercive role of trade unions is never backed up with any evidence, and that what evidence does exists suggests that the efficiency-damaging effects of British unions have not been nearly as bad as Hayek seems to suggest. Issing is skeptical of Hayek’s call for an end to central bank-produced fiat currency mainly because we have such little knowledge of the likely outcome of a competitive system. Although it is true that Hayek argued for competition precisely on the grounds that we cannot know what the future holds, it is equally true that monetary historians have produced some substantial evidence on the actual workings of competitive monetary systems prior to central banking. A good deal of that evidence shows that such systems were far better behaved that traditionally believed. Issing is either unaware of that work or has chosen to ignore it. What these two papers do point out, however, is that Hayek scholars are going to need to do a better job in convincing economists and policy makers that their theoretical and political claims can be empirically substantiated.

Overall, this collection is a good introduction to the broad themes of Hayek’s work. One general complaint is that too many of the papers seem unaware of the numerous contributions to Hayekian scholarship on this side of the Atlantic. As a result, several papers simply reiterate themes that have been pursued, often better, by other writers in recent years. Nonetheless, I would still recommend this book to those looking for a very broad and sympathetically critical exploration of Hayek. More serious Hayek scholars, however, are likely to find the recent edited collections by Birner and Van Zijp (1994), Colonna and Hagemann (1994), and Colonna, Hagemann, and Hamouda (1994) more satisfying.

References:

Birner, Jack and Rudy van Zijp, eds.. 1994. Hayek, Co-ordination, and Evolution: His Legacy in Philosophy, Politics, Economics, and the History of Ideas. New York: Routledge.

Colonna, Marina and Harald Hagemann, eds.. 1994. Money and Business Cycles: The Economics of F. A. Hayek, vol. 1, Aldershot, UK: Edward Elgar.

Colonna, Marina, Harald Hagemann, and Omar Hamouda, eds.. 1994. Capitalism, Socialism, and Knowledge: The Economics of F. A. Hayek, vol. 2, Aldershot, UK: Edward Elgar.

Selgin, George A.. 1988. The Theory of Free Banking: Money Supply Under Competitive Note Issue, Totowa, N.J.: Rowman and Littlefield.

Steven Horwitz is Associate Professor of Economics at St. Lawrence University in Canton, NY. He is the author of Monetary Evolution, Free Banking, and Economic Order (Westview, 1992) and the forthcoming Microfoundations and Macroeconomics: An Austrian Perspective (Routledge). He has also published numerous papers on Hayek and the Austrian school.

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EH.NET BOOK REVIEW

Published by H-Business@eh.net and EH.Net (May, 1998)

Paul D. Moreno. From Direct Action to Affirmative Action: Fair Employment Law and Policy in America, 1933-1972. Baton Rouge: Louisiana State University Press, 1997. 311 pp. Bibliographical references and index. $35.00 (cloth), 0-8071-2138-X.

Reviewed for H-Business and EH.Net by Charles A. Shanor, Professor of Law, Emory University

From Direct Action to Affirmative Action: Fair Employment Law and Policy in America, 1933-1972 fills a void in the history of an idea which has both captured and divided America over the past quarter century. The idea is that proportional representation (more or less) of racial groups, particularly in the employment context, is desirable social policy. The work thus complements Andrew Kull’s The Color-Blind Constitution.

Prior to the New Deal, Moreno argues, there was no affirmative action ideology of any significance. He finds “no support for benign racial classification” in the Reconstruction Era, which was dominated by the “effort to eradicate invidious racial classifications.” For example, when the original version of the Freedman’s Bureau Act of 1864 was limited to freedmen only, the Republicans who controlled Congress amended it to cover “refugees and freedmen” with “no distinction of color.” Only racist opponents of equality under the law argued that the law created a “benign classification” favoring blacks. Indeed, many advocates of equal civil and political rights at that time embraced “social” discrimination against black Americans. From the end of Reconstruction to the New Deal, there was no significant discussion of affirmative action for blacks: both the Supreme Court and legislative bodies reiterated views that “reasonable racial classifications” disadvantaging blacks were perfectly legal.

Moreno’s central thesis is that “The great depression, the maturation of civil rights organizations, and the New Deal’s change in American principles of property rights and labor policy” precipitated a shift to “our modern concept” of proportional racial representation in employment. The early 1930s “Don’t Buy Where You Can’t Work” campaign is illustrative. Direct civil rights actions were mounted against employers having “token” black employees as well as those having totally segregated workforces. One early case (involving picketing to demand that Beck Shoe Company in New York hire blacks as 50 percent of their workforce) was commented upon with much ambivalence in Harvard, Columbia, and NYU law review pieces. The focus of the decision and the articles was whether “labor controversy” in the Norris LaGuardia Act included picketing for proportional racial employment, not the merits or application of such an employment policy.

The central player in winning this issue, ultimately with the U.S. Supreme Court, was lawyer (and later federal judge) William Hastie, who represented the New Negro Alliance in Washington D.C. In a nutshell, Hastie argued that “while in theory there can be segregation without unequal treatment,” any negro who uses this theoretical possibility as a justification for segregation “is either dumb, or mentally dishonest.” W.E.B. DuBois responded that the Alliance was “fighting segregation with segregation” without admitting it. In the Supreme Court, Hastie expanded his argument with a Brandeis brief which included disproportionate unemployment and welfare statistics for blacks in Washington, as well as underemployment statistics in particular lines of work compared to population statistics. As Moreno summarizes the argument, “the alliance tried to use social science not to combat segregation, but to insist that segregation truly be equal.” The Supreme Court’s 1938 ruling in New Negro Alliance held that injunctions could not be entered by federal courts because the “Don’t Buy” picketing was a “labor dispute” under Norris-LaGuardia.

Within the Roosevelt Administration, Harold Ickes, as administrator of the Public Works Administration, settled on a plan requiring that the skilled labor payroll on PWA projects match the percentage of blacks in the occupational census. In response to Urban League criticisms that this was insufficient, Ickes’ staff explained this was a minimum, not a maximum, and fended off efforts to tie quotas to unemployment levels rather than the 1930 occupational census. TVA and other New Deal agencies adopted similar quota systems, though they sometimes maintained officially that their policies were not to discriminate.

The economic boom and full employment brought on by World War II ended for a time further consideration of proportional racial representation in employment. Then, in 1947-48, a California case, Hughes v. Superior Court, brought the issue of proportional representation to the nation’s attention. A split decision by the California Supreme Court upheld an injunction to stop picketing designed to urge an employer that discriminated against blacks to adopt proportional hiring policies. The majority held that “If Lucky [Stores] had yielded to the demands of [Hughes], its resultant hiring policy would have constituted, as to a proportion of its employees, the equivalent of both a closed shop and a closed union in favor of the negro race.” Justice Roger Traynor’s dissent countered: “Those racial groups against whom discrimination is practiced may seek economic equality either by demanding that hiring be done without reference to race or color, or by demanding a certain number of jobs for members of their group.” “No law,” argued Traynor, “prohibits Lucky from discriminating in favor of or against Negroes. It may legally adopt a policy of proportionate hiring.” Hughes appealed to the U.S. Supreme Court. Justice Frankfurter’s opinion, upholding the injunction, concluded that the California courts had legitimately distinguished picketing against discrimination (lawful) from picketing to compel discrimination (unlawful). It did not address the issue of proof of discrimination, ignoring both Hughes’ claim that discrimination was proved by the disparity between the black population and the number of black employees, and Lucky’s argument that its hiring of a few blacks showed nondiscrimination.

One of Moreno’s most significant contributions to understanding the conversion from the “colorblind” to the “proportional representation” model in the fair employment field lies in two chapters concerning operation of the fair employment laws in New York from 1945 to 1965. During the first of these decades, the State Commission Against Discrimination pursued the former strategy almost exclusively. In the second decade, following Brown v. Board of Education (a case which involved significant tension between “color-blind legalism and color-conscious sociology”), New York’s state commission drew increasing criticism from civil rights groups for focusing on individual complaints and for requiring proof of intentional discrimination. Because black unemployment remained far higher than white unemployment, and black wages continued to trail the wages of whites, advocates began focusing on group rights, compensation for past discrimination, and a national approach to employment discrimination.

At the federal level, government contracting rules moved, between World War II and the early 1960s, from an equal treatment model of nondiscrimination to race-conscious proportionalism. Most of this change took the form of encouraging employers to engage in voluntary racial preferences, however, since the federal contracting regulations explicitly avoided supporting racial quotas. By the early 1960s, both civil rights groups and President Kennedy began to view Congress as the next stage for combating discrimination. The story of Title VII’s enactment has often been told, and this book adds little to that drama. It does focus, however, more than most retellings, on the outcome of that drama: The impact of Title VII would depend on how the EEOC and the Justice Department defined their roles under the statute and how the courts received that definition. Civil rights groups feared that the statute protected individual rather than group rights, outlawed only discriminatory acts committed after its enactment, prohibited preferential treatment, and protected discriminatory seniority systems and ability tests. Their next step was to convince the EEOC and the Justice Department that the statute was not as restrictive as it appeared. This regulatory reshaping of statutory law included: EEOC’s early focus on large national employers having few black employees; expansive use of class actions by EEOC and DOJ because “race discrimination is by definition class-based discrimination”; governmental efforts to narrow the seniority system defense; and EEOC guidelines attacking tests having a disparate impact.

Moreno agrees with other scholars that “Employment discrimination law and policy had been radically transformed in the five years following the Civil Rights Act of 1964…racial proportionalism was in a practical sense the measure and remedy of discrimination, including preferential treatment and quotas.” What was left was for the courts to ratify this strategy of the agencies. This the Supreme Court did, unanimously, in Griggs v. Duke Power Company (1971). The Court’s decision, though very much at odds with some of the language and legislative history of Title VII, was of overarching importance. Moreno writes: “For the next twenty years, the development of Title VII law would be based not on what Congress meant in Title VII but on what the Court meant in Griggs.” By 1970, preferential treatment and quotas were publicly defensible in ways unacceptable only a decade earlier. Efforts by the Reagan Administration in the 1980s to reverse this trend were unsuccessful, and the Civil Rights Act of 1991 embedded proportionalism in the fabric of statutory law: “[T]he disparate-impact system, engineered by legal scholars, and ratified by the courts, in defiance of the statute under which they operated, in place for two decades by tacit consent of Congress and the president, at last gained popular consent.”

All in all, Moreno’s book ably chronicles the paradigm shift from the antidiscrimination norm to the racial proportionalism norm. However, Moreno’s closing words concerning the eclipse of the American Creed of equal treatment is ironic, for he may have measured the 1991 high-water mark of the paradigm shift just as the waters of proportionalism began to recede. Interestingly, Moreno does not chronicle the passage and judicial validation of California’s Proposition 209 (barring preferential treatment by race, gender, and other characteristics). Nor does he mention the Supreme Court’s application of strict scrutiny standards to racial affirmative action programs in the Croson and Adarand cases. In short, the battle between these two paradigms continues, and “popular consent” to proportionalism is far from being the final word on this controversial issue.

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