Economics 210a: Introduction to Economic History: U.C. Berkeley: Spring 2008

The Crisis of the "Mixed Economy"

Econ 210a: Introduction to Economic History: February 28 Class: The Crisis of the Mixed Economy

In the mid-1960s economists thought that they had it right. Bretton Woods. Keynesian domestic demand management. Progressive tax and transfer systems. And perhaps a bit of public ownership of the "commanding heights" and of "indicative planning." The problems of economic management seemed--to some at least, in the first world at least--to be broadly solved. And people were looking forward to future eras in which the "economic problem" would not be allocating scarce resources among various productive uses but allocating abundant products in the interest of human well-being. What is the economic problem in an era in which we have enough food not to be hungry, enough clothing not to be cold, enough shelter not to be wet, and certainly enough diversions not to be bored?

But as a result of the 1970s and 1980s, consideration of these problems was pushed into the far future, because it became clear that economists did not have it right:

Readings:

• J. Bradford DeLong (1997), "America's Peacetime Inflation: The 1970s," in Christina Romer and David Romer. eds., Reducing Inflation: Motivation and Strategy (Chicago: University of Chicago Press) http://www.j-bradford-delong.net/pdf_files/Peacetime_Inflation.pdf.
• William Nordhaus (2004), "A Retrospective on the 1970s Productivity Slowdown" http://mirror.nber.org/cgi-bin/sendWP.cgi/311459297/w10950.pdf.
• Olivier Blanchard "European Unemployment: The Evolution of Facts and Ideas," unpublished manuscript, MIT (October 2005), http://www.nber.org/papers/w11750
• Richard Ericson, "The Classical Soviet-Type Economy: Nature of the System and Implications for Reform," Journal of Economic Perspectives 5 (Fall 1991), pp. 11-28, http://uclibs.org/PID/1011.
• J. Bradford DeLong and Barry J. Eichengreen (2001), "Between Meltdown and Moral Hazard: Clinton Administration International Monetary and Financial Policy" http://www.j-bradford-delong.net/Econ_Articles/CIEP/CIEP_revision06102001.PDF

The embarrassing question is: "What is this class doing in an economic history course?" I say: "Some ask 'why?' I say 'why not!'!"

Barry Eichengreen says that when he was on the job market, Zvi Griliches asked him: "You say you're an economic historian, and you study the 1920s and 1930s. How can that be? I lived through the 1920s and 1930s."

And after today (except for special fill-in and guest lectures, except for dissertation and thesis supervising, except for talking to students about their class papers and then grading them, except for seminars--but I don't have organizational responsibility for any this semester) I am off the teaching line...

Econ 210a: Jan. 24. The First Age of Globalization [Eichengreen DeLong]

I'm filling in for Barry Eichengreen: he has the flu.

Jan. 24. The First Age of Globalization [Eichengreen DeLong]

Albert Fishlow (1985), "Lessons from the Past: Capital Markets During the 19th Century and the Interwar Period," International Organization 39, pp. 383-439, http://www.jstor.org/view/00208183/dm980251/98p00792/0
Douglas Irwin (1998), "Did Late Nineteen Century U.S. Tariffs Promote Infant Industries? Evidence from the Tinplate Industry," NBER Working paper no. 6835 (December), http://www.nber.org/papers/w6835
Arthur Bloomfield (1959), Monetary Policy Under the International Gold Standard, New York: Federal Reserve Bank of New York, selections, on reserve at Haas.
Hugh Rockoff (1983), "Some Evidence on the Real Price of Gold, Its Costs of Production, and Commodity Prices," in Michael Bordo and Anna Schwartz (eds), A Retrospective on the Classical Gold Standard, Chicago: University of Chicago Press, pp. 613-651, on reserve at Haas.

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Questions:

Textbooks say that the gold standard had internal mechanisms that worked automatically to maintain both price and balance-of-payments stability. On what grounds do Arthur Bloomfield and Hugh Rockoff challenge this textbook view? Are their points convincing?

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Thoughts:

• The infant-industry argument. Even John Stuart Mill admitted the power and force of the infant-industry argument. Doug Irwin takes it on. How convincing do you find his argument?

• Are there any truly important differences between late-nineteenth century capital markets and capital markets today. If so, what are the truly important differences?

• The classical gold standard in theory and history

  • Did it work?
  • How did it work in the core?
  • How did it work in the periphery?
  • The "rules of the game"--violated
  • What did central banks do?
    • Stabilized bond prices
    • Mirrored the Bank of England
    • What did the Bank of England do?
      • Avoided gold losses...
      • ???

Econ 210a: Fall 2006: Readings for November 8--Catch-Up

• Jan de Vries (1994), "The Industrious Revolution and the Industrial Revolution," Journal of Economic History 54:2 (June), pp. 249-70 http://links.jstor.org/sici?sici=0022-0507%28199406%2954%3A2%3C249%3ATIRATI%3E2.0.CO%3B2-8
• Adam Smith (1776), The Wealth of Nations, entire http://www.econlib.org/library/Smith/smWNtoc.html
• Daron Acemoglu, Simon Johnson and James A. Robinson (2005), "The Rise of Europe: Atlantic Trade, Institutional Change and Economic Growth," American Economic Review http://econ-www.mit.edu/faculty/download_pdf.php?id=1181.

Economics 210a: Fall 2006: Readings, Revised Schedule

REVISED, MORE-FINAL SCHEDULE

Oct. 11. Organizational Meeting (Short) [DeLong]

• Recommended: Robert M. Solow (1985), "Economic History and Economics," American Economic Review Papers and Proceedings 75 (May): 328-331.http://www.jstor.org/view/00028282/di950057/95p00934/0.
• M. I. Finley (1970), "Aristotle and Economic Analysis," Past and Present, No. 47. (May), pp. 3-25 http://www.jstor.org/view/00312746/ap020049/02a00010/0.

Oct. 18. The Malthusian Economy [DeLong]

• Jared Diamond (1987), "The Invention of Agriculture: The Worst Mistake in the History of the Human Race," Discover http://www.agron.iastate.edu/courses/agron342/diamondmistake.html
• M. I. Finley (1965), "Technical Innovation and Economic Progress in the Ancient World," Economic History Review, New Series, 18:1, pp. 29-45 http://links.jstor.org/sici?sici=0013-0117%281965%292%3A18%3A1%3C29%3ATIAEPI%3E2.0.CO%3B2-1
• Gregory Clark (2005), "The Logic of the Malthusian Economy," chapter 2 of The Conquest of Nature http://www.econ.ucdavis.edu/faculty/gclark/GlobalHistory/Global%20History-2.pdf

Oct. 25. Trade and the Industrious Revolution [DeLong]

• Avner Greif (1989), "Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders," Journal of Economic History 49:4 (December), pp. 857-882 http://links.jstor.org/sici?sici=0022-0507%28198912%2949%3A4%3C857%3ARACIMT%3E2.0.CO%3B2-M
• J. Bradford DeLong and Andrei Shleifer (1993), "Princes and Merchants: City Growth Before the Industrial Revolution," Journal of Law and Economics 36:5 (Oct), pp. 671-702 http://www.j-bradford-delong.net/movable_type/archives/000638.html.
• Jan de Vries (1994), "The Industrious Revolution and the Industrial Revolution," Journal of Economic History 54:2 (June), pp. 249-70 http://links.jstor.org/sici?sici=0022-0507%28199406%2954%3A2%3C249%3ATIRATI%3E2.0.CO%3B2-8
• Adam Smith (1776), The Wealth of Nations, Book I and Book V http://www.econlib.org/library/Smith/smWNtoc.html

Nov. 1. Agriculture and Forced Labor in Early Modern Growth [DeLong]

• Evsey Domar (1970), "The Causes of Slavery or Serfdom: A Hypothesis," Journal of Economic History, pp. 18-32 http://www.j-bradford-delong.net/movable_type/2003_archives/001447.html
• Stanley Engerman and Kenneth Sokoloff (1994), "Factor Endowments, Institutions and Differential Paths of Development Among New World Economies: A View from Economic Historians of the United States" (Cambridge: NBER Working Paper no. h0066) http://papers.nber.org/papers/h0066.pdf
• Claudia Goldin and Kenneth Sokoloff (1984), "The Relative Productivity Hypothesis of Industrialization: The American Case, 1820-1850," Quarterly Journal of Economics 99 (August), pp. 461-87 http://links.jstor.org/sici?sici=0033-5533%28198408%2999%3A3%3C461%3ATRPHOI%3E2.0.CO%3B2-V
• O'Brien, Patrick (1982), "European Economic Development: the Contribution of the Periphery," Economic History Review, 1-18. http://links.jstor.org/sici?sici=0013-0117%28198202%292%3A35%3A1%3C1%3AEEDTCO%3E2.0.CO%3B2-W

Nov. 8. Catch-Up Week [DeLong]

Nov. 15. The Industrial Revolution in Britain [Eichengreen]

• Joel Mokyr, "Technological Change, 1700-1830," in Roderick Floud and Donald McCloskey eds., The Economic History of Britain Since 1700, Cambridge: Cambridge University Press, second edition, 1994, pp.12-43. On reserve at Haas.
• N.F.R. Crafts, British Economic Growth During the Industrial Revolution, Oxford: Clarendon Press, 1986, pp.9-114 (read selectively). On reserve at Haas.
• Maxine Berg and Pat Hudson, "Rehabilitating the Industrial Revolution," Economic History Review new ser. 45, pp.23-50. Available online: http://www.jstor.org/view/00130117/di011838/01p0208u/0
• Peter Temin, "Two Views of the British Industrial Revolution," Journal of Economic History 57, pp.63-82. http://ideas.repec.org/p/nbr/nberhi/0081.html
• Jeffrey Williamson, "Why Was British Economic Growth So Slow During the Industrial Revolution?" Journal of Economic History 44, pp.687-712 http://www.jstor.org/view/00220507/di975668/97p1230f/0

Nov 22. American Exceptionalism [Eichengreen]

• Paul David (1966), "The Mechanization of Reaping in the Ante-Bellum Midwest," in Henry Rosovsky (ed.), Industrialization in Two Systems, New York: Wiley, pp. 3-28, on reserve at Haas.
• Peter Temin (1966), "Labor Scarcity and the Problem of American Industrial Efficiency in the 1850s," Journal of Economic History 26, pp. 277-298 http://www.jstor.org/view/00220507/di975596/97p0463m/0
• Kenneth Sokoloff (1984), "Was the Transition from the Artisanal Shop to the Non-Mechanized Factory Associated with Gains in Efficiency?" Explorations in Economic History 21, pp.351-382. http://www.nber.org/papers/w1386
• Robert Fogel (1962), "A Quantitative Approach to the Study of Railroads in American Economic Growth," Journal of Economic History 22, pp. 163-197, http://www.jstor.org/view/00220507/di975579/97p1266k/0
• Alfred Chandler (1990), Scale and Scope, Cambridge: Harvard University Press, chapter 3, pp. 51-89, on reserve at Haas.

Nov. 29. The Spread of Industrialization [DeLong]

• Nicholas Crafts (2002), "The Solow Productivity Paradox in Historical Perspective," (London: CEPR Discussion Paper no.3142) http://www.cepr.org/pubs/dps/DP3142.asp
• Alfred D. Chandler (1992), "Organizational Capabilities and the Economic History of the Industrial Enterprise," Journal of Economic Perspectives 6 (Summer) http://links.jstor.org/sici?sici=0895-3309%28199222%296%3A3%3C79%3AOCATEH%3E2.0.CO%3B2-X
• Susan Wolcott and Gregory Clark (1999). "Why Nation's Fail: Managerial Decisions and Performance in Indian Cotton Textiles, 1890-1938." Journal of Economic History, June http://links.jstor.org/sici?sici=0022-0507%28199906%2959%3A2%3C397%3AWNFMDA%3E2.0.CO%3B2-9
• Karl Marx and Friedrich Engels (1848), "Manifesto of the Communist Party" http://www.marxists.org/archive/marx/works/1848/communist-manifesto/

Dec 6. 19th Century Capital Markets [Eichengreen]

• Alexander Gerschenkron (1964), Economic Backwardness in Historical Perspective, Cambridge, MA: Harvard University Press, chapter 1, pp. 5-30, on reserve at Haas.
• Naomi Lamoreaux (1986), "Banks, Kinship, and Economic Development: The New England Case," Journal of Economic History 46, pp.647-667, http://www.jstor.org/view/00220507/di975676/97p04006/0
• Hugh Rockoff (1974), "The Free Banking Era: A Reexamination," Journal of Money, Credit and Banking 6, pp. 141-167, http://www.jstor.org/view/00222879/di963065/96p0182b/0
• Lance Davis (1965), "The Investment Market, 1870-1914: The Evolution of a National Market," Journal of Economic History 25, pp. 355-393, http://www.jstor.org/view/00220507/di975592/97p0351c/0
• Howard Bodenhorn and Hugh Rockoff (1992), "Regional Interest Rates in Antebellum America," chapter 5 in Claudia Goldin and Hugh Rockoff (eds), Strategic Factors in 19th Century American Economic History, Chicago: University of Chicago Press, pp. 159-187, on reserve at Haas.

Jan 17. 19th Century Labor Markets [Eichengreen]

• Sanford Jacoby (1984), "The Development of Internal Labor Markets in American Manufacturing Firms," in Paul Osterman (ed.), Internal Labor Markets, Cambridge, Mass.: MIT Press, pp. 23-69, on reserve at Haas.
• Susan Carter and Elizabeth Savoca (1988), "Labor Mobility and Lengthy Jobs in 19th Century America," Journal of Economic History 50, pp. 1-16, < http://links.jstor.org/sici?sici=0022-0507%28199003%2950%3A1%3C1%3ALMALJI%3E2.0.CO%3B2-9 >
• John James (1990), "Job Tenure in the Gilded Age," in George Grantham and Mary McKinnon, eds., Labour Market Evolution, London: Routledge, pp.185-204, on reserve at Haas.
• Joshua Rosenbloom (1990), "One Market or Many? Labor Market Integration in the Late Nineteenth Century United States," Journal of Economic History 50, pp. 85-107, http://www.jstor.org/view/00220507/di975690/97p01544/0
• Joshua Rosenbloom (2002), "Employment Agencies and Labor Exchanges: The Impact of Intermediaries in the Market for Labor," in Looking for Work, Searching for Workers: American Labor Markets during Industrialization (Cambridge, MA: Cambridge University Press), chapter 3, pp. 46-79, on reserve at Haas.

Jan. 24. The First Age of Globalization [Eichengreen]

• Albert Fishlow (1985), (Lessons from the Past: Capital Markets During the 19th Century and the Interwar Period,( International Organization 39, pp. 383-439, http://www.jstor.org/view/00208183/dm980251/98p00792/0
• Douglas Irwin (1998), "Did Late Nineteen Century U.S. Tariffs Promote Infant Industries? Evidence from the Tinplate Industry," NBER Working paper no. 6835 (December), http://www.nber.org/papers/w6835
• Arthur Bloomfield (1959), Monetary Policy Under the International Gold Standard, New York: Federal Reserve Bank of New York, on reserve at Haas.
• Hugh Rockoff (1983), "Some Evidence on the Real Price of Gold, Its Costs of Production, and Commodity Prices," in Michael Bordo and Anna Schwartz (eds), A Retrospective on the Classical Gold Standard, Chicago: University of Chicago Press, pp. 613-651, on reserve at Haas.

Jan. 31. The U.S. Depression [DeLong and Eichengreen]

• Milton Friedman and Anna Schwartz (1963), A Monetary History of the United States, 1867-1960, Princeton: Princeton University Press, chapter 13, pp. 676-700, on reserve at Haas.
• Christina Romer (1990), "The Great Crash and the Onset of the Great Depression," Quarterly Journal of Economics 104, pp.719-736, http://www.jstor.org/view/00335533/di971078/97p00037/0
• Ben Bernanke (1983), "Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression" American Economic Review 73, pp. 257-276, http://www.jstor.org/view/00028282/di950033/95p00602/0
• Paul Krugman, "Introduction" to John Maynard Keynes, The General Theory of Employment, Interest and Money http://www.pkarchive.org/economy/GeneralTheoryKeynesIntro.html
• John Maynard Keynes (1932), "The World's Economic Outlook," Atlantic http://www.theatlantic.com/unbound/flashbks/budget/keynesf.htm

Feb. 7. The World Depression [Eichengreen]

• Barry Eichengreen (1992), Golden Fetters: The Gold Standard and the Great Depression 1919-1939 (New York: Oxford University Press), chapter 1, pp. 3-28, on reserve at Haas.
• Ben Bernanke and Harold James, "The Gold Standard, Deflation and Financial Crisis in the Great Depression: An International Comparison," in Glenn Hubbard (ed), Financial Markets and Financial Crises, University of Chicago Press (1991), pp.33-68. On reserve at Haas.
• Margaret Weir and Theda Skocpol, "State Structures and Social Keynesianism: Responses to the Great Depression in Sweden and the United States," International Journal of Comparative Sociology 19, pp.4-29. [web link here]

Feb. 14. The Post-World War II Golden Age [Eichengreen]

• Peter Temin (2002), "The Golden Age of European Growth Reconsidered," European Review of Economic History 6, pp. 33-22. http://www.international.ucla.edu/cms/files/Temin.pdf
• Mancur Olson (1996), "The Varieties of Eurosclerosis: The Rise and Decline of Nations Since 1982," in Nicholas Crafts and Gianni Toniolo (eds), Economic Growth in Europe Since 1945, Cambridge, Cambridge University Press, pp.73-94.
• Barry Eichengreen, "Institutions and Economic Growth: Europe Since 1945," in Nicholas Crafts and Gianni Toniolo (eds), Economic Growth in Europe Since 1945, Cambridge, Cambridge University Press, pp.38-72.

Feb. 21. Combined and Uneven Development [DeLong]

• Richard Easterlin (1981), "Why Isn't the Whole World Developed?" Journal of Economic History 41:1 (March), pp. 1-19 http://links.jstor.org/sici?sici=0022-0507%28198103%2941%3A1%3C1%3AWITWWD%3E2.0.CO%3B2-Y
• Angus Maddison (1983), "A Comparison of Levels of GDP Per Capita in Developed and Developing Countries, 1700-1980," Journal of Economic History 43:1 (March), pp. 27-41 http://links.jstor.org/sici?sici=0022-0507%28198303%2943%3A1%3C27%3AACOLOG%3E2.0.CO%3B2-3
• J. Bradford DeLong and Larry Summers (1991), "Equipment Investment and Economic Growth," QJE, 445-502
• Lant Pritchett, "Divergence, Big Time," Journal of Economic Perspectives (Summer 1997), pp. 3-17, http://uclibs.org/PID/1011
• Dani Rodrik, "Getting Interventions Right: How South Korea and Taiwan Grew Rich," Economic Policy 20, (1995) pp. 55-107, http://papers.nber.org/papers/w4964.pdf

Feb. 28. The Crisis of the Mixed Economy [DeLong]

• Olivier Blanchard "European Unemployment: The Evolution of Facts and Ideas," unpublished manuscript, MIT (October 2005), http://www.nber.org/papers/w11750
• J. Bradford DeLong (1997), "America's Peacetime Inflation: The 1970s," in Christina Romer and David Romer. eds., Reducing Inflation: Motivation and Strategy (Chicago: University of Chicago Press). http://www.j-bradford-delong.net/pdf_files/Peacetime_Inflation.pdf
• Richard Ericson, "The Classical Soviet-Type Economy: Nature of the System and Implications for Reform," Journal of Economic Perspectives 5 (Fall 1991), pp. 11-28, http://uclibs.org/PID/1011
• William Nordhaus (2004), "A Retrospective on the 1970s Productivity Slowdown" http://mirror.nber.org/cgi-bin/sendWP.cgi/311459297/w10950.pdf
• J. Bradford DeLong and Barry J. Eichengreen (2001), "Between Meltdown and Moral Hazard"

Econ 210a: Fall 2006: Agriculture and Forced Labor in Early Modern Growth: Recommended Readings

Recommended auxiliary readings:

Daron Acemoglu, Simon Johnson and James A. Robinson (2005), "The Rise of Europe: Atlantic Trade, Institutional Change and Economic Growth," American Economic Review http://econ-www.mit.edu/faculty/download_pdf.php?id=1181.

Robert Brenner (1977), "The Origins of Capitalist Development: A Critique of Neo-Smithian Marxism," New Left Review I/104 http://www.newleftreview.net/?page=article&view=185.

Paul David and Peter Temin (1976), "Slavery: The Progressive Institution?" in Paul David et. al., Reckoning with Slavery, chapter 5.

Robert Fogel and Stan Engerman (1974), Time on the Cross: The Economics of American Negro Slavery, chapters 1, 4, and 6.

David Galenson (1981), White Servitude in Colonial America, chapter 9.

Roger Ransom and Richard Sutch (1977), One Kind of Freedom: The Economic Consequences of Emancipation, chapters 2, 3, and 9.

Barbara L. Solow (1987), "Capitalism and Slavery in the Exceedingly Long Run," in B.L. Solow and S.L. Engerman (eds.), British Capitalism and Caribbean Slavery: The Legacy of Eric Williams (Cambridge University Press), pp. 51-77.

Econ 210a: Fall 2006: Trade and Industriousness: Recommended, Highly Optional, Readings

Recommended (but not required: only for those of you with great interest and copious amounts of spare time) readings for October 25:

• Adam Smith (1776), The Wealth of Nations, entire http://www.econlib.org/library/Smith/smWNtoc.html
• Douglass North and Barry Weingast (1989), "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," Journal of Economic History 49:4 (December), pp. 803-832 http://links.jstor.org/sici?sici=0022-0507%28198912%2949%3A4%3C803%3ACACTEO%3E2.0.CO%3B2-9
• William Baumol (1990), "Entrepreneurship: Productive, Unproductive, and Destructive," Journal of Political Economy 98:5(1) (Oct), pp. 893-921 http://links.jstor.org/sici?sici=0022-3808%28199010%2998%3A5%3C893%3AEPUAD%3E2.0.CO%3B2-Z
• Peter Temin (2001), "A Market Economy in the Early Roman Empire," Journal of Roman Studies 91, pp. 169-181. http://links.jstor.org/sici?sici=0075-4358%282001%2991%3C169%3AAMEITE%3E2.0.CO%3B2-N *Kevin H. O'Rourke and Jeffrey G. Williamson (2001), "After Columbus: Explaining the Global Trade Boom 1500-1800" (Cambridge: NBER Working Paper w8186, March) http://papers.nber.org/w8186

Post-Neolithic Pre-Industrial Economies: Recommended, Highly Optional, Readings

Recommended (but not required: only for those of you with great interest and copious amounts of spare time) readings for October 18:

• William Godwin (1793), "An Enquiry Concerning Political Justice" http://dwardmac.pitzer.edu/anarchist_archives/godwin/PJfrontpiece.html
• Thomas R. Malthus (1795), "An Essay on the Principle of Population" http://www.econlib.org/library/Malthus/malPlong.html
• Paul R. Ehrlich (1968), The Population Bomb http://en.wikipedia.org/wiki/The_Population_Bomb
• Peter H. Lindert (1986), "Unequal English Wealth since 1670," The Journal of Political Economy 94:6 (December), pp. 1127-1162 http://www.jstor.org/view/00223808/di951041/95p0070r/0
• Michael Kremer (1993), "Population Growth and Technological Change: One Million B.C. to 1990," Quarterly Journal of Economics 108:3 (August), pp. 681-716 http://links.jstor.org/sici?sici=0033-5533%28199308%29108%3A3%3C681%3APGATCO%3E2.0.CO%3B2-A
• Richard H. Steckel (1995), "Stature and the Standard of Living," Journal of Economic Literature 33:4 (December), pp. 1903-1940 http://links.jstor.org/sici?sici=0022-0515%28199512%2933%3A4%3C1903%3ASATSOL%3E2.0.CO%3B2-C
• J. Bradford DeLong (1998), "Estimates of World GDP, One Million B.C. – Present " http://delong.typepad.com/print/20061012_LRWGDP.pdf
• Gregory Clark (2004), "Lifestyles of the Rich and Famous: Living Costs of the Rich versus the Poor in England, 1209-1869" http://www.iisg.nl/hpw/papers/clark.pdf#search=%22clark%20lifestyles%20of%20the%20rich%20and%20famous%22
• Kenneth Arrow et al. (2004), "Are We Consuming too Much?" http://www.atypon-link.com/AEAP/doi/pdf/10.1257/0895330042162377
• Gregory Clark (2005), "Living Standards in the Malthusian Era," chapter 3 of The Conquest of Nature http://www.econ.ucdavis.edu/faculty/gclark/GlobalHistory/Global%20History-3.pdf