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Published by EH.NET (April 2003) 
 
Brian Snowdon, _Conversations on Growth, Stability, and Trade: An 
Historical Perspective_. Cheltenham, UK: Edward Elgar, 2002. xvi + 483 pp. 
$120 (hardcover), ISBN: 1-84064-995-X. 
 
Reviewed for EH.NET by Christopher Hanes, Department of Economics, State 
University of New York at Binghamton (beginning fall 2003). 
 
 
The first part of this book is a survey of theories of long-run economic 
growth, business cycles, monetary policy and international trade and 
capital flows, based on the author's lectures at the Newcastle Business 
School, Northumbria University (England). The second part is transcripts of 
the author's interviews with Ben Bernanke, Jagdish Bhagwati, Alan Blinder, 
Nick Crafts, J. Bradford DeLong, Barry Eichengreen, Kevin Hoover, Charles 
Jones, Christina Romer and Joseph Stiglitz. Together, the survey and 
interviews give a clear view of current work in macroeconomics and its 
intellectual background, guided by a knowledgeable man who appears to have 
remarkably few axes to grind. Oddly missing is any discussion, beyond a 
bare mention, of "New Keynesian" theory -- that is, attempts to understand 
the microfoundations of wage and price rigidity and unemployment, and test 
implications of the new theories. But there is a lot on growth theory and 
monetary policy, two fields that have changed a lot in recent years. A 
particular virtue of the book is its emphasis on the interplay between 
economic thought, public policy, and economic outcomes. 
 
The book's title isn't accurate, as the book actually _doesn't_ give a 
historical perspective apart from its thorough discussion of the Great 
Depression and some of the interviews. History comes up hardly at all in 
the interviews with Bhagwati, Blinder, Hoover, and Stiglitz, for the 
excellent reason that those men have little to say about it (though they 
have a lot to say about other things). Mostly, the book guides the reader 
expertly through macroeconomics right up to the borders of economic 
history, and stops there. With respect to economic growth, for example, the 
textbook section explains the Harrod-Domar model, the Solow model, AK 
models, etc., and the role of free trade and capital flows, leading right 
into fascinating interviews with Jones and Stiglitz. The reader gets the 
idea that the important variable is institutions. Jones observes that "it's 
not at all clear why some countries are able to adopt institutions which 
encourage people to work hard to produce goods and services rather than to 
steal from their neighbours, either directly through theft or indirectly 
through rent seeking and corruption. The important question is how do you 
change those institutions?" (p. 355). "When we start to ask important 
questions like why are some countries better at setting up good 
institutions, certainly it seems that one needs to have a good 
understanding of the system of incentives that is in place at the start. 
Maybe it's important to understand where that system came from, in order to 
understand where it's likely to go" (p. 366). From this point, the author 
could lead us into the economic history literature and describe a few 
concrete examples of important or illustrative institutional developments 
in this or that time and place. But he doesn't. 
 
My other complaint about the book is that it appears to have come into 
print untouched by the hands of editors. There are frequent misspellings 
and grammatical errors of the kind that result from a careful author 
revising a manuscript himself, with no one else to read over the drafts. It 
was an editor's job, left undone, to restrain the author's use of quotes to 
make statements that do not require specific cites, like this: "As Easterly 
writes, 'When machines are scarce, the additional output from one more 
machine will be high. When machines are abundant, additional output from 
one more machine will be low'" (p. 74). Some sections of the book give the 
impression that the author made, and just barely lost, a bet that he could 
write whole paragraphs without using his own words. The staff at Elgar 
ought to be ashamed of themselves. 
 
None of this detracts from the usefulness of the book or Snowdon's 
achievement in producing it. The first part of the book is meant to set up 
the issues that will be discussed in the interviews, but it also 
constitutes an extraordinarily good textbook, explaining important ideas 
and pointing out connections between them. The interviews reveal the 
intelligence and humor of their subjects, and hold a few surprises. One 
might recall a recent flap when Stiglitz seemed to say that some fellow 
economists in public service were intellectually dishonest shills for Wall 
Street -- well, he says it again here (p. 396)! Romer's comments on current 
monetary policy issues go against conventional wisdom in important 
respects, but are strongly based on practical experience -- the vicarious 
experience one gains from studying history. This interview, and the ones 
with Bernanke, Crafts, DeLong and Eichengreen show how much historical 
knowledge can add to the work of a great economist. 
 
While the book won't tell a macroeconomist what he needs to know about 
economic history, it will tell an economic historian much of what he needs 
to know about current literature in macroeconomics. I recommend it to 
graduate students training in either area. It should be in every library. A 
hundred years from now, it will be an important guide to what leading 
economists thought they knew, and what they knew they didn't know, as of 
A.D. 2002. 
 
 
Christopher Hanes is the author of "Nominal Wage Rigidity and Industry 
Characteristics in the Downturns of 1893, 1929, and 1981," _American 
Economic Review_, December 2000, and (with John James) "Wage Adjustment 
under Low Inflation: Evidence from U.S. History," _American Economic 
Review_, forthcoming. 
 
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