moral economy of competition

See here for an interesting paper by Jason Opal on the moral economy in New England immediately after the Revolution.

I've always been intrigued by the moral economy model as it is applied to New England economic history. The model addresses the economic nature of the society that spans the time of the Puritans' settlement of Massachusetts in 1629 up until the first few decades after the Revolution. It has been the one constant theme of interest of mine since I read E.P. Thompson's classic paper "Time, Work-Discipline and Industrial Capitalism" in my Intro to Economic History class my first semester of grad school. A moral economy is an economic system wherein production and distribution are regulated by the community; work, wages, and prices are also socially regulated; and finally, production is generally for self-sufficiency and not for profit. It can be contrasted with capitalism or a market economy which is governed by individualist market forces of self-interest guided by competitive markets towards the accumulation of capital/profits. In this system, free markets "regulate" work, wages, prices, production and distribution.

I like the moral economy model for a number of reasons. First, it's a heterodox view of economic history because neoclassical economic historians and conservative historians of this period like to argue that since the first settlements, colonists have been inherently profit-driven and capitalist. Second, it's an evolutionary view of history (as opposed to determinist) that gives theoretical weight to the possibility that a variety of economic systems may have coexisted in the colonial era/Early Republic. Finally, I think that even today you can find examples of these "moral economies", or at the very least, traits of them.

Many people have worked on how one would construct a theoretical model of a moral economy. Much of this work has come from Marxist historians, and more recently from the "New Left" historians who emerged in the 1960s and 70s, each group has set out to show either theoretically or historically how features of the moral economy model can, or have, expressed themselves. For example, Michael Merril shows how farmers in colonial Massachusetts used money in a very different way from how we use it today: cash never really exchanged hands (it was generally only used as a store of account) and was seen on the same level as food or other goods which could be bartered. Sean Wilentz and others have shown how workers in the Early Republic reacted against the changing labor laws and the rise of capitalism in urban areas by pushing for their traditional workplace institutions.

And in the new economic history, historians such as Winifred Rothenberg have set out to demonstrate empirically the rise of the market economy. It began, according to her work, in the late 18th century. She is able to argue this by showing how prices for agricultural goods converged over the period 1750-1850, suggesting the presence of market forces conforming to the standard model of microeconomics (which most of us here are familiar with: rational, self-interested economic agents competing in free markets). Another example is Gordon Wood, who argues that what makes America exceptional is the value we placed on economic autonomy gained through hard work, and this led naturally to a unique brand of democratic capitalist institutions in the Early Republic.

The central tension in these two literatures is this: Rothenberg's evidence of an integrated market economy beginning in the early 1800s is strong and it conforms to other historical studies of this period. Few would doubt that this market economy existed -- and was, therefore, guided by profit motives which leads to capitalism. On the other hand, the evidence also confirms the existence of moral economies during this period. How can we reconcile these views?

A lazy way is to say that both systems existed simultaneously. Indeed, this is probably true: in the Early Republic there were most likely pockets of moral economies existing around networks of market economies. But this leaves important questions unanswered: how did some societies evolve from one system to the other? How did some societies resist/accept the intrusion of market forces from the outside?

A more interesting way of reconciling these views is to take the route Jason Opal embarks on in the paper I linked to above: what precisely were the motivations behind the development of the market economy? Were they really, as Rothenberg and others assert, defined by market forces of self-interest and competition? Or alternatively, was there still an essentially communal element to economic development, where wealth-producing "capitalist" enterprises were undertaken by and for the good of the community?

Opal identifies a historical example of this alternative view which reconciles the moral and market economists by saying that the market economy in this case was a result not of market economy forces but of moral economy forces of the public good and public regulation. The example he uses is of turnpikes in a Massachusetts town in the Early Republic. Turnpike projects were developed by towns in order to facilitate the transport of goods to and from markets, in other words, promoting the development of the market economy. When outside competition threatened to build roads that were uncomfortably close to the town's own roads, the autonomy of the community to use the roads without being economically bound to these new turnpike developers (in the form of tolls, etc.) was compromised, and thus these projects were resisted by the town.

Of course these groups, when they expressed opposition to the new turnpikes in the 1790s and the first decade of the 19th century, were against both dominant political parties of the era and indeed against the whole transformation in the legal conception of property in this period (see Horwitz on this) when public works projects were consistently given protection by the law against people suing over damage to their property. Opal states that during this period "[c]orporations became, not public entities funded by private means, but fictive individuals who used tax money to build bridges, canals, and then railroads" (16). Here is a good quote from the paper exemplifying the general situation:

"In this way, turnpike opponents echoed common law restrictions on competition as a public nuisance and an invasion of property rights, yet the dominant tenor of the anti-turnpike 'rage' was not a defense of older, static view [sic] of property or harmony but a vivid sense of local autonomy" (12).

Thus, in a way Opal blends the market economy and moral economy stories. In the end, Horwitz' narrative takes over to explain the burst in public works projects and their protection by law in theearly 19th century. But here we see precisely where this spirit of compromised property rights in the name of economic development came from: bourgeois attitudes that were not shared by the population at large -- that is, decidedly undemocratic.

More work needs to be done in this model. For example, Tomlins has done work on the changing conception of police in legal history in the U.S. Essentially, the difference is on the one hand between an older conception of the police as regulating the public good, public happiness and on the other hand the beginning of the centralization of the law partly as a product of the constitution and legal battles which ensued thereafter. The professionalization of law enforcement is a central part of 19th century legal and social history. How did communities deal with this development in the law? How and why did things eventually change? Can we find hybrid models of law enforcement/traditional understandings of police in this period?

These are all very important questions which chip away at the entire institutional edifice upon which early American development is based. What were the moral, economic, political mechanisms driving growth? How was the market policed/regulated to maximize growth?

We are getting there, slowly but surely...

final fantasy 13 trailer (tgs)

Below you will find the latest FFXIII trailer, which was shown at Tokyo Game Show a few weeks ago. Weaving together story and battle elements, the trailer gives me the impression that:

-Compared to previous FF's, the story will be filled with more (quantity- and quality-wise) subplots than we're used to seeing

-The battle system is your traditional turn-based (contrary to FFXII, which had strong real time elements) but not without its innovations, such as the combo system (not sure how it works though)

Some more obvious points/impressions:

- The futuristic style of FF7, FF8 is back ... regrettably

- A female main is not new to FF: 6, 9, 10, 12 had elements of this

- The graphics, of course, look amazing

- The voice acting doesn't seem that bad

Enjoy!

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.

after apple-picking, by robert frost

As promised to several of you --

My long two-pointed ladder's sticking through a tree

Toward heaven still,

And there's a barrel that I didn't fill

Beside it, and there may be two or three

Apples I didn't pick upon some bough.

But I am done with apple-picking now.

Essence of winter sleep is on the night,

The scent of apples: I am drowsing off.

I cannot rub the strangeness from my sight

I got from looking through a pane of glass

I skimmed this morning from the drinking trough

And held against the world of hoary grass.

It melted, and I let it fall and break.

But I was well

Upon my way to sleep before it fell,

And I could tell

What form my dreaming was about to take.

Magnified apples appear and disappear,

Stem end and blossom end,

And every fleck of russet showing clear.

My instep arch not only keeps the ache,

It keeps the pressure of a ladder-round.

I feel the ladder sway as the boughs bend.

And I keep hearing from the cellar bin

The rumbling sound

Of load on load of apples coming in.

For I have had too much

Of apple-picking: I am overtired

Of the great harvest I myself desired.

There were ten thousand thousand fruit to touch,

Cherish in hand, lift down, and not let fall.

For all

That struck the earth,

No matter if not bruised or spiked with stubble,

Went surely to the cider-apple heap

As of no worth.

One can see what will trouble

This sleep of mine, whatever sleep it is.

Were he not gone,

The woodchuck could say whether it's like his

Long sleep, as I describe its coming on,

Or just some human sleep.

From The Poetry of Robert Frost, edited by Edward Connery Lathem, copyright 1969 by Henry Holt and Co.

See the comments for my thoughts on the poem.

EDIT: This was posted just today (Sunday) on 3QD. Coincidence or do I have lurkers? If the latter -- I encourage you all to comment!

world of goo - pay what you want

The indie publisher/developer 2DBoy has offered up its famous puzzle game World of Goo for any price you want until October 25th:

http://2dboy.com/games.php

I would recommend getting this game for a number of reasons. First, you can pay as little as 1 cent for your copy (as many people did). Second, it's a great puzzle game which combines spatial problem solving with an interesting physics twist. Third, the environment is captivating, offering a unique art style and soundtrack (and you know how much I love videogame soundtracks). Finally, it doesn't require the investment of large amounts of time -- you can do a few levels and easily leave it for some other time. All of these elements combine to offer you a very unique videogame experience with extremely low cost.

Even though I already have it for the Wii (through their download content) I picked it up since it's been almost a year since I played it, so I forgot how to do most of the levels. It's really fun to go through a second time.

The "pay what you want" model is, of course, an interesting one which first gained widespread media coverage when Radiohead offered their album In Rainbows using this model a little over two years ago. Fortunately, 2DBoy were much more open about their "success": see an article here on the results of their experiment.

Additional links on World of Goo:

Gamefaqs page (including reviews, message board, screenshots)

World of Goo piano medley

Little-known fact: Some members of 2DBoy also worked on Henry Hatsworth, a review of which can be found here

economic origins of institutional persistence

Here is a paper by Suresh Naidu and Noam Yuchtman who explore the possible connection between economic incentives and legal institutions, basically making an economic argument for institutional persistence. They presented it at the Harvard economic history conference a few weeks ago.

Suresh has a Master's from UMass Amherst and a PhD from UC Berkeley.

I found the paper interesting, specifically the idea that institutional persistence can be explained by economic incentives. Essentially, the argument presented in the paper is that British industrial firms in the early- to late-19th century reacted to increased demand for labor by enforcing the Master-Servant laws which were in place until 1874. Furthermore, once the Master-Servant laws were abolished, wage rates increased. This suggests that (similar to Huberman's and Steinfeld's arguments) there are a variety of legal and monetary incentives placed on workers in capitalism to get them to exert the maximum amount of effort desirable from the perspective of the employer. Thus, they are never completely "free" in the legal/politicalsense of the word. For the Master-Servant laws, this entailed various legal threats such as being jailed for contract breach. And the efficiency wage model argues that in order to control the worker, the employer pays them above their reservation wage.

I have some issues with the argument. first, it is unclear what body of theoretical literature in economics Noam and Suresh is drawing on. While they use a game theoretic model to make their argument this is definitely not where the theoretical motivation comes from. I would suggest them to be more explicit here, identifying Steinfeld's arguments and (other legal scholars') that make the interesting case that the legal system inherently contains class (i.e. political/economic) interests. Thus, since the legal system is an instrument of the capitalist class we must reevaluate what it means to have an efficient "free" labor market. Honestly, I think the strongest entry point here is through work by people such as Horwitz, who has written one of the most influential books on American legal history in the last 50 years, arguing for an instrumental conception of law which brings such interesting topics into focus such as how property is socially defined.

Second, it is unclear how universal this argument is, especially if we consider the U.S. case. In the U.S., Master-Servant law disappeared from legal discourse by the turn of the 19th century due to a variety of reasons such as the rise of republican ideology, individualism, and its effects on how people viewed employment relationships. So, as I mentioned above with regard to Horwitz, to what extent can we argue that the various legal constraints on employment were a result of economic incentives of the capitalist class? While I think the argument is strong here as well, it begs the question of what kind of data could be used to show this. It's not as clear as the British case where you have a very clear break-off corresponding to the end of the Master-Servant laws. A variety of legal constraints were placed on the worker all the way up to the New Deal (for example, unions were never legalized/made illegal before this time!) For example, can we say employers used this as an alternative to the wage and that once these legal constraints lessened the wage series sees a break upwards? If not, what methodology may we use to establish Suresh's argument for the U.S. case?

Nevertheless, I found the paper interesting and would welcome ideas on how to approach this question for other countries with radically different institutional arrangements!

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!