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Information Revolutions in the History of the West

Author(s):Dudley, Leonard
Reviewer(s):Jones, Eric

Leonard Dudley, Information Revolutions in the History of the West. Cheltenham, UK: Edward Elgar, 2008. xi + 347 pp. $150 (cloth), ISBN: 978-1-84720-790-6.

Reviewed for EH.NET by Eric Jones, Melbourne Business School.

Leonard Dudley, a Canadian now at the University of Montreal, once formalized part of Harold Innis?s work on the role of communications in the history of empire. In his current book, Dudley (in part with co-authors) tries to isolate the effects of information revolutions in the whole grand sweep of the history of the Western World. This project is worthy of Innis and is a logical one for our time, when changes in IT and their societal impacts are so visible. Others have been nibbling at the cherry but Dudley has been left plenty to investigate.

A full 85 percent of Information Revolutions is devoted to nine episodes where the proposition is that new technologies, including developments like the standardization of languages and scripts, were followed by rapid changes in society, politics and economics. The author does not assert outright that the inventions and their diffusion caused the wide changes that followed but he obviously thinks this was the case. The nine episodes center on the following phenomena: the consolidation of the Carolingian empire, the Norman Conquest, the impact of Lutheranism, the fall of Charles I, the Reform Bill of 1832, the American Civil War, the Spanish-American War, the entry of the United Kingdom into the First World War, and a supposed link between the dissolution of the USSR and the fall of the Twin Towers. Each of these events is recounted in well-informed, well-documented and well-presented detail. Their precursors and the historical context tend to get more space than the consequences.

Most readers will learn a great deal from these sections, since few will be familiar with every episode. The accounts of the Spanish-American War, of Alfred Harmsworth and his mass production of debased newspapers, and of the Cold War seem the most compelling, despite the fact that the last two are much the most familiar among the cases. Yellow journalism is always fun to read about, though it is unclear just how much we should glory in the spread of literacy (exaggerated, by the way, in the figures Dudley cites) if its crowning achievement is an ability to read the tabloids. Education, judgment and literacy are different things. Any hesitation with which the reader may be left will not, however, concern the narratives but be a faint uncertainty as to why this, rather than some other set of cases, has been selected. Dudley?s answer will be plain: the examples serve as well as any to demonstrate the recurrent force of richer mixes of information.

A slightly greater hesitation may attach to the dramatizing nature of the expositions. Each invention, and its dissemination, is portrayed as rupturing the historical continuum. The thought may arise in the skeptical mind that the economy was often reshaped by less discontinuous change. For example, Yrjo Kaukaninen has shown (European Review of Economic History, 2001) how the transmission of information was being speeded up in the early nineteenth century, before the introduction of the electric telegraph. Dudley gives a lot of space, more conventionally, to Morse and pays special attention to the fact that Grant used the telegraph for coordinating simultaneous attacks on the Confederacy. Kaukianinen presents the argument for less punctuated change, involving broad front improvement via mail coach connections followed by railways, and sailing packets followed by steamships, with the result that more days were saved on most routes between 1820 and 1860 than after the adoption of the telegraph. Although the subject has not hitherto received proportionate scrutiny no one doubts that IT has repeatedly made a big difference to the world, but it remains a tad moot whether Dudley?s emphasis on revolutions is always warranted.

One difficulty with jump-starting history by means of new technologies is that on their own the devices remain inert. Something, or rather somebody, has to put them into the productive system: innovation trumps invention. Hence if we consider the example of Gutenberg?s printing press, we find Dudley makes the large claim that it began to generate a new type of society in early seventeenth-century Britain. This proposition follows the line to which he hews throughout ? that new information technologies spark off great social, political and economic changes. Yet if the printing press were so potent why had it not already succeeded in remolding the societies of China, Japan and Korea? Special interests and the political order muzzled the effects there. New technologies may be necessary conditions for certain types of change but they are not sufficient ones. Dudley is well aware of the significance of processes of diffusion and devotes half his space to them but does not pay much attention to contrary cases.

He frames the consequences of novel technologies in terms of network effects and economies of scale in information storage. The insistence that each episode supports his contention that IT necessarily has a revolutionary impact, as opposed to playing one important role among many in complex processes, is less easy to concede. When he introduces reports of two cruel psychological experiments which, he asserts, altered group behavior in ways analogous to the effects of IT, I am unpersuaded. The analogies are strained and seem mainly to demonstrate the fact that team sports inculcate violence. The historical narratives in this book, on the other hand, are exceptionally worth reading for their own sake.

Eric Jones is Professorial Fellow, Melbourne Business School, and Visiting Professor, University of Exeter. He is the author of The European Miracle (Cambridge University Press, third edition, 2003) and Cultures Merging: A Historical and Economic Critique of Culture (Princeton University Press, 2006).

Subject(s):Military and War
Geographic Area(s):North America
Time Period(s):Medieval

Free Trade Nation: Commerce, Consumption and Civil Society in Modern Britain

Author(s):Trentmann, Frank
Reviewer(s):Cain, Peter J.

Published by EH.NET (October 2008)

Frank Trentmann, Free Trade Nation: Commerce, Consumption and Civil Society in Modern Britain. Oxford: Oxford University Press, 2008. xiv + 450 pp. ?25/$50 (cloth), ISBN: 978-0-19-920920-0.

Reviewed for EH.NET by Peter J. Cain, Department of History, Sheffield Hallam University.

In discussions and analyses of trade regimes in Britain from the late nineteenth century through to the 1930s, protectionist campaigns have hogged most of the attention of historians and free trade ? the ruling regime before the 1930s ? has been relatively neglected. For that reason alone, Frank Trentmann?s account of free trade and its supporters would be a welcome addition to the literature: the bonus is that author, Professor of History at Birkbeck College in London University, has not only added a great deal to our knowledge through painstaking research but has written about it with verve and energy and produced a most readable volume on a subject that can be very dull indeed.

Trentmann?s case is that support for free trade in Edwardian Britain did not mainly rely on calculations of interest, though he does not totally ignore that, but was driven by a highly emotional, even passionate, commitment akin to nationalist or religious fervor, and was seen by its advocates as a crucial element in defining what they thought of as Britishness. He admits that around 1900 the free trade movement was in poor shape as foreign manufactured imports mounted and foreign tariffs rose, and that some form of protectionism was being discussed even at government level. Chamberlain?s tariff campaign starting in 1903 changed all that. Faced with a clear and open challenge, the free trade cause gathered an astonishing momentum which swept the previously ailing Liberal party into office in 1906 and helped to keep them there through two further elections. Masterminded by the Free Trade Union (which, ironically, learned much from its rival the Tariff Reform League) the electorate was aroused by a campaign of propaganda that successfully associated protection with poverty by reminding the nation of the ?Hungry Forties? when protection had last held sway. The free traders also succeeded in accusing protectionists of attempting to revive an oppressive state; of undermining free trade?s natural tendency to bring peace through economic interdependence; and of serving the interests of a minority of landed and business elites whom they branded as selfish vested interests, intent on creating monopolies and cartels that would exploit the majority of the nation. As Trentmann acutely notes, the campaign had a great effect in politicizing women as key consumers and, more widely, in putting consumers? interests at the center of policy, something that anticipates many modern political movements. All this made for a very lively politics that sometimes erupted into violence and which led to extraordinary organizational developments, such as the great series of lectures and entertainments that the FTU took to the seaside towns of Britain.

After 1914, that momentum proved increasing hard to sustain. The war shook faith in laisser-faire and made state control and big business seem much more natural. Under state auspices, some protection was introduced to regulate imports and ensure that they served the cause of winning the war: free trade thus began to appear as a policy that ministered to individual needs rather than to the national interest. That encouraged the idea of ?safeguarding? key industries after the war in case conflict should erupt again; and the much higher unemployment rates in the 1920s also undermined the long-held idea that free trade naturally meant prosperity. Again, the rise of nutritional science meant that more stress was placed on health and the need for the state to improve it, rather than on the ?cheapness? lauded by free traders that now began to seem synonymous with undernourishment and poverty. Moreover, free trade had clearly failed to keep the peace internationally and radicals who had once been fervent Cobdenites were thinking, by the 1920s, much more of the need for international organizations like the League of Nations to regulate international intercourse rather than relying on the invisible hand of the market. As visions of world peace and prosperity under free trade were challenged, empire increased in appeal and, naturally enough, greater stress was placed on the need to bind the empire to Britain through tariffs. All this served to undermine the great cultural movement that had transformed the Edwardian political scene and by the time the world economy began to collapse in the early 1930s, free trade was viewed not as the cement binding the nation together but as the belief of a relatively few staunch individualists who were out of touch with the times.

There is far more in this fine book than can be represented here and Trentmann makes a powerful case for his interpretation of the evidence. It may be, however, that he underestimates the fragility of the commitment to free trade before 1914, thus making its decline in the 1920s seem more precipitous than it was. Trentmann recognizes that Chamberlain was a godsend to free traders but he does not say enough about how easy he made it for them. Firstly, he split the Conservative party thus making it impossible for them at the 1906 election; secondly, in highlighting imperial preference he failed to garner the level of support that a more wholehearted commitment to domestic protection would have given. It may be true, as Trentmann contends, that effective organization by free traders was crucial to victory in the 1910 elections: but it is still the case that the Liberals only won the two elections of that year by a whisker, despite the fact that protectionism was still hobbled by disunity. Protectionists were also unlucky in their timing: Chamberlain launched his campaign just at the beginning of the long Edwardian boom. Support for protection increased sharply in the brief downturn of 1908-09, and if economic times had been harder free trade might have disappeared sooner. If this is so, it may put in question the depth of the moral commitment to free trade that Trentmann lays such stress upon. It may also suggest the need for a counterbalancing reinvestigation of the importance of interest in maintaining free trade before 1914 and in undermining it after that date.

Peter J. Cain is Professor of History at Sheffield Hallam University, UK. E-mail: He is the author of Hobson and Imperialism: Radicalism, New Liberalism and Finance, 1887-1938 (Oxford, 2002).

Subject(s):Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):Europe
Time Period(s):20th Century: Pre WWII

Herbert Hoover, Unemployment, and the Public Sphere: A Conceptual History, 1919-1933

Author(s):Gaddis, Vincent
Reviewer(s):Reagan, Patrick D.

Published by EH.NET (September 2008)

Vincent Gaddis, Herbert Hoover, Unemployment, and the Public Sphere: A Conceptual History, 1919-1933. Lanham, MD: University Press of America, 2005. xxix + 180 pp. $36 (paperback), ISBN: 978-0-7618-3235-5.

Reviewed for EH.NET by Patrick D. Reagan, Department of History, Tennessee Technological University.

In this suggestive, yet flawed, study Benedictine University historian Vincent Gaddis calls for reexamination of the unemployment policies of Herbert C. Hoover, Secretary of Commerce and President of the United States, between 1921 and 1933. Using the theoretical approach of German scholar Jurgen Habermas, Gaddis argues that Hoover manipulated the role of the American public in this period to impose his view of a limited voluntarist state on the broader society through the intermediate institutions of municipal government, business, labor, and urban charities in response to the depression of 1920-1921.

Gaddis deploys an abundance of research from the wealth of materials in the Secretary of Commerce and presidential papers at the Hoover Library in West Branch, Iowa to put Hoover at center stage in the public policy formulations of the 1920?s. In a brief introductory chapter on the conceptual challenge of making sense of Hoover?s ideas, Gaddis stresses the interrelationship among Hoover?s ideological values of individual virtue, preservation of liberty through a limited state, and the significance of voluntary action by local governments and private sector actors for public policy making implemented through the work of the President?s Conference on Unemployment of 1921. In the wake of what this reviewer has termed ?the forgotten depression of 1920-1921,? newly-appointed Secretary of Commerce Hoover created a series of follow up committees to investigate the issues of unemployment, the business cycle, seasonal unemployment in the construction industries, and industrial disputes.[1] Gaddis summarizes the work and impact of the conference, Hoover?s voluntarist views of political economy, and Hoover?s efforts to stabilize the coal industry in the 1920?s in separate chapters. In chapters 4 through 6, the most insightful and thoroughly research section of the work, Gaddis presents a sophisticated historical narrative focused on the work of the municipal committees on unemployment in the three key Midwestern cities of Chicago, Milwaukee, and Detroit. Gaddis draws on research in personal manuscript collections, municipal records, local and state historical societies, printed autobiographies and biographies, and city newspapers to fill in the picture of how the Hooverian response to the immediate crisis of unemployment in 1921 played out on the local level. Following recommendations of the Unemployment Conference for local and private-sector based responses to rising unemployment in 1921-1922, Republican machine mayor ?Big Bill? Thompson and Democratic successor William Dever in Chicago, socialist mayor Daniel Hoan in Milwaukee, and progressive Republican mayor James Couzens of Detroit roughly adhered to Hoover?s voluntarist policies in attempting to bring relief to the unemployed.

Yet, once the Great Depression of 1929-1941 began, voluntarism proved much too little and way too late. Traditional sources of local funding for relief such as food, housing subsidies, and limited health care were used up quickly. Little direct relief in the form of cash, known as ?the dole,? was available. Between 1929 and 1933, President Hoover desperately sought to hold on to voluntarist precepts through the work of the President?s Emergency Committee for Employment (1930-1931), the President?s Organization for Unemployment Relief (1931-1932), and, reluctantly, the new Reconstruction Finance Corporation (1932). During the same period, mayors Anton Cermak in Chicago, Daniel Hoan in Milwaukee, and Democrat Frank Murphy in Detroit mouthed voluntarist rhetoric while moving toward increasingly statist policies such as unemployment insurance and federal and direct relief as local charities, businesses, and municipal relief committees experienced a growing gap between their resources and the number and needs of the unemployed. In the penultimate and final chapters, Gaddis traces in detail Hoover?s growing divergence from socioeconomic reality and the city mayors? pragmatic moves toward the post-1933 social welfare state.

Unfortunately, the work is riddled with mistakes in grammar, spelling, and footnote citations that distract the reader?s attention from an otherwise valuable contribution to the historical literature on Hoover as Secretary of Commerce, public policy making in the Republican-dominated 1920?s, and the Hoover presidency. Throughout the text, conjunctions and prepositions that should appear remain missing. Some names appear in two spellings (e.g. Otto Mallery and Otto Mallory). Footnote numbers appear in mixed formats as regular, italicized, and superscript types. Two footnotes numbered 16 appear on pages xxiv and xxv. Chapter 3 with forty-nine footnotes at the end contains only one numbered footnote in the text (p. 53). One footnote on page 108 refers to notes 1 and 2 simultaneously. Whether through poor proofreading or lack of copy editing, this work reflects poorly on the author?s detailed research and careful thinking of an important topic in need of clarity and historical perspective. Production values, while not uppermost in a reader?s mind, do count.

More significantly, Gaddis appears unaware of key works such as Evan Metcalf?s study of Hooverian macroeconomic policy making, Ellis Hawley?s studies of Hoover?s coal stabilization work and Hoover?s use of the National Bureau of Economic Research, Guy Alchon?s Habermas-influenced analysis of Hoover?s policies throughout the period, and this author?s explication of the Hooverian committee and conference system bolstered by the work of the National Bureau of Economic Research and the financial support of national philanthropic foundations.[2] While Gaddis finally ties together many of his insights in the conclusion, this final chapter should have served as the introduction. Not only did Hoover and members of the newly reorganized Department of Commerce engage in a host of policy making ventures in the 1920?s, other people and institutions participated as well such as business groups including the National Civic Federation, the U.S. Chamber of Commerce, and local business associations. So too did the Taylor Society, locally-grounded firms, and individual New Era business leaders some have termed ?corporate liberals.?[3] Aware of the role of organized philanthropy in the Hooverian networks emerging from the Unemployment Conference of 1921, Gaddis points to the work of the Russell Sage Foundation, which played a minor part, while he ignores significant funding by the Laura Spelman Rockefeller Memorial, the Carnegie Corporation, and the Rockefeller Foundation. Rich primary sources exist for study of the part these second-generation philanthropies took in the Hooverian planning efforts throughout the decade as well as the capstone, landmark studies on Recent Economic Changes (1927) and Recent Social Trends (1933).[4] Unlike other revisionist works on Hoover?s ideology of voluntarism, his leadership of the President?s Conference on Unemployment of 1921 and its ensuing committee system, and the failure of President Hoover?s relief policies in the early 1930?s, Gaddis?s research shows us how and why the voluntarist response to the postwar crisis of 1921 set the tone, example, and model for Hoover?s later responses to the Great Depression. While the forgotten depression of 1920-1921 proved to be the sharpest economic downturn since the emergence of the business cycle in the early nineteenth century, it also was one of the shortest reversals. Hoover and his disciples along with city mayors, local business leaders, and local charities thought their response to rising unemployment worked in 1921-1922, so they quite understandably tried to use it again in the 1929-1933 period. In what Boston business leader and Hoover supporter Henry S. Dennison called ?the slowly sucking maelstrom? of the Depression, voluntarism reached its limits. The American people turned to Franklin Delano Roosevelt and the statist-oriented New Deal, leaving Herbert Clark Hoover and the voluntarist New Era behind. Still, when Franklin Roosevelt appointed the only national planning agency in U.S. history in July 1933, all of its members were veterans of the Hooverian experiments of the 1920?s.


1. Patrick D. Reagan, ?From Depression to Depression: Hooverian National Planning, 1921?1933,? Mid-America 70 (1988): 35-60.

2. Evan Metcalf, ?Secretary Hoover and the Emergence of Macroecoomic Management,? Business History Review 49 (1975): 60-80; Ellis W. Hawley, ?Secretary Hoover and the Bituminous Coal Problem, 1921-1928,? Business History Review 42 (1968): 247-270; Ellis W. Hawley, ?Economic Inquiry and the State in New Era America: Anti-Statist Corporatism and Positive Statism in Uneasy Coexistence,? in The State and Economic Knowledge: The American and British Experiences, eds. Mary O. Furner and Barry Supple (New York: Woodrow Wilson International Center for Scholars and Cambridge University Press, 1990), pp. 287-324; Guy Alchon, The Invisible Hand of Planning: Capitalism, Social Science, and the State in the 1920?s (Princeton: Princeton University Press, 1985); Patrick D. Reagan, Designing a New America: The Origins of New Deal Planning, 1890-1943 (Amherst: University of Massachusetts Press, 2000); and Michael A. Bernstein, A Perilous Progress: Economists and Public Purpose in Twentieth-Century America (Princeton: Princeton University Press, 2001), pp. 53-58.

3. Ellis W. Hawley, ?The Discovery and Study of a ?Corporate Liberalism?,? Business History Review 52 (1978): 309-20; Robert F. Himmelberg, The Origins of the National Recovery Administration: Business, Government, and the Trade Association Issue, 1921-1933 (New York: Fordham University Press, 1976); Robert F. Himmelberg, ?Government and Business, 1917-1932: The Triumph of Corporate Liberalism?? in _Business and Government: Essays in Twentieth-Century Cooperation and Conflict, eds. Joseph R. Frese and Jacob Judd (Tarrytown, NY: Sleepy Hollow Press, 1985), 1-23; and Essays in Business-Government Cooperation, 1917?1932 : The Rise of Corporatist Policies, ed. Robert F. Himmelberg (New York: Garland Publishing, 1994), Volume 5 in Business and Government in America Since 1870: A Twelve Volume-Anthology of Scholarly Articles.

4. For a sampling of works based on philanthropic records, see Barry D. Karl and Stanley N. Katz, ?The American Private Philanthropic Foundation and the Public Sphere, 1890?1930,? Minerva 18 (Summer 1981): 236-270; Robert Arnove, ed., Philanthropy and Cultural Imperialism: The Foundations at Home and Abroad (Boston: G.K. Hall, 1980); Jack Salzman, ed., Philanthropy and American Society: Selected Papers (New York Columbia University Press/Center for American Studies, 1987); Donald Fisher, Fundamental Development of the Social Sciences: Rockefeller Philanthropy and the United States Social Science Research Council (Ann Arbor: University of Michigan Press, 1993); and Ellen Condliffe Lagemann, ed., Philanthropic Foundations: New Scholarship, New Possibilities (Bloomington: Indiana University Press, 1999) .

Patrick D. Reagan is author of Designing a New America: The Origins of New Deal Planning, 1890-1943 (Amherst: University of Massachusetts Press, 2000); American Journey: World War I and the Jazz Age (Farmington Hills, MI: The Gale Group/ Primary Source Microfilm, 2000); editor of and contributor to Voluntarism, Planning, and the State: The American Planning Experience, 1914-1946 (Westport, CT: Greenwood Press, 1988); and contributor of essays on planning and several economists in Encyclopedia of the Great Depression, ed. Robert S. McElvaine (New York: Macmillan Reference USA, 2003), 2 volumes.

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

Trade in Classical Antiquity

Author(s):Morley, Neville
Reviewer(s):Temin, Peter

Published by EH.NET (June 2008)

Neville Morley, Trade in Classical Antiquity. Cambridge: Cambridge University Press, 2007. xiv + 118 pp. $30 (paperback), ISBN: 978-0-521-63416-8.

Reviewed for EH.NET by Peter Temin, Department of Economics, MIT.

This book is one of Cambridge University Press’s series of Key Themes in Ancient History. These brief books are designed to introduce various topics of ancient history to graduate students and interested laypeople alike. They presuppose little professional knowledge of the topic and provide an overview of the state of knowledge. The books have single authors, and they express the opinions of the authors more than a typical text.

Morley is a distinguished ancient historian, and this book fits the general pattern. It provides a summary view of trade in the ancient world, but the average economic historian needs a reader’s guide to extract this information. The problem is that Morley feels obliged to introduce his book with two chapters on methodology that easily will put off the non-ancient historian. In his words, “The aim of this book is not to offer a chronological history of the development of trade and commerce or to draw up lists of the goods that were traded between regions, but to identify the different structures ? physical, social, ideological ? that shaped the distribution of goods and the practices of exchange across the ancient world” (p. 15).

My advice to readers of this review is to skip the first two chapters and start reading at Chapter 3. The rest of the book will repay a careful read. Morley argues in Chapter 3 that the distinction between luxuries and necessities is culturally determined. You cannot decide which is which without knowing the culture of the trading people. Since ancient peoples of whom we know lived above biological subsistence, part of their consumption was devoted to culturally-determined goods, that is, goods that established their place in the local hierarchy. Chapter 4 is devoted to the institutions of trade, revealing the impact that Doug North has had on ancient history. This material is covered also in Kessler and Temin (2007), which apparently was not visible to Morley.

Morley confronts the morality of traders in Chapter 5. He argues that most ancient traders and office holders were law abiding in the modern sense. Just as today most contracts are honored without the intervention of a court, so Morley says ancient people dealt with each other on a trusting basis. Since law enforcement is expensive, this is a very important point, and Morley raises but does not answer the question of where this morality comes from. Perhaps that should be the topic of another book in this series. In the sixth and final chapter, Morley assesses the extent of what he calls “ancient globalization.”

One problem for the modern economic historian is Morley’s practice of hopping back and forth between Classical Greece and Republican Rome. These two venues were separated by time and ? more importantly ? scale. In modern terms, Athens was a small open economy, while Rome was the largest economy in the ancient world. Small and large countries differ even today, and we might infer that there were differences then too. This question does not appear to have occurred to Morley.

Another problem is Morley’s ambivalent attitude toward globalization. On the one hand, he says, “Farmers were never wholly isolated from society or wholly divorced from the market” (p. 45). On the other hand, he argues in Chapter 6 that globalization was severely limited by poor technology in transportation and information transmission. Morley does not appear to have a way to resolve this issue. Fortunately, two recent papers help to resolve this puzzle. Both papers were the outcomes of Harvard senior theses in economics.

Geraghty (2007) argues that the extension of Roman trade across the Mediterranean led Roman farmers to shift out of wheat into wine and truck farming for the neighboring city of Rome. This paper complements and extends Morley’s analysis of Roman farming in his 1996 book. Kessler and Temin (2008) show that Roman trade was so extensive that there was a single monetary system and a single wheat market across the whole Mediterranean Sea. Wheat prices were highest in the center of consumption, the city of Rome, and fell with the distance from Rome. While Morley’s new book is a worthy addition to the Key Themes series, I recommend that readers of this review start with the articles I have mentioned here and continue on to Morley if they want more evidence.


Geraghty, Ryan M., “The Impact of Globalization in the Roman Empire, 200 BC – AD 100,” Journal of Economic History 67 (December 2007): 1036-61.

Kessler, David, and Peter Temin, “The Organization of the Grain Trade in the Early Roman Empire,” Economic History Review 60 (May 2007): 313-32.

Kessler, David, and Peter Temin, “Money and Prices in the Early Roman Empire” in William V. Harris, editor, The Monetary Systems of the Greeks and Romans (Oxford: Oxford University Press, 2008): 137-59.

Morley, Neville, Metropolis and Hinterland: The City of Rome and the Italian Economy, 200 BC – AD 200 (Cambridge: Cambridge University Press, 1996).

Recent articles by Peter Temin include “The Economy of the Early Roman Empire,” Journal of Economic Perspectives (2006); “Interest Rate Restrictions in a Natural Experiment: Loan Allocation and the Change in the Usury Laws in 1714” (with Joachim Voth), Economic Journal, forthcoming; and “The German Crisis of 1931: Evidence and Tradition,” Cliometrica, forthcoming.

Subject(s):International and Domestic Trade and Relations
Geographic Area(s):Middle East
Time Period(s):Ancient

Adam’s Fallacy: A Guide to Economic Theology

Author(s):Foley, Duncan K.
Reviewer(s):Waterman, A. M. C.

Published by EH.NET (November 2007)

Duncan K. Foley, Adam’s Fallacy: A Guide to Economic Theology. Cambridge MA: Harvard University Press, 2006. xvii + 265 pp. $26 (cloth), ISBN: 978-0-674-02729-9.

Reviewed for EH.NET by A. M. C. Waterman, St John’s College, Winnipeg.

Presumably this book was sent to me for review because of its sub-title. I am sorry to report, therefore, that it contains no theology whatsoever. Its author, who is Leo Model Professor of Economics at the New School for Social Research, uses the word pejoratively to label a way of thinking about economics that he finds objectionable on moral grounds. That way of thinking is “the idea that is it possible to separate an economic sphere of life, in which the pursuit of self-interest is guided by objective laws to a socially beneficent outcome, from the rest of social life, in which the pursuit of self-interest is morally problematic” (p. xiii). Seemingly unaware of the work of Gilbert Faccarello (1999) on Boisguilbert and the latter’s background in Jansensist theology, Duncan Foley attributes this doctrine to Adam Smith and calls it “Adam’s Fallacy.”

After a Preface which states the theme, the book contains six chapters: “Adam’s Vision” on Smith and Wealth of Nations (45 pages); “Gloomy Science” which treats Malthus and Ricardo (41 pages); “The Severest Critic” on Marx (69 pages); “On the Margins,” chiefly about Jevons, Menger and J. B. Clark, with an endnote on Veblen (22 pages); “Voices in the Air” on Keynes with brief mention of Hayek and Schumpeter (34 pages); and “Grand Illusions,” which is a summing up (18 pages). These are followed by 14 pages of appendices on technical matters. It is apparent that two-thirds of this text concerns four canonical authors of the so-called “English School” ? Smith, Malthus, Ricardo and Marx ? followed by a mere 9 percent on what now constitutes the core of economic theory, and another 15 percent on Keynes and two of his contemporaries. The book might almost be called “Political Economy of the English School with an Epilogue” ? except that it totally ignores the most influential single author of that “school,” John Stuart Mill. The dust-jacket calls this “The Intelligent Person’s Guide to Economics”: which implies that the intelligent person will skip almost everything of importance that has happened in our discipline over the past one hundred years.

Foley’s favorite chapter, upon which he lavishes most care and in which he exhibits most scholarship, is that on Marx. With one exception to be noted below, the exposition is careful, lucid and balanced, and this chapter could be recommended to anyone wanting a readable introduction to what Marx’s political economy was about.

The same can hardly be said for chapters 1 and 2. For though these too contain many valuable insights it is all too obvious that Foley has not kept up his reading of the vast and expanding secondary literature on Smith, Malthus and Ricardo. This is most evident in his treatment of Smith and Malthus. There is no understanding of the relation between “labor-embodied” and “labor-commanded” prices; no awareness that Smith’s “natural wages” are dynamic equilibrium outcomes determined by the rate of accumulation; no recognition that the primitive supply-and-demand apparatus of Smith and Malthus is what eventually “won out” (as Schumpeter put it) over the labor theory of value (LTV); and no acknowledgement that this happened because it eventually became clear that Smith’s “natural prices” were the equivalent of Marshall’s long-run equilibrium prices. The fact that Malthus took all of his population theory from the Wealth of Nations (WN) is ignored, as is the fact that what distinguishes the analysis of WN from that of the Essay is that the former abstracts from land scarcity and the diminishing returns implied by Malthus’s “ratios,” which Samuelson, Stigler and many others have noted. The latter means that “Ricardo’s theory of Rent” (p. 74) is actually Malthus’s as Ricardo acknowledged, though Torrens and West also got there at the same time in 1815. Much more contentious is Foley’s account of Ricardo’s value theory. By ignoring the importance of capital costs in determining relative prices he misses the point that Ricardo’s LTV is nothing but a rough and ready approximation ? Stigler’s (1958) “93%” LTV ? brilliantly deployed in the theory of comparative international advantage but now subsumed by Hecksher and Ohlin. Foley’s fixation on the archaic and operationally useless LTV also slightly mars his chapter on Marx. For Marx, like Ricardo, well understood that capital costs enter into prices: but tried unsuccessfully to evade this unwelcome result in the hideous contortions of volume III, chapter IX of Capital.

Rather than appraising the analytical content of the relatively unimportant chapters 4 and 5, which like the curate’s egg are good in parts, we ought rather to turn to what Foley is really interested in, which is ethics. Is the pursuit of self-interest “morally problematic”? And did Smith and his successors create a distinction between an “economic sphere” in which self-interest may have socially beneficent outcomes and “the rest of social life” in which it may not?

It is undoubtedly the case that for Smith and Malthus, eighteenth-century “political economy” was a branch of “Christian moral science” (Winch 1996), for which these were vitally important questions. From the standpoint of intellectual history, however, Foley has chosen to enter the debate some time in 1723, after the public outcry at a new edition of Mandeville’s Fable but before the first of Joseph Butler’s Rolls Sermons preached in response, which showed that “self-love” is morally acceptable in a wide variety of cases and is actually a duty taught by Christ. There is no necessary link between Private Vices and Publick Benefits. Bishop Butler’s doctrine was explicitly incorporated into the analysis of economic behavior by his chaplain Josiah Tucker; and Smith followed Butler and Tucker in Theory of Moral Sentiments which provided a satisfactory account of the part played by self-love in a general theory of conscience, duty and virtue. It is certainly true that in WN Smith separated the public sphere, in which self-love may safely rule, from the private sphere of the family and other intimate relations, in which mutual altruism is important (Folbre 2001). It is also the case that he explicitly acknowledged that “justice,” by which he meant a willingness on the part of agents to obey the rules of the game even when the umpire is not looking, is necessary in order that economic freedom might lead to socially beneficent outcomes. But these imply no distinction between the “economic” and “the rest of social life.”

Malthus, Smith’s most faithful disciple, seems to have accepted this account of self-love, and had no hesitation in describing at as “the main-spring of the great machine.” As for Ricardo and Marx, there is no evidence that they were at all interested in the question. Like all subsequent economists they viewed political economy as a positive science. If we assume that most human beings consistently pursue a set of privately formulated goals most of the time, what will be the unintended social consequences? There is no automatic expectation that these will be socially beneficent. Ricardo’s stationary state, with wages at bare subsistence and rents at an all-time high, is almost certainly not. Whether Marx’s own invisible-hand theorem (“what the bourgeoisie … produces, above all, are its own grave-diggers”) is socially beneficent or not is a matter of taste. As for present-day economics, Samuelson’s theory of public goods, Buchanan’s “public choice” analysis of the actions of bureaucrats and politicians, Chicago theory of marriage and the family, Stiglitz’s investigations of the relative efficiency of public and private sectors, the economics of environmental degradation ? to mention only a few ? provide innumerable examples of the unintended consequences of private, self-regarding acts which are almost certainly maleficent.

I therefore conclude that Duncan Foley’s charges against our profession are without foundation, and ought to be dismissed.


Gilbert Faccarello, 1999. The Foundations of Laissez-faire: The Economics of Pierre de Boisguilbert. London: Routledge.

Nancy Folbre, 2001. The Invisible Heart: Economics and Family Values. New York: The New Press.

George J. Stigler, 1958. “Ricardo and the 93% Labor Theory of Value,” American Economic Review 48: 357-67.

Donald N. Winch, 1996. Riches and Poverty: An Intellectual History of Political Economy in Britain, 1750-1834. Cambridge: Cambridge University Press.

A. M. C. Waterman is Fellow of St John’s College, Winnipeg, and Emeritus Professor of Economics in the University of Manitoba. His most recent book is Political Economy and Christian Theology since the Enlightenment (Palgrave Macmillan 2004). For more information, see

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

Thorstein Veblen and the Revival of Free Market Capitalism

Author(s):Knoedler, Janet T.
Prasch, Robert E.
Champlin, Dell P.
Reviewer(s):Samuels, Warren J.

Published by EH.NET (November 2007)

Janet T. Knoedler, Robert E. Prasch and Dell P. Champlin, editors, Thorstein Veblen and the Revival of Free Market Capitalism. Cheltenham, UK: Edward Elgar, 2007. xxi + 239 pp. $125 (cloth), ISBN: 978-1-84542-540-1.

Reviewed for EH.NET by Warren J. Samuels, Department of Economics, Michigan State University.

Within neoclassical price theory and its applications, a common problem arises. Although the conventional protocol calls for unique determinate optimum equilibrium solutions, a change in assumption or circumstance yields two different such solutions. The problem has to do with which price structure is to be used in making calculations, the pre-change or the post-change structure. That problem is one of a larger genre. Consider, for example, a change from one Smithian stage to the next stage. Which cultural norms, which legal rights, and which moral rules, as between the two stages, are to be used in rendering interpretations and normative judgments? On a more homely level, we observe intergenerational conflict, a conflict that is perhaps sharpest between ?migr? parents and their children, each raised in different cultures. The book under review is noteworthy for its variations on the theme.

The editors are well-known institutionalists. Janet Knoedler is Chair of the Department of Economics at Bucknell University. Robert Prasch is in the Department of Economics at Middlebury College. Dell Champlin is Visiting Professor of Economics at Western Washington University. In the editors’ introduction to the ten contributions comprising this new collection, they argue that “to understand Veblen, it must be appreciated that as a youth he came of age in a time and place influenced by the Populist movement, but, intellectually, he came of age during the Progressive era. As a consequence, his thinking shares elements of both, but cannot be located in either” (p. xiii). Each of the ten chapters raises the problem, directly or indirectly. For that reason alone, the authors are to be seen as breaking new interpretative ground in understanding Veblen ? not as to whether or not he was correct but in understanding the tensions and ambiguities raised by his analysis.

Perhaps the most pregnant essay, apparently the essay most deeply felt by the editors, is that by the political scientist and Veblen scholar Sidney Plotkin. In his view, Veblen distrusted both the Captains of Industry and the legislators, judges and administrators who form the government, all of whom operate on the basis of status emulation centering on wealth. Government is an important institution but its officeholders are much beholden to business. Democracy is thus sabotaged from within, by those seeking hierarchical status and by those seeking power. What is there about government which makes it legitimate? If neither the leaders of business nor those of government pay attention to the masses, except to identify what political language will serve to manipulate them along desired lines, is democracy a fraud?

Anne Mayhew’s opening essay appropriately considers the place of science in a society whose culture encompasses more than science. Relying in part on insights from Joel Mokyr , Mayhew examines the cultural foundations of the relationships between science and technology and the questions which science is unable to answer, questions of a religious and metaphysical nature. What is there about science and metaphysics which lead some people to consider one and not the other legitimate? What is there about biological and cultural factors which lead some people to emphasize one and not the other? She concludes with an even deeper query: “What should or can be shielded from science and what opened to its dispassionate glare remains a question to which Veblen gave no definitive answer” (p. 14). For some people, Veblen is so persuasive they readily overlook his lack of conclusiveness when held at arm’s length.

In a collection in which no chapter is weak, one of the deepest is Robert Prasch’s analysis of the origins and meaning of private property. Property is to be understood in a context of power structure, affirmation and denaturalization of property, status emulation, property as a means of support and participation by the individual, property as predation, the inevitable changes in the institution of property, and so on. Every generation thinks that its social construction of property is both the true one and the one from time immemorial. Given change in the law of property, which law, the old or the new, is to be the basis of interpretation and evaluation?

A similar situation pertains to the corporation and the various forms of capital, outlined by Eric Hake. The evolution of the corporation, capital, markets, asset valuation, credit, securities markets and their sundry combinations, each of which defines the economy for some people, can be unidirectional or multidirectional. The question, which is the interpretive base from which all else is to be viewed, announces the common problem. It is not only the institutions of property and the corporation that have evolved. So too have the cultural incidence of pecuniary institutions and the machine process, their interrelations and the further “financialization” of the economy, as Glen Atkinson puts it. William Waller examines the variety of theories of exchange and of markets, as well as value, from Adam Smith to the present, emphasizing what is missing in the work of Veblen, though not in the work of numerous later disciples of Veblen. When do we follow Veblen and when not?

Atkinson focuses on the evolution of the economy, and Waller identifies what is missing from Veblen. Geoffrey Hodgson takes up four myths of Veblenian institutionalism: (a) that Veblen’s psychology was behaviorist, (b) that Veblen saw individual behavior as being almost entirely explained by culture or institutions, (c) that Veblen upheld a “dichotomy” between institutions and technology, and (d) that the work of Clarence Ayres represents a direct continuation and development of Veblenian precepts (p. 127). All four will be controversial, but especially the latter two.

Each chapter presents lines of reasoning and evidence that lead to a further general question: Veblen developed his theories in the context of his times. What would Veblen say about the new world of business, government, higher education, and religion? It is because the contributors to this volume are aware of the situational specificity of Veblen’s theories that each, so far from merely rehearsing Veblen’s ideas, wonders what “a reassessment and reintegration” (p. 64) will look like.

While the insights of John R. Commons and Malcolm Rutherford are amply and properly brought to bear by several contributors, only one mention of Hyman Minsky is to be found and none of Daniel Bromley or of A. Allan Schmid.

The contributors have two further things in common. Each chapter is rich in detail and, although only Mayhew explicitly elaborates on pragmatism in her account, pretty much all contributors tell stories amenable to pragmatist interpretation.

I am not quite certain as to what lesson the editors intend to convey by juxtaposing “the revival of free market capitalism” to Veblen. I am, however, optimistic that the volume will mark the onset of a new stage in the interpretation and reformulation of Veblen’s institutionalism.

Warren J. Samuels is Professor Emeritus of Economics at Michigan State University. He is currently working on preliminary articles based on his study of the use of the concept of the invisible hand in economics.

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

The Soulful Science: What Economists Really Do and Why It Matters

Author(s):Coyle, Diane
Reviewer(s):MacDonald, John A.

Published by EH.NET (September 2007)

Diane Coyle, The Soulful Science: What Economists Really Do and Why It Matters. Princeton, NJ: Princeton University Press, 2007. vii + 255 pp. $28 (cloth), ISBN: 978-0-691-12513-8.

Reviewed for EH.NET by John A. MacDonald, Department of Economics, Wake Forest University.

With the title “The Soulful Science: What Economists Really Do and Why it Matters,” Diane Coyle surely inspires interest in economists and non-economists alike. The point of her book is presumably to rally economists while explaining the importance of our discipline to anyone else who views it with suspicion. Unfortunately, while the book is thoughtfully presented and thoroughly researched, the presentation of this point is largely obscured by some rather dense prose. But if the reader gets past this drawback, the underlying message becomes clear: economics is more than you think, and yes, it really does matter.

To make her case, Coyle begins with a chapter devoted entirely to the seemingly innocuous topic of data. The ensuing discussion reveals how economists have risen to the enormous task of accumulating and reconstructing all sorts of data. The central character in this discussion, economic historian Angus Maddison, is known for having estimated GDP and growth rates for almost two hundred nations dating back to the year 1000 A.D. Incredible efforts like Maddison’s enable researchers to tackle questions that, in the absence of data, were essentially impossible to answer. Hence, economists provide the extremely vital service of collecting and maintaining important data sets.

The next thing economists do, once the data are in place, is test theories and refine their tools of analysis. With this in mind, the second and third chapters are primarily concerned with the evolution of post-neoclassical endogenous growth theory. Along with the advent of powerful computers and increasingly sophisticated econometrics, the massive data expansion has enabled empiricists to treat previously exogenous variables as endogenous. This has led to both a testing of long-accepted growth theories (i.e., Solow’s model) and the development of new ones (i.e., human capital and technology growth models). Such theoretical developments in turn enable policymakers to better address – and potentially fix – vexing social issues, such as poverty. Clearly the implications of these synergies are profound.

At this point, assuming that the reader has developed a strong grasp of “why it matters,” Coyle shifts the focus of the discussion inwards. She devotes the middle three chapters (4-6) to an introspective examination of several key assumptions generally made by economists. For example, while economists have long believed that per capita GDP is an appropriate indicator of well-being, many are questioning it as a truly useful measurement of “happiness.” Possible substitutes include the Index of Sustainable Economic Welfare (ISEW), the Genuine Progress Index (GPI), and the Human Development Index (HDI). Each is constructed with emphasis on a particular aspect considered important to its promoters. However, any such emphasis is inherently subjective, revealing biases that can be exploited to fit just about anyone’s agenda. After much consideration, Coyle concludes that GDP is a pretty good measurement of well-being after all, and that any permutations that push us away from it unnecessarily damage consensus (and, therefore, our collective credibility).

Not all innovative work is viewed so skeptically, however. Chapter 5 challenges the assumption that all people are rational, utility maximizing robots. New models and policy angles instead suggest that people are, in a sense, predictably unpredictable. For instance, normal people exhibit inertia to the point where they take what’s given to them most of the time, even when they know such behavior isn’t rational. A good example is “opt-out” versus “opt-in” retirement savings programs: opt-out participation is in the 70-80% range, while opt-in participation for identical programs is in the 20-30% range. We also have a problem getting normal people to be objective in the first place: they often get set in their opinions and refuse to believe the truth even when it stares them in the face. Paying attention to such things helps keep models as realistic as possible, which helps maximize the persuasiveness of their conclusions.

Shifting gears one last time, Coyle concludes her book with three chapters intended to bring together “the social nature of the economy and the human nature of the individuals making up society.” Chapter 7 provides a convincing account of evolutionary economics: why markets are Darwinian, how economics influenced Charles Darwin, and how Darwin, in turn, influenced economics. She links the concept of natural selection to the gradual transformation of markets over time. Successful firms are much like successful biological entities in that they persevere as a result of gradual mutation/innovation, constant adaptation, and chance. Joseph Schumpeter is oft-discussed here as a sort of visionary user of evolutionary principles, being among the first modern economists to really embrace dynamic questions. But evolutionary economics has only recently caught on because, as Coyle points out, it fell out of fashion after WWII due to its association with the Nazis (through eugenics). Nevertheless, she sums up its reemerging appeal by striking a centuries-old nostalgic chord: “the attraction of evolutionary theory is the absence of a plan, a designer, a central organizing intelligence – the invisible hand, the emergent, self-organizing economic order.” Despite commanding a minority interest in economics, it is hard to disagree with her conclusion that “any economist who studies industrial organization and technical change clearly has a strong intuition that it is an evolutionary process.”

While these topics might sound very interesting, they suffer from a lack of obvious cohesion when presented one after another in the book. Ironically, one might say “The Soulful Science” lacks soul: there is no single, central, pervasive point that inspires much emotional excitement. This is a problem because the title of the book would seem to suggest otherwise. The problem is compounded by the strange sense that “what economists really do” is nothing more than deal, around the clock, with data: they collect it, construct it, argue about how to interpret it, devise complex models around it – undeniably important stuff, but not exactly soulful. Further, although one gets the feeling throughout that there must be a punch line somewhere in the text revealing “why it matters,” it doesn’t materialize until the third to last page. This is strange because it is arguably the most important point of the book. Nonetheless, it is summarized by Coyle as follows: “The availability of solid empirical evidence on an array of social issues is?going to make economics very controversial. … A lot of sacred political cows are heading for the slaughterhouse?” In other words, the mounting evidence provided by, analyzed by, and interpreted by economists will eventually, when combined with the massive proliferation of information, lead to incredible political momentum towards all sorts of change. THAT’s why it matters. Why did it take 253 pages to say so?

In short, the book is a good reference for economists interested in how the discipline has flourished in the past thirty years or so. It might also be appropriate for economic history courses that focus on the modern era. But the length and editing make “The Soulful Science” unlikely to capture the attention of casual readers.

John A. MacDonald recently defended his dissertation, “An Examination of Airline Pricing: Testing the Effects of Mergers and Uncertainty on Average Fares and Dispersion,” at the University of North Carolina ? Chapel Hill.

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

How Countries Compete: Strategy, Structure, and Government in the Global Economy

Author(s):Vietor, Richard H. K.
Reviewer(s):Eloranta, Jari

Published by EH.NET (August 2007)

Richard H. K. Vietor, How Countries Compete: Strategy, Structure, and Government in the Global Economy. Boston: Harvard Business School Press, 2007. vi + 308 pp. $35 (hardcover), ISBN: 978-1-4221-1035-5.

Reviewed for EH.NET by Jari Eloranta, Department of History, Appalachian State University.

Richard Vietor, a prominent Harvard scholar who is comfortable in many fields including business history, economics, and management, has written a comprehensive and rich survey of the “unique social, economic, cultural, and historical forces that shape individual governments’ approach to economic growth.” The book builds from his extensive research and consulting experience, providing in essence a thesis of why government can serve a crucial role in the economic development of nations. Vietor argues that government can do this in a variety of ways in order to advance the performance of business, namely by inducing savings and offering low interest rates, guaranteeing property rights and other necessary institutions, providing an educated workforce, and maintaining low inflation. The main thrust of the book is to posit that institutions are the central building blocks of any economy, and that “good” institutions are vital for sustained economic development. This argument is not very new, albeit his emphasis on the role of the government is a bit more novel. He wants the book to serve as sort of a manual for business managers, so that they can learn from the past and the present, as well as to be able to handle future challenges.

This volume is divided into three sections. The first focuses on the Asian high growth experience, in particular on Japan, Singapore, China, and India. Vietor’s reason for this is that he wants to reel in the casual reader by discussing the cases that are the most visible examples of his arguments. The spectacular growth performances of these nations are discussed at length in the book, usually preceded by rather skimpy historical introductions. By and large, he emphasizes the role of government policies and institutions in producing high savings and investment, low inflation and wages, and the transitions toward export-led development strategies. The second part discusses cases in which institutional transitions have been less successful, such as Russia and Mexico. Vietor argues that the main difference between for example Latin America and Asia has been the lack of institutional progress and stability. The third, and final, section of the book analyzes the role played by deficits, debt patterns, and persistent stagnation in the development of the biggest economies in the world. His main focus is on comparative analysis of the development paths of the European Union, Japan, and the United States. The main message of this section appears to be that having a strong governmental presence in the economy does not necessarily have adverse effects for economic growth, a message that is obviously aimed at American policymakers.

While this volume is certainly well researched and fluently written, even appealing for lay readers too, it has some weaknesses. The first is that it is written for a general audience and mostly lacks theoretical depth, for example in its treatment of institutions. Vietor does not address some of the major developments in the field of institutional economics and history, in particular the common division between formal and informal institutions. For him institutions seem to mainly consist of the former kind, produced by various governmental organizations. The analysis would have been enriched by a comparative analysis of the evolution of particular informal institutions and cultural development patterns, as done before by Douglass North and Avner Greif, among others. My second point of criticism, or curiosity, pertains to the selection of the country cases. For example, why focus so heavily on the European Union as a uniform entity and then select Italy as an illustrative case study of its problems? Vietor’s treatment of the integration process itself, and its history, is superficial at best. Moreover, if the author wanted to make a point about government-business relations and the beneficial role of the state, why not choose the Nordic countries as cases, given the performance of their welfare states and corporatist institutions? Third, the book is very light in terms of quantitative evidence to support the main arguments, mostly because the book is meant for a broader audience. Specialists, however, will be clamoring for more evidence to prove some of the causal linkages inferred by the author. For instance, the link between military spending and economic growth, as Vietor intimates in the case of Japan, is not necessarily that straightforward and the so-called peace dividend is often hard to come by.

All in all, it is very difficult to do justice to such a broad, proficient, and comparative analysis of today’s global economy in such a brief review. It is certainly a worthwhile read for anyone interested in the issues of institutional and economic development, role of the state in the current era of globalization, and comparative analysis of economic processes. If the reader is interested in detailed economic history and analysis of the countries covered in the book, then perhaps it would be useful to refer to more specific studies on those polities. While this book lacks some of the explanatory power and evidence of the usual academic tomes, it more than makes up for this in its powerful narrative. It is also very well written and should appeal to policymakers, business managers, and other informed readers both domestically and abroad.

Jari Eloranta is Assistant Professor in the Department of History, Appalachian State University in Boone, North Carolina. His research interests include corporate political action in the long run, defense economics and the financing of wars, as well as the analysis of government spending in the nineteenth and twentieth centuries. His publications include: “The Evolution of Corporate Political Action: A Framework for Processual Analysis” (with Juha-Antti Lamberg, Mika Skippari, and Saku M?kinen) Business and Society (2004); “Rent Seeking and Collusion in the Military Allocation Decisions of Finland, Sweden, and the UK, 1920-1938” (forthcoming, 2008) Economic History Review; and “Struggle for Leadership? Military Spending Behavior of the Great Powers, 1870-1913” (2007) European Review of Economic History.

Subject(s):Government, Law and Regulation, Public Finance
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII

Structuring the Information Age: Life Insurance and Technology in the Twentieth Century

Author(s):Yates, JoAnne
Reviewer(s):Haigh, Thomas

Published by EH.NET (May 2007)

JoAnne Yates, Structuring the Information Age: Life Insurance and Technology in the Twentieth Century. Baltimore: Johns Hopkins University Press, 2005. x + 351 pp. $50 (hardcover), ISBN: 0-8018-8086-6.

Reviewed for EH.NET by Thomas Haigh, School of Information Studies, University of Wisconsin ? Milwaukee.

In Structuring the Information Age, JoAnne Yates tells the story of the use of computers and tabulating machines within the life insurance industry. Beginning with a snapshot of the already-mature life insurance industry during the first decade of the last century, Yates guides us through the introduction of successive waves of tabulating and punched card equipment, the interaction of life insurance firms with early producers of tabulating and computer technology, and the use of three generations of electronic computers large and small from the 1950s to the 1970s.

This timely and important work is the first scholarly history devoted to the use of information technology within a single American industry. Much less historical attention has been devoted to the use of computers than to the history of computer technologies and of computer manufacturing firms. But the economic and social importance of information technology stems more from its contributions to almost every industry, social activity and scientific discipline than from the relatively tiny industry devoted to designing and building computers. The internal dynamics of hardware and software firms provide fascinating stories but are rarely more than tangentially related to the experiences of computer users. Recent work by scholars such as James Cortada (2003), Martin Campbell-Kelly (1994), Jon Agar (2003) and me (Haigh 2001, 2001) has begun to explore the role of organizations and individuals as users of information technology. Structuring the Information Age makes a major contribution to this literature, establishing itself as the most important work to date on the use of information technology within business.

Yates tells the story of life insurance in parallel with the story of information technology within it. History has been defined as the study of change over time, but any historical work must also explain continuities: what didn’t change and why. By focusing on a single industry, Yates shows successive generations of information technology shaping, and being shaped by, the industry’s existing business processes, cultures and practices. Stories told from the viewpoint of the computer and its creators inevitably tend to produce tales of disruption and sudden upheaval. But, told from the viewpoint of a computer-using industry, this story is for the most part one of gradual and evolutionary change.

The first chapter, a sketch of the life insurance industry in the early 1900s and its origins, sets the stage for what follows. As well as ensuring the book is accessible to those without previous knowledge of the industry, it outlines a number of distinctive features of the life insurance business. This material supports later arguments that the specific course of technological development within the industry had a great deal to do with its history and culture. This was a conservative industry, heavily regulated and concerned with stability and efficiency rather than profit or rapid growth. Yet processing paperwork was its main business process, rather than a sideline as for a manufacturing industry, meaning that improvements to administrative efficiency promised a real boost to overall performance.

The use of tabulating machines by insurance companies from the 1890s onward is the subject of the next three chapters. Although a considerable amount has been written on the business and technical history of the tabulating machine industry (Campbell-Kelly 1989; Heide 1997), almost nothing had been published on their administrative application in America between their celebrated debut at the US Census of 1890 and their adoption on a massive scale by the newly established Social Security Administration circa 1935. Yates’ work here is the deepest analysis to date of their actual use in business. She is the first author to analyze what I consider a crucial transition: from application of punched card technology purely within the niche field of statistical tabulation for which it was originally designed (in this case, actuarial work within life insurance) to its general use for a much broader range of routine administrative tasks such as payroll, billing, and account balance calculation. Yates identifies early operational use of the machines by Phoenix Mutual as early as 1910 (pp. 46-47), long before manufacturers had begun to target applications of this kind by adding hardware features to support it.

When punched card machines were modified to better support administrative work, Yates places users, rather than supplier firms, in the vanguard. As in her award winning Business History Review paper (Yates 1993) she presents technological improvements to tabulating machines during the 1920s and 30s as a “co-evolution” between technology and use. The two most important advances during this era were the addition of printing capabilities and the extension of tabulating equipment to process letters as well as numbers. Both of these advances were pioneered by insurance firms, working closely with established suppliers and entrepreneurial innovators, sponsoring the development of new machines and even, in one case, purchasing a supplier firm.

Beginning with the 1920s, Yates pays considerable attention to the role of trade associations in the spread of technological practices within the life insurance industry. This too is an important contribution. While Phil Scranton and others have drawn attention to the historical development of industries as clusters of firms (Scranton 1997), business historians more often write as if each firm acted independently when introducing managerial, technological, and organizational innovations. Trade associations, in this case the Life Office Management Association, play a vital role in sharing experiences, discussing new ideas, and legitimating particular applications of technology. They also provide a bridge between managers within firms, equipment suppliers, and independent experts. LOMA set up formal working groups and committees to evaluate new technologies and formalize best practices for their use.

The second half of the book is about the computerization of the life insurance industry. Two chapters deal with early developments during the 1940s and 1950s, another with the third generation computer systems introduced in the 1960s and used into the 1970s, and a final narrative chapter presents two detailed case studies. The topics of these chapters mirror those already established: interactions between the users and producers of technology, incremental and evolutionary change, and the importance of trade associations in shaping technological adoption. The symmetry Yates achieves between her analyses of the punched card and computer eras captures one of her main insights: that user organizations experienced computer technology as an extension of well-established tabulating technologies rather than as a revolutionary break with the past. Indeed, this perception itself played an important role in shaping the ways in which computers were used and may therefore have been something of a self-fulfilling expectation. (While the continuities between the tabulating industry and the business computing industry have been well documented, less has been written about these continuities in use (Haigh 2001)).

Yates offers an extended discussion of Prudential Insurance’s Edmund Berkeley, one of the most colorful figures in the early history of computing. Berkeley was exposed to early computing efforts during the war, and returned to the world of insurance keen to apply the power of these new electronic marvels to insurance work. He worked closely with the designers of the Univac I, and pushed Prudential into becoming the first firm to order a commercial computer. (The order was later cancelled, but by then Berkeley had already embarked on an idiosyncratic career as author of the first popular guide to computing, publisher of the first computer journal, and founding secretary of what grew into the main association for computer science.) Berkeley, it must be said, is something of an exception in this book, as one of the few individuals granted much personal agency or a life story. His story has been told before, not least by Yates herself (Yates 1997), but it benefits here from its context as part of the longer history of technological innovation in the life insurance history.

Subsequent discussion returns the focus to trade groups, particularly the Society of Actuaries, in studying and standardizing the use of computers. Yates discusses the strategies taken by a number of firms large and small, illustrating differences in the kinds of computers ordered, the tasks to which they were applied, and the aggressiveness with which companies attempted to impose new business processes along with the new hardware.

These chapters also include some brief discussion of the organizational changes around the technology: feasibility studies, personnel issues, and worries about technological unemployment. The early-1960s transition from vacuum tube computers to transistorized machines such as the IBM 1401 appears here as another evolutionary development, as does the arrival of IBM’s hugely successful and technologically disruptive range of 360 series machines in the mid-1960s. While Yates follows some aspects of the story into the early 1970s, the narrative fizzles out without reaching any clearly demarcated stopping point or milestone event. Instead she shifts to case-study mode, recapitulating events of computer era through developments in two companies: New England Mutual Life and Aetna Life. These case studies, sourced in part from interviews with managers involved in events, help to bring some texture to the story and demonstrate the interplay of industry-wide trends with personal and cultural factors specific to individual firms.

Yates does an excellent job in meeting a key challenge facing anyone writing on the historical use of information technology: how to convincingly analyze technological capabilities without getting the book stuck in a swamp of model numbers and electronic widgets. Throughout the book, she provides just enough detail on the technological capabilities of different generations of tabulating machines and early computers to support her analysis of their business applications. As a result it should prove accessible to readers unstepped in the existing history of computing literature.

Stories familiar from the viewpoint of producer histories, such as the late-1950s success of IBM’s small but flexible 650 computer, take on a new aspect when seen from the viewpoint of user organizations. Yates provides a particular service by showing how identical machines were used in different ways by different firms. Users play a particularly important role in determining the social and organizational impact of computer technologies because of the huge flexibility of the underlying hardware and the consequent importance of software. Insurance companies wrote their own application programs and applied the machines to different areas of the business. Some aimed to consolidate processes, while others mimicked the existing paper-based procedures. While no individual user could exert the same influence over computer hardware in the 1960s that Berkeley enjoyed in the 1940s, the importance of software meant that individual firms continued to exercise an enormous amount of control over the functioning and organizational impact of their own computers. The success of the popular ’62 CFO package introduced by IBM for smaller firms showed that even companies using the same application software package could achieve very different results. In what may be the first historical analysis of the user community of a single mainframe software package, Yates finds that firms used the package in different ways, with some rewriting it to create their own versions. She demonstrates that software packages played an important role within the life insurance industry a good decade before the independent packaged software industry was established in the early 1970s. (For more on this issue, including discussion of an earlier paper by Yates on the topic (Yates 1995), see Haigh (2002).) It remains unclear whether the insurance industry was unique in this respect, or if an equally close examination of other industries will reveal similar examples of early software standards.

Yates’ methodologies and sensibilities are unmistakably those of business history rather than economic history. One fascinating aspect of the story summarized here is the willingness, indeed the eagerness, of hundreds of companies to order computers long before their economic viability had been established. Yates places less emphasis than I do on the symbolic value of computerization as an emblem of modernity, which I believe rapidly led to a situation in which no self-respecting firm could afford not to place an order for a computer. Did the sometimes frenzied investments made in computer technology during the 1950s, 60s and 70s ever pay off? Yates doesn’t know for sure, but neither does anyone else ? including the people who ordered the computers. But unlike other historians who have tackled the business use of computer technology, she did make a concerted effort to find some solid data on the topic. Numbers are crunched, industry averages calculated, and estimates made of the percentage of insurance premiums consumed by administrative overhead. The result: no clear link between computerization and efficiency within individual firms or within the industry as a whole. (This mirrors the findings of Paul Strassman (1997) and other observers of the so-called “productivity paradox” during the 1980s and early 1990s.) Believers in the strategic importance of computing might object that this focus on clerical cost reduction obscures what were often called the “intangible” benefits of flexibility, better managerial decision making, new products or services made possible by automation, and so on. But these benefits appear only rarely in the book, and Yates shows in several of the case studies that firms attempting to make more aggressive use of computer technology to integrate their operations or provide real-time interactive access to information tended to run into insurmountable technical obstacles during the 1950s and 60s.

Like most historians, Yates devotes little explicit discussion to methodological or theoretical questions. This is an observation of disciplinary norms rather than a criticism, and her narrative moves smoothly and convincingly throughout. She relies largely on archival sources, meaning that her evidence is rich but must face the same question as any business history based largely on case studies: how representative are these firms of the general population of institutions of the same kind? As mentioned previously, Yates goes a long way toward answering this question by exploring sources from a second kind of institution: trade associations. This gives a glimpse at the kinds of questions preoccupying administrative managers within life insurance firms at different points in time and of the stories they were telling each other about the power of technologies and systematization.

The one overt appearance of theory in the book is her invocation (pp. 4-5) of Anthony Giddens’ structuration theory as an underpinning justification for her approach and as the source of the book’s title. (Wanda Orlikowski, a collaborator of Yates on earlier work, is well known for applying structuration theory to the use of technologies within organizations.) Structuration theory aims to reconcile the freedom of individual action with the power and persistence of social structure. Its central insight is that social structures of all kinds constrain and guide individual actions, but are themselves constantly reproduced and minutely shifted by those actions. Though the potential relevance of this metatheory to the mutual shaping of institutions and practices is clear, Yates never explicitly comes back to it in the body of the work or in its conclusions to show more directly how it shaped her analysis and findings. As a theory of everything, structuration runs the risk being applicable to any situation without necessarily providing the observer with specific guidance on how to analyze its particulars.

Yates might have found a more directly related body of theory within the literature on “The New Institutionalism in Organizational Analysis” associated with Paul DiMaggio and Walter Powell (1991). As they argue in the introduction to this volume, the New Institutionalist approach has many parallels with structuration theory, but has the benefit of being directly concerned with the evolution of organizational form. Certainly Yates’ findings seem to support their central concept of institutional isomorphism: the idea that organizations within a field (in this case the life insurance industry) tend to grow alike in terms of organizational structure, culture, and practices. Powell and DiMaggio offer a useful set of mechanisms to explain this process: regulation and other external pressure, imitation, and most relevantly here, creation of shared cultural norms within professional communities.

Yates has discussed her methodological goals for the project more thoroughly in a companion essay, published recently in Enterprise and Society (2006). She argues that, while historians of technology have been talking about the social construction of technology and the importance of users for more than two decades, their conception of the user has almost always been that of an individual consumer. Yates insists instead on the importance of thinking of organizations as users of technology, an idea she refers to there as “broadening the demand-side turn.” She reports some resistance to this idea from historians of technology, captured in her recorded surprise at being asked by such an historian why there were no users in her narrative. Having been immersed in the business-school environment in which the idea of user-firms is well established, she wonders in turn why the unnamed historian insisted on focusing on individual people involved with computer technology (whom she would characterize as computer operators) when the relevant decisions were made by “an organization made up of many individuals with different roles and interactions” (Yates 2006, p. 434).

This observation crystallizes the strengths and limitations of Structuring the Information Age more clearly than any single statement within the book itself. Yates’ primary concern is with organizations as users of technology, and therefore she has written a story in which firms are the main actors: firms learn, firms make decisions, firms investigate technologies, and firms create and administer computer applications. But to ascribe such actions to a firm is as much of a simplification as to ascribe it to an individual. This is especially true in the case of software. Most computer application systems during the period Yates discusses were specified, designed and coded by computer staff within “user” firms, using hardware and software tools provided by vendors such as IBM. From the point of view of an IBM sales representative, both the insurance firm and its computer department are users and consumers of technology. But from the point of view of the programmers inside the firm, and their internal customers, the data processing department was a producer of IT systems. Whether a firm appears to be a user or producer of technology depends on where one stands.

Since firms are made of people, Yates inevitably addresses the actions of individuals, such as Berkeley. Issues of organizational politics and personal conflict appear at various points within the case studies, but are not really taken up in her broader analysis. The “roles and interactions” within the firms, which Yates rightly draws attention to, surface sometimes within her case studies but are not generalized into her overall conclusions. “Personnel issues” are dealt with only briefly, and presented (for example on pp. 161-67, 181-82) primarily to discuss the challenges of reassuring workers the computers would not eliminate their jobs and relocating any displaced clerks.

Yates thus downplays something that looms large in my own interpretation of these events: the emergence of new groups of technical and professional specialists within corporate society, each with their own identity and interests (Haigh 2003). Though Yates has a great deal to say about the evolution of the life insurance firm as an institution and its relationship to technology, she has almost nothing to say about the organization, management or culture of the new departments of data processing that accreted, deep inside life insurance firms, around the new machines. Machine operators, systems analysts, computer programmers, corporate accountants and middle managers matter a great deal as classes and communities within the corporate world, even if their individual agency is tightly constrained. (After all, the structuration theory Yates references in her title aims to show how ordinary people can shift social structures even as they reenact them.)

Studying occupational subcultures within the corporation provides an intermediate level of analysis, between firms and individuals, in which to explore the creation of new institutions within firms, such as the data processing department, and the emergence of new occupational groups such as the systems analyst, computer operator, or computer programmer. From Berkeley onward, actuaries, clerks and managers who joined projects to study or implement computer systems often found their careers taking unexpected detours into the new world of data processing. Indeed, the very study groups and industry associations she chronicles must have played an important role in establishing new identities and communities around the intersection of computers and life insurance. A culture of computer enthusiasm created a heterogeneous alliance devoted to the installation and expansion of computer systems. Yates’ predisposition to view technological adoption as the result of rational decision making by the firm as a whole may obscure the importance of these communities of computer enthusiasts within and between firms in pushing the new technology forward.

Today, American businesses employ more than ten million IT workers, and senior managers rely on computer specialists to create and oversee the systems that run every aspect of their firms’ core operations. Only teams of highly specialized technical staff can understand, still less modify, the behavior of these systems. We take this for granted today, but in the 1950s and 60s it represented an important shift in managerial society. As Yates showed in her earlier book, Control through Communication (1989), progressive American managers from the 1890s onward had embraced the personal mastery of new technologies such as graphs, written procedures, organizational charts and filing systems as symbols of modern management expertise. With computerization, however, detailed knowledge of administrative technologies was inevitably separated from general managers to create a new class of specialists. Yates mentions that some managers distrusted magnetic tape because, unlike punched cards, it contained no visible mark of the data within. But she does not further address the cultural or structural consequences of this shift of power within the managerial ranks.

Many computer personnel came to identify more closely with the “data processing profession” than with banking or insurance. The new ranks of technology managers and specialists, mediating between the practices and cultures of business and those of the computer room, faced a set of conflicts and challenges familiar to anyone who has leafed through a book of Dilbert cartoons. Managers complained about the perceived lack of loyalty of the computer staff, whose primary identity often formed around machines or skills rather than a particular organization or even industry. Identities and practices were knitted together across a range of industries by organizations such as the Data Processing Management Association and trade publications such as Datamation and Business Automation. This highlights one of the inevitable limitations of a single industry study. While the organization, identity and practices of data processing departments appear to have been quite stable across industries, Yates tells the story of information technology use within the life insurance industry as a self-contained narrative. Until similar studies are produced of other industries we will not know which characteristics of computer use here were exceptional and which merely mirrored broader trends. James W. Cortada (2003, 2006) has already published the first two in a projected three volume series of books surveying computer use in a series of industries, providing a complementary perspective.

These comments reflect a subject area so rich than no single study could begin to exhaust its potential. As historians come to grips with the business history of the end of the last century and the beginning of this one there will be few industry historians who can avoid the topic. Likewise, historians of technology dealing with the past half century will find rich pickings in the history of business administration and its systems. A flood of books describing information technology use in different industries will sooner or later appear, and their authors will find Structuring the Information Age an invaluable guide and model. The book is a significant landmark within the history of computing literature. I hope Yates succeeds in her stated aim of convincing historians that businesses can be creative users of technologies. We would all benefit if it can also serve what must have been an implicit aim: to remind business school faculty that history explains a great deal about how technology does and doesn’t work when applied within an industry.


Agar, Jon. 2003. The Government Machine. Cambridge, MA: MIT Press.

Campbell-Kelly, Martin. 1989. ICL: A Technical and Business History. New York: Oxford University Press.

Campbell-Kelly, Martin. 1994. The Railway Clearing House and Victorian Data Processing. In Information Acumen: The Understanding and Use of Knowledge in Modern Business, edited by L. Bud-Frierman. London: Routledge.

Cortada, James W. 2003. The Digital Hand: How Computers Changed the Work of American Manufacturing, Transportation, and Retail Industries. Oxford: Oxford University Press.

Cortada, James W. 2006. The Digital Hand, Volume 2: How Computers Changed the Work of American Financial, Telecommunications, Media, and Entertainment Industries. Oxford: Oxford University Press.

Haigh, Thomas. 2001. “The Chromium-Plated Tabulator: Institutionalizing an Electronic Revolution, 1954-1958.” IEEE Annals of the History of Computing 23 (4): 75-104.

Haigh, Thomas. 2001. “Inventing Information Systems: The Systems Men and the Computer, 1950-1968.” Business History Review 75 (1): 15-61.

Haigh, Thomas. 2002. “Software in the 1960s as Concept, Service, and Product.” IEEE Annals of the History of Computing 24 (1): 5-13.

Haigh, Thomas. 2003. “Technology, Information and Power: Managerial Technicians in Corporate America.” Ph.D. dissertation, History and Sociology of Science, University of Pennsylvania, Philadelphia.

Heide, Lars. 1997. “Shaping a Technology: American Punched Card Systems 1800-1914.” IEEE Annals of the History of Computing 19 (4): 28-41.

Powell, Walter W., and Paul J. DiMaggio, eds. 1991. The New Institutionalism in Organizational Analysis. Chicago: University of Chicago Press.

Scranton, Philip. 1997. Endless Novelty: Specialty Production and American Industrialization, 1865-1925. Princeton, NJ: Princeton University Press.

Strassmann, Paul. 1997. The Squandered Computer. New Canaan, CT: Information Economics Press.

Yates, JoAnne. 1989. Control through Communication: The Rise of System in American Management. Baltimore: Johns Hopkins University Press.

Yates, JoAnne. 1993. “Co-evolution of Information-processing Technology and Use: Interaction between the Life Insurance and Tabulating Industries.” Business History Review 67 (1): 1-51.

Yates, JoAnne. 1995. “Application Software for Insurance in the 1960s and Early 1970s.” Business and Economic History 24 (1): 123-134.

Yates, JoAnne. 1997. “Early Interactions between the Life Insurance and Computer Industries: The Prudential’s Edmund C. Berkeley.” IEEE Annals of the History of Computing 19 (3).

Yates, JoAnne. 2006. “How Business Enterprises Use Technology: Extending the Demand-Side Turn.” Enterprise and Society 7 (3): 422-455.

Subject(s):History of Technology, including Technological Change
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

New Voices on Adam Smith

Author(s):Montes, Leonidas
Schliesser, Eric
Reviewer(s):Young, Jeffrey T.

Published by EH.NET (March 2007)

Leonidas Montes and Eric Schliesser, editors, New Voices on Adam Smith. London: Routledge, 2006. xxi + 364 pp. $145 (cloth), ISBN: 0-415-35696-2.

Reviewed for EH.NET by Jeffrey T. Young, Department of Economics, St. Lawrence University.

George Stigler began his banquet speech at the Glasgow University bicentennial of the publication of the Wealth of Nations with the now frequently quoted salutation, “I bring you greetings from Adam Smith, who is alive and well and living in Chicago.” (quoted in Meek, p. 3) Thirty odd years later the remark remains true, though ironically not in the Economics Department. Of the fourteen young scholars whose work is published in this book, five earned their Ph.D.s at the University of Chicago, none in economics. Indeed of the fifteen only four are economists, despite the book’s placement in Routledge’s Studies in the History of Economics series. This is reflective of the fact that Smith scholarship has largely moved away from seeing WN and its seminal role in the nineteenth century development of economics as a discipline as Smith’s crowning achievement. The focus today is largely on seeing Smith’s system as a whole, of which The Theory of Moral Sentiments is the foundational work. This is even true among economists who now trawl through TMS in search of interesting hypotheses in the new field of behavioral economics (see Ashraf, Camerer, and Lowenstein, 2005). However, it is even more true among philosophers, who now find TMS a rich vein of philosophical insight, whereas previously it was largely unread or misread.

These trends are amply on display in the present volume, as is Smith’s healthy status among a new generation of international academics. Montes and Schliesser are to be commended for assembling a wide-ranging and stimulating set of essays from a talented group of scholars all of whom completed their doctorate since 2000. The book consists of fifteen chapters organized into four parts, which deal respectively with Adam Smith’s sources and influence, moral theory, economics, and theory of knowledge. A book of this sort does not lend itself easily to adequate treatment in a short review. The coverage ranges widely over all aspects of Smith’s work, with particular attention to the relatively neglected essays on the arts, languages, and the history of science.

As an historian of economics, though, I was particularly interested to see what the younger generation is doing with Smith’s economics. The answer is “not much,” although I do not mean this in a negative way at all. The economics section consists of three essays on Smith’s relation to Mandeville, his interpretation and use of Newtonian method in economics, and his analysis of paper money. As the training of professional economists has long since separated itself from mastery of the classics, interest in the analytical material in WN has waned. Leon Montes’s essay on Newtonianism and general equilibrium theory is about the only place where this book touches on topics that have historically been of interest to professional economists. Here he advances the idea that modern general equilibrium theory, by which is meant the axiomatic approach to general equilibrium modeling, has its philosophical roots in French interpretations and adaptations of Newton’s scientific method. Smith, however, absorbed a Scottish Newtonianism that was empirical, inductive, and, in its application to human affairs, historical. Therefore, associating Smith’s invisible hand with the modern theory, say as an early statement of the theorems of welfare economics, reflects a fundamental philosophical misunderstanding of Smith’s application of Newtonian science.

It is not surprising to me that British empiricists and French rationalists would come up with very different readings of Newton. However, I would like to suggest that if we take a broader perspective in terms of what we classify as general equilibrium modeling, there is more under the sun than Walrasian general equilibrium models. Surely Sraffa’s production of commodities qualifies as general equilibrium modeling, as does Marx’s transformation problem. Indeed, there is plenty of general equilibrium reasoning in Smith, which is expressible in simultaneous equations models. The famous beaver and deer case of the early and rude state, which introduces a labor embodied value theory, is surely a general equilibrium model. While I agree wholeheartedly with the thrust of Montes’s paper, that Walrasian general equilibrium falsely sails under a Smithian flag, I do not think we can conclude there is no concept of general equilibrium to be found in Smith. Nor would I preclude the possibility that Smith may have inspired Walrasian modeling in some way, and that modern theories of the automaticity of the market mechanism owe at least some intellectual debt to Smith. After all, one does not need to have a deep understanding of the sources and context of Smith’s book to be stimulated and taught by it. Misunderstanding can lead to insight also.

This book will be of interest primarily to Smith specialists, both economists and non-economists. I believe that essays are perhaps a bit too narrowly focused, and cover a wide range of interesting, but off-beat, topics, that the general historian of economics may not find much of interest here. I must confess, though, that I did not find the essays to be uniformly interesting to me. At times I felt they suffered some from the young scholar’s eagerness to be original and provocative, perhaps stretching a point. It is good to know, however, that Smith is alive and well among a new generation of accomplished scholars. Their depth and breadth of understanding of a quite complex thinker, as well as their passion for Smith’s unique body of work, is very gratifying.


Nava Ashraf, Colin F. Camerer and George Lowenstein, 2005. “Adam Smith, Behavioral Economist,” Journal of Economic Perspectives, 19(3), Summer, pp. 131-146.

Ronald L. Meek, 1977. Smith, Marx and After, London: Chapman and Hall.

Jeffrey T. Young is the A. Barton Hepburn Professor of Economics at St. Lawrence University in Canton, New York. He is the editor of The Elgar Companion to Adam Smith (forthcoming) and his most recent publication is “Adam Smith and New Institutional Theories of Property Rights,” Adam Smith Review 2.

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