1 Copyright © 2013 Uther Charlton-Stevens
Modern and Postmodern Economic History
Course Description
This course covers episodes from Global economic history over the last five hundred years. It will
include topics such as: writing Global history and tackling problems like eurocentrism; the Great
Divergence between Europe and Asia in which Europe developed and expanded at the expense of
the Asian share of world GDP; the Needham question – why did China not have a scientific
revolution? Why did not China, India or Japan expand into the Americas, Africa or Europe?;
preindustrial economies and the state in early modern Europe; Malthus and issues of demography;
the role of women in early modern Europe; proto-industry; agriculture; markets; Smithian growth
through trade and Schumpeterian growth through technological change; technology and science –
was tacit knowledge transmitted face to face by skilled artisans more important than the scientific
revolution?; the military revolution and the costs and benefits of violent conflict; industrialisation,
sources of energy and ecology; why did the industrial revolution occur in England?; did Imperial
China suffer from a high level equilibrium trap?; mercantilism, long distance trade and European
merchant empires; the Spanish colonial system, the treasure galleons bringing bullion from the
Americas and causing inflation in Europe and China (via the Manila trade); the slave plantation
economy of the American South and the American Civil War; the Mughal empire in India, the rise of
the East India Company and the British Raj; the debate around gentlemanly capitalism, the
imperialism of free trade and the Hobson-Lenin thesis of empire; British settler colonies and staple
crops; Henry Ford and the moving assembly line; the Great Depression and the New Deal; the Gold
Standard, inflation and central banks.
Course Aims and Objectives
This course aims to build on students’ prior knowledge and to encourage them to make broad
comparisons across wide geographical spaces and chronological time frames. The course seeks to
expose students to a wide range of historical subjects of relevance to the development of the world
economy in the last five hundred years and to encourage them to gain the insight and analytical
skills necessary to draw out key concepts and points. The course cannot aim to be in any way
comprehensive in covering such a wide subject matter, and is necessarily selective in choosing
particular historical case studies and concepts. Students will be expected to form their own
conclusions as to which features of the history set out are of paramount importance, which were
decisive in historical causation, and which are of the greatest contemporary relevance to those
looking at the world economy today. Economists have a tendency to see contemporary problems in
a rather short term perspective; students taking this course should gain a much needed
macrotemporal perspective on the long term causes of divergent economic growth trajectories.
Introductory Lecture: Longue Durée Economic Growth, Global History, and the Return of the
Metanarrative.
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Postmodernism and its disciples reject the possibility of offering 'metanarratives' of the human
experience, perceiving value only in the voices of the dispossessed and challenging the
epistemological underpinnings of history as a discipline. Like many doctrinaire approaches to the
study of our species postmodernism contains its own contradictions, for is not any methodology or
system of thought which claims to be universal in its validity itself a meta narrative? Knowledge that
is not to be fragmentary and incoherent requires marshalling into theoretical, explanatory or
narrative frameworks. It is also difficult to posit philosophical reasons why one scale of comparison
between social units, for example a village as against its neighbour, is intrinsically more valid than
another such as England vs. Japan. Any boundary between an acceptable frame of comparison and
one that is too wide is impossible to draw other than arbitrarily. The conviction that it is both useful
and important to draw comparisons and chart connections across great distances of time and space
has given rise to the field of global history – predominantly the domain of economic historians. The
rising contemporary significance of transnational economic and cultural forces has urged the
question how far back does globalization go? Looking at history in the long run and on a global scale
is an onerous task beset with difficulties, but it is one that well rewards the effort and which offers
unique insights and perspectives on the past. We shall start with the question of when globalization
began, and put forward a toolkit of useful frameworks for analysing global economic change over
time.
Seminar 1: China, the Needham Question and the Great Divergence.
The Great Divergence between Europe and Asia and its causes are central to global history. Why did
early modern science and technology advance so far in Europe? Why did global trading empires
emerge from the geographically small western end of the Eurasian landmass? Addressing the
Needham question, why was it not China that developed early modern science? Why did not China,
India or Japan expand into the Americas, Africa or Europe?
Reading:
Robert Finlay, China, the West, and World History in Joseph Needham's "Science and Civilisation in
China", Journal of World History, Vol. 11, No. 2 (Fall, 2000), pp. 265-303, available at
http://www.jstor.org/stable/20078851
Stephen Broadberry and Bishnupriya Gupta, ‘The Early Modern Great Divergence: Wages, Prices and
Economic Development in Europe and Asia, 1500-1800’, The Economic History Review, New Series,
Vol. 59, No. 1 (Feb., 2006), pp. 2-31, available at http://www.jstor.org/stable/3806001
Kenneth Pomeranz, ‘Is There an East Asian Development Path? Long-Term Comparisons, Constraints,
and Continuities’, Journal of the Economic and Social History of the Orient , Vol. 44, No. 3 (2001), pp.
322-362, available at http://www.jstor.org/stable/3632355
Joel Mokyr, ‘Eurocentricity Triumphant’ , The American Historical Review , Vol. 104, No. 4 (Oct.,
1999), pp. 1241-1246, available at http://www.jstor.org/stable/2649575
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Jack A. Goldstone, ‘Efflorescences and Economic Growth in World History: Rethinking the "Rise of
the West" and the Industrial Revolution’, Journal of World History, Vol. 13, No. 2 (Fall, 2002), pp.
323-389, available at http://www.jstor.org/stable/20078976
Further Reading:
Kenneth Pomeranz, ‘Chinese Development in Long-Run Perspective’, Proceedings of the American
Philosophical Society, Vol. 152, No. 1 (Mar., 2008), pp. 83-100, available at
http://www.jstor.org/stable/25478470
Kenneth Pomeranz, ‘Political Economy and Ecology on the Eve of Industrialization: Europe, China,
and the Global Conjuncture’, The American Historical Review, Vol. 107, No. 2 (April 2002), pp. 425-
446, available at http://www.jstor.org/stable/10.1086/532293
P. H. H. Vries, ‘Are Coal and Colonies Really Crucial? Kenneth Pomeranz and the Great Divergence’,
Journal of World History, Vol. 12, No. 2 (Fall, 2001), pp. 407-446, available at
http://www.jstor.org/stable/20078914
Yong Xue, ‘A "Fertilizer Revolution"? A Critical Response to Pomeranz's Theory of "Geographic
Luck"’, Modern China, Vol. 33, No. 2 (Apr., 2007), pp. 195-229, available at
http://www.jstor.org/stable/20062667
Timothy Brook, ‘The Sinology of Joseph Needham’, Modern China, Vol. 22, No. 3 (Jul., 1996), pp. 340-
348, available at http://www.jstor.org/stable/189191
Lecture 1: Malthus, Demography and the Cambridge School.
Malthus in his Essay on Population expressed a central problem of economic growth in the
premodern (and perhaps modern?) world – populations he argued increase geometrically because of
the irresistible ‘passion of the sexes’, which can only be restricted by famines or by preventative
measures that control fertility (restricting sex outside of marriage and delaying marriage for
example), while even in a growing economy food production can only increase arithmetically. Are
populations doomed to grow beyond their food supply? Must they always eat up the proceeds of
growth? How did they escape from the Malthusian trap and from subsistence crises?
Seminar 2: Malthus, Population and the Food Supply.
The ideas of Malthus. Was pre-modern Europe afflicted by Malthusian crises or checks on population
growth? The ideas of the Cambridge school – the importance of demography for development. How
useful are Malthus's ideas in the modern era? Many are now inclined to say that Malthus was wrong
because technology has rescued our species from the threat of continual checks on population
growth, as evidenced by the massive increase in the world's population. However Malthus's
fundamental insight is surely that we suffer from limited land and resources, and even if we discover
untapped resources the fact remains that resources are finite. While technology may push up the
'ceiling' for the possible human population by allowing us to utilise resources more efficiently, there
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remains a 'possibility-production frontier' for humanity as a whole that could only be escaped by
infinite technological progress and ultimately an alchemical trick to make something out of nothing.
Reading:
Chapter 7, ‘Why poverty was inevitable in traditional societies’ in E. A. Wrigley’s (2004): Poverty,
Progress and Population.
Thomas Malthus (1798): ‘An Essay on the Principle of Population’, available at
http://www.esp.org/books/malthus/population/malthus.pdf
Further Reading:
Cormac Ó Gráda, ‘Markets and Famines in Pre-Industrial Europe’, The Journal of Interdisciplinary
History, Vol. 36, No. 2 (Autumn, 2005), pp. 143-166, available at
http://www.jstor.org/stable/3656154
Nigar Hashimzade, ‘Famines without shortages’, Oxford Economic Papers 58 (2006), pp. 636–654,
available at http://oep.oxfordjournals.org/content/58/4/636.full.pdf+html
Robert Dorfman, ‘Thomas Robert Malthus and David Ricardo’, The Journal of Economic Perspectives,
Vol. 3, No. 3 (Summer, 1989), pp. 153-164, available at http://www.jstor.org/stable/1942767
Lecture 2: Is Europe Different? The Problem of Eurocentrism.
Given that specific regions within Europe became predominant through trade and imperial expansion
how do we present a fair and balanced picture of the world? How do we deal with the problem of
eurocentrism? How do we account for counterfactual alternatives to Europe's rise without seeing it
as inevitable and thus embracing a form of historical determinism? If we redress the balance by
emphasising economies that have been resurgent (China, Japan and India) in recent decades are we
not equally guilty of emphasising some geographic regions and civilisations at the expense of others
(for example, Africa)?
Seminar 3: Ecology and the Retreat of the Elephants from Southern China.
Contemporary debates over climate change, environmental damage and sustainability remind us to
consider the development of economies not merely in terms of GDP and technological advancement
but also to consider the ecosystems in which expanding human economies exist. Historical case
studies point to the vast changes which can take place in the landscape through deforestation and
species extinction, and to human populations through desertification, land exhaustion, draught and
pollution. How can we recast the history of economic development to take account of ecology?
Reading:
Ray Bush, ‘Drought and Famines’, Review of African Political Economy, No. 33, War and Famine
(Aug., 1985), pp. 59-63, available at http://www.jstor.org/stable/4005668
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Peter C. Perdue, ‘The Retreat of the Elephants: An Environmental History of China by Mark Elvin
Review’, T'oung Pao, Second Series, Vol. 91, Fasc. 4/5 (2005), pp. 436-445, available at
http://www.jstor.org/stable/4529016
Lillian M. Li, ‘The Retreat of the Elephants: An Environmental History of China by Mark Elvin Review’,
Harvard Journal of Asiatic Studies, Vol. 65, No. 2 (Dec., 2005), pp. 499-505, available at
http://www.jstor.org/stable/25066788
Further Reading:
Robert B. Marks, ‘The Retreat of the Elephants: An Environmental History of China by Mark Elvin
Review’, The Journal of Interdisciplinary History, Vol. 36, No. 2 (Autumn, 2005), pp. 313-315,
http://www.jstor.org/stable/3656207
James R. Hudson, ‘Braudel's Ecological Perspective’, Sociological Forum, Vol. 2, No. 1 (Winter, 1987),
pp. 146-165, available at http://www.jstor.org/stable/684532
If accessible please see Jared Diamond’s (2005) Guns, Germs and Steel: the Fates of Human Societies,
Mark Elvin’s (2006) The Retreat of the Elephants: An Environmental History of China, and Fernand
Braudel’s (1996) The Mediterranean and the Mediterranean World in the Age of Philip II (2 vols.).
Lecture 3: Adam Smith, Specialisation and Markets.
We will explore Smith’s great 1776 work An Inquiry into the Nature and Causes of the Wealth of
Nations more commonly known as the Wealth of Nations. Smith was concerned with ethical
questions as well as material ones, and yet recognized that ‘It is not from the benevolence of the
butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own
interest.’ Smith advanced the example of pin-making to reveal how specialization (which required
exchange, and hence trade) could further advance human productivity. What insights did Adam
Smith and other classical economists have into the nature of economic activity? Why did the idea of
looking at the world through this prism arise at this particular point? And were classical economic
theories, with their conception of ‘diminishing returns’ on capital investment already out of pace with
the changes that were taking place in technology, energy and productivity at the time? Did Adam
Smith expect growth through trade and specialization to peter out in Britain as it had done in the
Netherlands?
Seminar 4: How Much do Religion and Cosmology Matter?
Even in our own time it is clear that religion is a force that cannot be overlooked. Economic models
of migration take little or no account of belief systems and yet these can profoundly affect the
choices made by individuals and families in society and the economy. We will explore case studies
that remind us how significant religion can be, even when intermixed with material, political and
other considerations.
Reading:
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Alan Heston, ‘Crusades and Jihads: A Long-Run Economic Perspective’, Annals of the American
Academy of Political and Social Science, Vol. 588, Islam: Enduring Myths and Changing Realities (Jul.,
2003), pp. 112-135, available at http://www.jstor.org/stable/1049857
Reuben Fine, ‘The Protestant Ethic and the Analytic Ideal’, Political Psychology , Vol. 4, No. 2 (Jun.,
1983), pp. 245-264, available at http://www.jstor.org/stable/3790937
Anthony J. Dachs, ‘Missionary Imperialism-The Case of Bechuanaland’, The Journal of African History,
Vol. 13, No. 4 (1972), pp. 647-658, available at http://www.jstor.org/stable/180759
Further reading:
J. A. Raftis, ‘Western Monasticism and Economic Organization’, Comparative Studies in Society and
History, Vol. 3, No. 4 (Jul., 1961), pp. 452-469, available at http://www.jstor.org/stable/177665
Daniel T. Reff, ‘The "Predicament of Culture" and Spanish Missionary Accounts of the Tepehuan and
Pueblo Revolts’, Ethnohistory, Vol. 42, No. 1 (Winter, 1995), pp. 63-90, available at
http://www.jstor.org/stable/482934
Lecture 4: The Economic Costs and Benefits of Warfare, and the dynamism of the European
Competitive State System.
Violence seems key to the competition between military-fiscal states engaged in almost unrelenting
bouts of warfare across long periods of Western History. Does this seeming destructive enterprise
actually account for the pace of European technological growth, as spin-offs from military technology
follow and the cost of financing war puts ever greater strains on states while rewarding those whose
institutional and financial mechanisms can best face the challenge? The shift between technologies
of war that favour the offensive and the defensive is characteristic of global as well as European
conflict up to our own age. Did the level of technology continuously redefine the optimal size of the
competitive military-fiscal state?
Seminar 5: Cultural Embeddedness and Rationality Assumptions.
How rational and economically minded are human beings as actors? Has this changed over time?
Do economists overestimate human rationality and overlook the importance of religion, cosmology,
culture, and the pursuit of fame, power and artistic achievements for their own sake? If cultures
matter and economic activity can be said to be ‘culturally embedded’ then how significant are
differences between cultures in promoting, constraining and shaping the nature of their economic
development and charting the path-dependent trajectories of societies, their institutions and their
technologies (including information and communication technologies like written systems which can
shape the way we think)?
Reading:
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David Dequech,’ Cognitive and Cultural Embeddedness: Combining Institutional Economics and
Economic Sociology’, Journal of Economic Issues, Vol. 37, No. 2 (Jun., 2003), pp. 461-470, available at
http://www.jstor.org/stable/4227910
James R. Wible, ‘Towards a Process Conception of Rationality in Economics and Science’, Review of
Social Economy, Vol. 63, No. 3, The Best of the "Review of Social Economy":1944-1999 (Sept., 2005),
pp. 465-481, available at http://www.jstor.org/stable/29770332
Further Reading:
If accessible please see Deepak Lal’s (1998) Unintended Consequences: The Impact of Factor
Endowments, Culture and Politics on Long Run Economic Performance.
Lecture 5: Technology and Science: the 'Blue Banana'.
We shall explore the shifting locus of technological leadership from Renaissance Italy to Industrial
Britain. Plotted on a map, populations, economic activity and scientific leadership appear to follow a
line across Europe which has been characterised as the 'blue banana'. Cultural, artistic and other
creative energies seem to go in tandem with economic cutting edge technology – how do we explain
efflorescences of creativity and dynamism? Was competition once again key? What about
commercialization and trade?
Seminar 6: Warfare and Early Modern State Building.
What were the benefits of violence? What were the drawbacks of organized violence? How much
damage did warfare cause in terms of lives, goods and effects on economic activity? Are states
merely some kind of protection racket that attempt to hold the monopoly of violence? We will
evaluate Parker's concept of the Military Revolution and explore the relationship between war and
the rise of European states. Did warfare accelerate the development of technology (through spin-offs
from military technology) and revenue raising capabilites for European states? What is the validity of
the economists' concept of creative destruction and can it be applied to warfare? In the long term
does armed conflict increase or decrease economic growth?
Reading:
Frederic Lane, ‘Economic Consequences of Organized Violence’, The Journal of Economic History,
Vol. XVIII, No. 4 (Dec., 1958), pp. 401-417, available at http://www.jstor.org/stable/2114533
Richard Bean, ‘War and the Birth of the Nation State’, The Journal of Economic History, Vol. 33, No.
1, The Tasks of Economic History (Mar., 1973), pp. 203-221, available at
http://www.jstor.org/stable/2117151
Further Reading:
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Melissa Meriam Bullard, S. R. Epstein, Benjamin G. Kohl and Susan Mosher Stuard, ‘Where History
and Theory Interact: Frederic C. Lane on the Emergence of Capitalism’, Speculum , Vol. 79, No. 1
(Jan., 2004), pp. 88-119, available at http://www.jstor.org/stable/20462795
Edgar Kiser and April Linton, ‘Determinants of the Growth of the State: War and Taxation in Early
Modern France and England’, Social Forces, Vol. 80, No. 2 (Dec., 2001), pp. 411-448, available at
http://www.jstor.org/stable/2675585
If accessible Geoffrey Parker’s (1996) The Military Revolution: Military Innovation and the Rise of the
West, 1500-1800 and (2004) The Army of Flanders and the Spanish Road, 1567-1659: The Logistics of
Spanish Victory and Defeat in the Low Countries' Wars.
Lecture 6: Industrialisation, Sources of Energy and Ecology.
How important were energy deposits and sources to the massive increase in productivity through
industrialisation? Does the location of coal, peat, forests, waterways and other geographic factors
help to account for the timing and place of early industrialisation? Why did the Dutch golden age
peter out? We will explore the ideas of subterranean forests and the transition from an organic
economy.
Seminar 7: the Epstein Debate, Science vs. Technology?
How important was the scientific revolution for changes in the European economy? How important
was tacit and experiential knowledge communicated directly by craft workers from one to another
for the development of technology? Which was more important for generating Schumpeterian
growth? And are the two really at odds anyway? If Epstein is right that early industrial growth was
solely responsible for the technological improvements that drove economic growth can we still argue
that a culture and a climate that reflected Europe’s interest in science was a vital part of the context
for European economic takeoff in the long run?
Reading:
Stephan R. Epstein, ‘Property Rights to Technical Knowledge in Premodern Europe, 1300-1800’, The
American Economic Review , Vol. 94, No. 2, Papers and Proceedings of the One Hundred Sixteenth
Annual Meeting of the American Economic Association San Diego, CA, January 3-5, 2004 (May,
2004), pp. 382-387, available at http://www.jstor.org/stable/3592915
Joel Mokyr, ‘Technological Inertia in Economic History’, The Journal of Economic History, Vol. 52, No.
2 (Jun., 1992), pp. 325-338, available at http://www.jstor.org/stable/2123111
John D. Sterman and Jason Wittenberg, ‘Path Dependence, Competition, and Succession in the
Dynamics of Scientific Revolution’, Organization Science, Vol. 10, No. 3, Special Issue: Application of
Complexity Theory to Organization Science (May - Jun., 1999), pp. 322-341, available at
http://www.jstor.org/stable/2640334
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Further Reading:
Joel Mokyr, ‘Punctuated Equilibria and Technological Progress’, The American Economic Review, Vol.
80, No. 2, Papers and Proceedings of the Hundred and Second Annual Meeting of the American
Economic Association (May, 1990), pp. 350-354, http://www.jstor.org/stable/2006599
Stephan R. Epstein, ‘Craft Guilds, Apprenticeship, and Technological Change in Preindustrial Europe’,
The Journal of Economic History, Vol. 58, No. 3 (Sep., 1998), pp. 684-713, available at
http://www.jstor.org/stable/2566620
Francisco J. Ayala, ‘Darwin's Greatest Discovery: Design without Designer’, Proceedings of the
National Academy of Sciences of the United States of America, Vol. 104, In the Light of Evolution I:
Adaptation and Complex Design (May 15, 2007), pp. 8567-8573, available at
http://www.jstor.org/stable/25427713
If accessible please see Joel Mokyr’s (1990): The Lever of Riches: Technological Creativity and
Economic Progress.
Lecture 7: The Industrial Revolution, the Game Changing Event in Global Economic History.
The Industrial Revolution is a term that has aroused much debate, because it is suggestive of sudden
and dramatic change. As it happens the Industrial Revolution was a long drawn out process, but that
does not overturn the revolutionary nature of the changes it caused. Resource scarcity, access to
transport by sea and river, the demand for energy from a rapidly commercializing society with global
maritime trading links and colonial possessions which increased commodification of articles of mass
consumption, an agricultural revolution and demographic growth – all of these factors are impossible
to ignore in the technological story of how the power and potential of coal was harnessed through
the steam engine (invented to drain the coal mines of water), and how Britain became the most
productive cotton textile producer in the world. The first country to industrialise would inevitably
have a different experience than those who followed, but was it simply a story of England first and
then diffusing the example and the technology so that others could follow?
Seminar 8: Early Modern Mercantilism and Empires of Trade
What is mercantilism? Who practised it and in what ways? The Chinese imported precious metals
and exported commodities. Europeans had limited precious metals and a taste for spices and other
commodities. The Islamic world was the intermediary for obtaining these goods prior to Portuguese
exploration which lead the way to Asia. What was the significance of long distance trade? How
important was the rise of European trading empires to global economic history? Did the Spanish
achieve their purported monopoly in trade with their colonies in the Americas? Did the British
attempt to regulate and tax trade with the 13 colonies in North America cause them to lose their first
mercantilist empire? Did the British deindustrialise India? What economic changes and continuities
existed with the rule of the Mughals? What was the impact on British-Indian legal and political
institutions on the economy? How did the restructuring of land tenure and the Permanent Settlement
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of Bengal (1793) affect the rural economy? How do we account for the decline in Indian
manufacturing – was this an example of imperial mercantilism where the colony was forced to
produce raw materials and purchase British value added manufactures?
Reading:
Steve Pincus, ‘Rethinking Mercantilism: Political Economy, the British Empire, and the Atlantic World
in the Seventeenth and Eighteenth Centuries’, The William and Mary Quarterly, Vol. 69, No. 1
(January 2012), pp. 3-34, available at http://www.jstor.org/stable/10.5309/willmaryquar.69.1.0003
Robert S. Smith, ‘Spanish Mercantilism: A Hardy Perennial’, Southern Economic Journal, Vol. 38, No.
1 (Jul., 1971), pp. 1-11, available at http://www.jstor.org/stable/1056063
Douglas A. Irwin, ‘Mercantilism as Strategic Trade Policy: The Anglo-Dutch Rivalry for the East India
Trade’, Journal of Political Economy, Vol. 99, No. 6 (Dec., 1991), pp. 1296-1314, available at
http://www.jstor.org/stable/2937731
Further Reading:
Curtis P. Nettels, ‘British Mercantilism and the Economic Development of the Thirteen Colonies’, The
Journal of Economic History, Vol. 12, No. 2 (Spring, 1952), pp. 105-114, available at
http://www.jstor.org/stable/2113218
Susan D. Amussen, ‘Political Economy and Imperial Practice’, The William and Mary Quarterly, Vol.
69, No. 1 (January 2012), pp. 47-50, available at
http://www.jstor.org/stable/10.5309/willmaryquar.69.1.0047
D. C. Coleman, ‘Mercantilism Revisited’, The Historical Journal, Vol. 23, No. 4 (Dec., 1980), pp. 773-
791, available at http://www.jstor.org/stable/2638725
Cathy Matson, ‘Imperial Political Economy: An Ideological Debate and Shifting Practices’, The William
and Mary Quarterly, Vol. 69, No. 1 (January 2012), pp. 35-40, available at
http://www.jstor.org/stable/10.5309/willmaryquar.69.1.0035
Lecture 8: The Chinese Dynastic Cycle: Cosmology, Technology and the High Level Equilibrium
Trap?
We will begin with a short account of Chinese technological efflorescence during the Song dynasty –
was this a period when owing to a competitive state dynamic China was more vibrant? Successive
Chinese dynasties can be seen as following a pattern of rise, golden age, decline and fall, understood
through the doctrine of the 'mandate of heaven' – is this a valid framework for understanding pre-
modern China? What were the cosmologies, religions and philosophies of China and do they help us
to understand the patterns of long run Chinese history? Does China's political system account for the
successes of Zheng He's voyages and the reversal and abandonment of the outward looking
diplomatic and trading policy these voyages represented? Moving onto China’s economy – was
China subject to a high level equilibrium trap? This could be characterised as a blissful sleep of plenty
for a country that could largely meet its food needs and focussed on political contentment and safety
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for its subjects. Why did it fall into complacency and see its share of world trade and proportion of
global GDP fall so dramatically? Why the great expenditure on the Great Wall and the imperial
adventures in Central Asia and what were the effects of these? We also return to the Needham
question, why didn't science advance further in China with such a high base to begin from?
Seminar 9: The Low Countries and the Limits of the Organic Economy
Were early modern economies constrained by agricultural productivity and a zero sum game in
sources of energy? How important were energy deposits and sources to the massive increase in
productivity through industrialisation? Does the location of coal, peat, forests, waterways and other
geographic factors help to account for the timing and place of early industrialisation? Why did the
Dutch golden age peter out? We will explore the ideas of subterranean forests and the transition
from an organic economy.
Reading:
Chapter 1, E. A. Wrigley’s (2004) Poverty, Progress and Population.
Jan de Vries, ‘The Role of the Rural Sector in the Development of the Dutch Economy: 1500- 1700’,
The Journal of Economic History, Vol. 31, No. 1, The Tasks of Economic History (Mar., 1971), pp. 266-
268, available at http://www.jstor.org/stable/2117037
Jan de Vries, ‘The Industrial Revolution and the Industrious Revolution’, The Journal of Economic
History, Vol. 54, No. 2, Papers Presented at the Fifty-ThirdAnnual Meeting of the Economic History
Association (Jun., 1994), pp. 249-270, available at http://www.jstor.org/stable/2123912
Further Reading:
Joel Mokyr, ‘Industrial Growth and Stagnation in the Low Countries, 1800-1850’, The Journal of
Economic History , Vol. 36, No. 1, The Tasks of Economic History (Mar., 1976), pp. 276-278, available
at http://www.jstor.org/stable/2119820
E. A. Wrigley, ‘The Transition to an Advanced Organic Economy: Half a Millennium of English
Agriculture’, The Economic History Review, New Series, Vol. 59, No. 3 (Aug., 2006), pp. 435-480,
available at http://www.jstor.org/stable/3805970
Lecture 9: Long Distance Trade, Mercantilism and Merchant Empires.
What is mercantilism? Who practised it and in what ways? The Chinese imported precious metals
and exported commodities. Europeans had limited precious metals and a taste for spices and other
commodities. The Islamic world was the intermediary for obtaining these goods prior to Portuguese
exploration which lead the way to Asia. What was the significance of long distance trade? How
important was the rise of European trading empires to global economic history?
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Seminar 10: the Industrial Revolution, why England First?
One of the biggest questions in economic history – why did the industrial revolution happen? And
why did it happen when it did and where it did? What were the advantages and disadvantages of
being first? What was the significance and nature of the industrial revolution for global history? How
did subsequent industrialisation occur in other countries?
Reading:
Joel Mokyr,’ Why Was the Industrial Revolution a European Phenomenon?’, Supreme Court
Economic Review , Vol. 10, The Rule of Law, Freedom, and Prosperity (2003), pp. 27-63, available at
http://www.jstor.org/stable/1147137
Nico Voigtländer and Hans-Joachim Voth, ‘Why England? Demographic Factors, Structural Change
and Physical Capital Accumulation during the Industrial Revolution’, Journal of Economic Growth,
Vol. 11, No. 4 (Dec., 2006), pp. 319-361, available at http://www.jstor.org/stable/40216109
Richard E. Baldwin, Philippe Martin and Gianmarco I. P. Ottaviano, ‘Global Income Divergence,
Trade, and Industrialization: The Geography of Growth Take-Offs’, Journal of Economic Growth, Vol.
6, No. 1 (Mar., 2001), pp. 5-37, available at http://www.jstor.org/stable/40215903
N. F. R. Crafts, ‘Exogenous or Endogenous Growth? The Industrial Revolution Reconsidered’, The
Journal of Economic History, Vol. 55, No. 4 (Dec., 1995), pp. 745-772, available at
http://www.jstor.org/stable/2123815
Further Reading:
Peter Temin, ‘Two Views of the British Industrial Revolution’, The Journal of Economic History, Vol.
57, No. 1 (Mar., 1997), pp. 63-82, available at http://www.jstor.org/stable/2951107
C. Knick Harley and N. F. R. Crafts, ‘Simulating the Two Views of the British Industrial Revolution’, The
Journal of Economic History, Vol. 60, No. 3 (Sep., 2000), pp. 819-841, available at
http://www.jstor.org/stable/2566439
Nicholas Crafts, ‘Productivity Growth in the Industrial Revolution: A New Growth Accounting
Perspective’, The Journal of Economic History, Vol. 64, No. 2 (Jun., 2004), pp. 521-535, available at
http://www.jstor.org/stable/3874783
Julian Hoppit, ‘Counting the Industrial Revolution’, The Economic History Review, New Series, Vol. 43,
No. 2 (May, 1990), pp. 173-193, available at http://www.jstor.org/stable/2596785
Joel Mokyr, ‘Intellectual Property Rights, the Industrial Revolution, and the Beginnings of Modern
Economic Growth’, The American Economic Review , Vol. 99, No. 2, Papers and Proceedings of the
One Hundred Twenty-First Meeting of the American Economic Association (May, 2009), pp. 349-355,
available at http://www.jstor.org/stable/25592423
Lecture 10: Spanish Conquest and Colonisation of the Americas, American Silver and the Manila
Trade.
13 Copyright © 2013 Uther Charlton-Stevens
The search for Asia took the Spanish instead to the Americas, where they found precious metals and
created a system for conveying gold and silver back to Spain. The Spanish did not understand
inflation, seeing the value of gold and silver as fixed; their economy suffered from something akin to
Dutch disease while they spent their treasure on fighting wars within Europe. Then there was the
Manila trade with Asia via their colony, the Philippines. Spanish America became prey to pirates from
northwestern Europe, especially the English, who along with the Dutch and French acquired sugar
plantation colonies in the Americas oriented towards cash crops. What was the impact of the
'discovery' of the new world by the old? How did its integration into a new global economy impact on
economic change?
Seminar 11: Modern Empire and Gentlemanly Capitalism?
Cain and Hopkins’ theory of Gentlemanly Capitalism has aroused heated and prolonged debate. How
persuasive is their characterization of the nature of modern empire and British overseas expansion?
What distinguished different phases of European imperialism and colonisation? What objections can
we make to the theory of Gentlemanly Capitalism? And even if we accept the substance of their
arguments is the term appropriate?
Reading:
P. J. Cain and A. G. Hopkins, ‘Gentlemanly Capitalism and British Expansion Overseas I. The Old
Colonial System, 1688-1850’, The Economic History Review, New Series, Vol. 39, No. 4 (Nov., 1986),
pp. 501-525, available at http://www.jstor.org/stable/2596481
P. J. Cain and A. G. Hopkins, ‘Gentlemanly Capitalism and British Expansion Overseas II: New
Imperialism, 1850-1945’, The Economic History Review, New Series, Vol. 40, No. 1 (Feb., 1987), pp. 1-
26, available at http://www.jstor.org/stable/2596293
Lecture 11: British Settler Colonies and the Search for the Staple – From the 13 Colonies to
Australia.
Early European colonial endeavour looked for navigable rivers and entry points for trade and
focussed on a combination of subsistence farming and the quest for the staple crop (tobacco in
Virginia, sheep in Australia) which would be profitable enough for the colony to grow and prosper.
What were the nature of white settler colonies? What determined the success of those settlement
colonies that took off? How did they attract migrants from Britain and Europe? How did white
settlers interact with indigenous peoples? How did settlements develop from colonies to dominions
to self-governing democracies?
Seminar 12: The Imperialism of Free Trade?
Was imperialism primarily about trade? What kind of trade? Weren’t Europeans scraping the barrel
with their limited levels of trade with their African colonies for example? Can forcing open markets
14 Copyright © 2013 Uther Charlton-Stevens
(as with the Opium War) be seen as free trade? What about informal empire and trade with
countries outside of the colonial relationship? If we accept that there was an imperialism of free
trade, how did it arise from systems of imperial mercantilism and trade with ‘imperial preference’?
Does it complicate the picture when we realise that some leading advocates of free trade were also
fierce critics of empire?
Reading:
John Gallagher and Ronald Robinson, ‘The Imperialism of Free Trade’, The Economic History Review,
New Series, Vol. 6, No. 1 (1953), pp. 1-15, available at http://www.jstor.org/stable/2591017
D. C. M. Platt, ‘The Imperialism of Free Trade: Some Reservations’, The Economic History Review,
New Series, Vol. 21, No. 2 (Aug., 1968), pp. 296-306, available at
http://www.jstor.org/stable/2592437
Oliver MacDonagh, ‘The Anti-Imperialism of Free Trade’, The Economic History Review, New Series,
Vol. 14, No. 3 (1962), pp. 489-501, available at http://www.jstor.org/stable/2591889
Further Reading:
D. C. M. Platt, ‘Further Objections to an "Imperialism of Free Trade", 1830-60’, The Economic History
Review, New Series, Vol. 26, No. 1 (1973), pp. 77-91, available at
http://www.jstor.org/stable/2594760
R. J. Moore, ‘Imperialism and 'Free Trade' Policy in India, 1853-4’, The Economic History Review, New
Series, Vol. 17, No. 1 (1964), pp. 135-145, available at http://www.jstor.org/stable/2592695
W. M. Mathew, ‘The Imperialism of Free Trade: Peru, 1820-70’, The Economic History Review, New
Series, Vol. 21, No. 3 (Dec., 1968), pp. 562-579, available at http://www.jstor.org/stable/2592751
Peter Harnetty, ‘The Imperialism of Free Trade: Lancashire and the Indian Cotton Duties, 1859-1862’,
The Economic History Review, New Series, Vol. 18, No. 2 (1965), pp. 333-349, available at
http://www.jstor.org/stable/2592098
Lecture 12: European Imperial and Trading Expansion into Asia, the Commodification of Spices
and the Foundation of Dutch Slave Plantations in the Banda Islands.
Europeans in their Carribean colonies had pioneered a slave plantation model orientated towards the
export of cash crops such as sugar and tobacco. Following the Portuguese, the tiny Dutch Republic
became the largest maritime power in the world during the Dutch Golden Age, extending its trade
networks all the way to Japan (and maintaining a trading presence there throughout Japan’s later
isolation from the other western economies). How did the Dutch turn preciosities such as nutmeg
into commodities and ultimately articles of mass consumption? How did the Banda Islands come to
exemplify the slave plantation for spice production in Asia? And how did Dutch mercantilist
protection of their trade lead to wars and rivalry with interlopers such as the English?
15 Copyright © 2013 Uther Charlton-Stevens
Seminar 13: The Hobson-Lenin Thesis of Imperialism.
Two arch critics of empire, one of whom seems to have drawn rather heavily on the other (students
are reminded that Lenin ought to have cited Hobson). Students should read Hobson even if they take
the opportunity to read Lenin in Russian. What did Hobson and Lenin argue? What distinctions can
we find to distinguish between their arguments? And what are the implications of their ideas? Is one
that imperialism suppresses wages in the home country and that such inward investment might lead
to a virtuous upwards spiral of growth (as with Henry Ford’s five dollars and day, that allowed his
workers to become consumers and increase demand as they could afford saving schemes towards
buying one of the Model Ts that they helped to build)? What about the implications of the theory for
the colonized, are these as well thought out and developed?
Reading:
John A. Hobson (1902), Imperialism, A Study, available at
http://www.marxists.org/archive/hobson/1902/imperialism/index.htm
Vladimir Ilyich Lenin (1917), Imperialism, the Highest Stage of Capitalism, available at
www.marxists.org/archive/lenin/works/1916/imp-hsc/
Lecture 13: Mughal Vulnerability, the Rise of the East India Company (EIC) and the Raj; an
Economic and Military Transition.
Were the Mughals fundamentally an agrarian land-based empire? What was the Mughal
involvement in Indian Ocean and overseas trade? What capacity did the Mughal State have to
extract taxation from its subjects? How did the Mughal Empire's proportion of global GDP change
over time? Was the Mughal State in relative decline by the time the EIC obtained its bridgehead in
Bengal, and if so why and how? The EIC had followed in the footsteps of other joint-stock companies
such as the Dutch East India company (the VOC). So are joint-stock companies really simple entities,
was their creation a major institutional development that would revolutionise the global economy?
The EIC managed to out-compete its rivals in South Asia with the help of local Indian finance and key
defections to the Company's side during military conflict. Indians had adapted European military
technology from the first arrival of Europeans in South Asia and managed to create some superior
technologies (such as laminated guns). Did the EIC import the Military Revolution into South Asia?
Why did it turn out to be the most successful military-fiscal player in the conflict to control South
Asia? What economic changes and continuities existed with the rule of the Mughals? What was the
impact on British-Indian legal and political institutions on the economy? How did the restructuring of
land tenure and the Permanent Settlement of Bengal (1793) affect the rural economy? How do we
account for the decline in Indian manufacturing – was this an example of imperial mercantilism
where the colony was forced to produce raw materials and purchase British value added
manufactures? Did the British deindustrialise India? Did British rule provide any institutional or
economic benefits to India or was the Raj a purely extractive and exploitative enterprise?
16 Copyright © 2013 Uther Charlton-Stevens
Seminar 14: Douglass North and New Institutional Economics (NIE) or Telling Economists What
Historians Already Knew.
Douglass North’s theory won him the Nobel Prize. What questions does North and NIE raise? Do
states matter? Do institutions matter? How do they function in order to facilitate economic
transactions, enforce contracts and lower transaction costs? Historians have always discussed the
importance of political structures and legal systems and the exercise of violent compulsion by states.
Are Economists now willing to acknowledge their importance as vital contexts for efficient economic
activity? If economics has largely been captured by mathematical models, is there room for
subjective concepts that cannot easily fit into a formula and if there isn’t aren’t economists the
poorer for it?
Reading:
Douglass C. North, ‘Institutions’, The Journal of Economic Perspectives, Vol. 5, No. 1 (Winter, 1991),
pp. 97-112, available at http://www.jstor.org/stable/1942704
Douglass C. North, ‘Government and the Cost of Exchange in History’, The Journal of Economic
History, Vol. 44, No. 2, The Tasks of Economic History (Jun., 1984), pp. 255-264, available at
http://www.jstor.org/stable/2120702
Further Reading:
Douglass C. North, ‘Economic Performance Through Time’, The American Economic Review, Vol. 84,
No. 3 (Jun., 1994), pp. 359-368, available at http://www.jstor.org/stable/2118057
Douglass C. North, ‘What Do We Mean by Rationality?’, Public Choice, Vol. 77, No. 1, The Next
Twenty-Five Years of Public Choice (Sep.,1993), pp. 159-162, http://www.jstor.org/stable/30027216
Lecture 14: the Ming Dynasty (1368–1644), its Rise and its Fall as a Measure of the Chinese
Dynastic Cycle and the Emerging Global Economy.
The Ming colonisation of Southern China may have proved (in the long run) to be one of the most
significant events in global history, converting a subtropical and thinly settled region into the centre
of an export orientated silk producing economy. The Ming used imports of Spanish American silver
via the Manila trade to more extensively monetize their economy and their taxation system. But
when the silver supply contracted and the world was faced with climate induced famines from China
to Spain the Ming state found it increasingly difficult to face of the Manchu military threat on their
northern borders and to collect taxes in silver from a distressed peasantry. The Ming empire
descended into banditry and chaos and the three pronged threat brought the dynasty to an end,
revealing the dangers of relying on integrated global trade networks and of an overly rigid monetary
and taxation system.
Seminar 15: Wallerstein and World Systems Theory, or ‘Neo-Smithian Marxism’.
17 Copyright © 2013 Uther Charlton-Stevens
Brenner dubbed World Systems Theory 'Neo-Smithian Marxism', is this a fair characterisation? What
is World Systems Theory? Is it an accurate depiction of the changing global economy or of economic
processes? Amongst the various critics of global capitalism why has it proved a popular framework
for writing global history? Is the theory hampered by a sense that the global economy is an
exploitative ‘zero sum game’? Does the Smithian and Ricardian understanding of relative
‘comparative advantage’ in trade help to discredit this idea? How does it account for the emergence
of new cores within the world system without the absolute descent of other parts of the system? Is it
not the case that overall, for the most part, real nominal GDP has been rising globally, and that the
system does not necessitate the absolute immiseration of one part of the globe’s population in order
to enable the enrichment of another? When it comes to real improvements in living standards or
lack thereof shouldn’t we be listening to Malthus rather than Wallerstein?
Reading:
Immanuel Wallerstein, ‘After Developmentalism and Globalization, What?’, Social Forces, Vol. 83,
No. 3 (Mar., 2005), pp. 1263-1278, available at http://www.jstor.org/stable/3598277
Daniel Garst, ‘Wallerstein and His Critics’, Theory and Society, Vol. 14, No. 4 (Jul., 1985), pp. 469-495,
available at http://www.jstor.org/stable/657223
Further Reading:
Robert A. Denemark and Kenneth P. Thomas, ‘The Brenner-Wallerstein Debate’, International
Studies Quarterly, Vol. 32, No. 1 (Mar., 1988), pp. 47-65, available at
http://www.jstor.org/stable/2600412
If accessible see Immanuel Wallerstein’s (2011, 3rd edn.) Historical Capitalism with Capitalist
Civilization.
Lecture 15: China: the Opium War, the Taiping TianGuo, and the Era of Unequal Treaties.
As China under the Qing continued to demand the importation of silver and gold bullion in exchange
for their valuable and sought after trade goods (especially silk, porcelain and tea) British traders
struggled to meet the demands of European markets without sufficient bullion. Using the Bengal
bridgehead they began to produce Opium to sell to the Chinese market in violation of Chinese
imperial regulations. Ultimately the vast trade in illegal drugs sparked a conflict in which British
naval supremacy would force China into humiliating concessions (including ceding the island of Hong
Kong) and open the way for more unequal treaties between Western powers that allowed their
citizens access to the Chinese market and gave them immunity from Chinese laws.
Seminar 16: King Cotton and the Slave Plantation Economy of the American South.
In the mid Nineteenth Century the issue of the expansion of slavery into the territories being acquired
by the rapidly expanding U.S. empire is coming to a head. America is split between an increasingly
backward agricultural slave plantation economic system in the South (whose profitability had been
18 Copyright © 2013 Uther Charlton-Stevens
restored by the invention of the Cotton Gin in 1793) and an increasingly prosperous and industrial
North. A bloody conflict foreshadows the modern carnage of the First World War. We will look at
figures on the relative economies and production capacity of the two sides which show that much like
the Japanese attack on Pearl Harbour, the South's bid for independence was a reckless gamble if
material and economic factors are seen to be decisive in the outcome of conflicts. But the Southern
Plantation Economy was vibrant and profitable, its cotton production was export market orientated
and slaves as a human commodity were worth more than any other single financial asset in the
United States other than the entirety of the land itself. Was the conflict between the rival economic
systems inevitable? Had war been averted or the Sotuh achieved its independence could the slave
based economic system have modernized further and survived into the 20th Century?
Reading:
Heywood Fleisig, ‘Slavery, the Supply of Agricultural Labor, and the Industrialization of the South’,
The Journal of Economic History, Vol. 36, No. 3 (Sep., 1976), pp. 572-597, available at
http://www.jstor.org/stable/2118846
Viken Tchakerian, ‘Productivity, Extent of Markets, and Manufacturing in the Late Antebellum South
and Midwest’, The Journal of Economic History, Vol. 54, No. 3 (Sep., 1994), pp. 497-525,
http://www.jstor.org/stable/2123866
Further Reading:
Robert S. Starobin, ‘The Economics of Industrial Slavery in the Old South’, The Business History
Review, Vol. 44, No. 2 (Summer, 1970), pp. 131-174, available at
http://www.jstor.org/stable/3112351
Lecture 16: Slave trading, Western Expansion, Railroad Building and the Economic Divergence of
the American North and South.
After the Spanish came the English, Dutch and French. The triangular slave trade between Europe,
Africa and the Americas was a massive undertaking and profitable economic concern laying the
groundwork for a slave plantation system in the Americas producing commodities like sugar, cotton
and tobacco. How was slavery and the plantation system related to Europe's economic rise and later
industrialisation? Slavery gained its strongest foothold in the American South, and with invention of
the Cotton Gin became increasingly profitable. We will explore the slave economy and the
profitability of the interstate slave trade as the Southern states of the Atlantic seaboard and the
Upper South colonized the South West with ever larger slave plantations. This contrasted with the
reforms and railroad driven expansion of cities like Chicago in the North with their free-labour
factories. Were the two systems destined to compete and ultimately clash?
Seminar 17: The Gold Standard and the Role of Central Banks.
In the early 20th Century leading economies left the gold standard, and the role of central banks was
hotly debated. Bretton Woods rebuilt the international economic system in 1944 on the basis of the
19 Copyright © 2013 Uther Charlton-Stevens
gold standard, setting up institutions like the IMF. In 1971 a Republican President Nixon abandoned
the gold standard. Now all major currencies are fiat currencies (something which had also existed in
several Chinese dynasties). Weimar Germany points to the dangers of hyperinflation experienced
when a fiat currency is printed too freely. Massive indebtedness in the advanced western economies
(resulting from overspending by states and an imbalance in world trade) to emerging creditor
countries like China has prompted arguments over currency. The Chinese currency is not freely
convertible and is kept artificially low say American policy-makers and politicians, causing unfair
terms of trade. China and Russia have suggested freeing the world economy from the dominance of
the dollar through the creation of some kind of international currency or basket of currencies based
on IMF drawing rights. Russia has called for a return to the gold standard. The Euro crisis has
imperilled one major alternative currency which could be included in any basket. The gold price has
risen throughout recent crises. What is the meaning and significance, past and present, of the gold
standard?
Reading:
Angela Redish, ‘The Evolution of the Gold Standard in England’, The Journal of Economic History, Vol.
50, No. 4 (Dec., 1990), pp. 789-805, http://www.jstor.org/stable/2122455
Ian M. Drummond, ‘The Russian Gold Standard, 1897-1914’, The Journal of Economic History, Vol.
36, No. 3 (Sep., 1976), pp. 663-688, available at http://www.jstor.org/stable/2118850
Further Reading:
Lawrence H. Officer, ‘The Efficiency of the Dollar-Sterling Gold Standard, 1890-1908’, Journal of
Political Economy, Vol. 94, No. 5 (Oct., 1986), pp. 1038-1073, available at
http://www.jstor.org/stable/1833191
Giulio M. Gallarotti, ‘Hegemons of a Lesser God: The Bank of France and Monetary Leadership under
the Classical Gold Standard’, Review of International Political Economy, Vol. 12, No. 4 (Oct., 2005),
pp. 624-646, available at http://www.jstor.org/stable/25124041
Lecture 17: The American Civil War, Reconstruction and the Rise of Jim Crown Segregation.
A totemic conflict which saw the invention of iron clad ships, revolutionizing naval technology and
warefare, and which pointed towards the carnage of the First World War to come. We look at the
economic as well as military capacities of each side to fight a war in which ultimately the more
economically powerful side would triumph. Attempts at radical reconstruction of the racial and
economic order in the South proved short-lived however, and the South remained economically
agricultural and relatively ‘backward’ while reintroducing a discriminatory regime against Southern
blacks in place of the slave system that had been abolished as a result of the Civil War.
Seminar 18: The Wall Street Crash, the Great Depression and the New Deal.
20 Copyright © 2013 Uther Charlton-Stevens
American capitalism was at its most brash and confident in the 1920s. The mechanical production
line was catapulting American industry to new levels of efficiency and leaving the likes of Britain
behind. Ford's Model T car began production in 1908 and ended in 1927 having sold more than
fifteen million cars. The demands of assembly line production created a high turn over of employees,
but Ford did not slow down production, instead in 1914 Ford offered employees the unheard of wage
of five dollars a day. It foreshadowed a virtuous cycle in American capitalism whereby the wages of
industrial workers would rise to create mass demand for products that they themselves were
manufacturing. (It is interesting to look back at Hobson's argument from Seminar 16 in this light.)
However, stock markets were still in their infancy and the Wall Street Crash of 1929 brought all this
dynamism to a halt. We will examine the nature and impact of the Great Depression and explore the
contemporary economic arguments as to how to tackle it. Did Keynes offer the right solution to this
crisis of capitalism? How successful were New Deal policies? Was it really the demands of total war
that completed the recovery?
Reading:
Barry Eichengreen and Peter Temin, ‘The Gold Standard and the Great Depression’, Contemporary
European History, Vol. 9, No. 2 (Jul., 2000), pp. 183-207, available at
http://www.jstor.org/stable/20081742
Christina D. Romer, ‘The Great Crash and the Onset of the Great Depression’, The Quarterly Journal
of Economics, Vol. 105, No. 3 (Aug., 1990), pp. 597-624, available at
http://www.jstor.org/stable/2937892
Price V. Fishback, William C. Horrace and Shawn Kantor, ‘Did New Deal Grant Programs Stimulate
Local Economies? A Study of Federal Grants and Retail Sales during the Great Depression’, The
Journal of Economic History, Vol. 65, No. 1 (Mar., 2005), pp. 36-71, available at
http://www.jstor.org/stable/3875042
Further Reading:
Jim F. Couch, Keith E. Atkinson and William H. Wells, ‘New Deal Agricultural Appropriations: A
Political Influence’, Eastern Economic Journal, Vol. 24, No. 2 (Spring, 1998), pp. 137-148, available at
http://www.jstor.org/stable/40325833
Jeff Manza, ‘Political Sociological Models of the U.S. New Deal’, Annual Review of Sociology, Vol. 26
(2000), pp. 297-322, available at http://www.jstor.org/stable/223446
Julian E. Zelizer, ‘The Forgotten Legacy of the New Deal: Fiscal Conservatism and the Roosevelt
Administration, 1933-1938’, Presidential Studies Quarterly, Vol. 30, No. 2 (Jun., 2000), pp. 331-358,
available at http://www.jstor.org/stable/27552097
M. Stephen Weatherford and Boris Sergeyev, ‘Thinking about Economic Interests: Class and
Recession in the New Deal’, Political Behavior, Vol. 22, No. 4 (Dec., 2000), pp. 311-339, available at
http://www.jstor.org/stable/1520055
21 Copyright © 2013 Uther Charlton-Stevens
Lecture 18: The Age of Confidence, World Trades Fares, Technological Breakthroughs, the
Emergence of Modern Japan and the Shock of the First World War.
The late 19th and early 20th Century was a largely laissez faire era of confidence in man’s capacity to
overcome the limitations of nature through enterprising and pioneering technology. This brash
confidence was characterized by the many Great Exhibitions and World’s Fairs held in Britain,
America and France which suggested how nations might peacefully compete to create a bright future
(made brighter by electric lights and cinema and a myriad of other useful inventions). Having been
forcibly opened to foreign trade by Commodore Perry of the US Navy Japan also saw record growth
in this period, Westernising, modernising and industrialising to the extent that it was able to defeat
Russia in 1904-1905, placing it in a position to exploit its weaker neighbour China who had failed to
adapt as well to global challenges and the threats of western imperialism.
Seminar 19: The Keynes Hayek Debate.
Did the demands of the wartime planned economy geared towards total war create a Keynesian
economy? What about the alternative answers given by the Austrian School of economists? Could it
be said that Hayekian approach provides more answers as to the causes of booms and bubbles while
the Keynesian provides the policy solutions for the bust? Keynes ideas can be read strictly as
advocating countercyclical intervention to boost aggregate demand through state spending in times
of economic downturn. However policymakers have often ignored the other side to his arguments –
that the state should contract during economic booms and repay the debts incurred by deficit
spending during the downturn and save funds for a future crisis – is implementing a truly Keynesian
countercyclical approach a problem for democracies? Keynsians have also taken his advocacy of
more central state planning as a license to create a larger state and a mixed economy leading
Government’s to take control of what Lenin referred to as the ‘commanding heights’ of the economy.
Keynesians have also found that stagflation confounds their theories, so do Keynesian solutions fit
every economic downturn? Are they as useful for us today as they were in the 1930s? After the
relatively laissez faire environment of the early 20th Century and the Keynesian consensus of the mid-
century, Hayek’s ideas (suspicious of macroeconomics, state intervention in the economy and central
planning) gained ground towards the end of the Century as states began to retreat from the
commanding heights of the economy. But after the financial crisis of the new Century are we once
again ‘all Keynesians now’? There is an even a case to be made that deregulationist free marketeers
like Ronald Reagan also embraced Keynesian orthodoxies in their bids to boost the economy (and
aggregate demand) through deficit-spending tax cutting (rather than deficit-spending on increasing
the state) – are we persuaded?
Reading:
F. A. von Hayek, ‘Reflections on the Pure Theory of Money of Mr. J. M. Keynes’, Economica, No. 33
(Aug., 1931), pp. 270-295, available at http://www.jstor.org/stable/2548035
J. M. Keynes, ‘The Pure Theory of Money. A Reply to Dr. Hayek’, Economica, No. 34 (Nov., 1931), pp.
387-397, available at http://www.jstor.org/stable/2549192
22 Copyright © 2013 Uther Charlton-Stevens
F. A. von Hayek, ‘A Rejoinder to Mr. Keynes’, Economica, No. 34 (Nov., 1931), pp. 398-403, available
at http://www.jstor.org/stable/2549193
F. A. von Hayek, ‘Reflections on the Pure Theory of Money of Mr. J. M. Keynes (continued)’,
Economica, No. 35 (Feb., 1932), pp. 22-44, available at http://www.jstor.org/stable/2548974
Further Reading:
J. M. Keynes, ‘The General Theory of Employment’, The Quarterly Journal of Economics, Vol. 51, No.
2 (Feb., 1937), pp. 209-223, available at http://www.jstor.org/stable/1882087
J. M. Keynes, ‘Note by Lord Keynes ‘,The Economic Journal, Vol. 54, No. 215/216 (Dec., 1944), pp.
429-430, available at http://www.jstor.org/stable/2226439
Lecture 19: The Moving Assembly Line, Henry Ford and the Model T, and the Wall Street Crash.
American capitalism was at its most brash and confident in the 1920s. The mechanical production
line was catapulting American industry to new levels of efficiency and leaving the likes of Britain
behind. Ford's Model T car began production in 1908 and ended in 1927 having sold more than
fifteen million cars. The demands of assembly line production created a high turn over of employees,
but Ford did not slow down production, instead in 1914 Ford offered employees the unheard of wage
of five dollars a day. It foreshadowed a virtuous cycle in American capitalism whereby the wages of
industrial workers would rise to create mass demand for products that they themselves were
manufacturing. (It is interesting to look back at Hobson's argument from Seminar 16 in this light.)
However, stock markets were still in their infancy and the Wall Street Crash of 1929 brought all this
dynamism to a halt.
Seminar 20: Hyperinflation in interwar Germany.
Understanding and controlling inflation is a major concern for Central Banks. Fears of deflation and
hyperinflation put strict limits on the options they feel are available to them, and most have aimed at
stable and low levels of inflation. However recent rounds of quantities easing (QE or money printing)
have led to discussion of competitive devaluation and currency wars and of the costs (often unseen)
that inflation inflicts on working people and people’s savings and investments, and also to the
medium and long term risks of higher inflation. It is instructive to discuss the money printing and
hyperinflation that crippled Germany’s interwar economy and provided fertile ground for the rise of
the Nazi party, especially as some governments today (like Zimbabwe) seem yet to have learned the
lessons of hyperinflation. Some economists have suggested that though low inflation is usually
associated with growth, like a drug, you need to keep increasing the dosage to get the same benefits
over the long run, and ultimately inflicting intentional pain on the economy to restore sound currency
and low levels of inflation will be necessary. What is inflation, can it be controlled in the global
economy and if so how? What are the dangers of letting inflation get out of hand?
Reading:
23 Copyright © 2013 Uther Charlton-Stevens
P. Michael, A. R. Nobay and D. A. Peel, ‘The German Hyperinflation and the Demand for Money
Revisited’, International Economic Review, Vol. 35, No. 1 (Feb., 1994), pp. 1-22, available at
http://www.jstor.org/stable/2527088
David E. Laidler and George W. Stadler, ‘Monetary Explanations of the Weimar Republic's
Hyperinflation: Some Neglected Contributions in Contemporary German Literature’, Journal of
Money, Credit and Banking, Vol. 30, No. 4 (Nov., 1998), pp. 816-831, available at
http://www.jstor.org/stable/2601130
Alessandra Casella and Jonathan S. Feinstein, ‘Economic Exchange During Hyperinflation’, Journal of
Political Economy, Vol. 98, No. 1 (Feb., 1990), pp. 1-27, available at
http://www.jstor.org/stable/2937639
Further Reading:
Rodney L. Jacobs, ‘Hyperinflation and the Supply of Money’, Journal of Money, Credit and Banking,
Vol. 9, No. 2 (May, 1977), pp. 287-303, available at http://www.jstor.org/stable/1991979
Paul Evans, ‘Time-Series Analysis of the German Hyperinflation’, International Economic Review, Vol.
19, No. 1 (Feb., 1978), pp. 195-209, available at http://www.jstor.org/stable/2526404
Lawrence J. Christiano, ‘Cagan's Model of Hyperinflation under Rational Expectations’, International
Economic Review, Vol. 28, No. 1 (Feb., 1987), pp. 33-49, available at
http://www.jstor.org/stable/2526858
Lecture 20: The Great Depression, the New Deal, Rearmament and War-induced Recovery.
We will examine the nature and impact of the Great Depression and explore the contemporary
economic arguments as to how to tackle it. Did Keynes offer the right solution to this crisis of
capitalism? How successful were New Deal policies? Was it really the demands of total war that
completed the recovery? And did the demands of total war create a Keynesian economy? Is
Keynesianism as useful for us today (when it advocates countercyclical government spending which
seems impossibly at variance with democratic pressures and with advanced bond markets that
punish governments for overspending in an economic downturn)? What about the alternative
answers given by the Austrian School of economists?
Seminar 21: West Germany, Erhard and the Wirtschaftswunder.
In the postwar years West German politician Ludwig Erhard (first as Minister of Economics then as
Chancellor) played a key role in creating the environment for Germany’s economic miracle. Like
France and Britain, West Germany benefited greatly from the Marshall Plan, but Erhard defied advice
and the policies of the allied military occupiers to unilaterally end wage and price controls (a policy
that would continue to be deployed in the United States as late as the Nixon administration). Faced
with four occupation currencies (in the Soviet, American, British and French occupation zones) Erhard
was also responsible for introducing the Deutsch Mark to prevent a return of hyperinflation. The
24 Copyright © 2013 Uther Charlton-Stevens
move angered the Soviet authorities (who had not been consulted) as the old Reichsmarks which the
Deutsch Mark replaced flooded into East Germany causing inflation forcing them to introduce their
own Deutsch Marks (colloquially known as the Ostmark). The Soviet Ostmark was officially
maintained to be worth the same as the West German Deutsch Mark, but due to continued inflation
its relative value against the rival currency plummeted making it difficult for East Germans to use
their money in the Western sectors before the erection of the Berlin Wall. Both of Erhards policies
helped to establish a sound basis for West German economic recovery helping to put an end to a
rampant black market barter economy in which cigarettes functioned as the effective currency for
small transactions and Cognac for larger transactions (with all the attendant transaction costs such a
system entails). East and West Germany came to symbolize the divergence in economic systems and
fortunes that would characterize the Cold War. West German success was greater than the other
Western economies – was this due to policies that were more free market than even those of the
United States? In any event the German economic miracle was part of a wider boom in Western
economies, a period of almost interrupted growth that was to last for 30 years until the first of the oil
shocks of the 1970s.
Reading:
Ludwig Erhard, ‘Germany's Economic Goals’, Foreign Affairs, Vol. 36, No. 4 (Jul., 1958), pp. 611-617,
available at http://www.jstor.org/stable/20029315
Ludwig Erhard, ‘The Free Market Economy Works’, Challenge, Vol. 6, No. 8 (May 1958), pp. 40-45,
available at http://www.jstor.org/stable/40717665
D. F., ‘The Literal Ludwig Erhard’, Challenge, Vol. 6, No. 2 (Nov., 1957), pp. 27-28, available at
http://www.jstor.org/stable/40717935
Further Reading:
Steven Tolliday, ‘Enterprise and State in the West German Wirtschaftswunder: Volkswagen and the
Automobile Industry, 1939-1962’, The Business History Review, Vol. 69, No. 3 (Autumn, 1995), pp.
273-350, available at http://www.jstor.org/stable/3117336
Robert Spencer, ‘Germany in the "Erhard Era"’, International Journal, Vol. 19, No. 4 (Autumn, 1964),
pp. 458-473, available at http://www.jstor.org/stable/40199060
Lecture 21: The Keynes Hayek Debate, Political Context and Consequences.
Keynes was a policy-orientated academic who frequently worked with government. Keynes was
appointed financial representative for the British Treasury at the 1919 Versailles peace conference,
an experience crucial to shaping his outlook. Keynes prophetic warnings to government at the time
(repeated in his 1919 The Economic Consequences of the Peace) that a policy of punishing Germany
would be economically unsustainable and would lead to dire consequences were ignored as the
Treaty of Versailles imposed punitive reparations payments on defeated Germany, which would lead
to money printing, hyperinflation and conditions that proved fertile for the rise of the Nazi party.
Hayek’s views were shaped by a wariness of the threat of totalitarian government for destroying the
25 Copyright © 2013 Uther Charlton-Stevens
freedom of the individual, which explains his attack on central planning as The Road to Serfdom
(1944), and his subsequent distress that through much of his life Keynes seemed to have triumphed –
not merely in the views he had actually put forth, but in the wide interpretation of Keynesianism by
policymakers as a license to take over heavy industries and place government at the commanding
heights of a mixed economy. Where the political consequences of these two figures distinct from the
substance of their economic ideas?
Lecture 22: Marshall Plan Aid, Post-war Recovery, and the 30 Year Boom.
After the war Western Europe faced widespread physical destruction, depopulation, and serious food
shortages. Rationing became worse in Britain and was extended to bread as American lend-lease
wartime aid was replaced with demands for repayment and as Britain shipped food to Germany to
head off starvation there. In response to the American perception (fostered by Winston Churchill’s
warnings about an ‘Iron Curtain’) that this was fertile ground for the spread of communism American
Marshall Aid money, agricultural and industrial equipment poured into the reconstruction of Western
Europe. Some European countries continued wartime central planning of industry, increasing
nationalisations and beginning the construction of welfare states. West Germany adopted the most
free market approach and enjoyed the most significant industrial growth (exemplified by the success
of Volkswagen Type 1 or ‘Beetle’ ). In their first major covert overseas action the recently formed CIA
helped the Christian Democrats to defeat the Communist in Italy. Italian incomes continued to lag
behind the likes of the US, Britain and West Germany, but they too participated in a miraculous 30
year boom of growth, whose pattern seemed to follow the virtuous cycle of Fordism in the pre-
Depression U.S. , as workers became consumers leading to ever more production and employment.
Italian car company Fiat like other European automakers travelled to America to learn from Ford, but
Italian success was symbolized by the ubiquitous Vespa motorcycle. It was not until the oil shocks of
the early 1970s that this continuous boom for Western economies finally came to an end.
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