is owned and operated by the Economic History Association
with the support of other sponsoring organizations.

The Ancient Economy

Author(s):Scheidel, Walter
Von Reden, Sitta
Reviewer(s):Silver, Morris

Published by EH.NET (January 2003)


Walter Scheidel and Sitta von Reden, editors, The Ancient Economy. Edinburgh: Edinburgh University Press, 2002. xxi + 282 pp. ?16.99 (paperback), ISBN: 0-7486-1321-8; ?45 (hardback), ISBN: 0-7486-1322-6.

Reviewed for EH.NET by Morris Silver, Professor Emeritus, Department of Economics, City College of the City University of New York.

In 1973, the classical scholar Moses Finley (1973, 1985, 1999) unveiled a view of the economic underpinnings of ancient economies in which markets and economic motivations played little if any role. Status and civic ideology governed the allocation of scarce resources. Hence, the application of economic theory to the ancient economy was at best a futile exercise and at worst a source of grave misunderstandings. By “ancient economy” Finley had in mind only the economy of classical civilization — i.e., of the Graeco-Roman area beginning roughly in the earlier first millennium BC. However, Finley’s perspective found completion and generalization in the works of the economic historian Karl Polanyi (1981).1 Polanyi argued forcefully that the ancient Near East did not know markets and, like Finley, he was implacably opposed to the application of economic theory to ancient economic life. Thus was formed a new orthodoxy. Suggestions in the literature of ancient market behavior or economic motivation might simply be ignored or dismissed in a condescending manner as mere “anachronism.” The latter criticism was found devastating by Greek and Roman scholars.

The world of scholarship is rarely completely static, however. Scholars came forward with new evidence and new interpretations pointing to a significant role for markets. In their “Introduction” Scheidel and von Reden* explain that “Critics question the real-life impact of elite mentality and identify apparent tensions between the historical record and the model that was meant to make sense of it. They tend to emphasize the considerable scale of economic activities (above all trade) and, make a case for significant economic growth in the Roman imperial period when political and fiscal unification boosted market exchanges.” (p. 3)

This, it may be added, represents only the tip of the critical iceberg. Thus, the study of the ancient economy became an “academic battleground.”2 As a result of this battle the influence of the Finley/Polanyi orthodoxy has unquestionably waned.3 At present the study of the ancient economy might be compared to a minefield, full of perils for the unsuspecting scholar.

Thus it is most encouraging to learn from the publisher’s website that the Greek and Roman scholars involved in the publication of The Ancient Economy aim to move the debate beyond “partisan controversies.”4 Scheidel and von Reden seem to second the call for studies moving the debate beyond the Finley/Polanyi agenda and benefiting from “the conceptual and analytical repertoire of modern economics” (pp. 3-4). Obviously, a new synthesis is badly needed even if, to begin with, it is confined to the Greek and Roman periods.

Concerning the realities of the volume, it is certainly not reassuring that in the lead article (originally published in 1998), Greek specialist Paul Cartledge (p. 15) takes as a given Finley’s view that “the categories of neoclassical economic analysis” have “no useful application to ‘the ancient economy’.” Cartledge goes on to consider how we should “set about formulating usable and useful models.”5 We search his contribution vainly for the citation of even one example in which the predictions of economic theory are falsified by economic events in the Graeco-Roman economy. No synthesis, no new evidence and no usable new model can be detected here!

Turning to the closing (previously unpublished) article, as is my wont in collections of this kind, Roman specialist Richard Saller (p. 253) agrees with Finley that modern economic theory is inappropriate for antiquity because of an “incomparability in economic organization.”5 The problem, Saller suggests, is the absence in antiquity of integrated markets: * Had the markets been fully integrated, there should not have been desperate grain shortages in individual cities, at the same time as other cities were well supplied. * In such cases hungry urban dwellers did not depend solely on higher market prices to draw larger supplies from elsewhere in the [Roman] Empire. but resorted to imperial intervention. * In an integrated market, this sort of supervision would have been superfluous because pricing would have drawn grain to areas in need (p. 254 with n. 2).

Understandably, not being imbued with the trained suspicions of the modern economist, it does not occur to Saller that imperial “supervision” and not the absence of “fully integrated markets” kept the grain away from hungry cities! The classic example is provided by a serious famine at Antioch in AD 362/3. Despite the enlightened protests of Libanius and others, Emperor Julian had responded to rising grain prices caused by a severe and prolonged drought with an edict of maximum prices and the sale of imported grain at prices below the market-clearing level. These well-meant but counterproductive measures served mainly to misallocate the available stock of grain (see Downey 1951: 315-19; de Jonge 1948). They also operated to discourage large landowners (and other speculators) from storing grain.7 The problem here was not transport costs/fragmented markets but a much more significant problem: failure to understand the economic facts of life.8

The remainder of Saller’s contribution includes some cautionary observations on the scale of Roman economic growth. The ancients did of course accumulate material and human capital and they introduced important technical innovations. Clearly, the industrial era’s increased reliance on scientific knowledge and its increased range and variety of fixed capital goods have steeply accelerated the rate of technical progress and material growth. It must not be overlooked, however, that dramatic improvements in living standards are attainable through improvements in economic organization. The evidence demonstrates that ancient civilizations experienced lengthy periods of market activity and prosperity, including even affluence, interspersed with periods of pervasive economic regulation by the state and, ultimately, economic retrogression. There can be no doubt, for example, that something very important happened to Roman living standards between Romulus and Remus and Diocletian!

Perhaps there is more evidence of a move beyond partisan controversy towards a new synthesis in some of the contributions positioned between Cartledge and Saller. I proceed selectively and begin with a useful, previously published article by historian Reger because of its possible bearing on the question of integrated markets raised by Saller. Reger compares time-series of prices for a number of imported commodities (oil, perfume, papyrus, pitch). The price data are taken from priestly inscriptions on the island of Delos dating to the Hellenistic period in the third and second centuries BC. The prices of the various commodities display markedly different patterns. This finding is understood by Scheidel and von Reden (pp. 133-34) to undermine the view that the Hellenistic market was integrated (Reger 145). The assumption underlying this conclusion seems to be that economic integration requires prices to be determined by “general economic trends” and/or “broader interregional developments” meaning, apparently, that all prices must change in the same direction. Have Scheidel and von Reden identified price inflation/deflation with economic integration? Obviously, integration across spatially distant markets is quite consistent with an unchanged general level of prices combined with pronounced changes in relative prices — i.e., perfume rises in price, oil prices decline. Indeed, such changes are commonplace in the contemporary economy and in no way indicate an absence of integrated markets.

The beginning of a trend toward synthesis can indeed be seen in the (previously published) contribution by the French historian Andreau. I especially appreciated his suggestion that “To contrast, term by term, everything pre-industrial with everything modern, and endlessly to scour antiquity for all possible and imaginable signs of archaism, results in a very reductionist view of history. Besides, whether deliberate or not, such an approach has the effect of providing present-day institutions and situations with an intellectual justification which they do not always merit, and of strengthening our reassuring (but illusory) impression that they are eternal, or at least immortal, since we have now entered modernity.” (p. 35)9

While there is room for disagreement, Andreau’s article merits close and respectful attention.

A (previously published) article by archaeologist Halstead also is helpful. He sees “famine-brokering” as a partial answer to “what is arguably the most important problem in the ancient economy ‘how did rich Greeks and Romans in classical antiquity acquire their wealth?'” (p. 68) Selling stored grain on the market in periods of exceptionally high prices “may well hold the key to the original emergence of a rich minority, given that current ancient historical orthodoxy seems…to have ruled out all the obvious alternatives” (p. 69) (emphasis added). Of course, the “obvious alternatives” for becoming wealthy would be reinstated in any new synthesis! Thus, archaeologist Hitchner (p. 76) in his discussion of growth in the olive oil industry in the Roman provinces of North Africa observes “the proliferation of small farms with one or two presses often in close proximity to oileries, and frequently on agricultural marginal lands…. That is, the decision to construct a large stone lever press… particularly when much more modest means of extracting oil for subsistence needs were available, implies that surplus oil production was the ultimate objective of the small farm occupants. Although the capital for these presses is likely, in many instances, to have come from the owners of the nearby oilieries interested in the oleocultural development of marginal lands in or around their estates, we may also see in these arrangements an effort by the farms’ occupants, whether independent small-holders, free tenants or even slaves, to better their lot.” (emphasis added)

Let it be noted that Hitchner published these words in 1993 when proponents of the idea that members of the ancient public might become rich by means of productive activity were still likely to risk being derided as “anachronistic.”10 With respect to the sources of Athenian wealth in the fourth century BC Osborne (pp. 128-30) tentatively raises the possibilities, “against firmly held modern convictions,” that manufacture was of some importance and that agriculture was actually profitable.

The Ancient Economy, much to my surprise, actually does include a number of contributions (Andreau, Halstead, Hitchner plus the “Introduction”) that move the discussion beyond partisan controversy toward a new synthesis. The volume has the additional merit of bringing together in one place valuable previously published articles by Hopkins, Panella/Tchernia, and Rathbone. On the other hand, the articles by Saller and, especially, Cartledge cling to the Finley/Polanyi orthodoxy. Their strategic placement in the book, first and last chapters, betrays a serious tension in the conception of the editors. To conclude, this is a collection that scholars of the ancient world should be pleased to have in their libraries.

I do have one strong complaint. The editors (p. 4) note that “It goes without saying that it is impossible for a collection of this kind to cover all the bases.” Agreed, but why in a volume devoted to economic history do we find classicists, historians, archaeologists and even a philosopher but not a single contribution by a professional economist? The omission is glaring and revealing.


*About the Editors: Walter Scheidel, formerly Moses and Mary Finley Research Fellow of Darwin College, Cambridge, currently teaches Ancient History at the University of Chicago; Sitta von Reden is Senior Lecturer in Classics and Ancient History at the University of Bristol.

1. I have relied upon Polanyi’s posthumously published manuscript entitled The Livelihood of Man (1981). The editor of this volume, Harry W. Pearson, has included material on Polanyi’s life and has contributed a useful introduction citing Polanyi’s major publications and placing his thought in perspective.

2. The “Suggestions for further Reading” include recent contributions on both sides of the controversy.

3. Interestingly, as their empirical base deteriorated some scholars loyal to this “primitivist/substantivist” school began to denigrate the use of empirical evidence and, more and more, to stress the importance of “erudite models” (see note 6 below). Indeed, even Finley (1985: 182) in “Further Thoughts,” appealed to historical and anthropological/sociological “models” as opposed to “the continual evocation of individual ‘facts’.”


5. In modern economic models are conceptual structures capable of being manipulated to make predictions, which may be tested against empirical evidence. For Finley/Polanyi scholars, however, a model is “a heuristic device for organizing data into an intelligible whole” (Stager 2001: 625) As Finley (1985: 182) explained in “Further Thoughts,” “models” are “valuable in obscuring incidental detail and in allowing fundamental aspects of reality to appear.” “Model” serves as an objective-sounding name for a priori positions that are employed to sift, shape, interpret or avoid the evidence.

6. With two exceptions the articles included in The Ancient Economy were originally published elsewhere. The editors contribute an introduction and chapter commentaries. With one exception the contributions are authored by classicists, historians and archaeologists. The exception is a reprinted contribution by philosopher Scott Meikle who, while critical of modern economic theory, is quite adept at manipulating the Marxist categories of “use value” and “exchange value.”

7. Halstead (p. 69) notes that the Roman writer Varro advised landowners to store grain in order to take advantage of high market prices in times of famine.

8.Readers interested in market integration in the Roman world might consult Temin (2001).

9. One might consider in the light of Andreau’s remarks Douglass North’s (1991: 98) pursuit of the “Holy Grail” of a once-and-for-all incremental evolution of efficient institutions.

10. Hitchner (pp. 80-81) was well aware of the professional risk he was taking in citing empirical evidence for significant growth in the Roman economy.


Downey, Glanville (1951). “The Economic Crisis at Antioch under Julian the Apostate.” In P.R. Coleman-Norton (editor), Studies in Roman Economic and Social History. Princeton, N.J.: Princeton University Press, 312- 21.

Finley, Moses (1973, 1985, 1999). The Ancient Economy. Berkeley: University of California Press.

de Jonge, P. (1948). “Scarcity of Corn and Corn Prices in Ammianus Marcellinus.” Mnemosyne, 1, 238-45.

North, Douglass C. (1991). “Institutions.” Journal of Economic Perspectives, 5, 97-112.

Polanyi, Karl (1981). The Livelihood of Man. Harry W. Pearson (editor). New York: Academic.

Stager. Lawrence E. (2001). “Port Power in the Early and the Middle Bronze Age: The Organization of Maritime Trade and Hinterland Production.” In Samuel R. Wolff (editor), Studies in the Archaeology of Israel and Neighboring Lands. Chicago: Oriental Institute, 625-38.

Temin, Peter (2001), “A Market Economy in the Early Roman Empire.” Journal of Roman Studies, 91, 169-81.

Suggestions for Further Reading:

Bleiberg, Edward (1995). “The Economy of Ancient Egypt.” In Jack M. Sasson, John Baines, Gary Beckman, and Karen S. Rubinson (editors), Civilizations of the Ancient Near East, Vol. III. New York: Scribner’s Sons, 1373-85.

Cartledge, Paul, Edward E. Cohen, and Lin Foxhall (editors) (2002). Money, Labour and Land: Approaches to the Economies of Ancient Greece. London: Routledge.

Castle, Edward W (1992). “Shipping and Trade in Ramesside Egypt.” Journal of the Economic and Social History of the Orient, 35, 239-77.

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

Dercksen, Jan Gerrit (editor) (1999). Trade and Finance in Ancient Mesopotamia. Leiden: Nederlands Historisch-Archaeologisch Instituut te Instanbul.

Donlan, Walter (forthcoming). “Homer and Hesiod on Commerce and Trade”. In Rollinger and Ulf (editors), Commerce and Monetary Systems in the Ancient World.

Engels, Donald (1990). Roman Corinth: An Alternative Model for the Classical City. Chicago: University of Chicago Press.

Figueira, Thomas J. (1984). “Karl Polanyi and Ancient Greek Trade: The Port of Trade.” Ancient World, 10, 15-30.

Greene, Kevin (2000). “Technological Innovation and Economic Progress in the Ancient World: M.I. Finley Re-considered.” Economic History Review, 53, 29-59.

Hudson, Michael and Baruch A. Levine (editors) (1999). Urbanization and Land Ownership in the Ancient Near East. Cambridge, Massachusetts: Peabody Museum of Archaeology and Ethnology, Harvard University.

Hudson, Michael and Marc Van De Mieroop (editors) (2002). Debt and Economic Renewal in the Ancient Near East. Bethesda, Maryland: CDL Press.

Mattingly, David .J. (1988). “Oil for Export? A Comparison of Libyan, Spanish, and Tunisian Olive Oil Production in the Roman Empire.” Journal of Roman Archaeology, 1, 33-56.

Mattingly, David J., David Stone, Lea Sterling and Nejib Ben Lazreg (2001). “Leptimus (Tunisia): A ‘Producer’ City?.” In David J. Mattingly and John Salmon (editors), Economies Beyond Agriculture in the Classical World. London: Routledge, 66-89.

Menu, Bernadette (2001a). “Economy: Overview.” In Redford (editor), The Oxford Encyclopedia of Ancient Egypt. Vol. 1, 422-6.

Menu, Bernadette (2001b). “Economy: Private Sector”. In Redford (editor), The Oxford Encyclopedia of Ancient Egypt. Vol. 1, 430-3.

Millett, Paul (1991). Lending and Borrowing in Ancient Athens. Cambridge: Cambridge University Press.

Olivier, Jean-Pierre (1987). “Des Extraits De Contrats De Vente D’Esclaves Dans Les Tablettes De Knossos.” In John T. Killen, Jos? L. Melena, and Jean-Pierre Olivier (editors), Studies in Mycenaean and Classical Greek. Salamanca: Universidad de Salamanca, 479-98.

Purcell, Nicholas (1990). “Mobility and the Polis.” In Oswyn Murray and Simon Price (editors), The Greek City from Homer to Alexander. Oxford: Oxford University Press, 29-58.

Redford, Donald B. (editor) (2001). The Oxford Encyclopedia of Ancient Egypt. 3 volumes. Oxford: Oxford University Press.

Rollinger, Robert and Christoph Ulf (editors) (forthcoming). Commerce and Monetary Systems in the Ancient World (5th International MELAMMU Conference, Innsbruck Oct. 3rd-8th 2002).

Silver, Morris (1995). Economic Structures of Antiquity. Westport, Connecticut: Greenwood Press.

Silver, Morris (forthcoming). “Modern Ancients”. In Rollinger and Ulf (editors), Commerce and Monetary Systems in the Ancient World.

Morris Silver is Professor Emeritus of Economics in the City College of the City University of New York. His most recent publications about ancient economies are Taking Ancient Mythology Economically (Leiden: Brill, 1992) and Economic Structures of Antiquity (Westport, Connecticut: Greenwood Press, 1995). “Modern Ancients” is forthcoming in Rollinger and Ulf (editors), Commerce and Monetary Systems in the Ancient World , Fifth Annual Melammu Conference 2002. Professor Silver maintains a website on “Ancient Economies” at

Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):Europe
Time Period(s):Ancient

A Monetary History of the Ottoman Empire

Author(s):Pamuk, Sevket
Reviewer(s):Munro, John

Published by EH.NET (November 2002)


Sevket Pamuk, A Monetary History of the Ottoman Empire. New York: Cambridge University Press, 2000. xxvi + 276 pp. $70 (hardback), ISBN: 0-521-44197-8.

Reviewed for EH.NET by John Munro, Department of Economics, University of Toronto.

It is my firm conviction that one cannot fully comprehend European economic history without an adequate knowledge of Islamic history (and indeed of Asian-African history) — and, from the early fourteenth century, such a knowledge, in particular, of Ottoman-Turkish history. Furthermore, I also believe that a proper knowledge of economic history must be informed by a command of monetary history (and monetary economics, of course), one of the most difficult forms of history to produce well. For these reasons, and also for the quality of the research, analyses, and historical narrative, this book is a singular triumph, a masterpiece (albeit one to be expected from such an eminent economic historian), and indispensable for European economic historians. And I read it through with ease and great pleasure, in one sitting. Very few scholars could possibly have undertaken a study with such a vast scope, geographically and temporally, covering seven centuries and this very extensive, far-flung empire, embracing not only the Anatolian heartland, but also most of the Balkans, and then, from 1517, the former Mamluk domains in the Levant (Syria-Palestine), Egypt, and adjacent lands in North Africa, Iraq and Arabia. But monetary and more general economic history of these Turkish-ruled lands are not discussed in isolation, they are admirably integrated into the mainstream themes of European and Asian economic history, particularly in analyses of commercial relationships, specie flows, and monetary changes within and among these various areas in the Mediterranean basin especially.

The introductory chapter provides an overview of these developments, over these many centuries, in the particular context of Ottoman monetary and more general economic policies; the second chapter analyses the relationships among commercial, financial and specie flows; the changing supplies of gold, silver, and copper; and the organization and operation of the mints in the earlier centuries. Chapter 3 focuses on the book’s central theme: the role of late-medieval coinage debasements as essentially a fiscal policy (though analyzed as well in the context of their possible relationship to periodic bullion scarcities, and other possible motives for debasement); and it is worth noting that medieval Ottoman debasements were far more modest than those in most of medieval western Europe (excepting England). Chapter 4 explores the development of the Ottoman imperial monetary system, based on a common gold coinage, one conveniently modeled on the Venetian ducat or zecchino (with 3.56 g fine gold), or rather on the Mamluk gold ashafri first minted, on this basis, in 1425 (the model for the Ottoman sultani, minted from 1447-8); but, from the sixteenth century, the silver coinages largely retained their regional identities (i.e., beyond the original Ottoman silver ak?e). Even in the medieval world, however, there was more to money than just coinage; and Chapter 5 thus discusses the important roles of credit and related financial institutions. Chapter 6 provides a much more detailed analysis of monetary changes in the various imperial regions: the Balkans; Egypt; the “shahi” zone of eastern Anatolia, Iraq, and lands bordering Iran; Crimea (a dependency); and North Africa (the Maghrib, Tunis, Algeria, Tripoli). Chapter 7, on the early modern Price Revolution, provides an even-more globally integrated view, emphasizing not just changes in monetary stocks but more especially in monetary flows (and in the context of the “monetary approach to the balance of payments”). This chapter is of particular interest in utilizing the author’s own extensive and invaluable research on Ottoman prices, allowing him to critique and modify, though substantially support, the earlier and renowned work of O. L. Barkan, segregating the impact of debasements from the other monetary forces examined.

The following Chapters 8 (ominously called “Debasement and Disintegration”), 9 (“In the Absence of Domestic Currency”), 10 (“The New Kurus”), and 11 (“Linkages with the Periphery”) examine the following developments from the late sixteenth to early twentieth centuries: a greatly increased fiscal reliance, aggravated by declining mining outputs, on truly drastic debasements (from 1586), which reduced the silver ak?e to a virtually unusable small coin and forced much of the populace to rely instead on imported European coins; a return (from the later seventeenth century) to purely copper coins (first issued in the fifteenth century); the eighteenth-century attempt to establish, on a more centralized minting basis, a new and much heavier silver currency (the kurus), aided by a revival in Ottoman and indeed European silver mining, accompanied by a revival in gold minting as well; and the establishment of stronger, more stable monetary links with the outlying provinces. Before a brief conclusion, the final two chapters, 11 (“The Great Debasement”) and 12 (“From Bimetallism to the ‘Limping Gold Standard'”), establish that the later eighteenth-century attempts to eschew debasements and rely instead on European borrowing could not continue,; and thus, from 1808-34 the worst debasement in Ottoman history ensued (forcing down the exchange rate on the British pound from 8 to 104 kuruses by 1839) — a most remarkable experience. Nevertheless from 1839-44, the Turkish government successfully achieved its goals of monetary reform, finally abandoning coinage debasements, introducing a limited circulation of non-convertible paper currency, marketing long term “bonds” (or annuities?), and, from 1881, adopting a “limping” gold standard, and modern (French-dominated) commercial banking institutions. The book ends, of course, as did the Empire, with World War I.

The heart of the book lies in the truly superb economic analyses of coinage debasements and their consequences — perhaps the best that I have read. While I fully endorse Pamuk’s thesis that the primary objective of aggressive debasements was purely fiscal, in increasing seigniorage revenues (and perhaps in reducing the real burden of debt repayments), debasements could also be defensive reactions to neighboring mint policies. Thus a comparison of Ottoman debasements with those of the Habsburg Empire and Safavid Persia (Iran) — with whom the Ottomans were so frequently at war — might have provided a better perspective, if such evidence were available. My only other minor criticism about this theme concerns the attempt to distinguish among the causes of the Ottoman Price Revolution: i.e., between the effects of debasement and those of other monetary forces, by providing both nominal and silver-gram prices. While useful, it unwisely and unrealistically suggests — without these added caveats — that debasement produces an exactly proportional inflation; or implicitly that a debasement (1) produces an inversely proportional expansion in the coined money supply (if based on the formula: [1/(1-x)] – 1, in which “x” represents the percentage reduction of fine silver or gold in the monetary unit of account); and that (2) such a monetary expansion would lead to an exactly proportional rise in the price level — implying acceptance of a very crude version of the Quantity Theory. Elsewhere, of course, the author very properly establishes that the extent of inflation depends as well upon changes in monetary flows and real output changes in the economy: i.e., upon the variables V (=1/k) and y, in MV = Py; or, better, in M = kPy. Clearly, however, different degrees of coinage debasements do help explain differences in price levels among regions and countries in early-modern Europe; and yet the most remarkable feature of Graph A-1 (p. 236) is how much the Istanbul price level, from 1450 to 1900, resembles the patterns of the Phelps-Brown Hopkins index for southern England! My other minor quarrel is Pamuk’s almost complete neglect of the Central European silver mining boom, from the 1460s to 1530s (expanding Europe’s silver supply about five-fold), whose causes and consequences would have put in much better perspective his discussions of the mid-fifteenth century “bullion famine” and the monetary origins of the sixteenth-century Price Revolution. And for the latter, at least in a pan-European perspective, more attention should have been given to the sixteenth-century financial revolution in negotiable credit instruments. But Pamuk is in good company, since most economic historians continue to neglect these important monetary phenomena. Finally, these criticisms do concern only minor defects. In sum: this book is a splendid, monumentally important achievement, warmly and strongly recommended to all European economic historians.

(Pamuk is Professor of Economics and Economic History at Bogazici University, Istanbul, Turkey. He is also the author of The Ottoman Empire and European Capitalism, 1820-1913 (1987).)

John Munro is Professor of Economics at the University of Toronto; and is currently the medieval area editor of the forthcoming Oxford Encyclopedia of Economic History (Joel Mokyr, general editor). He is the author of, inter alia, Bullion Flows and Monetary Policies in England and the Low Countries, 1350-1500 (Aldershot, 1992); and “Wage Stickiness, Monetary Changes, and Real Incomes in Late-Medieval England and the Low Countries, 1300-1500: Did Money Matter?” Research in Economic History, 21 (2002), 185-297.

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):Europe
Time Period(s):Medieval

Economic Sentiments: Adam Smith, Condorcet, and the Enlightenment

Author(s):Rothschild, Emma
Reviewer(s):Hueckel, Glenn

Published by EH.NET (September 2002)

Emma Rothschild, Economic Sentiments: Adam Smith, Condorcet, and the

Enlightenment. Cambridge, MA and London: Harvard University Press, 2001.

ix + 353 pp. $50 (hardcover), ISBN: 0-674-00489-2; $18.95 (paper), ISBN:


Reviewed for EH.NET by Glenn Hueckel, Department of Economics, Pomona College.

This is a book that will itself provoke in its readers a number of

“sentiments,” chief of which will be, no doubt, what Smith would have

described as a “sense of wonder” at the breathtaking range of the author’s

learning. Her exposition carries us beyond the works of the two authors in the

staring roles, beyond even those of the two chief supporting actors (Hume for

Smith; Turgot for Condorcet), to commentaries on Greek tragedies, studies of

medieval British labor markets, comments on a modern French philosophical

critique of “bourgeois society,” and much more. Indeed, since few

English-speaking readers will be able to measure up to Rothschild’s linguistic

skills, her commentary on a vast French literature, supplemented with

occasional German sources, cannot fail to prompt new lines of thought. The

argument is lavishly documented; her endnotes alone could provide the diligent

scholar with a rich syllabus for a long and highly instructive course of


The text, however, is a rather different matter. That initial reaction of

“wonder” will be, I fear, quickly tempered by a growing sense of aggravation

and disappointment as readers contemplate the interpretative structure the

author constructs from her sources, particularly as that structure concerns

Smith. Frequently, the reading advanced seems to be conditioned by the needs

of Rothschild’s argument rather than by the content of her sources. This is,

without question, a difficult book. The exposition is highly allusive,

carried along by hundreds of fragmentary quotations that are more tantalizing

than instructive. Not infrequently one longs for a series of simple

declarative sentences where one can get one’s bearings. Nevertheless,

“enlightenment” eventually arrives in the last chapter, where the author

finally makes explicit her organizing structure.

That structure is best described as comprising three layers of varying degrees

of complexity. At the simplest, most descriptive level, the author seeks to

“cast light” on her notion of eighteenth-century enlightenment. For this

purpose, the object of our attention is to be understood as “a universal, or

potentially universal disposition; … not a characteristic only of

philosophers,” but “a particular disposition of everyone.” This is a

disposition to “a discursive, disputatious, theorizing way of life” which

infuses all areas of existence, particularly the political and commercial

spheres (which, as the author is at pains to point out, are themselves

interrelated) (pp. 16, 31, 39, 49). It is at this level that the argument is

most instructive. The ideas of her authorities fit easily into this scheme,

and the arrangement reveals a number of fascinating insights that will enrich

our understanding of those authorities.

It will be evident from the book’s title that our attention is to be directed

at those enlightenment authors who were roughly a generation younger than

Quesnay and his physiocratic contemporaries. This is an important distinction

since that earlier generation has been criticized for the authoritarian stance

of their political views, a sort of “compulsory enlightenment” in which the

state was to shape the spirit of its people in the philosophers’ image of the

“laws of nature.” Indeed, our authors — Condorcet and Turgot; Smith and Hume

— were among those critics. The failure to maintain this important

distinction in the post-Revolutionary world led, we are told, to the false

portrayal of Smith and Condorcet as expressing that same “cold, rational, and

reflective calculation” associated with the previous generation of

Enlightenment writers in contrast to that “warmth” of sentiment said to

characterize post-Napoleonic thought (pp. 25-28; 34-39).

The author’s first objective is to rescue the reputations of Condorcet and

Smith from this frigid characterization. The task is accomplished for

Condorcet in chapters 6 and 7, the latter of which is slightly revised from

its earlier version appearing in the Historical Journal, 39.3

(September 1996): 677-701. These demonstrate quite satisfactorily that his

“principles … are strikingly different from the cold, unfeeling, all-summing

‘mechanical philosophy’ which is supposed to be characteristic of the French

enlightenment” (p. 212). His world not only permitted diversity of opinion but

encouraged it. Indeed that diversity is to be seen as “of central importance”

to the analysis of voting procedures that led to his famous conclusion that

aggregation of individual choices by majority vote will, under certain

circumstances, produce intransitive outcomes. Condorcet’s solution to the

problem was to envision constitutional procedures to manage that “political

dissonance” by encouraging “deliberation, delay, and the prospect of

reversibility.” His citizens would “vote interminably” on “everything from

property rights in ponds to the future constitution of representative

government” (pp. 188-89; 198-99; 204-05; 219-20).

In Smith’s case, the rescue occurs in chapter 2, which, like chapters 3 and 7,

is very slightly revised from an earlier publication (in the Economic

History Review, 1992, 45.2: 74-96). Here the problem is to explain how

Smith’s expansive views on “natural liberty” could come, within a decade of

his death, to be compressed in the minds of his countrymen to no more than a

narrow call for commercial freedom. Here the argument introduces us to the

oppressive social atmosphere in Britain of the 1790s, when widespread fear

that the terrors of the Revolution might be exported across the Channel made

very unpopular any discussion of reform, or even expressions of anything less

than wholehearted support for the war with France. We are reminded that

Stewart, Smith’s first biographer, read his “Account” of Smith’s life to the

Royal Society of Edinburgh at just the time when several of his countrymen

were on trial in the same city for sedition, for which they were eventually

convicted and transported. Some even appealed in their defense to the views

expressed in The Wealth of Nations, which, no doubt, made Smith’s less

reckless readers very nervous. Indeed, Stewart himself fell afoul of the

contemporary sensibilities a year later and was constrained to repudiate what

seems to modern eyes a very mild quotation from Condorcet included in an

earlier work. No wonder Stewart was at pains in his “Account” to distinguish

commercial freedom alone as conducive to national wealth, assuring his hearers

that the freedom of widespread political participation is not, in all cases,

necessary to the “happiness of mankind” (Smith, 1980, p. 310). It is, of

course, obvious that the reception and interpretation of an author’s work will

be influenced by the political and social environment of the time. Rothschild

has here given us a fascinating picture of how that environment influenced the

reception of Smith’s work in the 1790s. A similar story is told in chapter 4,

which contrasts Smith’s criticism of apprenticeship with the arguments

advanced in the debates leading to the 1814 repeal of the apprenticeship

clauses of the Elizabethan statute of artificers. Here too we see in detail

how the participants in those debates carefully chose from among Smith’s

broader arguments to support their own narrower purposes. These and the

intervening chapter 3 may well be the best in the book.

That intervening chapter (appearing in a shorter version in the Economic

Journal, 1992, 102.414: 1197-1210), completes the effort to rescue

Condorcet and Smith from that “cold” and “unfeeling” version of the

Enlightenment. Here we are concerned with the teachings of our authorities

regarding the grain trade because, we are told, “The political economy of food

has been an emblem, at least since the 1760s, of the heartlessness of the

liberal system” (p. 72; the like point is made with particular reference to

Smith on p. 61). Rothschild, however, is at pains to convince her readers that

Condorcet, Turgot, and Smith all “argued that free trade in corn is the best

means to avoid famine” (pp. 73-74). This will come as no surprise to

economists; but her brief survey of the arguments contained in Turgot’s

“Lettres” and Condorcet’s R?flexions on the grain trade (which, apart

from some brief excerpts from Turgot translated by Groenewegen, are not

available in English) will be of considerable help to scholars interested in

understanding how societies (and economic theory) respond to subsistence


It should by now be evident that Rothschild’s effort to describe the positions

advanced by her second-generation Enlightenment authors and to trace out how

the perception of those positions changed in the decades immediately following

the Revolutionary period does indeed cast new and revealing light on the

position of those authors in the pre-Revolutionary intellectual firmament.

About midway through the book, however, the argument shifts away from this

descriptive stance and turns ever greater attention to an evaluation of that

“liberal economic thought” associated with those authors. By the end of the

fifth chapter we are confronted with what Rothschild insists are the two

“shortcoming[s] of the liberal economic order.” The first is its alleged

failure to acknowledge “that individuals seek, on occasion, to pursue their

own (economic) interests by political means.” The second is the “inconstancy”

of that “liberal order.” The institutions comprising the world described by

Condorcet and Smith, being “the outcome of innumerable, unruly judgments, …

may or may not be good.” In this respect that structure “is very unlike a

divine providence … in which individuals should have confidence.” Or, as

the point is expressed in the last chapter, this “more insidious shortcoming

of the liberal orders … is that they do not contain within themselves the

sources of their own improved orderliness.” If, in their intellectual systems,

our authors deny the existence of a “divine providence” looking after things,

then they can have no certainty that those “innumerable, unruly judgments”

will lead to “improved orderliness” (pp. 157-58; 219-20). This uncertainty

provides the third facet of Rothschild’s organizational structure. As she puts

it on the penultimate page of her text, she “has been concerned in this book

with an economic thought in which uncertainty is the overwhelming condition of

commercial society.”

It must be admitted that this theme of “uncertainty” appears frequently in

various brief obiter dicta throughout the book, but the precise nature

of the “uncertainty” that is supposed to be at issue is not made explicit

until the last chapter. There it takes several forms, ranging from the trivial

to the profound. At its most mundane level, it is no more than normal market

risk: “The world of eighteenth-century commerce was insecure, or risky, in the

sense that it was full of new investments and new economic relationships” (pp.

239-40). Yes, replies the reader, and the same could be said for any other

century. To some degree, the uncertainty that is supposed to be at the heart

of “liberal economic thought” arises from capricious changes in the rules of

the game: “The new world of commerce was insecure, too, because it was subject

to frequent and often sudden changes in laws, regulations, and the

jurisprudence of property” (p. 240). But the key role in the argument is

played by those sources of uncertainty that correspond to Rothschild’s two

“shortcomings” of the “liberal order.” That enlightened disposition to “a

discursive, uneasy, self-conscious way of life” that produced the “political

dissonance” that so occupied Condorcet spills over into commercial life as

well: “The eighteenth-century system of commerce … was subject to continuing

flux not only in events, and in rules, but also in the dispositions of the

individuals … of whom the system is composed.” This “flux in the condition

of men is the essential circumstance of modern commerce, in Smith’s, Turgot’s,

and Condorcet’s description” (p. 241). The individuals who populate the world

envisioned by these authors are said to “have opinions about their own

interests, about the interests of the society, and about the policies which

are likely to promote those interests,” and they recognize that they can

promote their private interests through efforts to influence those policies:

“They are buying and selling, buying and selling; in the end, they are buying

and selling rules, and customs, and their own dispositions.” Apparently this

flaw in the “liberal economic system” is to be understood as a fundamental

internal contradiction and is, consequently, the source of “the system’s own

insecurity”: “The system of economic freedom is founded on the equality of all

individuals, and it is at the same time subversive of equality,” that

subversion arising from “the endless circle in which individuals become rich,

and use their money to buy power, to buy other individuals, and to influence

the ways in which other individuals think” (pp. 239; 245; 251-52). Here,

obviously, we have come to Rothschild’s first “shortcoming.” The connection to

the second is obvious: without the presumption of a benevolent, divine

creator, there can be no certainty that those shifting “dispositions of the

individuals” in the system will lead to a socially desirable outcome. But,

Rothschild insists, the system to which Smith, Hume, Condorcet, and Turgot all

subscribed “is not the sort of order which is directed, like the ‘movements of

nature,’ by an ‘all-wise Being,’ or by a single, unified theory” (p. 230).

Here then is the evaluative framework that Rothschild would have us adopt. It

portrays the social systems envisioned by Condorcet and Smith as infused by

uncertainty in various forms, all arising from the “continuing flux” in the

“dispositions” of a “discursive, disputatious” populace, that perpetual social

“dissonance” operating with no hope of a divine, guiding hand and,

consequently, plagued by the “shortcoming” that its agents might pursue their

private interest through anti-social means. But what of the supporting

argument? Can such a reading be shown to be consistent with the texts under

review? With respect to Condorcet, Rothschild’s evidence is extensive and

largely persuasive. Smith, however, simply will not permit himself to be

forced into this template for it attributes to his work positions that, in

several cases, are directly opposed to those which he actually advanced. At

nearly every point, the argument rests on selective omissions and

misrepresentations of the Smith texts. Consider, as illustration, just those

bearing on Rothschild’s two “shortcomings of the liberal order.”

If, as alleged by that first “shortcoming,” we fail to acknowledge that those

intelligent, “discursive,” “self-conscious,” agents in our enlightened world

will recognize the incentives to pursue their private interests through the

political system, then our only hope for future social improvement is to take

refuge in the hope that those agents will grow in social awareness and form

their own interests to those of society. As Rothschild puts it, the

Enlightenment’s “late eighteenth-century exponents” looked forward to “a

universe of small proprietors, most of whom are sufficiently foresighted to

understand that their own lasting self-interest, which coincides with the

interest of the society, consists in competing by economic means … and not

through political influence” (p. 158). Now, this seems a fair portrayal of

Condorcet’s position, at least as it was near the end of his life. Quoting

from her translation of one of his last texts, Rothschild observes that

Condorcet put his faith in reform. With “better laws, … ‘the interest in

acquiring things by illegitimate means will present itself less often, to a

smaller number of individuals, and in less diverse and less seductive forms'”

(p. 166). Here, no doubt, is the source of Rothschild’s claim of

“uncertainty.” There is nothing in this rendition of Condorcet’s vision to

inspire confidence in future improvement. It is, as Rothschild puts it, no

more than “a probabilistic judgment,” an “expression of confidence in the

disposition of individuals to discuss and to live by principles of morality;

to be mild and moderate, and to feel an increase of humanity, from the very

habit of conversing together” (p. 232). “The only source of certainty in such

a society,” we are told, “is to be found … in domestic virtues and domestic

conversations. … Condorcet … is prepared to defend the softness or

sweetness of modern life; to look forward to the ‘easy virtues’ of a world in

which improvements in education and laws would have made ‘the courage of

virtue almost useless.'” But, and here we see evidence of that second

“shortcoming,” Condorcet “also recognizes the frightening insecurity of such a

world, in which there is no foundation of political order, either in reverence

for divine right, or in fear, or in political virtue” (p. 235). Now, to make

her case, Rothschild must demonstrate the existence of Smithian parallels to

this rather bland, but insecure, Condorcevian society. Hence we are told that

Smith “was confident that there would be very little opportunity for violence

in a free, civilized, commercial society, and little advantage to be derived

from fraud” (p. 244). We are to take it that Condorcet’s “mild and moderate”

agents populate Smith’s world too. At any rate, we read that “Smith’s

political philosophy … is a description of a world without violent conflicts

over political principles, without revolutions, and without certainty” (p.

232). Presumably to echo Condorcet’s praise of the “softness or sweetness of

modern life,” we are assured that, for Smith, the “political virtues are the

virtues of humanity, and they are even, in some circumstances, the virtues of

women”; and we are offered a brief quotation in support: “‘Humanity is the

virtue of a woman,’ Smith wrote in the Theory of Moral Sentiments, and

it … requires ‘no self-denial, no self-command, no great exertion of the

sense of propriety'” (p. 234).

By now, those familiar with Smith’s thought will be writhing in agony. Anyone

who is aware of Smith’s praise for the virtue of self-command (that from which

“all the other virtues seem to derive their principal luster”) will be

suspicious of any suggestion that it can be excluded from the “political

virtues.” The suspicion is confirmed when we take the trouble to check the

citation. Rothschild fails to warn us that the fragment concerning “humanity”

as “the virtue of a woman,” appears as the other half of a contrast with the

character of “generosity.” The meaning of the passage changes dramatically

when we return the fragment to its context: “Generosity is different from

humanity. … Humanity is the virtue of a woman, generosity of a man.” While

it is true that “[t]he most humane actions require no self-denial, no

self-command, no great exertion of the sense of propriety, … it is otherwise

with generosity.” This “masculine” virtue requires the “sacrifice [of] some

great and important interest of our own to an equal interest of a friend or of

a superior.” It is, in other words, the opposite of “humanity” in that it

does require “self-denial.” Now, perhaps Rothschild’s selective omission of

the other half of Smith’s rhetorical contrast could be excused if the omitted

concept was, in Smith’s system, excluded from the “political virtues,” but no

such defense is possible here. In the very next sentence, Smith takes his

illustrations from the fields of political and military conflict: “The man who

gives up his pretensions to an office that was the great object of his

ambition because he imagines that the services of another are better entitled

to it; the man who exposes his life to defend that of his friend, which he

judges to be of more importance; neither of them act from humanity;” rather,

they both exhibit the “self-denial” of “generosity” (Smith 1976b, p. 190-91).

Apparently Smith’s vision does include “conflicts over political principles”

and even battlefield sacrifice. His system contemplates revolution too, but

here that “divine order” supposedly missing from that system interposes

impediments to such violent disruption. As we will see shortly, Rothschild’s

peculiar refusal to acknowledge the role of a divine creator in Smith’s system

is the most puzzling aspect of her argument. The benevolent care of that deity

pervades his Theory of Moral Sentiments. “[T]o raise and support …

the great, the immense fabric of human society,” Smith wrote there, “seems in

this world, if I may say so, to have been the peculiar and darling care of

Nature.” To preserve that social fabric, “Nature” implants in us a disposition

to acquiesce in our rulers even when reason would have it otherwise: “That

kings are the servants of the people, to be obeyed, resisted, deposed, or

punished, as the public conveniency may require, is the doctrine of reason and

philosophy; but it is not the doctrine of Nature.” On the contrary, “Nature

would teach us to submit to them for their own sake.” This disposition to

submit to unjust rulers can apply even in the case “of the most brutal and

savage barbarians, of an Attila, a Gengis, or a Tamerlane.” This is not a

particularly noble characteristic. It arises from our disposition to admire

success and to despise failure even when those outcomes are the product of

chance or force. Nevertheless, even this “great disorder in our moral

sentiments” serves to preserve human society, particularly in the worst of

times. Consequently, “we may on this, as well as on many other occasions,

admire the wisdom of God even in the weakness and folly of man.” It may be a

“foolish admiration,” but by this tendency to admire those who, whether by

chance, by force, or by merit, succeed in achieving positions of political

leadership, the populace “are taught to acquiesce with less reluctance under

that government which an irresistible force imposes upon them, and from which

no reluctance could deliver them.” Where in passages such as these are we to

find any hint of Rothschild’s reading of Smith as envisioning “a world

without violent conflicts over political principles, without revolutions”? At

best, Smith’s world is one in which, by virtue of “the wisdom of God,” only

“the most furious passions, fear, hatred, and resentment … excited [to] the

highest degree” can rouse “the bulk of the people … to oppose [their

leaders] with violence” (Smith 1976b, pp. 53, 86, 252-53).

Nor does Smith’s vision of social order rest on a na?ve “confidence in the

disposition of individuals to live by principles of morality.” The agents who

populate Smith’s world exhibit all the faults we have come to know in fallible

humans. It is true that Smith’s ethics — his “theory of moral sentiments” —

rest on a presumed human capacity and desire to, through our imaginations,

“enter into” the situation of our fellows and to experience to a muted degree

their emotions. But it is also true that Smith was ready to acknowledge that

“self-deceit” — that “fatal weakness of mankind” — that too often prevents

us from checking and condemning behavior in ourselves that we would condemn in

others. Yet the “fabric of human society” requires that we all meet certain

accepted standards of decorum. Once again “Nature … has not left this

weakness … altogether without a remedy; nor has she abandoned us entirely to

the delusions of self-love.” Through our normal social interactions, we form

“certain general rules concerning what is fit and proper either to be done or

to be avoided.” These “general rules of conduct” become “fixed in our mind” by

training and “habitual reflection.” Although “ultimately founded upon

experience of what … our moral faculties … approve, or disapprove of,”

their application does not require that all agents exhibit a finely-tuned

capacity for sympathy in all circumstances. A good thing too since “[t]he

coarse clay of which the bulk of mankind are formed, cannot be wrought up to

such perfection.” It is these general rules or duties that are the proximate

foundation of social order: “upon the tolerable observance of these duties

depends the very existence of human society, which would crumble into nothing

if mankind were not generally impressed with a reverence for those important

rules of conduct.” Finally, lest there be any remaining doubts as to the role

of a benevolent deity in Smith’s system, we are told in the next sentence,

“This reverence is still further enhanced by an opinion which is first

impressed by nature, and afterwards confirmed by reasoning and philosophy,

that those important rules of morality are the commands and laws of the

Deity,” a position which is elaborated on the subsequent pages (Smith, 1976b,

pp. 158-63).

We find in chapter 5 Rothschild’s defense of her claim that Smith’s system

exhibits those two “shortcomings” that she perceives in “liberal economic

thought.” The chapter advances the remarkable position that Smith’s “image of

the invisible hand is best interpreted as a mildly ironic joke” (p. 116; a

very brief summary of the argument appeared earlier in the American

Economic Review, 1994, 84.2: 319-22). This must be the case because “if it

were taken seriously,” the concept expressed by that metaphor “would have been

in conflict with several of Smith’s most profound convictions” (p. 136). What

is at issue here is not simply the metaphor itself but the concept which it is

taken to convey, that concept being, for Rothschild, that the individual

pursuit of private interest can produce an orderly aggregate outcome which

can, under some identifiable circumstances, be socially desirable (p. 121). It

is Smith’s expression of this concept that we are to take as intended as “an

ironic joke … on himself … [and] on his immense posterity as well” (p.


Among those of “Smith’s most profound convictions” with which this concept is

supposed to conflict is his well-known principle that merchants often pursue

their interest through political influence. By Rothschild’s argument, we may

take it that the notion of a spontaneous order conveyed by the invisible hand

metaphor was “un-Smithian and unimportant to his theory” because “Smith’s

criticisms of government and of established institutions are essential to his

economic thought; it is most unlikely that he would simply forget them in a

grand theory of the social good” (p. 128). But this bespeaks a remarkably

narrow reading. Smith did not “forget” his “criticisms” of public and private

institutions in his “grand theory”; they were part of his theory. Rosenberg

(1960) pointed out long ago that those “criticisms” were in fact original and

perceptive investigations of the incentive structures embedded in those

institutions, and the point has only been elaborated since. Rothschild is

quite right (p. 244) that Smith suggested in his jurisprudence lectures that

commercial relationships could improve the character of the participants, at

least with respect to their “probity and punctuality.” But as Rosenberg again

has elsewhere (1990) reminded us, Smith did not stop there. In his vision,

commercial society served to improve not only the character of the people but

also the legal structures that guide their actions and establish their

security of property right. The same philosopher who took account in his

ethics of the “coarse clay of which the bulk of mankind are formed” could not

fail to recognize in his investigation of market behavior that “such, it

seems, is the natural insolence of man, that he almost always disdains to use

the good instrument, except when he cannot or dare not use the bad one”

(Smith, 1976a, p. 799). He was quite aware that the individual pursuit of

private interest must be channeled by properly constructed incentive

structures (which include, of course, not only legal restraints but

competitive markets as well) to prevent recourse to the “bad instrument.” Only

when operating within such structures can we speak of an “invisible hand”

directing individual actions to a socially desirable outcome.

Yet Rothschild insists that there is “something oddly ingenuous in Smith’s

sudden invocation of the timid, virtuous merchant, led by the invisible hand

to pursue only harmonious interests” (p. 128). In violation of her own

injunction to understand the invisible hand reference in its broad, conceptual

sense, she here limits attention to “the invisible hand passage” in The

Wealth of Nations, where the merchant “does not, for example, seek to

collect together with other merchants to obtain special privileges for home

production.” No, not in this passage; but Smith was, no doubt, writing under

the reasonable presumption that his readers can be expected to recall the

countless other passages that warn of such collusion and propose incentive

structures designed to impede it.

Adding further to her portrayal of Smith as playing a sly joke on posterity

with his invisible hand metaphor, Rothschild would have us find it

“interesting … that in a chapter mainly concerned with British restrictions

on imports, Smith’s ingenuous merchant is described as a resident of

Amsterdam, trading in corn from K?nigsberg and fruit from Lisbon; he is a

cosmopolitan figure, far less tempted than any English merchant to pursue his

own advantage through political influence” (p. 128; the point recurs on p.

144). Now, any reader who takes the trouble to review the reference in its

context will find this to be a particularly egregious mischaracterization.

While it is not commonly mentioned, the particular social benefit supposed to

be achieved by the Wealth of Nations appearance of the invisible hand

is a preference for home over foreign investment, a principle that will seem

peculiar to modern readers accustomed to decisionmaking at the margin.

Nevertheless, the principle arises from Smith’s eighteenth-century view of

capital as “setting to work productive labor.” Capital employed domestically

“in purchasing in one part of the country in order to sell in another …

generally replaces by every such operation two distinct capitals.” But in

foreign trade, where one of the transactions occurs abroad, “the capital

employed … will give but one-half the encouragement to the industry or

productive labour of the country.” Hence, that famous invisible hand, which

Rothschild would have us believe is slyly applied by Smith to an Amsterdam

merchant “far less tempted” to pursue his interest through influence in the

British political arena, applies in fact to the domestic merchant who, in

“preferring the support of domestick to that of foreign industry, … intends

only his own security,” and is “in this, as in many other cases, led by an

invisible hand to promote an end which was no part of his intention,” that end

being, in this case, the support of more domestic labor than would have been

accomplished had he traded abroad. That Amsterdam merchant trading between

Prussia and Portugal enters Smith’s story only as illustration of the lower

risk associated with domestic trade by providing the contrast of the greater

“unease” felt by the merchant engaged in foreign trade, where he is “separated

so far from his capital” (Smith, 1976a, pp. 368; 454-56).

This alleged “ingenuous” character of Smith’s invisible hand expression recurs

throughout the rest of the argument and is central to Rothschild’s case for

her first “shortcoming.” Upon its introduction, that “first conflict or

shortcoming of economic thought” is described as having to do with “the

transformation of money into political power” and is illustrated by the claim

that “[i]n Smith’s description of the invisible hand in the Wealth of

Nations, the circumstance that individuals pursue their economic

objectives by political means is largely ignored” (p. 154). It also provides a

spurious point of contrast between Smith and Condorcet, who is described as

“admirably explicit in addressing one shortcoming of liberal economic orders,

to do with the transformation of money into political power, and of political

power into the power to influence markets” (p. 166). All this is no more than

a figment of Rothschild’s misreading of Smith.

The foundation of Rothschild’s second “shortcoming” of “liberal economic

thought” is also to be found in chapter five. There is no denying the

“conception of providential order” long associated with Smith’s invisible hand

metaphor. That association provides Rothschild with one more reason to dismiss

that metaphor as “un-Smithian” — namely the conviction that Smith would have

found “very serious problems” in such a “theology of the invisible hand” (p.

129). However, her argument on this point, for all its lavish citations, is

nearly devoid of textual evidence from Smith himself, apart from the remark

that he frequently made known “his differences with Christian doctrines.”

This, of course, is no more than a red herring. That Smith had little patience

with the positions and practices of the established Christian denominations of

his time is obvious. But it is equally obvious that a deistic faith in a

benevolent creator does not rest on Christian doctrine. In support of her

claim, Rothschild can offer us little more than the statement of her “own view

… that … Smith’s and Hume’s religious opinions were indeed quite close,” a

view that no doubt explains why her case so frequently rests on appeals to

Hume rather than to Smith (e.g. pp. 120, 130, 134-35, 139). One could, of

course, argue (and Rothschild does, in passing) that Smith’s frequent

references to the “all-wise Author of Nature” (some of which we have already

noticed) were no more than a smokescreen intended to avoid the kind of

conflict with contemporary sensibilities that so dogged his friend. But the

frequency and apparent sincerity of those references are far greater than the

minimum necessary to satisfy the local keepers of the public morals. Certainly

Rothschild’s claim that Smith denied “the conception of providential order,”

or employed it as no more than “an ironic joke,” is directly opposed to recent

scholarship on the matter. One wishes that in all her footnotes, she had taken

notice of those studies that, with a good deal more relevant documentation,

manage to advance an opposing view (e.g. Evensky 1998; although it appeared

too late to help Rothschild, interested readers will want to consult Hill 2001

as well).

To be sure, Rothschild does acknowledge the common view that Smith professed

the existence of a benevolent creator and that his position on this matter

derived from the natural theology of Stoic philosophy. But she offers little

in rebuttal beyond the unsupported declaration that he “was influenced by

different Stoic doctrines”; that “[w]ithin the overall Stoic system, … it

was the idea of a providential order … to which Smith was most opposed” (p.

132) As to that, I will simply leave it to those interested to read for

themselves Smith’s own assessment of that “Stoical” system, where he assures

us that, even in our greatest extremity, when, in spite of our best efforts,

events “turn out the most unfortunate and disastrous, Nature has by no means

left us without consolation,” that consolation being drawn “from a firm

reliance upon, and reverential submission to, that benevolent wisdom which

directs all the events of human life, and which, we may be assured, would

never have suffered those misfortunes to happen had they not been

indispensably necessary for the good of the whole” (Smith 1976b, p. 292). Is

this an author who opposed the idea of a providential order?

In spite of its flaws, we can learn a great deal from Rothschild’s work here.

Her command of a vast and complex literature is awesome. She has been

scrupulous in identifying her authorities, and she has opened a number of new

and promising lines for further work. She has reminded us that the forces

unleashed by the French Revolution left their mark not only on the political

and social structures of the period but also on the intellectual structures

that conditioned the discourse of the nineteenth century and, at a remove, of

our own time. She has prompted us to look again at the intellectual

influences running in both directions across the Channel in the immediate

pre-Revolutionary period, and she has identified the sources to do so. No

doubt it is that great promise that heightens the disappointment we feel when

we encounter her efforts to turn those sources to purposes which they simply

will not support.


Evensky, Jerry. 1998. “Adam Smith’s Moral Philosophy: The Role of Religion and

Its Relationship to Philosophy and Ethics in the Evolution of Society.”

History of Political Economy 30.1: 17-42.

Hill, Lisa. 2001. “The Hidden Theology of Adam Smith.” European Journal of

the History of Economic Thought 8.1:1-29.

Rosenberg, Nathan. 1960. “Some Institutional Aspects of the Wealth of

Nations.” Journal of Political Economy 68.6: 557-70.

1990. “Adam Smith and the Stock of Moral Capital.” History of Political

Economy 22.1: 1-18.

Smith, Adam. 1976a. An Inquiry into the Nature and Causes of the Wealth of

Nations. Edited by R. H. Campbell and A. S. Skinner. Oxford: Oxford

University Press.

1976b. The Theory of Moral Sentiments. Edited by D. D. Raphael and A.

L. Macfie. Oxford: Oxford University Press.

1980. Essays on Philosophical Subjects. Edited by W. P. D. Wightman and

J. C. Bryce. Oxford: Oxford University Press.

(The author, Emma Rothschild, is a Fellow of King’s College, Cambridge and

Director of the Center for History and Economics, King’s College.)

The reviewer, Glenn Hueckel, is the author of various articles on the history

of economic thought in the seventeenth to the nineteenth centuries.

Subject(s):History of Economic Thought; Methodology
Geographic Area(s):Europe
Time Period(s):18th Century

Rising Life Expectancy: A Global History

Author(s):Riley, James C.
Reviewer(s):Easterlin, Richard A.

Published by EH.NET (February 2002)

James C. Riley, Rising Life Expectancy: A Global History. New York:

Cambridge University Press, 2001. xii + 243 pp. $50 (hardback), ISBN:

0-521-80245-8; $17 (paperback), ISBN: 0-521-00281-8

Reviewed for EH.NET by Richard A. Easterlin, Department of Economics,

University of Southern California.

Economic historians, who have been backing into life expectancy by way of

stature, will find this book of interest. It is a qualitative survey of the

nature and causes of increasing life expectancy since 1800. Today, global life

expectancy at birth is about 67 years; two centuries ago it was 30 years or

less. The first fifth of this book describes briefly the temporal and spatial

features of this “health transition.” The remainder is devoted to individual

chapters on six possible causes: (1) public health, (2) medicine, (3) wealth,

income, and economic development, (4) famine, malnutrition, and diet, (5)

households and individuals, and (6) literacy and education. In the author’s


Two main arguments are developed . . . . The first . . . is that individual

countries . . . devise their own strategies for reducing mortality. People have

always selected from the same six tactical areas [listed above]. . . . But

different countries have used those means in different ways . . . .

The second . . . deals with the implications of having extended survival in

this way . . . . [On the plus side] [t]he multiplicity of tactics . . . are

accommodations to the different characteristics and preferences of people . . .

. [On the negative side] old schemes are often maintained even as new schemes

are being adopted [and] . . . strategies that limit risks to survival and

foster the good health of a population may be remarkably inefficient (pp.


A great strength of this book is its global approach. Riley, professor of

history at Indiana University, is not constrained by the geographic paradigm

that dominates economic history (Britain, France, Germany, U.S., Russia, Japan,

and perhaps a few others). He sees the spread of rising life expectancy as a

continuous worldwide process, and in chapter after chapter strives assiduously

to include developing along with developed countries. The text, footnotes, and

end-of-chapter references provide valuable entr?e, not only to a vast

historical literature, but also to much contemporary work in demography and

public health, as well as that by specialists at the World Health Organization

and World Bank.

Riley sees parallels between the health transition and modern economic growth,

and laments the casual concern with the causes of life expectancy compared to

those of economic growth. For economic historians who still believe that

economic development is the prime mover behind life expectancy, this is a

non-issue. But Riley seemingly believes that development is not a very

important cause of increased life expectancy (chapter 4). I think he is right,

though, surprisingly, reference to the adverse impact on mortality of

development-induced urbanization is in chapters other than that on economic

development (pp. 148, 175). Indeed, if economic historians came to see both

modern economic growth and life expectancy as analogous phenomena, each driven

by advances in different areas of knowledge and technology, they might benefit

from comparative study of the two. Riley’s book would be a help in such study.

Although a useful survey, this is, at the same time, a frustrating book. While

accepting the concept of an industrial revolution, Riley rejects this

term for the breakthrough in life expectancy. “[T]he health transition has no

well-defined beginning point. It . . . was underway by 1800, but the discovery

of a period or country where it began is a quite difficult matter” (p. 6). Here

I think Riley is wrong. It is relatively easy to date the onset of a

revolutionary rise in life expectancy in country after country. (See Richard A.

Easterlin, “How Beneficent is the Market? A Look at the Modern History of

Mortality,” European Review of Economic History, 3 (1999), pp. 262-264.)

By contrast, views on the timing of the onset of economic growth differ

greatly; as an example, Rostow dates Britain at 1783-1830 and Sweden at

1868-1890, whereas Maddison puts them both at 1820.

The book is frustrating too because of its emphasis on the variability among

countries in routes to rising life expectancy. Riley’s statement that “[p]eople

have always selected from the same six tactical areas . . . [b]ut different

countries have used those means in different ways” gives the impression that

all six sources of life expectancy increase have been equally important, and

countries could virtually choose at random the mix they wished to use. In fact,

the opposite is the case. The critical breakthroughs that have made possible

the worldwide revolution in life expectancy are public health and medicine,

Riley’s categories (1) and (2). Absent the transformation in health production

functions arising from these sources, categories (3) through (6) would not have

transformed health and life expectancy. All countries that have experienced a

marked increase in life expectancy have done so by implementing a new

technology of disease control via new institutions, centering on, but not

confined to, a public health system. The role of public initiative has been

central in this transformation in all countries — “households and individuals”

and “literacy and education” in themselves would have been of little importance

had it not been for public action to disseminate new knowledge of disease

control and promote new household and business practices to implement this

knowledge. Nowhere is this clearer than in the biggest single accomplishment

improving health and mortality, the eradication of smallpox, which required

concerted action by national and international authorities (cf. p. 71). To the

extent there have been “different paths” followed by countries, it is largely

because of differences in the state of knowledge at the time of onset of the

“health transition.” Britain is charged by Riley with a costly emphasis on

sanitation that today’s developing countries could and should avoid. But

Britain’s path reflects the state of biomedical knowledge at the time (along

with Britain’s relatively high level of urbanization). It’s as though one would

chide Britain for its costly nineteenth century emphasis on a technology of

steam-powered railroads and factories, rather than using motor vehicles and

electric motors.

I suspect Riley would agree with this view of the causal primacy of public

health and medicine, because one can find support for much of it in the

chapters on the “six tactical areas.” But by emphasizing variability rather

than commonalities among countries, Riley downplays the central role in raising

life expectancy of new knowledge, and public action to implement this

knowledge, in country after country.

In sum, this book is a useful starting point for understanding the modern

revolution in mortality. But economic historians will want to go farther to

identify and quantify the uniformities among countries in the rise of life

expectancy and in the requirements of labor, capital, and new institutions

underlying this rise, and to test models of causation.

Richard A. Easterlin is University Professor and Professor of Economics at the

University of Southern California. He is the author of Growth Triumphant:

The Twenty-First Century in Historical Perspective (Ann Arbor: University

of Michigan Press, 1996).

Subject(s):Historical Demography, including Migration
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII

Shifting Ground: The Changing Agricultural Soils of China and Indonesia

Author(s):Lindert, Peter H.
Reviewer(s):Johnson, D. Gale

Published by EH.NET (June 2001)

Peter H. Lindert, Shifting Ground: The Changing Agricultural Soils of China

and Indonesia. Cambridge, MA: MIT Press, 2000. xii + 351 pp. $45 (cloth),

ISBN: 0-262-12227-8.

Reviewed for EH.NET by D. Gale Johnson, Department of Economics, University of

Chicago, Emeritus.

The generally accepted opinion is that a large percentage of the world’s

agricultural land is degraded and is being further degraded year by year. The

World Map of the Status of Human-Induced Soil Degradation produced by

the United Nations Environment Program in the late 1980s is a major source of

such an opinion. Peter Lindert argues, persuasively in my opinion, that the

basis for the conclusion that a large percentage of the world’s agricultural

land is degraded as a result of human action is wholly inadequate. The

evidence used to reach this conclusion is not derived from historical

comparisons of the status of agricultural lands but on a description of lands

at a particular moment in time. As Lindert writes, “It tries to measure

changes over time in the absence of data over time” (p. 21).

Lindert (Professor of Economics and Director of the Agricultural History

Center at the University of California, Davis) utilizes data from soil surveys

in China and Indonesia. This data — from the world’s largest and fourth

largest countries (in terms of population) — has been available for decades.

These surveys cover a period of approximately half a century, from the 1930s

to the 1980s. The soil surveys provide measures of soil characteristics for a

given location at a given time. While the surveys are not identical in all

respects over time, there are many common elements — measures of the major

nutrients, of organic matter, alkalinity, acidity and the depth of the top


Such surveys exist in other countries, including the United States, but

apparently only Lindert has used them to provide a realistic picture of the

changes in the soils over time. Given the availability of such data, it is

surprising that it has not been used before to understand what has happened to

the quality of the world’s soils. The reason may be that it is an enormous

amount of work to effectively utilize the hundreds — thousands, probably —

of these surveys that exist and so far Lindert has been the only one willing

to make the required investment of time.

That erosion exists cannot be questioned. After all, the Yellow River didn’t

get its name by accident. But in much of the discussion of erosion, as well as

other aspects of soil degradation, it is seldom asked whether the erosion is

human induced — it tends to be merely assumed that it is. In addition, when

and where there is erosion, little or no evidence is provided as to whether or

not it occurs on farmland. Farmland, after all, constitutes a minority of the

world’s land. There can be many sources of the silt in rivers other than

farmland. Lindert directly addresses the issue of whether erosion has taken a

serious toll on the farmlands of two countries. As noted later, he finds no

evidence that the depth of the topsoil has declined over a period of half a

century in these two countries. One can hope that future estimates of soil

degradation, including the extent of soil erosion, will utilize the real

evidence that is available rather than speculating on the basis of models not

based on historical data.

Based on the comparisons of the soil surveys in China, Lindert concludes that

there have been positive and negative changes affecting the quality and

quantity of farmland. The negative factors have been declines in the nitrogen

and organic matter in the soils while the potassium and potash contents have

increased. The decline in nitrogen content of the soil seems to have little or

no negative effects on yield, however, since nitrogen can be and is added as


Perhaps the most striking conclusion is that the depth of the topsoil has not

diminished — erosion has not taken a toll on China’s soils. And the quantity

of farmland has apparently increased over the past half century, as recently

confirmed by the Chinese government, rather than decreasing significantly as

has been often claimed by Lester Brown, Vaclav Smil and others. Lindert

summarizes what has happened to soil quality in China: “The most reliable . .

. basic inference is that the overall soil quality did not decline between the

1950s and the 1980s” (p. 145). In fact, some of his estimates indicate a

modest increase in soil quality. Thus in a period of rapid change — the

creation of the communes, the period of the Great Famine, the Cultural

Revolution and the reforms of the late 1970s and early 1980s when the communes

were abolished and the household responsibility system emerged — the evidence

is very strong that the quality of the soil was not diminished.

In addition, Lindert finds no evidence that erosion of agricultural land in

Indonesia was a problem. This conclusion is based on two types of evidence —

the absence of a decline in the content of major nutrients in the soil and the

adjustment of the depth of topsoil data to account for certain problems in the

data for the early years. His overall estimate is that the average soil

chemical quality declined by 4 to nearly 6 percent. This decline was due

primarily to bringing new lands into cultivation in the outlying islands —

the soil quality index for the established agricultural areas in Java and

Madura may have increased by 10 percent. The area under cultivation more than

doubled between 1940 and 1990. If land is adjusted to the Javanese quality

level and adjustment is made for the small decline in average quality, the

increase in quality-adjusted land under cultivation during this period was

more than 75 percent.

To summarize the results presented in this very important book, Lindert shows

that for two of the most populous countries in the world farm people have

taken very good care of their land. Yes, erosion exists but careful analysis

is required to determine whether it is human induced and whether it affects

agricultural land. Lindert’s careful analysis supports two important

conclusions, though these conclusions are not stated explicitly by him. His

work confirms that “Farmers are as smart as the rest of us” and that “Farm

people of China and Indonesia have been good stewards of their land.” Studies

similar to this one should be made for other countries or areas for which soil

surveys exist over extended periods of time to determine whether farmers

elsewhere have been good stewards of their land. My expectation is that they

have been. I do not believe that the experiences in China and Indonesia were


D. Gale Johnson is the Eliakim Hastings Moore Distinguished Service Professor

of Economics Emeritus at the University of Chicago. He is the author of

World Agriculture in Disarray, revised edition 1991 and “Agricultural

Adjustment in China: Problems and Prospects,” Population and Development

Review, Vol. 26, No. 2, June 2000.

Subject(s):Agriculture, Natural Resources, and Extractive Industries
Geographic Area(s):Asia
Time Period(s):20th Century: WWII and post-WWII

The Conditions of Agricultural Growth: The Economics of Agrarian Change under Population Pressure

Author(s):Boserup, Ester
Reviewer(s):Federico, Giovanni

Project 2001: Significant Works in Economic History

Ester Boserup, The Conditions of Agricultural Growth: The Economics of Agrarian Change under Population Pressure. London, G. Allen and Unwin, 1965; Chicago: Aldine, 1965. 124 pp.

Review Essay by Giovanni Federico, Department of Modern History, University of Pisa.

Population, Agricultural Growth and Institutions: The Real Long-Run View

This may be an unusual review for the series. In fact, Ester Boserup was not a professional economic historian and this is not properly speaking a work of history. Boserup was part of the staff at the United Nations and she wrote the book out of her experience as a consultant in developing countries. The book does not discuss in depth any specific historical event, and quotations of historical works are rather rare. It nevertheless is one of the most widely quoted works in economic history. Usually, it is labeled as “anti-Malthusian” and encapsulated with a sentence such as “population growth causes agricultural growth.” This is undoubtedly an implication of her model and comes in handy to scholars who do not believe that the (human) carrying capacity of a given area is set, and cannot be exceeded. From this point of view, one can draw a parallel between The Conditions of Agricultural Growth and another highly influential book, Amartya Sen’s Poverty and Famines: An Essay on Entitlement and Deprivation (Oxford 1981), which dismantled another tenet of Malthusian theory — i.e. that famines were always (or mainly) caused by absolute deficiency of food.

However, Boserup’s book is much more than a simple rejection of Malthus. It aims at explaining all the characteristics of agriculture in any specific area and time according to the resource endowment — the land/labor ratio. The more dense population is, the more intensive cultivation becomes. Agrarian economists in the 1950s focused on the Western world, and thus they could appreciate only a relatively narrow range of techniques. Looking at less developed countries, Boserup could list five different agricultural systems, according to the length of fallow between periods of cultivation (pp.15-16): 1) forest-fallow or slash and burn (15-20 years of fallow), 2) bush-fallow (6-10 years); 3) short-fallow (1-2 years); 4) annual cropping (a few months); 5) multi-cropping (no fallow). Even if the original evidence comes from the observation of primitive societies in the 1940s, the leap from changes in space to changes in time is short. Thus the rest of the book explores the consequences of intensification — i.e. of the move from one stage to another caused by population growth. Each of them entails more labor per unit of (total) land, and thus the intensification increases the productivity of land and reduces that of labor. A household has to work more to keep the same level of income. The intensification brings about an improvement in tools (from the digging stick, to the hoe, to the plough) and in the long run also brings some investments in land improvement (e.g. irrigation schemes). With pre-industrial technology, land improvements had to be done manually by peasants. Thus, they are typical of the last stages of the process, when there is enough work-force and enough demand for food to justify them. Total factor productivity may increase in the long run, but surely most of the increase in total output is achieved with a massive growth of work effort by the agricultural population. Finally, the intensification also shapes institutions, and this is the most innovative aspect of Boserup’s model. The forest-fallow system is inconsistent with household property of any given plot of land. The land belongs to (or more precisely is exploited by) the tribe as a whole. Property rights have to be created only when the cultivation cycle is shorter, and the quality of each single piece of land begins to matter. In the later stages of development some people could cease to work, and be entitled to rights to a part of the product (a “two-tier” society). However, Boserup is not nostalgic about primitive societies. She makes it crystal clear that the “two-tier” societies are better, even if in these latter some men did not work as hard as others.

Some years later, Boserup extended her model from agriculture to the whole of society (Population and Technological Change: A Study of Long-term Trends, Chicago, 1981). She added the concept of economies of scale. Many technologies can be properly exploited only if the population is dense enough. Population growth makes urban civilization possible. The second book is highly interesting, and has many insightful passages. Yet it fails to reach the simple elegance of The Conditions of Agricultural Growth — that quality which makes this book really deserving of being added to this list of masterpieces.

Of course, one could quibble endlessly about the “details” of Boserup’s model such the number and the exact features of the “stages.” The overall view provides a short, but powerful, history of the world, from prehistory to the nineteenth century arranged around one of the basic principles of economic theory — that techniques (and much else) depend on resource endowments. As you would expect from a seminal work, The Conditions of Agricultural Growth launched and refocused many modern debates. Let me give two examples. When Boserup was writing, the British agricultural revolution (i.e. the change in rotations with the substitution of fodder crops for fallow) was considered an epochal change with far-reaching implications for the entirety of world history. This view is still diffused, if no longer dominant. In Boserup’s model, the change is only part of the long-run process of world-wide intensification, and Europe was trailing behind the two other major civilizations, India and China. In fact, the most advanced areas of Europe reached Stage 4 while China was already at Stage 5. Another, and perhaps less obvious, example may be Greg Clark’s thesis on the differences in work intensity between Eastern Europe and the West (including the US). He argues that in the early nineteenth century Eastern Europeans were less productive than Westerners, because they worked less hard, and that they worked less hard because “they were different” (Clark, “Productivity Growth without Technical Change in European Agriculture before 1850,” Journal of Economic History, Vol. 47, 1987, p. 431). The thesis is very controversial (see the subsequent debate with John Komlos in the Journal of Economic History, in 1988 and 1989), but let’s assume it is true. Is it not possible that the “different” work ethic had been shaped over the centuries by different land/labor ratios? Other examples could follow, but the main point is clear: Boserup’s book is a treasure-trove of ideas. Unfortunately, it is more often quoted than used in actual research. As far as I know, there are very few really “Boserupian” works — i.e., long-term analyses of agricultural change as driven by changes in factor endowments. The most ambitious is Kang Chao’s book on Man and Land in Chinese Economic History: An Economic Analysis (Stanford 1986).

Why this (relative) neglect in spite of the so frequent quotations? One can put forward three causes, which are not mutually exclusive. The first is academic specialization. Intensification lasted for centuries, even for millennia, and few scholars would feel at ease in discussing both pre-historical agriculture and nineteenth century techniques. This fate is common to all interpretations of long-term change (cf. J. L. Anderson, Explaining Long-term Economic Change, Basingstoke, 1991). Second, the evidence on early-stage societies is very scarce, and by its nature it is often unfamiliar to historians. “Real” historical sources exist for Western Europe, China and India in the last three stages.

Last, but not least, the model has its own weaknesses. It is surely convincing as an account of long-term growth. It is less convincing as an explanation of short-term trends, and in this case the “short” term can last for decades. Boserup speaks as if all the techniques were known since the beginning, so that the population had only to choose the one best suited to its resource endowment and adjust its institutions if necessary. On the contrary, new techniques had to be learned, and sometimes discovered or re-discovered. In backward economies, information travels very slowly or not at all, and thus a people may not know that another one, maybe hundreds or thousands of miles away, has successful managed to overcome a specific problem. And, even if it gets to know the right technique, plant, or implement, the population still may need time and effort to master it and to adapt it to its own environment. Thus a success in the long run may conceal several short-term crises. Outright failure cannot be ruled out entirely.

Second, Boserup assumes that population growth is exogenous, following a standard practice among economists in pre-Beckerian time. Today, however, most consider population growth to be endogenous, and largely affected by economic calculations. People could reduce population increase by delaying marriages, controlling births, migrating and the like. Slower population growth would, ceteris paribus, reduce the drive to agricultural intensification. This is, of course, an empirical issue.

Finally, Boserup seems to neglect the different nature of modern technology or, if you want, the new role of capital. Her world is a two-factor world — labor and land. As said, capital does exist either as simple tools or as labor-intensive investment projects — but not as labor-saving machinery and above all land-saving fertilizers. In her world, intensification is possible up to a point, but sooner or later it has to reach a limit. It is unclear whether in real history this limit had ever been reached, even if China in the eighteenth and nineteenth centuries may be a good candidate. Aside from China, even in, say, 1800 there was a lot of “free” land on the Earth and thus a “Malthusian” crisis was still far away for the world as a whole. But sooner or later, a limit had to be reached, and further population increase beyond it was bound to cause a Malthusian crisis (even if smart people may prevent it with birth control). As everyone knows, the solution was technical progress, which has increased the productivity of both land and labor. (One wonders whether there are ecological or maybe ethical limits to technical progress). Boserup should have added a Stage 6 to her intensification model. Of course, she was very well aware of the technical progress, but she did not. One may speculate that she was more interested in less developed countries than in advanced countries, or simply she did not want to add a stage which could not fit easily in a model based on the length of fallow.

It is too easy to criticize ex post with the hindsight of decades of research. In spite of all its shortcomings, The Conditions of Agricultural Growth remains a small masterpiece which economic historians should read — and not simply quote.

Giovanni Federico is the author of An Economic History of the Silk Industry, 1830-1930 (Cambridge University Press, 1997) and (with Jon Cohen) The Economic Development of Italy, 1820-1930 (Cambridge University Press, forthcoming for the Economic History Society).


Subject(s):Economic Development, Growth, and Aggregate Productivity
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

Mastering the Market: The State and the Grain Trade in Northern France, 1700-1860

Author(s):Miller, Judith A.
Reviewer(s):Liebowitz, Jonathan J.

Judith A. Miller, Mastering the Market: The State and the Grain Trade in

Northern France, 1700-1860. New York: Cambridge University Press, 1999.

xviii + 334 pp. $49.95 (cloth), ISBN: 0-521-62129-1.

Review by for EH.NET by Jonathan J. Liebowitz, Department of History,

University of Massachusetts Lowell.

Authorities in eighteenth and early nineteenth century France faced a dilemma:

How to keep the peace in the face of severe shortages of grain.

Harvest failure regularly (Miller finds nine incidents in the eighteenth

century) threatened consumers, who relied on a pound of bread a day for their

sustenance. Yet if the government acted to help them through price controls or

grain imports, it risked worsening the situation by provoking producers and

merchants to withdraw from the market.

Judith A. Miller (Department of History, Emory University) provides a

fascinating account of the State’s role in the grain trade as she reconstructs

the activities of local and national officials who sought to master the

treacherous market. She sympathizes with the plight of these officials as they

handled their next-to-impossible task. Miller’s theme is the growing success

they had in ‘mastering the market’ and bringing famine under control. Their

trial and error led them to conclude that too much government interference was

counterproductive but that a policy of total hands off would not be effective


Miller sets the stage by contrasting the failure of the state in the shortage

of 1709 with its effectiveness in that of 1 853. The goal of the rest of the

book is to show how the French government moved from the first to the second.

Miller emphasizes the role of the state because, whatever ideologues may have

wished, it could not stay out of the market. The region of study extends from

Paris to the Channel, with Miller stressing the competition between Paris and

Rouen, its Norman rival. The major sources are administrative archives, from

which she gathers information about the administrators’ goals and actions.

During the eighteenth century, down to 1789, under the influence of both

experience and the free trade movement, strategies moved toward influencing

supply and demand, rather than forcing particular actions on participants.

Part of the problem was that the grain trade was not only uncertain, but

highly regulated. Officially grain had to be sold in public markets, though

large buyers and sellers preferred to deal with each other privately. While

grain prices might fluctuate freely, bread prices, the focus of consumers’

concerns, had long been set by local authorities. They varied with the grain

prices, but, as Miller shows us, even the officials assumed that, as prices

rose, bakers would suffer a loss.

In the mid-eighteenth century the government found that its entry

into the market led to two major problems: owners (merchants and producers)

left the trade when they were undersold and treasuries suffered heavy losses

from selling at low prices. From their experience with this dilemma officials

worked out the tactics

called “simulated sales.” Their policy was to sell grain, but quietly and with

market-mimicking procedures, supporting the market rather than supplanting it.

With the influence of free trade ideas, price setting began to be abandoned in

the 1760s and 1770s. Turgot and officials like him hoped that with higher

prices, grain would become abundant. But that didn’t happen, and practicing

officials still had to intervene on behalf of buyers. Now they were guided by

the principles of “no forced sales, no set

prices.”(85) They continued to use the skill they had developed through long

experience to guide the market

The Revolution is usually at the heart of any discussion of grain prices in

France. Miller, however, treats it as essentially an interruption in the long

process of mastering the market. Eliminating the former authorities, who knew

what they doing, the upheaval brought in new ones, who had to go through a

long period of learning. In their efforts to secure food for the

cities and now for the revolutionary armies as well, officials adopted radical

policies like requisitions, public markets, and set prices (the maximum). Once

again, force did not work, whether because there just wasn’t enough grain or

because owners would not supply it at the fixed prices.

(Miller leans to the former conclusion.) Turmoil ensued and was only ended when

Napoleon, seeking practical solutions, returned to the pre-Revolutionary

policies of secrecy and planning in advance for possible shortages. The last

gasp of “radical measures”(226) like maximums and requisitions was the

shortage of 1812, when they proved to be disastrous.

At this point the Napoleonic prefects returned to the “well-organized,

finely tuned strategies”(233) that were in line with their predecessors’ as

well as those who followed them. The thrust of policy during the Restoration

and July Monarchy (1815-48) was toward lessening government controls and

relying on private business. The Parisian grain reserve that had been

instituted under

Napoleon was phased

out, but bakers were required to maintain their own stocks. Bread prices were

fixed, but the number of bakeries was limited to guarantee a profit. Slowly

controls were relaxed.

By the late nineteenth century the machinery was working well. Grain prices

still fluctuated, but arrangements had been worked out to provide stability.


state had created a framework for the trade and could step back and let it

operate on its own. Free trade (even then, not yet complete) had arrived but,

paradoxically, only through state involvement.

What can we learn from Miller’s tale – a narrative that is not flamboyant but,

like her officials, careful and painstaking, instructing its readers about many

things in many ways? Her main theme is that both the market and state

intervention were dangerous. Unfettered, they would lead to hunger and turmoil,

but the market could teach the state to limit its action and the state could

tame the market, calming its destructive tendencies.

Miller’s conclusions have implications for other questions. She supports the

argument that free markets (or free enterprise in general) do not result from

the absence of government intervention but from government shaping the rules

and structures that govern economic activity. She also reaffirms the

continuities in French history (particularly that of State intervention in the

economy) that overwhelm the disruptive upheavals of events like the Revolution.

Although Mastering the Market is neither cliometrics nor new


economic history;

it does have a lot to teach all economic historians.

Jonathan Liebowitz is the author of articles on draft animals and land tenure.

He is working on a study of the impact of the crisis of the late nineteenth

century on French tenants and sharecroppers.

Subject(s):Markets and Institutions
Geographic Area(s):Europe
Time Period(s):19th Century

The Great Wave: Price Revolutions and the Rhythm of History

Author(s):Fischer, David Hackett
Reviewer(s):Munro, John H.

Published by EH.NET (February 1999)

David Hackett Fischer, The Great Wave: Price Revolutions and the Rhythm of

History. Oxford and New York: Oxford University Press, 1996. xvi + 536.

$35 (hardcover), ISBN: 019505377X. $16.95 (paperback), ISBN: 019512121X.

Reviewed for EH.NET by John H. Munro, Department of Economics, University of


Let me begin on a positive note. This is indeed a most impressive work: a

vigorous, sweeping, grandiose, and contentious, though highly entertaining,

portrayal of European and North American economic history, from the High Middle

Ages to the present, viewed through the lens of “long-wave” secular price-

trends. Indeed its chief value may well lie in the controversies that it is

bound to provoke, particularly from economists, to inspire new avenues of

research in economic history

, especially in price history. The author contends that, over the past eight

centuries, the European economy has experienced four major “price-

revolutions,” whose inflationary forces ultimately became economically and

socially destructive, with adverse consequences that provoked various complex

reactions whose “resolutions” in turn led to more harmonious, prosperous, and

“equitable” economic and social conditions during intervening eras of “price

equilibria”. These four price-revolutions are rather too neatly set out as the

following: (1) the later- medieval, from c.1180-c.1350; (2) the far better

known 16th-Century Price-Revolution, atypically dated from c.1470 to c.1650,

(3) the inflation of the Industrial Revolution era, from c.1730 to 1815; and

(4) the 20th century price-revolution, conveniently dated from 1896 to 1996

(when he published the book).

Though I am probably more sympathetic

to the historical concept of

“long-waves” than the majority of economists, I do agree with many opponents of

this concept that such long-waves are exceptionally difficult to define and

explain in any mathematically convincing models, which are certainly not

supplied here. For reasons to be explored in the course of this review, I

cannot accept his depictions, analysis

, and explanations for any of them. This will not surprise Prof. Fischer, who

is evidently not an admirer of the economics profession. He is particularly

hostile to those of us deemed to be “monetarists,” evidently used as a

pejorative term. After rejecting not only the “monetarist” but also the


neo-Classical, agrarian, environmental, and historicist” models, for their

perceived deficiencies in explaining inflations, and after condemning

economists and historians alike for imposing rigid models in attempting to

unravel the mysteries of European and North American economic history,

Fischer himself imposes an exceptionally rigid and untenable model for all four

of his so-called price-revolutions, containing in fact selected Malthusian and

monetarist elements from these supposedly rejected models.

In essence, the Fischer model contends that all of his four long-wave

inflations manifested the following six-part consecutive chain of causal and

consequential factors, inducing new causes, etc., into the next part of the

chain. First, each inflationary long-wave began with a prosperity created from

the preceding era of price-equilibrium, one promoting a population growth that

inevitably led to an expansion in aggregate demand that in turn outstripped

aggregate supply, thus — according to his model

— causing virtually ALL prices to rise. Evidently his model presupposes that

all sectors of the economy, in all historical periods under examination, came

to suffer from Malthusian-Ricardian diminishing

returns and rising marginal costs, etc. Second, in each and every such era,

after some indefinite lapse of time, and after the general population had

become convinced that rising prices constituted a persistent and genuine trend,

the “people” demanded and

received from their governments an increase in the money supply to

“accommodate” the price rises. As Fischer specifically comments on p. 83: “in

every price-revolution, one finds evidence of frantic efforts to expand the

money supply, after people have discovered that prices are rising in a secular

way.” Third, and invariably, in his view, that subsequent and continuous growth

in the money supply served only to fuel and thus aggravate the already existing

inflation. He never explains, however, for any of

the four long-waves, why those increases in money stocks were always in excess

of the amount required “to accommodate inflation”. Fourth, with such

money-stock increases, the now accelerating inflation ultimately produced a

steadily worsening impoverishment of the masses, aggravated malnutrition,

generally deteriorating biological conditions, and a breakdown of family

structures and the social order, with increasing incidences of crime and social

violence: i.e., with a rise in consumer prices that outstripped generally

sticky wages in each and every era, and with a general transfer of wealth from

the poorer to richer strata of society. Fifth, ultimately all these negative

forces produced economic and social crises that finally brought the

inflationary forces to a halt,

producing a fall in population and thus (by his model) in prices, declines that

subsequently led to a new era of “price-equilibrium,” along with concomitant

re-transfers of wealth and income from the richer to the poorer strata of


(where such wealth presumably belonged). Sixth, after some period of economic

prosperity and social harmony, this vicious cycle would recommence, i.e., when

these favorable conditions succeeded in promoting a new round of incessant

population growth, which inevitably sparked those same inflationary forces to

produce yet another era of price-revolution, continuing until it too had run

its course.

While many economic historians, using more structured Malthusian-Ricardian type

models, have also provided a similarly bleak portrayal of

demographically-related upswings and downswings of the European economy,

most have argued that this bleak cycle was broken with the economic forces of

the modern Industrial Revolution era. Fischer evidently does not. Are we the

reforecondemned, according to his view, to suffer these never-ending bleak

cycles– economic history according to the Myth of Sisyphus, as it were?

Perhaps not, if government leaders were to listen to the various nostrums set

forth in the final chapter,

political recommendations on which I do not feel qualified to comment.

Having engaged in considerable research, over the past 35 years, on European

monetary, price, and wage histories from the 13th to 19th centuries, I am,

however, rather more qualified

to comment on Fischer’s four supposed long-waves. Out of respect for the

author’s prodigious labors in producing this magnum opus, one that is bound to

have a major impact on the historical profession, especially in covering such a

vast temporal and spatial range, I feel duty-bound to provide detailed

criticisms of his analyses of these secular price trends, with as much

statistical evidence as I can readily muster. Problematic in each is defining

their time span,

i.e., the onset and termination of inflations. If many medievalists may concur

that his first long- wave did begin in the 1180s, few would now agree that it

ended as late as the Black Death of 1348-50. On the contrary,

the preceding quarter-century (1324-49) was one of very severe deflation,

certainly in both Tuscany (Herlihy 1966) and England. In the latter, the

Phelps Brown and Hopkins “basket of consumables” price index (1451-75 =

100) fell 47%: from 165 in 1323 (having been as high as 216 in 1316, with the

Great Famine) to just 88 in 1346. Conversely, while most early-modern

historians would agree that the 16th-Century Price Revolution generally ended

in the 1650s (certainly in England), few if any would date its commencement so

early as the 1470s. To be sure, in both the Low Countries and England, a

combination of coinage debasements, civil wars, bad harvests, and other

supply-shocks did produce a short-term rise in prices from the later 1470s to

the early 1490s; but thereafter their basket-of-consumables price-indices

resumed their deflationary downward trend for another three decades (Munro

1981, 1983). In both of these regions and in Spain as well (Hamilton 1934), the

sustained rise in the general price level, lasting over a century, did not

commence until c.1520.

For Fischer’s third inflationary long-wave, of the Industrial Revolution era,

his periodization is much less contentious, though one might mark its

commencement in the late 1740s rather than the early 1730s.

The last and most recent wave is, however, by far more the most controversial

in its character. Certainly a long upswing in world prices did begin in 1896,

and lasted until the 1920s; but can we really pretend that this so neatly

defined century of 1896 to 1996 truly encompasses any form of long wave when we

consider the behavior of prices from the 1920s?

Are we to pretend that the horrendous deflation of the ensuing Great Depression

era was just a temporary if unusual aberration that deviated from this

particular century long (saeclum) secular tend? Fischer, in fact,


rarely ever discusses deflation, ignoring those of the 14th century and most

of the rest. Instead, he views the three periods intervening between his price-

revolutions as much more harmonious eras of price-equilibria: i.e. 1350-1470;

1650 – 1730; 1820 –

1896; and he suggests that we are now entering a fourth such era. In my own

investigations of price and monetary history from the 12th century, prices rise

and fall,

with varying degrees of amplitude; but they rarely if ever remain stable,

“in equilibrium”.

Certainly “equilibrium” is not a word that I would apply to the first of these

eras, from 1350 to 1470: not with the previously noted, very stark deflation of

c.1325 – 48, followed by an equally drastic inflation that ensued from the

Black Death over

the next three decades, well documented for England, Flanders (Munro 1983,

1984), France, Tuscany (Herlihy 1966),

and Aragon-Navarre (Hamilton 1936). Thus, in England, the mean quinquennial PB

& H index rose 64%: from 88 in 1340-44 to 145 in 1370-74, fal ling sharply

thereafter, by 29%, to 103 in 1405-09; after subsequent oscillations, it fell

even further to a final nadir of 87 in 1475-79 (when,

according to Fischer, the next price-revolution was now under way). For

Flanders, a similarly constructed price index of quinquennial means

(1450-74 = 100: Munro 1984), commencing only in 1350, thereafter rose 170%:

from 59 in 1350-4 to 126 in 1380-84, reflecting an inflation aggravated by

coinage debasements that England had not experienced, indeed none at all since

1351. Thereafter, the Flemish price index plunged 32%, reaching a temporary

nadir of 88 in 1400-04; but after a series of often severe price oscillations,

aggravated by warfare and more coin debasements, it rose to a peak of 138 in

1435-9; subsequent ly it fell another 31%, reaching its 15th century nadir of

95 in 1465-9 (before rising and then falling again, as noted earlier).

Implicit in these observations is the quite pertinent criticism that Fischer

has failed to use, or use properly, these and many other price

indices–especially the well-constructed Vander Wee index (1975), for the

Antwerp region, from 1400 to 1700, so important in his study; and the Rousseaux

and Gayer-Rostow-Schwarz indices for the 19th century (Mitchell &

Deane 1962). On the other hand, he has relied far too much on the dangerously

faulty d’Avenel price index (1894-1926) for medieval and early-modern France.

Space limitations, and presumably the reader’s patience, prevent me from

engaging in similar analyses of price trends

over the ensuing centuries, to indicate further disagreements with Fischer’s

analyses, except to note one more quarter-century of deflation during a

supposed era of price equilibrium: that of the so-called Great Depression era

of 1873 to 1896, at least within England, when the PB&H price index fell from

1437 to 947, a decline of 34% that was unmatched, for quarter-century periods

in English economic history, since the two stark deflations of the second and

fourth quarters of the 14th century. (The Rousseaux index fell from 42.5% from

127 in 1873 to 73 in 1893).

My criticisms of Fischer’s temporal depictions of both inflationary long-waves

and intervening eras of supposed price equilibria are central to my objections

to his anti-monetarist explanations for them, or rather to his

misrepresentation of the monetarist case, a viewpoint he admittedly shares with

a great number of other historians, especially those who have found

Malthusian-Ricardian type models to be more seductively plausible explanations


inflation. Certainly, too many of my students, in reading the economic history

literature on Europe before the Industrial Revolution era, share that beguiling

view, turning a deaf ear to the following arguments: namely, that (1) a growth

in population cannot by itself,

without complementary monetary factors, cause a rise in all prices, though

certainly it often did lead to a rise in the relative prices of grain,

timber, and other natural-resource based commodities subject to diminishing

return and supply

inelasticities; and thus (2) that these simplistic demographic models involve

a fatal confusion between a change in the relative prices of individual

commodities and a rise in the overall price-level. Some clever students have

challenged that admonition,


with graphs that seek to demonstrate, with intersecting sets of aggregate

demand and supply curves, that a rise in population is sufficient to explain

inflation. My response is the following. First, all of the historical prices

with which Fischer and my students are dealing

(1180-1750) are in terms of silver-based moneys-of-account, in the traditional

pounds, shillings, and pence, tied to the region’s currently circulating silver

penny, or similar such coin, while prices expressed in terms of the gold-based

Florentine florin behaved quite differently over the long periods of time

covered in this study. Indeed we should expect such a difference in price

behavior with a change in the bimetallic ratio from about 10:1 in 1400 to about

16:1 in 1650,

which obviously reflects the fall in the relative value or purchasing power of

silver — an issue virtually ignored in Fischer’s book. Second, the shift, in

this student graph, from the conjunction of the Aggregate Demand and Supply


from P1.Q1

and P2.Q2, requires a compensatory monetary expansion in order to achieve the

transaction values indicated for the two price levels: from 17,220,000 pounds

and 122,960,000 pounds, which increase in the volume of payments had to come

from either increased

money stocks and/or flows. Even if changes in demographic and other real

variables, shared responsibility for inflation by inducing changes in those

monetary variables, we are not permitted to ignore those variables in

explaining historical inflations.

Admittedly, from the 12th to the 18th centuries, to the modern Industrial

Revolution era, correlations between demographic and price movements are often

apparent. But why do so few historians consider the alternative proposition

that much more profound, deeper economic forces might have induced a complex

combination of general economic growth, monetary expansion, and a rise in

population, together (so that such apparent statistical relationships would

have adverse Durbin-Watson statistics to indicate significant serial

correlation)? Furthermore, if population growth is the inevitable root cause of

inflation, and population decline the purported cause of deflation, how do such

models explain why the drastic depopulations of the 14th-century Black Death


followed by three decades of severe inflation in most of western Europe?

Conversely, why did late 19th-century England experience the above-noted

deflation while its population grew from 23.41 million in 1873 (PB&H at 1437)

to 30.80 million in 1896 (PB&H

at 947)?

Nor is Fischer correct in asserting that, in each and every one of his four

price-revolutions, an increase in money supplies followed rather than preceded

or accompanied the rises in the price-level. For an individual country or

region, however

, one might argue that a rise in its own price level, as a consequence of a

transmitted rise in world or at least continental prices would have quickly —

and not after the long-time lags projected in Fischer’s analysis — produced an

increase in money supplies to satisfy the economic requirements for that rise

in national/regional prices. Fischer, however, fails to offer any theoretical

analysis of this phenomenon, and makes no reference to any of the well-known

publications on the Monetary Approach to the Balance of Payments [by Frenkel

and Johnson (1976), McCloskey and Zecher (1976), Dick and Floyd (1985, 1992);

Flynn (1978) and D. Fisher (1989), for the Price Revolution era itself]. In


and with some necessary repetition, this thesis contends:

(1) that a rise in world price levels, initially arising from increases in

world monetary stocks, is transmitted to most countries through the mechanisms

of international commerce (in commodities, services, labor) and finance

(capital flows); and (2) that monetized metallic (coin) stocks and other

elements constituting M1 will be endogenously distributed among all countries

and/or regions in order to accommodate the consequent rise in the domestic

price levels, (3) without involving those international bullion flows that the

famous Hume “price- specie flow” mechanism postulates to be the consequences of

inflation-induced changes in national trade balances.

In any event, the historical evidence clearly demonstrates that, for each of

Fischer’s European-based price-revolutions, an increase in European monetary

stocks and flows always preceded the inflations. For the first,

the price-revolution of the “long-13th century” (c.1180-c.1325), Ian Blanchard

(1996) has recently demonstrated that within England its elf,

specifically in Cumberland-Northumberland, a very major silver mining boom had

commenced much earlier, c.1135-7, peaking in the 1170s, with annual silver

outputs that were “ten times more than had been produced in the whole of

Europe” for any year in

the past seven centuries. By the 1170s,

and thus still before evident signs of general inflation or a marked

demographic upswing, an even greater silver mining boom had begun in the Harz

Mountains region of Saxony, which continued to pour out vast quantities of

silver until the early 14th century. For this same

“Commercial Revolution” era, we must also consider the accompanying financial

revolution, also evident by the 1180s, in Genoa and Lombardy; and though one

may debate the impact that their deposit-

and-transfer banking and foreign-exchange banking had upon aggregate European

money supplies,

these institutional innovations undoubtedly did at least increase the volume of

monetary flows, and near the beginning, not the middle, of this first



For the far better known 16th-Century Price Revolution, Fischer seems to pose a

much greater threat to traditional monetary explanations, especially in so

quixotically dating its commencement in the 1470s, rather than in the 1520s.

Certainly Fischer and many other critics are on solid grounds in challenging

what had been, from the time of Jean Bodin (1566-78) to Earl Hamilton

(1928-35), the traditional monetary explanation for the origins of the Price

Revolution: namely, the influx of Spanish

American treasure. But not until after European inflation was well underway,

not until the mid-1530s, were any significant amounts of gold or silver being


(via Seville); and no truly large imports of silver are recorded before the

early 1560s (a

mean of 83,374 kg in 1561-55: TePaske 1983), when the mercury amalgamation

process was just beginning to effect a revolution in Spanish-American mining.

Those undisputed facts, however, in no way undermine the so-called

“monetarist” case; for Fischer, and far too many other economic historians,

have ignored the multitude of other monetary forces in play since the 1460s.

The first and least important factor was the Portuguese export of gold from

West Africa (Sao Jorge) beginning as a trickle in the 1460s;

rising to 170 kg per annum by 1480, and peaking at 680 kg p.a. in the late

1490s (Wilks 1993). Far more important was the Central European silver mining

boom, which began in the 1460s, at the very nadir of the West European

deflation, which had thus raised the purchasing power of silver and so

increased the profit incentive to seek out new silver sources: as a

technological revolution in both mechanical and chemical engineering.

According to John Nef (1941, 1952), when this German-based mining boom reached

its peak in the mid 1530s, it had augmented Europe’s silver outputs more than

five-fold, with an annual production that ranged from a minimum of 84,200 kg

fine silver to a maximum of 91,200 kg — and thus well in excess of any amounts

pouring into Seville before the mid-1560s. My own statistical compilations,

limited to just the major mines, indicate a rise in quinquennial mean

fine-silver outputs from 12,356 kg in 1470-74 to 55,025 kg in 1534-39 (Munro

1991). In England, 25-year mean mint outputs rose

from 18,932 kg silver in 1400-24 to 33,655 kg in 1475-99 to 59,090 kg in

1500-24; and then to 305,288 kg in 1550-74 (i.e., after Henry VIII’s

“Great Debasement”); in the southern Low Countries, those means go from 54,444

kg in 1450-74 to 280,958 kg in 15 50-74 (Challis 1992; Munro 1983,


In my view, however, equally important and probably even more important was the

financial revolution that had begun in or by the 1520s with legal sanctions for

and then legislation on full negotiability, and the contemporary establishment

of effective secondary markets (especially the Antwerp Bourse) in fully

negotiable bills and rentes, i.e., heritable government annuities; and the

latter owed their universal and growing popularity, compared with other forms

of public debt, to papal bulls (1425,

1455) that had exonerated them from any taint of usury. To give just one

example of a veritable explosion in this form of public credit (which thus

reduced the relative demand for gold and silver coins), an issue that Fischer

almost completely ignores: the annual volume of transactions in Spanish

heritable juros rose from 5 million ducats (of 375 maravedis) in 1515 to 83

million ducats in the 1590s (Vander Wee 1977). Thus we need not call upon

Spanish-American bullion imp orts to explain the monetary origins of the

European Price Revolution, though their importance in aggravating and

accelerating the extent of inflation from the 1550s need hardly be questioned,

especially, as Frank Spooner (1972) has so aptly demonstrated,

even anticipated arrivals of Spanish treasure fleets would induce German and

Genoese bankers to expand credit issues by some multiples of the perceived

bullion values. Fischer, by the way, comments (p. 82) that: “the largest

proportionate increases in Spanish prices occurred during the first half of

the sixteenth century — not the second half, when American treasure had its

greatest impact.” This is simply untrue: from 1500-49, the Spanish composite

price index rose 78.5%; from 1550-99, it rose by another 92.1% (Hamilton


Changes in money stocks or other monetary variables do not, however,

provide the complete explanation for the actual extent of inflation in this or

in any other era. Even if every inflationary price trend that I have

investigate d, from the 12th to 20th centuries, has been preceded or

accompanied by some form of monetary expansion, in none was the degree of

inflation directly proportional to the observed rate of monetary expansion,

with the possible exception of the post World War I hyperinflations.

Consider this proposition in terms of the oft-maligned, conceptually limited,

but still heuristically useful monetary equation MV = Py [in which real y = Y/P

= C + I + G+ (X-M)]; or, better, in terms of the Cambridge “real cash

balances” approach: M = kPy [in which k = the proportion of real NNI (Py) that

the public chooses to hold in real cash balances, reflecting the constituent

elements of Keynesian liquidity preference]. Some Keynesian economists would

contend that an increase in M, or in the rate of growth of money stocks, would

be accompanied by some

offsetting rise in y (i.e. real NNI), whether exogenously created or

endogenously induced by related forces of monetary expansion, and also by some

decline in the income velocity of money, with a reduced need to economize on

the use of money. Since mathematically V = 1/k, they would similarly posit

that an expansion in M,

or its rate of growth, would have led, ceteris paribus — without any change in

liquidity preference, to a fall

in (nominal) interest rates, and thus, by the consequent reduction in the

opportunity costs of holding cash balances, to the necessarily corresponding

rise in k (i.e., an increase in the demand for real cash balances; see Keynes

1936, pp. 306-07). Sometimes, but only very rarely, have changes in these two

latter variables y and V (1/k) fully offset an increase in M; and thus such

increases in money stocks have also resulted, in most historical instances, in

some non-proportional degree of inflation: a rising P, as measured by some

suitable price index, such as the Phelps Brown and Hopkins

basket-of-consumables. [Other economists,

it must be noted, would contend that, in any event, the traditional Keynesian

model is really not applicable to such long-term

phenomena as Fischer’s price-revolutions.

Keynes himself, in considering “how changes in the quantity of money affect

prices… in the long run,” said, in the General Theory (1936, p. 306):

“This is a question for historical generalisation rather than for

pure theory.”]

For the 16th-century Price Revolution, therefore, the interesting question now

becomes: not why did it occur so early (i.e., before significant influxes of

Spanish American bullion); but rather why so late — so many decades after the

onset of the Central European silver-copper mining boom?

Since that boom had commenced in the 1460s, precisely when late-medieval

Europe’s population was at its nadir, perhaps 50% below the 1300 peak, and just

after the Hundred Years’ War had ended, and just

after the complex network of overland continental trade routes between Italy

and NW Europe had been successfully restored, one might contend that in such an

economy with so much “slack” in under-utilized resources, especially land, and

with elastic supplies for so many commodities, both the monetary expansion and

economic recovery of the later 15th century , preceding any dramatic

demographic recovery, permitted an increase in y proportional to the growth of

M, without the onset of diminishing returns an d without significant inflation,

before the 1520s By that decade, however, the monetary expansion had become

all the more powerful: with the peak of the Central European silver-mining

boom and with the rapid increase in the use of negotiable, transferable

credit instruments; and, furthermore, with the Ottoman conquest of the Mamluk

Sultanate (1517), which evidently diverted some considerable amounts of

Venetian silver exports from the Levant to the Antwerp market.

The role of the income-velocity of money

is far more problematic. According to Keynesian expectations, velocity should

have fallen with such increases in money stocks. Yet three eminent economic

historians — Harry Miskimin

(1975), Jack Goldstone (1984), and Peter Lindert (1985) — have sought

to explain England’s16th-century Price Revolution by a very contrary thesis:

of increased money flows (or reductions in k) that were induced by demographic

and structural economic changes, involving interalia(according to their

various models) disproportionate changes in urbanization, greater

commercialization of the rural sectors, far more complex commercial and

financial networks, changes in dependency ratios, etc. The specific

circumstances so portrayed, however, apart from the demographic, are largely

peculiar to 16th- century England and thus do not so convincingly explain the

very similar patterns of inflation in the 16th-century Low Countries, which had

undergone most of these structural economic changes far earlier. Certainly

these velocity model s cannot logically be applied to Fischer’s three other

inflationary long-waves. Indeed, in an article implicitly validating Keynesian

views, Nicholas Mayhew (1995) has contended that the income-velocity of money

has always fallen with an expansion in money stocks, from the medieval to

modern eras, with this one anomalous exception of the 16th-century Price

Revolution. Perhaps, for this one era,

we have misspecified V (or k) by misspecifiying M: i.e., by not properly

including increased issues of negotiable credit; or perhaps institutional

changes in credit (as Goldstone and Miskimin both suggest) did have as dramatic

an effect on V as on M. Furthermore, an equally radical change in the coined

money supply (certainly in England), from one that had been principally gold

to one which, precisely from the 1520s, became largely and then almost entirely

silver, may provide the solution to the velocity paradox: in that the

transactions velocity attached to small value silver coins, of 1d., is

obviously far higher

velocity than that for gold coins valued at 80d and 120d. Except for a brief

reference to Mayhew’s article in the lengthy bibliography, Fischer virtually

ignores such velocity issues

(and thus changes in the demand for real cash balances) throughout his

eight-century survey of secular price trends.

Finally, Fischer’s thesis that population growth was responsible for this the

most famous Price Revolution (and all other inflationary long waves) is hardly

credible, especially if he insists on dating its inception the 1470s. For most

economic historians (Vander Wee 1963; Blanchard 1970;

Hatcher 1977, 1986; Campbell 1981; Harvey 1993) contend that, in NW Europe,

late-medieval demographic decline continued into the early 16th-century;

and that England’s population in 1520 was no more than 2.25 million,

compared to estimates ranging from a minimum of 4.0 to a maximum of 6.0 or even

7.0 million around 1300, the upper bounds being favored by most historians. How

— even if the demographic model were to be theoretically acceptable — could

a modest population growth from such a very low level in the 1520s, reaching

perhaps 2.83 million in 1541, and peaking at 5.39 million in 1656, have been

the fundamental cause of persistent, European wide-inflation, already underway

in the 1520s?

According to Fischer, the ensuing, intervening price-equilibrium

(c.1650-c.1730) involved no discernible monetary contraction, and similarly,

his next inflationary long-wave (c.1730-1815) began well before any monetary

expansion became — in his view — manifestly evident. The monetary and price

data, suggest otherwise, however, incomplete though they may be. Thus, the data

complied by Bakewell, Cross, TePaske, and many others on silver mining at

Potosi (Peru) and Zacatecas (Mexico) indicate that their combined outputs fell

from a mean of 178,692 kg in 1636-40 to one of 101,534 kg in 1661-5, rising to

a mean of 156,497 kg in 1681-5

[partially corresponding to guesstimates of European bullion imports, which

Morineau (1985) extracted fr om Dutch gazettes]; but then sharply falling once

more, and even further, to a more meager mean of 95,842 kg in 1696-1700. During

this same era, the Viceroyalty of Peru’s domestically-

retained share of silver-based public revenues rose from 54% to 96%

(T ePaske 1981); the combined silver exports of the Dutch and English East

India Companies to Asia (Chaudhuri 1968; Gaastra 1983) increased from a

decennial mean of 17,293 kg in 1660-69 to 73,687 kg in 1700-09, while English

mint outputs in terms of fine sil ver (Challis 1992) fell from a mean of 19,400

kg in 1660-64 (but 23,781 kg in 1675-79) to one of just 430.4 kg in 1690-94,

i.e., preceding the Great Recoinage of 1696-98. From the early 18th century,

however, European silver exports to Asia were well more

than offset by a dramatic rise in Spanish-American, and especially Mexican

silver production: for the latter (with evidence from new or previously

unrecorded mines: assembled by Bakewell 1975, 1984; Garner 1980,

1987; Coatsworth 1986, and others), aggregate production more than doubled

from a mean of 129,878 kg in 1700-04 to one of 305,861 kg in 1745-49.

Possibly even more important, especially with England’s currency shift from a

silver to a gold standard, was a veritable explosion in aggregate

Latin-American gold production: from a decennial mean of just 863.90 kg in


zooming to 16,917.4 kg in 1741-50 (TePaske 1998). Within Europe itself, as

Blanchard (1989) has demonstrated, Russian silver mining outputs, ultimately

responsible for perhaps 7%

of Europe’s total stocks,

rose from virtually nothing in the late 1720s to peak at 33,000 kg per annum in

the late 1770s, falling to 18,000 kg in the early 1790s then rising to 21,000

kg per year in the later 1790s.

Finally, even though changes in annual mint outputs are not valid indicators

of changes in coined money supplies, let alone of changes in M1,

the fifty-year means of aggregate values of English mint outputs (silver and

gold: Challis 1992) do provide interesting signals of longer-term monetary

changes: a fall from an annual mean of 348,829 pounds in 1596-1645 to one of

275,403 pounds in 1646-95, followed by a rise, with more than a full recovery,

to an annual mean of 369,644 pounds in 1700-49 (thus excluding the Great

Recoinage of 1696-98). Meanwhile, if the earlier Price Revolution had indeed

peaked in 1645-49, with the quinquennial mean PB&H index at 680, falling to a

nadir of 579 in 1690-94, the fluctuations in the first half of the 18th-century

do not demonstrate any clear inflationary trend, with the mean PB&H index

(briefly peaking at 635 in 1725-9) stalled at virtually the same former level,

581, in 1745-49. Thereafter, of course,

for the second half of the 18th century, the trend is very strongly and

incessantly upward, with almost a

doubling in PB&H index, to 1093 in 1795-9.

Whatever one may wish to deduce from all these diverse data sets, we are

certainly not permitted to conclude, as does Fischer, that inflation preceded

monetary expansion, and did so consistently. Such a view becomes all the more

untenable when the radical changes in English and banking and credit

institutions, following the establishment of the Bank of England in 1694-97,

are taken into account: the consequent introduction and rapid expansion in

legal-tender paper bank note issues (with prior informal issues by London’s

Goldsmith banks), and more especially fully negotiable,

transferable, and discountable Exchequer bills, government annuities,

inland bills and promissory notes, whose veritable explosion in circulation

from the 1760s, with the proliferation of English country-banks, hardly

requires any further elaboration, even if these issues are given short shrift

in Fischer’s book. In view of such complex changes in Britain’s financial and

monetary structures,

subsequent data on coinage outputs have even more limited utility in

estimating money stocks. But we may note that aggregate mined outputs of

Mexican silver more than doubled, from a quinquennial mean of 305,861 kg in

1745-49 to 619,495 kg in 1795-99, while those of Peru more than tripled, from

34,318 kg in 1735-39 (no data for the 1740s) to 126,354 kg in 1795-99 (Garner

1980, 1987; Bakewell 1975, 1984; J.

Fisher, 1975).

Having earlier considered the so-called and misconstrued

“price-equilibrium” of 182 0-1896, let us now finally examine the inception of

the fourth and final long-wave commencing in 1896. Fischer again contends that

population growth was the “prime mover,” despite the fact that Britain’s own

intrinsic growth rate had been falling from its

1821 peak [from 1.75 to 1.31 in 1865, the last year given in Wrigley-Davies-

Oppen-Schofield (1997)]. For evidence he cites an assertion in Colin McEvedy

and Richard Jones, Atlas of World Population History (1978) to the effect that

world population, having increased by 35% from 1850 to 1900,

increased a further 53% by 1950. Are we therefore to believe that such growth

was itself responsible for a 45.2% rise in, for this era, the better structured

Rousseaux price-index [base 100 = (1865cp +1885cp)/2]: from 73 in 1896 to 106

[while the PB&H index rose from 947 in 1896 to 1021 in 1913]?

As for the role of monetary factors in the commencement of this fourth long

wave, Fischer observes (p. 184) that “the rate of growth in gold production

throughout the world was roughly the same before and after 1896.” This

undocumented assertion, about an international economy whose commerce and

finance was now based upon the gold standard, is not quite accurate.

According to assiduously calculated estimates in Eichengreen

and McLean

(1994), decennial mean world gold outputs, having fallen from 185,900 kg in

1850-9 to 135,000 kg in 1880-9 (largely accompanying the aforementioned 44%

fall in the Rousseaux composite index from 128 in 1872 to 72 in 1895),

thereafter soared to

a mean of 255,600 kg in 1890-9 — their graph of annualized data shows that

the bulk of this increased output occurred after 1896 — virtually doubling to

an annual mean of 513,900 kg in 1900-14.

World War I, of course, effectively ended the international gold-standard era,

since the Gold- Exchange Standard of 1925-6 was rather different from the older

system; and the post-war era ushered in a radically new monetary world of fiat

paper currencies, whose initial horrendous manifestation came in the hyper

inflations of Weimar Germany, Russia, and most Central European countries, in

the early 1920s. For this post-war economy, Fischer does admit that monetary

factors often had some considerable importance in influencing price trends; but

his analyses, even of the post-war radical, paper-fuelled hyperinflations, are

not likely to satisfy most economists, either for the inter-war or Post World

War II eras, up to the present day.

This review, long as it is, cannot possibly do full justice to an eight-century

study of this scope and magnitude. So far I have neglected to consider his

often fascinating analyses of the social consequences of inflation over these

many centuries, except for brief allusions in the introduction, where I

indicated his deeply hostile views to persistent inflation for its inevitably

insidious consequences: the impoverishment of the masses, growing malnutrition,

the spread of killer-diseases, increased crime and violence in general, and a

breakdown of the social order, etc.

While some of

the evidence for the latter seems plausible, I do have some concluding quarrels

with his use of real wage indices. Much of our available nominal money-wage

evidence comes from institutional sources on daily wages, which, by their very

nature, tend to be fixed over long periods of time [as Adam Smith noted in the

Wealth of Nations (Cannan ed.

1937, p. 74), “sometimes for half a century together”). Therefore, for such

wage series, real wages rose and fell with the consumer price index, as

measured by, for example, our Phelps Brown and Hopkins basket-of-consumables

index. Its chief problem (as opposed to the better constructed Vander Wee

index for Brabant) is that its components, for long periods, constitute fixed

percentages of the total composite index,

irrespective of changes in relative prices for, say, grains; and they thus do

not reflect the consumers’ ability to make cost-saving substitutions.

Secondly, they are necessarily based on daily wage rates, without any

indication of total annual money incomes; thirdly, the great majority of

money-wage earners in pre-modern Europe earned not day rates but piece-work

wages, for which evidence is extremely scant.

But more important, before the 18th century (or even later), a majority of the

European population did not live by money wages; and most wage-earners had

supplementary forms of income, especially agricultural, that helped insulate

them to some degree from sharp rises in food prices. If rising food prices hurt

many wage-earners, they also benefited ma ny peasants,

especially those with customary tenures and fixed rentals who could thereby

capture some of the economic rent accruing on their lands with such price

increases. It may be simplistic to note that there are always gainers and

losers with both inflation and deflation — but even more simplistic to focus

only on the latter in times of inflation, and especially simplistic to focus on

a real wage index based on the PB&H index. And if deflation is so beneficial

for the masses, why, during the deflationary period in later 17th and early

18th century England, do we find, along with a rise in this real-wage index, a

rise in the death rate from 23.68/1000 in 1626 to 32.14/1000 in 1681,

thereafter falling slightly but rising again to an ultimate peak of

37.00/1000 in 1725 (admittedly an era of anomalous disease-related

mortalities), when the PB&H real-wage index stood at 60 —

some 24% higher than the RWI of 36 for 1626? One of the many imponderables yet

to be considered, though one might ponder that sometimes high real wages

reflect labor shortages from dire conditions, rather than general prosperity

and more equitable wealth and income distributions, as Fischer suggests.

Finally, Fischer’s argument that inflationary price-revolutions were always

especially harmful to the lower classes by leading to rising interest rates is

sometimes but not universally true, even if rational creditors should have

raised rates to protect themselves from inflation. Thus, for the Antwerp money

market in the 16th century,

the meticulous evidence compiled by Vander Wee (1964, 1977) shows that

nominal interest rates fell over this entire period [from 20% in 1515 to 9% in

1549 to 5% in 1561; and on the riskier short term loans to the Habsburg

government, from a mean of 19.5

% in 1506-10 to one of 12.3% in 1541-45 to 9.63% in 1561-55]. In the next

price-revolution, during the later 18th century, nominal interest rates did

rise during periods of costly warfare, i.e., with an increasing risk premium;

but real interest rates actually fell because of the increasing tempo of

inflation (Turner 1984), more so than did real wages for most industrial



Georges d’Avenel, Histoire economique de la propriete, des salaires, des

denrees, et tous les prix

en general, depuis l’an 1200 jusqu’en l’an 1800,

7 vols. (Paris, 1894-1926).

Peter Bakewell, Silver Mining and Society in Colonial Mexico: Zacatecas,

1546-1700 (Cambridge, 1972).

Peter Bakewell, “Registered Silver Production in the Potosi District, 1550

– 1735,” Jahrbuch fur Geschichte von Staat, Wirtschaft und Gesellschaft

Lateinamerikas, 12 (1975), 67-103.

Peter Bakewell, “Mining in Colonial Spanish America,” in Leslie Bethell,

ed., The Cambridge History of Latin America, Vol. II: Colonial Latin Amer ica

(Cambridge and New York: Cambridge University Press, 1984), 105-51.

Peter Bakewell, ed., Mines of Silver and Gold in the Americas, Variorum Series:

An Expanding World: The European Impact on World History, 1450 –

1800 (London, 1997):

Ian Blanchard,

Russia’s ‘Age of Silver’: Precious-Metal Production and Economic Growth in the

Eighteenth Century (Routledge: London and New York,


Ian Blanchard, “Population Change, Enclosure, and the Early Tudor Economy,”

Economic History Review, 2nd ser. 23 (19 70), 427-45.

Ian Blanchard, “Lothian and Beyond: The Economy of the ‘English Empire’ of

David I,” in Richard Britnell and John Hatcher, eds., Progress and Problems in

Medieval England (Cambridge and New York: Cambridge University Press,

1996), pp. 23-45.

Michael Bordo, “Explorations in Monetary History: A Survey of the

Literature,” Explorations in Economic History, 23 (1986), 339-415.

Bruce Campbell, “The Population of Early Tudor England: A Re-evaluation of the

1522 Muster Returns and the 1524 and 1 525 Lay Subsidies,” Journal of

Historical Geography, 7 (1981), 145-54.

Christopher Challis, “Lord Hastings to the Great Silver Recoinage, 1464 –

1699,” in Christopher E. Challis, ed., A New History of the Royal Mint

(Cambridge: Cambridge University Press

, 1992), pp. 179-397; C.E. Challis,

“Appendix 1. Mint Output, 1220-1985,” pp. 673-698.

John Coatsworth, “The Mexican Mining Industry in the Eighteenth Century,”

in Nils Jacobsen and Hans- Jurgen Puhle, eds., The Economies of Mexico and Peru

during the La te Colonial Period, 1760 – 1810 (Berlin 1986), pp. 26-45.

Harry Cross, “South American Bullion Production and Export, 1550-1750,” in John

Richards, ed., Precious Metals in the Later Medieval and Early Modern Worlds

(Durham, 1983), Appendix II, p. 422.

T revor Dick and John Floyd, Canada and the Gold Standard: Balance of Payments

Adjustment under Fixed Exchange Rates, 1871 – 1913 (Cambridge and New York:

Cambridge University Press, 1992).

Barry Eichengreen and Ian W. McLean, “The Supply of Gold Under the

pre-1914 Gold Standard,” The Economic History Review, 2nd ser., 47:2 (May



John Fisher, “Silver Production in the Viceroyalty of Peru, 1776-1824,”

Hispanic American Historical Review, 55:1 (1975), 25-43.

Douglas Fisher, “The Price Revolution: A Monetary Interpretation,” Journal of

Economic History, 49 (December 1989), 883 – 902.

John Floyd, World Monetary Equilibrium: International Monetary Theory in an

Historical-Institutional Context (Philadelphia, 1985).

Dennis Flynn, “A New Perspective on the Spanish Price Revolution: The Monetary

Approach to the Balance of Payments,” Explorations in Economic History, 15

(1978), 388-406.

Jacob Frenkel and Harry G. Johnson, eds., The Monetary Approach to the Balance

of Payments (Toronto: University of Toronto Press, 1976),

especially Jacob Frenkel and Harry Johnson, “The Monetary Approach to the

Balance of Payments: Essential Concepts and Historical Origins,” pp. 21-45;

Harry Johnson, “The Monetary Approach to Balance-of-Payments Theory,” pp.


67; Donald N. McCloskey and J. Richard Zecher, “How the Gold Standard Worked,

1880-1913,” pp. 357-85.

FS. Gaastra, “The Exports of Precious Metal from Europe to Asia by the Dutch

East India Company, 1602-1795 A.D.,” in John F. Richards, ed.,

Precious Metals in the Medieval and Early Modern Worlds(Durham, N.C.,

1983), pp. 447-76.

Richard Garner, “Long-term Silver Mining Trends in Spanish America: A

Comparative Analysis of Peru and Mexico,” American Historical Review, 67:3

(1987), 405-30.

Richard Garner,

“Silver Production and Entrepreneurial Structure in 18th-Century Mexico,”

Jahrbuch fur Geschichte von Staat, Wirtschaft und Gesellschaft

Lateinamerikas,17 (1980), 157-85.

Jack Goldstone, “Urbanization and Inflation: Lessons from the English Price

Revolution of the Sixteenth and Seventeenth Centuries,” American Journal of

Sociology, 89 (1984), 1122 – 60.

Earl Hamilton, American Treasure and the Price Revolution in Spain,

1501-1650 (Cambridge, Mass., 1934; reissued 1965).

Earl Hamilton, Money, Prices, and Wages in Valencia, Aragon, and Navarre,

1351 – 1500 (Cambridge, Massachusetts: Harvard University Press, 1936).

Barbara Harvey, Living and Dying in England, 1100 – 1540 (Oxford: Oxford

University Press, 1993).

John Hatcher, Plague, Population, and the English Economy, 1348-1530

(Studies in Economic History series, London, 1977).

John Hatcher, “Mortality in the Fifteenth Century: Some New Evidence,”

Economic History Review, 39 (Feb. 1986), 19-38.

David Herlihy, Medieval and Renaissance Pistoia: The

Social History of an Italian Town, 1200-1430 (New Haven and London, 1966).

John Maynard Keynes, The General Theory of Employment, Interest and Money

(London, 1936).

Peter Lindert, “English Population, Wages, and Prices: 1541 – 1913,” The

Journal of Interdisciplinary History, 15 (Spring 1985), 609 – 34.

Nicholas Mayhew, “Population, Money Supply, and the Velocity of Circulation in

England, 1300 – 1700,” Economic History Review, 2nd ser.,

48:2 (May 1995), 238-57.

Harry Miskimin, “Population Growth and

the Price Revolution in England,”

Journal of European Economic History, 4 (1975), 179-85. Reprinted in his Cash,

Credit and Crisis in Europe, 1300 – 1600 (London: Variorum Reprints,

1989), no. xiv.

B.R. Mitchell and Phyllis Deane, eds. Abstract of British Historical

Statistics (Cambridge, 1962)

John Munro, “Mint Outputs, Money, and Prices in late-Medieval England and the

Low Countries,” in Eddy Van Cauwenberghe and Franz Irsigler, ed.,

Munzpragung, Geldumlauf und Wechselkurse / Minting, Monetary Circulation and

Exchange Rates, (Trierer Historische Forschungen, Vol. VIII, Trier,

1984), pp. 31-122.

John Munro, “Bullion Flows and Monetary Contraction in Late-Medieval England

and the Low Countries,” in John F. Richards, ed., Precious Metals in the

Medieval and Early Modern Worlds (Durham, N.C., 1983), pp. 97-158.

John Munro, “The Central European Mining Boom, Mint Outputs, and Prices in the

Low Countries and England, 1450 – 1550,” in Eddy H.G. Van Cauwenberghe,

ed., Money, Coins, and Commerce: Essays in

the Monetary History of Asia and Europe (From Antiquity to Modern Times)

(Leuven: Leuven University Press,

1991), pp. 119-83.

John Nef, “Silver Production in Central Europe, 1450-1618,” Journal of

Political Economy, 49 (1941), 575-91.

John Nef, “Mining

and Metallurgy,” in M.M. Postan, ed., Cambridge Economic History, Vol. II:

Trade and Industry in the Middle Ages (Cambridge, 1952),

pp. 456-93. Reprinted without changes, in the 2nd revised edn. of The Cambridge

Economic History of Europe, Vol. II, edited by M.M. Postan and Edward Miller

(Cambridge, 1987), pp. 691-761.

E.H. Phelps Brown and Sheila V. Hopkins, “Seven Centuries of en Centuries of

the Prices of Consumables Compared with B Building Wages,” Economica, 22

(August 1955), and “Sevuilders” Wage-

Rates,” Economica, 23 (Nov. 1956),

reprinted E.H. Phelps Brown and Sheila V. Hopkins, A Perspective of Wages and

Prices (London, 1981), containing additional statistical appendices not

provided in the original publication.

Frank Spooner, The International Economy and Monetary Movements in France,

1493-1725 (Cambridge, Mass., 1972)

John TePaske, “New World Silver, Castile, and the Philippines, 1590-1800 A.D.,”

in John F. Richards, ed., Precious Metals in the Medieval and Early Modern

Worlds (Durham, N.C.

, 1983), pp. 424-446.

John TePaske, “New World Gold Production in Hemispheric and Global Perspective,

1492 – 1810,” in Clara Nunez, ed., Monetary History in Global Perspective, 1500

– 1808, Papers presented to Session B-6 of the Twelfth International Eco nomic

History Congress (Seville, 1998), pp. 21-32.

Michael Turner, Enclosures in Britain, 1750 – 1830, Studies in Economic History

Series (London, 1984).

Herman Vander Wee, Growth of the Antwerp Market and the European Economy,

14th to 16th Centuries,

3 Vols. (The Hague, 1963). Vol. I: Statistics; Vol.

II: Interpretation, 374-427; and Vol. III: Graphs.

Herman Vander Wee, “Monetary, Credit, and Banking Systems,” in E.E. Rich and

Charles Wilson, eds., The Cambridge Economic History of Europe, Vol. V:

T he Economic Organization of Early Modern Europe(Cambridge, 1977), chapter V,

pp. 290-393.

Herman Vander Wee, “Prijzen en lonen als ontwikkelingsvariabelen: Een

vergelijkend onderzoek tussen Engeland en de Zuidelijke Nederlanden,

1400-1700,” in Album aan geboden aan Charles Verlinden ter gelegenheid van zijn

dertig jaar professoraat (Gent, 1975), pp. 413-47; reissued in English

translation (without the tables) as “Prices and Wages as Development Variables:

A Comparison Between England and the Southern Net herlands,

1400-1700,” Acta Historiae Neerlandicae, 10 (1978), 58-78.

Ivor Wilks, “Wangara, Akan, and the Portuguese in the Fifteenth and Sixteenth

Centuries,” in Ivor Wilks, ed., Forests of Gold: Essays on the Akan and the

Kingdom of Asante (Athens, Ohio

, 1993), pp. 1-39.

E.A. Wrigley, R.S. Davies, J.E. Oeppen, and R.S. Schofield, English Population

History from Family Reconstitution, 1580- 1837 (Cambridge and New York:

Cambridge University Press, 1997).

Subject(s):Macroeconomics and Fluctuations
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

The Age of Mass Migration: Causes and Economic Impact

Author(s):Hatton, Timothy J.
Williamson, Jeffrey G.
Reviewer(s):Rosenbloom, Joshua L.

Published by EH.NET (September 1998)

Timothy J

. Hatton and Jeffrey G. Williamson, The Age of Mass Migration:

Causes and Economic Impact. New York and Oxford: Oxford University Press,

1998. ix + 301 pp. $49.95, ISBN: 0-19-511651-8.

Reviewed for EH.NET by Joshua L. Rosenbloom, Department of Economics,

University of Kansas, and National Bureau of Economic Research.

Between 1850 and 1914 about 55 million Europeans left home for the Americas or

Australasia. This unprecedented voluntary redistribution of population was the

subject of extensive study at the time, and remains of interest to historians

and other social scientists today. In this book Timothy Hatton,

Professor of Economics at the University of Essex, and Jeffrey Williamson,

Professor of Economics at Harvard University, present the results of their

reexamination of the causes and consequences of migration in the late

nineteenth and early twentieth centuries. Their approach is quantitative and

social scientific, eschewing micro-detail in pursuit of systematic patterns

and central tendencies.

Drawing on a broad array of quantitative evidence Hatton and Williamson provide

new support for many hypotheses while overturning quite a few more.

The work they report here is important and will be necessary reading for anyone

interested in historical or contemporary migration topics or the historical

development of labor markets. Although the authors suggest that a better

understanding of the era of mass migration will shed new light on contemporary

immigration controversies, it is less clearly successful in achieving this

goal. An accurate understanding of historical context is almost always

valuable, but I doubt that anything in this book would directly alter one’s

analysis or understanding of contemporary migration phenomena.

After two introductory chapters that lay out the major issues and summarize the

key findings, the rest of the book divides into two parts. The first

part–chapters 3 through 6–examines the causes of migration. The second

part–chapters 7 through 11–focuses on the effects of migration on both

receiving and sending regions.

The analysis of the causes of migration opens with an examination of the

determinants of variation in long-run gross emigration rates from 12 European

countries between 1850

and 1913. A variety of hypotheses about the determinants of migration are

first laid-out, and then tested using a panel-regression framework. In a major

advance over previous work, the regressions make use of internationally

comparable real-wage data for sending and receiving regions constructed by

Williamson. The strong positive effect of relative real wages provides a

compelling confirmation of the importance of economic incentives in encouraging

migration. But the regressions also demonstrate that

a number of other non-wage factors were important. In particular, they reveal

that demographic shocks, the assistance of friends and relatives living

overseas, the progress of industrialization at home, and the rate of migration

in the recent past all had a significant effect on the rate of emigration.

Overall the model does a good job of accounting for inter-country variations in

emigration rates. It appears that differences in the explanatory variables are

sufficient to account for both the very high rates of emigration from Ireland

and Scandinavia and the very low rates of emigration from France. Only four

countries–Italy, Spain,

Portugal, and Belgium–require the addition of separate intercept terms to

account for their level of emigration. The

estimates also illuminate the sources of the characteristic inverted-U shape

pattern of emigration rates found for most countries, which appears to have

arisen from the systematic evolution of several of the explanatory variables as

each country passed through the process of industrialization.

In chapters 4 through 6 the authors extend their model of emigration to account

for short-run variations in the timing of migration and apply it to the

experience of a range of different countries. Chapter 4 elaborates a

short-run model incorporating the effects of employment conditions at home and

abroad into the general framework developed earlier, and estimates it using

data from the United Kingdom and three Scandinavian countries.

Chapter 5 explores Irish emigration after the famine, while Chapter 6

considers the case of Italian emigration. The results in each case are

consistent with those obtained from the panel regressions reported in Chapter

3, while confirming that short-run fluctuations in the timing of emigration

were influenced by variations in relative unemployment levels.

Because adequate data on unemployment are not readily available in all cases,

however, estimation of these models leans heavily on the use of proxies, some

more adequate than others. In the case of Ireland, for example, it is

necessary to use deviations of agricultural output from its trend. It is not

obvious that this measure should be closely related to unemployment rates,

however, and no support for this substitution is offered in the text.

Despite the broad similarity in approach for these different country studies,

there is no explicit attempt to compare or contrast them in the text.

Annoyingly, the regression results in each chapter are reported in slightly

different for mats, and there is no attempt to assemble the results in a

coherent fashion. While the results for the different countries are similar in

many respects I was struck by some of the differences in coefficient estimates.

For example, it would appear that the stock of migrants living abroad had an

effect on emigration from the United Kingdom and Ireland several orders of

magnitude larger than it did for Italy or the Scandinavian countries. Why this

should be true is not immediately apparent.

The second half of the book shifts the focus from the causes of migration to

its consequences on receiving and sending regions. Two chapters (7 and 8)

examine the United States, one of the chief destination countries.

Chapter 7 explores the progress of immigrant assimilation, a topic that

attracted considerable contemporary concern, and has also generated a large

historical literature. While a number of recent studies have found little

evidence of immigrant assimilation (as measured by the gap in earnings relative

to the native born), Hatton and Williamson reach a more optimistic conclusion

on this subject. Arguing that the quadratic age-earnings profiles estimated in

earlier studies are misspecified, Hatton and Williamson show that once a more

realistic specification is adopted wage gaps appear to have closed relatively

quickly for older immigrant groups.

Although the newer immigrant groups who predominated after 1890 did start at a

significant wage disadvantage relative to the native born,

Hatton and Williamson conclude that this was due largely to their lower skill

levels, and find that there is nonetheless evidence that wage gaps closed over


Chapter 8 considers the impact of immigration on Americans. Here Hatton and

Williamson argue that immigrants competed directly with less skilled

native-born workers, and although migration was sensitive to short-run economic

fluctuations it did little to moderate variations in unemployment rates over

the business cycle. These facts suggest that immigration should have tended

to lower American wage levels. Using a partial equilibrium framework, they

suggest that by 1910 American wages would have been 5 to 6 percent higher in

the absence of immigration after 1890, or 11 to 14 percent higher if there had

been no immigration after 1870.

Chapters 9 and 10 introduce a general equilibrium framework to analyze the

impact on sending regions, and the contribution of migration to the substantial

wage convergence which occurred during the late nineteenth century. The


equilibrium framework allows the authors to assess the relative contributions

of factor price equalization and labor mobility in producing wage convergence.

Both trade and migration emerge as important factors in explaining the

narrowing of international wage gaps, although their relative importance

varies from country to country. The general equilibrium framework also helps

to highlight the extent to which the impact of migration depends on the

counterfactual world against which events are to be compared. In particular,

the late nineteenth century was characterized by considerable capital as well

as labor mobility, and the fact that capital

“chased” labor from the Old to the New World substantially offset the extent of

wage convergence. Had capital

not been mobile, migration would have produced even more dramatic convergence

than it actually did. These findings suggest that, at least for this period,

forces of globalization may have been more important than technological

convergence, which has figured so prominently in recent discussions of the

sources of international differences in real incomes.

On the face of it, these results seem plausible. But it is difficult to

adequately assess them, both because of the complexity of the general


models on which they rest, and the fact that many of the details needed to

evaluate the models are not explicitly discussed in the book. Rather, curious

or skeptical readers will be obliged to refer to a series of other articles to

track down these facts.

In chapter 11, the authors consider the impact of population redistribution on

inequality. The chapter makes an important conceptual point: that discussions

of migration’s effects on inequality have generally taken too narrow a view by

focussing on a single country. Much more light can in principle be shed on

the question by considering the simultaneous effects on both sending and

receiving countries. The chapter is less successful,

however, at resolving the empirical question of how migration affected

inequality trends in different countries. A priori we might expect that

immigration would tend to reduce inequality in labor-abundant Old World

countries while raising it in labor-scarce New World countries. Hatton and

Williamson argue that this

is the case, based on the behavior of wage-land value and wage-GDP per worker

hour ratios–both of which tended to fall in destination countries and rise in

source countries. But this evidence is not entirely convincing given the large

volume of international capital flows. Since Old World capitalists were able

to benefit from high rates of return on New World investments it is not obvious

what these ratios reveal about income inequality trends within countries.

As an analysis of the causes and consequences of migration in the late

nineteenth and early twentieth centuries, this book is an important

contribution to the literature. It offers a comprehensive quantitative

analysis that substantially extends and modifies our understanding of this

important historical epoch. The conclusions and conjectures here should

provide much food for thought and subsequent study.

Joshua L. Rosenbloom Department of Economics University of Kansas and National

Bureau of Economic Research

Joshua L. Rosenbloom is author of “Strikebreaking and the Labor Market in the

United States, 1881-1894,” Journal of Economic History 58 (Mar.

1998), and “Was There a National Labor Market at the End of the Nineteenth

Century? New Evidence on Earnings in Manufacturing,”

Journal of

Economic History 56 (Sept. 1996); as well as numerous other articles on the

history of U.S. labor markets.

Subject(s):Historical Demography, including Migration
Geographic Area(s):General, International, or Comparative
Time Period(s):19th Century

The Vanishing Irish: Households, Migration, and the Rural Economy in Ireland, 1850-1914

Author(s):Guinnane, Timothy W.
Reviewer(s):Gemery, Henry A.

Published by EH.NET (August 1998)

Timothy W. Guinnane, The Vanishing Irish: Households, Migration, and the Rural Economy in Ireland, 1850-1914. Princeton, NJ: Princeton University Press, 1997. ix + 335 pp. $39.95 (cloth), ISBN: 0-691-04307-8.

Reviewed for EH.NET by H.A. Gemery, Department of Economics, Colby College.

Over the post-Famine years from 1841 to the eve of World War I, the Irish population fell from 8.2 million to 4.1 million–a complete reversal of the rapid population growth of the pre-Famine era. By 1881 nearly 40% of the Irish-born were living elsewhere. As late as 1911, with slowing emigration, 33% resided elsewhere (p. 104). In studying the why and how of this de-population, Timothy Guinnane (Yale University) examines, at the rural, household level, the decision-making giving rise to major features of that demographic experience: “the rarity of marriage, large families, …. extensive emigration” (p. 7). None of these features alone, Guinnane argues, were unique to Ireland, but the three in combination were.

Before examining why young Irish people made the decisions about marriage, childbearing, and emigration they did, Guinnane undertakes a survey of the Irish rural economy, the role of the state as well as the “several church,” and the demographic patterns of the post-Famine era. After that survey, there follows a detailed examination of household decision-making and it is here that the full range, subtlety, and depth of analysis come into play. The empirical data available are limited and imperfect. As Guinnane ruefully admits, the empirical circumstance is somewhat similar to the drunk-under-the-lamppost anecdote–searching where the light is best. The specific example of this is the “somewhat unusual procedure of going backward in historical time,” i.e. using manuscript census samples from 1901 and 1911 together with tax valuation data to infer individual behavior and decision-making for much earlier, empirically darker, decades (p. 133). However, such data in combination with less detailed, published census material and demographic work done by O Grada, Connell, and others, provide the basis for Guinnane’s attempt to “visualize the [economic and demographic] decisions as people of the day saw them” (p. 17). Thus, Guinnane aims for what he notes (quoting Hammel) as “culturally smart microeconomics” (ibid).

The first step in analysis is with “Households and the Generations,” an examination of the household structures characterizing rural Ireland, the patterns of impartible and partible inheritance, farm size, and the evidence against primogeniture. Guinnane finds a large number of extended family households (“the real Irish departure from the nuclear-family model” p. 142) where an efficiency logic militated against primogeniture, and where increasing emigrant opportunities changed notions of intra-family equality to one of “giving one son a solid farm and the others a chance at good life elsewhere” (p.164). In support of that logic, Guinnane finds that few farms were subdivided in the post-Famine period and the average holding increased, suggesting that amalgamation of holdings became more common.

The analysis then turns to “Coming of Age” and “The Decline of Marriage” where Guinnane finds a Malthusian model of nuptiality (a trade-off between personal consumption and marriage/family) largely a failure. Three grounds are cited: many of the never-married were heads of prosperous households, many remaining in Ireland and remaining unmarried could have emigrated to “a decent life overseas,” and rising rural incomes in the 1851-1911 period were directly at odds with the Malthusian preventative check of increasing poverty (p. 227). Other causal hypotheses, demographic, cultural, and religious are also rejected. Neither a sex imbalance argument nor the role of Catholicism in serving as a brake on marriage are perceived as plausible. Post-Famine emigrant flows were surprisingly evenly balanced across the sexes; thus leaving the remaining home population with a balanced sex ratio as well. A “marriage squeeze” was then, in Guinnane’s judgement, an unlikely occurrence. The Catholicism argument encounters “a simple empirical weakness,” i.e. marital status differences between Catholics and Protestants in Ireland were minor, and overwhelmingly Catholic areas abroad, like the Quebec Province of Canada, did not exhibit high celibacy. Rather, the causes of the rise in permanent celibacy in Ireland are found in economic circumstance: land tenancies made more secure and valuable by the Land Acts, and in the development of a poor relief system with, late in the period, an old age pension system as well. The former meant a rise in the value of an eventual succession to an Irish tenancy relative to the value of emigration. The latter provided a security that substituted, to a degree, for the necessity of family and children. Thus, Guinnane develops “a perspective on marriage” that is quite “Becker-like” in pointing to the altered costs and benefits of marriage and the rise of “marriage substitutes” (p. 238). The outcome, in the Irish case, was a weakened incentive to marry coupled with a rising attractiveness of emigration. By 1911 then, cohort celibacy rates (for ages 45-54) of 25% appeared (Table 4.1).

While celibacy rose, marital fertility remained comparatively high, though Guinnane notes that “recent studies … produce stronger evidence for the beginnings of a fertility transition in Ireland by 1911” (p. 255). An index of marital fertility (referenced to 1000 for a population with uncontrolled fertility) falls from 868 in 1840 to 769 in 1911 (p. 249). More refined measures of fertility such as cohort parity analysis indicate a beginning adoption of fertility control measures, though fertility remained high by European standards of a fertility transition. Guinnane observes: “The Irish fertility transition consisted, it seems, of couples reducing their families from seven to nine children down to four to six, a number very high by contemporary European standards but demonstrating fertility control nonetheless” (p. 259).

If there is an understated dimension to this nicely-detailed demographic history, it lies with the primacy of emigration in determining the magnitude of the Irish population decline. That point is more evident in Cormac O Grada’s chapter on the same period, “Population and Emigration, 1850-1939” in his Ireland: A New Economic History, 1780-1939 (1994). In all decades from 1861 to 1926, the net external migration rate dominates the population change rate with its negative impact being nearly double the positive contribution of natural increase (O Grada, Table 9.6). In Guinnane’s analysis, emigration and the emigration decision are never absent–its empirical dimensions (though aggregate population ion change is never decomposed into its components), the coming of age and leaving home, the impact of emigration decisions on nuptiality and fertility. Indeed, a fair portion of the chapter defining the demographic setting is given over to emigration with discussions of migrants’ characteristics and chain migration. Yet, for all that, the decision to leave seems less well defined than are others. That is, perhaps inevitably, a result of the inability to bring empirical evidence to bear directly on mig ration decisions. Unlike the case with two of the major contributions of the work–the empirical base given to discussions of nuptiality and marital fertility–the micro-evidence on migration may be beyond reach.

In this work, as in Guinnane’s earlier a articles on economic-demographic interrelations in Ireland, the case is made for “a more careful integration of microeconomic analysis and institutional detail” (p. 276). It is that sort of careful integration that makes The Vanishing Irish a major contribution to both economic and demographic history.

H.A. Gemery Department of Economics Colby College

Hank Gemery has written articles and monographs on trans-Atlantic migration in periods from the colonial era through the twentieth century.


Subject(s):Historical Demography, including Migration
Time Period(s):16th Century