Economic mobility and American Exceptionalism

A recent article by the economic historian Gregory Clark argues that economic mobility in the U.S. is far from ideal. Of course, Clark is not the first to write about economic mobility, but his historical comparisons help convey the ideas to his readers about how mobile American society is relative to other societies in the past and present. I like this style of economic history: in some ways it is similar to Piketty's recent work which makes sweeping but compelling claims about the future of our economic system. Quoting Keynes, it is the type of great economics which studies "the present in the light of the past for the purposes of the future."

When reading Clark, I was reminded of Joseph Ferrie's research on the history of economic mobility in the U.S. He used linked census data to study intergenerational occupational mobility in the late-19th and early-20th century. He groups occupations into four categories to make his comparisons with post-WWII studies of mobility using Current Population Survey data.

Ferrie separates out mobility into two ideas: prevalence and association. Prevalence measures the ratio of, say, white collar to farm workers across generations. Association compares the odds that the son of a white collar worker becomes white collar to the odds that the sone of a farmer becomes white collar. Using both measures, Ferrie finds that occupational mobility rates were higher in the late-19th century than in the 20th century. In other words, Clark's argument is blown a little out of proportion: while the American Dream may not be easily realized today, it was relatively more easily realized in the late-19th century.

What about late-19th century mobility relative to Britain? Ferrie is referring here to the "American Exceptionalists", a group of social scientists beginning with Tocqueville and Marx, and later Werner Sombart, who argued that the lack of a socialist politics and class consciousness in the U.S. is due to Americans' obsession with "moving up the ladder" and other materialist concerns, as well as geographic mobility (to the frontier - more on that later). Ferrie does indeed find that mobility was higher in the U.S.; for example, 51.3% of British sons of unskilled fathers were able to move up the ladder, while 81.4% of American sons were able to do so, between 1850 and 1880. So, again, Clark's argument is blown a little more out of proportion: the American dream was real in the late-19th century and likely attracted people from other countries seeking a better life.

The causal story is much less clear: what was it about American society that made workers so mobile? One one level, it's a Kuznets-style story of the transition out of agriculture to industry which is capturing some of the mobility findings. Other explanations include the rise of public education and geographic mobility. The emphasis on geographic mobility and the "frontier" more generally has a long history in American scholarship. The frontier would serve as a safety-valve for urban growth and the growth of a "dependent class". Ferrie finds that Americans who moved were twice as mobile as those who didn't, suggesting that geographical mobility is an important part of the story.

It would be interesting to link this work up with recent discussions of the role of inequality through the so-called "Gatsby curve". To wit: is our modern capitalist system preventing economic mobility through a failure to effectively spread the wealth around? And to what extent did that same mechanism operate in the 19th century? Obviously many things have changed since then, including institutions and the role of the state. Still, it could be an interesting additional factor to consider.

the interregional slave trade in the antebellum south: new research

In a section of Chapter 2 of Fogel and Engerman's Time on the Cross entitled "The Interregional Redistribution of Slaves", the following claim is advanced:

If the planters of the Old South engaged in deliberate breeding for export, it was a minor 'crop.' The total value of all the slaves sold from east to west in 1860 was about $3,000,000. (pg. 48)

This is an important point in the context of antebellum Southern historiography, because the extent of slave trading (and breeding for export) signifies the extent to which plantation owners had exhausted the soil of the Old South. The story goes that the soil of the Old South was depleted of its nutrients through harsh, aggressive harvesting, leaving the plantation owners to resort to slave breeding via a rising interregional market for slaves. (The significance of their claim comes up again in Chapter 3 on the "Myth of Slave-Breeding".)

The story fits nicely within what Fogel and Engerman call "traditional" accounts of the slave South, in which irrational and inhumane masters stupidly destroy the basis of their livelihood and then resort to raising slaves as they would any other crop as a means of maintaining a high profit margin. This leads to larger issues of broken families and the disintegration of black family structure. The fact that Fogel and Engerman do not find evidence of significant trading suggests that family structure was more cohesive, and plantation owners more scientific in their agricultural methods, than the traditional story suggests.

In the latest (September 2013) Journal of Economic History, Richard Steckel and Nicolas Ziebarth push back on the issue of interregional slave trading. They argue that the interregional slave trade was more significant than what Fogel and Engerman suggest. The main contribution of the research comes from its new dataset. They use the fact that, after the ban on the Atlantic slave trade in 1808, U.S. law required ships with slaves to report each slave's origin and destination - these were recorded in the "slave manifests", which they collect to assemble the largest dataset yet on the slave trade. Using this dataset, they find that over half and possibly up to 60% of slaves travelling West (specifically, to the lower South) were traded.

In contrast, Fogel and Engerman draw only from sales data in Ann Arundel County, Maryland, as well as some related findings for New Orleans - a major trade destination, but not the only one - and conclude that 16% of slaves travelling from Old to New South were traded.

Does Steckel and Ziebarth's research give more weight to the traditional view of the plantation owner of the Old South - irrational agriculturalist and slave-breeding? They don't mention how their work might place in the more general historiography of the South. Unlike the older, more ambitious cliometricians, Steckel and Ziebarth are much more humble about what their conclusions might imply. But their results do suggest that a reexamination of the behavioral foundations of the southern plantation owner might bear more fruit.

A copy of the paper can be found here: https://www.dropbox.com/s/46mwc7lknqvokcn/Steckel%20and%20Ziebarth%20galley.pdf

Explanations for the British Industrial Revolution, Revisited

It's been a while since I posted here. I thought I would get back into writing by briefly commenting on the lead article in the August 2013 Economic History Review by Jane Humphries.

Humphries takes aim at R. C. Allen's recent study of the origins of the British Industrial Revolution, which has been lauded as a very important and innovative work on this question. Allen focuses on four features that put the British economy at the technological "frontier" in the mid-to-late 18th century: higher wages than in the past, higher wages than in other countries, higher wages relative to the cost of capital, and higher wages relative to the price of coal. These four conditions in the "high wage economy" put Britain in a unique place for rapid capital-intensive investment, spurring productivity and hence growth.

The "high wage" thesis is part of what is called the "Habbakuk thesis". This argument maintains that labor is scarce (wages are high), then investors will want to find ways of saving money on labor, so they invest in machines and capital. This has the unintended effect of promoting industry and thus capitalism.

Humphries develops a three-pronged critique of Allen's claims.  All three points center around the nature of British labor markets in the time period of interest.

She first contends that wages were not that high relative to living standards. This builds off of a significant amount of research that Humphries has done recently on child labor and the plight of the poor in the Industrial Revolution. She cites a wealth of sources, essentially diaries and other direct accounts, that show that workers were indeed strapped for cash, barely "scraping by" if you will.

She then contends that family structure was considerably more stressed than what Allen assumes for his computations -- particularly regarding the caloric needs of a typical British household. Allen assumes a 2-child household when the reality was far different. This "patriarchal" assumption is a very old one and needs to be dropped in favor of a more inclusive idea of work or labor. Again, this draws on family economics and the need to incorporate unpaid women's labor into household needs and labor supply decisions and the production of value.

Finally, she contends that there was a dual labor market in Britain, which is not new, but she wishes to emphasize the labor market for women and children as having a quite dominant role. It was not just the labor market for the typical male worker that mattered. In fact, she showed how some employers specifically developed new machinery in order to allow women and children to take part in the work. Employing such workers also meant a lower wage bill -- another plus which is ignored in Allen's account.

The critique is all well and good, and like any good critique, it starts to raise more questions: how might we account for the rise of British capitalism? Is there an alternative theory that we can promote? If it's true that the high-wage story seems flawed, then what explains the rapid technological progress that took place? Perhaps something can be found in the story of the "disempowered" that Humphries mentions, who are all but forced into the factories, or at least, they take part in the capitalist labor market more out of necessity than want. Of course, such a story is known to many social and labor historians of early capitalism. But how might we bring new empirics (like Allen does) to test such claims and thus bring that perspective closer to current debates?

39 stripes - revisited

A while back I posted a comment on the usage in Southern law books of "39 lashes" as the specific punishment given to slaves for select crimes, such as publicly speaking out against the slave system. When I asked, "why 39?", after some searching I found that (supposedly) any more than that was considered a death sentence under Jewish law. So for example, Paul was given only 39 lashes, 5 times, by the Jews, according to 2 Corinthians 11.

There are several rationale given for making the maximum at 40, according to different versions of the Bible:

• Punishing an Isrealite with over 40 lashes would cause the punisher to be publicly humiliated ("your brother [the punisher] will be degraded in your eyes")
• In some cases, a bit worse than the above: "thy brother will become despicable in thine eyes"

 According, however, to written Jewish law, apparently they capped it at 39 because 40 was considered "full judgment" delivered by God, according to passages from Genesis and Numbers (and other references to 40 in the Old Testament). The 40 in Genesis, for example, refers to the 40 days and 40 nights of flooding. In Numbers, it refers to God punishing those who sinned by making their children serve as Shephards for 40 years. So accordingly, one might think that 40 was actually considered a death sentence, or at the very least, was considered entirely unthinkable as a punishment carried out by anyone other than God.

This seems to be the most plausible reading of the issue. Here is the source used for some of this discussion: http://bible.cc/2_corinthians/11-24.htm.

Ques. Do you not find yourself mistaken now? Ans. Was not Christ crucified.

Christopher Tomlins on Walter Benjamin, Max Weber, and Nathaniel Turner's Confessions:

Why did Memnon's reverberations haunt Thomas Roderick Dew? What was the sound that the broken, thrown-down statue of an Ethiopian warrior-king made when touched by the rising sun every day, day after day? Pausanias says it was like 'the breaking of the string of a lute or lyre.' Perhaps that was what Turner's voice sounded like in Southampton's courtroom -- the breaking of an 'endless pagan chain of guilt and atonement.' Not guilty.

Read more here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2034443

"is there truth in interpretation?" dworkin on law, literature, and history

columbus day

Arawak men and women, naked, tawny, and full of wonder, emerged from their villages onto the island's beaches and swam out to get a closer look at the strange boat. When Columbus and his sailors came ashore, carrying swords, speaking oddly, the Arawaks ran to greet them, brought them food, water, gifts. He later wrote of this in his log:

They ... brought us parrots and balls of cotton and spears and many other things, which they exchanged for the glass beads and hawks' bells. They willingly traded everything they owned.... They were well-built, with good bodies and handsome features.... They do not bear arms, and do not know them, for I showed them a sword, they took it by the edge and cut themselves out of ignorance. They have no iron. Their spears are made of cane.... They would make fine servants.... With fifty men we could subjugate them all and make them do whatever we want.

These Arawaks of the Bahama Islands were much like Indians on the mainland, who were remarkable (European observers were to say again and again) for their hospitality, their belief in sharing. These traits did not stand out in the Europe of the Renaissance, dominated as it was by the religion of popes, the government of kings, the frenzy for money that marked Western civilization and its first messenger to the Americas, Christopher Columbus.

From chapter 1 of Howard Zinn's A People's History of the United States (pg. 1)

gender roles: other explanations?

In the previous post, I mentioned recent research highlighting how economic historians think about gender roles and labor. Regardless of any problems that may exist with their econometric technique, it's clear that their overall framework is more economic than historical.One could even say that the economic historians' creed -- at least in modern research -- is path dependence, which is mainly a mathematical concept which has been criticized for its ahistorical characteristics by many historians.

Labor or legal historians are generally more interested in the details behind why cultural norms and beliefs persist, even in the presence of economic change. Intuition for why we might go this route: 1. institutions have significant inertia; 2. economic change does not necessarily lead to political changes given the existing power structure in society as a coercive force; and (similar to 2) 3. pre-existing political structures have been shown to determine the trajectory of economic change, particularly the choice of technique (i.e. technological change). All of these factors are things that economic historians can learn from historians and represent a way that they can strengthen their  own arguments.

(1) is something that even mainstream economic historians would probably agree with, though they would still want to assert that the adjustment mechanism is largely driven by material (market) forces. Intuition behind (2) can actually be found in the frontiers of research on political economy, most notably the work of Daron Acemoglu (see his Political Economy lecture notes , for example). (3) Is somewhat more radical but has been a mainstay in the political science and history literature for many years -- see for example Robert Brenner's explanation for the transition from feudalism to capitalism. (3) is, without a doubt, an extremely important idea.

To see how these ideas work, consider a recent example from economic history.

A classic example of the "gender roles" debate among economists and legal/labor historians in the American context highlighting the relevance of both (1) and (2) above is Geddes and Lueck's (2002) article, published in the American Economic Review, on the growth of women's rights in the 19th and early-20th centuries. They attempt to explain the emergence of women's rights using the fact that their increasing participation in the market economy increased their relative bargaining power in the household, leading to political change in the form of the decline of femme covert. Geddes and Lueck, both being economists, are rather ahistorical in their account, trying to place some economic forces regarding bargaining power at the forefront of historical change.

Geddes and Lueck fail to mention -- both in their paper and in their bibliography -- Norma Basch's (1979) work, Invisible Women, in which she uncovers significant historical detail to show how gender norms actually persisted throughout the 19th century. For example she cites the institution of judicial review, representing the power of courts and law more generally to overturn statutes which may have been passed to improve women's condition, as a means by which  the gender system was maintained and propagated throughout society. In other words, the courts were a key reason why many legislative attempts to overturn femme covert ended in failure. So while some laws did change, the underlying application of those laws maintained considerable inertia and was influenced by political forces clearly against expanded political power for women.

As a final side note: in my critique of Alesina et al.'s paper, I mentioned the issue of endogeneity. That mainly addresses point (3) above, regarding the importance of pre-existing political structures in the direction of material (technological) change. Essentially, I would like to know how the adoption of the plough or other technologies may actually have been explained by pre-existing gender norms in select cultures, or how pre-existing gender norms may have prevailed regardless of the adoption of technology. As I mentioned in my review, I believe the weakness of the authors' geography instrument and its failure to capture the variables I suggested above means more work needs to be done.

But regardless of these failures, legal or labor historians are simply not interested in "origins"-types of theses. At any point in time, many paths could have been taken by society. Understanding that variation should be under the purview of the economic historian's craft.

gender roles and labor: path dependence

Alberto Alesina, Paolo Giulliano, and Nathan Nunn have a recent paper on the origins of gender roles.

They test the hypothesis that the cross-country variation in the cultural presence of gender norms today can be explained by looking at how different countries arranged their agricultural production prior to their Industrial Revolutions. Their framework is simple: one choice of technique did not require specific physical attributes, while the other was more capital-intensive and also required significant physical strength. Specifically, the latter technique was the plough, and given that the plough required "significant upper body strength", leading to the need for men to "specialize" in working the plough, the hypothesis is that societies that used the plough developed clear gender roles. (For agricultural tools with no biological need for specialization, women were also able to work in the fields and thus no specialization needed to occur.)

Their initial empirical strategy is to do a brute-force test of the hypothesis given country and ethnographic data on gender roles. On a crude first-pass through the data, they find a positive association between use of the plough (vs. the less-specialized and less-capital-intensive technique) and gender inequalities today. Given that this story is not really robust (gender discrimination most likely has its origins even further back than early industrialization, and indeed choice of technique could be endogenous to gender inequality -- i.e. gender inequalities prior to adoption of the plough may have influenced the economic trajectory of the region), they move on to a other possible tests of the hypothesis.

One other possible test they do is to use geographic factors as instrumental variables for the use of the plough. Ploughs are not appropriate for all types of crops, so the question becomes whether pseudo-random (based on geography) assignment of ploughs vs. other agricultural methods still ends up explaining gender inequalities. If so, then they can more confidently say that it was the plough itself, and not pre-existing gender norms favoring the adoption of the plough, which led to the gender inequalities we see today.

This second test of the thesis (i.e. the geographic origins thesis) is much more interesting and nuanced than the first. Doing so requires moving beyond OLS. Simple OLS estimates are not appropriate because plough use is most likely endogenous to existing social conditions (i.e., a more male-dominant society is probably highly correlated with the use of certain technologies and production methods). So what of these second (IV) estimates?

The authors begin by citing Engels' (1902) discussion of gender norms and agriculture. In Engels' discussion, according to the authors, intensification of agriculture led to the emergence of private property which, in turn, led to a male-dominated institutional regime overturning matriarchy. This is essentially how Engels argued it in Origin of the Family, Private Property, and the State. Intensified agriculture led to an agricultural surplus, leading to the need for market relations and private property, which gave rise to male power. Thus for Engels, it is not the capital-intensive or the use of specific physical exertion in agricultural technique which leads to male domination -- rather, imposing private property for accumulation of a surplus creates unequal power in a society.

The authors address Engels' alternative argument by including a set of controls which are intended to consider the possibility that historically patri-local marriage rules are the real driver of the variation. In the OLS estimates these "patriarchy varialbes" are not found to have an impact on the statistical significance of the main variable (plough use) -- though the estimate on plough use does drop by roughly 30% with the inclusion of these controls, highlighting that they may have some explanatory power. In other words, it seems that Engels' theory is validated, at least partially, in this analysis -- and even to the extent that the authors want to throw out Engels' theory, doing so is not justified simply through the use of OLS.

The more important point is, of course, the endogeneity issue: won't plough use be correlated with gender norms that exist prior to its adoption? The geographical IV is employed to solve the issue -- seeing whether geographies more conducive to the plough give rise to gender roles more strongly than geographies not conducive to heavy plough use. But there are problems with this strategy too: plough use according to the tables (pp. 35-36) is highly correlated with industrialized countries today. In other words, I am sure that plough use is a much better predictor for modern development than it is for gender inequalities. Still, the authors find a statistically significant impact of geography on cultural beliefs, showing some evidence for their hypothesis.

Overall, it is the presence of the significant correlation between plough use and modern economic development which sticks strongest with me as a key weakness in the authors' study. The main hypothesis is just too simple -- that the need for specialization in agriculture in particular is what led to the formation of gender inequality. Perhaps the authors simply lose a bit too much by going on such a macro-level scale.
And path dependence, as I've mentioned before, is not the most rigorous of historical methods. More about that in the next post.

further thoughts on workplace democracy: importance of law

While it has been immensely fruitful to have scholars from political science, economics, and philosophy contribute to the debate on workplace democracy, one field has been surprisingly absent from that conversation: law. A quick check over at the Workplace Prof blog, for example, does not give any evidence of the debate being discussed. The Legal History Blog has also not engaged.

That's really too bad, because I believe that law can shed a useful perspective on some of the misconceptions held by those on both the right and the left in this debate.

First, on the right, Tabarrok chimes in with his discussion of worker quits. I actually already replied to him in this post -- but allow me to briefly flesh out the idea more.

The big event in early 1800s labor law was the conscious choice of applying Master-Servant law to all contract labor, not just contracts of servitude (i.e. indentured servants). Master-Servant law, as you can imagine, is more than simply "free contract"! It permitted judges to assume a substantial degree of authority into the labor contract as a contract which implies a degree of obedience of the worker to the capitalist. Such a law is, as Karen Orren states, essentially feudal. But Master-Servant law was a conscious choice of the judges at this time! Talking about this aspect of labor law is, I think, more crucial for understanding how workplace democracy has been prohibited over the history of capitalism.

On the left, Konczal replies to Tabarrok on quits, choosing to fight Tabarrok on his own turf rather than direct the workplace democracy debate in a more fruitful direction. Even Corey Robin commits a similar error by talking about pee breaks.

In short, the point is not about freedom to exit or not to exit, the point of workplace democracy is to control the conditions of one's work -- rights over how production is actually managed. Quitting or peeing may be part of that question, but on a more fundamental level we must recognize a legal system which implicitly assumes a degree of obedience and master authority which has existed and still exists to this day.

It would be interesting to see what legal scholars have to say about the space for expanding workplace democracy, or the history of workplace democracy over time. Yes we know a lot about unions, but we don't know as much about other forms of participation as sanctioned (or not) in the law.

tsk, tsk, alex tabarrok... tsk, tsk

In his laughable response to Crooked Timber bloggers' central claim that libertarians don't care an ounce for workplace democracy, Tabarrok makes the following comment:

If you think that the freedom to quit is without value bear in mind that under feudalism and into the early 19th century in the U.S. and a bit later in Britain employers and even potential employers could prevent workers from quitting and from moving. The freedom to quit was hard won. We should not disparage the liberation brought by a free market in labor.

This is not in fact true. Freedom to quit, even in the early 19th century, was exercised across New England. See Jonathan Prude's Coming of Industrial Order for numerous accounts of "French Leave", or the practice of workers coming and going from the factories as they felt convenient.

Tabarrok is about 20 years behind in his research on 19th century American labor law. In a recent (2010) account, Christopher L. Tomlins convincingly demonstrates the relative lack of institutional controls on adult white male workers as far back as the 17th century. In what is a practical overturning of Steinfeld's thesis, Tomlins demonstrates the relative continuity of labor law for adult white males even through the Revolution and into the 19th century.

So the right to quit never was a key element of workers' concerns -- rather, as Tomlins suggests, it is the grafting of Master-Servant law onto employment relations in the late 18th century which represents the real significant legal change. And indeed, that set of laws was hierarchical and undemocratic.

Why is this important? Because it shows that whatever the right to exit may mean in social relations, it certainly is not the main issue and certainly does not comprise what we mean by "workplace democracy". Workplace democracy means the right to control conditions of labor, and that's something which Master-Servant law has quite clearly shown to not exist in American law.

making path dependence history

Words to think about:

But there is another reason why the historians of the past should be taken seriously. A good knowledge of historiography—and the same could probably be said of the history of economics or the history of sociology—greatly diminishes the current practitioners’ claims to being innovative. When economists say that “history matters,” they invariably think of “path dependence,” the concept introduced by Paul David (1985) and often cited as if it was a Copernican revolution. This idea not only is not new but had already been shown to be unhistorical at least seventy years ago. In his The Historian’s Craft, published posthumously in 1949, Marc Bloch warned against the “idol of origins,” which leads to “confusing ancestry with explanation” (p. 27). Just as the seed from which it develops contains the destiny of a plant only to a minimum degree, so the history of social facts results from forces that are not found in the “initial conditions” to any great degree and whose effects are not propagated automatically.

From Boldizzoni's excellent The Poverty of Clio: Resurrecting Economic History, Princeton University Press, 2011.


The spectre of "path dependence" haunts a large amount of modern research on economic history. Perhaps that is due to its close association with physical sciences and mathematics (path dependence is, after all, really a concept derived from the science of particle motion).

But Bloch is ultimately correct -- ascribing the success of something today to a few determinist factors many, many years ago is not really history. At best, it is a convenient excuse to not talk about political power's influence on the success of a particular idea or institution. At worst, it's an apology for all the evils that allow an institution to persist.


So instead of making path dependence a part of economic history, let's make path dependence history, in the sense that we no longer fall back on it as an explanatory variable when in fact it is not one at all -- as Boldizzoni remarks, a multitude of other paths always exists, and seeing why others fail or succeed throughout history is the real task of economic historians.

schumpeter on the transition to capitalism

He wisely states in Capitalism, Socialism, and Democracy:

Economically all this [i.e. the transition] meant for the bourgeoisie the breaking of so many fetters and the removal of so many barriers. Politically it meant the replacement of an order in which the bourgeois was a humble subject [to the monarchy, aristocracy] by another that was more congenial to his rationalist mind and to his immediate interests. But, surveying that process from the standpoint of today, the observer might well wonder whether in the end such complete emancipation was good for the bourgeois and his world. For those fetters not only hampered, they also sheltered. (135)

That last sentence is important. For Schumpeter, the influence of "old money", so to speak, is vital for keeping capitalism stable. Otherwise, modern ideas of free contract, for example, have a powerful ideological effect on workers, forcing them to question why they should be obedient to their employers if they have complete freedom over themselves. Such ideas could of course become revolutionary -- leading the economy down the road to socialism that Schumpeter so lamented.

At some point later on Schumpeter responds to this by saying that the threat of unemployment (under various guises) becomes the main tool of social control in the period of "unsheltered" capitalism, when feudal norms of obedience no longer hold sway.

fun legal quote of the day: sailors be damned!

Justice Waite rules in Matthews v. Terry, 10 Conn. 455 (1835):

There is no doubt but that, for just cause, a parent may reasonably correct his child, a master his apprentice, and a schoolmaster his pupil. Yet that power cannot be lawfully exercised, by a master over his hired servant, whether that servant is employed in husbandry, in manufacturing business, or in any other manner, except in the case of sailors.

Sailors have a long and brutal history re: labor law. Richard B. Morris, for example, writes of the continued use of labor controls (imprisonment for contract breach, fines, etc.) on seamen into 20th century Maryland -- long after the use of indentured servitude (and of course slavery) had disappeared from the region.

learn american economic history online this summer

This summer, learn why they are the
backbone of American prosperity.

For regular readers of the blog, you might be interested to know that I am teaching an online course this summer through the UMass Economics Department, on American Economic History, from June 5 - July 10.

If you're interested, or if you know of others who might be interested, you should pass along this advertisement to them. You can sign up online at  http://www.umassulearn.net/classes/summer-2012?clid=9444&view=class.

If you've been reading the blog regularly, you know what this course is going to be about: economics from a social-historical perspective, with an emphasis on the ways in which social conflict has helped shape economic institutions such as the market, firm, the state, and even the environment. We will use a variety of tools to answer tough questions -- including statistical analysis, economic theory, and (of course) historical method.

Grading will be through papers and discussions, drawn from a rich reading list of social, labor, and economic history.

Please pass along to anyone you think might be interested in taking the course. And I'm glad to answer any questions! Leave a comment on this post or send me an email. For more information about my teaching credentials and approach, see this link: https://sites.google.com/site/dpmacdona85/home/teaching.

master and servant, NOT principal and agent

The way that labor economists normally think about employment relationships is in terms of "Principal-Agent Models". The term "Principal-Agent" is meant to classify any set of models in which the Agent's behavior is in some way influential on the profitability of a project, of which the Principal is the residual claimant.

The thing is, the history of employment law in America has not developed according to Principal-Agent law. Principal-Agent law is normally used to describe relationships between, say, a merchant (Principal) and the deliverer of the merchant's goods (Agent). Because the Principal will not get paid unless the Agent gets the goods to the customer on time, it seems natural to think about the legal dimensions of such a relationship using Principal-Agent law.

So what kind of law has historically been applied to employment relationships?

...Wait for it...

Master-Servant law. Traditionally used to define the ambit of the master over his servant in feudal England, this body of law was transported to the U.S. by legal scholars in the late 18th century. By the early 19th century, when industrialization began to develop in the U.S., courts by default applied Master-Servant law to employment disputes.

So labor economists are wrong for talking about labor relationships in terms of Principal and Agent. That's not how contract law thinks about workers and employers! From the early 1800s up until today, (yes, today), employment law is largely defined as the law of Master and Servant. Principal-Agent law is separate and certainly does not deal with labor contracts between employer and employee.

Chalk it up to another reason why labor economics is inherently bourgeois and therefore evil.

39 stripes

A slave code from Alabama (1852) reads:

#993. The patrol has power to punish slaves found under the circumstances recited in the preceding section, by stripes, not exceeding thirty-nine. 

(The "patrol" was the officer in charge of making rounds on the various plantations to catch slaves who were off their master's plantation without permission or who were simply loitering. Any white, male slaveowner below 60 years old were required to be available for patrol duty -- seems similar to jury duty today.)

Why 39? The number comes from the amount of lashes Paul received from the Jews, according to 2 Corinthians 11:24. Jewish executioners were not allowed to go above that amount of lashes according to the law of Moses (later codified into Roman law). 40 lashes was considered a death sentence.

legal history teaching materials

Someone who commented on my previous post asked for the reading list for the course I'm teaching on law, labor, and capitalism. I linked to it back in January -- you can find the post in which I linked to it here.

In addition to the reading list, I've uploaded two more items (both PDF). The first here is slides from a lecture I gave on the history of police in American history (inspired by Christopher Tomlins' research on the subject), titled "'F*ck tha Police'? Law, Institutional Change, and the American Revolution". The second here is a lecture on the relative autonomy thesis as applied in Morton Horwitz's brilliant Transformation in American Law, 1780-1860. The title of that one is much less interesting: "Relative Autonomy and Historical Materialism in Horwitz's Transformation in American Law".

Just a brief note: the field of legal history is ripe for economists' picking. It is indeed due time to revive the idea of a "law and economics for the left", or a "radical law and economics", or maybe simply, "heterodox law and economics", something in the spirit of the early 20th century Commons-esque old institutionalism, but updated with a more interdisciplinary and stronger theoretical outlook. I humbly consider my dissertation as one step in that direction -- we'll see where that goes.

More on these issues when I get around to getting them out of my head and putting them down somewhere.

where weber and kafka intersect: interesting new research

A (relatively) new article out of Law, Culture, and the Humanities (February 2011) by Douglas Litowitz titled "Max Weber and Franz Kafka: A Shared Vision of Modern Law" studies the impact of Weberian concepts of law using an interesting historical link between the two great thinkers. Here is a (gated) link to the article -- abstract below:

Recent scholarship suggests a line of influence from the sociologist Max Weber to the writer Franz Kafka, mediated through the lesser-known figure of Alfred Weber, who was Max’s younger brother and a law professor who served as one of Kafka’s law school examiners. This paper finds textual support for this claim of influence. Indeed, there is an uncanny similarity between Weber’s and Kafka’s writings on law, particularly in their diagnosis of a legitimation crisis at the heart of modern law, and in their suspicion that modern law cannot deliver on its promises.Weber and Kafka succeed at capturing the irrationalities, paradoxes, and disaffections of modern law, but in the final analysis their work suffers from a failure to appreciate law’s progressive and emancipatory potential.

reconsidering rothenberg's from market places to a market economy, 20 years later: part I of a series

In this first installment of a series on the transition to capitalism in early America I am going to look back at one of the most influential books on the market revolution, Winifred Rothenberg's From Market-Places to a Market Economy, published 20 years ago. Rothenberg's work has since been read as a kind of "textbook" for understanding the liberal perspective on economic development and has (at least, I am told it has) been studied carefully by high-powered development economists at the World Bank and other organizations to help inform the crafting of development programs in the developing world, such as the Washington Consensus. Thus, given the importance of her work and its longstanding influence, I am going to reconsider her thesis in light of more recent work that has forced us to question some of the crucial premises of her hypothesis that the freeing up of (product and labor) markets laid the bedrock for industrial development in the early-19th century Northeast.

We note briefly that the premise of Rothenberg's thesis clearly depends on the widespread prevalence of local regulatory regimes of both product and labor markets in the 18th century, particularly the early 18th century (given that her observation of increasing market integration begins around 1750). To support that thesis, she draws primarily on quantitative data. Further qualitative support is found in the so-called "Whig" historiography of the American Revolution, of which the quintessential proponent is Gordon Wood's Radicalism of the American Revolution (1992).

For Wood, the American Revolution was radical in its assertion of a popular basis for politics. For Joyce Appleby, a scholar writing along similar lines, its importance for political economy was in its emphasis on liberalism as an economic philosophy -- stressing private property rights, enforceable contract, economic independence, and a laissez-faire theory of government policy. A corollary of this thesis is the rise of a free market mentalitie, as Rothenberg put it -- a rise in the value of free markets and trade for mutual gain among the newly democratic society. Rothenberg finds quantitative evidence of this assertion in the regional convergence of market prices for various agricultural goods as well as the rise of contract labor in the Northeast in the late-18th and early-19th centuries. Her analysis draws from account books, diaries, and prices taken from newspapers. A key aspect of her thesis is the rise of free contract labor and free labor more generally, as distinct from the coercive institutions of the early 18th century. The question to be answered there is, Did the American Revolution give rise to what we would eventually see as the "free labor" necessary to fuel the fire of the Industrialization of the North? Rothenberg answers with a resounding "Yes". Others have their reservations.

Writing from a different perspective, Morton Horwitz's 1977 Transformation in American Law had a chapter on contract law which suggested (but did not prove) a counter-hypothesis. Sifting through court records and treatises he finds that not only was labor subject to a set of legal controls in the early 19th century significantly curtailing its freedom to contract and its mobility, but that the law exhibited a clear class bias against the worker and in favor of entrepreneurship.  Taking issue with Horwitz's thesis in her own 25-year-later reconsideration (published on EH.net here) of Transformation she shows how many of the claims of class bias and worker unfreedom in Horwitz have not withstood more recent, closer examinations of the actual application (or more appropriately, lack thereof) of some of the seminal labor cases upon which Horwitz relies. (See Karsten's Head versus Heart for a good summary of right-to-quit law in the Northeast.)

Time to put race at the center of labor
history in the U.S. instead of  unfree white labor?

At this point, it seems that Rothenberg has the upper hand. Several other labor law histories centered on the Northeast accepted the basic claim that the American revolution was marked by a fundamental embracing of political equality, throwing off the institutional fetters of an unfree and coercive colonial America (including the legal system!). Indeed, if we are to question at least the labor market-side of her thesis, it behooves us to either find some more empirical evidence to support the Horwitzian argument about labor control in the early 19th century, or to reconsider the labor law history of the colonial era to see in what ways labor ever was unfree or coerced or regulated -- or we could do both.

In the next part of the series, we will see how recent historical research has questioned precisely the points mentioned in the previous paragraph, seriously calling into question whether labor developed along an essentially government-free trajectory in the early Republic.