nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2015‒10‒10
eighteen papers chosen by

  1. Seven centuries of European economic growth and decline By Stephen Broadberry; Roger Fouquet
  2. Growth (and Segregation) by Rail: How the Railways Shaped Colonial South Africa By Johan Fourie and Alfonso Herranz-Loncan
  3. The role of international institutions of global governance in steering globalization By C.V.R Wait and T.A Thibane
  4. Leveraged Bubbles By Moritz Schularick; Alan Taylor; Oscar Jorda
  5. The great moderation in historical perspective. Is it that great? By María Dolores Gadea; Ana Gómez-Loscos; Gabriel Perez-Quiros
  6. Occidental Rationalism: Its Early Impact on the Foundations of Modern Science By Abdulkader Cassim Mahomedy
  7. Human Capital Investment in a Late-Developing Economy: Evidence from Württemberg, c. 1600 – c. 1900 By Sheilagh Ogilvie and Markus Küpker
  8. On commercial gluts Unexpected affinities between Jean-Baptiste Say and the Saint-Simonians By Adrien Lutz
  9. The age distribution of Italy’s labor force in 1911 and its implications for the economy’s past: new evidence on the long swing in investment from unification to the Great War. By Pezzuto, Roberto
  10. Jean-Baptiste Say et la révolution industrielle… ou les certitudes d'un entrepreneur du secteur textile By Michel Vigezzi
  11. Media, markets and institutional change: evidence from the Protestant Reformation By Jeremiah Dittmar; Skipper Seabold
  12. Estimations of very long-term time series of global energy return-on-investment (EROI) of coal, oil and gas By Victor Court; Florian Fizaine
  13. Cereals, Appropriability and Hierarchy By Joram Mayshar; Omer Moav; Zvika Neeman; Luigi Pascal
  14. The cash is in the medium, not in the machine: Toward the golden moments of 3D printing By Steffen Roth
  15. Past, present and ¿future? Of the institutional theory in organizational analysis: a literature review By Viviana A Gutierrez Rincon; Jairo A Salas Paramo
  16. The evolution of wealth inequality over half a century: the role of skills, taxes and institutions By Markus Poschke; Baris Kaymak
  17. "Cult of equity": actuaries and the transformation of pension fund investing, 1948–1960 By Yally Avrahampour
  18. Ecumenical foundations? On the coexistence of Austrian and neoclassical views on utility By Senderski, Marcin

  1. By: Stephen Broadberry; Roger Fouquet
    Abstract: This paper investigates very long run pre-industrial economic development. New annual GDP per capita data for six European countries over the last seven hundred years paint a clearer picture of the history of European economic development. First, the paper confirms that sustained growth has been a recent phenomenon, but rejects the argument that there was no long run growth in living standards before the Industrial Revolution. Instead, the evidence demonstrates the existence of numerous periods of economic growth before the nineteenth century – unsustained, but raising GDP per capita. It also shows that many of these economies experienced substantial economic decline. Thus, rather than being stagnant, pre-nineteenth century European economies experienced a great deal of change. Finally, it offers some evidence that, from the nineteenth century, these economies increased the likelihood of being in a phase of economic growth and reduced the risk of being in a phase of economic decline.
    Date: 2015–09
  2. By: Johan Fourie and Alfonso Herranz-Loncan
    Abstract: The railway played a large part in late nineteenth century and early twentieth century globalization since, to benefit from the international economy, peripheral countries needed cheap inland transport. This paper discusses how the railway transformed the economy of South Africa’s Cape Colony during the first era of globalization. A very large share of the Colony’s GDP came from rail transport – its resource saving effect was one of the highest in the world at that time. We estimate that 46 to 51% of the Colony’s increase in labor productivity between 1873 and 1905 came directly from the railway, whether from investment in the rail network or from savings in transport costs. We argue that it was the boom in diamond production, necessitating the building of the railway to connect the Kimberley diamond fields with the international economy, that weighted the Colony’s economy so heavily towards the rail transport sector. The railway not only boosted the Colony’s growth, it also re-shaped its economic geography, organizing it around the railway lines that connected the diamond mines with the ports. Areas not served by the railway missed out on the benefits of globalization. As these areas were mostly populated by blacks, the railway helped to create a dual economy with a racial social divide and was later instrumental in creating black ‘homelands’ and establishing the apartheid institutions.
    Keywords: railways, Cape Colony, South Africa, social savings, economic geography, segregation
    JEL: N4 H4 O1
    Date: 2015
  3. By: C.V.R Wait and T.A Thibane
    Abstract: Globalization is a historical process, as it traces back to the 14th century during the origins of civilization. The post-World War II rise of globalization coincided with the post-war roles of these institutions, by forcing them to reform their roles in order to make them relevant to the changing global economic environment. These institutions had a variety of strengths and weaknesses in steering globalization from the period 1945-2006 and our study has revealed that their strengths have outweighed their weaknesses, and they have also fairly steered the process of globalization.
    Keywords: Globalization, International trade, FDI, labour, migration, Technology, IMF, World Bank, IBRD, WTO, GATT
    JEL: F53
    Date: 2015
  4. By: Moritz Schularick (University of Bonn); Alan Taylor (Department of Economics & Graduate Schoo); Oscar Jorda (U.C. Davis)
    Abstract: What risks do asset price bubbles pose for the economy? This paper studies bubbles in housing and equity markets in 17 countries over the past 140 years. History shows that not all bubbles are alike. Some have enormous costs for the economy, while others blow over. We demonstrate that what makes some bubbles more dangerous than others is credit. When fueled by credit booms asset price bubbles increase financial crisis risks; upon collapse they tend to be followed by deeper recessions and slower recoveries. Credit-financed house price bubbles have emerged as a particularly dangerous phenomenon.
    Date: 2015
  5. By: María Dolores Gadea (University of Zaragoza); Ana Gómez-Loscos (Banco de España); Gabriel Perez-Quiros (Banco de España)
    Abstract: The Great Moderation (GM) is widely documented in the literature as one of the most important changes in the US business cycle. All the papers that analyze it use post-WWII data. In this paper, we set the GM for the first time against a long-dated historical backdrop, stretching back a century and a half, which includes secular changes in the economic structure and a substantial reduction of output volatility. We find two robust structural breaks in volatility at the end of WWII and in the mid-eighties, showing that the GM still holds in the longer perspective. Furthermore, we show that GM volatility reduction is only linked to expansion features. We also date the US business cycle in the long run, finding that volatility plays a primary role in the definition of the business cycle, which has important consequences for econometricians and forecasters.
    Keywords: business cycle, volatility, structural breaks, secular changes
    JEL: C22 E32
    Date: 2015–10
  6. By: Abdulkader Cassim Mahomedy
    Abstract: Rationalist thought has had a deep and lasting impact on modern civilisation. This influence has pervaded almost all facets of the socio-politico-economic and scientific domains of contemporary human experience. Religiously-oriented societies have, however, throughout their encounter with rationalism, generally struggled to reconcile some of their doctrines and practices with the principles espoused by rationalist philosophy. This strained relationship has always been particularly acute in the area of epistemology. The impasse in the development and growth of the emerging discipline of Islamic Economics clearly reflects this tension. In this paper (the first of a two-part series), I first describe some of the epistemological challenges in Islamic economics and then explain the need for its proponents to critically engage with these issues. I trace the roots of this problematique to the indelible influence of ancient Hellenist philosophy, which initially penetrated Christendom selectively, and later on, more substantively through the encounter of the Christian West with the Islamic World. It was during this second phase that European Christian scholarship had become fully exposed to the works of the Arab-Muslim philosopher-cum-scientists of the time, the likes of Avicenna and Averroes. Although of Greek origin, the predominantly rationalist nature of their writings and commentaries, in both philosophy and science, had planted the seeds of the rationalist/scientistic worldview that was to emerge only much later in Europe. After explaining how this occurred, I show how it created an insuperable tension between religious orthodoxy and the fledgling new philosophical outlook of the day, leading ultimately to a schism in the unicity of human intellection. The ensuing dualism has subsequently had a most profound impact on all aspects of human thought and praxis in the modern age, with grave implications for both humankind and its environment. How this latter aspect evolved will be fully examined and explained in a second part of this study which will be published in a subsequent issue of this series.
    Keywords: Occidental Rationalism: Its Early Impact on the Foundations of Modern Science
    Date: 2015
  7. By: Sheilagh Ogilvie and Markus Küpker
    Abstract: Modern growth models view human capital, particularly education, as central to economic growth. But historical evidence has proved elusive. This paper investigates human capital levels in Württemberg, a late-developing German economy, between 1610 and 1899. Württemberg achieved higher and more universal literacy than any other European economy before 1800. A multivariate analysis reveals that this exceptional level of human capital in Württemberg was largely decoupled from economic variables from a very early date. Literacy declined significantly with individuals’ age, suggesting that education was irrelevant to economic life. The Württemberg human capital miracle was unrelated to economic growth or human development indicators, casting doubt on theories that ascribe education a central role in economic growth. economic history; human
    Keywords: capital; education; growth; Germany
    JEL: N33 E24 J24 O15
    Date: 2015–09–29
  8. By: Adrien Lutz (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France, Université Jean Monnet, Saint-Etienne, F-42000, France)
    Abstract: A standard reading in the history of economic thought considers Saint-Simonianism to be embodied in the works of a set of European social thinkers including Robert Owen, William Godwin and Sismondi, all of whom are seen as standing in strict opposition to the doctrine of laissez-faire. This article, however, argues that, during the first quarter of the 19th century, the Saint-Simonians and the liberal economist Jean-Baptiste Say can be seen to adopt convergent views on commercial gluts. First, it shows how the Saint-Simonians and Say both see undersupply and lack of industry as causes of gluts. Next, we assert that their intellectual affinities are also visible in their belief that increasing production remains an appropriate solution for gluts. Finally, this convergence is explained by their common heritage : Saint-Simonianism is embedded in a neo-Smithian tradition for which Say can be taken as representative. We argue that this legacy explains their convergence.
    Keywords: Saint-Simonianism, Jean-Baptiste Say, Adam Smith, Laissez-faire, Commercial gluts
    JEL: B10 E5 N00
    Date: 2015
  9. By: Pezzuto, Roberto
    Abstract: The data on the age distribution of the labor force in the 1911 demographic census have been very largely neglected. This paper provides an initial examination of those data, which shed light on various aspects of the economy of the day -- and on its preceding path. In particular, these data reflect the long cycle in construction, and in the production of construction materials. They further suggest that the long cycle of the engineering industry documented by its aggregate metal consumption was indeed present in the production of construction-related hardware, but notably absent from the production of machinery and, derivatively, industrial investment. This last point denies the empirical premise of the extant interpretations of Italy’s post-Unification industrial growth; but it sits well with the new disaggregated time-series estimates of the engineering industry’s product.
    Keywords: Italy; economic history; cycle; demography; migration
    JEL: N1 N3 N6
    Date: 2015–10
  10. By: Michel Vigezzi (CREG - Centre de recherche en économie de Grenoble - Grenoble 2 UPMF - Université Pierre Mendès France)
    Abstract: From three texts by Jean-Baptiste Say (Olbie ... 1800, Full Course…1819 and a Letter to Malthus in 1820 processing machinery) and a historical approach to technical changes of this period, we will make three observations : 1. Say-entrepreneur is at the heart of the industrial revolution but can not have an overall vision... ; 2. His multiform social status can't develop this overall vision and leads to an descriptive vision favoring the recensions... ; 3. Despite this absence, Say was one of the first economists to focus on the technical changes despite a conflict between his approach in terms of production and his conclusions focused on the creation of utilities and income distribution and expenses. In conclusion, we shall identify a second "Law of Say": the increasing difficulty of financing innovations and of their developments lead to the cancellation of their disadvantages.
    Abstract: À partir de trois textes de Jean-Baptiste Say (Olbie… de 1800, Cours complet… de 1819 et une Lettre à Malthus en 1820 traitant des machines) et d'une approche historique des changements techniques de cette période, nous formulerons trois constats : 1. Say-entrepreneur est au coeur de la révolution industrielle mais ne peut en avoir une vision d'ensemble… ; 2. Son statut social multiforme l'empêche de développer cette vision d'ensemble et le conduit à une vision descriptive privilégiant les recensions… ; 3. Malgré cette absence, Say a été l'un des premiers économistes à s'intéresser aux changements techniques même si une contradiction apparaît entre son approche en terme de production et ses conclusions centrées sur la création d'utilités et sur la répartition des revenus et des charges. En conclusion, on identifiera ainsi une seconde "Loi de Say" : les difficultés croissantes du financement des innovations et leur développement conduisent à l'annulation de leurs inconvénients.
    Keywords: changement technique , économiste , entrepreneur , industrie , industrie textile , innovation , pensée économique , révolution industrielle
    Date: 2014–08–27
  11. By: Jeremiah Dittmar; Skipper Seabold
    Abstract: This research studies the role of competition in the diffusion of radical ideas and institutional change during the Protestant Reformation. We construct a new measure of religious content in the media using data on all known books and pamphlets printed in German-speaking Europe 1454-1600. We find that Protestant content was produced in greater quantity in local media markets with more competing firms when Martin Luther circulated his initial arguments for reform in 1517. We find that competition mattered differentially more for the diffusion of Protestant ideas and for institutional change where city governments had the least legal autonomy from feudal lords. We document the relationship between competition and diffusion directly and using the deaths of printers to isolate plausibly exogenous variation in competition. We show that cities where initial competition was greater, and which were more exposed to Protestant ideas, were more likely to adopt the legal institutions of the Reformation.
    Keywords: Competition; firms; media; technology; institutions; religion; politics; high-dimensional data
    JEL: D02 L82 N33 N94 O3 P48 Z12
    Date: 2015–08
  12. By: Victor Court; Florian Fizaine
    Abstract: So far the Energy-Return-On-Investment (EROI) of fossil fuels has been estimated for recent decades only and generally in specific country contexts. In the present paper we propose a methodology to assess the global EROI of coal, oil and gas from the beginning of their reported production (respectively 1800, 1860 and 1890) to 2011. In order to do that we first estimate on the same time periods the global time series of the energy prices of these different fossil fuels, the monetary return on investment of the energy sector, and the total energy intensity of the economy. These preliminary results allow us to estimate the historical global EROI of coal, oil and gas productions, and the historical EROI of the global primary fossil energy sector. We find that the maximum EROI of global oil and gas productions have respectively reached the values of 73:1 in 1931 and 200:1 in 1945, which is in line with previous studies that had hypothesized such results (without possible verification). We also find a good concordance between our results and the estimations of the global EROI of oil and gas performed by Gagnon et al. (2009) on the 1992-2006 time period. Furthermore, we suggest that the EROI of global coal production has not yet reached its maximum value (which is however very close) and that marginal gains are still to be expected in this sector thanks to coming technological improvement. In this article we also present a new theoretical dynamic expression of the EROI of a given energy resource as a function of its cumulated production based on the original work of Dale et al. (2011). We are able to calibrate with a rather good fit such a theoretical model on each of our historical estimates of coal, oil and gas global EROI. We then use this theoretical model in a prospective exercise and estimate that a maximum EROI value of 106:1 will be attained for global coal in 2022.
    Keywords: EROI, Fossil energy prices, Theoretical EROI function.
    JEL: N7 Q3 Q4 Q57
    Date: 2015
  13. By: Joram Mayshar; Omer Moav; Zvika Neeman; Luigi Pascal
    Abstract: We propose that the development of social hierarchy following the Neolithic Revolution was an outcome of the ability of the emergent elite to appropriate cereal crops from farmers and not a result of land productivity, as argued by conventional theory. We argue that cereals are easier to appropriate than roots and tubers, and that regional di¤erences in the suitability of land for di¤erent crops explain therefore di¤erences in the formation of hierarchy and states. A simple model illustrates our main theoretical argument. Our empirical investigation shows that land suitability for cereals relative to suitability for tubers explains the formation of hierarchical institutions and states, whereas land productivity does not.
    Keywords: geography, hierarchy, institutions, state capacity
    JEL: D02 D82 H10 O43
    Date: 2015–09
  14. By: Steffen Roth (ESC Rennes School of Business - ESC Rennes School of Business)
    Abstract: "Abstract: Since 3D printing technology has been available as early as in the early 19th century, the present article start from the question why this radical and probably disruptive technology has been observed as only incremental innovation for so long time. In answering this question, we assume that this incrementalization of the supposed key to the next industrial revolution occurred due to circumstances that complicated and complexed the observation, with the most important of which being that 3D printers do not print on the medium, but rather print the medium, which emerges as form. In this article, this paradox is unfolded in the form of a form-theoretical theory statement on the inherently paradox nature of observation, subsequent to which 3D printing can be observed as both form and medium. In exploring this paradox, we will show that suppliers of 3D printing solutions currently try to sell 3D printing as form, whereas demanders observe 3D printing as medium. In focussing the latter side of the distinction, we finally suggest that the key to successful 3D printing business models will be in solutions that relate observations of the technological multifunctionality of 3D printing to a social multifunctionality lens. [...]" Steffen Roth
    Keywords: 3D printing,Golden moment,Customer Relationship Management,Marketing Strategy
    Date: 2015
  15. By: Viviana A Gutierrez Rincon; Jairo A Salas Paramo (Faculty of Economics and Management, Pontificia Universidad Javeriana Cali)
    Abstract: This paper is a review of the Institutional Theory, starting from a comparison and contrast of the work of its principal authors, with the purpose to show the evolution of institutional perspectives used in organizational analysis. To this end, was performed a review of the most representative papers of Institutional Theory or "Old" institutionalism, the "New" or Neoinstitutionalism and a systematization of the citations to these articles. In addition to identifying the approaches of the new institutional perspectives (change, work, entrepreneurship and institutional logics) and their representative authors.
    Keywords: institutional theory, institutional change, institutional work, institutional entrepreneurship, institutional logics
    JEL: M10
    Date: 2015–09
  16. By: Markus Poschke (McGill University, Montreal); Baris Kaymak (Universite de Montreal)
    Abstract: Over the last 50 years, the US economy saw significant changes in its fiscal structure. Notable among these are the introduction and expansion of social security programs and Medicare, and the transformation of the tax system. These institutional changes took place against a backdrop of developments in the technology of production that increasingly favored skilled workers.In this paper, we analyze how the interplay between these institutional and technological factors might have shaped the distributions of income, wealth, consumption and welfare. We find that while changes in income inequality are mostly attributable to technological factors, the increase in wealth inequality has further been compounded by the expansion of social security and Medicare, which have reduced saving incentives for retirement, in particular for low and middle income groups. As a result, they have substantially increased wealth concentration in US. Results suggest that approximately 25% of the rise in the share of wealth held by the wealthiest 1% is explained by larger transfers to senior population.
    Date: 2015
  17. By: Yally Avrahampour
    Abstract: This article examines the mid-twentieth-century transformation of U.K. pension fund investment policy known as the “cult of equity.” It focuses on the influence exercised by the Association of Superannuation and Pension Funds over actuarial and corporate governance standards, through actuaries who were members of its council. This intervention led to increasingly permissive actuarial valuations that reduced contributions for sponsors of pension funds investing in equities. Increased demand for equities required pension funds to adopt a more permissive approach to corporate governance than insurance companies and investment trusts, and contributed to declining standards of corporate governance.
    JEL: E6
    Date: 2015
  18. By: Senderski, Marcin
    Abstract: Utility has long been a debatable concept, with many competing interpretations. The Austrian school and the neoclassical school, however broad these categories may seem, have made the most substantial and, by the same token, the most contrasting contributions to the theory of value. The paper’s goal is not to adjudicate past arguments or observe the evolution of the theory, but rather to resolve contemporary misunderstandings. The references are made to such trouble spots as subjectivism vs. objectivism, cardinality vs. ordinality, and mathematical formalism vs. verbal formalism. Both schools entrenched themselves in their views long ago. Nevertheless, this paper shows that discussing utility on common ground and on the basis of shared presumptions is not necessarily the melody of the future. The paper is concluded with recommendations on how the current dissent may be attenuated.
    Keywords: Austria; Austrian school; economic thought; heterodox economics; neoclassical school; utility
    JEL: B41 B53
    Date: 2014

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