------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (June 2008)
Michael J. Oliver and Derek H. Aldcroft, editors, _Economic Disasters
of the Twentieth Century_. Cheltenham, UK: Edward Elgar, 2007. ix +
361 pp. $125 (hardback), ISBN: 978-1-84064-589-7.
Reviewed for EH.NET by Hugh Rockoff, Department of Economics, Rutgers
University.
This is a great idea for a book: economic disasters of the twentieth
century. The editors, Michael Oliver and Derek Aldcroft, have written
chapters on Financial Crises (Oliver) and the African Growth Disaster
(Aldcroft). And they have recruited seven scholars to write chapters
on other twentieth-century disasters: the First World War (John
Singleton), the Great Depression (W.R. Garside), the Second World War
(Niall Ferguson), OPEC Price Increases (Michael Beenstock), Inflation
(Forrest Capie), Stock Market Crashes (Geoffrey E. Wood), and the
Demise of the Command Economies of the Soviet Union and its Outer
Empire (Steven Morewood). It is a stellar cast. Each author is an
authority in his field and would make anyone's list of the best
people to write a particular essay.
The book is intended, first of all, for economic historians. These
are what might be called creative surveys. The authors summarize the
literature in their field, but they also try to push things forward a
bit by addressing a few broad questions that haven't been addressed
fully in the literature. It is, therefore, worth looking at an essay
even if it falls within your area of research. I was familiar, for
example, with many of the references in Niall Ferguson's chapter on
World War II, but I still learned a lot from his extraordinary
command of the literature, and his reflections on the origins,
conduct, and consequences of the war. The greatest value added for
me, however, came from reading Derek Aldcroft's essay on the
development failures in southern Africa, a subject about which I knew
little beyond what I have read in the _New York Times_ and the _Wall
Street Journal_.
The book would make a good text or supplemental reading for a course
in the economic history of the twentieth century, either at the
advanced undergraduate or graduate level. Students love disasters. So
a whole semester when they could go from one recent economic disaster
to another would make for a very popular course. All of the essays
would be accessible to advanced undergraduates. Only Michael
Beenstock's essay on OPEC employs algebra and graphical analysis.
Many of the essays, however, assume some familiarity with the
historical background and are densely packed with economic reasoning.
Therefore, many undergraduates would need help mastering the essays.
Are the authors optimistic or pessimistic about our ability to learn
from these economic disasters and avoid similar mistakes in the
future? On the whole, the authors dealing mainly with the advanced
industrial countries draw optimistic conclusions. Either the
economically advanced countries will avoid economic disasters or, at
a minimum, cope with them. John Singleton sets the tone in his essay
on the First World War. (It is the first essay: they are arranged
chronologically.) Singleton catalogs the enormous costs of the war.
These include not only direct costs such as battlefield casualties
and expenditures for weapons, but also indirect costs, such as the
exacerbation of the influenza epidemic of 1918-19. But Singleton also
points out that there were winners as well as losers. He sees Japan
as (arguably) "the main economic beneficiary" of the war (p. 23). And
he concludes that "The First World War was an economic disaster but,
paradoxically, it also demonstrated the resilience of industrial
capitalism" (p. 43). Niall Ferguson concludes his essay about World
War II on an even more positive note: "Two new models of state-led
production -- the American and the Soviet -- were put to the test of
total war and passed it with flying colours. Those new models were
then exported around the northern hemisphere, generating major
improvement in economic performance nearly everywhere they were
adopted or imposed" (p. 124).
W.R. Garside's essay on the Great Depression sees an important lesson
of the 1930s being applied in the 1970s: political pressure to
prevent a recurrence of the high unemployment of 1930s, even at the
cost of abandoning economic orthodoxies. Michael Beenstock traces
fluctuations in the price of oil and in OPEC's role in the oil
market. He ends his essay by enumerating the reasons why oil price
shocks are likely to be less disruptive today than they were in the
1970s. The most important factor, in his view, is improved
macroeconomic policies.
Forrest Capie's essay on inflation shows that periods of
hyperinflation or very high inflation are almost always the product
of "civil war or revolution or at a minimum serious social unrest"
(p. 172). Weak governments faced with threats to their existence
resort to the printing press. The implication is that we are unlikely
to see very high inflation in advanced industrialized nations. Capie
ends his essay by enumerating the many ways that nations have found
to limit the potential for inflation: independent central banks,
dollarization, currency boards, monetary unions and so on. Geoffrey
Wood sees stock market crashes as an inevitable part of the economic
scene. But he argues they need not produce macroeconomic disasters.
Disasters happen when a stock market crash is combined with "banking
and monetary system failures" (p. 254). The message is that we may
not be able to avoid the waves of optimism and pessimism that capture
the stock market from time to time, but we can avoid the policy
mistakes that turn stock market crashes into macroeconomic disasters.
On the other hand, when the focus shifts to less economically
advanced nations, the conclusions become pessimistic. Michael Oliver,
after surveying the literature on international financial crises
concludes: "... it is a sobering thought to conclude that whatever
reforms are made to the international financial architecture and
however robust domestic financial systems are made, economists and
policy-makers will still be dealing with financial crises 100 years
hence" (p. 227). Steven Morewood is not at all sure that the end of
communism in the Soviet Union and its satellites was a good thing
economically. "Time will tell" (p. 308) is as far as he is willing to
go. The most pessimistic essay is Aldcroft's on the African growth
disaster: "Thus we can say confidently that, short of a miracle, the
prospects for most of the very poor nations, and especially the SSA
[Sub-Saharan Africa] group, will continue to remain very bleak
indeed" (p. 348).
This is a fine collection of essays. There is no point in playing the
game of awarding gold, silver, and bronze medals, as reviewers often
do, because all the essays reach a high level of quality. Each of the
authors is a well-regarded expert in his field and clearly capable of
producing a well-crafted essay. The surprising thing, given the
variability that characterizes most collected volumes, is that all of
the authors came through. Each wrestled with important questions and
developed his answers in detail. There were no slackers. The authors
and editors are to be congratulated.
Hugh Rockoff is a professor of economics at Rutgers University and a
research associate of the National Bureau of Economic Research. He
recently published (with Leonard Caruana) "An Elephant in the Garden:
The Allies, Spain, and Oil in World War II" in the _European Review
of Economic History_.
Copyright (c) 2008 by EH.Net. All rights reserved. This work may be
copied for non-profit educational uses if proper credit is given to
the author and the list. For other permission, please contact the
EH.Net Administrator ([log in to unmask]; Telephone: 513-529-2229).
Published by EH.Net (June 2008). All EH.Net reviews are archived at
http://www.eh.net/BookReview.
-------------- FOOTER TO EH.NET BOOK REVIEW --------------
EH.Net-Review mailing list
[log in to unmask]
http://eh.net/mailman/listinfo/eh.net-review
|
