Reading Notes for September 29, American Exceptionalism
Economics 210a, Fall 1999
Alfred Conrad and John Meyer (1958), "The Economics of
Slavery in the Ante-Bellum South," Journal of Political
Economy 66:1 (1958), pp. 95-130.
Back before Conrad and Meyer, most historians would have told
you that pre-Civil War American slavery was unprofitable--that
investments in slaves yielded less than market rates of return,
that slavery was an inefficient and unprofitable mode of production,
that slaveholders held slaves in order to promote their self-image
("aristocrats" and "cavalier fops"), and
that America's Peculiar Institution was clearly on its way out
for economic reasons well before the Civil War.
We could talk about the historiography of this belief--and
make snide and nasty comments about the political and cultural
motivations of those who argued that slavery in America would
have died a natural death in the late nineteenth century whether
or no their was a Civil War...
But I would prefer to talk about Conrad and Meyer. Are they
right? If they are right, then how could this be? We all know
that, in the bloodless language of high theory, of all labor
contracts the slave "contract" is the most incentive-incompatible.
Surely it would have been more efficient to give the worker some
"property" in his or her labor--make her a wage laborer
or a tenant farmer or at least a serf? How, then, are we to explain
what Conrad and Meyer find?
Robert Fogel (1979), "Notes
on the Social Saving Controversy," Journal of Economic
History 42:1 (March), pp. 1-54.
This is a long article by Robert Fogel (his Economic
History Association Presidential Address). By "social saving"
Robert Fogel means a particular kind of counterfactual calculation:
What would have been the reduction in national income in a particular,
fixed year if industry X--in this case the railroad--had not
existed, if the location of people and economic activity had
remained the same, and if the capital and labor that were employed
in industry X were instead employed in the next-best substitute
that could have carried out its functions, industry Y.
In Fogel's case--applied to the railroad industry in the United
States at the turn of the century--Fogel's answer was "4%."
The average American worker would have been 4% less productive
had the railroad not been invented, and had people instead relied
for transportation on steamboats pulling barges up rivers and
canals and on wagons.
The standard reading of Fogel's argument is that railroads
were not "indispensable" for American economic development.
But there are other readings as well...
John Coatsworth (1979), "Indispensable
Railroads in a Backward Economy: The Case of Mexico,"
Journal of Economic History 39:4 (December), pp. 939-60.
John Coatsworth carries out Fogel's social saving calculation
for Mexico during the Porfiriato (the rule of President-for-(Nearly-)Life
Porfirio Diaz during the generation before 1910). In striking
contrast to the 4% social saving for the United States estimated
by Fogel, Coatsworth estimates 40%!
Pre-WWI Mexico as it was would simply have been impossible
without the railroad: people could not have lived where they
lived and done what they did and still remained alive.
Yet Coatsworth also wants to say that the railroad did not
have a strong positive effect on Mexican economic growth. Instead
of "developing" Mexico, Coatsworth says, the railroad
"underdeveloped" Mexico. What does he mean? Is he right?
Moses Abramovitz and Paul David (1973), "Reinterpreting
American Economic Growth: Parables and Realities," American
Economic Review 63:2 (May), pp. 428-39.
In the introduction to their paper Abramovitz and David are
trying to make, in a subtle and indirect way, a point about the
content of much macroeconomic modelling. What point are they
trying to make? (I think it is a true and important point.) And
do you think that Michael Kremer has gotten it? (I don't. I also
don't think that Robert Lucas has gotten it. But, then, I am
at bottom a historian and not a theorist...)
What are Abramovitz and David trying to teach us when they
talk of the "Great Traverse," and speak of economic
growth as a series of "technologically-induced traverses,
disequilibrium transitions between successive growth paths"?
What criticisms are they making of standard growth accounting
And what ways of analyzing economic growth do they argue should
take the place of the conventional growth-accounting framework?
Alfred Chandler (1977), The Visible Hand: The Managerial
Revolution in American Business (Cambridge: Harvard University
Press), pp. 1-12, 285-314.
How is it that America came to be dominated by big businesses?
What were the sources of those big businesses' competitive advantage?
Why were there no big businesses back in the very old days?
And just what is it, exactly, that managers do that makes
their role worthwhile?
These are the big questions that Alfred Chandler tries to
answer in The Visible Hand and in his other big books
about the rise of big business and business management in America.
I think that he does a relatively good job.