New Economics Papers
on Business, Economic and Financial History
Issue of 2006‒07‒15
eleven papers chosen by

  1. The Rise, Expansion, and Decline of the Italian Cloth Industries, 1100 - 1730: a study in conjoncture, transaction costs, and comparative advantage By John H. Munro
  2. Luxury and Ultra-Luxury Consumption in Later Medieval and Early Modern European Dress By John H. Munro
  3. Do we need a new 'Great Transformation'? Is one likely? By Frances Stewart (QEH)
  4. Three Lectures on Monetary Theory and Policy: Speaking Notes and Background Papers By David Laidler
  5. The Spectre of Deflation: A Review of Empirical Evidence By Gregor W. Smith
  6. Wicksell at the Bank of Canada By Kevin Clinton
  7. "Dissent and Discipline in Ben Gurion's Labor Party: 1930-32" By Joel Perlmann
  8. The Growth Performance of Developing Countries in the Last Thirty Years. Who gained? Who Lost? By Horst Siebert
  9. Competition Policy and the Swedish Model By Lundqvist, Torbjörn
  10. Oil crisis, Energy Saving Technological Change, and the Stock Market Collapse of 1974 By Adrian Peralta-Alva
  11. Secularism and the Gujarat state: 1960-2005 By Nikita Sud (QEH)

  1. By: John H. Munro
    Abstract: This study of the Italian wool-based textile industries (woollens, worsteds, and serges) seeks to examine its rise, expansion, and ultimate decline, over a period of five centuries (from ca. 1200 to ca. 1730) in the context of both international competition and economic conjoncture, in the context of the major macro-economic and demographic changes that the European economy experienced during these five centuries. The story commences during the so-called ‘Commercial Revolution’ era of the thirteenth-century when the Franco-Flemish cloth industries of north-west European dominated the international markets in a very wide range of these textiles, even in the Mediterranean basin. From the 1290s, and then into the better know period of the Hundred Years’ War (1337-1453) the European economy suffered from the ravages of ever more widespread and debilitating warfare, throughout the Mediterranean basin and western Europe, and then from various factors, including plagues, that led to serious depopulation. The consequences led to a severe rise in transportation and transaction costs that gravely undermined the profitability of long-distance trade in cheaper textiles. That, in turn forced most textile manufacturers dependent on long-distance trade, and especially those who had operated as price-takers, to re-orient their export-based production to far higher priced, indeed luxury textiles, which could better sustain the burden of rising transactions costs, especially in acting as ‘price-makers’ engaged in monopolistic competition. That industrial-commercial transformation can be seen in the textile industries of northern France, the Low Countries, and England; but also those in Catalonia and above all in Italy: principally Tuscany and Lombardy. In so far as warfare and rising transaction costs limited the importation of even luxury textiles from north-west Europe, the Italian cloth industries thereby gained a far larger share of Mediterranean markets. This study focuses in particular on the ensuring history of the Florentine woollen cloth industry in the later Middle Ages. One price that all of these luxury-oriented cloth industries had to pay was steeply rising tax burdens on exported English wools; for the prime determinant of luxury quality in these textiles was the use of the finer grade English wools, the best in the world, until the development (through breeding and management) of Spanish merino wools, which finally succeeded in rivalling and then surpassing the English by the later sixteenth century. By the sixteenth century, with a reduction in European warfare and with renewed population growth, substantial economic growth, and significant innovations in transportation, transactions costs fell, and fell enough to make long-distance trade in cheaper textiles once more profitable; and that is reflected in product changes in the Florentine textile industry, which increasingly used Spanish merino wools in place of the English. But the most important events in the history of the Italian textile industries was the sudden rise of the Venetian cloth industry from the early to mid-sixteenth century, reaching a peak in the early seventeenth century, and then experiencing an equally rapid decline, in the famous of English textile competition, by the agency of the new Levant Company, which gained major advantages over the Italians in the large Ottoman Empire. The study concludes by examining the nature of those English advantages, which lay far more in the commercial (and transportation sphere) than in the industrial sphere, in terms of both traditional heavy weight woollens (made from Spanish wools) and the lighter, coarser, and cheaper fabrics of the English New Draperies (benefiting from a transformation in English wool production, from the Tudor-Stuart Enclosures). In sum: a study of comparative advantage in five centuries of international trade, in wool-based textiles, in terms of transaction costs, inputs (wools), and commercial organization.
    Keywords: woollens, worsteds, serges, warfare, English and Spanish wools, Florence, Milan, Venice, Ottoman Empire, Flanders, Levant Company, New Draperies
    JEL: D23 D43 E32 F10 H25 J11 L14 L23 L79 L91 N63 N7
    Date: 2006–07–10
  2. By: John H. Munro
    Abstract: Over many millennia, mankind has laboured to consume and satisfy three very necessary material wants or needs: food (including drink), shelter, and clothing. Each of these, however, has also been a major object of luxury consumption. Textiles were necessities in providing almost all people with protection from the elements: from winter and evening cold, from summer heat, and from precipitation (rain, sleet, snow, hale); and also protection, in terms of modesty, from public shame and humiliation. For many people, however, clothing has also served and still serves other or supplementary wants, in terms of luxury consumption: for decoration, the assertion of personal values, and also for assertions or symbols of social status. The subject of this particular study, woollen textiles, is arguably the one that best permits a statistical comparison of market values of both luxury and ‘every-day’ textiles, because of the abundance and continuity of price data that have survived in two economically linked regions, the southern Low Countries and England, over two centuries: from the mid-fourteenth to the mid-sixteenth centuries. Luxury- quality textiles from this region played a very major role in European international trade during this long period, for reasons also examined in this study. The core of this study is a comparison of the prices and relative values of the purchases of two luxury woollen textiles and of two relatively cheap textiles in Ghent, Mechelen, and Antwerp in the years 1538 to 1544: the first category consists of the Ghent dickedinnen and the Mechelen zwart rooslaken broadcloths; the second (latter) consists of single and double says from Hondschoote, sold on the Antwerp market. The prices are given in the Flemish pond groot (live gros). But such prices are meaningless unless proper relative comparisons be made, to indicate the ‘real’ values of these textiles. This study utilizes two such techniques: (1) an estimate of the number of days’ wages that an Antwerp master mason would have required to buy one of these textiles (or 12 square metres of each); (2) the number of ‘baskets of consumables’, the measure used to construct the annual Consumer Price Index, whose aggregate value in pounds groot equalled the value of one of each of these textiles. The differences in relative values for these years are most vividly revealed by the first technique: For 1538-44, the average number of days’ wages required to purchase 12 square metres of cloth (enough to make up a man’s full suit of clothing) would have been: 13.725 days for a Hondschoote single say; 16.958 days for a Hondschoote double say; and 5.4 times as many days, 91.413 for a Ghent dickedinnen and 74.144 days for a Mechelen rooslaken. To make that comparison all the more clear – the differences between a heavy-weight luxury woollen broadcloth and a lighter-weight semi-worsted fabric (says) used for every-day wear, the next section analyses the physical composition of these various textiles, from the weavers’ guild ordinances: in terms of the wools used, the dimensions on the loom, the final dimensions after finishing, the weight of the cloths, and their gram weights per square metre. A snap-shot comparison of these textile values for just these few years, near the mid-sixteenth century, will not prove convincing, however, unless the ‘real’ values of these and other woollen textiles can be presented over much longer periods of time. The following tables presents the values of woollen broadcloths from Ghent, Mechelen, Bruges, Ypres (Ieper), Leuven, and England, for various periods from the 1330s to the 1570s – more than two and half centuries. Those values are again presented in three forms: (1) in Flemish pounds (£) groot; (2) the number of days’ wages that a Flemish (Bruges-Ghent), or English (Oxford-Cambridge), or Brabantine (Antwerp) master mason would have had to spend to purchase just one of each of these woollen cloths; and (3) the number of annual ‘baskets of consumables’ (Flemish, Brabantine, English) whose aggregate money-of-account value equalled the value of just one of these textiles. Of all the woollen textiles produced in medieval Europe by far the most luxurious, rivalling silks in value, were the scarlets, whose nature, composition, dyestuffs, finishing costs, and market values are considered – in the same fashion – for Mechelen from 1361 to 1415 (the only period of continuous data available). Finally, tables are presented on the prices of the finer English wools used in manufacturing all these fine woollens.
    Keywords: luxury consumption, woollen broadcloths, worsteds, English wools, scarlets, kermes, medieval Flanders, Brabant, England; real incomes
    JEL: D4 D7 F1 F2 H3 L1 N4 N5 N6 N7 Q2
    Date: 2006–07–04
  3. By: Frances Stewart (QEH)
    Abstract: Karl Polanyi wrote 'The Great Transformation' in 1944 which analysed the double movement Europe experienced, from a situation where the market was heavily regulated and controlled in the 18th century to a virtually unregulated market in the 19th century; and the great Transformation in which the market was once more brought under control as a reaction to the poverty, unemployment and insecurity brought about by the unregulated market. Yet in both developed and developing countries there has since been a reaction with a new move towards the market. This paper analyses such processes in contemporary developing countries, and considers whether, in the light of the consequences of the unregulated market, a new 'Great Transformation' is needed. It also considers whether such a transformation is likely, reviewing moves towards increased regulation of the market, and also the constraints faced by any contemporary great transformation arising from globalisation and the nature of politics.
  4. By: David Laidler
    Abstract: In order to promote the exchange of ideas and to support its own research capacity, the Oesterreichische Nationalbank regularly invites internationally renowned economists for short guest professorships. This year, from June 12 -14 2006, David Laidler gave three public lectures on topics related to monetary theory and monetary policy. The first lecture was on “Monetary Policy and the Austrians”, the second on “The Rise and Fall of Monetarism” and the third has dealt with the question “Is there a Role for Money in Monetary Policy in the 21st Century?”. The lectures were based on three background papers, which are contained in this OeNB Working Paper that also includes the lecture notes that were prepared for the lecture series.
    Date: 2006–06–19
  5. By: Gregor W. Smith (Queen's University)
    Abstract: What explains the widespread fear of deflation? This paper reviews the history of thought, economic history, and empirical evidence on deflation, with a view to answering this question. It also outlines informally the main effects of deflation in applied monetary models. The main finding is that -- for both historical and contemporary deflations -- there are many open, empirical questions that could be answered using the tools economists use to study inflation and monetary policy more generally.
    Keywords: deflation
    JEL: E31
    Date: 2006–07
  6. By: Kevin Clinton (Queen's University)
    Abstract: Wicksell, writing around the start of the 20th century, outlined an approach to monetary policy strikingly similar to the modern approach, of which the Bank of Canada has been a pioneer. Its features include: the overriding objective of price stability (or low inflation); an interest rate instrument controlled by the rates on settlement balances at the central bank; and a policy rule under which the instrument varies in response to deviations from the objective. Wicksell’s natural rate of interest has resurfaced as the neutral rate in mainstream macroeconomic models; and his description of the inflation process has parallels in the modern Phillips curve. Moreover, in a mandate for price stability, one can find a logical basis for the independence and accountability of central banks. The paper tries to explain why Wicksell’s ideas fell by the wayside for a century, and describes how the Bank of Canada, by pragmatic steps in the 1990s, helped reinvent Wicksell, and install a neo-Wicksellian monetary policy.
    Keywords: Wicksell, central bank, monetary policy, Bank of Canada
    JEL: E42 E52 E58
    Date: 2006–06
  7. By: Joel Perlmann
    Abstract: This paper describes a small opposition group that functioned during 1930-33 on the left fringes of Ben Gurion's Mapai party in Palestine. Mapai dominated Jewish Palestine's politics, and later the politics of the young State of Israel; it lives on today in Israel's Labor Party. The opposition group, probably no more than a dozen active individuals at the outset, was comprised mostly of young adults, recently arrived from the Soviet Union or Poland. They put out a series of pamphlets, <em>Reshimot Sozialistiyot</em> (Socialist Notes), apparently held some public meetings and sought some minor party offices as well. These activities, and especially the pamphlets troubled Ben Gurion and the other party leaders. The leadership discussed the opposition group on 10 separate occasions at their private official meetings during 1932. They invited the opposition for an extensive clarification of views, and then insisted that the members cease functioning as an organized group. When that insistence failed to stop the publications, the leadership published a decree (written by party ideologue, B. Katznelson) expelling each of them from Mapai by name. The opposition's critique of Mapai revolved around the balance of internationalism inherent in socialism and nationalism inherent in Zionism. The party reaction showed 1) specific features of ideology that were unacceptable even to this eclectic party; 2) the leadership's concern for control and for disciplined followers; and 3) the nature of leadership discussion and behavior in regard to expulsion.
    Date: 2006–07
  8. By: Horst Siebert
    Abstract: This paper answers the question which developing countries have gained and which have lost in the international division of labor during the last thirty years. The indicators used are GDP per capita in constant purchasing power parity and relative distance to the United States. Nearly all developing countries have improved in absolute terms over the last thirty years; many, among them China and India with large populations, have also reduced their relative distance to the United States. The paper classifies developing countries and discusses impediments to economic development and core elements of a growth strategy.
    Keywords: Economic development, growth, GDP per capita, stages of development, classification of developing countries, newly industrializing countries, core elements of a growth strategy, growth and equity, impediments to growth
    JEL: F O O40 N
    Date: 2006–06
  9. By: Lundqvist, Torbjörn (Institute for Futures Studies)
    Abstract: The aim of this paper is to present some findings from a study on the development of competition policy in Sweden since 1945. The comprehensive questions are about the view on knowledge in competition policy, the trust to the Swedish model, the change of the model and what has replaced it, and the attitudes to competition and co-operation in politics, authorities and interest groups. The study is basically built on government bills and directives to committees, committee reports, and comments on the later from authorities and interest groups.<p> Typical signs of the Swedish model were a consensus and co-operative attitude towards interest conflict, with institutional arrangements aimed for negotiations and pragmatism. This was also typical for competition policy. During the 1990s we find a change to an EU-model. It meant a transition to a more legalistic and theoretic view on competition.<p> When it comes to attitudes they changed successively in the direction of favouring competition before co-operation. The change was however radical when it comes to politicians and competition authorities. Not least the later came to argue for an “antitrust” view on competition. However, business interests were sceptical to the new competition law copying the EU-model.
    Keywords: competition policy; Swedish model
    JEL: N00
    Date: 2006–05
  10. By: Adrian Peralta-Alva (Department of Economics University of Miami)
    Keywords: Stock Market, Energy Prices, Tobin's q
    JEL: E22 O33 Q43
    Date: 2006–07–04
  11. By: Nikita Sud (QEH)
    Abstract: Secularism has been a defining norm for the modern, liberal Indian state. The constitutionally secular Gujarat state is believed to have undergone a paradigmatic shift in 2002, when it supported a massacre of Muslim citizens. This essay investigates the empirical as well as normative state in situations of inter-religious violence. It traces the journey of the secular norm over a 45-year period, in the context of contests over identity, political ideology and socio-political dominance. The picture that emerges is much more nuanced than that projected by stark pronouncements of paradigm shifts and the inauguration of a Hindu rashtra.

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