Reading Notes for September 22, Nineteenth-Century
Economics 210a, Fall 1999
Richard Easterlin (1981), "Why
Isn't the Whole World Developed?" Journal of Economic
History 41:1 (March), pp. 1-19.
This article is USC economic historian Richard Easterlin's
Economic History Association Presidential Address--given now
almost two decades ago. We have seen Easterlin on this reading
list before, casting gloom on the idea that things will
make us happy, and arguing that the causes of the revolution
in living standards are fundamentally distinct from the causes
of rising material prosperity. Here we see Easterlin trying to
make sense of the enormous relative gap that opened between rich
and poor countries during the nineteenth century--the restriction
of nineteenth-century industrialization to "Europeans."
Easterlin's answer is that the whole world is not developed
because back before World War II education was not developed--both
in the sense that learning to use modern technology is a form
of education, and in the sense that you need formal education
(a lot of formal education) before you can begin thinking about
how you might use modern technology. And "in 1850, little
more than a century ago, virtually the entire population of the
world outside of northwestern Europe and America had little or
no exposure to formal schooling."
But today formal schooling--and thus the acquisition of the
tools needed to comprehend and use modern industrial technologies--is
common throughout the world. Hence Easterlin is (aside from some
gloomy asides about how things won't make us happy) very optimistic
about the future of world development.
Easterlin's paper also serves as a springboard for Gregory
Clark, who reacts to and against it in the next article on the
Gregory Clark (1987), "Why
Isn't the Whole World Developed?: Lessons from the Cotton Mills,"
Journal of Economic History 47:1 (March), pp. 141-74).
Another article that--as with Michael Kremer's--generates
sharp divisions of opinion. Some think it a work of true genius,
posing the dilemmas and puzzles of economic history with a unique
sharpness and clarity of vision. Others see at as an intellectual
mountebank's trick that (somehow) casts confusion and darkness
on the subject.
I like it a lot.
The crux of Clark's argument is that in the cotton textile
industry at the end of the nineteenth century, businesses in
- used identical technologies
- ran their machines at very similar speeds (hence very similar
- faced widely divergents costs of labor
- found in every case that the cost of labor was the principal
component of costs
Yet cheap wages did not lead either to increased profits or
to high market share--because countries in which labor was cheap
were also countries in which labor was extremely unproductive.
As you read Clark's article, ask yourself:
- why was labor so inefficient in low-wage countries?
- what could be wrong with Clark's argument?
- Why when you combined British-made machines and British-born
workers in Fall River, Massachusetts did your textile factory
produce twice as much output per man-hour as when you combined
the British-made machines and British-born workers in Manchester?
Sidney Pollard (1981), Peaceful Conquest (Oxford: Oxford
University Press), pp. 84-141, 191-251.
Why does Pollard make such a big deal about regions?
What do you think about the perennial British-French debate
over which society handled industrialization better in the mid-nineteenth
Why did "outer Europe" have such a hard time copying
the technological and institutional changes taking place in "inner
How does Pollard characterize the attempts by European governments
to manage economic change--"industrialization" and
"globalization"--in the years before World War I?
D. McCloskey (1970), "Did Victorian Britain Fail?"
Economic History Review (2nd series), 23:3 (December),
This is one of my favorite polemics. Yet at its end I still
find myself unconvinced--or, rather, convinced that something
went very wrong with the British economy and its growth around
But what, exactly, went wrong? Doesn't McCloskey have a good
David Landes (1958), Bankers and Pashas: International
Finance and Economic Imperialism in Egypt (New York: Harper)
During the American Civil War of the early 1860s, the price
of cotton in Europe spiked as the spinning factories of northwest
Europe found themselves way short of their necessary raw material.
This boom in cotton prices was a tremendous source of revenue
and wealth to cotton-growing Egypt.
Landes's Bankers and Pashas is a study of what happened
to Egypt as a result of its cotton-boom wealth. The answer is:
nothing good. Rapacious foreigners, corrupt officials, incompetent
bureaucrats, a weak and dissipated ruler--practically everything
you can think of to turn what should have been a national economic
bonanza into a national economic disaster...