Economic History Videos and a Podcast

Peter Temin at INET by way of The Past Speaks.

Barry Eichengreen  by way of Finance: Past, Present and Future.

Gavin Wright on Sharing the Prize: The Economics of the Civil Rights Revolution at New Books in History

Review of Half Has Never Been Told

Trevor Burnard reviews The Half Has Never Been Told in Slavery and Abolition.

"This book has been the subject of a minor scandal as a result of a negative review in the

Economist in which the author was accused of writing advocacy rather than history. An

ensuing controversy led to an apology and the withdrawal of the review. But the

Economist’s withdrawal of a spiteful review does not necessarily mean that this is a good

book. Indeed, it is a poor book. It is badly written, sometimes spectacularly so. It is

inadequately researched and shows a lack of familiarity with economic theory. It is

overblown and full of overstatements. Most disturbingly, however, it is sloppy,

indeed scandalously deficient, in its referencing. These deficiencies are so serious as

to cast considerable doubt about the capacity of the author to present evidence properly.

In short, a lot of the book is just made up, as a deliberate strategy arising from a

flawed research design."

I have had similar thoughts myself.

Koyama on the History Manifesto

Mark Koyama reviews the History Manifesto. In it he mentions Pseudoerasmus' post on the many errors in the book.

The rise and fall of economic history

Peter Temin describes the rise and fall of economic history at MIT in the History of Political Economy and an un-gated version here.  Temin also talks about the costs of not having actual economic historians, even if you do have people who write about history.

MIT isn’t the only place to experience a rise and fall of economic history. My grad school  (for my econ Ph. D.) has pretty much completely turned its back on economic history. When I was there we had Douglass North, John Nye, and, for the last year or so, Sukoo Kim. There was a well-attended history lunch every week. Doug retired. John went to George Mason. Soks is still there, but my understanding is that he is not very involved in the economics department. History is not listed as a field for graduate students. The economists that replaced the economic historians have demonstrated the potential problems associated with model makers using the past without consideration for the historians concerns with context and source criticism. Boldrin and Levine use the example of James Watt to argue against patents. On the actual influence of Watt’s patent see Selgin and Turner “Strong Steam, Weak Patents” JLE 2011 or Bottomley’s British Patent system During the Industrial Revolution.

 My wife’s grad school also moved away from economic history. While she was doing her graduate work at Illinois they had Jeremy Atack, Larry Neal, Lee Alston, and Charles Calomiris. Now, if they have an economic historian, I don’t know who it is.

Fortunately, it is also possible to name departments where economic history is either on the rise or holding its position, with multiple economic historians and consistent production of good Ph. D. students. UC Davis, Yale, Vanderbilt, George Mason, and Northwestern are some of the schools that come to mind. My apologies to the other good schools I did not mention.

Bankruptcy

Juan Sanchez of the St. Louis Fed looks at recent bankruptcies and concludes that

"BAPCPA clearly had an impact on the number of bankruptcies being filed. However, the exact impact may not be known for some time, since the recession hit right after the BAPCPA was implemented."

I agree that it is going to be difficult to determine the impact of BAPCPA (Bankruptcy Abuse and Consumer Protection Act) . Consumer bankruptcy is usually the end of a series of events: debt, default, and non-bankruptcy collection. There are a many things besides the bankruptcy law that play a role in the process.

Also from the St Louis Fed is this discussion of a symposium on the balance sheets of American families.

The Gold Standard

Here is my favorite gold standard political cartoon from an 1896 Harper's Weekly.

The cartoon shows godlbugs as widows, orphans and veterans. In other words, people living on fixed incomes. It reflects the view that the primary benefit of a gold standard was to place a constraint on the money supply.

However, from the St Louis Fed on U.S. economic performance under the gold standard from the St. Louis Fed: "the historical evidence indicates that neither a gold standard nor the absence of a central bank guarantees economic or financial stability."

The end of capitalism?

Jeremy Rifkin says the end of capitalism is coming. In the meantime, he will tell you about it for only $20,000 to $40,000.

History of Capitalism at the Legatum Institute

The Legatum Institute has a program on the History of Capitalism.

They are sponsoring a series of lectures, which are available online.



This one is Nicholas Crafts explaining why England was first to industrialize.

Bailyn, Wood and American History

Gordon Wood on Bernard Bailyn and William Black on Gordon Wood on Bernard Bailyn (at the Junto)

I was a bit surprised when Wood suggested that historians had not liked the Barbarous Years. I quickly looked at the reviews in AHR and JAH. They weren’t really too negative.    Archer thought that the book was “a marvelous accomplishment and a testament to Bailyn’s standing as one of our finest historians.” Pulsipher declared that it was the “kind of book that the word “magisterial” was made for.”

 

I’m not sure to what extent Bailyn is regarded as an economic historian, but his early work appeared in the Journal of Economic History and Explorations in Entrepreneurial History as well as The New England Merchants in the Seventeenth Century .

Here is some more recent work on New England merchants and credit by David Flynn and Jeremy Schwartz

Economic Growth

This last week I have been reading Sven Beckert’s Empire of Cotton and Sheilagh Ogilvie and A.W. Carus Institutions and Economic Growth in Historical Perspective. Both deal with the relationship between institutions and economic growth.

Beckert’s book reminds me of the old saying that “There is much here that is new and much that is interesting. Unfortunately, that which is new is not interesting, and that which is interesting is not new.” The interesting parts are the discussions of the industrial revolution (mostly Robert Allen’s theory), the role of force in promoting trade (Findlay and O’Rourke, and others, have made this argument); the capitalist nature of slavery (Conrad and Meyer and Fogel and Engerman said this a long time ago). What’s new is the argument that cotton, slavery and empire were not just important parts of economic history, they are the key to how the west got rich and capitalism was born. The book falls into the popular “________ that changed the World” category, where you insert whatever it is you are writing about into the blank. It places too much emphasis on one part of the economy: cotton. This is particularly true for the United States. We see many references to the importance of cotton as an export, but we never see any information about how important exports were to U.S. growth. The problem is that economic historians for more than half a century have been moving away from simple monocausal arguments about economic growth.  Beckert declares that slavery was the first big business, not railroads. But the new history of capitalism is on no firmer ground making slavery the driving force behind economic growth than Rostow’s non-communist manifesto was in making railroads the driving force. The only difference is that much of the evidence about railroads the importance of railroads was developed after Rostow wrote.

Of course, one can make the argument that “Plunder may not have directly fueled the Industrial Revolution, but mercantilism and imperialism were an important part of the context within which it originated, expanding markets and ensuring the supply of raw materials.” (Findlay and O’Rourke, xx) But Findlay and O’Rourke already made this argument in Power and Plenty.

Sheilagh Ogilvie and A.W. Carus Institutions and Economic Growth in Historical Perspective is at the opposite extreme. For them the devil is in the details. One of their key points is that it is not really productive to consider the influence of one institution in isolation; particular institutions can only be understood within the broader institutional framework that they are a part of. Beckert should have given more consideration to this point because the most obvious problem with his argument is that the institutions at the center of his story (slavery, expropriation, and the use of force to control trade) have existed for a long time. They did not lead to modern economic growth. If Ogilvie and Carus are right understanding modern economic growth might be hard work.

Pioneer Girl

I ordered a copy of Laura Ingalls Wilder's Pioneer Girl: The Annotated Autobiography several months ago, but I just got it last week. The University of South Dakota Press underestimated the demand by a pretty wide margin. I did not read the any of Wilder's books until I was an adult and read them to my kids.  I loved all the detail about life on the Great Plains in the nineteenth century. I remember great descriptions of things like how to build a log cabin and what the brake man did on a train.

http://pioneergirlproject.org/

Financial History

John Turner on Financial History and Financial Economics

Sean Kenny and Anders Ogren on Corporate Governance of Regulation : Unlimited and Limited Banks Compared in the 1907 Crisis (the paper examines Swedish banks in the 1907 crisis)
It is nice to see some international perspective on 1907. In addition, the paper examines some of the same questions regarding regulation of financial institutions as my recent paper on trust companies in the Panic of 1907.

Some Digital History

A digital reconstruction of Washington, D.C. in 1814


The Junto is doing a week long roundtable review of Richard S. Dunn's A Tale of Two Plantations: Slave Life and Labor in Jamaica and Virginia


And here is the website that goes with the book

The Economic Benefits of Finance

A new working paper by Luigi Zingales

New Books in Business History

From the Exchange

If you are working on a book you might want to think about how to put capitalism in the title.

In his keynote address to the Economic and Business History Society when it met in Baltimore Lou Galambos discussed the success of history of capitalism as a brand.

New Stuff on the History of Bankruptcy

Mary O’Sullivan “A Fine Failure: Relationship Lending, Moses Taylor, and the Joliet Iron and Steel Company, 1860-1888,” Business History Review (Winter 2014) examines how one industrial failure actually played out under the 1867 Bankruptcy Act. I found particularly interesting the discussion of conflicts over jurisdiction and the attempts of local courts to protect local interests, including employees and local merchants.

 

M. Susan Murnane, Bankruptcy in an Industrial Society: A History of the Bankruptcy Court for the Northern District of Ohio. (University of Akron Press) provides a detailed study of how bankruptcy courts actually operated over a long period of time. I learned a lot about how referees were selected and how they operated.

Forecasting Recessions

Robert Shiller recently wrote about on the value of economics. I agree with most of what he says, but he also seems to perpetuate a myth about the inability of economists to forecast downturns in the economy.

 

Shiiler states that “Indeed, economists failed to forecast most of the major crises in the last century, including the severe 1920-21 slump, the 1980-82 back-to-back recessions, and the worst of them all, the Great Depression after the 1929 stock-market crash.”

Read more at http://www.project-syndicate.org/commentary/are-economists-good-by-robert-j--shiller-2015-01#IvJFopWQS6EmSZ2Z.99

I am not going to address all of these recessions, but it is relatively easy to look back to 1980. In the New York Times I find this

“the April decline in the composite index was the fourth in the last six months and comes at a time when many private economists are predicting a mild recession during the last half of 1979.” New York Times June 1, 1979 pg. D1.

And this

“Summarizing the latest Data Resources forecast, Miss Mosser said that “the economy will at best slow down and at worst we’ll see a double dip come the first of this year.” New York Times Dec. 2 1980 pg. A1.

Not all economists agreed, but it is certainly not the case that no one saw it coming.

Forecasting recessions with a reasonable degree of accuracy is actually one of the easier things to do in economics. The yield curve, for instance, is an easy to use and pretty reliable tool. If it is upward sloping the chances of a recession in the near future are small. If it flattens out or slopes downward the chances of a recession are pretty good. Anyone paying attention to the yield curve should not have been surprised by our most recent recession.

It is harder to forecast the severity of recession, but Shiller was one of a number of economists that expressed concerns about the underlying strength of the economy in the time leading up to the most recent financial crisis, suggesting that next recession could be severe because of problems in financial markets.  

Economics needs better critics

The Washington Post describes protests at the ASSA.

They suggest that students ask their economics professors

How does climate change factor into our study of economics?
Why is there nothing about Islamic economics in our curriculum?
Should we slow down fast money with a Robin Hood Tax?


The first question is odd because the discussion of market failures, such as degradation of the environment, is a prominent part of mainstream economics. Austrian economists think that mainstream economists talk about almost nothing but market failures. One of the people they targeted was Greg Mankiw. Mankiw is one of the most prominent supporters of increased taxes on negative externalities.

Why are they concerned about Islamic economics but not Catholic social theory? Are they also concerned that natural scientists teach theories based on religious beliefs?

I have no idea what it means to slow down fast money.

I am not what most people would regard as a traditional mainstream economist. I would like to see less attention to formal mathemtical models, and more attention to institutions, to history, and to narrative forms of explanation.  But these people do not appear to have even a basic understanding of economics.

The Benefits of Doing Historical Research

Anthony Grafton and James Grossman in The American Scholar

 

"The best defense for research, however, is that it’s in the archive where one forms a scholarly self—a self that, when all goes well, is intolerant of weak arguments and loose citation and all other forms of shoddy craftsmanship; a self that doesn’t accept a thesis without asking what assumptions and evidence it rests on; a self that doesn’t have a lot of patience with simpleminded formulas and knows an observation from an opinion and an opinion from an argument."

 

In other words, doing history develops skills that all college graduates need.

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.

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."

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.

Business History from HBR

The Birth of Commercial Credit

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.  

2.       Baptist’s attempts to enlarge the impact of cotton on GDP are nonsensical.

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.

 

 

 

 

These figures are from the working paper by Nathan Nunn “Slavery, Inequality and Economic Development in the Americas: An Examination of the Engerman-Sokoloff Argument (October 2007). There is no question that slaveholders benefited from slavery, but that does not mean that the economy as a whole was better off as a result of slavery. Arguments and evidence presented by Gavin Wright, Sokoloff and Engerman, and David Meyer also suggest that slavery had long term negative effects on economic growth.

 

4.       The abolition of slavery did not have a negative effect on per capita GDP in the United States or its rate of growth.
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?

 

 

 

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?