------------ EH.NET BOOK REVIEW --------------
Classic Reviews in Economic History
Stanley Lebergott, _Manpower in Economic Growth: The American Record
since 1800_. New York: McGraw-Hill, 1964. xii + 561 pp.
Review Essay by Robert A. Margo, Department of Economics, Boston University.
_Manpower_ after Forty Years
During the first half of the twentieth century classical musicians
routinely incorporated their personalities into their performances.
One recognizes immediately Schnabel in Beethoven, Fisher in Bach,
Cortot in Chopin, or Segovia in just about anything written for
guitar. As the century progressed performance practice evolved to
where the "text" -- the music -- became paramount. The ideal was to
reveal the composer's intent rather than putting one's own stamp on
the notes -- the performer as conduit per se rather than co-composer.
Personal style played a major role in the early years of the
cliometrics revolution. Hand a cliometrician an unpublished essay by
Robert Fogel or Stanley Engerman, and I am quite sure she could
identify the author after reading the first couple of paragraphs (if
not the first couple of sentences). No one can possibly mistake a
book by Doug North for a book by Peter Temin or an essay by Paul
David for one by Lance Davis or Jeffrey Williamson. To some extent
this is because personal style mattered at the time in economics
generally -- think Milton Friedman or Robert Solow. But mostly it
mattered, I think, because these cliometricians were on a mission.
Men and women on a mission put their personalities up front, because
they are trying to shake up the status quo.
So it is with Stanley Lebergott. Indeed, of all the personalities who
figured in the transformation of economic history from a sub-field of
economics (I am tempted to write "intellectual backwater") that
eschewed advances in economic theory and econometrics to one that
embraced them (I am tempted to write "for better and for worse"),
Lebergott's style was perhaps the most personal. In re-reading
Lebergott's most famous book -- his _Manpower in Economic Growth: The
American Record since 1800_ (1964) -- one sees that style front and
center on nearly every page, as well as the conflicting emotions as
its author tried, not always successfully, to marry the anecdotal and
archival snippets beloved by historians with the methods of
economics. _Manpower_ was (and is) substantively important for two
reasons. First, prior to _Manpower_, the "economic history of labor"
meant unions and labor legislation. By contrast, Lebergott made the
labor market -- the demand and supply of labor -- his central focus
and in doing so elevated markets and market forces to a central
tendency in the writing of economic history. Second, Lebergott
produced absolutely fundamental data -- estimates of the labor force,
industrial composition, unemployment, real wages, self-employment,
and the like -- that economic historians have relied on (or
embellished) ever since.
These two accomplishments aside, I emphasize style not because, in
_Manpower_'s case, it is light years from the average article that I
accept for publication in _Explorations in Economic History_.
Economic history, like all economics, is vastly more technical than
it was in the early 1960s. Burrowing into the style of _Manpower_
reveals an author transfixed with what he perceived to be the
grandness of the American experiment, the transformation of a
second-rate colony into the greatest economy the world had yet seen.
The core of _Manpower_ would always be its 33 appendix tables and 252
(!) pages of accompanying explanatory text lovingly produced and so
relentlessly documented as to drive any reader to distraction (or
tears). So much the line in the sand, daring -- indeed, taunting --
the reader to do better. Lebergott knew that, in principle, one could
do better, because he did not have ready access to all the relevant
archival materials. I would conjecture, however, that he would always
be surprised if anyone did, in fact, do better. Tom Weiss, himself
one of the great compilers of American economic statistics, spent
several years redoing Lebergott's labor force estimates using census
micro data rather than the published volumes that Lebergott relied on
(Weiss 1986). In commenting on Weiss's work, Lebergott (1986)
characterized the differences between his original figures and the
revisions as "very small beer" and then took Weiss to task for
failing (in Lebergott's) view to fully justify the revisions. "One
awaits with interest," he concluded, "further work by the National
Bureau of Economic Research project of which this is a part." When
Georgia Villaflor and I (Margo and Villaflor 1987) produced a series
of real wage estimates for the antebellum period drawing on archival
sources that Lebergott did not use, I received a polite letter
congratulating me but requesting more details and admonishing me to
think harder about certain estimates that Lebergott felt did not mesh
fully with his priors. There are thousands of numbers in those 33
appendix tables and one's sense is that each number received the
undivided attention of its creator for many, many, many hours.
But numbers do not a narrative make. Chapter One, "The Matrix," has
little in common with the archetypal introduction that gives the
reader a roadmap and a flavor of the findings. It begins rather with
an 1802 quote from "The Reverend Stanley Griswold" about the frontier
that lay before the good minister. "This good land, which stretches
around us to such a vast extent ... large like the munificence of
heaven ... [s]uch a noble present never before was given to any
people." (Reviewer's note: any people? Which people?) The first
sentence goes on to describe an incongruous scene from Kentucky in
1832, "a petit bon homme" and his wife and their "little pile of
trunks" sitting in a restaurant in the middle of (literally) nowhere.
We then learn of a "great theme" of American history, that which
motivated those who wrested the land from the "wilderness" -- a
belief in an open society, of which there were three elements. First,
"hope" -- an unabashed belief that things will always get better, and
were better in America than in Europe. Second, "ignorance" --
Americans were always willing to try something new, no matter how
crazy. Third, America had a huge amount of space for people to spread
out in. OK, the reader says, but where's the economics? Ca. page 13
Lebergott emphasizes that the three elements made Americans unusually
restless people, willing to move all the time. Ordinarily, Lebergott
opines, it is the smaller (geographically-speaking) countries that
have higher labor productivity because, ordinarily, people do not
like to move. But Americans liked to move, he claims, and they did so
on the slightest provocation. Excessive optimism, misinformation, and
folly are core attributes of the American spirit and key factors in
the American success story. In the end, the errors didn't matter
anyway ("small beer" indeed) because the land was so rich. More
people moved to California in 1850 than could be rationally justified
by the expected returns to gold mining but, as a result, California
entered the aggregate production function sooner than otherwise.
Labor mobility per se was a Good Thing, and American had it in
abundance.
Chapter Two asks where all the workers would come from. Lebergott
notes that certain labor supplies were highly predictable -- slaves,
for example. But once the slave trade was abolished the supply of
slave labor grew at whatever the natural rate of increase. If the
riches of America were to be tapped, free labor would have to be
found -- all the more difficult if the required number of workers to
be assembled in any given spot was very large.
Another element of the Lebergott style is a dry wit, as evidenced in
his exchange with Weiss. In a section on "[t]he Labor Force:
Definition" we are told that '[t]he baby has contributed more to the
gaiety of nations than have all the nightclub comics in history. We
include the comic in the labor force ... as we include [his] wages in
the national income but set no value on the endearing talents
provided by the baby." In discussing the then-fashionable notion that
the aggregate labor force participation rate (like other Great
Ratios) was "invariant to economic conditions" Lebergott notes that
small changes can nevertheless have great import. "The United States
Calvary," he observes, "was sent to the State of Utah because of the
difference between 1.0 wives per husband and a slightly greater
number." The remainder of the chapter considers segments of the labor
force whose labor was, indeed, "responsive to economic conditions" --
European immigrants, internal migrants, (some) women and children as
well as the impact of social and political factors on labor supply;
it demonstrates the extraordinary flexibility of the American labor
force and its responsiveness to incentives. While this conclusion
would not surprise anyone today it was, I think, quite revolutionary
at the time. It is as good an example of any I know of the power of
historical thinking to debunk conventional wisdom derived from
today's numbers.
By now the reader is accustomed to Lebergott's modus operandi -- the
opening paragraph that sometimes seems to be beside the point but
really isn't; quotations in the text from travelogues, diaries,
plays, literature and what-not; obscure (to say the least) references
in the footnotes; all interspersed with economic reasoning that has
more than a tinge of what would be called today "behavioral"
economics. In Chapter Three Lebergott talks about the "process" of
labor mobility, which is really one extended probing into the
relationship between mobility of various sorts and wage
differentials. We get to see some univariate regression lines,
superimposed in scatter-plots of decade-by-decade changes in the
labor force at, say, the state level, against initial wage rates.
Generally, labor flows were directed at states with higher initial
wage rates, although Lebergott is quick to assert that "[m]igrants
suboptimized" because the cross-state pattern was far less apparent
at the level of regions. Next, Lebergott takes on the notion that
economic development is an inexorable process of labor shifting out
of agriculture. The American case, Lebergott claimed, challenges this
notion. American workers shifted out of agriculture when the economic
incentives were right; that is, when the value of the marginal
product of labor was higher outside of agriculture.
The remainder of Chapter 3 is divided into two brief sections, both
of which contain some of the most interesting writing in the book. In
"Social Mobility and the Division of Labor," Lebergott examines the
relationship between occupational specialization and growth. In the
nineteenth century most workers possessed a myriad of skills, farmers
especially. They were jacks of all trades, masters of none. Lebergott
speculates that this was a good thing because the master of none was
more inclined to try something new, rather than assume he was, well,
the master and therefore knew everything. If some fraction of novel
techniques were successful, this could (under strong assumptions)
lead to a higher rate of technical progress. "Origins of the Factory
System" considers the problem posed earlier in the book of assembling
large numbers of workers at a given location. Rather than pay higher
wages, manufacturers turned to an under-utilized source of labor,
women and children. Some years later, the ideas presented in this
section would develop in full bloom in a celebrated article by
Claudia Goldin and Kenneth Sokoloff (Goldin and Sokoloff 1982) on the
role of female and child labor in early industrialization.
At 89 pages, Chapter Four, "Some Consequences," is the longest
chapter in the book. The first few pages, highly influential, are
given to the formation of a national labor market, revealed by
changes over time in the coefficient of variation of wages across
locations. We are then given an extended tour of the history of
American real wages, back and forth between the relevant tables in
the appendix, quotations from contemporaries and other anecdotal
evidence. The "Determinants of Real Wage Trends" comes next. The
first, productivity, is no surprise. The second, "Slavery," isn't
really either, but here Lebergott's contrarian instincts, I think,
get the better of him. Lebergott would have the reader believe that,
first, free and slave labor were close to perfect substitutes; and,
second, slave rental rates contained a premium above what the slave
would have commanded in a free labor market. Consequently, when
slavery ended, wages fell and there was downward pressure on real
wage growth for a time. No question that wages fell in the South
after the Civil War but Lebergott's analysis is incomplete at best.
Slave labor was highly productive before the Civil War because of the
gang system, and when the gang system ended, the demand for labor
fell in the South. Because labor supplies were not perfectly elastic,
wages fell too. "Immigration," the third purported influence, had
negative short run effects on wages but positive long run effects via
productivity growth.
What follows next is a 25-page section that years later produced two
high-profile controversies in macroeconomics. This is the
(celebrated) section where Lebergott presents his long-term estimates
of unemployment. In thinking today about his work, we would do well
to remember that, at the time he prepared his estimates, the United
States had only a relatively brief experience with the direct and
regular measurement of unemployment, courtesy of the 1940 Census and
the subsequent Current Population Survey (CPS). (By "direct" I mean
answers to questions about a worker's time allocation during a
specific period of time -- if you did not have a job during the
survey week, were you looking for one?)
Like all the estimates in the book, Lebergott's unemployment figures
were the product of detailed, painstaking work that, inevitably,
required strong assumptions. The fundamental problem was that, if one
wanted annual estimates of unemployment, there was no way to obtain
these directly from survey evidence prior to the CPS. For some
benchmark dates one could produce tolerable direct estimates from the
federal census, but the federal census was useless if one wanted to
generate an estimate, say, for 1893 or, for that matter, 1933.
Lebergott's solution was to rely on an identity. By definition, the
labor force was the sum of employed and unemployed workers. One might
not know the number of unemployed workers but perhaps one could
extrapolate between benchmark dates the number of workers in the
labor force and employment, one could estimate unemployment levels
via subtraction.
The first high profile controversy involved Lebergott's estimates for
the 1930s, which included in the count of unemployed workers persons
on work relief. After 1933 there were many such workers, and so, by
historical standards, unemployment looks, of course, rather high.
This generated a lot of theoretical work for macroeconomists who
thought they had to explain how unemployment rates could remain above
10 percent while real wages were rising (after 1933).
Michael Darby (1976) suggested that this effort was misplaced because
Lebergott "should" have included the persons on work relief in the
count of employed workers. Darby showed that doing so made the
recovery after 1933 look much more normal. I've written a few papers
on this issue, and my view is somewhere in-between Darby and
Lebergott (Margo 1991; Finegan and Margo 1994; see also Kesselman and
Savin 1978). Ideally, in constructing labor force statistics we
should be consistent over time, so if persons on work relief were
"employed" in the 1930s we should consider adding, say, "workfare"
recipients to the labor force (or, possibly, prisoners making license
plates) today, but this ideal may not be achievable in practice. The
real issue with New Deal work relief is not the resolution of a
crusty debate between competing macroeconomic theories but whether
the program affected individual behavior. Here I think the answer is
a resounding yes -- unemployed individuals in the 1930s did respond
to incentives built into New Deal policies. Wives were far more
likely to be "added workers" if their unemployed spouses had no work
whatsoever, than if the spouse held a work relief job, so much so
that, in the aggregate, the added work effect disappeared entirely in
the late 1930s, because so many unemployed men were on work relief.
The second high-profile debate involved Christina Romer's important
work on the long-term properties of the American business cycle.
Prior to her work it was (and in some quarters still is) a "stylized
fact" that the business cycle today is less volatile than it was in
the past. Lebergott's original unemployment series combined with
standard post-war series were often used to buttress claims that the
macroeconomy become much more stable over time. Statistical measures
of volatility estimated from the combined series clearly suggest
this, whether volatility is measured by the average "distance" (in
percentage points) between peaks and troughs or standard deviations.
Romer (1986) argued that, to a large degree, this apparent decline in
volatility was a figment of the way the original data were
constructed. In particular, in constructing his annual series,
Lebergott assumed (among other things) that deviations in employment
followed one-for-one deviations in output. Romer invoked Okun's law,
arguing that the true relationship was more like 1:3. Constructing
post-war series by replicating (as close as possible) Lebergott's
procedures produced a new series that was not less volatile than the
pre-war series, thereby contradicting the stylized fact that the
macroeconomy became more stable over time. This was, needless to say,
a controversial conclusion, with many subsequently weighing in. Now
that the dust is settled, my own view -- a view I think that many
share, although I could be wrong -- is that there is definitely
something to Romer's argument; at the very least, she demonstrated
(as she claimed in her original article) that before one draws
conclusions from historical time series, one should be very familiar
with how the series are constructed. Chapter Four ends with another
of Lebergott's meditations on the alleged constancy of aggregate
parameters -- in this case, factor shares.
Chapter Five ("Some Inferences") concludes the narrative portion of
the book. It repeats the book's earlier mantra that "Yankee
ingenuity" and initiative, especially that embodied in immigrants,
were central to American success as opposed, say, to "factor
endowments." It ruminates on how highly mobile labor influenced the
choice of technique, in ways familiar to the first generation of
cliometricians, especially those who found H.J. Habakkuk a source of
(repeated) inspiration. It notes how "thickening markets" made
finding continuous work easier over time, reducing the wage premium
associated with unemployment risk. Today's economic historians,
infatuated with "institutions" v. "geography" would probably disagree
with the emphases in the chapter but I think there is much to admire
in Lebergott's "inferences."
Some economic historians make their mark as much through their
graduate students as their writings. Lebergott spent his academic
career in a liberal arts college and did not, therefore, directly
produce graduate students like a William Parker, Robert Fogel or
(more recently) Joel Mokyr. In certain ways he was an outsider to
economic history, an economist with a vast and deep appreciation for
history in all of its flavors, who saw the past for what it can say
about the present, not as an end in itself like a more "traditional"
historian would. Compared with other classic works of cliometrics
such as Fogel's _Railroads and American Economic Growth_ or North and
Thomas's _The Rise of the Western World_, _Manpower_'s quirkiness can
be a frustrating, more suitable for dabbling than a sustained read.
By today's standards the book falls short in its treatment of racial
and ethnic differences (gender is more balanced) although this would
hardly distinguish it from most other work in economics and economic
history at the time. Yet Lebergott's influence on economic history
has been profound. There are few activities that economic historians
can engage in of greater consequence than reconstructing the hard
numbers. In this line of work Lebergott had few peers. _Manpower_ put
the labor force -- people -- at the center of economic history, not
the bloodless "agents" of economic models but real people. As if to
underscore this, the style asserts, like a triple fff in music: a
real person not a (bloodless) "social scientist" wrote this book, one
in deep and abiding awe of the economic accomplishment of his
forbearers.
References:
Darby, Michael. 1976. "Three and a Half Million US Employees Have
Been Mislaid: Or, An Explanation of Unemployment, 1934-1941,"
_Journal of Political Economy_ 84 (February): 1-16.
Finegan, T. Aldrich and Robert A. Margo. 1994. "Work Relief and the
Labor Force Participation of Married Women in 1940," _Journal of
Economic History_ 54 (March): 64-84.
Goldin, Claudia and Kenneth Sokoloff. 1982. "Women, Children, and
Industrialization in the Early Republic: Evidence from the
Manufacturing Censuses," _Journal of Economic History_ 42 (December):
741-774.
Kesselman, Jonathan R. and N. E. Savin. 1978. "Three and a Half
Million Workers Were Never Lost," _Economic Inquiry_ 16 (April):
186-191.
Lebergott, Stanley. 1964. _Manpower in Economic Growth: The American
Record since 1800_. New York: McGraw-Hill.
Lebergott, Stanley. 1986. "Comment," in Stanley Engerman and Robert
Gallman, eds., _Long Term Factors in American Economic Growth_, pp.
671-673. Chicago: University of Chicago Press.
Margo, Robert A. 1991 "The Microeconomics of Depression
Unemployment," _Journal of Economic History_ 51 (June): 333-341.
Margo, Robert A. and Georgia Villaflor. 1987. "The Growth of Wages in
Antebellum America: New Evidence," _Journal of Economic History_ 47
(December): 873-895.
Romer, Christina. 1986. "Spurious Volatility in Historical
Unemployment Data," _Journal of Political Economy_ 94 (February):
1-37.
Weiss, Thomas. 1986. "Revised Estimates of the United States
Workforce, 1880-1860," in Stanley Engerman and Robert Gallman, eds.,
_Long Term Factors in American Economic Growth_, pp.641-671. Chicago:
University of Chicago Press.
Robert A. Margo is Professor of Economics and African-American
Studies, Boston University, and Research Associate, National Bureau
of Economic Research. He is also the editor of _Explorations in
Economic History_.
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