nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2013‒07‒28
nineteen papers chosen by
Bernardo Batiz-Lazo
Bangor University

  1. The High wage Economy and the Industrial Revolution: A Restatement By Robert Allen
  2. Narrow Banking, Real Estate, and Financial Stability in the UK, c.1870-2010 By Avner Offer
  3. Lectures on John Maynard Keynes’ General Theory of Employment, Interest and Money (1): Chapter One, Background and Historical Setting By Brian S. Ferguson
  4. At the Onset of the original capital accumulation By Mauro Rota; Luca Spinesi
  5. Tierra, género y herencia en Pigüé, Argentina (1884-1929) By José Muzlera
  6. Bowling for Fascism: Social Capital and the Rise of the Nazi Party in Weimar Germany, 1919-33 By Shanker Satyanath; Nico Voigtländer; Hans-Joachim Voth
  7. The long Term Effects of the Printing Press in Sub Saharan Africa By Julia Cagé; Valeria Rueda
  8. Coercion, Conflict, and Commodities By Jacobus Cilliers
  9. The Political Economy of Land Privatization in Argentina and Australia, 1810-1850: A Puzzle By Alan Dye; Sumner la Croix
  10. Retail Price Differences across U.S. and Canadian Cities during the Interwar Period By James MacGee; Chris Hajzler
  11. Do We Really Need to Start From Scratch? Economic Theory on Economic Crises. By Michał Gradzewicz; Krzysztof Makarski; Joanna Tyrowicz
  12. Lock-in, path dependence, and the internationalization of QWERTY By Neil Kay
  13. The Economics of Defence in France and the UK By Ron Smith
  14. The accuracy of graphs to describe size distributions By González-Val, Rafael; Ramos, Arturo; Sanz-Gracia, Fernando
  15. The contribution of African women to economic growth and development in post-colonial Africa : historical perspectives and policy implications By Akyeampong, Emmanuel; Fofack, Hippolyte
  16. Living Standards and Plague in London, 1560–1665 By Neil Cummins; Morgan Kelly; Cormac Ó Gráda
  17. A Nonparametric Study of Real Exchange Rate Persistence over a Century By Hyeongwoo Kim; Deockhyun Ryu
  18. Exploring the interrelation between process management and organizational culture: A critical review By Grau, Corinna; Moormann, Jürgen
  19. How to make the economics profession socially useful? (A reaction to George Soros’ lectures and INET’s activities) By Yefimov, Vladimir

  1. By: Robert Allen
    Abstract: This article responds to Professor Jane Humphries' critique of my assessment of the high wage economy of eighteenth century Britain and its importance for explaining the Industrial Revolution.  New Evidence is presented to show that women and children participated in the high wage economy.  It is also shown that the high wage economy provides a good explanation of why the Industrial Revolution happened in the eighteenth century by showing that increases of women's wages around 1700 greatly increased the profitability of using spinning machinery.  The relationship between the high wage economy of the eighteenth century and the inequality and poverty in Britain in the nineteenth century is explored.
    Date: 2013–06–10
  2. By: Avner Offer
    Abstract: Banking in the UK was stable for more than a century after 1866.  Financial institutions were differentiated according to function.  The core banks did not engage in maturity transformation, but in managing a payments system for business.  Real estate was a potential source of instability due to high credit elasticity of demand and to long maturities, but credit was successfully rationed by building societies, who relied on the funds that their savers had actually withdrawn from consumption.  After 1945, credit rationing came under pressure from consumers and housebuyers.  Incremental liberalisations after 1971 released a tide of credit which created a property windfall economy.  Borrowers and lenders both prospered until the system collapsed under its own weight in 2007.
    Date: 2013–06–14
  3. By: Brian S. Ferguson (Department of Economics, University of Guelph)
    Abstract: This paper puts John Maynard Keynes’ "The General Theory of Employment, Interest and Money" into its historical context, both in terms of economic history and in terms of the history of economics. It discusses the post-World War I period as background to the General Theory, looks at the influence of other economists of the period on the evolution of Keynes’ thought and considers the parallels between the post-World War period and the post-Napoleonic War period, when Ricardo and Malthus were debating issues very similar to the ones with which Keynes was wrestling.
    Keywords: Keynes, General Theory, Keynesian Economics, Classical Economics, Great Depression, Macro Modelling, Hawtrey, Pigou,
    JEL: B10 B12 B13 B22 B31 E12 N12 N14
    Date: 2013
  4. By: Mauro Rota; Luca Spinesi
    Abstract: The historical data show that the early modern period in Great Britain paved the way to the classical industrial revolution presenting the rst phase of capital accumulation and rise in per capita income. This paper captures the relevant evidence by means of a stylized model describing two engines determining this economic process: the role of the guilds in the manufacturing industry and proto-industrialization. On the evidence of the historical facts, we show that the process of capital accumulation was driven by a class of capitalists, the entrepreneurs-merchants, who shifted manufacturing production to the countryside in order to escape from the guilds' market power in urban environments. In the countryside entrepreneurs-merchants increased their rate of prot, triggering capital accumulation by exploiting cheaper labour costs and the re-allocation of working time from agricultural to manufacturing activity. Finally, we show that the model corresponds to the pattern of historical data on manufacturing production and capital accumulation from the 14th century to the rise of the classical industrial revolution.
    Keywords: original capital accumulation, guilds, merchants, proto- industry.
    JEL: N13 N63 O10 O14
    Date: 2013–07
  5. By: José Muzlera
    Abstract: This paper is an empirical exercise that describes and analyzes the dynamics of the land in the agricultural colony of Pigüé, Province of Buenos Aires, Argentina, during the late nineteenth and early twentieth century. Rural maps (1884, 1913 and 1929) were used as the main source for this purpose. The transformation of all farms in the lands that formed the colony when it was founded was tracked through each map. The gender of the owner, the stay in the family and the variation in the surface were considered as major variables.
    Keywords: Heritage, Concentration of land, Land Market, French Immigration in Argentina
    JEL: D03 F22 A14
    Date: 2013–07
  6. By: Shanker Satyanath; Nico Voigtländer; Hans-Joachim Voth
    Abstract: Social capital – a dense network of associations facilitating cooperation within a community – typically leads to positive political and economic outcomes, as demonstrated by a large literature following Putnam. A growing literature emphasizes the potentially "dark side" of social capital. This paper examines the role of social capital in the downfall of democracy in interwar Germany by analyzing Nazi party entry rates in a cross-section of towns and cities. Before the Nazi Party’s triumphs at the ballot box, it built an extensive organizational structure, becoming a mass movement with nearly a million members by early 1933. We show that dense networks of civic associations such as bowling clubs, animal breeder associations, or choirs facilitated the rise of the Nazi Party. The effects are large: Towns with one standard deviation higher association density saw at least one-third faster growth in the strength of the Nazi Party. IV results based on 19th century measures of social capital reinforce our conclusions. In addition, all types of associations – veteran associations and non-military clubs, "bridging" and "bonding" associations – positively predict NS party entry. These results suggest that social capital in Weimar Germany aided the rise of the Nazi movement that ultimately destroyed Germany’s first democracy.
    Keywords: social capital, democracy, political economy, Weimar Germany, Nazi Party
    JEL: N44 P16 Z10
    Date: 2013–06
  7. By: Julia Cagé (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales [EHESS] - Ecole des Ponts ParisTech - Ecole normale supérieure de Paris - ENS Paris - Institut national de la recherche agronomique (INRA), Harvard University [Cambridge] - University of Harvard); Valeria Rueda (IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris - Institut d'Études Politiques [IEP] - Paris - PRES Sorbonne Paris Cité - Fondation Nationale des Sciences Politiques [FNSP])
    Abstract: This article examines the long-term consequences of the introduction of the printing press in the 19th century on newspaper readership and other civic attitudes in sub-Saharan Africa. In sub-Saharan Africa, Protestant missionaries were the first both to import the printing press technology and to allow the indigenous population to use it. We build a new geocoded dataset locating Protestant missions in 1903. This dataset includes, for each mission station, the geographic location and its characteristics, as well as the educational and health related investments undertaken by the mission. We show that proximity to a historical missionary settlement endowed with a printing press significantly increases newspaper readership today within regions located close to historical mission settlements. We also find a positive impact on political participation at the community level. Results are robust to a variety of identification strategies that attempt to address the potential endogenous selection of missions into printing and externalities on education and literacy.
    Keywords: Printing press ; Protestant missions ; Historical persistence ; Newspaper readership ; Political participation
    Date: 2013–07
  8. By: Jacobus Cilliers
    Abstract: Why do armed groups sometimes coerce and sometimes not? Civilian suffering due to coercion in conflicts is larger; yet, anecdotal evidence suggests that armed groups often choose not to coerce. To explain the observed variation in coercive practices, I combine a two-sector specific-factos trade model with a model of violence. Armed tgroups operating in the resourc esector and allocate military reosurces between conflict and coercion, which captures more land and labour respectively. The model shows that coercion depends, not only on economic factors, but also the military landscape and the interactin between the two. First, coercion is higher if labour scare or extraction labour-intensive. Second, coercion is high if one group is dominant, relative to the others. Third, the impact of the prcie of the commodity depends on the distribution of military strength: coercion increases with price if one group is dominant, but this effect is reversed if military power is highly decentralised. The first result is consistent with historical accounts of the re-emergence of serfdom in 16th century Russia, and the prevalence of slavery in West Africa. The second result explains why coercion decreased in the Kivu privinces after 2002: the Rwandan Army, by far the most powerful group, evacuated. The third result explains why the rubber boom in late 19th lead to a highly coercive regime in the Congo Free State, but less so in Amazonia. The Congo Free State had a monopoly, but conflict between Spanish and Portuguese colonies escalated during the boom, reducing their coercive power. It further explains why, during the protracted Civil War in Sierra Leone, coercion was common in the rice plantations, but not the diamond mines. The number of battles were higher in the diamond-rich areas, but level of civilian victimisation less. With land the valueable factor of productions, violence was allocated to conflict, not coercion.
    Keywords: conflict, coercion, slavery, natural resources, Sierra Leone civil war, eastern DRC
    JEL: D21 D3 D24 D41 D74 N37 N47 N57 Q34
    Date: 2013
  9. By: Alan Dye (Department of Economics Barnard College); Sumner la Croix (Dept. of Economics University of Hawaii)
    Abstract: This paper examines a puzzle regarding public land privatization in New South Wales and the Province of Buenos Aires in the early nineteenth century. Both claimed frontier lands as public lands to raise revenue. New South Wales lost control of the public claim as squatters rushed out and claimed vast tracts of land. Property rights thus originated as de facto squatters’ claims, which government subsequently partially accommodated as de jure property rights. Paradoxically, in Buenos Aires, where de jure property rights were less secure, original transfers of public lands were nonetheless specified de jure by government. The paper develops a model that explains these differences as a consequence of violence and the relative cost of enforcement of government claims to public land.
    Date: 2013–07
  10. By: James MacGee (UWO); Chris Hajzler (University of Otago)
    Abstract: We construct a unique panel of retail food prices in 69 Canadian and 51 U.S. cities during the Interwar (1920-40) period. Surprisingly, we find that average relative price dispersion across cities within Canada and the U.S., and the role of distance in accounting for cross-city price differences, was very similar to estimates from the 1980s and 1990s. We also find large changes in the importance of the Canada-U.S. border during the Interwar period. While increased price differences between Canadian and U.S. cities coincide with the end of the gold-standard (and the move to floating nominal exchange rates), large relative and absolute price differences persist even after the Canada-U.S. nominal exchange rate returned to parity. The substantial "thickening" of the border in the 1930s appears to reflect dramatic changes in trade policy and the degree of market integration during this period.
    Date: 2012
  11. By: Michał Gradzewicz (National Bank of Poland); Krzysztof Makarski (National Bank of Poland, Warsaw School of Economics); Joanna Tyrowicz (National Bank of Poland, Warsaw School of Economics; Faculty of Economic Sciences, University of Warsaw)
    Abstract: Has the crisis indeed demonstrated that as profession we are misled by the beauty of the mathematical models and the only useful, workable solutions at hand were provided in early 1930s? The objective of this paper is to provide a review of the current state-of-the-art literature from the perspective of its usefulness in the context of economic crises. We argue that although economists might be unable to answer many questions or to “predict” crises, the path the profession is following is approaching the operational ability to provide useful policy guidance in the context of business cycles. Analysing the state of economics after the crisis it is argued that ability to answer these questions relies critically on the development of better models with micro-foundations. Already existing and promising directions for future research are discussed.
    Keywords: financial crisis, economic modelling, micro-foundations
    JEL: B22 B40 D10 E61
    Date: 2013
  12. By: Neil Kay (Department of Economics, University of Strathclyde)
    Abstract: This paper looks at the emergence of what is described here as the QWERTY family of standards (QWERTY and its international adaptations QZERTY, AZERTY, and QWERTZ). QWERTY has been described as an inferior solution and an accident of history. However, the analysis here finds that each member of the family represented highly efficient adaptations to specific user needs and technical challenges encountered in their own environments. These findings may be seen to have wider implications given QWERTY’s role as paradigm case in the literature on increasing returns and path dependence, and these are pursued in the paper.
    Keywords: QWERTY, innovation, invention, path dependence, technological standards
    JEL: O31
    Date: 2013–06
  13. By: Ron Smith (Department of Economics, Mathematics & Statistics, Birkbeck)
    Abstract: France and the UK face similar geostrategic circumstances: both were once Great Powers and still retain their positions among the five permanent members of the UN Security Council. During the Cold War both were dwarfed by the super-powers and were thus extremely sensitive about their status: what the French called their grandeur and the British called their seat at the top table. Despite their strategic similarities, they have differed in many of their defence policy choices and in particular how they balanced their strategic aspirations with their limited financial resources. Thus a comparison of British and French defence policies provides a revealing case study of military choices.
    Date: 2013–07
  14. By: González-Val, Rafael; Ramos, Arturo; Sanz-Gracia, Fernando
    Abstract: This paper analyses the performance of the graphs traditionally used to study size distributions: histograms, Zipf plots (double logarithmic graphs of rank compared to size) and plotted cumulative density functions. A lognormal distribution is fitted to urban data from three countries (the US, Spain and Italy) over all of the 20th century. We explain the advantages and disadvantages associated with these graphic methods and derive some statistical properties.
    Keywords: city size distribution, Zipf plot, lognormal
    JEL: C16 R00
    Date: 2013–07
  15. By: Akyeampong, Emmanuel; Fofack, Hippolyte
    Abstract: This paper draws on history, anthropology, and economics to examine the dynamics and extent of women's contribution to growth and economic development in post-colonial Africa. The paper investigates the paradox of increased female enrollment in education and the persistence of gender discrimination in labor force participation; it also considers the overwhelming importance of the informal economy in female economic activity. The first axis the paper studies is whether reducing educational gender gaps enhances growth in per capita gross domestic product and reduces female fertility rates and infant mortality. The question is, why would some African countries resist this pattern? The second axis examines agriculture and home production. Women's economic activities in the informal economy largely represent the commercialization of domestic skills and dependence on social networks. The shunting of female production to the informal sector in the male-dominated colonial economy is easy to understand, but why has the informal economy persisted where female production is concerned well beyond the colonial period? The paper attempts to explain these trajectories by using country case studies on Senegal, Botswana, and Kenya. Although women's contribution to growth and economic development seems to be positive and significant in predominantly Christian and mineral-rich economies, it is more constrained in pronounced Muslim dominated countries and agrarian economies. At the same time, impressive uniform growth in informal sector production in recent years suggests that occupational job segregation and gender inequality remain strong across the region, despite the apparent loosening of traditional norms and cultural beliefs, most notably illustrated by the reduction in educational gender gaps and increased female labor force participation rates.
    Keywords: Gender and Development,Population Policies,Primary Education,Gender and Law,Achieving Shared Growth
    Date: 2013–07–01
  16. By: Neil Cummins (London School of Economics); Morgan Kelly (University College Dublin); Cormac Ó Gráda (University College Dublin)
    Abstract: We use individual records of 920,000 burials and 630,000 baptisms to reconstruct the spatial and temporal patterns of birth and death in London from 1560 to 1665, a period dominated by recurrent plague. The plagues of 1563, 1603, 1625, and 1665 appear of roughly equal magnitude, with deaths running at five to six times their usual rate, but the impact on wealthier central parishes falls markedly through time. Tracking the weekly spread of plague before 1665 we find a con- sistent pattern of elevated mortality spreading from the same northern suburbs. Looking at the seasonal pattern of mortality, we find that the characteristic autumn spike associated with plague continued into the early 1700s. Given that individual cases of plague and typhus are frequently indistinguishable, claims that plague suddenly vanished af- ter 1665 should be treated with caution. Natural increase improved as smaller plagues disappeared after 1590, but fewer than half of those born survived childhood.
    Keywords: : demography, population economics, health, cities
    Date: 2013–07–24
  17. By: Hyeongwoo Kim; Deockhyun Ryu
    Abstract: This paper estimates the degree of persistence of 16 long-horizon real exchange rates relative to the US dollar. We use nonparametric operational algorithms by El-Gamal and Ryu (2006) for general nonlinear models based on two statistical notions: the short memory in mean (SMM) and the short memory in distribution (SMD). We found substantially shorter maximum half-life (MHL) estimates than the counterpart from linear models, which is robust to the choice of bandwidth with exceptions of Canada and Japan.
    Keywords: Real Exchange Rate; Purchasing Power Parity; Short Memory in Mean; Short-Memory in Distribution; mixing; Max Half-Life; Max Quarter-Life
    JEL: C14 C15 C22 F31 F41
    Date: 2013–07
  18. By: Grau, Corinna; Moormann, Jürgen
    Abstract: Managing the business processes of a company is a task which has emerged as a top priority across all industries. However, business process management (BPM) is not just a set of structured methods and technologies which can simply be assigned to employees. In contrary, the success of any process initiative is interwoven with the culture of the respective company. In addition, in most cases there is not only one organizational culture but often a range of subcultures within an organization due to previous mergers, existing subsidiaries etc. Despite its importance, the interrelation between BPM and organizational culture has been only sparsely explored. This paper analyzes and determines the status quo of academic literature concerning the interrelation between BPM and organizational culture. The results reveal considerable differences in the perception of the interface between both fields. Furthermore, our analysis shows that the organizational psychological perspective has been widely neglected in process management literature. To the best of our knowledge, this is the first literature review written from both a process management and an organizational psychological perspective. As such, it strives to contribute to a comprehensive and thorough understanding of this interrelation. Based on the review we develop a framework, serving as a basis for a deeper understanding of the interdependency and providing avenues for future research. --
    Keywords: Business Process Management (BPM),Organization,Organizational culture,Organizational psychology,Process
    JEL: L20 M10 M14
    Date: 2013
  19. By: Yefimov, Vladimir
    Abstract: The profession of economics does not fulfill its social function to provide people a correct understanding of economic phenomena. In other words, the institution of economics does not work properly. George Soros makes this conclusion in his lectures at the Central European University (Soros, 2010). He sponsored the creation of the Institute for New Economic Thinking (INET) with the objective to change this situation in economics. However activities of the INET are not oriented to change the institution of economics and most of participants in its activities are mainstream economists. This short paper summarizes my ideas in what way it is necessary to change the institution of economics. First, in order to make the profession of economists socially useful, it is necessary to reconsider the methodology and history of economics. At present the former leads the profession in a wrong way and the latter to a great extent justifies this wrong way. Secondly, it is necessary to reform the institution of economics. I define the notion of institution in the following way: an institution is a set of formal and informal rules, and also beliefs, that stand behind these rules, that orient the behaviour of members of a certain community. The rules of the institution of economics relate to the community of university professors and students of economics. These rules provide a framework for developing curricula and syllabi, as well as for the organization of examinations. They define the procedures and directions of economic research, and the criteria for publication of articles in academic economic journals. These rules include formal and informal rules of functioning of professional organizations of economists, such as the American Economic Association. Beliefs that underlie the rules of functioning of the community of academic economists are expressed in different answers to such questions as: What does it mean to undertake economic research? What is the purpose of economic research? What should economists study? How should they carry out the study? In what form should the results of the study be presented? What does it mean to teach economics? What kind of economics should we teach? The answers to these questions, along with formal and informal rules of behaviour based on the answers, together constitute the institutional knowledge of professional economists. Candidates for admission to the profession acquire most of this knowledge during the preparation and defense of PhD dissertations that many do in the framework of post-graduate studies. If someone becomes a member of the profession and does not have this knowledge, or refuses to follow its instructions, then sooner or later she/he will be rejected by the profession. To reform the profession of economists means to reform the institution of economics, i.e. to change their rules and beliefs. I think that the only way for economics to become a socially useful science is the transformation of economics from a kind of applied mathematics (mainstream economics) or social philosophy (heterodox economics) to something similar to social anthropology with its ethnographic method justified in the framework of the constructivist discursive methodology. The methodology that I prone can be expressed very shortly in the following way. The social-economic regularities result from the fact that people behave according to certain socially-constructed rules, and these rules are explained, justified, and kept in mind by telling themselves and others some stories. Taking this statement into consideration, we must agree with the fact that for the identification of social-economic regularities, we must explore and analyse these stories. Modern economics does not study the discourses of economic actors and thereby deprive itself of the ability to understand and predict economic phenomena. The study of discourse is not a deviation from the academic standards which are built into natural sciences, but rather an approximation to it, since almost all social interactions are mediated by language.
    Keywords: institution of economics, radical reform of the economic discipline, manipulative and cognitive functions of economics, new model of scientific research, interpretive paradigm (discursive economics)
    JEL: A11 A13 B4 B41
    Date: 2012–03–12

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