Economists and Historians on Economic History

On March 10 Mokyr and Beckert will discuss the path of economic history at Brown. I have heard this referred to as a debate but the website describes it as a discussion.

Tyler Beck Goodspeed has a paper on Capitalism and the Historians Revisited. Since discusions of capitalism and hsitory often turn to slavery I will mention that Goodspeed also has a paper on the long term negative consequences of slavery in Georgia.

Colleeen Dunlavy asks “Whatever Happened to (American) Economic History and Could the "History of Capitalism" Become the Newer Economic History?”

Caitlin Rosenthal seeks a quantitative middle ground in a recent paper in the Journal of the Early Republic. I am sympathetic to Rosenthal’s argument and I think she does some interesting work, but if an economist had seen the paper before it was published she might have referred to econometricians instead of econometrists. Econometrist is a word, but it is not the one economists generally use.

Stephen Mihm and the State of Financial History

The winter 2016 issue of The Journal of the Early Republic includes several papers from a conference on Economic History’s Many Muses, held at the Library Company of Philadelphia.

The papers consider a wide array of topics and approaches within history. Two were of particular interest to me as an economist/economic historian: Caitlin Rosenthal and Stephen Mihm. Both authors have been associated with the “new history of capitalism,” and both wrote essays that explicitly address the relationship between economists who work on historical issues and historians who work on economic issues. Rosenthal argues that both sides need to work to break down the barriers between the two. I agree.

I’m not sure that Mihm shares that goal. His essay on financial history was the one most closely related to my work in economic and business history, yet it presented a picture of the state of economic history generally and financial history specifically that I found largely unrecognizable.

The essence of Mihm’s argument was that financial history has largely disappeared:

“Financial history, as well as economic history more generally, was once a vital part of both the historical and economics disciplines. And then it effectively vanished, save for a few isolated individuals in the academy. Understanding how and why that happened may help frame the challenges facing practitioners of the “history of capitalism.” He argues that historians largely abandoned the field to economists and that “the move to economics departments ended less happily than it began. Increasingly, economic historians in economics departments served to substantiate existing models and formulas, where historical inquiry was not really the point. Economic historians found themselves marginalized.”

Yet when you actually look at some evidence you are more likely to come to the conclusion that Ran Abramitzky did, that “economic history is far from being marginalized and overlooked by economists.” Abramitzky finds that “economic history today is more respected and appreciated by the average economist is also reflected by an increase in economic history publications in the top-5 economic journals. The decline in economic history in the top-3 journals that McCloskey documented has been reversed, and the percentage of economic history publications in the top-3 journals has gone back up to its heydays of the 1920s and 1930s, although QJE has replaced the JPE as the most historical journal (Table 1). 4 Similarly, the number and percentage of economic history papers published in the top 5 economic journals (AER, QJE, JPE, Econometrica, Restud) has doubled over the last twenty years (Figure 1), in part, reflecting a broader trend in economics away from theory and into empirical work.”

In short, the rumors of economic history’s demise have been greatly exaggerated. There have been some setbacks. My own alma mater, Washington University in St Louis, is one of the worst examples. On the other hand, many highly regarded economics departments in the United States still have multiple economic historians: Harvard (Eric Chaney, Melsissa Dell, Claudia Goldin, and Nathan Nunn); Stanford (Avner Grief and Ran Abramitzky); Yale (Naomi Lamoreaux, Tim Guinane, Jose Antonio Espin Sanchez); Northwestern, (Joel Mokyr, Robert Gordon, Joe Ferrie); Berkeley (Barry Eichengreen, Brad De Long, Martha Olney, Christina Romer); Michigan (Paul Rhode, Martha Bailey); Vanderbilt (Peter Rousseau, William Collins, Claudia Rei, Andrew Goodman-Bacon); U.C. Davis (Alan Taylor, Katherine Eriksson, Greg Clark, Chris Meissner); UCLA (Leah Boustan, Michela Giorcella, Dora Costa, Walker Hanlon). Other departments, like George Mason (John Nye, Noel Johnson, Mark Koyama, and Carlos Ramirez) have built up very strong programs in economic history in recent years. And this is just the United States. As best I can tell economic history seems to be thriving in Europe as well. Moreover, several of the economic historians that I just listed focus on financial issues, and Rutgers (Hugh Rockoff, Eugene White, and Michael Bordo) practically has a financial history department.

Ironically, Mihm’s argument that financial history all but vanished is most forcefully refuted by his own footnotes. He cites numerous recent papers by Rockoff, Grubb, Wallis, Sylla, Bodenhorn, Rousseau, Knodell, Calomiris, Schweikart, Lamoreaux, and Wright. Moreover, the list could have been even longer. Mihm does not include references to important recent work by economic historians like Eric Hilt and Matt Jaremski. And this is only counting people who have written on early America. The list is much longer if one turns to Europe or America after the Civil War.

Mihm’s footnotes also seem at odds with his text on specific issues. For example, when he acknowledges that economists have given considerable attention to some topics, like “free banking,” he suggests that “a significant portion of past scholarship by economists has been motivated in order to produce a historical brief to support the abolition of central banks or the deregulation of banking.” The term “free banking” seems to conjure notions of some sort of financial equivalent of “free love.” Free banking, however, did not mean that anything goes. Free banking de-politicized bank chartering. It moved finance in the United States toward what North, Wallis and Weingast describe as an open access order. It was not a world without rules. It was a world in which everyone had to follow the same rules. Everyone had to follow the same rules about capital requirements, specie redemption, and security backed note issues. Ironically, although Mihm cites numerous authors who have written on free banking (e.g., Rockoff, Rolnick and Weber, and Economoupolous), he does not cite some more libertarian leaning economists (Lawrence White and George Selgin) who have written on financial history. His fellow NYU grad and University of Georgia colleague George Selgin, who has written extensively on the money and banking, doesn’t get a single mention.

Similarly, he claims that “Also understudied are the ways that “bringing the state back in,” to use the famous words of Theda Skocpol, requires a recognition of the central role public finance played and its corresponding entanglements with private finance.” Yet he cites a number of the papers by Sylla, Wallis, Lamoreaux, and others that do exactly this.

Reading Mihm’s paper it is easy to see why Cathy Matson, who organized the conference and introduces the papers, would suggest that a “A new kind of financial history would retrieve the themes of tariffs, taxation, and especially banking from the special preserve of economists. Its historians would ask such questions as who underwrote banks, how was bank money used, how was its value created, what was the extent of banking power at different times in North American history, what are the links between banks and slavery or the rise of wage labor?” In other words, this new financial history would do what financial historians, both economists and historians, are already doing.

Need a Break From Reading Economic History?

If you need a break from reading economic hsitory you can watch these videos or listen to these podcasts about economic history.

Videos:

Greg Clark at Lewis and Clark on “Unequal chances or unequal abilities: What determines social mobility?" (ht @antonhowes)

Tim Leunig’s Ted Talk is about education and creativity, but part way through he explains the benefits of studying economic history.

Professors and students make a pitch for economic history at the LSE.

Podcasts:

Judy Stephenson at the Economics Detective discusses her work on wage rates and the implications of recent work on English wages for our understanding of the Industrial Revolution.

Gavin Wright talks about the economic history of slavery at The Exchange (from August 2015).

Christy Clark –Pujara discusses the business of slavery in Rhode Island with Liz Covart at Ben Franklin’s World

Economic History in 2016: American Economic History

I posted recently about economic history in 2016 and said that I would have another post that focused on American Economic History. Here it is. Again, 2016 is loosely defined for the purposes of this blogpost, though I think most of the stuff here was published or presented in some way during the year. Also, please do not think that this is intended as an objective list of the best or most important work. This is more like a list of things that came to my attention and will influence what I teach my students in American Economic History.

Measuring Income and Inequality

Lindert, Peter H., and Jeffrey G. Williamson Unequal Gains: American Growth and Inequality since 1700

This book did not get nearly as much attention as Robert Gordons’ book, but it is far more important for American economic history. There are a lot of reasons why this is an important book. It provides the most up to date picture of long term economic development in America, and it provides a model for economic historians of careful use of primary sources, making the most of the limited sources available.  

Some of the findings:

1.       The U.S. was among the most developed nations very early on.

2.       The Revolution had a large negative effect on incomes.

3.       The relative decline of the South began long before the Civil War.

4.       There is no fundamental law driving inequality. Instead, inequality has risen and fallen over time in response to a changes in demographics, finance, technological change, politics, education policy, and trade.

See also Lindert, Peter H., and Jeffrey G. Williamson. "American colonial incomes, 1650–1774." The Economic History Review 69.1 (2016): 54-77, which shows that “The common view that American per capita income did not overtake that of Britain until the start of the twentieth century appears to be off the mark by two centuries or more.”

Race, Racism, and the Effects of Slavery

Marcella Alsan and Marrianne Wanamaker. "Tuskegee and the Health of Black Men." (2016) used survey data on mistrust of doctors, data on health care utilization, and mortality to show that the Tuskegee experiments had a significant negative effect on the health of older African American men.

See also Celeste K. Carruthers, and Marianne H. Wanamaker. Separate and unequal in the labor market: human capital and the Jim crow wage gap. No. w21947. National Bureau of Economic Research, 2016 on the effect of unequal eduction on skills and wages.

John Parman, Trevon Logan, and Lisa D. Cook used census records in innovative ways to answer questions about segregation and the consequences of distinctively black names. Many of their working papers are available at their websites.

Logan, Trevon, and John Parman. The national rise in residential segregation. No. w20934. National Bureau of Economic Research, found that “The likelihood that an African American household had a non-African American neighbor declined by more than 15 percentage points (more than a 25% decrease) through the mid-twentieth century.” Using this measure of segregation, they also find that higher levels of segregation were associated with an increase in lynching (go to Parman’s website for a link to this paper.)

Lisa Cook, Trevon D. Logan, and John M. Parman. "The mortality consequences of distinctively black names." Explorations in Economic History 59 (2016): 114-125 see Vox for a summary of this work. They found that distinctively black names raised male life expectancy by about 4 years. “One possible explanation lies in the nature of those historical black names. They often draw on biblical names or denote empowerment. Coupled with evidence that names were often passed from father to son, these name characteristics suggest that those with a distinctively black name may have stronger family, church, or community ties. These stronger social networks could help an individual weather negative shocks throughout life, ultimately leading to far better long-term outcomes, as demonstrated in Cook (2011, 2012).”

Evolution of Institutions, Organizations and Markets

Several economic historians are using the North, Wallis and Weingast (transition to open access order) framework to explain the evolution of institutions, especially those governing business organization and finance, in early America.

Naomi R. Lamoreaux and John Joseph Wallis, “States, Not Nation: The Sources of Political and Economic Development in the Early United States” 

Hilt, Eric. "Corporation Law and the Shift toward Open Access in the Antebellum United States." In Organizations, Civil Society, and the Roots of Development. University of Chicago Press.

Economic History and the History of Capitalism

On two occasions, at Dartmouth and the AHA meetings economic historians and historians of capitalism got together in the same room. Caitlin Rosenthal was involved both times, and in a recent paper in Journal of the Early Republic she continues to argue for more interaction. 

Economics of Mixed Martial Arts Training

This is from bjpenn.com.

Firas Zahabi is the head coach at Tristar Gym in Montreal. he has worked with Georges St. Pierre and number of other UFC champions.

Here he is explaining why Ronda Rousey's problems as a standup fighter might not be entirely the fault of her coach. I actually think her coach is a big part of the problem, but I liked Zahabi's analysis of the problem, especially the last two sentences.

“The reason why a Ben Askren or a Ronda Rousey’s striking usually — not always — doesn’t hit that high level, is because they’ve spent so much time wiring their brain and their body and their nervous system to fight in one particular way. It’s opportunity cost. Every time you do one thing, you’re costing yourself in another.”

Economic History in 2016

This is my subjective assessment of some of the major developments in economic history in the last year. Most of the papers I cite are from 2016 (or at least the versions I cite are from 2016) A few are from earlier, but you can just think of it as the long 2016. It seemed long. By the way, I intend to do a another post that focuses more on developments in American economic history.

Measuring Long Run Economic Performance

One of the most significant developments in economic history over the last several decades has been the work to improve our estimates of long run economic performance. Responding to challenges presented by Pomeranz’s Great Divergence and obvious weaknesses in Madison’s estimates, a number of economic historians have worked to develop better estimates of economic performance in Europe and Asia over the very long run. Economic historians continue these efforts but also recognize the limitations of what they have done and, possibly, what they can do.

Stephen Broadberry has done much of this work with a number of different co-authors.  For a recent example see Roger  Fouquet and Stephen Broadberry. "Seven centuries of European economic growth and decline." The Journal of Economic Perspectives 29, no. 4 (2015): 227-244.

Deng and O’Brien raise numerous questions about the usefulness of these estimates for Asia.

New estimates of long term economic performance have prompted new attempts to explain differences in long term economic performance. 

State Capacity and Economic Growth

Economic historians have long recognized that the countries that led the way in modern growth, England and Holland, also led the way in the development of state capacity (the ability to tax and borrow to spend on public goods.) But recent work has attempted to establish this relationship more generally and identify the specific mechanisms by which state capacity contributed to economic growth. Recent work has focused on the combination of state capacity and constraints on state action. The problem, of course, isn’t new: it is the fundamental Hobbesian problem, but economic historians are trying to understand how effective solutions evolved.

See the survey paper on state capacity by Noel Johnson and Mark Koyama (available through Noel’s website). The published version of Johnson and Koyama is "States and economic growth: capacity and constraints" Explorations in Economic History.

And this recent Economic Journal paper by Mark Dincecco and Gabriel Katz

Religion and Economic Growth

Related to the work on state capacity, economic historians have shed new light on the relationship between religion and early modern growth. The idea that there might be some connection between economic growth and religion has a long history. This connection was, for instance, central to the stories told by Max Weber and R.H. Tawney.  What is new is that economic historians have gathered evidence and employed techniques that enable them to identify specific mechanisms through which religious beliefs and institutions influenced economic performance.

See, for instance,

Eric Chaney on Religion and the Rise and Fall of Islamic Science

Anderson on Inquisition and Scholarship

Jared Rubin’s forthcoming book

Anderson, Johnson, and Koyama Jewish persecution and weather shocks

Johnson and Koyama Jewish communities and city growth

This working paper  by Dittmar and Meisenzahl on the religion, politics and public goods in Germany during the Reformation

English Wages and Industrialization

Recent research on wages in England have challenged Robert Allen’s theory of the industrial revolution. Allen’s theory was attractive in its simplicity: relative prices drove the Industrial Revolution in England. People invested in machines because labor was expensive and coal was cheap. Several recent studies have, however, challenged the evidence of high wages in England.

See Jane Humphries and Benjamin Schneider

And these great videos of Humphries describing the project.

See also Judy Stephenson’s work on the building trades and her blog post about the papers presented at a workshop on English wages.

You can also look at these blog posts for descriptions of the state of the debate Pseudoerasmus  and Vincent Geloso. By the way, based upon the volume of tweets, blog posts, papers, and working papers I am beginning to believe that Vincent Geloso must actually be the name of a consortium of economic historians.


Note: This post was edited on December 4, 2017 to add a link to he published version of the Johnson and Koyama paper on state capacity.

My Response to Seth Rockman's Tweetstorm

I prefer blogging to tweeting. Below is my response to Seth Rockman’s tweetstorm. His tweets are in bold.

2. @BAllanHansen Your piece on counterfactuals makes good sense. I also like the one by Dietrich Vollrath

Thank you. I try to make good sense. I also like Vollrath’s post

4. But when the counterfactual is “pretend slavery didn’t happen,” then it gets bumpy.

Which economic historian has put forward this counterfactual? I don’t recall it from Fogel or Olmstead and Rhode. I believe that Robin Blackburn considered a counterfactual in which there was an early abolition of slavery, but he is an historian so I don’t think this is referring to him.

6. It is different from “pretend there were no railroads.” It isn’t merely “academic.”

The debate over railroads was not merely academic. I tried to make that point in my post yesterday. To the extent that Rostow’s theory influenced policy, the debate over whether dumping a lot of funds into some targeted leading sector could drive economic growth mattered. Robert Wright has argued that the current argument over slavery and economic development matters in a similar way: to the extent that you argue that slavery is a necessary, or even useful, means of promoting growth it can provide support for regimes that allow modern slavery to continue.

10. And although economists have known slavery was capitalistic since Fogel, it seems delusional to claim this is mainstream US knowledge

It is one thing to say that it is insufficiently recognized by the public. It is another thing entirely to suggest, as Baptist does, that economists and historians generally accepted that it was not capitalist.

11. Nor clear to me what work economists have done to make this “commonsensical” in American culture and politics... or in Econ 101.

Scholars like Fogel, and Wright have written numerous books, many of them accessible to a general audience. It is in every American Economic History textbook. Maybe economic historians need to take some marketing classes.

14. Especially when the haggling involves (a) pretending slavery didn’t actually happen

Saying something over and over again does not actually make it true.

15. or (b) privileging white testimony in problematic historical sources over black voices in other differently-problematic sources.

Again, who are you talking about? Olmstead and Rhode’s latest paper makes extensive use of slave narratives as well as plantation records. It is easy to find on google scholar. And I am pretty sure that Trevon Logan was not privileging white testimony here.

16. I’d be encouraged if I thought economic historians were also grappling with slavery’s archive by reading Saidiya Hartman, Jennifer Morgan

Good suggestions. At least listen to Jennifer Morgan on Liz Covart’s podcast Ben Franklin’s World. By the way, I would also recommend Kathleen Hilliard.

19. I will gladly read more econ.hist. when econ. historians are really grappling with race, power, & knowledge production—past and present.

You might try the literature on the negative consequences of slavery, beginning with Sokolof and Engerman, and more recently Nathan Nunn and others. You might also look at some of the recent work by Trevon Logan, Lisa Cook, and John Parman. You can find a lot of it at Logan’s website. Let me know if you want more suggestions.

Overall, my response to Professor Rockman’s tweetstorm is the same as my response to much of the work that Baptist et al have done: he continues to think that presenting a false picture of what economic historians have said is a legitimate form of argument. When I criticize Baptist or Beckert or Rockman I try to quote them. Rockman puts quotation marks around “pretend slavery didn’t happen,” but he does not tell me who actually said this.