------ EH.NET BOOK REVIEW ------
Title: Economic Evolution and Revolution in Historical Time

Published by EH.Net (January 2012)

Paul W. Rhode, Joshua L. Rosenbloom, and David F. Weiman, editors,
Economic Evolution and Revolution in Historical Time. Stanford, CA:
Stanford University Press, 2011. xx + 461 pp. $60 (hardcover), ISBN:
978-0-8047-7185-6.

Carolyn M. Moehling, Department of Economics, Rutgers University.

A recent review in this series described festschrifts as “an honored
tradition” but “also a somewhat antiquated and awkward form of
scholarly communication.”  That awkwardness has been increasing in
recent years.  More and more young scholars are being told that book
chapters will receive little, if any, weight in tenure reviews, and
many citation indices – which are fast-becoming the “summary
statistics” of scholarly productivity – ignore such contributions.
Given these trends, it is becoming more and more difficult to produce
a collective volume that is relevant for current scholarship.
However, in the volume under review, Paul Rhode, Joshua Rosenbloom and
David Weiman have proved that this can be done.  They do start with a
tremendous advantage in that the scholar they honor, Gavin Wright, is
one of the true greats in our profession.  Wright’s research is
remarkable for both its scope and its diversity of method, and the
editors have put together a volume that shares these qualities.
Several of the chapters are review essays which take a particular area
of Wright’s research and place it in the context of the broader
economic and historical literature.  These essays are more than just
genuflections on the work of a beloved scholar and teacher; they
discuss the challenges to Wright’s conclusions posed by other scholars
and propose directions for future research.  Other chapters report the
results of new or on-going research projects, many of which were
inspired by Wright’s work.  For the most part, these essays make
substantive and provocative contributions to the literature.  The
editors achieve this feat by soliciting papers from well-established
scholars who are no longer tormented by the ticking of the tenure
clock.  The end result is a hefty volume of 17 chapters and over 400
pages.

Given space constraints, this review cannot adequately discuss the
merits of each of the essays included in the volume.  The goal,
instead, is to provide an overall sense of the volume by highlighting
some of the more notable contributions.  Strong entries in the review
essay category are the chapters by Karen Clay, Robert Fleck, and
Joshua Rosenbloom and William Sundstrom.  Clay reviews Wright’s work
on the role of natural resources on the development of the U.S.
economy.  In a seminal paper published in the American Economic Review
in 1990, Wright challenged conventional wisdom by claiming that the
success of American manufacturing before 1940 was due to its intensive
use of natural resources.  He went further to argue that this natural
resource abundance was due less to the size of America's geological
endowment than to the ability to exploit that endowment.  Clay
discusses the factors that led to this successful exploitation:
federal and state geological surveys, the development of American
mining and engineering colleges, and incentives for private agents to
search for and extract natural resources.  Clay draws upon her own
research with Wright on the Gold Rush to argue that these incentives
existed even when the government could not effectively guarantee
property rights.  Mining communities, building on cultural conceptions
of fairness, created private-order institutions to secure such rights.
 Clay then turns to the $64,000 question: why didn't the U.S. suffer
from the "resource curse?"  Clay believes that it was the strength of
American political institutions and the high transportation costs of
the period that made natural resources facilitate rather than hinder
growth.  She then proposes a framework for future research to test
this hypothesis.

Fleck situates Wright's research on the New Deal and the
transformation of the Southern economy in the broader political
economy literature.  He provides a nice overview of the empirical
studies of the politics of New Deal spending and re-interprets the
findings to emphasize their more general implications for the
interplay between policy and institutions.  Fleck goes on to connect
this work to the very recent research on the role of institutions and
economic development.  He focuses, in particular, on theoretical
models of the extension of voting rights and how these models draw
upon and complement Wright's much earlier work on the South.

Rosenbloom and Sundstrom take on an even more ambitious agenda: using
Wright's concept of institutional regimes to provide a history of
American labor markets from the colonial period to the present.  In
this framework, political and economic institutions evolve to be
complementary and mutually reinforcing, hence making them stable over
long periods of time.  Only a shock or crisis precipitates change and
then change can happen rapidly, as it did in Southern labor markets in
response to the Civil War and then again in the mid-twentieth century.
 The overarching theme of Rosenbloom and Sundstrom's narrative is that
changes in labor market outcomes cannot be interpreted simply in terms
of shifts of supply and demand.  Instead, they must be examined in the
context of the prevailing labor market institutions and how those
institutions change and evolve over time.

Frank Levy and Peter Temin follow up on the theme of institutional
regimes in their study of trends in income inequality in the second
half of the twentieth century.  They argue that the declining position
of the average worker reflects more than just the effects of
globalization and skill-biased technological change.  They place the
blame instead on the political and economic changes in the late 1970s
and early 1980s that led to the erosion of organized labor's
bargaining power.  The institutional regime changed in a way that
disadvantaged the average worker.

Leonard Carlson's chapter also focuses on how outcomes are shaped by
institutions.  Carlson contrasts the experiences of the aboriginal
peoples of North America and Australia.  As he notes, there are many
parallels in the settlement and development of these two areas.  Yet,
they dealt very differently with their native populations.  In
Australia, settlers developed a new legal concept, "terra nullius,"
which asserted that the land belonged to no one prior to the arrival
of the English in 1788.  In North America, native peoples were viewed
as having "aboriginal rights" to the lands they occupied.  The result
was that in North America, settlers had to negotiate land sales or
treaties with natives in order to claim the land whereas in Australia,
they did not.  Carlson presents a compelling case that the differences
in these initial institutions can help to explain the very different
experiences of these two native populations all the way up to the
present.

Alan Olmstead and Paul Rhode return to the question of the
productivity of slave agriculture.  Building on their previously
published work, they argue that the expansion of cotton production
into the New South and the increased labor productivity in cotton that
generated, relied heavily on the continuing biological innovations in
cotton varieties.  A nice feature of this essay is that Olmstead and
Rhode provide a re-evaluation of the economics of slavery literature
based on their new findings.

Richard Sutch contributes a provocative essay linking the minimum wage
to increases in education.  He argues that the minimum wage binds in
the youth labor market.  Decreasing labor market opportunities for
young workers could create what Sutch calls an educational cascade
whereby teenagers stay in school longer both because of peer effects
and the declining opportunity of schooling.  Using data from the
Current Population Surveys and the decennial censuses, Sutch shows
that birth cohorts which were in high school during periods in which
the minimum wage was being increased, have higher than expected
average years of schooling.  He proposes, therefore, that raising the
minimum wage may be a way to lower high school dropout rates.

Stacey Jones offers an intriguing alternative explanation for the
dramatic changes in women's occupational choices starting in the
1960s: the declining demand for teachers.  The demographic changes in
the 1960s led to a drop in the number of school children at the same
time that the number of college-educated women was growing by leaps
and bounds.  Educated women needed to find occupations outside of
teaching, and as more and more of them did, they changed societal
expectations about what was appropriate work for women.  Jones'
argument nicely complements the many recent studies that examine the
effects of contraceptive technology on women's career and educational
choices.

The remaining chapters are remarkable for the variety of scope, data,
and method.  George Grantham explores the history of science in Europe
between 1650 and 1850.  Warren Whatley and Rob Gillezeau develop a
theoretical model to consider how the effective demand for slaves in
the New World affected the development of African economies.  Ta-Chen
Wang compares the textile industries in Boston and Philadelphia in the
early 1800s to examine how differences in state banking systems
affected industrial development.  Jeremy Atack, Michael Haines, and
Robert Margo present preliminary results from their large-scale
research project on the impact of railroads on economic development.
Scott Redenius and David Weiman seek to explain the seasonality in
financial markets in the South after the Civil War and then to examine
its impact on the National Banking System.  Susan Wolcott studies
rural credit markets in colonial India.  Susan Carter links the rise
of Chinese restaurants in the U.S. to the Chinese Exclusion Act.

Finally, this volume contains a bonus chapter.  Wright himself
provides an essay reflecting on the tradition of economic history
research at Stanford.  This essay provides a rare glimpse at how a
scholar and teacher evaluates his own body of work and those of his
students and colleagues.

Carolyn M. Moehling is an Associate Professor of Economics at Rutgers
University.  She is the author of “The Political Economy of Saving
Mothers and Babies: The Politics of State Participation in the
Sheppard-Towner Program” (with Melissa A. Thomasson), Journal of
Economic History (forthcoming).

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Geographic Location: Africa, Australia/New Zealand, incl. Pacific
Islands, North America
Subject: Agriculture, Natural Resources, and Extractive Industries,
Education and Human Resource Development, Financial Markets, Financial
Institutions, and Monetary History, Government, Law and Regulation,
Public Finance, Servitude and Slavery, Industry: Manufacturing and
Construction, Labor and Employment History, Markets and Institutions
Time: 18th Century, 19th Century, 20th Century: Pre WWII, 20th
Century: WWII and post-WWII