This is a blog about economics, history, law and other things that interest me.
Monday, December 29, 2014
Is Economics Already Open Access?
We just got the December 2014 issue of The American Economics Review. It took me about 10 minutes to find ungated versions of all the papers.
Friday, December 26, 2014
An appreciation of E.P. Thompson
This is The American Conservative's Christmas reading list. Benjamin Schwarz, the national editor of The American Conservative, chose E.P. Thompson's The Making of the English Working Class.
"Steeped in English literature—see the constant, apposite, and often starling allusions to Bunyan and Byron, Defoe and the Bible—Thompson wrote powerfully, concretely, plangently, with an exquisite sense of cadence and rhythm. That style deepens this elegiac book, elevating it to a masterpiece of literature as well as of scholarship. This is a work, Thompson unabashedly makes clear, about history’s losers, and in its embrace of the losers, as well as in other ways, The Making of the English Working Class is a profoundly anti-progressive book. Its protagonists’ values and their 50-year struggle to resist being turned into a proletariat may have seemed merely primitive and retrograde to strident Marxists (and may seem so to progressives of all stripes today), but Thompson’s historical imagination and sympathy allowed him to see the value, and the tragedy, of lost causes."
"Steeped in English literature—see the constant, apposite, and often starling allusions to Bunyan and Byron, Defoe and the Bible—Thompson wrote powerfully, concretely, plangently, with an exquisite sense of cadence and rhythm. That style deepens this elegiac book, elevating it to a masterpiece of literature as well as of scholarship. This is a work, Thompson unabashedly makes clear, about history’s losers, and in its embrace of the losers, as well as in other ways, The Making of the English Working Class is a profoundly anti-progressive book. Its protagonists’ values and their 50-year struggle to resist being turned into a proletariat may have seemed merely primitive and retrograde to strident Marxists (and may seem so to progressives of all stripes today), but Thompson’s historical imagination and sympathy allowed him to see the value, and the tragedy, of lost causes."
Does History Need a Manifesto?
Peter Mandler and Deborah Cohen review The History Manifesto by Jo Guldi and David Armitage. The review provides an interesting and optimistic assessment of the current state of the discipline of history.
Here is an earlier review by Pseudoerasmus, focusing on the books false claims about economic historians.
Here is an earlier review by Pseudoerasmus, focusing on the books false claims about economic historians.
Thursday, December 25, 2014
Tuesday, December 23, 2014
Cotton, Slavery and Economic Growth
Recently, several historians (Edward Baptist and Sven Beckert) have
attempted to make slavery and cotton the driving force behind American economic
growth in the nineteenth century. I believe that they present a misleading view
of economic growth and the relationship between slavery and economic growth.
1.
Slavery was predominately associated with one
product: cotton. Cotton was a very important crop. It is true, as Beckert points
out, that cotton accounted for over half of U.S. exports on the eve of the
Civil War. But exports were only about 9 % of GDP. Similarly, cotton accounted
for about 23 % of income in the South, but the South accounted for only 26% of
U.S. income. See D. A. Irwin, “The Optimal Tax on Antebellum U.S. cotton
Exports,” Journal of International Economics 60(2003):287) Ultimately, the
value of cotton production was equal to about 6% of GDP. The attempts to make
cotton the driving force of the American economy misses one of the most
important finding of economic historians: do not get too focused on a single
sector of an economy (see Fogel on the railroads and McCloskey on the textile
industry in England). There is no Rostovian engine of growth.
3.
Slavery appears to have had a negative effect on
long run trends in per capita GDP. The more a region depended on slave labor in
the past the lower its per capita income now.
You can go to measuringworth.com and graph the log of per capita GDP from 1800 to 1900. Does it appear to you that the rate of growh declined after 1865?
Wednesday, December 17, 2014
If all else fails just make it up
In the Washington
Post today Jim Tankersley reports on the negative influence of finance on
the economy. He reports that “In perhaps the
starkest illustration, economists from Harvard University and the University of
Chicago wrote in a recent paper that every dollar a worker earns in a
research field spills over to make the economy $5 better off. Every dollar a
similar worker earns in finance comes with a drain, making the economy 60 cents
worse off.” I clicked on the link to the paper (Lockwood BB,
Nathanson CG, Weyl GE. Taxation
and the Allocation of Talent). As best I can tell it says no such thing. It
seems to me that the authors are quite explicit that they do not have such
estimates of the spillover effects of different occupations. They use a variety
of guesses about what they might be to examine the implications of their model.
More new "history" of capitalism
Sven Beckert has an essay in the Chronicle Review, markting his new book.
Historians “observe,
quite rightly, that the world we live in cannot be understood without coming to
terms with the long history of capitalism—a process that has arguably unfolded
over more than half a millennium. They are further encouraged by the
all-too-frequent failings of
economists, who have tended to naturalize particular economic
arrangements by defining the "laws" of their development with
mathematical precision and preferring short-term over long-term perspectives.”
The need to offer some vague critique of economics in everything
they write is one of the most tiresome features of the new historians of
capitalism. I suggest that he take a look at some of the work by economists
that examines the influence of differences in institutions and endowments on
long term economic performance: North, Sokolof and Engerman, and Nunn would be
good places to start.
“What distinguishes
today’s historians of capitalism is that they insist on its contingent nature,
tracing how it has changed over time as it has revolutionized societies,
technologies, states, and many if not all facets of life.”
Who does this distinguish them from? Business historians have
frequently made such distinctions, writing about proprietary capitalism and
managerial capitalism, or just varieties of capitalism. Or, consider the work
on the evolution of monopoly capitalism by Marxist scholars. Most of the work by new institutional economic historians is about how capitalist economies have differed from place to place and eveolved over time.
“For too long, many
historians saw no problem in the opposition between capitalism and slavery.
They depicted the history of American capitalism without slavery, and slavery
as quintessentially noncapitalist. Instead of analyzing it as the modern
institution that it was, they described it as premodern.
Some scholars have always
disagree with such accounts. In the 1930s and 1940s, C.L.R. James and Eric
Williams argued for the centrality of slavery to capitalism, though their
findings were largely ignored. Nearly half a century later, two American
economists, Stanley L. Engerman and Robert William Fogel, observed in their
controversial book Time on the Cross (Little, Brown, 1974) the modernity and
profitability of slavery in the United States. Now a flurry of books and conferences are building
on those often unacknowledged foundations.”
Why don’t the people doing the new history of capitalism start acknowledging
these foundations?
Special Issue on Piketty's Capital
The British Journal of Sociology has a special issue on Piketty's Capital. All the articles are available free of charge.
Wednesday, December 10, 2014
Happy Birthday to The Junto
The Junto is celebrating its second birthday. I am not an early Americanist, but The Junto is one of my favorite blogs. The contributors are thoughtful and passionate about what they do. Anyone interested in American history, doing history, or teaching history should read what they have to say.
Tuesday, December 9, 2014
The Depression of 1921?
The “Depression of 1921” has been receiving a lot of
attention recently (Krugman,
Selgin,
Murphy,
and Sumner)
mostly in response to James Grant’s The
Forgotten Depression:1921: The Crash That Cured Itself. The argument of the
book is that the economy recovered more quickly because neither the federal
government nor the Federal Reserve attempted to pursue activist policies. I am
skeptical that 1921 is a useful case to generalize from.
It was a post war recession, much like the one after World
War II. Most business cycle movements have been associated with busts after
periods of credit expansion (see the recent work of Alan Taylor et al). In those
cases it was households and businesses that borrowed and spent during the boom.
Consequently, when the bust comes, businesses and consumers struggle to repay
their debts. Businesses fail and consumers default. Even consumers who do
not go bankrupt reduce their current spending to avoid default (see Martha
Olney). As businesses and households default the value of bank assets fall and
banks fail. The bank failures result in decreases in the money supply (Friedman
and Schwartz) and disintermediation (Bernanke). In other words, it creates a real mess when people take on excessive amounts of debt, especially when they use that debt to bid up the prices of assets like stocks or real estate.
In terms of increases in output and prices, war time booms
look similar to credit fueled booms, but the government is the one borrowing
and spending. The end of the boom does not necessarily lead to a financial
crisis or reductions in consumption and investment. Granted government borrowing can also create a mess, particulalry if people begin to doubt its willingness or ability to pay, but that hasn't really been an issue for the U.S.
I also have a problem with calling this a depression. I know
that there is no universally accepted definition of the term depression. And I
know that Grant is not the first to refer to this episode as a depression. But
we completely lose any distinction between a recession and a depression if this
was a depression. Neither the length nor the severity of the decline in real
GDP warrant the term depression.
Saturday, December 6, 2014
Business History Conference
The Business History Conference launched its new website yesterday. In addition to the usual stuff about meetings it has an extensive list of links for research in business history and syllabi and other resources for teaching business history and business history related courses.
Thursday, December 4, 2014
Claudia Goldin in Saudi Arabia
The New York Times reports on how the economic historian Claudia Goldin tries to help Saudi women enter the labor force while following the prime directive (see paragraph 5).
Tuesday, December 2, 2014
The Fall and Rise of Economic History
Jeremy Adelman and Jonathan Levy describe "The Fall and Rise of Economic History" in the Chronicle of Higher Education
I still hope that economic history will regain a prominent position in both economics and history and that economists and historians will be able to move forward together.
I found this essay particularly interesting because both Jeremy
Adelman and I studied economic history at the LSE in 1984-85. If I
remember correctly, we were the first cohort to do a new M.Sc. program focusing on
Third World economic history. He went on to get his PhD. In history (Oxford); I
went on to get a Ph. D. in economics (Washington University).
I remember a seminar where Jeremy presented the work he was
doing on Argentina. The first person to speak was one of the older professors
in the department, very much a traditional historian. He said, “That is political
history. This is a seminar in economic history.” He then leaned back, laced his
fingers over his stomach, and looked around the room, smiling as if he had just
said all that needed to be said. I know he did not speak for all the professors
present, but it was still a very discouraging moment. Like Jeremy, I was interested
in economic questions but didn’t believe it was possible to leave politics and
ideology out of the answer. I had also just started to read Douglass North’s
work on institutions and ideology and thought it might provide the way forward.
I decided to pursue a degree in economics. Since then, I think economists (for
example, North, Wallis, McCloskey, Mokyr) have continued to make progress in
reintegrating politics, the law, and culture into the study of economic history.
I have, on the other hand, been very disappointed in the “new
history of capitalism” that has arisen in history departments. I first thought
that this might be the moment for a much needed reunion of economists and
historians, but it quickly became clear that that was not what the new history
of capitalism was about. Instead of confronting the work of economists directly
it is generally ignored or dismissed. People throw around terms like homo
economicus, suggesting that economists all think that people care only about
maximizing their material wealth and that they do so with perfect information.
They seem to believe that the recent financial crisis has undermined the
credibility of economic theory because things did not work out well, while a
student in any decent principles of economics class could show you the
prisoners’ dilemma and explain to you that economic models do not all conclude
that everything will work out for the best. The quality of the historical research is
secondary to the author’s stance against capitalism (which is not defined) and
economics.
Saturday, November 29, 2014
Who is shocked by this?
The Economist reports that the performance of state owned enterprises has been shockingly bad.
If there is state capitialism, is there private enterprise socialism?
If there is state capitialism, is there private enterprise socialism?
Thursday, November 27, 2014
Jeffrey Beall Explains Why People Should Avoid "journals" published by the Clute Institute
http://scholarlyoa.com/2014/11/27/why-researchers-should-avoid-the-clute-institute/
"In conclusion, I recommend that honest scholars seek out a better publisher for disseminating their research than the Clute Institute. This publisher, with its dubious claim to be an institute, is little more than a scholarly vanity press — it’s essentially a money press — and publishing papers in this publisher’s journals may hurt authors in the long run. By this I mean that for any researcher who publishes a paper in a Clute Institute journal, that paper will be in the company of other papers with highly questionable citation and authorship practices and may be damaged by association."
"In conclusion, I recommend that honest scholars seek out a better publisher for disseminating their research than the Clute Institute. This publisher, with its dubious claim to be an institute, is little more than a scholarly vanity press — it’s essentially a money press — and publishing papers in this publisher’s journals may hurt authors in the long run. By this I mean that for any researcher who publishes a paper in a Clute Institute journal, that paper will be in the company of other papers with highly questionable citation and authorship practices and may be damaged by association."
Wednesday, November 26, 2014
What Was Funny?
Huffington reports on how the Board of Visitors of UVA deal with the problem of sexual asault on campus:
"Later, however, as the meeting neared its third hour, board member Edward D. Miller interrupted to note the Visitors were laughing too much for a session dedicated to such a serious issue. Miller commented through a conference call, as he was not able to be there in person. His comment was quietly applauded by public audience members."
"Later, however, as the meeting neared its third hour, board member Edward D. Miller interrupted to note the Visitors were laughing too much for a session dedicated to such a serious issue. Miller commented through a conference call, as he was not able to be there in person. His comment was quietly applauded by public audience members."
Wednesday, November 19, 2014
Tuesday, November 18, 2014
Kudos to Cabell's
Cabell's is taking a stand against fake journals:
"Unfortunately, academic publishing has been rife with fraudulent procedures over the past several years. Instances of deceptive practices and outright fraud have skyrocketed. Understandably, this has led to a significant erosion of trust in the scholarly publication process. In an effort to offer our users guidance and to support our mission of providing academics with accurate information and reputable outlets for publication, Cabell’s has launched a reevaluation initiative whereby selected journals appearing in our Directories will be examined according to new, more stringent criteria on a rotating basis throughout the year. Journals are selected for reevaluation based on inclusion in Jeffery Beall’s 2014 List of Predatory Publishers, exclusion from DOAJ and/or OASPA, and not meeting requirements of the Cabell’s Selection Policy. As these selected journals undergo this reevaluation process, they will be removed from our database. Essentially, these journals will be reapplying for inclusion. Journals will be evaluated according to the Cabell’s Selection Policy. Each journal’s editor or publisher will be asked to complete a new Application for Inclusion. Our Journal Admissions Department will verify that all journals reapplying for inclusion meet the required criteria. This comprehensive reevaluation process is expected to be completed by the end of 2015."
"Unfortunately, academic publishing has been rife with fraudulent procedures over the past several years. Instances of deceptive practices and outright fraud have skyrocketed. Understandably, this has led to a significant erosion of trust in the scholarly publication process. In an effort to offer our users guidance and to support our mission of providing academics with accurate information and reputable outlets for publication, Cabell’s has launched a reevaluation initiative whereby selected journals appearing in our Directories will be examined according to new, more stringent criteria on a rotating basis throughout the year. Journals are selected for reevaluation based on inclusion in Jeffery Beall’s 2014 List of Predatory Publishers, exclusion from DOAJ and/or OASPA, and not meeting requirements of the Cabell’s Selection Policy. As these selected journals undergo this reevaluation process, they will be removed from our database. Essentially, these journals will be reapplying for inclusion. Journals will be evaluated according to the Cabell’s Selection Policy. Each journal’s editor or publisher will be asked to complete a new Application for Inclusion. Our Journal Admissions Department will verify that all journals reapplying for inclusion meet the required criteria. This comprehensive reevaluation process is expected to be completed by the end of 2015."
Wednesday, November 12, 2014
More on the History of Capitalism
Tom Cutterham has a post at the Junto about both the recent Shenk essay in The Nation and the discussion in the recent issue of Journal of American History.
Tuesday, November 11, 2014
Sunday, November 9, 2014
Saturday, November 1, 2014
Friday, October 31, 2014
A Failure of Regulation: Reinterpreting the Panic of 1907
The Autumn 2014 issue of Business History Review is out now. It contains my paper on New York city trust companies during the panic of 1907.
This is the abstract for the paper
This is the abstract for the paper
Financial Regulation and the Panic of 1907
Lax regulation enabled trust companies to take
excessive risks, according to previous studies of the Panic of 1907, leading to
a loss of confidence and massive runs. These studies have, however, given
relatively little attention to the historical development of trust companies. This
article argues that a more historical perspective can lead to a better
understanding of the institutional framework and the actions of trust
companies. Depositors did not lose confidence because of inadequate regulation;
depositors lost confidence in specific trust companies because of false rumors,
and diversity among trust companies hindered cooperation to halt the Panic.
Thursday, October 30, 2014
The Back of Ed Baptist's Envelope
I have finally had a chance to read some more of Edward Baptist’s
The Half Has Never Been Told.
A central claim of the book is that slavery was not just an
important institution in American economic growth but that “the returns from
the cotton monopoly powered the modernization of the rest of the American economy.”
Baptist provides a back of the envelope accounting of the impact of slave
produced cotton.
Baptist The Half has Never Been Told (page 321-2)
“But here’s a back- of- the –envelope accounting of cotton’s
role in the US economy in the era of slavery expansion. In 1836, the total amount
of economic activity―the value of all the goods and services produced―in the
United States was about $1.5 billion. Of this, the value of the cotton crop
itself, total pounds multiplied by average price per pound―$77 million―was
about 5 percent of that entire gross domestic product. This percentage might
seem small, but after subsistence agriculture, cotton sales were the largest
single source of value in the American economy. Even this number, however,
barely begins to measure the goods and services directly generated by cotton
production. The freight of cotton to Liverpool by sea, insurance and interest
paid on commercial credit―all would bring the total to more than $100 million
(see Table 4.1).
Next
come the second- order effects that comprised the goods and services necessary
to produce cotton. There was the purchase of slaves―perhaps $40 million in 1836
alone, a year that made many memories of long marches forced on stolen people. Then
there was the purchase of land, the cost of credit for such purchases, the pork
and the corn bought at the river landings, the axes that the slaves used to
clear land and the cloth they wore, even the luxury goods and other spending by
the slaveholding families. All of that probably added up to about $100 million
more.
Third
order effects, the hardest to calculate, included the money spent by
millworkers and Illinois hog farmers, the wages paid to steamboat workers, and
the revenues yielded by investments made with the profits of the merchants,
manufacturers, and slave traders who derived some or all of their income either
directly or indirectly from the southwestern fields. These third order effects
would also include the dollars spent and spent again in communities where cotton
related trades made a significant impact another category of these effects is
the value of foreign goods imported on credit sustained the opposite flow of cotton. All these
goods and services might have added up to $200 million. Given the short term of
most commercial credit in 1836, each dollar “imported” for cotton would be
turned over about twice a year: $400 million. All told more than $600 million,
or almost half of the economic activity in the United States in 1836, derived
directly or indirectly from cotton produced by the million odd slaves― 6
percent of the total US population―who in that year toiled in labor camps on
slavery’s frontier.”
Where do I begin? The approach is fundamentally flawed.
Baptist begins with gross domestic product (GDP), the value of all the final goods
and services produced in the country during the year. He refers to this as a
measure of the total economic activity. He notes that the value of cotton
production equaled about 5 % percent of GDP. No problems so far. But he then adds
the cost of the inputs to the production of cotton. Anyone who has taken
Principles of Macroeconomics knows that you can’t do this; it is referred to as
double counting. If I buy $1000 worth of wood and then make it into a table
that I sell for $1,500, we do not add $1,000 and $1,500 because the value of
the wood is included in the value of the table, the final good. If he is going
to engage in double counting for cotton he would need to engage in double
counting for all other goods. He then adds the costs of transportation and
insurance; these only count toward US GDP to the extent that they are produced
by Americans. He also adds the sales of assets: land and slaves. Again, the
sales of assets are not counted in GDP. GDP only counts the value of final
goods and services produced during the year. Not all purchases are counted as part
of GDP. Only purchases of newly produced goods and services are counted in GDP.
Comparing his calculation of economic
activity related to cotton to GDP is meaningless.
There is, however, an even deeper problem with this back of
the envelope accounting:
perhaps $40
million
probably added up
to about $100 million
might have added
up to $200 million
Baptist is simply pulling numbers out of thin air, or a hat,
or wherever it is that he gets them. Back of the envelope calculations tend to
involve simplifying assumptions. Baptist seems to understand the term to mean
that he can just make things up. The only reference provided is to Table 4.1.
Table 4.1 does not provide, as one might assume, information about shipping and
insurance. It does not even have any information at all for the year 1836.
Both historians and authors of fiction tell stories, but the
stories that historians tell are distinguished from fiction by their grounding
in the sources. Historians are constrained to tell stories that they can
support with evidence from their sources. Baptist has thrown off this
constraint and set himself free to simply make up numbers (or events). This really is a new history of capitalism.
Monday, October 27, 2014
Economic History's Many Muses
Many of the papers from the the Library Company of Phildelphia Program on Early American Economy and Society's conference on Economic History's Many muses are available here.
Thursday, October 23, 2014
Wednesday, October 15, 2014
More Slavery and the History of Capitalism
The
September 2014 Journal of American History has an Interchange on the History of
Capitalism. In the Interchange Scott Marler states that
“The
problem arises when historians assert that the slave South was “a flexible,
highly developed form of capitalism” (as Robert Fogel does). The evidence for
such characterizations is thin and usually hinges on questionable
interpretations. For example, some will emphasize the careful attention given
to profit among that minority of big planter–slave owners, despite the facts
that the majority of slaves were held on small units, using roughly five or
fewer slaves, and that three-fourths of white households held no slaves on the
eve of the Civil War. This is why definitions of capitalism matter. The
relationship between master and slave was, at bottom, a nonmarket relationship,
redolent of precapitalist relations between lords and serfs—not an economic
one, as with the qualitative changes apparent in fast-growing wage-labor
societies elsewhere.”
I
am not going to get into the issue of whether slavery in the United States was
capitalist or not, but Marler bases his conclusion on “the facts that the majority
of slaves were held on small units, using roughly five or fewer slaves, and
that three-fourths of white households held no slaves on the eve of the Civil
War.” All of the sources I know of do indicate that the vast majority of
southern families did not own slaves. On the other hand, Gavin Wright estimated
that the majority of slaves (nearly 80 percent in the Cotton South in 1860)
lived on plantations with 16 or more slaves.
Marler cites Kolchin’s American Slavery
as a reliable source on the demographics of southern slavery. Kolchin (Appendix
Table 4) claims that about 70 percent of slaves lived on farms with 10 or more slaves
in the South as a whole; the figure was 80 percent for the Deep South. The majority
(about 75 percent) lived on plantations with less than 50 slaves. Overall, the
estimates in Wright and Kolchin are pretty consistent.
The availalbe evidence does suggest that the majority of slaveholders had five or fewer slaves, but that is
not the same as saying that the majority of slaves lived on farms with five or
fewer slaves. In other words, the typical southern farm owner would have looked
around his farm and seen few if any slaves. The typical slave, on the other
hand, would have looked around the farm he worked on and seen more than a dozen
other slaves.
Monday, October 13, 2014
Monday, October 6, 2014
et tu Foner?
There is a myth about historians and the Great Depression that some economists have tried to peddle over the years. The myth is that historians think Hoover was an opponent of government action and that the New Deal brought the country out of the Depression. They then act like they have made a great discovery if they show that Hoover tried to intervene in markets and that the economy continued to operate well under potential throughout the 1930s. The only problem is that this story is a complete misrepresentation of what most historians knew about the Great Depression. Listen to David Kennedy's Econ Talk with Russ Roberts for a discussion of what historians actually tended to think.
Some historians are now trying to peddle their own myth that before the "new history of capitalism" historians all believed that slavery was unprofitable and did not appreciate the economic importance of slavery, especially cotton production, to the development of the American economy.
In his New York Times review of Edward Baptist's book Eric Foner seems to join this crowd. He writes that
"For residents of the world’s pre-eminent capitalist nation, American historians have produced remarkably few studies of capitalism in the United States. This situation was exacerbated in the 1970s, when economic history began to migrate from history to economics departments, where it too often became an exercise in scouring the past for numerical data to plug into computerized models of the economy."
He goes on to state that
"For decades, historians depicted the institution as unprofitable and on its way to extinction before the Civil War (a conflict that was therefore unnecessary). Recently, historians like Sven Beckert, Robin Blackburn and Walter Johnson have emphasized that cotton, the raw material of the early Industrial Revolution, was by far the most important commodity in 19th-century international trade and that capital accumulated through slave labor flowed into the coffers of Northern and British bankers, merchants and manufacturers. And far from being economically backward, slave owners pioneered advances in modern accounting and finance."
As with the Great Depression story, the problem is that this story is not true. It is true that "for decades, historians depicted the institution as unprofitable and on its way to extinction," but these were decades after 1918 when Ullrich B. Philllips published his American Negro Slavery. By the 1960s, however, evidence was beginning to pile up that slave owners received high rates of return on their investment, managed their plantations with an eye on profits, achieved high levels of productivity, and were increasing productivity over time. The economic historians who produced this evidence did not keep their work secret. Someone taking an intro to American history class was likely to know about it. In George Brown Tindall's America: A Narative History we find that "More often than not the successful planter was a driving newcomer bent on maximizing profits." and "in recent years economic historians have reached the conclusion that slaves on the average supplied about a 10 percent return." (Tindall 1988:571)This is was written nearly three decades ago. Suggesting to people that before the new history of capitalism everybody thought that slavery was unprofitable is either dishonest or incompetent.
Foner's snarky comment about economists turning economic history into an exercise in scouring the past for numerical data is particulalry ironic since Baptist's argument is based on the work of economic historians who scoured the past for numerical data. His book is based on an increase in productivity in cotton production. It turns out this can only be demonstrated with numerical data that Alan Olmstead and Paul Rhode scoured the past to obtain.
What happened to historians like Herbert Gutman and Kenneth Stampp who were willing to challenge economists head on when they disagreed with their work on slavery.
Some historians are now trying to peddle their own myth that before the "new history of capitalism" historians all believed that slavery was unprofitable and did not appreciate the economic importance of slavery, especially cotton production, to the development of the American economy.
In his New York Times review of Edward Baptist's book Eric Foner seems to join this crowd. He writes that
"For residents of the world’s pre-eminent capitalist nation, American historians have produced remarkably few studies of capitalism in the United States. This situation was exacerbated in the 1970s, when economic history began to migrate from history to economics departments, where it too often became an exercise in scouring the past for numerical data to plug into computerized models of the economy."
He goes on to state that
"For decades, historians depicted the institution as unprofitable and on its way to extinction before the Civil War (a conflict that was therefore unnecessary). Recently, historians like Sven Beckert, Robin Blackburn and Walter Johnson have emphasized that cotton, the raw material of the early Industrial Revolution, was by far the most important commodity in 19th-century international trade and that capital accumulated through slave labor flowed into the coffers of Northern and British bankers, merchants and manufacturers. And far from being economically backward, slave owners pioneered advances in modern accounting and finance."
As with the Great Depression story, the problem is that this story is not true. It is true that "for decades, historians depicted the institution as unprofitable and on its way to extinction," but these were decades after 1918 when Ullrich B. Philllips published his American Negro Slavery. By the 1960s, however, evidence was beginning to pile up that slave owners received high rates of return on their investment, managed their plantations with an eye on profits, achieved high levels of productivity, and were increasing productivity over time. The economic historians who produced this evidence did not keep their work secret. Someone taking an intro to American history class was likely to know about it. In George Brown Tindall's America: A Narative History we find that "More often than not the successful planter was a driving newcomer bent on maximizing profits." and "in recent years economic historians have reached the conclusion that slaves on the average supplied about a 10 percent return." (Tindall 1988:571)This is was written nearly three decades ago. Suggesting to people that before the new history of capitalism everybody thought that slavery was unprofitable is either dishonest or incompetent.
Foner's snarky comment about economists turning economic history into an exercise in scouring the past for numerical data is particulalry ironic since Baptist's argument is based on the work of economic historians who scoured the past for numerical data. His book is based on an increase in productivity in cotton production. It turns out this can only be demonstrated with numerical data that Alan Olmstead and Paul Rhode scoured the past to obtain.
What happened to historians like Herbert Gutman and Kenneth Stampp who were willing to challenge economists head on when they disagreed with their work on slavery.
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