Summer Camps for Economic and Business History Students

CAGE/EHES SUMMER SCHOOL, 2017
GEOGRAPHY, INSTITUTIONS AND ECONOMIC GROWTH IN HISTORY

University of Warwick, 11-15 July 2017
Organisers: Stephen Broadberry and Alexander Klein 

The Centre for Competitive Advantage in the Global Economy (CAGE) at the University of Warwick and the European Historical Economics Society (EHES) are joining together to provide a Summer School, to be held at the University of Warwick, 11-15 July 2017. The theme of the Summer School will be geography, institutions and economic growth in history. The aim is to evaluate geography and institutions as competing explanations of growth performance over the long run. The focus in the geography section of the Summer School will be on the new economic geography, exploring the sources of agglomeration economies and the long run effects of market potential on economic outcomes in the world economy. The institutions part will focus on both the theoretical framework of new institutional economics and the role of state capacity and constraints on the exercise of arbitrary power in particular economies covering Asia as well as Europe. The Summer School is intended mainly for PhD students and early postdoctoral researchers in economic history. The morning sessions will consist of keynote lectures by Nick Crafts (Warwick) and Sheilagh Ogilvie (Cambridge), with additional lectures by distinguished speakers including Kerstin Enflo (Lund), James Foreman-Peck (Cardiff), Walker Hanlon (UCLA), Joan Roses (LSE), and Nikolaus Wolf (Berlin). The afternoon sessions will consist of presentations by students and postdocs, with feedback from the lecturers and other participants. Presentations can be on any aspect of economic history. 

Accommodation and meals will be provided free of charge and economy only travel expenses up to £250 will also be covered. Applications to attend the Summer School should be sent to Jane Snape at:Jane.Snape@warwick.ac.uk by 23 April 2017.

Please include the following:

(1) A short CV (maximum one-page) indicating your contact details and university level        education
(2) Contact details for your supervisor, who will be asked to provide a supporting statement
(3) A short abstract (maximum 500 words) of the research that you would like to present

Notification of acceptance will be sent out by 11 May 2017.

Call for Papers: University of Tübingen PhD Summer School Business beyond Businesses: Agency, Political Economy & Investors, c.1850-1970

20-22 September 2017, Tübingen, Germany.

The University of Tübingen as part of its Institutional Strategy (ZUK 63) has made available funding for an intensive three-day event aimed at PhD students in business or economic history or affiliated fields working on any topic which overlaps with the theme of the school (for more details, see below). Students will be hosted in the historic town of Tübingen, and will present, debate and discuss their work-in-progress with leading international scholars within a world-class university. The school aims to provide doctoral students with an overview of relevant research and innovative tools and methodologies in the field in order to sharpen their own research skills. It is organised jointly by the Seminar für Neuere Geschichte (Tübingen) and the Centre for Business History in Scotland (University of Glasgow).

The school will take the form of presentations from students (c.25 minutes) and workshops hosted by established experts in the field. The aims of the school are: 1) To deepen students’ understanding of current themes in historical research (and how this can inform their own work). 2) To enhance research skills through masterclasses on methods for researching and writing history. 3) To explore the main theoretical underpinnings particular to business and economic history. 4) To provide a welcoming and convivial environment in which to discuss their research with leading scholars and peers.

Students will benefit from the experience of academics from Tübingen and beyond. Our keynote speaker will be Professor Phil Scranton, of Rutgers University (USA), a world-renowned scholar who has produced numerous books and articles on many different aspects of modern business and technology. Other confirmed participants include Professor Patrick Fridenson (EHESS, France), Professor Ewald Frie (Tübingen), Dr Daniel Menning (Tübingen), and Dr Christopher Miller (Glasgow).

Funding will cover flights and/or trains (up to an agreed limit), accommodation, lunches, and the conference meal for up to ten students. A further ten will be eligible to receive part-funding. There may also be limited space left-over for those wishing to fully self-fund (or have received funding from their own institution). Those interested in attending the summer school should send the documents listed below by e-mail to the organisers Dr Daniel Menning (Daniel.Menning@uni-tuebingen.de) and Dr Christopher Miller (Christopher.Miller@glasgow.ac.uk). The deadline for applications is 8 May 2017. A maximum of 20 funded applicants will be selected and notified shortly afterwards. 1) a brief CV (max two pages) 2) a summary of their PhD (max two pages); 3) a title/abstract for their desired presentation topic (max one page). This should incorporate one or more major themes of the student’s PhD. 4) (desirable) an example of work in progress, e.g. a draft chapter, article, working paper (preferably in English, German or French – though all presentations and discussions will be in English).

Further Notes for Applicants:

Overview of scope and aims of school:

(This overview is a guide only. Students working on similar topics to those listed below are encouraged to speak to Daniel Menning and/or Christopher Miller in the first instance)

Business history and economic history have been distinct disciplines, separate from both economics and organizational studies, for over three-quarters of a century. They have developed a rich and varied historiography that has helped to answer and contextualize some of the largest questions of the last two centuries. These include explaining rapid technological changes of the industrial and information ages, the globalization of financial and production markets, and, not least, the rise of Capitalism itself. However, recent trends have in some cases deepened the divide with ‘traditional’ history and historiography. For instance, business history has often found its natural home in business schools rather than history departments, while economic history is increasingly undertaken in a highly quantitative manner in economics, rather than history, faculties. However, while much work remains to be done to redress the balance, new approaches from historians are starting to re-bridge the divide. We believe historians engaged in archival research have much to offer business and economic topics, and it is work in this area that this summer school intends to foster.

More particularly, the school will examine one of the major ‘problems’ prevalent in the existing literature. Simply put, the firm – that is the company or organization itself – has been the unit of assessment most prevalent in business and economic historiography, matched only by overviews of national economies or government policies. Many historians, economists and business scholars have made their careers explaining the rise (and fall) of major corporations, or the successes and failures of a nation’s economy or core industries. However, while these studies have been immensely valuable, such narratives of success and/or failure have missed, or not yet fully developed, important nuances as a result.

We have identified two major issues such nation or firm-specific studies fail to capture, and have broken them down as follows:

1. Business people regularly move between firms, but they also move into, influence, or create, organizations outside the world of private profit-seeking business. These can be linked to politics, government, the military, education, health care and the environment, philanthropy, promotion of trade, and/or other pursuits. Their work can transcend state, national, and continental boundaries, and can influence entire economic systems. For example, businessmen have advised military production ministries in Britain during (and between) both World Wars; business leaders collaborated with municipal authorities on measures to reduce smoke pollution in 19th century Chicago; and in more recent times have changed the face of private higher education with multi-million dollar donations to their Alma Mater, and indirectly have aided the rise of the modern ‘Business School’ itself. Thus, businessmen seek to influence – though not always for private profit – the world that their businesses operate in, and this has not often been captured in existing studies of firms or economies.

2. Similarly, businesses are not only influenced by the acumen of their managers, by the general state of the economy or by governmental regulation. With the creation of joint-stock companies, external private investors entered the field of business, for various reasons and with myriad motives. Some desired to achieve a permanent stream of income. These investors’ sentiments became a force that was hard to ignore, as witnessed during stock market bubbles in England, France and the Netherlands as early as the 18th century. Technological (and legal) changes after 1860 accelerated these processes. Some new investors entered the market simply for the thrill and/or for the financial gains possible by means of speculation, perhaps with little or no interest in the businesses at all. Nevertheless, this group, often already wealthy and influential, helped create more volatile markets, and caused unease among politicians and business people in the process. Moreover, when such individuals were left as losers following the bursting of the bubbles they helped create, their complaints were loud and public. In short, the role of speculation and the attempts to define or limit what kind of investors should be allowed to enter this world (and, thus,

the world of business) are also important in understanding the environment beyond the boundary of the firm or nation that businesses operated in.

Furthermore, while these problems are not completely unique to the modern world, they acquired greater significance from the second-half of the 19th century. The second-wave of industrialization after 1850 (primarily in Britain, Germany, Japan and America) gave birth to larger corporations and professional management structures, which gradually diminished the role of wholly family-owned and/or operated firms. In their place, joint stock firms further proliferated with some (such as General Motors) growing and transitioning to multi-divisional and multi-national conglomerates by the 1930s. In turn, this allowed for the rise in the wealth and influence of professional business magnates such as Charles Schwab (Bethlehem Steel), Alfred Sloan (GM), and others. Simultaneously, technological advances in communication and technology – from the telegraph to the ticker tape – allowed real-time transactions and completely transformed stock market speculation, increasing the number of willing participants and tradable shares dramatically. As such, the cases of business going beyond the firm or the national boundary multiplied dramatically from this point, and offer up myriad exciting avenues for historical research.

Similarly, though in recent times we understand well the nature of a ‘globalized’ world in which firms and agents transcend company or national boundaries, the term itself has its roots in the 1970s. The vast increase in computing power and the equally dramatic decrease in the cost of aviation in the last forty or so years means we could reasonably understand this later period as an era unto itself, in much the way the transformation of firms and speculation was a century earlier. For these reasons, the summer school plans to concentrate on this particularly volatile century or so of change, and would invite papers from PhD students working on business and economic topics broadly defined from roughly 1850 to 1970.

To aid interested students, some of the specific questions to be addressed in global, national, regional, and comparative contexts might include the following:

• What constitutes entrepreneurship, innovation or efficiency outside the context of the private profit-seeking firm?

• How did business people moving into other organizations change their ways of doing things, and vice versa? How did they attain (and retain) influence, and have these movements changed over time?

• How have business people and their behavior and attitudes affected the structures and practices of other organizations or politics?

• How have the interrelationships between business and other organizations affected the structures, strategies, and practices of the firm?

• How do business leaders use nonprofit-making activities outside the firm to advance their own entrepreneurial activity through measures to create good will? What impact have charitable donations from business had on technologic or scientific development?

• Are some national or regional governance structures, business networks, more conducive than others to fostering movement and mutual learning between business and organizations than others, and, if so, why?

• How did politicians and businessmen deal with the influence of investors on businesses?

• What were the attitudes in business, government and society towards speculation for pure gain and how did these change over time?

• How were investors with limited or no knowledge in the world of business supposed to survive or, better even, win money in the world of the stock exchange?

• How did technology affect the ability of people to get involved in the world of business?

In sum, this school will on one level explore the interrelationships between business practice/entrepreneurs and the actors, organizations, and institutions of the broader social and political environment. On another, it will study the influence of ‘outsiders’ upon the wider economy and society, both by means of speculation on the business world and by the reactions of governments and business community to their actions. These are very large and important questions which are only

slowly beginning to be tackled by historians, and our hope is that the summer school will help to map out and better understand spheres of business beyond the national economies or particular firms, to the benefit not only of history students, but to show why and how history can benefit the kinds of studies that have hitherto taken place mainly in economics faculties or business schools.

Historical Perspective on Financial Crises

For many years it was regarded as appropriate to lay the blame for the Panic of 1837 on Andrew Jackson. In 1832 Jackson vetoed the recharter of the second Bank of the United States and began to place the government’s deposits in other banks. With the conservative influence of the Bank of the United States gone, his critics claimed, other banks over issued their notes, fueling a speculative boom. Peter Temin showed that this explanation of the Panic of 1837 paid insufficient attention to the international sector. If banks were over issuing their notes, he argued, then the ratio of notes to reserves should have been decreasing, but it was increasing. The number of bank notes in circulation was increasing, but bank reserves were increasing even more rapidly. Reserves were increasing not because of Jackson’s policies but because of international forces. Because the country was on a bimetallic standard, the supply of money was ultimately dependent on the amount of specie in the country. Temin argued that both the inflation of the early 1830s and the crisis were caused by specie flows that were driven by external events. While acknowledging the negative influence of external forces, Peter Rousseau has recently shifted attention back to internal forces. International forces set the conditions for the Panic, but the economy was pushed over the edge by distribution of the federal surplus and the Jackson administration’s requirement that land purchases be made in specie, both of which drained specie from New York City banks.
The Panic of 1837 has received far more attention than the Panic of 1839, but for many the real trouble did not begin until 1839. The Panic of 1839 initially appeared to be a sequel to the Panic of 1837. However, unlike the Panic of 1837, there was no quick recovery. John Wallis has attributed the difference between the two panics to the run up in state debt that occurred between them. The boom of the 1830s involved mutually reinforcing expansions of land sales and internal improvements. The prospect of low cost transportation fueled demand for western lands; land sales in turn raised the revenue of western states and promised even further increases in revenue in the future. People were willing to buy land because states were going to build railroads and canals, the states were willing to borrow for internal improvements because people were going to come and buy the land. The credit crunch brought and end to both. Land sales and prices fell, the market for state bonds collapsed.
Possibly the most useful lesson to be gained from this history is humility. More than a century and a half after the panics of 1837 and 1839 we are still trying figure out what happened. It might be useful to keep this in mind when reading (or writing) diagnoses of the current financial problems.

What Is Capitalism?

S-USIH.org has the fourth of James Livingston’s essays on What is Called History at the End of Modernity. among other tings, Livingston is interested in recent assertions that slavery was capitalist. Like many of the people who have commented on the essay, I was reminded of the debate between Brenner and Wallerstein in the 1970s, but I also thought of this from Beckert’s Empire of Cotton

 

“In 1980 the Soviet Union produced nearly 6 billion pounds of cotton, making it the world’s largest producer after China. These stratospheric gains—production increased by about 70 percent between 1950 and 1966 alone—were only possible because of massive state investments in irrigation, fertilizers and machinery.

                Such recourse to the state in postcolonial and postcapitalist societies was not a return to the war capitalism of the eighteenth and early nineteenth centuries, but a sharpening of the tools and enhancing of the methods of industrial capitalism.” (Empire of Cotton pages 435-36)

Maybe I am reading this the wrong way, but it seems to say that the rapid growth of cotton production in the USSR and China was “a sharpening of the tools and enhancing of the methods of industrial capitalism.” It is not just slavery that is capitalist, communism is capitalist. If communism is capitalism, is capitalism a useful category for the analysis of economies?

Clearly, there is a place for the study of capitalism.  If nothing else, we need to try to understand how people have used the term in different places and times. What is not clear is how useful it is as a tool to analyze economic history.

In economics it seems to me that capitalism has largely gone out of fashion as a useful category for analysis. Economists used to write about capitalism on a regular basis (for example, Schumpeter’s Capitalism, Socialism and Democracy; Friedman’s Capitalism and Freedom; and Williamson’s Economic Institutions of Capitalism).  Many departments of economics offered courses in Comparative Economic Systems that examined the differences between capitalism, communism and socialism. Comparative economic systems courses went out of fashion with the decline of communism. More generally, it wasn’t clear that traditional notions of what capitalism were useful for understanding big questions like growth and distribution.  New institutional economists generally seem to regard the old categories used in comparative economic systems as inadequate.

 

Quick Take on Bankers and Empire

I just finished reading Peter James Hudson’s Bankers and Empire: How Wall Street Colonized the Caribbean  

Here is John Clegg interviewing Hudson for the Brooklyn Rail.

Here is a New Dawn podcast of Hudson talking to Michael Dawson about the book.

Hudson describes the activities of America’s most important financial firms in the Caribbean during the late nineteenth and early twentieth centuries. I have been looking forward to reading the book because he studies many of the same firms that I have studied in my work on trust companies. (Institutions, Entrepreneurs and American Economic History: How the Farmers Loan and Trust company Shaped the Laws  of Business: 1822-1929; “A Failure of Regulation?: Reinterpreting the Panic of 1907,” Business History Review October 2014; and “Trust Company Failures and Institutional Change in New York, 1875-1925,” Enterprise and Society forthcoming). He is also looking at roughly the same period that I do, but he asks very different questions.

Hudson wants to understand how the actions of these firms in the Caribbean were shaped by the combination of racism and the profit motive.  He writes about racial capitalism, but do not confuse this book book with Baptist and Beckert style New History of Capitalism. They make grand claims and portray their work as the result of intense archival research, but their overblown claims are constructed from a secondary literature that is either misrepresented or concealed, and the archival references are ornamental. Hudson, in contrast, tells a story that is built from the ground up using primary sources. It is a messy story, because that is the story that emerges from the wide array of primary sources that he uses. I thought this quote from the interview with Clegg provided a nice description of my impression of the book:

I think it has helped me to understand that the project of “U.S. imperialism” was contingent, marked by an incomplete hegemony, often notable for its confusion, experimentation, and failure, defined through competing interests, and rarely triumphalist. This is not to say that it didn’t exist—or that its effects in the Caribbean, and elsewhere, were not palpable, bloody, or real. But there was always pushback and, while the U.S. state often served as the intermediary for U.S. capital in the Caribbean, oftentimes government officials tried to be a brake on the activities of banks if they felt they were not in the strategic and economic interests of the state. Before I began this project I don’t think I was aware of the role of law and regulation in mediating the relation between banking and imperialism. More often than not, banking expansion was an attempt to evade, erode, or re-write the federal regulations governing banking activity. 

The bankers in the book both compete and cooperate. They see the potential for profit, but ignorance and prejudice often leave them stumbling around trying to get hold of it. There are profits, but there are also failures. They try to use both U.S. and foreign governments to their advantage, but not always successfully. They see themselves as constrained by the law, while also trying to change the law and take advantage of operating under multiple legal regimes. The book reminded me of the end of E.P. Thompson’s Whigs and Hunters, where he describes sitting in his office, surrounded by piles of papers, trying to figure out what it all meant, because the story he had found did not fit into existing narratives about the role of law.

I’ll admit that the economist in me sometimes wanted a little more about the quantitative significance of the firms’ actions. In addition, although the references to the secondary literature, including business history, are extensive, Hudson does not address more social science oriented history. There has been a lot of recent work on institutions and financial development in history, including Latin America and the Caribbean (especially work by Haber and his students), and I’ll have to give more thought to how Hudson’s story relates to this work.

Those issues aside, however, the book tells an interesting story, and I love Hudson’s commitment to building a stories from the primary sources. Moreover, as someone who has written about the same characters, the stories rang true to me. I have tried to tell very different stories about these firms, but his descriptions of them and the people who ran them sounded like the firms and the people that I found in the sources. 

Bankrupt in America

Bankrupt in America: A History of Debtors, Their Creditors and the Law in the Twentieth Century will be published by The University of Chicago Press in January 2020.

In the meantime, here are the review quotes:

Lee J. Alston, Indiana University

“Bankrupt in America is a tour de force analysis of bankruptcy legislation and its impact over the twentieth century. It shows the interplay among state and federal legislation, economic conditions, social stigma, and the role of certain individuals in accounting for changes over time and across states. The authors offer an institutional and cliometric account that deftly draws on economics, history, law and political science. It will become the resource for many scholars, and I hope legislators.”

Hugh Rockoff, Rutgers University

“Mary and Bradley Hansen have presented us with a superb economic history of personal bankruptcy laws in the United States in the twentieth century. They have collected large quantitative databases and subjected them to careful statistical analysis—cliometricians will applaud—but they have also analyzed the interest-group politics that shaped the bankruptcy laws, and provided us with numerous stories of individuals coping with debt and bankruptcy which make the economic analysis come alive. Bankrupt in America will become a classic—the book that generations of economic historians will cite as the authoritative source. But the book is also timely, as we have come to realize that the social safety net, of which the bankruptcy laws form an important part, has become increasingly frayed.”

David Skeel, University of Pennsylvania

“Bankrupt in America is a wonderful combination of history, institutional analysis, and empirical economics, all in the same book. The book is full of important new insights into twentieth and early twenty-first century American consumer bankruptcy, including the authors’ remarkable discovery that the principal determinants of consumer bankruptcy have often been the supply of consumer credit and the stringency of state garnishment laws, rather than changes in bankruptcy law itself. Bankrupt in America is destined to become an empirically rigorous companion to classics of American consumer finance such as Lendol Calder’s Financing the American Dream.”

ASSA in Philadelphia

 

 

I got back from the ASSA meetings in Philadelphia last night. I had some excellent food. We'll have to go back to Alma de Cuba when its warmer and try their ceviche sampler. We took Mary's students Leanne Roncolato and Megan Fasules out to Serpico, which had a really nice tasting menu. And Pumpkin cemented its position as my favorite place to eat in Phildelphia. Also went to Saint John the Evangelist Friday night.

 

I also attended some great sessions. The economic history sesions (organized by the Cliometric Society and the Economic History Association) were all excellent and very well attended. The one in which my wife, Mary Eschelbach Hansen and her student, Megan Fasules, presented was packed and both Paul Solman and Matt Yglesias were there. Yglesias even tweeted one of the slides from Mary and Megan's presentation.

 

Cliometric Society Sessions

Spatial Allocation of Conflict, Individuals, and Economic Activity

January 3, 2014, 12:30 – 2:15 pm, Philadelphia Marriott, Meeting Room 406

Organizer: John Murray (Rhodes College)

Chair: Mary Hansen (American University)

Discussants: John Brown (Clark University), Allison Shertzer (University of Pittsburgh), Hugh Rockoff (Rutgers), Chris Vickers (Northwestern)

“Railroads and the Regional Concentration of Industry in Germany 1846 to 1882,” Theresa Gutberlet (Rensselaer Polytechnic Institute)

“Segregation (Forever?): Measuring the Short- and Long-Term Consequences of Segregation,” John Parman (College of William and Mary) and Trevon Logan (Ohio State University and NBER)

“Military Conflict and the Economic Rise of Urban Europe,” Mark Dincecco (University of Michigan) and Massimiliano Onorato (IMT Institute for Advanced Studies)

“Murder and the Black Market: Prohibition’s Impact on Homicide Rates in American Cities,” Brendan Livingston (???)

Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective

January 3, 2014, 2:30 – 4:30 pm, Philadelphia Marriott, Meeting Room 406

Organizer: John Murray (Rhodes College)

Chair: William Collins (Vanderbilt and NBER)

Discussants: Carola Frydman (Boston University and NBER), William Collins (Vanderbilt and NBER), Matt Jaremski (Colgate University and NBER)

“Corporate Governance and the Establishment of Manufacturing Enterprises in New England,” Eric Hilt, (Wellesley College and NBER)

“Economies of Scale in Nineteenth Century American Manufacturing Revisited: A Resolution of the Entrepreneurial Labor Input Problem,” Robert A. Margo (Boston University and NBER)

“How Does Governance Matter? An Examination of the Long-Term Evolution of Bank Boards in the United States, 1800-1933,” Howard Bodenhorn (Clemson University and NBER) and Eugene White (Rutgers University and NBER)

Technology and Property Rights

January 4, 2014, 2:30 – 4:30 pm, Philadelphia Marriott, Meeting Room 406

Organizer: John Murray (Rhodes College)

Chair: David Mitch (University of Maryland-Baltimore County)

Discussants: Lisa Cook (Michigan State), Carol Shiue (University of Colorado), Ahmed Rahman (U.S. Naval Academy), Susan Wolcott (Binghamton University)

“Copyright and the Diffusion of Classical Music,” Petra Moser (Stanford University) and Jerry Lao (Stanford University)

“The Great Divergence and the Economics of Printing,” Luis Angeles (University of Glasgow)

“Turning Points in Leadership: Shipping Technology in the Portuguese and Dutch Merchant Empires,” Claudia Rei (Vanderbilt University)

“Industrial development and technology adoption in late nineteenth century Japan,” John Tang (Australia National University)

Economic History Association Sessions

Poverty from a Historical Viewpoint

January 4, 2014, 12:30 – 2:15 pm, Philadelphia Marriott, Meeting Room 307

Organizer: Martha Bailey (University of Michigan)

Chair: Robert Margo (Boston University)

Discussants: Tom Vogl (Princeton), Robert Margo (Boston University), Melissa Thomasson (Miami University – Ohio), Rob Gillezeau (New Democratic Party, Ontario Canada)

“Up from Poverty? The 1832 Cherokee Land Lottery and the Long-run Distribution of Wealth,” Joseph Ferrie (Northwestern University) and Hoyt Bleakley (University of Chicago)

“The Effects of Childhood Means-tested Cash Transfers on Mortality: Evidence from the Mother’s Pension Programs,” Shari Eli (University of Toronto), Anna Aizer (Brown University), Adriana Lleras-Muney (UCLA), and Joseph Ferrie (Northwestern University)

“Interactions between Social Insurance Programs: The Impact of Medicare on the Characteristics of Petitioners for Bankruptcy,” Megan Lynn Fasules (American University) and Mary Eschelbach Hansen (American University)

“Poverty and Progress among Canadian Immigrants, 1911-1931,” Chris Minns (London School of Economics), Kris Inwood (University of Guelph) and Fraser Summerfield (University of Guelph)

Reception hosted by the Cliometric Society

Saturday, January 4th, 6:00-8:00 pm

Philadelphia Marriott Downtown - Meeting Room 403

Banking

January 5, 2014, 10:15 am – 12:15 pm, Philadelphia Marriott, Meeting Room 307

Organizer: Martha Bailey (University of Michigan)

Chair: Hugh Rockoff (Rutgers)

Discussants: Dominick Bartelme (UC Berkeley), Joshua Hausman (University of Michigan), Jonathan Rose (Federal Reserve Board)

“American Banking and the Transportation Revolution Before the Civil War,” Matthew Jaremski (Colgate University), Jeremy Atack (Vanderbilt University), and Peter Rousseau (Vanderbilt University)

“Central Bank Credibility and Reputation: An Historical Exploration,” Pierre Siklos (Wilfrid Laurier University) and Michael Bordo (Rutgers University)

“Financial Liberalization and Bank Failures: The United States Free Banking Experience," Philipp Ager (University of Southern Denmark) and Fabrizio Spargoli (Erasmus University)

Economics still needs better critics

I just got back from the meeting of the Economic and Business History Society in Montreal, and I was going to blog about that, but then someone tweeted about this stupid essay at Evonomics. Eric Beinhocker writes about the problems with traditional economics and the benefits of the new economics. The primary problem with his essay is that his description of traditional economics is what would generally be referred to as bullshit.  He conveniently provides a table from his book, The Origin of Wealth, which I was fortunate enough to have never heard of before.

Pick any element you want. For instance the first one declares that traditional economics assumes that everyone has perfect information. Really? Even principles textbooks cover imperfect information and uncertainty. For Dynamics, he states that traditional economics assumes that the “The Economy automatically goes to equilibrium where social welfare is maximized.” Find me a principles textbook that doesn’t cover externalities, public goods, and monopoly. I like his description of the New Economics even better. “Economy is a highly dynamic system that can go far from equilibrium and become trapped in a suboptimal state.” It can become trapped in a state that is far from equilibrium? Does this guy not know what equilibrium means? Stability is the essential characteristic of equilibrium. In the absence of some sort of shock the situation won’t change. Later he refers to market failures, but he does so at the same time that he declares traditional economics assumes a natural tendency toward efficiency. Market failure is a situation in which the market equilibrium is inefficient. Moreover, equilibrium is a property of models, not reality. Reality is never stable. Equilibrium is nevertheless useful for helping us to consider the direction of change and possible unintended consequences.  In the case of innovation, what he ascribes to new economics is a feature of traditional economics and what he ascribes to traditional economics is not. Traditional economists have long studied the factors that are likely to encourage or impede innovation.

He describes one of the implications of new economic thinking for policy as follows:

Regulators take an action to address a perceived problem, that changes the perceptions and actions of market participants, which in turn creates a new set of problems triggering further regulator actions, and so on. Over time this infinite chase between fallible regulators and equally fallible market participants leaves a trail of rules, structures, and institutions that has a major effect on shaping the evolution of the economy.

Ironically, this is pretty much a description of my paper "LearningTo Tax: The Political Economy of the Opium Trade in Iran, 1921-1941," Journal of Economic History 61(March 2001):95-113. It is ironic because I regard myself as a pretty traditional economist. I see this paper, and most of my work on history and institutions, as building on traditional economics not refuting it.

I have taught pretty traditional principles of microeconomics for more than a quarter century, and I still believe that those simple models provide a great deal of value to students. 

I'll try to write about EBHS and Montreal later today.

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?

Stelzner and Beckert on the Contribution of Enslaved Workers to Output and Growth

 

There is a new working paper by Mark Stelzner and Sven Beckert The Contribution of Enslaved Workers to Output and Growth in the Antebellum United States that attempts to estimate the significance of enslaved labor to the American economy. The essence of the approach is to use slave prices to estimate slave production. The price of a slave should reflect the value of output that the enslaved person is expected to produce. They then use estimates of production in 1839 and 1859 to estimate the contribution to growth.

My initial reaction is that recognition that cotton was not the only good produced by enslaved people is long overdue, and their approach generally makes sense, though I need more time to consider the specifics. And I find the results plausible. 

That said, their estimate of the percentage of commodity output attributable to enslaved people seems somewhat low. They state that “For the United States as a whole, slaves created between 14.8 and 16.5 percent of total commodity output in 1839 and between 13.0 and 14.8 percent in 1859.” Enslaved people only accounted for 12% of the population, so why would I regard this estimate as low? While enslaved people accounted for about 12% of the population in 1859, they accounted for 21.7% of the labor force. Given that enslaved people were engaged primarily in commodity production, I would have expected their share of commodity output to be close to their share of the labor force. The difference may arise from the fact that much of the over-representation of enslaved people in the labor force comes from women and children being forced to work at higher rates than free people. Their estimates are actually very close to the share of the male labor force accounted for by enslaved men: enslaved men accounted for about 13.6% of the male labor force (labor force share are from Historical Statistics Millennial Edition Tables B11-10 and Ba 40-49). To the extent that the women and children were less involved in commodity production and their prices were lower than for adult males the estimation procedure would lead to estimates of output share that are less than the labor force share. The bottom line, however, is that their estimates of the commodity output share attributable to enslaved people is similar to estimates of the percentage of the labor force accounted for by enslaved people.

Although I find the results reasonable, I was surprised by the authors claims about their implications. They seem to suggest that it provides support for the earlier claims of Baptist and Beckert and refutes their critics. In conclusion, they state that “These estimates do not consider economic activity, like in insurance, banking, transportation and industrial sectors that were stimulated by the slave economy, and thus represent a lower bound estimate for the overall importance of slavery. However, they do show, as argued by Du Bois (1935), Callender (1902), Schmidt (1939), North (1961), Darity (1990), Johnson (2013), Beckert (2014), Baptist (2016), Beckert and Rockman (2016), and Stelzner (2020), that slavery was important historically for US economic development.” In other words, they frame their argument against a straw man who claims that slavery was unimportant instead of framing it against actual people who criticized claims by Baptist, Beckert and others that slave produced cotton was not just important but was the driving force behind economic growth, accounting for nearly half of all output. Ironically, they even criticize scholars who challenged claims about slave produced cotton as the driving force of economic growth for focusing too much attention on cotton. Although, I agree that the history of slavery in American economic development needs to move beyond cotton, if you are going to make misleading claims about the cotton economy you should expect people to challenge them with evidence about the cotton economy.

The claims about slave produced cotton being the driving force behind growth rely on the theory that there were large spillovers from cotton onto the rest of the economy. Many recent historians of slavery and the economy cited Douglass North’s theory that interregional trade linkages made cotton exports the driving force behind growth (this is also the argument of Callender and Schmidt). But research in the 1960s and 1970s had already shown that the available evidence did not support the argument. More recently arguments about linkages have shifted toward finance and services, but the evidence on these linkages remains largely anecdotal. That these connections were large has been asserted rather than established. To the best of my knowledge, quantitative estimates of their significance are still lacking. As they note in their conclusion, Stelzner and Beckert do not provide any evidence regarding them.

In sum, the paper provides a new approach to estimating the economic significance of slavery that begins with the labor of enslaved people rather than the production of specific goods. It finds that that the contribution of enslaved people to production was similar to their share of the labor force, which seems reasonable to me. It does not, however, provide any support for the theory that Baptist and Beckert built their original stories around?  In fact, to the extent that the share of commodity production is less than the share of the labor force one might regard the result as consistent with arguments about the negative economic effects of slavery.

Some recent history and economic history

The latest issue of History Now from the Gilder Lehrman Institute is about the history of the blues and jazz. It has this nice list of links to music.

There has been a lot of discussion recently about state capacity and the evolution of norms. I think it is safe to say many economist historians regard both as essential to understanding long run economic performance.

On state capacity, here is Koyama on Salter on Johnson and Koyama. And here is Koyama on Political Decentralization and Innovation in early modern Europe and The Economist covers the work of Anderson, Johnson and Koyama on poor harvests and violence.

On the evolution of norms:

Pseudoerasmus “Where Do Pro-Social Institutions Come From?” originally published as a blog post but recently published on Evonomics.

Peter Turchin writes that

“Cultural Evolution is a new interdisciplinary field whose intellectual roots go back only to the 1970s (unless, of course, you count Charles Darwin; but in a sense any new development in evolutionary science can be traced to Darwin). In this new field, “culture” is defined as information, which can affect human behavior, that is socially transmitted—through books and manuals, by teaching, or simply by observing and imitation. Cultural variants are information packages that cause people to behave in alternative ways. Cultural Evolution, then, studies how and why frequencies of cultural variants change with time, just as biological evolution focuses on the changing frequencies of genetic variants.”

       

Of course North placed a great deal of emphasis on the importance of changing beliefs (especially in Structure and Change and later works) but this also reminds me of Veblen, who argued that “institutions are, in substance, prevalent habits of thought with respect to particular relations and to particular functions of the individual and of the community” and that "the evolution of society is substantially a process of mental adaption on the part of individuals under the stress of circumstances which will no longer tolerate habits of thought formed under and conforming to circumstances in the past." He argued that these prevalent habits of thoughts influenced both the objectives that people sought to achieve and the means that they perceived to achieve them. Consequently, their evolution should be the primary concern of economists.

In addition, Jared Rubin and Murat Iyigun have a paper on the Ideological Roots of Institutional Change

BTW there is actually a connection between the first link and the last link in this post.