nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2009‒10‒24
twenty-one papers chosen by
Bernardo Batiz-Lazo
University of Leicester

  1. Consumption, Social Capital, and the ‘Industrious Revolution’ in Early Modern Germany By Ogilvie, S.
  2. Growth, Quality, Happiness, and the Poor By McCloskey, Deirdre
  3. Political Economy of Anglo-French Trade, 1689-1899: Agricultural Trade Policies, Alcohol Taxes, and War By Nye, John V.C.
  4. The Tools of Transition: Education and Development in Modern Southeast Asian History By Tim Harper
  5. Energy and Natural Resource Dependency in Europe, 1600-1900 By Paul Warde
  6. The End of Literacy: The Growth and Measurement of British Public Education Since the Early 19th Century By David Vincent
  7. Health in India Since Independence By Sunil S. Amrith
  8. How and Why Does History Matter for Development Policy? By Michael Woolcock; Simon Szreter; Vijayendra Rao
  9. "Lessons from the New Deal--Did the New Deal Prolong or Worsen the Great Depression?" By Greg Hannsgen; Dimitri B. Papadimitriou
  10. The Stupendous Modernity of the First Government Loan for Institutionals in 1555 By Georges Gallais-Hamonno
  11. Returning and Sharing Memories”. Genesi e sviluppo di un progetto per l’uso del “passato comune” italo-etiope (1935-1941) By Paolo Bertella Farnetti
  12. Development Finance, Private and Public Sectors in Zimbabwe: Sustainability or Odious Debt? By Sarah Bracking; Lloyd Sachikonye
  13. The Millennium Development Goals (MDGs): A Short History of the World’s Biggest Promise By David Hulme
  14. Developing Countries in the ITO and GATT Negotiations By James Scott
  15. Bismarckian Transformations in Contemporary Nicaragua? From Gang Member to Drug Dealer to Legal Entrepreneur By Dennis Rodgers
  16. Teorias do desenvolvimento regional e suas implicações de política econômica no pós-guerra: o caso do Brasil By Ana Carolina da Cruz Lima; Rodrigo Ferreira Simões
  17. The history of transaction cost economics and its recent developments By Lukasz, Hardt
  18. “What is so Austrian about Austrian Economics?” By David Colander
  19. New Series for GDP per capita, per worker, and per worker-hour in Portugal, 1950-2007 By Amaral, Luciano
  20. Risk, Asset Markets, and Inequality: Evidence from Medieval England By Cliff T. Bekar; Clyde G. Reed
  21. PORTUGUESE AVERAGE COST OF CAPITAL By Costa, Jose Carlos; Mata, Maria Eugenia; Justino, David

  1. By: Ogilvie, S.
    Abstract: This paper uses evidence from German-speaking central Europe to address open questions about the Consumer and Industrious Revolutions. Did they happen outside the early-developing, North Atlantic economies? Were they shaped by the “social capital” of traditional institutions? How were they affected by social constraints on women? It finds that people in central Europe did desire to increase market work and consumption. But elites used the “social capital” of traditional institutions to oppose new work and consumption practices, especially by women, migrants, and the poor. Although they seldom blocked new practices wholly, they delayed them, limited them socially, and increased their costs.
    Keywords: economic history; consumption; social capital; institutions; guilds; communities; labour; discrimination; gender; Germany
    JEL: N0 N33 N43 N63 N73 N93 J13 J22 J31 J4 J7 O15 O17
    Date: 2009–10–15
  2. By: McCloskey, Deirdre
    Abstract: Real national income per head in Britain rose by a factor of about 16 from the 18th century to the present. Other cases, such as that of the U.S. or Korea, have been even more startling, historically speaking. Like the realization in astronomy during the 1920s that most of the “nebulae” detected by telescopes are in fact other galaxies unspeakably far from ours, the Great Fact of economic growth, discovered by historians and economists in the 1950s and elaborated since then, changes everything. And 16, if one follows William Nordhaus’ persuasive arguments about quality improvements in (say) lighting, is a very low lower bound: the true factor is roughly 100. As Maxine Berg has argued, changing quality of products was as important as changes in process. But the gain is not to be measured by pot-of-pleasure “happiness studies.” These are questionable on technical grounds, but especially on the grounds that they do not measure human fulfillment. They ignore the humanities, pretending to scientific precision. It makes more sense to stay with things we economists can actually measure, such as the rise of human scope indicated by the factor of 16 or Nordhaus’ factor of 100, or by what Sen and Nussbaum call “capabilities.” Of course, what we really care about are the scope or capabilities of the poor. These have enormously expanded under “capitalism”---though a better word is simply “innovation,” arising from bourgeois dignity and liberty. It is the Bourgeois Deal: let me alertly seek profit, and I will make you rich.”
    Keywords: growth; quality; happiness; poor; bourgeois; industrial revolution
    JEL: N0 N13
    Date: 2009–06–07
  3. By: Nye, John V.C.
    Abstract: Britain â contrary to received wisdom â was not a free trader for most of the 1800s and, despite repeal of the Corn Laws, continued to have higher tariffs than the French until the last quarter of the century. War with Louis XIV from 1689 led to the end of all trade between Britain and France for a quarter of a century. The creation of powerful protected interests both at home and abroad (notably in the form of British merchants, and investors in Portuguese wine) led to the imposition of prohibitively high tariffs on French imports -- notably on wine and spirits -- when trade with France resumed in 1714. Protection of domestic interests from import competition allowed the state to raise domestic excises which provided increased government revenues despite almost no increases in the taxes on land and income in Britain. The state ensured compliance not simply through the threat of lower tariffs on foreign substitutes but also through the encouragement of a trend towards monopoly production in brewing and restricted retail sales of beer (which began around 1700 and continued throughout the eighteenth century). This history is analyzed in terms of its effects on British fiscal and commercial policy from the early 1700s to the end of the nineteenth century. The result is a fuller, albeit revisionist account of the rise of the modern state that calls into question a variety of theses in economics and political science that draw on the naive view of a liberal Britain unilaterally moving to free trade in the nineteenth century.
    Keywords: International Development, International Relations/Trade, Political Economy, F13, H20, N40, N43, N53, O13, Q17,
    Date: 2009–07
  4. By: Tim Harper
    Abstract: Although great importance is attached to the role of education in national development in Southeast Asia, its role has been ambivalent. In the colonial period, education was a central way in which societies mobilised to challenge and resist European rulers. Yet education has also been the central vehicle through which colonial and post-colonial states have sought to impose their own visions and discipline their subjects. Southeast Asia’s history has been marked by a cultural willingness to borrow and adapt ideas, practices and institutions from outside. Yet this has also been a source of anxiety and conflict. The ‘indigenous’ is often a product of an immediate post-colonial history, rather than the expression of a longer cultural experience. Historians can try to provide a useful narrative of regional thinking about education and development in Southeast Asia, particularly during its key ‘periods of transition’, and thus help to set educational developments within in a wider context. Providing a historical perspective, this paper attempts to map some of the region’s capacities and capabilities, and to examine how adequately they have been exploited by the formal educational sector.
    Date: 2009
  5. By: Paul Warde
    Abstract: This paper takes a historical perspective on the role of resource endowment in economic development, examining the leading economies of the early modern era, the Netherlands and England; the first case largely dependent on imports for raw materials, while the second enjoyed the boon of much larger indigenous energy reserves. It argues that locational advantages were an essential part of the story of early modern growth: in the Dutch case, access to factor markets and trade routes; in the English, these combined with natural resources. There is little evidence that the benefits of growth were spread to the periphery, but neither did inequities in growth patterns contribute significantly to institutional backwardness and rent-seeking in the periphery.
    Date: 2009
  6. By: David Vincent
    Abstract: The paper explores the significance of counting communication skills in one of the earliest societies to achieve mass literacy. The Millennium Development Goals in education reflect structures of practice and thinking rooted in the 19th century. The notion of a goal itself, the measurable output of official endeavour, belongs to the founding of the modern state. Literacy as an early performance indicator of public expenditure embodied a construction of an opposition between ignorance and knowledge, a disaggregation of social structures and a dismissal of informal education. It sustained the rise of the performance orientation of schooling, which subordinated the role of users. Despite their cultural limitations, the literacy and postal statistics permitted long-run quantitative analysis. There remains a question, to which historians do not have a privileged answer, as to whether education in its fullest sense is a goal that can ever be consistently measured over time and across space. The contemporary shifts in the meaning of literacy threaten to disconnect the term from history and disable our capacity fully to understand the dynamics of change.
    Date: 2009
  7. By: Sunil S. Amrith
    Abstract: This paper suggests that history is essential to an understanding of the challenges facing health policy in India today. Institutional trajectories matter, and the paper tries to show that a history of under-investment and poor health infrastructure in the colonial period continued to shape the conditions of possibility for health policy in India after independence. The focus of the paper is on the insights intellectual history may bring to our understanding of deeply rooted features of public health in India, which continue to characterise the situation confronting policymakers in the field of health today. The ethical and intellectual origins of the Indian state’s founding commitment to improve public health continue to shape a sense of the possible in public health to this day. The paper shows that a top-down, statist approach to public health was not the only option available to India in the 1940s, and that there was a powerful legacy of civic involvement and voluntary activity in the field of public health.
    Date: 2009
  8. By: Michael Woolcock; Simon Szreter; Vijayendra Rao
    Abstract: The consensus among scholars and policymakers that ‘institutions matter’ for development has led inexorably to a conclusion that ‘history matters’, since institutions clearly form and evolve over time. Unfortunately, however, the next logical step has not yet been taken, which is to recognise that historians (and not only economic historians) might also have useful and distinctive insights to offer. This paper endeavours to open and sustain a constructive dialogue between history—understood as both ‘the past’ and ‘the discipline’—and development policy by (a) providing a critique of recent ‘big picture’ accounts of comparative economic development (by economists, historians and others), (b) clarifying what the craft of historical scholarship entails, especially as it pertains to understanding causal mechanisms, contexts and complex processes of institutional change, (c) providing examples of historical research that support, qualify or challenge the most influential research (by economists and economic historians) in contemporary development policy, and (d) offering some general principles and specific implications that historians, on the basis of the distinctive content and method of their research, bring to development policy debates.
    Date: 2009
  9. By: Greg Hannsgen; Dimitri B. Papadimitriou
    Abstract: Since the current recession began in December 2007, New Deal legislation and its effectiveness have been at the center of a lively debate in Washington. This paper emphasizes some key facts about two kinds of policy that were important during the Great Depression and have since become the focus of criticism by new New Deal critics: (1) regulatory and labor relations legislation, and (2) government spending and taxation. We argue that initiatives in these policy areas probably did not slow economic growth or worsen the unemployment problem from 1933 to 1939, as claimed by a number of economists in academic papers, in the popular press, and elsewhere. To substantiate our case, we cite some important economic benefits of New Deal–era laws in the two controversial policy areas noted above. In fact, we suggest that the New Deal provided effective medicine for the Depression, though fiscal policy was not sufficiently countercyclical to conquer mass unemployment and prevent the recession of 1937–38; 1933's National Industrial Recovery Act was badly flawed and poorly administered, and the help provided by the National Labor Relations Act of 1935 came too late to have a big effect on the recovery.
    Keywords: New Deal; Public Works Projects; NIRA; NLRA; Cartelization; Unions; Labor Relations Policy; Fiscal Policy; Fiscal Stimulus; Unemployment; Great Depression
    JEL: E20 E62 J58 L43 N12
    Date: 2009–10
  10. By: Georges Gallais-Hamonno (Centre Emile Bernheim, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and LEO, University of Orleans, France.)
    Abstract: In order to finance the Italian war, Henry II ‘financial advisers have made in 1555 an enormous financial operation in LYON – then the French financial capital: a huge debt consolidation plus a cash issue. This issue was outstandingly “modern” by at least three aspects. 1. The subscription was reserved to the institutional investors --- the merchant-bankers. 2. For the first time, the amortization took the form of a 41-quarterly –constant-annuities system. 3. Because of a huge demand, an incredible system of “assimilation” of new loans has been organized. The end of this loan is as stupendous as its technics: less than two years later, the Royal government defaulted and only 9% of the total issue has been repaid according to schedule.
    Keywords: Government loans of 1555; Amortization and assimilation technics; Government bankruptcy
    JEL: G00 H63 N23
    Date: 2009
  11. By: Paolo Bertella Farnetti
    Abstract: Abstract. This paper introduces a pilot project aiming at returning Ethiopian people the historical memories about the Italian ephemeral “Empire” in the Horn of Africa (1935-1941). The “conquerors” took away a lot of historical documents and images, taking advantage of their technological superiority. For instance, unlike Ethiopians, many Italian soldiers had cameras, which were popular and affordable back then. Thanks to technology now we can duplicate documents – producing exact copies of originals – without displacing them or changing ownership.Our starting point is to duplicate the visual memories collected in Modena and donate them to Addis Ababa University, making them available to researchers and students. Our aim is approaching colonialist studies in a different way, sharing the historical memories with the former enemies, encouraging a joint study of Ethiopia and Italy’s common past. Our hope is to create a lean working method that can be used by others, able to stimulate similar initiatives not only from private people but also from the Italian public archives and institutions
    Keywords: Italian colonialism; photographic sources; Ethiopia; Modena
    Date: 2009–09
  12. By: Sarah Bracking; Lloyd Sachikonye
    Abstract: This paper reviews the political economy of development finance in Zimbabwe from the late 1980s to the present day, to see where the current sovereign debt arose from. It disaggregates initial private sector development interventions by type, provider, sector and at the firm level, to see how development finance was extended and spent during the structural adjustment era and after. It notes a number of design flaws and problems in development-financed projects and programmes over the period which undermined their later profitability as productive assets and contributed to debt build-up. The paper also notes the effects of poor domestic governance on the productivity of ventures supported. However, the macroeconomic policies within the structural adjustment programme were also a central trigger to the future unsustainability of debt. Also, in the post-2000 period, the deterioration of the debt position has been exacerbated by the Reserve Bank of Zimbabwe, by means of its extensive foreign exchange denominated loans to parastatal corporations, and by its quasi-fiscal activities. Zimbabwe’s public sovereign debt can be reduced, and future private sector development policy enhanced, if recourse to expensive and unproductive fiscal interventions, either by international financial institutions or by the Reserve Bank, are avoided.
    Date: 2009
  13. By: David Hulme
    Abstract: This paper provides a chronological account of the evolution of the Millennium Development Goals (MDGs). It examines their historical antecedents; the UN conferences and summits that provided their content; the role of OECD’s Development Assistance Committee (DAC) in formulating the International Development Goals (IDGs); the influence of the UN’s Secretariat in drafting the Millennium Declaration; and the final negotiations between the UN, DAC, World Bank, and IMF to amend the IDGs into the MDGs in 2001. This account reveals the complexity and unpredictability of global policymaking processes. Although the overarching structures of economic and political power framed all negotiations, so the MDGs are largely a rich world product for rich world audiences, there are opportunities for norm entrepreneurs and message entrepreneurs to exercise personal agency. As the time approaches for the assessment of the MDGs, at the UN General Assembly in September 2010, it is useful to reflect on the ‘chaos of accidents and purposes’ that generated the MDGs in the first place.
    Date: 2009
  14. By: James Scott
    Abstract: The literature examining the participation of developing countries in the General Agreement on Tariffs and Trade (GATT) and International Trade Organisation (ITO) negotiations generally sees their attitudes towards these projects as having been driven exclusively by a commitment to import substitution. This commitment, it is argued, led developing countries to oppose many aspects of the GATT/ITO project, particularly the requirement for reciprocal tariff cuts. This paper argues that this view misconstrues and caricatures the ideas and motivations underpinning developing countries’ attitudes towards the GATT and ITO. Though import substitution and the related objective of industrialisation each played a part in shaping developing countries’ attitudes, they are only aspects of a more complex set of aims and ideas. Developing countries were drawing from a range of key experiences and ideas beyond simply import substitution in forming their attitude towards the GATT/ITO project, in particular the volatility in commodity markets that preceded the negotiations, the legacy of colonialism, and the lessons provided by the 19th and 20th centuries on trade policy. Finally, it is argued that evidence from the first round of GATT negotiations indicates that developing countries were substantially less opposed to reciprocal tariff concessions than has previously been argued. These findings are important for anyone who wants to understand the evolution of the GATT and the role developing countries played in it, and the difficulties between the rich and poor nations that continue to characterise negotiations in the World Trade Organisation.
    Date: 2009
  15. By: Dennis Rodgers
    Abstract: Through a detailed life history of Bismarck, a Nicaraguan youth gang member turned illegal drug dealer turned legal entrepreneur, this paper explores the potential relationships between formal and informal economic activity. It focuses particularly on the various economic activities that he has been involved in at different stages in his life, tracing their origins and evolving dynamics in order to highlight not only how the ‘formal’ and ‘informal’ often mix, but also how they can in fact be extremely interdependent, to the extent that they often directly feed off each other. At the same time, however, Bismarck’s story also underlines how the systemic iteration of economic activity ultimately depends less on their form and more on the contingent articulation of the specific type of activity concerned, the particular trajectory of the individual social agents involved, as well as ultimately the nature of the broader contextual political economy.
    Date: 2009
  16. By: Ana Carolina da Cruz Lima (Cedeplar-UFMG); Rodrigo Ferreira Simões (Cedeplar-UFMG)
    Abstract: Discussions about the regional question gained new impetus in the post-war and its ideas influenced the regional economic planning in many countries, especially in Latin America. This paper describes the main characteristics of four theories developed in this period: The Theory of Growth Pole, the Theory of Circular Cumulative Causation, the Theory of Unbalanced Growth and the Export Base Theory. After that we analyze how these theories influenced the regional planning in Brazil between 1950 and 1980. The analysis of the main national plans of development shows that the policy makers tried to follow these theoretical recommendations. However, the results of these policies were limited by several misinterpretations, like the exaggerate emphasis on the import replacing without diversification of the exportations, and the national development of long-term has been compromised. After this period of state intervention, there were many changes in the economic environment, including in the mainstream about the regional development.
    Keywords: Regional Development Theories, Economic Planning, Regional Development Policies
    JEL: R11
    Date: 2009–09
  17. By: Lukasz, Hardt
    Abstract: The emergence of transaction cost economics (TCE) in the early 1970s with Oliver Williamson’s successful reconciliation of the so called neoclassical approach with Herbert Simon’s organizational theory can be considered an important part of the first cognitive turn in economics. The development of TCE until the late 1980s was particularly marked by treating the firm as an avoider of negative frictions, i.e., of transaction costs. However, since the 1990s TCE has been enriched by various approaches stressing the role of the firm in creating positive value, e.g., the literature on modularity. Hence, a second cognitive turn has taken place: the firm is no longer only seen as an avoider of negative costs but also as a creator of positive knowledge.
    Keywords: transaction cost economics; Oliver Williamson; theory of the firm; modularity literature; cognitive turn
    JEL: D21 D23 B21 B31
    Date: 2009
  18. By: David Colander
    Abstract: Modern mainstream economics is a plurocracy in which there is no orthodoxy of ideas, only an orthodoxy of method. Given the training it provides its students, mainstream economic’s natural domain is science. With the mainstream’s acceptance of complexity views of the economy, Austrian economist’s views can now get a hearing within the mainstream. Thus, within the science of economics, there is no need for a separate Austrian economics. However, there is a need for Austrian economics in political economy, that branch of economics that takes the insights of science and relates them to policy. The paper urges Austrian economics to embrace political economy as its domain, and to position its work as within political economy.
    Date: 2009–10
  19. By: Amaral, Luciano
    Abstract: JEL codes:
    Date: 2009
  20. By: Cliff T. Bekar (Lewis & Clark College); Clyde G. Reed (Simon Fraser University)
    Abstract: Between the eleventh and fourteenth centuries English peasants faced large income shocks relative to mean incomes. Innovations in property rights over land induced peasants to respond by trading small parcels of land as part of their risk coping strategy. The same period witnessed a dramatic increase in inequality in the distribution of peasant landholdings. We argue that these events are related. When agents are able to trade their productive assets to manage risk, wealth dynamics become unstable and generate increasing inequality over time. We analyze the effects of these dynamics in the context of medieval English land markets and peasant landholdings.
    Date: 2009–10–01
  21. By: Costa, Jose Carlos; Mata, Maria Eugenia; Justino, David
    Abstract: The oldest Portuguese share index still being calculated is the BVL/PSI-General, one which started the daily series on 5/Jan/1988 with a base value of 1000 points. Everyday a single value is computed based on the closing prices of all the shares included in the sample. Also, all corporate events affecting the price of any share beyond market sentiment are taken into account through proper adjustments, either in the numerator or the denominator of the formula. However, for dates before January 1988, there is nothing comparable to this index since the two different series known either never disclosed the methodology adopted to calculate the index or followed solutions not compatible with the above index. The present paper explains the solutions adopted to replicate as closely as possible the methodology of the BVL-General index to the main market of the Lisbon Exchange for the period 1978 – 1987. This is the first estimate of the historical Equity Risk Premium in Portugal above short-term riskfree rate from the re-opening of the market following the Carnation Revolution (and the accompanying nationalizations), to the present. In showing a value of the same order of magnitude found in other countries, the paper invites further studies on the effects of political decisions such as privatizations and joining the European Union. JEL codes:
    Date: 2009

This nep-his issue is ©2009 by Bernardo Batiz-Lazo. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.