Comments for the "Wars" Session of the Economic History Association Annual Meeting

J. Bradford DeLong
delong@econ.berkeley.edu
http://www.j-bradford-delong.net/


Of all the sessions proposed for the Economic History Association's annual meeting, this was the one that got me the most excited. Hence I immediately snatched up the roles of chair and discussant. It has long seemed to me that economic historians have a lot to say about war and its consequences, and yet in the past we have said relatively little. Thus to the extent that you believe that the production and reproduction of the necessities, conveniences, and luxuries of life is one of the principal bases on which the superstructure that is the rest of history rests, you think that a history of war without economics is inevitably partial, incomplete, and misleading.

I think that this session shows that we do indeed have a lot to offer. As authors we have four of our best--Michael Edelstein from CUNY and Queens College talking about "The Size of the U.S. Armed Forces During World War II: War Planning and Feasibility"; Jari Eloranta from the European University Institute talking about "The Lack of American Military Leadership and Its Impact on the Military Spending of European Democracies, 1920-1938"; and Phil Hoffman from Caltech and Jean-Laurent Rosenthal from UCLA talking about "The Political Economy of Warfare and Taxation on the Eve of the Industrial Revolution."

I'm going to leave Michael Edelstein's excellent paper to Alex Field to discuss, and I'm going to talk about the other two, starting with Hoffman and Rosenthal. They start with the observation that all across Europe--in the Hohenzollern domains in northeast and northwest German, in the Habsburg domains, in France, in Spain, elsewhere--the years around 1800 saw what they call "fiscal centralization": the end of an at least eight-century deadlocked struggle between monarchs and assemblies of elites over who would control taxation and spending, a struggle that had kept the ability of central governments to mobilize resources limited and that had preserved the relative immunity from taxation of politically-powerful segments of the military-socio-economic-political elite. The question they set themselves is "why?" Why was this fiscal-political gridlock broken in the years around 1800? It was not due to the rising tide of democracy: democracy came nearly a century later.

The answer that they come up with is that the stakes at risk in the state's principal activity--war--were suddenly raised. The higher stakes made it much more necessary to mobilize resources for war, because the consequences of losing a war were so much greater. And under pressure of necessity one of the two sides in the deadlocked struggle--either the monarch on the one hand, or the estates, estates-general, cortez, parlement, or whatever on the other--would give way, thinking a sacrifice of its influence over fiscal matters worthwhile to increase potential military power.

Were the stakes higher? Indeed they were. As Hoffman and Rosenthal point out, no matter what happened to a French king on the battlefield from well before the end of the first millennium to the eighteenth century, his legitimacy and his throne remained intact. But in the nineteenth and twentieth centuries Napoleon I, Napoleon III, and the Third Republic could testify that defeat in war meant the immediate and total collapse of your regime. Indeed, failure to have at your disposal sufficient military force to control the streets of Paris could also have regime-destroying consequences, as Louis XVI, Charles X, and Louis-Philippe discovered, as Napoleon III had in mind when he set Baron Haussman to work tearing down houses to make the excellent fields-of-fire that are the Grand Boulevards of Paris, as Charles de Gaulle must have been wondering in 1968 when he paid his sudden visit to the headquarters of the strike force of France's army.

Why were the stakes at risk suddenly so much higher? Hoffman and Rosenthal do not say. They focus on the consequences of higher stakes in triggering the reform of the fiscal system.

Are Hoffman and Rosenthal correct? I think that they are. The principal reasons that I think they are correct come from two historical episodes that Hoffman and Rosenthal do not analyze, but that I think are very instructive: the "premature" fiscal centralizations of the Dutch Republic and the English Kingdom.

Let me first talk about the Dutch Republic.

In the 1560s Philip II "the Prudent" sent his lieutenant the Duke of Alva to the Low Countries with the Spanish Army of Flanders to consolidate royal control, centralize power, and extirpate Protestant heresies. The leading noble of the Low Countries, Willem of Nassau, Prince of Orange decided not to lose his head by conducting a constitutional opposition but to abandon his lands, retreat into Germany, and wait for the moment to launch a military counterstroke. Willem hoped that if he won the private war he would become effective King of the Low Countries, as the Dukes of Burgundy had been a century and more before. But that's not how it worked out. The Princes of Orange--all in all an extraordinarily skilled dynasty at politics and war--wound up as at best captains-general and at worst puppet-figureheads working for the Estates General of the United Provinces of the Netherlands, with none of the regelian rights or control over budgets of even the weakest of the "absolutist" monarchs elsewhere.

You may quarrel with my implicit claim that the finances of the United Provinces were "centralized." By nineteenth-century standards they weren't. By seventeenth-century standards they were. From 1570 to 1650 four million Netherlanders raised enough money to equip armies and navies to fight off the American silver-funded Spaniards for eighty years while conquering the Portuguese seaborne empire. From 1675 to 1715 they fought off Louis XIV and French who outnumbered them by five to one. In between they took on England: as the Secretary of the Admiralty watched the English fleet burning in the Thames estuary, he wrote despairingly in his diary that he believed "the Devil shits Dutchmen."

Why was the Dutch Republic as it crystalized around 1600 able to mobilize three, four, five times as large a share of national income as its seventeenth-century contemporary states? For Hoffman and Rosenthal's reasons: it had to. Its war with Spain was not just a nationalist war but a religious war. Defeat meant not just loss of a province or having to learn a new language to talk to one's rulers but confiscation of property, exile, and quite probably burning at the stake.

The case of the English Kingdom is similar. The overthrow of the Catholic James II Stuart and the accession to the throne of Mary II Stuart and her husband William III Orange (a great-grand-nephew of the original Willem) in the name of the Protestant Succession was rapidly followed by France's backing of the deposed James II as its candidate for the throne of England. The elites who had overthrown James II were faced with the prospect of a wholesale purge of their number--for political and for religious reasons--should the War of the League of Augsburg or the War of the Spanish Succession be lost. Once again the addition of a layer from the wars of religion on top of the struggle for influence and provinces massively raised the stakes at issue. And the higher stakes provoked an extraordinary effort, the best history of which I've seen is John Brewer's _The Sinews of Power_.

The upshot? The English fiscal system of the eighteenth century consolidated power in the hands of the elite assembly, and, as Adam Smith wrote in _The Wealth of Nations_, raised three times as much money as the French system while seeming only 1/3 as burdensome to commerce and industry.

So I'm convinced. I would, however, like even more: a tracing of lines of influence, a recounting of political decisions. But this is a very nice paper that makes me think in new ways about stuff I have long known.


Jari Eloranta asks questions triggered by Paul Kennedy's _Rise and Fall of the Great Powers_. Kennedy's book always seemed to me to generalize excessively and inappropriately from the decline of Spain and the problems of the Dutch Republic. It is certainly the case that Spain's American silver-financed imperial career harmed its economic development. It is certainly the case that Spain's American silver-financed imperial career created an amazing if short-lived empire--from Manila to Peru to Crete and the shores of the North Sea. But Kennedy never successfully demonstrated that Spain's economic decline was the result of heavy taxation to finance the military rather than of the relative price changes produced by the silver inflow. That American silver played a role in driving both is clear. Additional causal links from military effort to economic decline are harder to trace.

And it is surely the case that Dutch relative economic decline was in part at least due to the enormous cost of fighting first the 80 Years' War against Spain, second the three Anglo-Dutch wars, and third the 40 Years' War against France. But it's hard to see this as well described by imperial "overstretch." For the overwhelming bulk of Dutch military expenditures were always in the European theater, where Holland was always on the defensive. It was not that it took on a large military burden in order to satisfy imperial ambitions: it took on a large military burden to avoid being conquered--after which it would have been re-Catholicized as its prominent citizens would have been either burned at the stake by the Duke of Alva or forced to flee as were the French Protestants in the aftermath of King Louis XIV's Revocation of the Edict of Nantes.

And these are the two cases in which Kennedy's argument seemed strongest. Extending it beyond these two cases always seemed to me to involve inappropriate generalization.

In a thumbnail sketch, Kennedy's argument seemed to be that the leading power in any era takes on much more than its share of the burden of providing international security for its broad alliance. The heavy taxation needed to finance a large imperial armed force causes relative economic decline. The fact that the imperial power's allies and dependencies largely escape this burden means that their economies grow rapidly. Thus the imperial power suffers from "imperial overstretch" and relative economic decline while meanwhile nurturing the cuckoo's egg of its successors to economic dominance in the nest of its security umbrella. As Eloranta puts it, "follower states act as free-riders in the international system stabilized by the hegemon."

Jari Eloranta performs the singular service of trying to test this approach by looking closely at what happened between the world wars, as the U.S. which had clearly risen to economic dominance refuses to take on the hegemonic role of financing international security. Eloranta rejects what he calls the "first testable hypothesis" derivable from Kennedy: that relatively high military expenditures in the first half of the twentieth century were a source of economic weakness. The United States's withdrawal into isolation after World War I was not followed by an increase in its economic edge. Britain's and France's continuation of high military budgets in the 1920s were not an important source of economic weakness. Indeed, the biggest association in the first half of the twentieth century is between massive rearmament and economic growth, both during the Nazi era in Germany and during Stalin's genocidal crash program of military industrialization.

Eloranta also rejects what he calls Kennedy's "second testable hypothesis"--that "follower" countries will cut back on their military spending after the hegemonic power raises its spending, and will expand their military spending should the hegemonic power cut back. Eloranta finds, instead, a strong Primacy of Internal Politics: military spending levels are not influenced by any view that a follower country can rely on the leader country's security umbrella, but by the outcome of domestic political struggles.

Indeed Eloranta concludes that it is not the case that military spending in the present is a source of future economic weakness, but that among twentieth century democracies it is past economic strength that is the source of present military spending. A case not considered in his data set serves as a powerful example: it was only after America's extremely strong wartime recovery from the Great Depression and the continued avoidance of Depression after World War II that anything like the post-WWII American commitment first to the Marshall Plan and then to the Cold War military became conceivable.

And Kennedy's "imperial overstretch" theory has problems when cast back into the nineteenth century. Britain's nineteenth century Empire was acquired amazingly cheaply, financed by domestic tax rates too low to have any appreciable depressing effect on the economy. And rather than being a source of economic weakness, Britain's empire was a source of twentieth-century military strength as the Dominions and India threw enormous resources onto Britain's side during World Wars I and II.


I should conclude by saying something about how in the past economists have paid too little attention to war in their studies of the deveopment of politico-economic institutions, and that historians have paid too little attention to economic reality in spinning their interpretations. This session shows how bridges can be built, and how as a result we can all do better history of the development of institutions and better history of politico-military affairs. But I very much doubt that I'll get this far in my comments: I only have ten minutes to talk, after all...

[Approx. 18 minutes as written]


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