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Project 2001: Significant Works in Economic History 
 
Alexander Gerschenkron, _Economic Backwardness in Historical Perspective: A 
Book of Essays_. Cambridge, MA: Belknap Press of Harvard University Press, 
1962. 456 pp. 
 
Review Essay by Albert Fishlow, International Affairs, Columbia University. 
<[log in to unmask]> 
 
 
Alexander Gerschenkron: A Latecomer Who Emerged Victorious 
 
Alexander Gerschenkron and his ideas have had, like excellent wine, a 
remarkable maturing in recent years. Rare is the sophisticated course in 
political economy that does not assign his model of relative backwardness 
as a required reading. Rarer still is the doctoral student in economic 
history who remains uninfluenced by his beguiling hypotheses about the 
process of historical change within Europe since the Industrial Revolution. 
 
Gerschenkron's Background and Early Career 
 
Fortunately, as a consequence of a wonderful biography, _The Fly Swatter_, 
by Nicholas Dawidoff, (New York: Pantheon, 2002) his grandson, we know much 
more about his life than we had previously. Born in Odessa in 1904, he died 
in Cambridge, Massachusetts in 1978. His early life was eventful. He fled 
the Bolshevik Revolution with his father in 1920, apparently bound for 
Paris, but wound up in Vienna instead. The reason was his father's 
immediate success in finding a position running a turbine factory. There he 
rapidly learned German, as well as Latin, enabling him to attempt to pass 
the entrance examination for secondary school within seven months. His 
failure, only in Latin and geometry, meant he was rejected. That challenge 
was overcome, months later when he easily gained admission. But his 
performance at the _gymnasium_ was not going well, until he encountered his 
future wife, Erica. Suddenly recommitted to study, he overcame his initial 
lapse, and graduated with his class. 
 
Thereafter he enrolled in the University of Vienna's school of 
_Nationalokonomie_ in 1924. His early professional career is not recorded 
in autobiography as was his first 20 years. Indeed, as Dawidoff summarizes 
it, "he didn't much talk about the period from 1924 to 1938 because that 
was for him a period of growing frustration and disappointment that 
culminated in catastrophe." 
 
The University experience was the first of these disappointments. Whatever 
the strength in economics had been with Bohm-Bawerk, Menger and others who 
had pioneered in the Austrian school, it was not there in the 1920s. 
Gerschenkron graduated in 1928, his thesis focusing on Austria's happy 
future as a Marxist democracy. He married, had a child and took a position 
representing a Belgian motorcycle firm in Vienna. That was successful, but 
inadequate. Three years later, he committed himself to politics and the 
Social Democrats. That ended in 1934 with the virtual civil war that 
terminated the party's existence, and began the process of decline into 
_Anschluss_. 
 
Gerschenkron's parents left for England at that time. Four years later, he 
and his family would exit and join them, and hardly in easy circumstances. 
But the important novelty, and a decisive point in his career, was the 
invitation from Charles Gulick, a Berkeley professor whom he had earlier 
helped in his research in Austria, to come to the United States. His 
acceptance marked the real beginning of his academic career that 
subsequently was to flourish over the rest of his life. 
 
But it began equivocally. The finished Gulick book, _Austria from Habsburg 
to Hitler_, a two-volume work, published in 1948 (Berkeley: University of 
California Press), was brilliant. There is good reason to credit 
Gerschenkron's twelve months of continuous research and writing for that 
outcome. At least Berkeley provided a place for him to return, as he did in 
September 1939. There he was to stay for only five years before moving on 
to the Federal Reserve Board. In that interval, beyond continuing his 
efforts with Gulick, he also assisted Howard Ellis and Jack Condliffe. And 
he wrote, in long nights of private work, what proved to be his single 
piece of greatest length, _Bread and Democracy in Germany_, published in 
1943 (Berkeley: University of California Press). That book attacked the 
Junkers for their exploitation of the rest of the German population, and 
earned him promotion to the rank of Instructor with the opportunity to 
teach courses. It did not earn him any greater special recognition at 
Berkeley -- any more than Albert Hirschman's simultaneous efforts there did 
-- and he moved on to Washington in late 1944. 
 
At the Federal Reserve, he established himself as an expert on the Soviet 
economy. This was a period when relationships with the Soviet Union became 
central to the United States, and when there were few others with his 
knowledge, interest and immense capacity to immerse himself in any and all 
information. He did well, advancing to head of the International Section, 
until the decisive moment came in 1948: Harvard offered him a position as a 
tenured professor, the successor to Abbot Payson Usher. He accepted, and 
his university career really began. 
 
There were four parts of that career that are relevant. It all began, 
appropriately enough, with the Soviet Union. At Harvard, Gerschenkron 
established himself at the new Russian Research Center. In a notable Rand 
study in 1951, _A Dollar Index of Soviet Machinery Output, 1927-28 to 
1937_, he showed that the remarkably high rates of growth of Soviet 
industrial production owed itself to the index number bias: a Laspeyres 
index calculated on the basis of 1926-27 weights significantly overstated 
real expansion. Rapid Soviet growth was not constructed on the basis of 
false statistics, but rather, inappropriate technique. The "Gerschenkron 
effect," the difference between calculated Paasche and Laspeyres volume 
indexes, commemorates his contribution. Important as the work was at the 
time, deflating vastly superior Soviet growth, it was not to be the basis 
of his subsequent fame. 
 
Gerschenkron's Economic History: Understanding Economic Backwardness 
 
His present reputation comes instead from his dedication to European 
economic history. He flourished as the doyen of economic history in the 
United States. He influenced a generation of Harvard economists through his 
required graduate course in economic history. His erudition and breadth of 
knowledge became legendary in its time. Gerschenkron defined an indelible, 
if unattainable, standard of scholarship for colleagues and students alike. 
 
Backwardness was at the root of his model of late-comer economic  
development. His hypothesis first took form in a 1951 essay entitled 
"Economic Backwardness in Historical Perspective." From that brief 25-page 
contribution to a conference held at Chicago, and later published in 
_Economic Development and Cultural Change_, were to emerge the central 
ideas that characterized his subsequent academic career. The essay gave its 
name to his volume of essays published by Harvard University Press in 1962. 
It is the opening chapter of that volume, and a significant reason that it 
was recently selected as one of the most influential works of economic 
history ever published. 
 
The central notion is the positive role of relative economic backwardness 
in inducing systematic substitution for supposed prerequisites for 
industrial growth. State intervention could, and did, compensate for the 
inadequate supplies of capital, skilled labor, entrepreneurship and 
technological capacity encountered in follower countries seeking to 
modernize. England, the locus of the Industrial Revolution, could advance 
with free market guidance along the lines of Adam Smith. France, beginning 
later, would need greater intervention to compensate for its limitations. 
In Germany, the key innovation would be the formation of large banks to 
provide access to needed capital for industrialization, even as greater 
Russian backwardness required a larger and more direct state compensatory 
role. 
 
Gerschenkron's analysis is conspicuously anti-Marxian. It rejected the 
English Industrial Revolution as the normal pattern of industrial 
development and deprived the original accumulation of capital of its 
central force in determining subsequent expansion. It is likewise 
anti-Rostovian. There were no equivalent stages of economic growth in all 
participants. Elements of modernity and backwardness could survive side by 
side, and did, in a systematic fashion. Apparently disadvantageous initial 
conditions of access to capital could be overcome through new institutional 
arrangements. Success was indicated by proportionally more rapid growth in 
later developers, signaled by a decisive spurt in industrial expansion. 
 
This model underlay Gerschenkron's extraordinary research into the specific 
developmental experiences of Russia, Germany, France, Italy, Austria and 
Bulgaria. Those specific cases, in turn, bolstered his advocacy of a 
comparative, all-encompassing European structure. "In this fashion," as he 
wrote in 1962, "the industrial history of Europe is conceived as a unified, 
and yet graduated pattern." 
 
Over time, and as he read prodigiously and modestly altered the theoretical 
foundation, the structure of his approach became ever more specific. I 
summarize it here in four hypotheses: 
 
(1) Relative backwardness creates a tension between the promise of economic 
development, as achieved elsewhere, and the continuity of stagnation. Such 
a tension takes political form and motivates institutional innovation, 
whose product becomes appropriate substitution for the absent preconditions 
for growth. 
 
(2) The greater the degree of backwardness, the more intervention is 
required in the market economy to channel capital and entrepreneurial 
leadership to nascent industries. Also, the more coercive and comprehensive 
were the measures required to reduce domestic consumption and allow 
national saving. 
 
(3) The more backward the economy, the more likely were a series of 
additional characteristics: an emphasis upon domestic production of 
producers' goods rather than consumers' goods; the use of capital intensive 
rather than labor intensive methods of production; emergence of larger 
scale production units at the level both of the firm as well as the 
individual plant; and dependence upon borrowed, advanced technology rather 
than use of indigenous techniques. 
 
(4) The more backward the country, the less likely was the agricultural 
sector to provide a growing market to industry, and the more dependent was 
industry upon growing productivity and inter-industrial sales, for its 
expansion. Such unbalanced growth was frequently made feasible through 
state participation. 
 
The considerable appeal of the Gerschenkron model derives not only from its 
logical and consistent ordering of the nineteenth- and 
early-twentieth-century European experience. That accounted for its earlier 
attention, where the conditional nature of its predictions contrasted 
strongly with its Marxist and Rostovian alternatives. What has given it 
greater recent notice has been its broad scale generalization to the 
experience of the many late late-comers of the present Third World. His 
formulation dominates the stages of growth approach because of its emphasis 
upon differential development in response to different initial conditions. 
There is thus the irony of Walt Rostow's demise at the hands of 
Gerschenkron - does anyone now assigns _The Stages of Economic Growth_? -- 
when Rostow had been the first choice of Harvard to succeed Usher in 1948. 
 
In Gerschenkron's own hands, his propositions afforded an opportunity to 
blend ideology, institutions and the historical experience of 
industrialization, especially in the case of his native Russia, in a 
dazzling fashion. For others, his approach has often proved a useful 
starting point for the historical discussion of other parts of the world, 
such as Henry Rosovsky did with Japan, and others, elsewhere. Always, 
application of the backwardness approach requires close attention to 
detail, as well as a quantitative emphasis. 
 
Responses to Gerschenkron's Thesis 
 
The model is, of course, not without its limitations and its critics. 
History, even of Europe alone, does not in every detail bear easily the 
weight of such a grand design. In other parts of the world, and in a later 
time period, larger amendments are frequently required, and sometimes 
forgotten by current advocates. And somewhat surprisingly, in view of 
Gerschenkron's own path-breaking essay in political economy, _Bread and 
Democracy in Germany_, there is too little special attention to the 
domestic classes and interests seeking to control the interventionist 
state. Backwardness can too easily become an alternative, technologically 
rooted explanation that distracts attention from the state and the politics 
surrounding it, rather than focusing upon its opportunities and 
constraints. Ultimately, as well, there are the many developmental failures 
-- rather than only the successes -- that now loom larger and attract 
attention. While he did explicitly treat Austria as a failed case, it was 
not a central part of his theoretical structure. Moreover, important 
current issues like globalization, the central role of international trade, 
and education are less significant through much of the nineteenth century 
in Europe. 
 
Still, the concept of relative backwardness, and Gerschenkron's always 
insightful and rich elaborations in so many national contexts, represent a 
brilliant and original approach to economic history that has been perhaps 
unequalled in the twentieth century. And more recently, with the rise of 
political economy as a field, his work is widely assigned as required 
reading. A quick measure of his current influence is the almost 2000 Google 
references that turn up with the entry of his name. 
 
Gerschenkron's Enduring Influence 
 
His third great contribution came through his students. Dawidoff's _The Fly 
Swatter_, provides a whole chapter, and more, focused on his role. First, 
in the 1950s came the students who worked upon the Soviet Union. Then, as 
his interests concentrated upon economic history, came his direction of the 
Ford Foundation supported Economic History Workshop at Harvard in the late 
1950's and 1960s. His seminar then, and the availability of fellowship 
support, attracted several Harvard students, and even some from neighboring 
MIT, to work in the field. Always, too, there were an impressive group of 
visitors to Cambridge who were invited to speak to the seminar, but never 
had permanence in its regular activities. 
 
His recruitment techniques were subtle but effective. Economics 233, the 
course in economic history required of all graduate students, assigned a 
paper as well as a final examination. That provided a chance for him to 
assess each student early on through a brief visit to his office. Entry 
therein was a special occasion: filled as it was with books, journals, 
documents, maps, etc., it embodied scholarship with a capital S. Few who 
were recruited could desist, regardless of initial inclinations that were 
not directed to economic history. 
 
The course was just the introduction. For those who went on in the field 
more seriously, the regular evening seminar became the focus. There ideas 
for dissertations were discussed and quantitative techniques evaluated. It 
was just as the computer was evolving and econometrics was undergoing rapid 
advance. Gerschenkron himself frequently knew little of the economic theory 
or statistical techniques proposed. He usually limited himself to a final 
evaluative comment, and one that either justified further research or 
implicitly suggested that another topic might be a better eventual choice. 
That judgment was informed by the previous discussion as well as his sense 
of the student's intellectual capacity. 
 
Gerschenkron had extremely good judgment or very good luck, or perhaps a 
combination of both. For the small crop of students who wrote with him over 
more than a decade went on to leadership as the field of economic history 
was just changing back from an historical emphasis to an economic one. 
Cliometrics was the new terminology. Leading universities absorbed his 
students, who almost always have had productive subsequent careers. 
Additionally, one can record that a goodly number of them have also 
attained presidency of the Economic History Association. 
 
It was not his direct dissertation supervision that was responsible. He 
provided no topic, no suggestion of sources, no regular guidance, no 
timetable for conclusion. Most of the students chose subject matter far 
from continental Europe. What these persons gained was proximity to a 
stellar intellect, and close association with each other as they pursued 
their research. They also obtained a father figure whom they desperately 
sought to imitate in their own scholarship and subsequent teaching. Those 
who survived that complex relationship almost always emerged with deep 
affection and fond memories, even if the process was far from linear and 
continuous. 
 
By the mid-1960s, ten of his students, both in Soviet economics and 
economic history, prepared a _Festschrift_ in his honor. The book, 
_Industrialization in Two Systems_, was organized and edited by Henry 
Rosovsky, and published in 1966 (New York: Wiley). Many of the essays are 
still worth reading. But the dedication, from the _Pirke Avot_, states 
their strong feelings perhaps best of all: "The day is short, and the work 
is great, and the laborers are sluggish, and the reward is much, and the 
Master is urgent." 
 
A fourth and last relevant observation relates to his general intellect. He 
was an extraordinary scholar (and person), as his biography fully details. 
He was an exceptional reader, of good books and bad. In his own writings, 
his references were varied, and consciously intended to impress: "There was 
almost always a little Latin, unless there was a little Greek or a little 
German or a little Russian or a little French or a little Italian; ..." Nor 
did he exclusively write on economic history. There were his book reviews 
and other essays, including the one joint work -- with his wife -- on the 
adequacy of the diverse translations of Hamlet's quatrain to Ophelia in 
sixteen different languages. There were his regular lunchtime performances 
at the Faculty Club and Eliot House and his interactions with other Harvard 
scholars. His talents were notable and appreciated: what other economist 
would have been offered chairs in Italian literature and Slavic studies? 
 
Not surprisingly, upon reaching the mandatory retirement age of 65 in 1969, 
he was offered a further five years. But those years were not a happy 
terminus to his long stay at Harvard. The war in Vietnam, and the student 
reaction, imposed a large cost, as it did to many others who had fled 
Europe in the 1930s. Long-standing friendships were broken, as with John 
Kenneth Galbraith. The end of the economic history requirement in 1973 was 
another major disappointment. Perhaps the greatest one, however, was his 
inability to publish the great work, the big book that would summarize his 
brilliant insights into the process of European industrial change, the book 
that could and would influence political scientists and economists for 
generations to come. Despite this lapse, Gerschenkron's influence has 
subsequently blossomed. The collection of essays under review, which opens 
with the backwardness thesis and closes with appendices on industrial 
development in Italy and Bulgaria (with reflections on Soviet literature 
along the way) -- has achieved a hallowed acceptance. 
 
Recent Developments and Gerschenkron's Ideas 
 
The current surge of interest in political economy has brought a second 
wave of increasing interest in Gerschenkron's insights. As the contemporary 
world continues to confront the problem of inadequate development, 
particularly over the last twenty years in Latin America and Africa, that 
special magic of nineteenth century backwardness stimulates greater appeal, 
and greater hope. So does the case of success in Asia. 
 
The rapid pace of development in East Asia, for example, has inspired a 
whole set of major works over the last fifteen years, seeking to ascertain 
how a region, apparently condemned to continuing stagnation by religion, 
language and tradition, could spurt ahead in the 1970s and subsequent 
periods. Even the recent pause, requiring massive assistance from the IMF 
and extensive domestic restructuring, has come off with barely a temporary 
decline. 
 
After all the discussion of major changes supposedly required in the system 
of international financial flows in the past few years, little has, in 
fact, happened. The market has continued to distribute something like $1 
trillion, in both capital flows as well as foreign investment, throughout 
the world. Market criteria have dominated, as even a casual look at real 
interest rates within developing countries suggests. This has not much 
altered the pattern of development. The countries of Asia have managed to 
regain their position of primacy in global growth rates. 
 
With AIDS spreading rapidly throughout Africa, with malaria and other 
diseases recurring, with environmental degradation threatening, with a 
demographic transition that will begin to exert the pressure of an aging 
population, there is no lack of additional new problems that are pressing. 
On the other side is the reality of declining international assistance from 
the already developed North. 
 
Failure of economic development to become a global process, as it appeared 
to do in the 1960s, and for broad convergence in per capita income levels 
to occur, now constitutes a major intellectual and practical challenge. 
Should one opt against the pressures of increasing globalization, and 
return to the industrial protection and import substitution of the past? 
Should one seek to enhance the role of central direction and decision at 
the expense of decentralization and private determination? Should one 
attack the inequality of income and poverty by imposing greater burdens 
upon the domestic rich and foreign investors? Should one engage in 
significant land reform? Should one renationalize after the extraordinary 
privatization that has occurred over the last decade or so? 
 
These new issues are not ones that Gerschenkron explicitly raised. But they 
are implicit in his efforts to pose the advantages of backwardness. What 
was an advantage in one historical setting can readily become a 
disadvantage in another. But the very effort to construct an explicit, and 
testable, model is what differentiates him from his contemporaries. Shura, 
as he was better known by those very close to him, is guaranteed a place in 
the pantheon of economic  
history. 
 
 
Albert Fishlow is Professor of International Affairs and Director, 
Institute of Latin American Studies at Columbia University. He has served 
as Deputy Assistant Secretary of State for Inter-American Affairs; Dean of 
International and Area Studies at UC-Berkeley; Paul A. Volcker Senior 
Fellow for International Economics at the Council of Foreign Affairs; and 
coeditor of _Journal of Development Economics_, among numerous other 
positions. 
 
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