Category Archives: Economic History

Spatially-Embedded Collective Memory and Political Behaviors

Activated History – The Case of the Turkish Sieges of Vienna

Christian Ochsner and Felix Roesel (Ifo Institute – Leibniz Institute for Economic Research at the University of Munich Dresden Branch)

Abstract: We study whether long-gone but activated history can shape social attitudes and behavior even after centuries. We exploit the case of the sieges of Vienna in 1529 and 1683, when Turkish troops pillaged individual municipalities across East Austria. In 2005, Austrian right-wing populists started to campaign against Turks and Muslims and explicitly referred to the Turkish sieges. We show that right-wing voting increased in once pillaged municipalities compared to non-pillaged municipalities after the campaigns were launched, but not before. The effects are substantial: Around one out of ten votes for the far-right in a once pillaged municipality is caused by salient history. We conclude that campaigns can act as tipping points and catalyze history in a nonlinear fashion.

URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_6586&r=his

Circulated by NEP-HIS on: 2017-11-05

Revised by Martin Söderhäll (Uppsala University)

The_Turkish_Siege_of_Vienna

The Turkish Siege of Vienna (1529). Collection: Vienna Museum. Source: Wikimedia Commons.

a) Summary

Is it possible for “arguably irrelevant” historical events to shape the voting behavior of a population if triggered by political campaigning exploiting said historical events? This is the main question the authors set out to answer in the paper. The authors show that political campaigning that uses stereotypes of religious and ethnic minorities can be highly effective when encountering spatially embedded collective memory utilizing a set of seemingly unique historical and societal circumstances occurring in present day Austria, among other things: 1. The pillaging of Austrian villages by Turkish troops during the Ottoman military expeditions in the 16th and 17th centuries. 2. The presence of one of Europe’s oldest and still existing right-wing populist parties (the Freigeitliche Partei Österreich, FPÖ) which in 2005 started to campaign against Muslims and Turks explicitly referring to “their vicious crimes during the Turkish sieges of Vienna” and 3. The arguably exogenous location of the Battle of Bisamberg which led to spatial discontinuity in the probability of villages being pillaged by the Turks north of the Danube during the second siege of Vienna in 1683.

map

The empirical strategy is directed towards examining if the vote share of the Austrian right-wing populist party (FPÖ) was significantly higher in villages exposed to Turkish pillaging in the 16th and/or the 17th centuries (i.e. in villages were the collective memory of Turkish pillages was stronger) than in villages that were not pillaged, right after the change in campaign tactics of the FPÖ in the year 2005. Using the “tools of the trade” of 21st century economic historical research (the baseline model uses a traditional DiD approach, although the spatial fuzzy RD design using panel data, seen in section 4.3 is new according to the authors), Ochsner and Roesel find that having been exposed to pillaging in the 16th and the 17th centuries led to an activation effect (i.e. the average treatment effect) of 1.6-3.05 percent depending on the specification. The larger effect sizes, 2.5-3.05 percent are estimated using the spatial fuzzy RD design on the sub sample of villages west of Vienna.

 

The authors conclude that neither “a local historical record of foreign atrocities” or “a campaign that addresses the stereotypes of these foreigners” are necessary and sufficient conditions to activate any effect. However, when both conditions are met the effect is statistically significant and robust across a range of specifications. In section 7 of the paper the authors address the underlying mechanisms at work. Ochsner and Roesel find that the effects of the campaigning were stronger in small rural communities and in communities with a lower share of out-commuters. Their findings suggest that “collective memory is likely to be a function of local embeddedness”. The authors conclude their paper with a call for future research that addresses the fact that societies can evolve and interact in a non-linear manner.

b) Comments

In general, I tend to approach quasi-experimental long-run effects papers with seemingly robust and large effects on the treatment group, with a bit of skepticism. In this case however, at least from my point of view, the authors made an excellent job of convincing me of (at least) the internal validity of their study. This is in part thanks to the appealing empirical setting, which they carefully account for in the introduction, and the two following sections of the paper.  The use of pictures and references to visual remnants of history in East Austria as well as quotes of “anti-Turkish” comments in online forums and the analysis of FPÖ’s campaign content provides context to readers unfamiliar with the setting, which is great!

campaign

While I find the authors interpretation of the mechanisms at work plausible, the empirical examination of said mechanism lacks the attention to detail shown in section 4-6. Collective memory might well be a function of local embeddedness; however, the authors use the share of out-commuters from a village as a proxy for embeddedness. Arguably this variable could also be a proxy for a lot of other things such as the average income or the age structure of the population in the villages (which they do not control for in the models presented in table 13). Addressing the mechanisms at work more carefully would in my opinion further improve the paper.

As a final comment, the results provided by the authors raises many interesting questions. The possibility to activate history in places were a collective memory of past events is present by campaigning could be utilized by a range of actors. In this day and age when the costs for highly customized political advertising (on social media platforms for example) is lower than ever before, “activating history” could be utilized by political parties (or other interest groups) in locations were the probability of a positive effect is higher, whilst other (less controversial) campaigning strategies could be used in other locations. The fact that the authors implicitly raise the awareness of how distant history in subtle ways can influence our opinions is truly a good thing.

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Environmental Shocks and their Effects on Imperial Rome’s State Capacity

Droughts of Dismay: Rainfall and Assassinations in Ancient Rome

By Cornelius Christian (Brock University) and Liam Elbourne (St. Francis Xavier University)

Abstract: We find that lower rainfall in north-central Europe (Gaul/Germania) predicts more assassinations of Roman emperors from 27 BC to 476 AD. Due to agricultural pressures on Germanic tribes, low precipitation caused more barbarian raids. These raids, in turn, weakened the Empire’s overall political stability, and reduced the costs of assassinating an emperor. We buttress our empirical analysis with case study evidence.

URL: http://d.repec.org/n?u=RePEc:brk:wpaper:1703&r=his

Circulated by nep-his on 2017/10/08

Review by Fernando Arteaga (George Mason University)

 

Summary

Was Imperial Rome’s political stability disturbed by environmental shocks? If so, what were the transmission channels? These are the two fundamental questions the authors aim to answer. Their thesis is straightforward: As any pre-industrial society, rainfall levels predicted agricultural output in Roman times. A lack of rain affected food availability, especially in the underdeveloped regions where Northern Germanic Tribes resided, making these societies more prone to raid Roman towns across the border. The incursions then created political conflict among the Romans themselves.

colosseum

The text relies on econometric analyses and a couple of case studies to back up the argument. The main statistical test is simple: they regress Roman political stability on rainfall data. The main variable they use as a proxy of political unrest is the assassination of Roman emperors (as presented by Scarre 1995): the more emperors were killed, the less stability in the Empire. Alternatively, they also employ an index of inflation and new governmental infrastructure investment as a proxy for stability  (larger inflation and less imperial projects imply improved stability).  The rainfall variable comes from Buengten et al. (2011) own estimations on precipitation levels across France and Germany for all the period under study. Figure 1 displays the main data points used in the analysis. The authors find that negative rainfall shocks are both associated with more emperor’s being killed (Figure 2) and with having larger inflation rates and fewer investment projects. A decrease of one standard deviation in precipitation caused an 11.6% standard deviation increase in assassination probability. The regression is empirically valid because there is no possibility of reversal causality; precipitation is not a factor that may be influenced by Roman politics [1].

 

RomeFigure1

Figure 1: Roman Gaul/Germania (Yellow). Rainfall Datapoints (Green). Emperor Assassination Locations (Red)

 

 

RomeFigure2

Figure 2: The red line indicates the precipitation level, while the blue is the amount of Roman Emperors assassinated.

 

But how exactly does lack of rain destabilized Roman society? The paper’s hypothesis relies on the Germanic raid linkage: Germanic tribes attacked Rome when they had a poor harvest of their own, which then created unrest in Roman interior stability.  To test such assertion, they regress Germanic/Gaul incursions on the rainfall levels. The raid data they use comes from Venning (2010), who reviewed the many times the Roman Empire suffered raids through its history. The authors find a negative correlation: a decrease in one standard deviation in rainfall is associated with a 4% standard deviation increase in a number of raids. They corroborate the results by doing some robustness tests: 1) a placebo test, in which they regress non-Germanic raids on precipitation levels, which they find that had insignificant impact (which means that precipitation mattered only in Germanic zones, because they were the only ones that really suffered from a lack of rain); 2) an instrumental variable where the relationship between Roman instability and Germanic incursion is instrumented by rainfall. They find that “a standard deviation increase in the raid dummy [the presence of raiding] causes a 29.3% increase in the probability of assassination.”

To give more weight to their results, they present a brief recapitulation on the reigns of two assassinated Roman emperors: Severus Alexander (208-235) and Gallienus (218-268). The key insight is that both emperors faced important challenges on the Eastern and Northern borders, however only the latter had a relevant impact on Roman internal politics. On the East, the Roman Empire frequently collided with the Sassanid Empire (the other larger state in the area), but notwithstanding the severity of the clashes (at some point they even captured a Roman Emperor, the father of Gallienus) it never caused great civil unrest in Rome. However, on the North, Rome bordered the Germanic tribes (scattered non-organized societies) that did affect Rome’s stability.  The conclusion we get from the narrative is that the Germanic border was important/special precisely because it was very susceptible to environmental shocks, which then led to constant raiding; unlike the Sassanid border, in which the Romans faced a cohesive society that could successfully resist bad crops or confront military bravados on non-environmental factors.

 

Comment

I enjoyed reading the paper very much. It made me re-realize why I find Economic History fascinating: it deals with topics that are interesting in themselves (the politics of the Roman Empire! What is not to like about it?), that remain relevant for today’s problems (we still seek to understand the relationship between nature and political conflict very much), and it treats the issues under study with great care and humility (there is no grand universal theory, but a careful attempt to attain a reliable empirical finding- however small that is).

My main concern with the paper is that the authors never clarify the relationship between Northern Rome’s lack of state capacity and the barbarian incursions. The main narrative maintains that the Germanic raids were the source of Roman political unrest (that is the way I summarized the argument in the preceding section). But at several instances across the paper, the authors hint that Roman political complications in Gaul were themselves a precursory factor that made the Germanic incursions more menacing.

The problem is present in both the econometric analysis and in the case studies. If I understood it correctly (by looking at figure 1), the regressions they asses rely on data that captures rainfall in both Roman Gaul/Germania and non-Roman Germania. The argument is that lack of rain affected Germanic independent tribes more because they were less prepared than the Roman borderline towns. Intuitively, this sounds right. However, the assertion does not imply that alternative transmission channels could not matter too. Yes, Roman towns were better prepared to endure bad harvests than their Germanic neighbors, but that doesn’t imply that bad agricultural output in Roman towns could not be the cause of political instability in them. There may be a relevant omitted variable bias problem in the empirical specification. [2]

The problem seems clearer when we consider the conclusions the authors get from their case studies: in them, they compare the level of relevance local border town problems in Germania/Gaul and in Syria had on larger Roman politics. The Germanics were a constant thorn on Rome, but the Syrians weren’t. Why? The authors explicitly stress that Roman Gaul/Germania had lower state capacity than Roman territories next to Syria, and so it was easier to subdue unrest in Syria than in Gaul. However, if that is so, then we are led to beg the question of what causes what? Is weak state capacity due to raiding, or is raiding due to weak state capacity? The paper’s narrative emphasizes the former linkage (all of the quantitative estimations rely on that sole mechanism too) while, at the same time, it recognizes that the latter mattered too. Unfortunately, it never sets to disentangle the underlying causality. [3]

References

Buengten, Ulf et al. (2011)  “2,500 years of European climate variability and human
susceptibility.” Science, 331(6017), pp. 578-582

Scarre, Chris (1995) Chronicle of the Roman Emperors: The Reign-by-Reign Record of the Rulers of Imperial Rome. Thames & Hudson: London.

Scheidel, Walter (2015) “Orbis: the Stanford geospatial network model of the Roman world.” http://orbis.stanford.edu/

Venning, Timothy. (2010) A Chronology of the Roman Empire, Bloomsbury Academic: New York.

Endnotes

[1] The authors confirm this by regressing rainfall at time t on lagged t -1 political stability.  It is interesting to note that this obvious observation may not be true for current events. Climate change is indeed affected by the domestic politics of some countries.

[2] I also remain confused about what data was used for some of the alternative estimations. For example, on the placebo test, they regress non-Germanic raids on precipitation levels. I assume they are using non-Germanic precipitation levels too. Otherwise, it would mean they would be testing how rain in Germania affects raids in non-Germania, which would make no sense.  However, they don’t clarify.

[3] My two cents on the Syrian/Gaul distinction is that geography and travel times may explain it. ORBIS (A project that reenacts the geospatial framework of the Roman Empire) allows us to estimate the times and cost of regular trips to different cities in the Roman Empire. A trip from Rome to Cologne would last 32 days on the fastest route and 63 days on the cheapest. A trip from Rome to Palmyra, on the other hand, would last 28 on the fastest route and 42 on the cheapest. This can provide a benchmark of the cost of mobilizing resources across regions: moving a Roman army could be 1/3 cheaper if it had to go to Syria rather than Germania. This significative figure implies that the costs of subduing unrest in Germania were larger and so more difficult.

Industrialization, Gold, and Empires: Trade Collapse in the Great Recession vs. the Great Depression

Two Great Trade Collapses: The Interwar Period & Great Recession Compared

by Kevin Hjortshøj O’Rourke (All Souls, University of Oxford)

Abstract: In this paper, I offer some preliminary comparisons between the trade collapses of the Great Depression and Great Recession. The commodity composition of the two trade collapses was quite similar, but the latter collapse was much sharper due to the spread of manufacturing across the globe during the intervening period. The increasing importance of manufacturing also meant that the trade collapse was more geographically balanced in the later episode. Protectionism was much more severe during the 1930s than after 2008, and in the UK case at least helped to skew the direction of trade away from multilateralism and towards Empire. This had dangerous political consequences.

URL: https://econpapers.repec.org/paper/cprceprdp/12286.htm

Distributed by NEP-HIS on 2017-09-24

Review by Anna Missiaia

Comparisons between the Great Depression of the 1930s and the Great Recession of 2008-10 have been performed by several scholars interested in the lessons that we could draw from history. Famous examples are Eichengreen’s Hall of Mirrors: The Great Depression, The Great Recession, and the Uses-and Misuses-of History in which the economic policies in the two crisis are compared, or Crafts and Fearon’s The Great Depression of the 1930s: Lessons for Today” in which contribution from a variety of fields are collected. The paper by Kevin O’Rourke proposed here contributes to the same line of research by using a large body of empirical evidence on both the Great Depression and the Great Recession to compare the different outcomes on trade of the two crises. In both the 1930s and 2008-10, the level of global trade experienced a contraction; however, the effect was initially more sever in the latter but much more persistent in the former, pointing to different dynamics in the two cases. Figure 1 illustrates the two trajectories.

 

Figure 1: World Trade during the Great Depression and the Great Recession: months after June 1929 and April 2008

According to the author, the striking different behaviors of trade in the two crises are linked to a different composition of the world exports. On the eve of the Great Depression, industrial products accounted for roughly 44% of total trade; in 2007 the same figure had risen to 70%. This is important in the light of different volatilities of these two broad classes of goods. Figure 2 shows world trade divided into manufacturing and non-manufacturing during the Great Depression while Figure 3 shows the same for the Great Recession.

 

Figure 2: Manufacturing and Non-Manufacturing World Trade during the Great Depression, 1929-1940

Figure 2: Manufacturing and Non-Manufacturing World Trade during the Great Depression, 2008-2015

From these two graphs, we see that in both cases non-manufacturing trade (basically composed of agricultural products) did not collapse but it was rather the manufacturing exporting sector that suffered the most (of course this is in terms of volumes, not prices). The compositional effect therefore explains the much more violent decrease in the first years of the Great Recession, but also the faster recovery (although the former is discussed by O’Rourke much more in detail compared to the latter). O’Rourke illustrates this compositional effect using counter-factual analysis which basically applies the shares of manufacturing and non-manufacturing of 2007 to trade during the Great Depression, showing that the pattern is very much changed depending on the composition. The different share of manufacturing during the two crises is driven by the catch up of the periphery, and in particular Asia, which was during the Great Recession much closer to the level of industrialization of the core countries, leading to a more “regionally balanced” shock at world level.

The Great Depression had seen a deterioration of the terms of trade of developing countries, leading to an increase in protectionist measures. O’Rourke suggests that one of the explanations to both the depression and the protectionist measures is found in the monetary regime: the Gold Standard had deprived countries of the possibility to implement counter-cyclical monetary policies, leading to the sole use of protectionist policies in the attempt to contrast the former. The lack of coordination among countries, which got off gold in different moments, made the late movers deal with an overvalued currency which worsened their position even further.  The paper also contains a positive assessment of the crisis response after the 2008 crash, when countries behaved in a much more coordinated fashion and were able to apply monetary and fiscal stimulus which ultimately led to a much shorter contraction of trade worldwide.

Figure 4: Victims of High Tariffs during the Great Depression.

Using again a counterfactual analysis, O’Rourke (citing his work with de Bromhead et al., 2017) shows that also the existence of trading blocs, and notably the British Empire, led to a “balkanization” of trade during the 1930s. This ultimately led to a contraction of overall trade that was not observed in the much more multilateral trade environment of 2008-10. More multilateralism also led to more efficient specialization worldwide and therefore to a milder effect of the crisis on trade.

The paper provides several policy-oriented results that should be considered in times of economic crisis (and to some extent cast a positive light on how the latest crisis has been handled). The first result is that multilateralism in trade is good for everyone because of its expansive effect of trade. The recent attacks to multilateral trade agreements, for instance through the threat by the US to leave NAFTA or by the UK to leave the EU single market, are dangerous both economically and politically. The paper also contains a historically grounded praise of the monetary and fiscal policies pursued in this latest crisis compared to the detrimental ones in the 1930s. Maybe, after all, we do learn from our mistakes and this is also thank to the efforts by economic historians.

Bibliography

Crafts, N. and P. Fearon (2013) The Great Depression of the 1930s: Lessons for Today. Oxford: Oxford University Press.

de Bromhead, A., A. Fernihough, M. Lampe and K. H. O’Rourke (2017) “When Britain Turned Inward: Protection and the Shift towards Empire in Interwar Britain”, CEPR Discussion paper 11835.

Eichengreen, B. (2015) Hall of Mirrors: The Great Depression, The Great Recession, and the Uses-and Misuses-of History. Oxford: Oxford University Press.

 

 

Governance structures and market performance

Contractual Freedom and Corporate Governance in Britain in the Late Nineteenth and Early Twentieth Centuries

by Timothy W. Guinnane (Yale University), Ron Harris (Tel-Aviv University), and Naomi R. Lamoreaux (Yale University)

Abstract: British general incorporation law granted companies an extraordinary degree of contractual freedom. It provided companies with a default set of articles of association, but incorporators were free to reject any or all of the provisions and write their own rules instead. We study the uses to which incorporators put this flexibility by examining the articles of association filed by three random samples of companies from the late nineteenth and early twentieth centuries, as well as by a sample of companies whose securities traded publicly. Contrary to the literature, we find that most companies, regardless of size or whether their securities traded on the market, wrote articles that shifted power from shareholders to directors. We find, moreover, that there was little pressure from the government, shareholders, or the market to adopt more shareholder-friendly governance rules.

Business History Review, Volume 91 (2 – Summer 2017): 227-277.

DOI: https://doi.org/10.1017/S0007680517000733

Review by John Turner (Centre for Economic History, Queen’s University Belfast)

Tim Guinnane, Ron Harris and Naomi Lamoreaux are three scholars that every young (and old) economic historian should seek to emulate. This paper showcases once again their prodigious talent – there is careful analysis of the institutional and legal setting, a lot of archival evidence, rigorous economic analysis, and an attempt to understand how contemporaries viewed the issue at hand.

In this paper, Guinnane, Harris and Lamoreaux (GHL) examine the corporate governance of UK companies in the late nineteenth and early twentieth centuries. The UK liberalised its incorporation laws in the 1850s and introduced its first Companies Act in 1862. From a modern-day perspective, this Act enshrined very little in the way of protection for shareholders. However, the Appendix to the 1862 Companies Act contained a default set of articles of association, which was the company’s constitution. This Appendix, known as Table A, provided a high level of protection for shareholders by modern-day standards (Acheson et al., 2016). However, the majority of companies did not adopt Table A; instead they devised their own articles of association.

The aim of GHL’s paper is to analyse articles of associations in 1892, 1912 and 1927 to see the extent to which they shifted power from shareholders to directors. To do this, GHL collected three random samples of circa 50 articles of association for 1892, 1912 and 1927. Because most (if not all) of these companies did not have their securities traded on stock markets, they also collected sample of 49 commercial and industrial companies from Burdett’s Official Intelligence for 1892 that had been formed after 1888. However, only 23 of these companies had their shares listed on one of the UK’s stock exchanges.

GHL then take their samples of articles to see the extent to which they deviated from the clauses in Table A. Their main finding is that companies tended to adopt governance structures in their articles which empowered directors and practically disenfranchised shareholders. This was the case no matter if the company was small or large or public or private. They also find that this entrenchment and disenfranchisement becomes more prominent over time. However, GHL unearth a puzzle – they find shareholders and the market appeared to have been perfectly okay with poor corporate governance practices.

How do we resolve this puzzle? One possibility is that shareholders (and the market) at this time only really cared about dividends. High dividend pay-out ratios in this era kept managers on a short leash and reduced the agency costs associated with free cash flow (Campbell and Turner, 2011). Interestingly, GHL suggest that this may have made it more difficult for firms to finance productivity-enhancing investments. In addition, they suggest that the high-dividend-entrenchment trade-off may have locked in managerial practices which inhibited the ability of British firms to respond to future competitive pressures and may ultimately have ushered in Britain’s industrial decline.

Another solution to the puzzle, and one that GHL do not fully explore, is that the ownership structure of the company shaped its articles of association. The presence of a dominant owner or founding family ownership would potentially lessen the agency problem faced by small shareholders. In addition, founders may not wish to give too much power away to shareholders in return for their capital. On the other hand, firms which need to raise capital from lots of small investors on public markets may adopt more shareholder-friendly articles. The vast majority of companies in GHL’s sample do not fall into this category, which might go some way to explaining their findings.

A final potential solution is that the vast majority of firms which GHL examine may have raised capital in a totally different way than public companies, and this shaped their articles of association. These firms probably relied on family, religious and social networks for capital, and the shareholders trusted the directors because they personally knew them or were connected to them through a network. Indeed, we know precious little about how and where the multitude of private companies in the UK obtained their capital. Like all great papers, GHL have opened up a new avenue for future scholars. The interesting thing for me is what happens when private firms went public and raised capital. Did they keep their articles which entrenched directors and disenfranchised shareholders?

Unlike the focus of GHL on mainly private companies, a current Queen’s University Centre for Economic History working paper examines the protection offered to shareholders by circa 500 public companies in the four decades after the 1862 Companies Act (Acheson et al., 2016). Unlike GHL, it takes a leximetric approach to analysing articles of association. Acheson et al. (2016) have two main findings. First, the shareholder protection offered by firms in the nineteenth century was high compared to modern-day standards. Second, firms which had more diffuse ownership offered shareholders higher protection.

How do we reconcile GHL and Acheson et al. (2016)? The first thing to note is that most of Acheson et al’s sample is before 1892. The second thing to note is that in a companion paper, Acheson et al. (2015) identify a major shift in corporate governance and ownership which started in the 1890s – companies formed in that decade had greater capital and voting concentration than those formed in earlier decades. In addition, unlike companies formed prior to the 1890s, the insiders in these companies were able to maintain their voting rights and entrench themselves. This corporate governance turn in the 1890s is where future scholars should focus their attention.

References

Acheson, Graeme G., Gareth Campbell, John D. Turner and Nadia Vanteeva. 2015. “Corporate Ownership and Control in Victorian Britain.” Economic History Review 68: 911-36.

Acheson, Graeme G., Gareth Campbell, John D. Turner. 2016. “Common Law and the Origin of Shareholder Protection.” QUCEH Working Paper no. 2016-04.

Campbell, Gareth and John D. Turner. 2011. “Substitutes for Legal Protection: Corporate Governance and Dividends in Victorian Britain.” Economic History Review 64: 571-97.

On the Long-term Determinants of Cultural Traits: Family Structures in the Past

Origins and Implications of Family Structure across Italian Provinces in Historical Perspective

By Graziella Bertocchi (Modena and Reggia Emilia University and IZA) and Monica Bozzano (Modena and Reggia Emilia University)

Abstract: In this study we review the literature on the origins and implications of family structure in historical perspective with a focus on Italian provinces. Furthermore we present newly collected data on three of the main features of family structure: female mean age at marriage, the female celibacy rate, and the fraction of illegitimate births. The data are collected at the provincial level for 1871, the year of Italy’s political unification. The analysis of the data allows us to confirm and quantify the geographic differentiation in family patterns across the country.
We also illustrate the links between family structure and a set of socio-economic outcomes, in the short, medium, and long run.

URL: http://EconPapers.repec.org/RePEc:iza:izadps:dp10327

Distributed by NEP-HIS on: 2017‒06‒25

Review by: Guido Alfani (Bocconi University, Milan)

The recent interest in the long-term determinants of cultural traits has led to a new wave of research on family systems in the past, as well as to debates that renewed old disputes about the actual possibility of identifying areas of coherent family systems and their causal effect on contemporary behaviours. Graziella Bertocchi and Monica Bozzano have been very active in this field, focusing on such a culturally fragmented and varied area as Italy. In this new working paper, they present further evidence at the provincial level from the Italian 1871 census. They show the importance of looking at the sub-national and indeed, at the sub-regional level to identify correctly the prevalent family structures and demographic behaviours. Their data show feeble evidence that the so-called EMP (European Marriage Pattern) is associated with economic development, human capital accumulation and women’s empowerment. These findings are relevant to current debates on European family systems and on their possible permanent effects on cultural traits.

ItalianFamily_earlyXXc

Italian Family, early twentieth-century. Source:  www.novecento.org.

Summary

This paper presents new data, at the provincial level, about family structures in Italy in 1871. In that year, the first national census was made after the conquest of Rome and the incorporation of the residual territories of the former Papal States, and Veneto, into the Kingdom of Italy. The authors provide information about family types, female age to marriage, proportion of brides under age 20, female final celibacy rates, and illegitimacy rates. Family types are classified as nuclear vs complex, as well as according to the four-way classification introduced by Todd (1990) which combines residential habits (neolocal vs patrilocal) and inheritance systems (partible vs impartible): absolute nuclear family, egalitarian nuclear family, stem family, and communitarian family. Additionally, the authors build upon earlier research (Bertocchi and Bozzano 2015) to apply their own classification of Italian families, which distinguishes between egalitarian families with late female age to marriage (found to be prevalent, in 1871, in the North-West of Italy), incomplete stem families (prevalent in the North-East), communitarian families (prevalent in the Centre) and egalitarian families with early age to marriage (prevalent in the South).
Beyond the technicalities of the classification, an important contribution of the article is to clearly show, by means of a set of well-drawn maps, the high variability of family types and behaviours to be found across the Italian peninsula, even in contiguous territories. The obvious consequence of this, is to make it much more difficult to neatly characterize different parts of Italy according to their family systems and prevalent demographic behaviours.
Interestingly, the authors focus on characteristics connected to the so-called European Marriage Pattern (EMP), including nuclear residential patterns, relatively late age to marriage and relatively high final celibacy rates. The prevalence of the EMP has been connected to economic success, as originally hypothesized by Hajnal (1965) and as later assumed by many economic historians and economists (for example, Greif 2006; De Moor and Van Zanden 2010). But in this paper, in the authors’ words, “Overall our results show very feeble evidence that the different characteristics of the EMP are associated with economic development, human capital accumulation, or women’s empowerment” (p. 14). However, the authors do find a significant correlation between some of their indicators and measures of contemporary gender balance. For example, gender equality in economic leadership (measured as the rate of women in managerial positions) in year 2009 is found to grow with the female mean age to marriage in 1871 and to decline with the proportion of brides under age 20 and the prevalence of nuclear families. This is in line with earlier research by Bozzano (2016).
The authors are mindful of placing correctly their discussion in the broader context of current research on the long-term impact of family systems and structures done by economic historians and economists. Consequently they provide to all researchers interested in the field a useful survey of the recent literature (although a better coverage of recent demographic and historical-demographic literature would also have been useful – see for example Reher 1998).

Comment

This paper is an interesting and important contribution to the renewed pan-European research efforts aimed at identifying the characteristics of past family systems. Although many researchers pursue this objective solely to improve our knowledge of the past, others are driven by the aim of finding long-term determinants of differences in current social and economic behaviour. Two examples of this are the “Patriarchy Index” project (Szołtysek et al. 2017) and the recently-started Institutional Family Demography project (IFAMID) led by Arnstein Aassve, which is currently focusing on the measurement of another of Hajnal’s favoured indicators, the prevalence of life-cycle servants, at the European sub-national level. Yet other scholars have analysed previously-neglected aspects of past societies which could also explain current behaviour – for example godparenthood practices, which began to diverge across Europe at the time of the Reformation and which might have led to differences in ways of doing business (Alfani and Gourdon 2012).
The sub-national scale of analysis is a particularly useful characteristic of this paper. First, it allows (at least on principle) for more precise measurement and greater explanatory power. Secondly, and maybe even more importantly, it reminds us that complexity in the geographic distribution of social systems and behaviours is the common feature of most of the European continent. Indeed, a seemingly frequent characteristic of old debates is that they are easily forgotten – and what might have seemed to be final acquisitions need to be re-discovered and re-discussed, decades later. This is the case of debates about the actual possibility of applying broad generalizations to studies of European social-economic dynamics, the most common of which, both when referring to the European continent, or to Italy alone, seems to be the “North vs South” one. Such debates already involved, in a somewhat defensive position, Peter Laslett and his school, but have been renewed due to the popularity acquired by Todd’s more recent classifications among economists and to some degree among economic historians (interestingly, Todd seems to have been much less influential on historians of the family). The debates about the role played by the EMP in determining economic success, which have recently been the object of intense discussion in the pages of the Journal of Economic History (Dennison and Ogilvie 2014; 2016; Carmichael et al. 2016), have old roots. It is still unclear where current discussion will lead us – whether we are bound to conclude that if we examine European family systems closely, they are in fact too diverse and intermixed to be of much use as indicators of persistent cultural divides, or whether we will finally reach a consensus on broad, documentable differences which do not only fit nicely with our views on European societies (even though such views might be more than a little tainted by prejudice and ideology), but do actually explain something. What is clear is that, in order to make the discussion progress in a fruitful way, we need more high-quality data – which is what this paper successfully delivers for Italy.
There are, of course, issues which might be debated further. For example, this paper (like most of its kind) does not discuss the choice of period to measure differences in past family systems. It is not enough to state that the earliest-available encompassing census is used – is 1871 also the right period to measure such differences? Were not family differences already influenced by the Industrial Revolution and the demographic transition, and were not these processes more advanced at that time in the North (and especially in the North-West) than in the South of Italy? And why did the authors not control in their regression analysis for the pre-unification Italian state to which each province belonged, given that they work on a period immediately following the birth of the Kingdom of Italy? Indeed, why should we rule out the possibility that pre-unification states also had permanent effects, perhaps due to some influence on their local family systems? Finally, how far could family systems in 1871 determine differences in cultural traits today, given the intense internal migration processes that affected Italy? Many northern regions today have a very mixed population if we consider where the current population’s ancestors lived in 1871. Should we not conclude that current cultural traits are better explained by past family systems in provinces of out-migration (mostly the southern ones) compared with those of in-migration (mostly the northern ones)? And how could we take this into account, if indeed it is possible?
But these are questions better left for further research and for future debates, which already seem to be looming on the horizon. For now, we should be grateful to the authors of this paper for providing us with new material to ponder.

Selected bibliography

Alfani, G. and Gourdon, V. (2012), “Entrepreneurs, formalization of social ties, and trustbuilding in Europe (fourteenth to twentieth centuries)”, Economic History Review 65 (3), pp. 1005–1028
Bertocchi, G. and M. Bozzano (2015),“Family Structure and the Education Gender Gap: Evidence from Italian Provinces,” CESifo Economic Studies 61, pp. 263–300.
Bozzano, M. (2016), “On the Historical Roots of Women’s Empowerment across Italian Provinces: Religion or Family Culture?”, European Journal of Political Economy, forthcoming.
Carmichael, S. G., De Pleijt, A., van Zanden, J.L. and De Moor, T. (2016), “The European Marriage Pattern and Its Measurement”, Journal of Economic History 76, pp. 196–204.
De Moor, T. and J. L. van Zanden (2010), “Girlpower: The European Marriage Pattern and Labour Markets in the North Sea Region in the Late Medieval and Early Modern Period”, Economic History Review 63, pp. 1–33.
Dennison, T. and S. Ogilvie (2014), “Does the European Marriage Pattern Explain Economic Growth?”, Journal of Economic History 74, pp. 651–693.
Dennison, T. and S. Ogilvie (2016), “Institutions, Demography, and Economic Growth”, Journal of Economic History 76, pp. 215–217.
Greif, A. (2006), “Family Structure, Institutions, and Growth: The Origins and Implications of Western Corporations”, American Economic Review 96, pp. 308–312.
Hajnal, J. (1965), “European Marriage Patterns in Perspective”, in D. V. Glass and D. E. C. Eversley (eds.), Population in History: Essays in Historical Demography, Edward Arnold, London, pp. 101–143.
Reher, D.S. (1998), “Family ties in Western Europe: Persistent Contrasts”, Population and Development Review 24, pp. 203-234
Szołtysek, M., Poniat, R., Gruber, S., Klüsener, S. (2017), “The Patriarchy Index: a new measure of gender and generational inequalities in the past”, Cross-Cultural Research 51 (3), pp. 1-35
Todd, E. (1990), L’Invention de l’Europe. Paris: Éditions du Seuil.

Populism is Back! Why has this happened and why does it matter?

Populism and the Economics of Globalization

By Dani Rodrik (Harvard University)

Abstract: Populism may seem like it has come out of nowhere, but it has been on the rise for a while. I argue that economic history and economic theory both provide ample grounds for anticipating that advanced stages of economic globalization would produce a political backlash. While the backlash may have been predictable, the specific form it took was less so. I distinguish between left-wing and right-wing variants of populism, which differ with respect to the societal cleavages that populist politicians highlight. The first has been predominant in Latin America, and the second in Europe. I argue that these different reactions are related to the relative salience of different types of globalization shocks.

URL: http://EconPapers.repec.org/RePEc:cpr:ceprdp:12119

Distributed by NEP-HIS on: 2017-07-09

Review by Sergio Castellanos-Gamboa (Bangor University)

Summary

Populism has been at the front of news headlines for a while now. Whether it was the controversial campaign for Brexit led by Nigel Farage from the United Kingdom Independence Party (UKIP) and Boris Johnson from the Conservative Party in Great Britain, or the equally controversial campaign and victory of Donald Trump in the recent United States elections, the rise of anti-immigrant and anti-European political parties in countries like France, Greece, and Spain, the so called “anti-imperial Castro-Chavist” movements and governments in Venezuela, Bolivia, and Ecuador, or the opposition of the Democratic Center Party (a right-wing political agrupation led by ex-president Alvaro Uribe Velez) to the peace treaty in Colombia, populism is back and very strong, and according to the author, it is here to stay for the foreseeable future.

Dani Rodrik combines the use of economic history and economic theory to analyze the recent surge of these populist movements across Europe and America (see a blog-post version of the paper on VOX here). The main argument of the paper is that “advanced stages of globalization are prone to populist backlash” and the specific form populism takes will depend on the different societal cleavages that politicians can exploit to promote anti-establishment movements. There will be a tendency for left-wing populism when “globalization shocks take the form of trade, finance, and foreign investment”. The opposite will happen when “the globalization shock becomes salient in the form of immigration and refugees”.

Dani_Rodrik_small_400x400

Rodrik first presents a rather short summary of what economic history has to say about the appearance of populism during the first globalization era. He points out to the abolition of the Corn Laws in Britain in 1846 as the origin of a series of commercial treaties that, combined with the Gold Standard and free mobility of capital and people, made the world almost as globalized as it is today. Nonetheless, the decline of agricultural prices in the 1870s and 1880s motivated an increase in agricultural tariffs in almost all of Europe, and later on, the United States instituted a series of acts to reduce immigration from several countries. Moreover, Rodrik argues that the first self-consciously populist movement appeared in the US during the 1880s, with the farmers’ alliance against the Gold Standard, bankers and financiers.

The author moves on to analyze the effects of trade on redistribution. Based on the theorem developed by Stolper and Samuelson (1941), Rodrik argues that in most international economic models where trade does not lead to specialization, “there is always at least one factor of production that is rendered worse off by the liberalization of trade. In other words, trade generically produces losers”. Moreover, he argues that the net profits of trade openness decrease relatively to the redistribution costs, as the initial barriers to trade are lower. He backs this argument with empirical evidence from the literature on NAFTA and the US trade with China, and a model that looks at the effect of the size of the initial tariff being removed on the change in low-skill wages and the increase in real income of the economy.

Rodrik also argues that although there could be a form of compensation for the affected industries, this is usually very costly and not practical. Also, one of the reasons why populist movements in Europe have not been anti-trade might be the existence of safety nets that made unnecessary ex-post mechanisms of compensation. Very important as well is the general perception of the masses on the degree of fairness of the increase in inequality perceived after reducing trade tariffs. Namely, populism is more likely to appear when the losses derived from globalization and increases in inequality are deemed to be produced by a group taking unfair advantage of the new economic atmosphere.

The author also analyzes the perils of financial globalization, whereby looking at the current literature of the effects of capital mobility on inequality, he concludes that countries prefer when capital adopts the form of a long-term flow, like direct foreign investment, rather than short-term, volatile financial flows. Rodrik comments that the literature has found that financial globalization tends to increase the negative impact of low-quality domestic institutions. There is also a high correlation presented by Reinhart and Rogoff (2009) between capital mobility and the incidence of banking crises.

The article concludes with an analysis of the possible determinants of the specific type of populism that spreads in a given country. In a different paper (Mukand and Rodrik, 2017) Rodrik presented a model that could explain to some extent the reason why populist movements in Europe have traditionally been right winged, whereas in Latin America they have been usually left winged. The main determinants in the model were the presence of an ethno-national/cultural or an income/social cleavage. Rodrik also provides empirical evidence of this phenomenon with a newly constructed dataset.

Comments

During my training as an economist I was well aware of the distributional effects that trade has on the economies involved. Nonetheless, the argument I heard was always that trade is a positive-sum game and net profits from it could be redistributed among the losers, thus alleviating any negative effects. The usual argument to explain why trade openness was sometimes not so popular was that the potential losers from trade were better represented and had more lobbying power, thus preventing tariff reductions. As Rodrik argues in this paper, sometimes, especially at advanced stages of globalization, not only are there problems redistributing the potential net profits; it looks as the net effects of opening more the economy at this stage might be actually negative.

This paper comes out at a moment when academics, politicians, the media, and the general public are trying to understand the reasons why these movements have appeared somewhat all of a sudden. Rodrik’s argument is that these events were predictable. The implications of the development of a particular form of populism on economic welfare are still not clear yet: analyzing this could be one of the lines of future research opened by this paper. Very often populism is associated with demagoguery, and it will be very important to differentiate between the two in the future. It is not the same that an anti-corrupt-establishment movement aims to change the political structure of a country, than filling the public opinion with lies and false promises as it happened with Brexit in the UK and with the peace treaty referendum in Colombia. In the former, the Leave campaign promised to the general public that the resources spent on the EU could be directly transferred to funding the National Health Service, which turned out to be a false statement. In the latter, leaks of recordings from the campaign opposing the peace treaty clearly showed how different socio-economic groups were fed different false arguments to gain their sympathy.

Finally, the paper shows the relevance of economic history for the discussion of present problems. Rodrik uses economic history to acknowledge that populism has sprung in the past at advanced stages of globalization. Following his example, economic historians should contribute to the literature by further explaining the channels through which populism has developed, to help us understand which are the consequences of different types of populism on economic development and societal welfare.

References

Mukand, Sharun, and Dani Rodrik, 2017. The Political Economy of Liberal Democracy. Harvard Kennedy School.

Reinhart, C.M. and Rogoff, K.S., 2009. This Time is Different: Eight Centuries of Financial Folly. Princeton University Press.

Stolper, W. F. and Samuelson, P.A., 1941. “Protection and Real Wages.” Review of Economic Studies 9(1), pp. 58-73.

Knowledge in Mining does matter. But not any Knowledge.

The Mining Sectors in Chile and Norway, ca. 1870 – 1940: the Development of a Knowledge Gap

By: Kristin Ranestad (University of Oslo)

Abstract: Chile and Norway are two ‘natural resource intensive economies’, which have had different development trajectories, yet are closely similar in industrial structure and geophysical conditions. The questions of how and why Chile and Norway have developed so differently are explored through an analysis of how knowledge accumulation occurred and how it was transformed by learning into technological innovation in mining, a sector which has long traditions in Norway and has been by far the largest export sector in Chile for centuries. Similar types of ‘knowledge organisations’ with the direct aim of developing knowledge for mining were developed in both countries. Formal mining education, scientifically trained professionals, organisations for technology transfer and geological mapping and ore surveys are compared in the search for differences which may explain the underlying reasons for variations in economic growth.

URL: http://econpapers.repec.org/paper/heswpaper/0105.htm

Distributed by NEP-HIS on: 2016-11-13

Review by Miguel A. López-Morell (University of Murcia)

The effect of mining on the economic development of countries with abundant natural resources is a central issue of the history of economics. The question is straightforward: Why does mining have a positive effect on some countries while in others its contributions to the economic development are scant, not to mention the huge environmental problems that mineral extraction and processing generate? The “resource curse” myth does, unfortunately, hold true in most developing economies, but it is hard to take on board when we consider countries with very long mining traditions like Australia, the USA and Canada, to mention but three, and their high levels of income. There is, therefore, a need for studies that do not demonize the sector but rather search out deep causes and well-founded arguments to explain the conditions in which mining has a positive effect, or other, on development.

Rajos-Centinela

Mines in Antofagasta (Chile). Source: Tapia, Daniela. “Distrito Minero Centinela: La ambiciosa apuesta de Antofagasta Minerals.” Nueva Minería y Energía, November 17, 2014, link.

 

Kristin Ranestad approaches the issue from a comparative institutional perspective. The examples she uses, Chile and Norway, are in some ways congruent, in that both have a long mining tradition and they are not dependent countries with development problems; indeed, in terms of development per inhabitant, they are clear leaders in South America and Europe.

Ranestad identifies the similarities and differences in the levels of education of the mining engineers and technicians; the proportional presence of the latter in mining; the deployment of advanced information systems, such as scientific journals or attendance at congresses and exhibitions; the existence of study travels and work abroad; and the intensity of geological mapping and ore surveys.

The conclusions Ranestad draws leave little room for doubt. All the above facets that affect technological knowledge in modern mining are to be found in both countries, yet there are important differences in terms of quality and quantity, with Norway always coming out on top, except in terms of university education. Chile loses out as there is no direct relationship between the size of the mining sector and the level of development of other factors, where it trails Norway by some way.

The reasons, although not explained in depth here, lie to a large extent in the presence of large North American groups like Kennecot or Anaconda in Chile since the First World War. These controlled the huge deposits of Chuquicamata or El Teniente, where they introduced modern mining production technologies that boosted export capacity, although they always acted in isolation. At the same time, there was a large group of small and medium size Chilean mines that was working with minimum technology, almost non-existent externalities and a highly deficient exploitation of the deposits, which were frequently abandoned well before they had been fully exploited with the technology of the time. In contrast, Norway was streets ahead in all aspects and its mines were far more diversified and making far better use of their resources. They were also far more in tune with the economic environment.

The approach seems to be an interesting one since economic historians frequently, and mistakenly, argue in favor of the importance of quickly reaching historical landmarks that affect institutional and technological development, while overlooking the real significance of these for the production system. We tend to give an overwhelming importance to the age of technical schools, professional associations or scientific publications rather than to reflect more on how much influence they have had and how mature they are.

There may be some question marks hanging over Ranestad’s figures for the numbers of active engineers in each country. According to her reasoning and to the sources consulted, the argument stems from the idea that training was an endogenous affair since she draws on the mining schools’ own records to fix the figures of engineers. So we cannot, on the basis of the information provided, know what percentage of engineers had been trained abroad. In Spain, for example, which was a leading mining power at the time, there was a relatively high number of engineers who had studied abroad prior to the Second World War. Indeed, foreigners and Spaniards who had studied abroad accounted for some 250 mining engineers, according to one database constructed using the annuals of mining engineers, even though it did not include man professionals working in large companies in Spain, like Rio Tinto Co, Tharsis, la Asturiana or Peñarroya, which did not even bother to inform about such matters (see Bertilorenzi, Passaqui and Garçon 2016, pp. 143-162). The author herself, when talking about foreign engineers, notes: “However, their dominance was negative in the sense that the lack of collaboration with domestic engineers and leaders prevented knowledge transfer within the sector”. Yet she does not back this up with hard figures.

Nevertheless, her contribution is a valuable one which affords a novel approach that is perfectly applicable to other works of comparative economic history. In the case of Chile, there is no explanation of the differences to the sector following the nationalization of the copper industry between 1853 and 1971. In perspective, though, it is not comparable with the Norwegian situation in the sense of the sector’s capacity to transfer knowledge to other sectors and to the country as a whole. A prime example is Orkla, which is today a huge, widely diversified conglomerate that has little do to with mining, but which in the 1920s produced copper and pyrites more profitably than its competitors, despite its mineral being 10% poorer in quality. It would even sell technology to Rio Tinto, no less. It would also be worthwhile analyzing whether the nationalization of copper mining and the government control of oil in Norway have had similar repercussions for the inhabitants of each country. A starting point would be to ask Chilean pensioners whether they have similar benefits to their Norwegian counterparts, even though the answer does seem foregone.

References

Bertilorenzi, Marco; Passaqui, Jean-Philippe and Garçon, Anne-Françoise (dirs.) (2016) Entre technique et gestion, une histoire des « ingénieurs civils des mines » (XIXe-XXe siècles).París, Press des mines

Harvey, C. and Press, J. (1989) “Overseas Investment and the Professional Advance of British Metal Mining Engineers, 1851 – 1914”, Economic History Review 1989, 42 (1) pp. 64-86.

Mokyr, Joel (2002) The Gifts of Athena: Historical Origins of the Knowledge Economy. Princeton: Princeton University Press.

Rosenberg, Nathan (1982) Inside the Black Box: Technology and Economics. Cambridge: Cambridge University Press.