Abstract: The paper discusses some evidence, based on a review of new literature on economic history, about what is referred to as the Sen-hypothesis, that increasing human agency (of both men and women) is a key factor in economic development. It briefly discusses various dimensions of agency (or its absence): slavery (as the absolute suppression of human agency), access to markets, agency concerning marriage, and political participation. This concept perhaps also allows economic historians to move beyond the historical determinism that is central to much recent work in this field.
J. L. van Zanden
This paper distributed by NEP-HIS on 2012-01-03 raises a challenge to economic historians: how can we improve our current explanations of differential development and escape the common rhetorical places of path dependency and institutional persistence in our explanations of material stagnation and change? By placing human agency of men and women in the center of our stories, says Jan Luiten van Zanden, in the form advocated years ago by Amartya Sen in his best-selling book Development as Freedom.
Amartya Sen
It might be useful to remember Sen’s definition of agency, a concept that diverged from the usual meaning of the term in economics:
The use of the term “agency” calls for a little clarification. The expression “agent” is sometimes employed in the literature of economics and game theory to denote a person who is acting on someone else’s behalf (perhaps being led on by a “principal” and whose achievements are to be assessed in the light of someone else’s (the principal’s) goals. I am using the term “agent” not in this sense, but in its older -and “grander”- sense as someone who acts and brings about change, and whose achievements can be judged in terms of her own values and objectives, whether or not we assess them in terms of some external criteria as well. This work is particularly concerned with the agency role of the individual as a member of the public and as a participant in economic, social and political actions (varying from taking part in the market to being involved, directly or indirectly, in individual or joint activities in political and other spheres) (Sen 1999: 18-19, my own emphasis added).
Zanden’s reading of agency in Sen is “the capacity for autonomous decision making” that ultimately drives “economic and social-political change” (Zanden 2011: 4). Agency is also a synonym of “participation, or autonomy” (Zanden 2011: 5). But two questions remain. How does agency affect economic change? How does freedom impact agency? Sen responds:
Development as Freedom
Expansion of freedom is viewed both as the primary end and as the principal means of development. Development consists of the removal of various types of unfreedoms that leave people with little choice and little opportunity of exercising their reasoned agency. The removal of substantial unfreedoms is constitutive of development (Sen 1999: xii).
Zanden advances the usefulness of Sen’s framework and formulates what he calls the dual Sen hypothesis, this is, if “development is defined as freedom [… that] freedom -or rather -agency- is an important precondition and driver of long-term economic and socio-political change” (Zanden 2011: 5).
The second part of the “Sen hypothesis”, agency as a determinant of historical change, can be tested with proxy variables such as the gross domestic product or the human development index. However, what is behind these indicators? Zanden advances a suggestive explanation drawn from the new growth theory of Paul Romer and Robert Lucas: human capital is the crucial determinant of economic growth and human development. Human capital is embedded in the other variables for “one has to possess the right skills -the human capital- to really participate in markets, political events and the civil society” (Zanden 2011:5).
The author then offers four brief examples of how historical inquiry guided by degrees of agency and human capital might illuminate problems in the past with echoes in the present: slavery, capital markets, patterns of marriage and political participation. In the following lines we will mention some of the arguments Zanden advances about each of these:
- Zanden rightly points out that the impoverishing consequences of slavery were experienced both in the slave-supplying and the slave-demanding regions of the world, “however, the slave trading nations seem to be unaffected by it” (Zanden 2011: 6). A fact that raises a question of method: how can economic historians discount the loss in welfare represented by the human tragedies of slavery in their long-run series of production?
- Zanden states that financial repression and inefficiency account for suboptimal allocation of resources to fund investment and growth. Nevertheless, the experience of fast processes of financial liberalization and subsequent crashes, such as those enacted in Latin American countries in the 1980s, the former Communist bloc countries in the 1990s or the United States and the European Union in the 2000s might help us tone down the discussion on freedom of access to financial markets to study the distributional consequences of the sudden reversal of fortune, that is, who pays for the negative externalities of financial intermediation gone awry?
- The author revisits the marriage pattern of Northwestern Europe after 1300 to identify two positive aspects of autonomy in choosing one’s partner, those being: a) men and women remained single for a longer time before getting married, thus allowing them to achieve an increased level of formation and accumulation of human capital, and b) the decline of the birth rate explained in terms of a shift “from ‘quantity’ to ‘quality’ of offspring” (Zanden 2011: 10) created the incentives to invest more in the human capital of (fewer) children. In Zanden’s example, we might be confronted to a rather traditional explanation for European exceptionalism and the Great Divergence, however, comparing the Northwestern European marriage pattern with other regions of the world depends on reliable demographic series in the long-run, which might not be available either by the scarcity of sources or problems to finance the assembling of reliable databases.
- On the section of political participation and economic development, Zanden explores the problem of specification of the relationship between economic growth and democracy: Does economic growth cause democracy? Is democracy an explanatory variable of economic growth? Or are both economic growth and democracy explained by a third variable, say, the stock of human capital or the participation of the civil society? This has been a fascinating debate “as old and venerable as the social sciences themselves” (Zanden 2011: 11). Van Zanden rescues the role of bottom-up organizations (communes, guilds and parliaments) that acted as countervailing powers to despotic rule and voiced the interests of (mostly wealthy members of) society. Then Zanden revisits the history of apartheid in South Africa, articulating a masterly example of how economic history would look like with full attention to sociopolitical factors.
In his conclusion, Zanden remarks that his is not a full account of the “genesis of global inequality”, but rather a suggestion of what the Sen approach to human development can offer to economic history, for if deprivations explain the level of development in the present, they will be even better to explain the longue durée processes of “economic change and [human] development” (Zanden 2011: 14):
Overcoming [deprivations] is a central part of the exercise of development. We have to recognize the role of freedoms of different kinds in countering these afflictions. Indeed, individual agency is ultimately central to addressing these deprivations. On the other hand, the freedom of agency that we individually have is inescapably qualified and constrained by the social, political and economic opportunities that are available to us. There is a deep complementarity between individual agency and social arrangements. It is important to give simultaneous recognition to the centrality of individual freedom and to the force of social influences on the extent and reach of individual freedom. To counter the problems that we face, we have to see individual freedom as a social commitment (Sen 1999: xi-xii).
Zanden’s paper is a welcome exercise to explore the relevance of our discipline to account for contemporary problems such as poverty, lack of social mobility and unequal distribution of wealth and income. It is indeed a first step towards enriching the new institutional economics paradigm and reintroducing historical contingency in our accounts of the past. However, we must be cautious not to subsume all new historiography in the agency paradigm without being aware of its ideological assumptions. For, as Walter Johnson (professor of History at Harvard University and second chair of the Project on Justice, Welfare and Economics, a research initiative first headed by Amartya Sen) has said with regards to the historiography of American slavery in the 19th century:
Walter Johnson
The idea of “the agent” as the essential subject of history has habited our history reading with an anachronistic (and generally unarticulated) assumption that beneath all history there lies a liberal individual subject waiting to be emancipated into the precise condition that characterize the lives of the imperial bourgeoisie of the twenty-first century. Pushed to the side has been any genuine consideration of historical subjectivity (Johnson 2011: 26, my own emphasis added).
This is to say, agency and freedom cannot be that easily equated. “Agency is a complex phenomenon” (Zanden 2011: 5). Questions of identity, of historical subjectivity and particularity might be lost if we do not problematize agency in the craft of economic history:
The selective reworking [of agency] has taken on the guise of a substantive account of historical subjectivity, an actually existing thing -the naturally autonomous, and intrinsically self-determining, and properly rights-bearing historical agent striving for “freedom”. Agency has come to serve us not as a container by which disparate versions of historical subjectivity (the terms through which human beings understand themselves as historical actors) might be analyzed and compared to one another but as a crypto-liberal account of the thing itself (Johnson 2011: 25, my own emphasis added).
To talk about individual empowerment is to reassert the importance of social, political and cultural factors on economic change. To speak about agency is to reiterate the pertinence of categories such as class, gender, race, ethnicity, sexual orientation, in economic and historical analysis, notwithstanding our temptation to stylize facts, to simplify and model with parsimony, to reconstruct historical series that might say nothing about differences in social welfare and the distributional aspects of economic growth.
Our discipline would do good to engage in dialogue with political, social and cultural historians who might offer valuable insights on how to approach agency, autonomy and freedom on the individual and the collective level. Economic historians have been heard by economists and other social scientists: it is time to narrow the gap and join the conversation with our colleagues in other historical fields. Then, we will be in even better company.
References
- Johnson, Walter. “Agency: A Ghost Story” in Slavery’s Ghost. The Problem of Freedom in the Age of Emancipation (Baltimore, MD: The Johns Hopkins University Press, 2011): 8-30.
- Sen, Amartya. Development as Freedom (Oxford: Oxford University Press, 1999).
- Zanden, Jan Luiten van. “In Good Company: About Agency and Economic Development in Global Perspective”. Stellenbosch Economic Working Papers 23/11 (December 2011).
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Reblogged this on Measuring Clio and commented:
Reflections on the use of agency in economic history.
Dear Manuel,
I reflected at grotesque lengths (500 pages, roughly) on such matters in Bourgeois Dignity: Why Economics Can’t Explain the Modern World (U of Chicago Press, 2010). Shamefully, I had not read Sen’s Development as Freedom when I wrote the book, out of a misplaced aversion to fashionability. But Amartya (who has always been kind to me: I should do him better) mnaged to summarize in 1999, by a miracle of time travel, what I was to conclude in 2010. In his words, which you most aptly quote:
the freedom of agency that we individually have is inescapably qualified and constrained by the social, political and economic opportunities that are available to us. There is a deep complementarity between individual agency and social arrangements. It is important to give simultaneous recognition to the centrality of individual freedom and to the force of social influences on the extent and reach of individual freedom. To counter the problems that we face, we have to see individual freedom as a social commitment (Sen 1999: xi-xii).
I do hope that in Jan Luiten’s paper you are commenting on, which I will now hasten to read, Jan Luiten engaged with my criticism in 2010 of his reduction of dignity and liberty to human capital. It’s not an open and shut issue, of course. But I argued that, from the historical evidence we have, the accumulation of human capital: (1.) is far too small in effect to explain much of the 2000 percentage increase in real incomes per head, if the mere accumulation is the point, and if therefore its oomph can be judged by crossection returns to years of education; (2.) is, unlike some physical capital if durable and most ideas if written down, not a long-run accumulation, because it depreciates, alack, alas, too soon, too soon, which means it must be reproduced (as the Marxists correctly observe) in the surrounding conditions of every generation, and so it is the surrounding sociological and political conditions that matter; (3.) is often conservative in the bad sense, being complementary with existing techniques, such as activity analysis in economics, briefly fashionable c. 1960 but then frozen into the minds of otherwise wonderful scholars such as Bob Allen, the trouble being of course that (once) existing techniques are sometimes not the best. The Chinese examination system is the standard example, but classical education in Europe (though containing the poison pill of Lucretius within it) is another.
As I say, I hope Jan Luiten faces such criticism in the spirit given: consider this seriously, my friend, so that in answering it, if you can, you will improve your hypothesis; and if you can’t, so that you will modify or abandon it. In the present case, I don’t think growth-theory routines, amusing as they undoubtedly are, and put forward by such eminences as my student Paul Romer and my former colleague, notable for his views on changing gender, Bob Lucas, are worth much scientifically. They are merely another attempt by economists to make everything, simply everything, lie down on a bed of “accumulate, accumulate! That is Moses and the prophets” (as the Master put it). And they certainly do not fit the humanomics that Amartya was articulating (and in fact which Lucas, too, exhibits, in a remarkable passage analysing the Naipaul novel A House for Mr. Biswas at the end of his central article).
As to Professor Johnson (as I remembering his name right from your piece? I am assigning myself to read his essay, too), yes: Sen believes, as I do, that bourgeois dignity and liberty are central to the modern world. But the claim that the bourgeois era has been bad for us, which I gather Johnson is assuming, is not correct, as one can see by consulting those remarkable chapters on imperialism and exploitation and many other wonders in Bourgeois Digbnity,
Regards,
Deirdre
Dear Deirdre:
It has been two years since I met you in the Second Latin American History Congress. Time flies! Thanks a lot for reading my commentary on Zanden’s paper.I hope Jan Luiten can answer some of the questions you ask him. On my part, I provide further references for those following the debate.
– Robert Lucas’s view on gender crossing, as it can be infered from
http://www.deirdremccloskey.com/gender/crossing.php, might be a negative one:
The male economists have on the whole–with some startling exceptions, such as my former colleague at the University of Chicago, Robert Lucas–taken the view that comes naturally to the grandchildren of Adam Smith: laissez faire : “If he . . . I mean she. . . wants to do that, and it doesn’t hurt anyone, well, um, OK.”
– An excerpt of what Lucas thinks of V. S. Naipaul’s “A House for Mr. Biswas”, available at http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=3419
But what is visible depends on where one looks. Look, for example, at V.S. Naipaul’s great novel of economic development, A House for Mr. Biswas. The novel begins with the story of Mohun Biswas’s birth and death, all within its first 40 pages. He is born in rural Trinidad, a grandson of immigrants who had come from India as indentured servants. As a small boy, his ambition is to become a herder of cattle like his older brothers. At his death, he is an unemployed journalist in Port-of-Spain, living in a ramshackle house, with no assets to support his wife and large family after he is gone. What life within such limits is to sustain the reader for the novel’s remaining 540 pages? Yet measured by the cultural distance between Mr. Biswas’s parents and his children, his life is a story of amazing progress. By the end of Biswas’s life, his oldest son, Anand—Naipaul’s own fictional counterpart—is a scholarship student at Oxford. Between Anand and Mohun Biswas’s parents is the entire 25-to-1 difference between living standards in India and living standards in Western Europe and the United States.
Biswas himself is no Horatio Alger figure. His talents are modest, and his willingness to ingratiate himself with those who might advance his career is nonexistent. He passes from one mediocre, limited job to another. But his unwillingness to accept the limits of each current situation as permanent, to make the best of it, turns out to be his strength. Through all his misfortunes and setbacks Mr. Biswas is able to maintain the sense of himself as a man with possibilities, with options, a man who is in a position to set limits on what he will put up with. And equally important, he lives in a society that will let him survive with this attitude. An African slave with these attitudes, working the same sugar cane fields as Biswas’s father and brothers did, would have been beaten to death, or starved as an outcast. So too might have been his own grandfather. But in the Trinidad of the interwar and World War II periods, options were available. A man with a little literacy could move from rural to small town to Port-of-Spain jobs, jobs where he could interact with people who could teach him a little more. Somehow Biswas survives, marries, supports a family after a fashion, and succeeds in passing on to some of his children this sense of living in a world with possibilities, a world that can reward those who accept the challenges it offers.
We know from direct experience that the passage in two generations from traditional agricultural society to the modern world that A House for Mr. Biswas describes is not a singular one. In my neighborhood in Chicago I bring my shirts to a laundry operated by a Korean woman, recently arrived, whose English is barely adequate to enable her to conduct her business. Her shop is open from 7 to 7, six days a week. As I enter, her 3-year-old daughter is seated on the counter being drilled in arithmetic—which she is very good at and clearly enjoys enormously. Fifteen years from now this girl will be beginning her studies at Chicago or Caltech, alongside the children of professors and Mayflower descendants.
The mathematics and science that this girl will study and perhaps contribute to were not created by the efforts of her and her family, just as the culture in which V. S. Naipaul was immersed when he arrived at Oxford was not the product of his and his father’s effort. These are parts of the body of knowledge that is generally available for access by suitably prepared people, “free to the people” as Andrew Carnegie had engraved over the entrances to the public libraries he built. The growth of what Kuznets called “the stock of useful knowledge” is, as everyone agrees, an essential factor in the industrial revolution. Without the existence of this stock, the efforts of families like the Naipauls would add up to nothing, or next to nothing.
It is my belief that economic history has to challenge the heteronormative, and patriarchal values embedded in economics, for “people have two ways, exchange and identity. Men can grasp only exchange” (Deirdre McCloskey. Crossing, A Memoir. Chicago, IL: The University of Chicago Press, 1999: 183).
In his excellent everyday history of the slave trade in the American South, Walter Johnson speaks of “an “impossibility of separating ‘the market’ from ‘the culture’” (Walter Johnson. Soul By Soul. Life Inside the Antebellum Slave Market. Cambridge MA: Harvard University Press, 1999: 242). If both the economy and culture are part of a complex object of study, what kind of economic history should we write? Johnson’s study is really effective in communicating not only the discourses of the historical actors involved in the slave trade but also their feelings. How can economic historians write persuasively in both the intellectual and emotional levels? Can we write a history that stimulates readers to be compassionate (in the sense of feeling with historical actors)?
I will try to contact Walter Johnson and let him know about this on-going debate.
Hugs,
Manuel
Reply to Manuel A. Bautista González and Deirdre McCloskey
Thanks for paying attention to my paper, which is not more than a first attempt to sketch a research project the Utrecht group in global economic history is working on (see also the website of the Centre for Global Economic History: http://www.cgeh.nl/,). The aim of this project, called Agency, Gender, and Economic Development, is to test the dual Sen hypothesis (as we call it), that freedom is the ‘true’ measure of economic development, and that agency in itself is an important – if not the crucial – engine of development. These ideas are also closely linked to institutional economics – the hypothesis can also be rephrased as: institutions in a society have be designed in such a way that they allow, facilitate and encourage agency of individuals in ways that are consistent with the aims of these individuals and of societal development at large (see for full details http://www.cgeh.nl/sites/default/files/AgencyEfficiencyWorldEconomyv10.pdf.). Gender plays an important role in our approach – we also link our research to ideas about the key importance of female empowerment (as for example expressed in the most recent World Development Report).
Such research can be criticized for being too optimistic about human nature. A development worker who had been a witness to the civil wars of central Africa once told me that he knew what ‘total agency’ implied, namely men with Kalashnikovs shooting at each other and at the civilian population. We try to deal with this by adopting the ideas of Sen and by incorporating institutional economics into our approach – both stress ‘the deep complementarity between agency and social arrangements’ (to quote Sen once more). Sen in particular is clear that freedom is not ‘negative’, in the sense of absence of all constraints, but ‘positive’- that for example the resources for making meaningful decisions (eg. human capital) form an essential precondition for real agency. Still, I have sensed from colleagues – and Manual González phrases this concern eloquently – that the agency approach is based on Enlightenment ideas about the free will that may be anachronistic. This ultimately leads to the question what the underlying – perhaps pre-scientific – values are that is guiding our research (and our lives). Coming from a Protestant tradition, I do feel that our ultimate aim (both within and outside academia) should be to enhance agency of women and men – that may be an anarchronistic Enlightenment idea (with obviously much older roots), it may be Eurocentric and even ‘crypto-liberal’ but it is the best idea I have heard so far.
This brings me to Deirdre’s comments. She compares the sketch of ‘my’ approach with the story told in her Bourgeois Dignity: why economics can’t explain the modern world. The analysis presented there I interpret as follows: innovation is the key thing in economic history – the main explanation of the spectacular rise of productivity and living standards occurring since about 1750. Economics cannot explain innovation, and human capital only plays a limited role as well. Thereby she criticizes the interpretation of the causes of the Industrial revolution as presented in my book The Long Road to the Industrial revolution, The European economy in a global perspective 1000-1800 (Brill Publishers 2009) – the details of her assessment of my interpretation are in pp. 323-4 of her book on Bourgeois Dignity. I will come back to this shortly. Her alternative is that it is the bourgeoisie that really mattered. It was the rise of a bourgeoisie and their rhetorics (frequently she states: ‘it was words’) that really mattered: ‘In its rhetoric the north-western European elite began to deem a bourgeois career honorable…. The English upper classes got down into the factories themselves’ (p. 387). That is an interesting idea, although one can perhaps argue about its emergence (I would place it in the ‘producer cities’ of Medieval Europe, dominated by local merchants elites). It is also not really clear to me why this social (r)evolution would necessarily lead to innovation on the scale we have seen since the 18th century. The bourgeois society par excellence, the Netherlands, was after ca 1670 not able to sustain its innovative activities. Perhaps some of the ingredients of the explanation of the Industrial Revolution as suggested by Robert Allen (relative prices) and Joel Mokyr (Scientific Revolution and Enlightenment) are required to complement McCloskey’s argument. And it is also quite difficult to test such an hypothesis. As Deirdre herself points out, this is not an explanation from within the realm of economics (because this discipline ‘cannot explain the modern world’), so it is unclear what the rules of the game are for discussing such a proposition – how for example to test this link between bourgeois virtues and innovation, which appears to me to be the most crucial part of the hypothesis?
Returning to her critical remarks concerning my use of the concept of agency and its linkage with human capital, she argues that I reduce ‘dignity and liberty’ to human capital. That is a misunderstanding. Both in my book on ‘The Long Road’ and in the brief essay discussed here I use a much broader concept of agency, but do stress that human capital is a resource required for the full exercise of Sen’s ‘freedom’. The developments discussed and analyzed in both the book and the paper – concerning for example marriage patterns and political freedoms – make this clear. What fundamentally explains ‘the Long Road’ to the Industrial Revolution and beyond, is in my view the fact that European institutional development created room for and was reshaped by ‘a million mutinies’, by ‘bottom up’ changes that brought about a specific demographic and socio-political regime that was quite dynamic. These changes, originating in the High Middle Ages, also ‘produced’ the bourgeoisie that is the remarkable hero of McCloskey’s book. But limiting our scope to the middle classes may imply that we do not see the whole picture: other social classes may have played a similar and perhaps even more revolutionary role in inducing social and economic change: the labouring classes, who already at an early stage became heavily dependent on wage labour (and thus, by implication, trusted markets to such an extend that they fully relied on them for livelihood), the peasantry (which similarly went through remarkable processes of commercialization), the parents and their children (who accepted consensus as basis for marriage and household formation, instead of arranged marriage), and the consumers (who if we are to believe Jan de Vries fascinating story used their agency to intensify contacts with the markets and work more hours to pay for it). It is the big picture of human agency changing the world that we should try aim at – this is what I have tried to do.
Jan Luiten van Zanden
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