All quiet before the take-off? Pre-industrial regional inequality in Sweden (1571-1850)

by Anna Missiaia and Kersten Enflo (Lund University)

This research is due to be published in the Economic History Review and is currently available on Early View.

 

Missiaia Main.jpg
Södra Bancohuset (The Southern National Bank Building), Stockholm. Available here at Wikimedia Commons.

For a long time, scholars have thought about regional inequality merely as a by-product of modern economic growth: following a Kuznets-style interpretation, the front-running regions increase their income levels and regional inequality during industrialization; and it is only when the other regions catch-up that overall regional inequality decreases and completes the inverted-U shaped pattern. But early empirical research on this theme was largely focused on the  the 20th century, ignoring industrial take-off of many countries (Williamson, 1965).  More recent empirical studies have pushed the temporal boundary back to the mid-19th century, finding that inequality in regional GDP was already high at the outset of modern industrialization (see for instance Rosés et al., 2010 on Spain and Felice, 2018 on Italy).

The main constraint for taking the estimations well into the pre-industrial period is the availability of suitable regional sources. The exceptional quality of Swedish sources allowed us for the first time to estimate a dataset of regional GDP for a European economy going back to the 16th century (Enflo and Missiaia, 2018). The estimates used here for 1571 are largely based on a one-off tax proportional to the yearly production: the Swedish Crown imposed this tax on all Swedish citizens in order to pay a ransom for the strategic Älvsborg castle that had just been conquered by Denmark. For the period 1750-1850, the estimates rely on standard population censuses. By connecting the new series to the existing ones from 1860 onwards by Enflo et al. (2014), we obtain the longest regional GDP series for any given country.

We find that inequality increased dramatically between 1571 and 1750 and remained high until the mid-19th century. Thereafter, it declined during the modern industrialization of the country (Figure 1). Our results discard the traditional  view that regional divergence can only originate during an industrial take-off.

 

Figure 1. Coefficient of variation of GDP per capita across Swedish counties, 1571-2010.

Missiaia 1
Sources: 1571-1850: Enflo and. Missiaia, ‘Regional GDP estimates for Sweden, 1571-1850’; 1860-2010: Enflo et al, ‘Swedish regional GDP 1855-2000 and Rosés and Wolf, ‘The Economic Development of Europe’s Regions’.

 

Figure 2 shows the relative disparities in four benchmark years. If the country appeared relatively equal in 1571, between 1750 and 1850 both the mining districts in central and northern Sweden and the port cities of Stockholm and Gothenburg emerged.

 

Figure 2. The relative evolution of GDP per capita, 1571-1850 (Sweden=100).

Missiaia 2
Sources: 1571-1850: Enflo and. Missiaia, ‘Regional GDP estimates for Sweden, 1571-1850’; 2010: Rosés and Wolf, ‘The Economic Development of Europe’s Regions’.

The second part of the paper is devoted to the study of the drivers of pre-industrial regional inequality. Decomposing the Theil index for GDP per worker, we show that regional inequality was driven by structural change, meaning that regions diverged because they specialized in different sectors. A handful of regions specialized in either early manufacturing or in mining, both with a much higher productivity per worker compared to agriculture.

To explain this different trajectory, we use a theoretical framework introduced by Strulik and Weisdorf (2008) in the context of the British Industrial Revolution: in regions with a higher share of GDP in agriculture, technological advancements lead to productivity improvements but also to a proportional increase in population, impeding the growth in GDP per capita as in a classic Malthusian framework. Regions with a higher share of GDP in industry, on the other hand, experienced limited population growth due to the increasing relative price of children, leading to a higher level of GDP per capita. Regional inequality in this framework arises from a different role of the Malthusian mechanism in the two sectors.

Our work speaks to a growing literature on the origin of regional divergence and represents the first effort to perform this type of analysis before the 19th century.

 

To contact the authors:

anna.missiaia@ekh.lu.se

kerstin.enflo@ekh.lu.se

 

References

Enflo, K. and Missiaia, A., ‘Regional GDP estimates for Sweden, 1571-1850’, Historical Methods, 51(2018), 115-137.

Enflo, K., Henning, M. and Schön, L., ‘Swedish regional GDP 1855-2000 Estimations and general trends in the Swedish regional system’, Research in Economic History, 30(2014), pp. 47-89.

Felice, E., ‘The roots of a dual equilibrium: GDP, productivity, and structural change in the Italian regions in the long run (1871-2011)’, European Review of Economic History, (2018), forthcoming.

Rosés, J., Martínez-Galarraga, J. and Tirado, D., ‘The upswing of regional income inequality in Spain (1860–1930)’,  Explorations in Economic History, 47(2010), pp. 244-257.

Strulik, H., and J. Weisdorf. ‘Population, food, and knowledge: a simple unified growth theory.’ Journal of Economic Growth 13.3 (2008): 195.

Williamson, J., ‘Regional Inequality and the Process of National Development: A Description of the Patterns’, Economic Development and Cultural Change 13(1965), pp. 1-84.

 

Global trade imbalances in the classical and post-classical world

by Jamus Jerome Lim (ESSEC Business School and Center for Analytical Finance)

 

Global_trade_visualization_map,_2014
A Global trade visualization map, with data is derived from Trade Map database of International Trade Center. Available on Wikipedia.

In 2017, the bilateral trade deficit between China and the United States amounted to $375 billion, a staggering amount just shy of what the latter incurred against the rest of the world combined. And not only is this deficit large, it has been remarkably persistent: the chronic imbalance emerged in earnest in 1989, and has persisted for the better part of three decades. Some have even pointed to such imbalances as a contributing factor to the global financial crisis of 2008.

While such massive, chronic imbalances may strike one as artefacts of a modern, hyperglobalised world economy, nothing could be further from the truth. For example, recent economic history records large, persistent imbalances between the United States and Britain during the former’s earlier stages of development. Such imbalances also characterised the rise of Japan following the Second World War.

In recent research, we show that external imbalances between two major economic powers – an established leader, and a rising follower – were also observed over three earlier periods in economic history. These were the deficits borne by the Roman empire vis-à-vis pre-Gupta India circa 1CE; the borrowing by the Abbasid caliphate from Carolingian Frankia in the early ninth century; and the imbalances between West European kingdoms and the Byzantine empire that emerged around the 1300s.

Although data paucity implies that definitive claims on current account deficits are all but impossible, it is possible to rely on indirect sources of evidence to infer the likely presence of imbalances. One such source consists of trade-related documents from the time as well as pottery finds, which ascertain not just the existence but also the size of exchange relationships.

For example, using such records, we demonstrate that Baghdad – the capital of the Abbasid Caliphate – received furs and slaves from the comparative economic backwater that was the Carolingian empire, in exchange for goods such as spices, dates and olive oil. This imbalance may have lasted as long as several centuries.

A second source of evidence comes from numismatic records, especially coin hoards. Hoards of Roman gold aurei and silver dinarii have been discovered, for example, in India, with coinage dating from as early as the reign of Augustus through until at least that of Marcus Aurelius, well over half a century. Rome relied on such specie exports to fund, among other expenditures, continued military adventurism during the second century.

Our final source of evidence relies on fiscal records. Given the close relationship between external and fiscal balances – all else equal, greater government borrowing gives rise to a larger external deficit – chronic budgetary shortfalls generally give rise to rising imbalances.

This was very much the case in Byzantium prior to its decline: around the turn of the previous millennium, the Empire’s saving and reserves were in significant surplus, lending credence to the notion that the flow of products went from East to West. The recipients of such goods? The kingdoms of Western Europe, paid for with silver.

Is bad news ever good for stocks? The importance of time-varying war risk and stock returns

by Gertjan Verdickt (University of Antwerp)

This paper was presented at the EHS Annual Conference 2019 in Belfast.

 

'Brussels_Stock_Exchange_Building_(Bourse_or_Beurs)'_by_Tania_Dey
Brussels Stock Exchange Building (Bourse or Beurs). Available at Wikimedia Commons.

One of the most severe events that affect stock markets is arguably a war. Because wars rarely occur, it is difficult to document what the effect of an increase in the threat and act of war is. Going back to history can go a long way to fill this gap.

In my research, I start by collecting a large sample of articles from the archives of The Economist to create the metrics, Threat and Act. This sample contains 79,568 articles from the period January 1885 to December 1913. To mimic investors and understand the content of news items, I rely on a textual analysis with a thorough human reading.

First, I document that Threat is a good predictor for actual events. If The Economist writes more about a potential military conflict, the probability of that conflict actually happening in the future is higher.

The other metric, Act, only captures conflicts that are happening right now. This suggests that, in contrast to what other historians find, The Economist did not write about war excessively but chose their war news coverage appropriately.

Verdickt Graph

Second, I focus on seven countries with stock listings on the Brussels Stock Exchange: Belgium, France, Germany, Italy, Russia, Spain and the Netherlands. These countries are important for Belgium, either through import and export or with a large number of stock listings in Brussels.

Additionally, I use information on other European and non-European countries with stock listings in Brussels to test whether war risk could be considered a European or global form of risk.

For the seven countries, I document that firms do not adjust dividend policies when there is an increase in the threat of war, but only when there is an outbreak of war.

Investors, on the other hand, sell their stocks when there is an increase in the potential and outbreak of a military conflict. When the threat is not followed by an act, stock prices adjust increase to the similar levels as before.

But when there is an outbreak of war, stock returns are negative up to 12 months after the initial increase. This shows that war risk is priced appropriately in stock markets, but that the outbreak of war is associated with higher uncertainty and welfare costs.

More interestingly, I show that there is a decrease in stock prices for other European countries, but no effect for non-European countries. This suggests that investors value the importance of proximity to a war. But firms from these countries do not adjust their dividend policy when threat and act increase.

Unions and American Income Inequality at Mid-Century

by William J. Collins (Vanderbilt University) and Gregory T. Niemesh (Miami University)

This article is published by The Economic History Review, and it is available on the EHS website.

 

EHS Great Depression
Crowd of depositors gather in the rain outside the Bank of United States after its failure. Available at Wikimedia Commons

Rising income inequality in the United States has attracted scholars’ attention for decades, resulting in an extensive and detailed literature on the trend’s causes and consequences.  An equally large but much less studied decline in income inequality occurred in the US during the 1940s.  This led to an era of relatively compressed income inequality that lasted into the 1970s. Goldin and Margo (1992) called this ‘The Great Compression.’

Our recent research has explored the role of changing labour market institutions in contributing to the Great Compression, with a focus on the role of labour unions.  In the US, labour unions rose to prominence starting in the late 1930s, following the Wagner Act of 1935 and a Supreme Court decision in 1937 upholding the Act.  This recast the legal framework under which unions formed and collectively bargained by creating the National Labor Relations Board to oversee representation elections and enforce the Act’s provisions, including prohibitions of various ‘unfair practices’ which employers had used to discourage unions.  Unions continued to grow through the 1940s, especially during the Second World War, and they peaked as a share of employment in the early 1950s.

Time series graphs of union density and income inequality over the full twentieth century in the US are nearly mirror images of each other (Figure 1).  But it is difficult to evaluate the role of unions in influencing this period’s inequality due to limitations of standard data sources.  The US census, for instance, has never inquired about union membership, which makes it impossible to link individual-level wages to individual-level union status in nationally representative samples for this period (see Callaway and Collins 2018 and Farber et al. 2017 for efforts to develop data from other sources).  Research on US unions later in twentieth century, when data are more plentiful, highlight their wage compressing character, as does some of the historical literature on wage setting during the Second World War, but there is much left to learn.

 

Figure 1: Unions and income inequality trends in the 20th-century United States

Great Depression Table

Sources: See Collins and Niemesh (forthcoming).

 

In a paper titled ‘Unions and the Great Compression of wage inequality in the United States at mid-century: evidence from labour markets,’ we provide a novel perspective on changes in inequality at the local level during the 1940s (Collins and Niemesh, forthcoming).  The building blocks for the empirical work are as follows: the “complete count” census microdata for 1940 provide information on wages and industry of employment (Ruggles et al. 2015); Troy’s (1957) work on mid-century unionization provides information on changes in unionization at the industry level over the 1940s; and subsequent censuses provide sufficient information to form comparable local-level measures of wage inequality.  We use a combination of local employment data circa 1940 and changes in unionization by industry after 1939 to create a variable for local ‘exposure’ to changes in unionization.

We ask whether places with more exposure to unionization due to their pre-existing industrial structure experienced more compression of wages during the 1940s and beyond, conditional on many other features of the local economy including wartime production contracts and allowing for differences in regional trends. The answer is yes: a one standard-deviation increase in the exposure to unionization variable is associated with a 0.072 log point decline in inequality between the 90th and 10th wage percentile in the 1940s (equivalent to 32 percent of the mean decline).  The association between local union exposure and wage compression is concentrated in the lower part of wage distribution.  That is, the change in inequality between the 50th and 10th percentile is more strongly associated with exposure to unionization than the change between 90th and 50th percentile.  As far as we can tell, this mid-century pattern was not driven by the re-sorting of workers (e.g., high skilled workers sorting out of unionizing locations) or by firms exiting places that were highly exposed to unionization.

We also explore whether the impression unions likely made on local wage structures persisted, even as private sector unions declined through the last decades of the twentieth century. In fact, the pattern fades a bit with time, but it remains visible to the end of the twentieth century. We leave for future research important questions about the mechanisms of persistence in local wage structures, non-wage aspects of unionization (e.g., implications for benefits or safety), implications for firm behaviour in the long run, and international comparisons.

 

To contact William J. Collins: william.collins@Vanderbilt.Edu

To contact Gregory T. Niemesh: niemesgt@miamioh.edu

 

Notes

Callaway, B. and W.J. Collins. ‘Unions, workers, and wages at the peak of the American labor movement.’ Explorations in Economic History 68 (2018), pp. 95-118.

Collins, W.J. and G.T. Niemesh. ‘Unions and the Great Compression of wage inequality in the US at mid-century: evidence from local labour markets.’ Economic History Review (forthcoming). https://doi.org/10.1111/ehr.12744

Farber, H.S., Herbst D., Kuziemko I., and Naidu, S. ‘Unions and inequality over the twentieth century: new evidence from survey data.” NBER Working Paper 24587 (Cambridge MA, 2018).

Goldin, C. and R.A. Margo, ‘The Great Compression: the wage structure in the United States at midcentury.’ Quarterly Journal of Economics 107 (1992), pp. 1-34.

Ruggles, S., K. Genadek, R. Goeken, J. Grover, and M. Sobek. Integrated public use microdataseries: version 6.0 [Machine-readable database]. (Minneapolis: University of Minnesota, 2015).

Troy, L., The distribution of union membership among the states, 1939 and 1953. (New York: National Bureau of Economic Research, 1957).

Wheels of change: skill-biased factor endowments and industrialisation in eighteenth century England

by Joel Mokyr (Northwestern University), Assaf Sarid (Haifa University), Karine van der Beek (Ben-Gurion University)

Shorrocks_Lancashire_Loom_with_a_weft_stop_MOSI_6406
Shorrocks Lancashire Loom with a weft stop, The Museum of Science and Industry in Manchester. Available at Wikimedia Commons

The main manifestation of an industrial revolution taking place in Britain in the second half of the eighteenth century was the shift of textile production (that is, the spinning process), from a cottage-based manual system, to a factory-based capital-intensive system, with machinery driven by waterpower and later on by steam.

The initial shift in production technology in the 1740s took place in all the main textile centres (the Cotswolds, East Anglia, and in the middle Pennines in Lancashire and the West-Riding). But towards the end of the century, as the intensity of production and the application of Watt’s steam engine increased, the supremacy of the cotton industry of the northwestern parts of the country began to show, and this is where the industrial revolution eventually took place and persisted.

Our research examines the role of factor endowments in determining the location of technology adoption in the English textile industry and its persistence since the Middle Ages. In line with recent research on economic growth, which emphasises the role of factor endowments on long run economic development, we claim that the geographical and institutional environment determined the location of watermill technology adoption in the production of foodstuffs.

In turn, the adoption of the watermill for grain grinding (around the tenth and eleventh centuries), affected the area’s path of development by determining the specialisation and skills that evolved, and as a result, its suitability for the adoption of new textile technologies, textile fulling (thirteenth and fourteenth centuries) and, later on, spinning (eighteenth century).

The explanation for this path dependence is that all these machines, including other machinery that was developed in various production processes (such as sawing mills, forge mills, paper mills, etc.), were all based on similar mechanical principles as the grinding watermills. Thus, their implementation did not require additional resources or skills and it was therefore more profitable to invest in them and expand textile production, in places that were specialised and experienced in the construction and maintenance of grinding watermills.

As textile exports expanded in the second half of the eighteenth century (both woollen and cotton textiles), Watt’s steam engine was introduced. The watermills that operated the newly introduced spinning machinery began to be replaced with the more efficient steam engines, and almost disappeared by the beginning of the nineteenth century. This stage of technological change took place in Lancashire’s textile centre, which enjoyed both the proximity of coal as well as of strong water flows, and was therefore suitable for the implementation of steam engine technology.

We use information from a variety of sources, including the Apprenticeship Stamp-Tax Records (eighteenth century), Domesday Book (eleventh century), as well as geographical databases, and show that the important English textile centres of the eighteenth century, evolved in places that had more grinding watermills during the Domesday Survey (1086).

To be more precise, we find that on average, there was an additional textile merchant in 1710 in areas that had three more watermills in 1086. The magnitude of this effect is important given that there were on average 1.2 textile cloth merchants in an area (the maximum was 34 merchants).

We also find that textile centres in these areas persisted well into the eighteenth century and specialised in skilled mechanical human capital (measured by the number of apprentices to masters specialising in watermill technology, that is, wrights, in the eighteenth century), which was essential for the development, implementation and maintenance of waterpower as well as mechanical machinery.

The number of this type of worker increased in the 1750s in all the main textile centres until the 1780s, when their number was declining in Lancashire as it was adopting a new technology that was no longer dependent on their skills.

From LSE Business Review – “Turf wars? Placing geographical indications at the heart of international trade”

by David M. Higgins (Newcastle University), originally published on 09 October 2018 on the LSE Business Review

 

igpWhen doing your weekly shop have you ever observed the small blue/yellow and red/yellow circles that appear on the wrappers of Wensleydale cheese or Parma ham? Such indicia are examples of geographical indications (GIs), or appellations: they show that a product possesses certain attributes (taste, smell, texture) that are unique to a specific product and which can only be derived from a tightly demarcated and fiercely protected geographical region. The relationship between product attributes and geography can be summed up in one word: terroir. These GIs formed an important part of the EU’s agricultural policy, launched in 1992 and represented by the logos PDO and PGI, to insulate EU farmers from the effects of globalisation by encouraging them to produce ‘quality’ products that were unique.

GIs have a considerable lineage: legislation enacted in 1666 reserved the sole right to ‘Roquefort’ to cheese cured in the caves at Roquefort. Until the later nineteenth century domestic legislation was the primary means by which GIs were protected from misrepresentation. Thereafter, the rapid acceleration of international trade necessitated global protocols, of which the Paris Convention for the Protection of Industrial Property (1883) and its successors, including the Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods (1890).

Full article here: http://blogs.lse.ac.uk/businessreview/2018/10/09/turf-wars-placing-geographical-indications-at-the-heart-of-international-trade/

 

Global Trade and the Transformation of Consumer Cultures

by Beverly Lemire (University of Alberta)

The Society has arranged with CUP that a 20% discount is available on this book, valid until the 11th October 2018. The discount page is: www.cambridge.org/ehs20

 

Our ancestors knew the comfort of a pipe. But some may have preferred the functionality of cigarettes, an alternative to the rituals of nursing tobacco embers. Historic periods are defined by habits and fashions, manifesting economic and political systems, legal and illegal. These are the focus of my recent book. New networks of exchange, cross-cultural contact and material translation defined the period c. 1500-1820. Tobacco is one thematic focus. I trace how global societies domesticated a Native American herb and Native American forms of tobacco. Its spread distinguishes this period from all others, when the Americas were fully integrated into global systems. Native American knowledge, lands and communities then faced determined intervention from all quarters. This crop became commoditized within decades, eluding censure to become an essential component of sociability, whether in Japan or Southeast Asia, the West Coast of Africa or the courts of Europe. [Figure 1]

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Figure 1. Malayan and his wife in Batavia, with pipe.

 

Tobacco is a denominator of the early global era, grown in almost every context by 1600 and incorporated into diverse cultural and material modes. Importantly, its capacity to ease fatigue was quickly noted by military and imperial administrations and soon used to discipline or encourage essential labour. A sacred herb was transposed into a worldly good. Modes of coercive consumption were notable in the western slave trade, as well as on plantations. Tobacco also served disciplinary roles among workers essential to the movement of cargoes; deep-sea long-distance sailors and riverine paddlers in the North American fur trade were vulnerable to exploitation on account of their need and dependence on tobacco during long stints of back-breaking labour.

Early global trade built on established commercial patterns – most importantly the textile trade including the long-standing exchange of fabric for fur. The fabric / fur dynamic linked northern and southern Eurasia and north Africa, a pattern of elite and non-elite consumption that surged after the late 1500s, especially with the establishment of the Qing dynasty in China (1636-1912), with their deep cultural preference for furs. Equally important, deepening trade on the northeast coast of North America formalized Indigenous Americans’ appetite for cloth, willingly bartered for furs. The fabric / fur exchange preceded and continued with western colonization in the Americas. Meanwhile, on both sides of the Bering Strait and along the northwest coast of America, Indigenous communities were pulled more fully into the Qing economic orbit, with its boundless demand for peltry. Russian imperial expansion also served this commerce. The ecologies touched by this capacious trade extended worldwide, memorialized in surviving Qing fur garments and secondhand beaver hats traded for slaves in West Africa.

I routinely incorporate object study in my analysis, an essential way to assess the dynamism of consumer practice. I trawled museum collections as commonly as archives and libraries, where I found essential evidence of globalized fads and fashions. Strategies of a Qing-era man are revealed, as he navigated Chinese sumptuary laws while attempting to demonstrate fashion (on a budget). His seeming mink-lined robe used this costly fur only where it was visible. Sheepskin lined all the hidden areas. His concern for thrift is laid bare, along with his love of style.

Elsewhere in the book, I trace responses to early globalism through translations and interpretations of early global Asian designs, in needlework. The movement of people, as well as vast cargoes, stimulated these expressive fashions, ones that required minimal investment and gave voice to the widest range of women and men. The flow of Asian patterned goods and (often forced) relocation of Asian embroiderers to Europe began this tale – both increased the clamour for floral-patterned wares. This analysis culminates in North America with the turn from geometric to floral patterning among Indigenous embroiderers. They, too, responded to the influx of Asian floriated things. Europeans were intermediaries in this stage of the global process.

Human desires and shifting tastes are recurring themes, expressed in efforts to acquire new goods through various entrepreneurial channels. ‘Industriousness’ was manifest by women of many ethnicities through petty market-oriented trade, as well as waged employment, often working at the margins of formal commerce. Industriousness, legal and extralegal, large and small, flourished in conjunction with large-scale enterprise. Extralegal activities irritated administrators, however, who wanted only regulated and measurable business. Nonetheless, extralegal activities were ubiquitous in every imperial realm and an important vein of entrepreneurship. My case studies in extralegal ventures range from the traffic in tropical shells in Kirkcudbright, Scotland; the lucrative smuggling of European wool cloth to Qing China, a new mode among urban cognoscenti; and the harvesting of peppercorns from a Kentish beach, illustrating the importance of shipwrecks in redistributing cargoes to coastal communities everywhere. [Figure 2] Coastal peoples were schooled in the materials of globalism, cast up by the tides, though some authorities might call them criminal. Ultimately, the shifting materials of daily life marked this dynamic history.

pic02
Figure 2. Shipwreck of the DEGRAVE, East Indiaman. The Adventures of Robert Drury, During Fifteen Years Captivity on the Island of Madagascar … (London: W. Meadows, 1807). Library of Congress, Digital Prints and Photographs, Washington, D.C.

 

To contact the author: Lemire@ualberta.ca

IMPERIAL ROOTS OF TODAY’S GLOBAL TRADE: Evidence from 140 empires

by Wessel Vermeulen (Newcastle University), Gunes Gokmen (New Economic School, Moscow), and Pierre-Louis Vézina (King’s College London)

 

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The rise and fall of empires over the last 5,000 years – from the Afsharid Dynasty to the British Empire – still influences world trade patterns today.

Their new data on the rise and fall of 140 empires across the world over the last 5,000 years reveals that present-day trade flows between countries that were once in a common empire are on average 70% larger than that between unrelated countries.

Empires facilitated trade within their controlled territories by building and securing trade and migration routes, and by imposing common languages, religions and legal systems. This led to the accumulation of ‘trading capital’, which outlives empires and shapes today’s trade patterns.

Throughout history, many empires were essentially created to facilitate trade; the Athenian Empire was established to secure food trade between Athens and Crimea.

Imperial formal and informal institutions as well as physical infrastructure might have played a role in the growth of trading capital and thus in shaping today’s trade patterns. For example:

  • Local institutions that emerged to support inter-ethnic medieval trade have resulted in a sustained legacy of ethnic tolerance in South Asian port towns.
  • Historical Habsburg-Empire regions have higher current trust and lower corruption than neighbouring regions, probably due to the empire’s well-respected administration, and countries of the empire trade significantly more with one another than with other neighbours.
  • Long-established commercial diasporas such as the Gujaratis in the British Empire still play an important role in world trade.

A novel dataset on countries’ imperial history going back 5,000 years makes it possible to measure this accumulated trading capital for all countries around the world and over the entire history of civilisations. In turn, it makes it possible to estimate its effect on trade today.

Imports from countries that were once in a common empire are on average 70% larger. The estimation in this study accounts for other important factors such as distance, shared borders, common legal systems, and genetic and linguistic distances. The effect of trading capital is related to but not entirely explained by these factors.

Some empires matter more than others. Trading capital builds up in times of common empire and depreciates slowly at other times. Hence, longer-lasting and recent empires matter most.

Trade is a major driver of economic growth without which isolated countries find it much harder to prosper. These results suggest that trading capital plays a role in reducing the trade costs that inhibit international trade.

While infrastructure such as roads or railways do promote trade, we know that transport costs do not account for most of the trade costs associated with borders and distance. Instead, cultural and informational frictions are the main culprits. Trading capital accumulated during empires could thus play an important role in making trade happen today.

The Deindustrialized World

by Andrew Perchard (University of Stirling), Lachlan MacKinnon (St Mary’s University – Nova Scotia), and Steven High (Concordia University – Montreal)

 

9780774834957fc-71269-800x600Deindustrialisation has ruptured the lives of tens of millions of working class lives in the latter half of the twentieth century and into the twenty first from the Rustbelt of North America to the coal and steel towns of north eastern China. Between 1969 and 1976, an estimated 22.3m jobs were lost in the US alone, with some 100,000 manufacturing plants closed between 1963 and 1982 (Bluestone and Harrison, 1982: 7; High, 2003: 93). In the 1990s, an estimated 30m workers were left unemployed by the collapse of industry in north eastern China, with the country’s steel province, Hebei, expected to lose 60 per cent of its steel companies by 2020 (Financial Times, 28 March 2016). These job losses represent a significant disruption in the lives of workers and in the fabric of communities from which capital vacates, but they are not the whole story. Industrial work, the social relationships to which it has contributed, and the cultures that emerge alongside are profoundly world-making. Plant closures, and the associated lost jobs, shatter all of these types of connections – not simply the economical.

These, arguably more intangible legacies of industrial closures, are often lost in layoff numbers or within a literature that talks about the transformation of economies or Schumpeterian waves of creative destruction. In the globalized world, with corporations shifting production to non-union, low-paying areas of the global South, displaced workers are sometimes framed as greedy or uncompetitive. What right do workers in Canada, the United States, or Western Europe have to these jobs or their spin-offs, especially when they contribute to the development of deeply impoverished areas goes the neoliberal line. In this progressive economic narrative, these casualities are a necessary corollary of growth; as the authors of an International Monetary Fund paper put in 1997 (Rowthorn and Ramaswamy): “Deindustrialization is not a negative phenomenon, but a natural consequence of further growth in advanced economies.” It is commonly supported by reified figures on employment transitions.  Besides, industries are polluting and dehumanizing and so have no place in our post-industrial and gentrifying cities. Those areas that have failed to make the transition have frequently been  peripherialised, with residents then demonised in the media and subjected to further punitive policy measures.

Most recently this anger, after decades of neglect, has been manipulated and misrepresented in debates around the election of Donald Trump to the US presidency and the Brexit vote, with the irony that both movements have been dominated by elite populists. In all of this, complacency to the plight of post-industrial working class communities has been marked. The Deindustrialized World (eds. High, MacKinnon and Perchard, UBC Press, 2017) responds to this historical moment by excavating the profound impact of deindustrialization on the lives of working people but also the wider ramifications of these structural economic, political, and cultural changes. Many will argue that total manufacturing numbers do not bear out the thesis of precipitous decline; but, for all of the increases in productive capacity, the types of jobs that are now available are oftentimes more precarious and require less skill than did those of yesteryear. In the words of one Scottish steelworker coming to terms with his redundancy:  ‘How do you tell fifty year old steelworkers to sell tartan scarves to Americans?’ Such arguments also miss the often-profound regional, local, and personal impact of these changes. The book demands that we go beyond national aggregation. In some cases, it has been accompanied by further capital flight and the collapse of civic infrastructure, leaving communities to deal with the legacies of multiple deprivation, ill-health and contaminated air and water, such as in Flint, Michigan.

Arising out of the ‘Deindustrialization and Its Aftermath’ conference in Montreal in 2014, this collection – scaling up our analysis from deindustrializing bodies to concerns of political economy – seeks to capture the complex cultural, environmental and social legacy of deindustrialisation (and industrialisation) for communities and individuals in Australia, Canada, France, the UK and US.  The fifteen essays demonstrate the different experiences and responses of those affected by industrial closures.  Chapters by Jackie Clarke and Sylvie Contrepois (France), Cathy Stanton (US), and Lucy Taksa (Australia) explore questions over the contested memory of industrial identities, places and spaces.   While Arthur McIvor (UK), Lachlan MacKinnon and Robert Storey (Canada) consider the environmental and health legacies of such industries.  In their urban studies of Australia, Canada and the US, Tracy Neumann, Andrew Hurley and Seamus O’ Hanlon discuss the tensions around regeneration and gentrification with urban studies.  While chapters by Steven High (Canada) and Andrew Perchard (Scotland), include discussions around deindustrialisation in association with geographical peripheralization, racial exclusion, and regional policy failures.  Andy Clark (Scotland), and Jackie Clarke (France), explore the role of female workers in resisting closures and maintaining an industrial legacy.  There is a confluence between many of these issues and discussions across the collection. The editors and Jim Phillips (Scotland) consider these questions within the context of the notion of ‘moral economy’ and the viewing of plants as collective resources.  Crucially, in amongst these voices seeking to make sense of what has happened to their lives and communities, are those of children living with the aftermath of deindustrialisation, alongside those of the adults shaped by an industrial culture and now left without it.

 

To contact the authors:

Andrew Perchard:  a.c.perchard@stir.ac.uk, @Aluminiumville

Lachlan MacKinnon: lachlan.f.mackinnon@gmail.com, @LachlanMacKinn

Steven High: Steven.High@concordia.ca

Are businessmen from Mars and businesswomen from Venus? An analysis of female business success and failure in Victorian and Edwardian England

by Jennifer Aston (Oxford University)  and Paulo di Martino (University of Birmingham)

The full paper was published on the Economic History Review, accessible here

 

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Fashion in Edwardian England

Do women and men trade in different ways? If so, why? And are men more or less successful than women? These are very important questions not just, or not only, for the academic debate, but also for the policy implications that might emerge, especially in countries such as the UK where, rightly or wrongly, we believe in personal entrepreneurship as one of the main antidotes to unemployment and to the crisis of big business.

In economic history, it has traditionally been argued that women and men traded in similar ways up to the industrial revolution but, since then, women have ben progressively relegated to a “separate sphere” allowed, at most, some engagement with naturally “female” occupations such as textiles or food provision. Although more recent literature has strongly undermined this view, a lot of ground has still to be covered, especially about the period post 1850s.

We approach this debate by starting with a simple question about business “success” across gender: did women happen to fail more likely than men? Thanks to the reconstruction of original data on personal bankruptcy derived from contemporary official publications by the Board of Trade, this research suggests that this was not the case. In fact, depending on how prudently data on the number of female entrepreneurs are looked at, women appear more successful in, at least, keeping their businesses alive.

This finding, however, only paved the way for more questions. In particular, had the narrative of women only dealing with traditional and safe industries and operating in semi-informal businesses been true, what we observe via the lens of official statistics would be just a distorted view. This researched focussed on other primary sources: the reports of about 100 women whose businesses failed around the turn of the century. The findings support the initial hypothesis: although smaller than male counterparts (hence, in fact, riskier), female businesses were not hidden away from the public sphere, the official trading places, or the rules of the formal credit market. So, boarding house keeper Eleanor Bosito and the hotelier Esther Brandon were declared bankrupt and subject to formal proceedings despite having very few creditors who all lived within five miles from the businesses of the two women.  with unsecured debts of about £160 faced bankruptcy as a result of the petition filed by Jane Davis, a widow who lived less than half a mile from Agnes’s home and had lent her the sum of £5. This was the same destiny faced by Elizabeth Goodchild a businesswoman who, contrary to the other cases, operated on a large scale with suppliers and clients from all around Britain and Europe. This evidence reveals that, first of all, small scale trade was thus not necessarily the rule for women and, even when it was the case, it did not coincide with informality or sheltering from the “rules of the game”.

Businesswomen then did not come from, nor traded on, a different planet and certainly did not need the patronising protection of a male-dominated institutional environment. Instead the legal system forged ad hoc rules for married woman, via specific provisions in Bankruptcy Laws which lifted them from any responsibility. These level of defence, similar only to the one available to lunatics and children, proved ineffective. Or, in fact, the perfect background for frauds: in 1899 a spinster who was due to be declared bankrupt got married before the actual beginning of the procedure, thus avoiding any legal consequence (and, hopefully, having found love too).

In conclusion, this research indicates that Victorian and Edwardian businesswomen were perfectly able to trade in a fashion similar to the one of their male counterpart and, if anything, they were more successful. This leads to a basic and probably intuitive policy implication: if we want more women to successfully engage in business, all we have to do is to remove the economic, social, and cultural barriers that limit their access to opportunities.