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.

what do you mean by capitalism?

A fellow grad student sent me an email after reading my most recent post, asking me a question about what I mean by tracing the evolution of capitalism.

For better or worse (honestly I can't decide which), there have been many debates over the necessary and sufficient conditions for capitalism. One of these debates occurred in the context of the moral economy debates in U.S. history, something I teach in an upper level course on American Economic History (Econ 362 at UMass). The central question of those debates is, when do we see the widespread growth of capitalist institutions in U.S. history?

One of the most compelling and interesting studies in the moral economy debate is Winifred Rothenberg's From Market-Places to a Market Economy which, as the title suggests, is an analysis of markets and market behavior. Prior to 1750, markets certainly existed, but they were generally confined to the local town and the prices and wages were set by local institutions. But as consumer mobility (as well as a host of other factors) increased after 1750, barriers between the local towns began to break down, leading market prices in each town to converge to one another -- leading eventually to an approximately equal price across all markets and towns. Thus Rothenberg argues convincingly that what we see in the century between 1750 and 1850 is the gradual breakdown of traditional institutions which hindered market integration. This is strong evidence for market integration and, Rothenberg argues, an empirical sign for the rise of a market society (signaled here by price convergence -- a hypothesis originally put forward by nineteenth century British economist Alfred Marshall).

We can extend this thought a bit further. The convergence of market prices is a strong sign that what we have between 1750-1850 is the rise of the liberal-minded citizen fully engaged in economic relations and quick to cast off his or her mercantile roots. It is a sign that government began to play less and less a role in the economy. The true radicalism of the Revolution, as famed historian of the period Gordon Wood has argued, was precisely this explosion of laissez-faire capitalist society and democratic institutions, such as markets, the press, and religion.

Sounds pretty convincing, right? In this model capitalism is shown to be an outgrowth of a liberal democratic population. But not so fast. As Wood himself has noted, capitalism does not necessarily equate with a market society. But whatever capitalism might mean, Wood points out, it's evident from studies such as Rothenberg's that it was a democratic process. Hm. An alternative view is argued by Marx, who stresses the social relations that change in capitalism. That is, it's not so much about market integration as about people's roles in the economy which change due to that market integration.

This was the approach more or less taken by Michael Merrill in the late 70s, and others in the 80s, who sought to show the importance of social relations in the story of the rise of capitalism. By searching deeply in the historical records for qualitative evidence (instead of simply focusing on quantitative data, as Rothenberg did), these historians partly argued that not only were social relations much slower to change (and even the change itself was quite uneven), but the process was not a natural "smoothing out" of the relevant market rigidities.

This latter observation is particularly important and, I would say, the main contribution of the leftists to this debate. (Even if the debate itself is debatably misdirected and unsubstantial, which I tend to believe.) The integration of market society is pretty well-documented in Rothenberg's amazing analysis of the data. But the leftists win in the end for showing that the process is not ahistorical.

And here, in short, we arrive at my approach. I am interested in the rise of the factory as a new system of production. That, for me, is what capitalism is all about. I want to know how contracts changed (or stayed the same) as a result of the breakdown of the traditional master-apprentice relationship, or even the small-manufacturer relationships more characteristic of some industries such as textiles. I am interested in the legal aspects of the evolution of private ownership of the means of production, and their economic implications.

And I can tell you one thing: it was not natural!

reflections on teaching time on the cross

Teaching this book was a very interesting experience. After Monday's class (just reading the introductory chapters: prologue, 1 and 2) I was uncertain how the rest of the week would go. In fact, even after Wednesday's class I questioned whether I would ever assign the book again. (I think I would.) If I were to assign it again, for the first class I would assign prologue, 1, 2, and 3, because chapter 3 contains the arguments over whether slavery was profitable/economically viable, and there is a lot to discuss there in terms of all the data they present and their methodology. The problem with this setup is you're assigning 100 pages of reading for the first class, which may be daunting for this text. It's possible to leave out chapter 2 (on "Occupations and Markets") as a compromise because there is comparatively little there in terms of their main arguments.

Basically, my approach was to first present methodological concerns (discussing what cliometrics is all about, and the new economic history more generally), then getting to their main points as quickly as possible. This part is really quite necessary because without a proper understanding of the formalist turn which took place in economic history at this time one may end up thinking 1. all economic history is done this way and 2. all economic history has always been done this way. While I do think an understanding of the themes in the historiography leading up to their book (in fact, some of which they leave out!) is important, such as how books written in the late 1960s and early 1970s that argued that slavery was inefficient were not based on racism, grappling with issues such as "How is slave productivity measured?" or "Is their definition of exploitation appropriate?" are relatively more important and can take some time to discuss. In terms of methodology, I highlighted the following:

-The issue of qualitative vs. quantitative evidence and how it influences historiography

^This is especially important for Fogel and Engerman since they often rely upon some notion of statistical or formalist economic significance (e.g., "it wasn't that important to their profit margins," etc.) to advance claims concerning the family, etc.

-The rise of formalism in economic theory after WW2 and then economic history in the mid-1950s

-Methodological individualism vs. social institutions (classic Jerry Friedman material from 103) in the context of slavery's efficiency

-Framing the entire debate in terms of economic incentives/motivations

These 4 points alone cover a class and a half of lecture and discussion. From there, you can move into the more intricate details of their quantitative analysis and the implications for an interpretation of slavery. Here are the main points:

-Calculating: slave diets in terms of caloric intake, whippings (very popular topic), medical problems of slaves, infant mortality rates, comparing standards of living to the North, data on slavery's effect on family (implication follows) => interpreting whether slavery was relatively benign for slaves

-Calculating efficiency and growth of the slave economy => unfree origins of labor productivity and nature of economic systems

In the end, I would definitely assign the book again. It is the best example I have found of how formalism can be taken to its extremes in economic history, and it does this in a way that makes it easy for students to debate and discuss the relative merits of the issues. What caught me off guard on Monday, I think, was I didn't realize how prepared I needed to be. Of course, I read the book before the week began. But Fogel and Engerman leave so much of the historiography out that to teach and have a dialogue with the text one needs some external resources (either the original texts or some good textbooks). I think this would allow me to strengthen the arguments I make concerning methodology and of course, some controversies with their data. It will also give me space to appreciate these classic texts better.

Overall, I must say, it was an excellent experience.

teaching time on the cross

I'm teaching Fogel and Engerman's Time on the Cross next week which means that I will hopefully have one solid week of great discussion after great discussion. For tomorrow we're reading the prologue and chapters 1 and 2, and I'm thinking of starting off class with the classical quantification debates, although there are really 2 or 3 other arguments I can foresee bringing up in class tomorrow. They mainly have to do with methodology, especially since the new economic historians have been quite forceful in forwarding their perspective as the "real economic" perspective and this idea occupies a significant part of the prologue and beginning chapters. These new economic historians rely on statistical analysis of data and formal economic models to answer questions in history. It raises immediately the question of how applicable economic models really are to reality: isn't the point of economic theory to generalize economic behavior by deducing a set of primary factors and testing the model against data? How does this compare to the obsession with general equilibrium since World War 2? I am reminded of a quote by Ronald Coase:

"Economists have devoted themselves to studying imaginary systems, and they don't distinguish between the imaginary system and the real world."

(There's a better one with the same flavor that I can't find right now where he basically says that all the Nobel prizes in economics have gone to economists who study a world which doesn't exist.)


So the idea that we can apply economic models to questions of history seems ridiculous. Especially since one of the central claims of McCloskey in "Does the Past Have Useful Economics?" is that we should be looking at history to inform our theory. There are other issues, such as how time has been dealt with in neoclassical economics (the answer: not very well, it's almost just like another dimension in space...), but this central point is very important because it strikes at the heart of what the new economic historians aim to do: reinterpret economic history using these models and data.


On the data -- few historians would disagree that the new economic history has done a great service to history by digging up massive amounts of data and compiling great databases of information on wages, slave prices, and other juicy details from employers' books. However, when it comes to how these economists have used the data, things are much more open to questions of methodology. Time on the Cross emphasizes formal methods, which are not "wrong" in and of themselves, but some argue that they clash with the traditional methodology of history (and of much social science) prior to the 1950s which was more oriented towards qualitative methods. When you combine this with the inherently conservative nature of neoclassical formal methods you have a mix that would definitely upset your traditional liberal historian.


But is there substance to the critique? I think there is. While one could argue that any historian uses models and that theory is always going to be a political project, the pressing need of the new economic historians to quantify everything seems not only a misplacement of emphasis of formal methods but can be downright hurtful to their analysis. For example, the narrow view of exploitation which they take up in Time on the Cross to argue that slaves were not as exploited as is commonly thought completely misses the main point and compromises the effectiveness of their argument. Essentially, they use a measure of the rate of exploitation which is the amount a slave produces over their compensation (in wages, living expenses, etc.). Even if Fogel and Engerman (rightly) point out that this isn't the whole of exploitation, simply by making the argument they are not adding anything productive to the debate at all. And what's worse, they imply that in a world of market processes where slaves get paid their marginal product exploitation is not an issue. Indeed, Ransom and Sutch used the same line of argument and measure of exploitation in their discussion of the postbellum Southern economy in One Kind of Freedom to say that racial exploitation is embodied in this labor market disequilibrium, implying that notions of power in the employer-employee relationship would be nonexistent were it not for overt racism. This is a world in which the neoclassical ideal is the baseline and so history is the story of deviations from this baseline. I simply cannot buy into such a story (and indeed, some very good neoclassical economists would not even buy into this story) , and I can see why people would be so upset by some passages of this book.


Another (less controversial!) thread of debate concerns the relationship between different economic systems in history. First and foremost, how do we characterize slavery as a socioeconomic system? Is it capitalist? Agrarian pre-capitalist? Feudalism? Whatever it is, the experience of the Southern U.S. is certainly not anomalous, as societies built on the idea of property in persons have existed for thousands of years. I think it's best to view slavery as an independent system of agricultural production for profit using people as (economic) property as the central means of production, and I do think this is where Fogel and Engerman operate on a stronger basis. Essentially, some historians of slavery in the South have argued that it's an institution that would have died out eventually -- either due to lack of markets, or declining productivity through exhausted resources, or some other economic reason. I believe that such arguments, especially made about entire institutions, do not do justice to the agency of anyone in such a system. If you have two distinct groups in an economic system and you argue that the system as a whole was on its way down the tubes, then you basically are arguing that both groups of agents were passive adjusters to forces out of their control. Fogel and Engerman instead give agency to both the strength of the families of slaves and also the rationality/profit-seeking behavior of the plantation owner by arguing that slavery was not on its way out immediately prior to the civil war. Here's a good quote explaining my point:

"While the New Orleans data show that slaveowners were averse to breaking up black families, they do not tell us about the reasons for their reluctance. Because earlier historians became overly preoccupied with dramatic and poignant but relatively isolated instances of the destruction of black marriages, they failed to grasp the extremely important role that the master class assigned to the family institution, a role that will be examined in chapter 4. Commitment to an exaggerated view of the eagerness of masters to put families on the auction block prevented historians from recognizing the strength and stability that the black family acquired despite the difficult circumstances of slave life." (Time on the Cross pg. 52)

In fact, you could argue that this was a central weakness of Marx's own theory: he failed to attribute sufficient level of agency to the proletariat and therefore saw the downfall of capitalism as occurring prematurely. Regardless of whether you buy into the conservative argument that individuals are inherently individualist, history has shown us that capital or state interests have not always been antithetical to worker interests and that worker interests haven't always been about overthrowing the property relations of capitalism. I of course would love to hear arguments against this and in fact to an extent I am one who is trying to produce such arguments, but it's by no means an easy question. Nevertheless, the ability of the capitalist system to reproduce itself at a rate contrary to Marx's and others' own predictions points to other forces at work in an economic system, and this, by analogy, is what Fogel and Engerman are doing with the traditional view of slavery. I think this is one very valuable contribution they have made.


Nevertheless, it will be an interesting week and I'll be sure to post more comments in the coming days!

dreaming, again

In the past two weeks, my class has covered what I find to be some of the most fundamental questions facing students of American history and the history of capitalism. However, I have doubts about whether I conveyed my extreme enthusiasm in class. Partly, this is because the issues are so complex that it's hard to go to the front of the class every other day and show them anything representing a coherent answer. I'm somewhat confused myself, and the hardest thing to do as a teacher is pretend like you know something really well when you are still searching for the answer yourself.

For example, today we read the beginning chapters of Kessler-Harris' Out to Work. Sure, the book is about the gendered aspects of work but it is just as much about workers coming to grips with the new social relations that came to dominate the economy by 1860. For example, on pg. 21 she asks, "Could a largely agrarian population unused to laboring for masters be persuaded not merely to sell their labor, but to sell it in confined quarters and under conditions that could remove them from their agrarian roots?" Honestly, this is one of the most striking sentences I've read in any work of economic history. It goes to the core of what the changing social economic system truly meant for these workers. I think it is the mark of a great historian (social, political, economic or other) to ask a question about the psyche of the people he or she is studying. Indeed, this is one of the questions that motivated me to focus on this time period in American history. I really want to understand on a fundamental level how factory work became such an integral part of American society and how people responded to it.

This is related to what I believe is the other central question of this time period which we have studied in class: given that work is a social relationship between parties, these relationships have a legal expression in the form of contracts. In fact, this is one of the most important expressions of the work relationship because contracts specify an exchange of property rights (labor power for a wage), and people are instinctually very attached to their property and the rules governing the use and distribution of that property. Here is the second question: How did the law deal with the changing nature of contracts which reflected the rise of factory work?

Of course, the two questions are intricately related. At the same time that you see the rise of a will theory of contract, you see the rise of proletarianization. Both are rooted in individualism, the market economy, liberalism. But the roots are more complex than what this simple picture may imply. Simultaneously with the rise of the factory worker, societies consciously grasped onto the home as a point of stability. How are we to fit this into our narrative, especially if the institutions of democratic capitalism are so entrenched by 1860?

Actually, how "entrenched" were they? Shaun, a friend of mine and a commentor on a few previous posts of mine on this subject questions whether we should think about capitalism in a utilitarian framework -- as an efficient economic system representing the interests of the majority. Can power explain the rise of capitalism in the U.S.? Does individualism contain any grain of truth in the story?

Such difficult questions indeed. I fully appreciate what my friend Zhun told me back in May when I was searching for a unifying theme for my American history syllabus: find that, and you have yourself a dissertation.

econ 362 syllabus - update

For background, see my earlier posts on this topic here here and here

In the end I did decide to include some papers by neoclassical economists because they have done most of the important economic history data analysis of the last 40 years. For example, a well-known argument by Chandler states that the mid to late 19th century industrial structure is characterized by firms of increased "scale and scope". While it is a compelling argument (which is why we do read him), work by Jeremy Atack and others has dug into the manufacturing censuses of this time period and computed Gini coefficients for firm size and other statistics to see the real presence and impact of large scale firms on markets and industrial structure. The empirical findings confirm Chandler in some aspects, but they also open new avenues for exciting research questions when the results do not confirm his theory.

So, in general I found that if a particular unit was getting heavy on the social history and was making arguments that could (in theory) be empirically verified, I would bring in a neoclassical paper addressing the issue, and then either criticize the paper directly for not addressing the social history thesis or show how it has some good points. For example, while I do think the Chandlerian argument above is a good example of a thesis that can be at least partly addressed by some simple statistics of market concentration and firm size, some other attempts at dispelling a heterodox/radical theory of its validity largely miss the point: Rothenberg's work at constructing evidence of an integrated Northeastern market economy by the early 19th century is one example of this. She wants to disprove the moral economy arguments of some leftist and radical historians of the New England economy, but her data do not entirely support this thesis, nor do her conclusions follow from the results. (I wouldn't agree that the presence of integrated markets implies that New England farmers were inherently capitalist or market-oriented.)

Other highlights of the reading list: classics such as a short piece by Gordon Wood on the American Revolution, Fogel and Engerman's Time on the Cross, Sean Wilentz and the history of labor radicalism, a week of Kindleberger's The World in Depression, and W. E. B. DuBois' Black Reconstruction.

You can find the full syllabus uploaded to the course website here later today.

schumpeteresque intro to econ 362

Economic history can be studied from a variety of perspectives. Much of the difference in these perspectives is derived from the wide spectrum of ways in which economists define "economy". While individuals and market behavior have played a central role in the development of the U.S. economy, analyzing only these aspects will give us an incomplete history. This is true for two reasons. First, the market mechanism has not always succeeded in promoting social welfare in the way in which utilitarian classical and neoclassical economists and other liberal philosophers have argued it would. Second, the success of the market mechanism has often relied on regulation by law and aid from the state.

Thus, the concept of “autonomous market forces” is a myth. It is a myth considering the state of things now, and it is a myth considering the state of things in 1800. This is not to make a blanket argument against the market mechanism; it is only to shed light on the historical nature of all market processes, and to point out that in order for a market to be properly functioning in the capitalist ideal you first need a lot of outside help. Therefore, a central focus of the syllabus will be how the market interacted with these historical forces and institutions, and examining both the successes and failures of these interactions: when and where did the market methdology triumph? When and where is state enforcement/history still a central part of the institution?

"not so fast: to teach economic history you must first define what you mean both by 'economy' and 'history'": part I, 'economy'

In the last week or so, I've given some more time to thinking about my syllabus for 362. I've received two textbooks from publishers: Atack and Passell and Hughes and Cain. While neither have been particularly helpful in their content, they have allowed me to compare and contrast what I see as widely differing views of economic history. On one side, we have these texts and on the other, the way I learned it here at UMass.

Initially, I found myself thinking that if I were to teach it the way I learned economic history here, I would be doing my students a great injustice by not exposing them to the mainstream methodology of current research in economic history. Thus, how could those students actively engage with that sphere if they wished to do so? The problem extends to heterodox approaches in general, but that does not mean the problem is unsolvable. Rather, it means that we, as part of the heterodox field of the profession, must craft our courses in such a way that we are able to accomplish two goals:

1. We must be rigorous in our own field, in our study of the heterodox texts. By "rigor" I do not necessarily mean "mathematical" (and in most cases for economic history, I will never equate rigor with the use of mathematics). I mean using logic, reason and evidence to evaluate the theories presented in class. By using rigor, we are putting our ideas up to the spotlight and testing them, as though we were debating our theories with some mainstream economic historian. Thus, we become more firmly wedded to our own theories.

2. We must gain a thorough understanding of the mainstream. Luckily, my students are required to have taken Intro to Micro and Macro and in some cases will probably have taken other upper level courses (possibly intermediate micro and macro, which would be excellent... note to self: ask them what econ courses they have taken). While this is not as necessary as 1, it is nevertheless important in case students are interested in this approach and want to pursue it at an advanced level later on in their studies. It also helps when debating the mainstream, but as I mentioned above, a critical approach to heterodox study is more important.

At first, I was unsure that I would be able to accomplish either of these in my class because the majority of readings I want to assign could barely pass for economics per se: a lot of it is legal and social history and political science. Someone looking at the syllabus (say, an employer!) may question whether students actually will learn any economic history in this class.

There's a catch, however, that saves me. It's all buried in what you define "economic history" to be. What is the history of the economy? Well, what is the economy? (What is history is a much more difficult question for me and I'll leave it for another blog post.) If you see the economy as primarily composed of individuals interacting in markets according to the laws of utility maximization and rationality, then economic history is the study of the market mechanism through time. One would study how markets operated at approximate efficiency. Since GDP growth is, in a sense, a measure of the expansion of value of commodities in markets (things not traded in formal markets, such as care labor, are not part of GDP), then economic history is the study of that GDP growth over time and what things influenced the markets to promote GDP (product, labor, financial).

On the other hand, if you view the economy as defined by a set of social relations that are partly to do with the market (but also partly to do with non-market activities), then you study GDP growth but you also study social history. Study of the legal system expands to study it as an institution which doesn't necessarily approximates efficiency and which therefore may be influenced by social or political variables. Thus, not only does social history become important but so does political science. And as soon as we admit of these additional fields, we must become more open to their ideologies and methodologies, expanding the toolkit which we use to study economic history.

What this all boils down to is that how you teach economic history depends on how you think about the economy. This is where the "new economic history" dovetailed nicely with the economic theory of the time. But, this is also why Marx spent so much time in Capital on the history of the British economy. Both methodologies were approaching history through their different understandings of the economy.

And how does this relate to my teaching methodology for 362? If I present the heterodox methodology, I must be relentless in my criticisms of it and not take anything for granted. Doing so will allow both me and my students to develop a firm grasp of this view of the economy steeped in historical study. Of course, I'm getting a bit out of control of myself, because there are merits to both approaches: there do exist fruitful insights to be made by the mainstream economists. For example, it is sometimes useful to think about the rational, utility maximizing case as a point of central tendency and to ask why there are deviations from it -- what factors are driving fluctuations or other differences around the equilibrium? Thus, part of my job as teacher is to recognize those points and to explore them.

Well, these are just some basic thoughts on syllabus methodology, and I am beginning to develop the first weeks of the syllabus which will most likely contain some of these debates. I will keep the blog updated on how I deal with them. But, until then, do you, reader, have any thoughts on these points?

Thoughts on Econ 362 Syllabus - Fall 09

I'm debating with myself over how to structure my syllabus for Econ 362 (American Economic History) which will be offered Fall 2009.

In the process, I've been asking myself a couple of related questions: 1. What are the broad themes of U.S. economic history, as I see them? 2. What are the most important parts of U.S. economic history, to me?

As you can tell, I've quickly realized that syllabus writing is no objective science. There simply is too much material out there to assign all of it, so the teacher is compelled to mix what he thinks is the best and most comprehensive material out there at the suitable level of difficulty.

For example, the concept of class and its historical implications are, for me, a central part of the story of U.S. economic history. So, I want to include class analysis in as many periods of my syllabus as possible. Examples include:

-pre-Revolutionary colonial governments and the political economy which gave rise to them

-class in the American Revolution

-legal history and class, late 18th and early 19th century

-proletarianization as we move through the 19th century

-trade union politics and welfare states in the 20th century

Since I am interested in race and gender in history and how they relate to economics, I would also want to talk about:

-slavery from the 17th to 19th century, its effects on post-bellum labor markets

-women and work in the 18th 19th 20th centuries

I am also interested in macro history, so I would want to include:

-Chandler-esque industrial history of the 19th and 20th century

-the Great Depression and Keynes

-studies of more recent trends in U.S. history including post-WWII "golden age" and financialization

I encounter some problems as soon as I want to include this third set. When I took U.S. economic history with Gerald Friedman, he concentrates solely on class analysis, and integrates slavery and gender issues into this theme. This would leave little room for Chandler, serious analysis of the Great Depression, and financialization.

My current dilemma is: can I reconcile my strong interests in class (particularly with regard to the first part of the course) with my equally strong interests in macro histories of competition and investment? (Perhaps if I was familiar with vols. 2 and 3 of Capital some theoretical framework could be developed? -- just an idea I am throwing out there.)

Discussing this dilemma with my friend Zhun, he said that if I could find such a unifying framework for U.S. economic history I'd probably have a dissertation on my hands. But even if I don't exactly come up with dissertation material, it helps to know that by thinking through the problem in this way, I am addressing some important and exciting questions in U.S. economic history.

This post is therefore just a beginning. There is much more to come