Bourgeois II: place in the world

Quite recently, I was reading musicologist Martha Feldman’s book The Castrato: Reflections on Natures and Kinds, which is, unsurprisingly, a study on the castrato and the music written for the voice type during the 17thand 18thcenturies. The concept is exactly what it sounds like – a male singer whose physical development was surgically ended in order to preserve his access to the high soprano range. The surgery in theory created an ideal singer because his head and ribs continued to grow to normal male size, creating someone with tremendous lung capacity and also large head space which created greater resonance. 

For anyone who might be wondering, no, castrati did not sing female roles; the type was still male in identity and was often associated with nobility or demi-gods in character casting. Incidentally, the practice of castrati eventually led to the operatic custom, beginning in the late 18thcentury, of mid-range female singers (mezzo-sopranos) singing the roles of young males because as religious and civil laws cracked down on the creation of castrati, this particular type of singer gradually disappeared, even as the music written for them increased in popularity. By the time Mozart wrote Le Nozze di Figaro(1785 – 86) and La Clemenza di Tito(1789), the roles of the junior males, Cherubino and Annio respectively, were written for women singers from the outset. 

The aspect that was, for me, quite interesting about the castrati was the level to which a concept which musicians more or less take for granted stemmed from larger social, legal, and cultural changes in Europe in the late 1500s. Explaining the castrato’s history in Italy, where the practice originated, Feldman mentioned philosopher and sociologist Jürgen Habermas and his work, particularly on the “weakening of industrialization and the refeudalization of Europe” following the Renaissance. More directly related to the trend of castrati, Feldman wrote:

Most of the time first sons were excluded (from castration in order to make a castrato) because primogeniture was the rule in Italy, hence first sons were heirs, breeders, and eventual legatees, though very poor or very ambitious families sometimes did have first sons castrated, including the family of Handel’s principal castrato Senesino (Francesco Bernardi), whose older brother was a castrato, and first son Gaetano Berenstadt (1687 – 1734), of Tyrolean descent, who ended up caring extensively for his family’s needs (Feldman, 13).

And further explained,

If some form of patriarchy had long been the rule, patriliny by contrast took root in a historically precise way only around 1570, as we have glimpsed above [a preceding paragraph on the combination of increased lifespan and the introduction of estate entail in Italy]. Prior to that time the ideal had been to marry off all or most sons to increase a family’s power not just vertically but horizontally, within a wider network of kin, with the goal of fortifying the clan as a whole. With the marrying off of first sons only, a situation arose in which younger sons were typically consigned to military or ecclesiastical careers and thus formally speaking to legal or effective celibacy at the same time as most upper-class daughters entered convents. Both strategies intensified with the severe economic crisis of the seventeenth-century, but the practice continued afterward, albeit with increasing tendencies toward diversification (45).

Before 1570, the law of entail was not prevalent in continental Europe, which also tended to include females in the line of succession – Salic law applied only to the throne in the case of France, so noble women could and did inherit their parents’ property. Since one of the central points of the Counter-Reformation was ending the abuse of Catholic religious facilities, either as retirement homes for dowagers or as cold-storage for spare heirs once their elder brother fulfilled his duty, convents, monasteries, and the priesthood quickly became unviable career options, at least for the aristocracy. 

This little tweak to Canon Law had two effects: 1) the Catholic clergy gradually ceased being a profession as such, which resulted in an increased number of non-elites joining voluntarily and rising to high places, and 2) the performing arts, particularly music, exploded as the young men enrolled in ecclesiastical preparatory schools and originally destined for careers in the Church had to find new avenues for their skills. On a side note, the struggle to enforce the new regulation took centuries, was closely related to the battle for separation of church and state, and it is a story for another time.

The point to this tale is the response of the younger sons to their change in fortunes and status. Being in cathedral schools, and even more impractically in music-specialist cathedral schools, at first glance there was not much use for what these young men could do in the secular world. They were fluent in Latin, usually had a good command of Greek, frequently had a solid understanding of modern European languages and literature in general, and they were competent musicians. In a world that not only was still largely agrarian but was also “refeudalizing” into a system where they were, on the one hand, very much locked into the expectations of their caste – an impoverished younger son was still an aristocrat – while simultaneously being locked out of any claim to family property, the position of these men appeared hopeless. 

Instead of giving in to the circumstances, though, these men went out and turned their skills into an industry – classical music as we know it. They taught it, wrote it, and developed it into a dominant art form. Some found multivariant use for their “irrelevant” skills. For example, the castrato Carlo Broschi (1705 – 1782) didn’t use his real name out of respect to his aristocratic family, performing under the name Farinelli. However, his birth and skill with languages also caused him to be appointed a diplomat-at-large and it was not uncommon for him to be in cities, such as London or Madrid, for opera engagements and be suddenly called upon to go to the royal court and help sort out a diplomatic issue. When he died at the unusually old age of 77 (a perfect example of Jonah Goldberg’s point about Second Sons as both victims and beneficiaries of the upper-classes having better medicine), he left behind a fortune, which in a delightful ironic twist bailed out his elder brother’s family.[1]What is remarkable is not that he did this, but that he was only slightly unusual in terms of his financial success. 

In her book The Bourgeois Dignity, Deirdre McCloskey argued, rather controversially, that all movement, no matter how organic, comes top down in terms of the social pecking order. In the case of capitalism, the movement occurred, in part, because the group whom Goldberg termed “Second Sons” and McCloskey “bourgeois” had a particular knack for both recognizing and creating markets, even in very negative situations. The resilience evinced in the story of the castrati and their role in the history of music is a type of proof that McCloskey’s thesis is correct. 

[1]In fairness to the elder Broschi, he was a well-regarded musician in his own right and had a strong career up until he inherited the estate and, following convention, retired to it to become a penniless landed gentleman, rather than a wealthy performer, like his younger brother. The suspicion is that Farinelli covered most of his brother’s family’s living expenses; it is known that he paid for the education of his nephews and niece. 

Middle-class: questioning the definitions

  Vestis virum (non) redit

                                                                                    ~ Latin proverb

As Brexit drags on, there is a reassessment occurring of Margret Thatcher and her legacy. After all, in addition to being a stalwart defender of free markets, free enterprise, and free societies, she helped design the EEC, the precursor to the EU. So in the process of leaving the EU, there is a lingering question regarding whether the referendum is a rejection of Thatcher’s legacy. Those who equate the referendum with a repudiation of Thatcher offer explanations along the lines of: “Thatcher destroyed the miners’ way of life [NB: this is a retort spat out in a debate on the freedom-vs.-welfare split in the Leave faction; it has been edited for grammar and clarity.].” Sooner or later, Thatcher-themed discussions wend their way to the discontents of capitalism, especially the laissez-faire variety, in society, and the complaints are then projected onto issues of immigration, sovereignty, or globalism. 

On the other side of the Atlantic, Tucker Carlson’s January 2 polemical monologue contained similar sentiments and provoked a response that proved that the same issues have divided America as well. Much of Carlson’s complaints were predicated on the concept of “way of life,” and here lies a dissonance which has meant that swaths of society talk without understanding: merely possessing a way of life is not equal to having values. In all the discussion of the “hollowing out of the middle-class,” one question is never raised: What is the middle-class?

It is only natural that no one wants to ask this question; modern society doesn’t want to discuss class in a real sense, preferring to rely on the trite and historically abnormal metric of income. To even bring up the C- word outside of the comfortable confines of money is to push an unspoken boundary. Although there is an exception: if one is speaking of high-income, or high-net-worth individuals, it is completely acceptable to question an auto-definition of “middle-class.” Everyone can agree that a millionaire describing himself as middle-class is risible. 

It is the income dependent definition that is the source of confusion. The reality is that modernity has conflated having middle income with being middle-class. The two are not one and the same, and the rhetoric surrounding claims of “hollowing out” is truly more linked to the discovery that one does not equal the other. 

In his The Suicide of the West, Jonah Goldberg wrote on the subject of the back history of the Founding Fathers:

[….] British primogeniture laws required that the firstborn son of an aristocratic family get everything: the titles, the lands, etc. But what about the other kids? They were required to make their way in the world. To be sure, they had advantages – educational, financial, and social – over the children of the lower classes, but they still needed to pursue a career. “The grander families of Virginia – including the Washingtons – were known as the ‘Second Sons,’” writes Daniel Hannan [Inventing Freedom: How the English-Speaking Peoples Made the Modern World (HarperCollins, 2013)]. [….]

In fact, Hannan and Matt Ridley [The Rational Optimist: How Prosperity Evolves (Harper, 2010] suggest that much of the prosperity and expansion of the British Empire in the eighteenth century can be ascribed to an intriguing historical accident. At the dawn of the Industrial Revolution, the children of the affluent nobility had a much lower mortality rate, for all the obvious reasons. They had more access to medicine, rudimentary as it was, but also better nutrition and vastly superior living and working conditions than the general population. As a result, the nobility were dramatically more fecund than the lower classes. Consequently, a large cohort of educated and ambitious young men who were not firstborn were set free to make their way in the world. If you have five boys, only one gets to be the duke. The rest must become officers, priests, doctors, lawyers, academics, and business men.

Goldberg concisely summarized the phenomenon which Deirdre McCloskey argues created the original middle-class. But more importantly, Goldberg’s history lesson emphasizes that the origins of America, from an idea to a reality, have a deep socio-cultural angle, one that is tied to status, property rights, and familial inheritance, that is often lost in the mythology.

As Goldberg explained, the complex, painful history of disenfranchisement due to birth order was the real reason the Founding Fathers both opposed the law of entail while simultaneously focusing almost myopically on private property rights in relation to land. As Hernando de Soto studied in his The Mystery of Capital, George Washington, who held land grant patents for vast, un-surveyed tracts in Ohio and Kentucky, was horrified to discover that early settlers had established homesteads in these regions, before lawful patent holders could stake their claims. Washington found this a violation of both the rule of law and the property rights of the patent holders and was open to using military force to evict the “squatters,” even though to do so would have been against English common law which gave the property to the person who cleared the land (Washington was no longer president at that point, so there was no risk that the aggressive attitude he expressed in his letters would lead to real action.).   

Before repudiating Washington for his decidedly anti-liberty attitude on this score, we should turn to Deirdre McCloskey and her trilogy – The Bourgeois Virtues: Ethics for an Age of CommerceBourgeois Dignity: Why Economics Can’t Explain the Modern World, and Bourgeois Equality: How Ideas, Not Capital or Institutions Enriched the World – for an understanding on why this might be important, and why conflating way of life with social standing and identity is both fallacious and dangerous. 

Part II coming soon!

On the popularity of economic history

I recently engaged in a discussion (a twittercussion) with Leah Boustan of Princeton over the “popularity” of economic history within economics (depicted below).  As one can see from the purple section, it is as popular as those hard candies that grandparents give out on Halloween (to be fair, I like those candies just like I do economic history). More importantly, the share seems to be smaller than at the peak of 1980s. It also seems like the Nobel prize going to Fogel and North had literally no effects on the subfield’s popularity. Yet, I keep hearing that “economic history is back”. After all, the Bates Clark medal went to Donaldson of Stanford this year which should confirm that economic history is a big deal.  How can this be reconciled with the figure depicted below?


As I explained in my twittercussion with Leah, I think that there is a popularity for using historical data. Economists have realized that if some time is spent in archives to collect historical data, great datasets can be assembled. However, they do not necessarily consider themselves “economic historians” and as such they do not use the JEL code associated with history.  This is an improvement over a field where Arthur Burns (former Fed Chair) supposedly said during the 1970s that we needed to look at history to better shape monetary policy. And by history, he meant the 1950s. However, while there are advantages, there is an important danger which is left aside.

The creation of a good dataset has several advantages. The main one is that it increases time coverage. By increasing the time coverage, you can “tackle” the big questions and go for the “big answers” through the generation of stylized facts. Another advantage (and this is the one that summarizes my whole approach) is that historical episodes can provide neat testing grounds that give us a window to important economic issues. My favorite example of that is the work of Petra Moser at NYU-Stern. Without going into too much details (because her work was my big discovery of 2017), she used a few historical examples which she painstakingly detailed in order to analyze the effect of copyright laws. Her results have important ramifications to debates regarding “science as a public good” and “science as a contribution good” (see the debates between Paul David and Terence Kealey on this in Research Policy for this point).

But these two advantages must be weighted against an important disadvantage which Robert Margo has warned against in a recent piece in Cliometrica.  When one studies economic history, one must keep in mind that two things must be accomplished simultaneously: to explain history through theory and bring theory to life through history (this is not my phrase, but rather that of Douglass North). To do so, one must study a painstaking amount of details to ascertain the quality of the sources used and their reliability.  In considering so many details, one can easily get lost or even fall prey to his own prior (i.e. I expect to see one thing and upon seeing it I ask no question). To avoid this trap, there must be a “northern star” to act as a guide. That star, as I explained in an earlier piece, is a strong and general understanding of theory (or a strong intuition for economics). To create that star and give attention to details is an incredibly hard task and which is why I argued in the past that “great” economic historians (Douglass North, Deirdre McCloskey, Robert Fogel, Nathan Rosenberg, Joel Mokyr, Ronald Coase (because of the lighthouse piece), Stephen Broadberry, Gregory Clark etc.) take a longer time to mature. In other words, good economic historians are projects that have have a long “time to build problem” (sorry, bad economics joke).  However, the downside is that when this is not the case, there are risks of ending up with invalid results that are costly and hard to contest.

Just think about the debate between Daron Acemoglu and David Albouy on the colonial origins of development. It took more than five years to Albouy to get his results that threw doubts on Acemoglu’s 1999 paper. Albouy clearly expended valuable resources to get the “details” behind the variables. There was miscoding of Niger and Nigeria, and misunderstandings of what type of mortalities were used.  This was hard work and it was probably only deemed a valuable undertaking because Acemoglu’s paper was such a big deal (i.e. the net gains were pretty big if they paid off). Yet, to this day, many people are entirely unaware of the Albouy rebuttal.  This can be very well seen in the image below regarding the number of cites of the Acemoglu-Johnson-Robinson paper on an annual basis. There seems to be no effect from the massive rebuttal (disclaimer: Albouy convinced me that he was right) from the Albouy piece.


And it really does come down to small details like those underlined by Albouy. Let me give you another example taken from my work. Within Canada, the French minority is significantly poorer than the rest of Canada. From my cliometric work, we now know that there were poorer than the rest of Canada and North America as far as the colonial era. This is a stylized fact underlying a crucial question today (i.e. Why are French-Canadians relatively poor).  That stylized fact requires an explanation. Obviously, institutions are a great place to look. One of the institution that is most interesting is seigneurial tenure which was basically a “lite” version of feudalism in North America that was present only in the French settled colonies. Some historians and economic historians argued that there were no effects of the institutions on variables like farm efficiency.  However, some historians noticed that in censuses the French reported different units that the English settlers within the colony of Quebec. To correct for this metrological problem, historians made county-level corrections. With those corrections, the aforementioned has no statistically significant effect on yields or output per farm. However, as I note in this piece that got a revise and resubmit from Social Science Quarterly (revised version not yet online), county-level corrections mask the fact that the French were more willing to move to predominantly English areas than the English were willing to predominantly French areas. In short, there was a skewed distribution. However, once you correct the data on an ethnic composition basis rather than on the county-level (i.e. the same correction for the whole county), you end with a statistically significant negative effect on both output per farm and yields per acre. In short, we were “measuring away” the effect of institutions. All from a very small detail about distributions. Yet, that small detail has supported a stylized fact that the institution did not matter.

This is the risk that Margo speaks about illustrated in two examples. Economists who use history merely as a tool may end up making dramatic mistakes that will lead to incorrect conclusions. I take this “juicy” quote from Margo (which Pseudoerasmus) highlighted for me:

[EH] could become subsumed entirely into other fields… the demand for specialists in economic history might dry up, to the point where obscure but critical knowledge becomes difficult to access or is even lost. In this case, it becomes harder to ‘get the history right’

Indeed, unfortunately.

Worth a gander

  1. Zero hour for Generation X
  2. Confederate flags and Nazi swastikas together? That’s new.
  3. America at the end of all hypotheticals
  4. What’s left of libertarianism?
  5. Factual free market fairness
  6. Thinking about costs and benefits of immigration

On doing economic history

I admit to being a happy man. While I am in general a smiling sort of fellow, I was delightfully giggling with joy upon hearing that another economic historian (and a fellow  Canadian from the LSE to boot), Dave Donaldson, won the John Bates Clark medal. I dare say that it was about time. Nonetheless I think it is time to talk to economists about how to do economic history (and why more should do it). Basically, I argue that the necessities of the trade require a longer period of maturation and a considerable amount of hard work. Yet, once the economic historian arrives at maturity, he produces long-lasting research which (in the words of Douglass North) uses history to bring theory to life.

Economic History is the Application of all Fields of Economics

Economics is a deductive science through which axiomatic statements about human behavior are derived. For example, stating that the demand curve is downward-sloping is an axiomatic statement. No economist ever needed to measure quantities and prices to say that if the price increases, all else being equal, the quantity will drop. As such, economic theory needs to be internally consistent (i.e. not argue that higher prices mean both smaller and greater quantities of goods consumed all else being equal).

However, the application of these axiomatic statements depends largely on the question asked. For example, I am currently doing work on the 19th century Canadian institution of seigneurial tenure. In that work, I  question the role that seigneurial tenure played in hindering economic development.  In the existing literature, the general argument is that the seigneurs (i.e. the landlords) hindered development by taxing (as per their legal rights) a large share of net agricultural output. This prevented the accumulation of savings which – in times of imperfect capital markets – were needed to finance investments in capital-intensive agriculture. That literature invoked one corpus of axiomatic statements that relate to capital theory. For my part, I argue that the system – because of a series of monopoly rights – was actually a monopsony system through the landlords restrained their demand for labor on the non-farm labor market and depressed wages. My argument invokes the corpus of axioms related to industrial organization and monopsony theory. Both explanations are internally consistent (there are no self-contradictions). Yet, one must be more relevant to the question of whether or not the institution hindered growth and one must square better with the observed facts.

And there is economic history properly done. It tries to answer which theory is relevant to the question asked. The purpose of economic history is thus to find which theories matter the most.

Take the case, again, of asymetric information. The seminal work of Akerlof on the market for lemons made a consistent theory, but subsequent waves of research (notably my favorite here by Eric Bond) have showed that the stylized predictions of this theory rarely materialize. Why? Because the theory of signaling suggests that individuals will find ways to invest in a “signal” to solve the problem. These are two competing theories (signaling versus asymetric information) and one seems to win over the other.  An economic historian tries to sort out what mattered to a particular event.

Now, take these last few paragraphs and drop the words “economic historians” and replace them by “economists”.  I believe that no economist would disagree with the definition of the tasks of the economist that I offered. So why would an economic historian be different? Everything that has happened is history and everything question with regards to it must be answered through sifting for the theories that is relevant to the event studied (under the constraint that the theory be consistent). Every economist is an economic historian.

As such, the economic historian/economist must use advanced tools related to econometrics: synthetic controls, instrumental variables, proper identification strategies, vector auto-regressions, cointegration, variance analysis and everything you can think of. He needs to do so in order to answer the question he tries to answer. The only difference with the economic historian is that he looks further back in the past.

The problem with this systematic approach is the efforts needed by practitioners.  There is a need to understand – intuitively – a wide body of literature on price theory, statistical theories and tools, accounting (for understanding national accounts) and political economy. This takes many years of training and I can take my case as an example. I force myself to read one scientific article that is outside my main fields of interest every week in order to create a mental repository of theoretical insights I can exploit. Since I entered university in 2006, I have been forcing myself to read theoretical books that were on the margin of my comfort zone. For example, University Economics by Allen and Alchian was one of my favorite discoveries as it introduced me to the UCLA approach to price theory. It changed my way of understanding firms and the decisions they made. Then reading some works on Keynesian theory (I will confess that I have never been able to finish the General Theory) which made me more respectful of some core insights of that body of literature. In the process of reading those, I created lists of theoretical key points like one would accumulate kitchen equipment.

This takes a lot of time, patience and modesty towards one’s accumulated stock of knowledge. But these theories never meant anything to me without any application to deeper questions. After all, debating about the theory of price stickiness without actually asking if it mattered is akin to debating with theologians about the gender of angels (I vote that they are angels and since these are fictitious, I don’t give a flying hoot’nanny). This is because I really buy in the claim made by Douglass North that theory is brought to life by history (and that history is explained by theory).

On the Practice of Economic History

So, how do we practice economic history? The first thing is to find questions that matter.  The second is to invest time in collecting inputs for production.

While accumulating theoretical insights, I also made lists of historical questions that were still debated.  Basically, I made lists of research questions since I was an undergraduate student (not kidding here) and I keep everything on the list until I have been satisfied by my answer and/or the subject has been convincingly resolved.

One of my criteria for selecting a question is that it must relate to an issue that is relevant to understanding why certain societies are where there are now. For example, I have been delving into the issue of the agricultural crisis in Canada during the early decades of the 19th century. Why? Because most historians attribute (wrongly in my opinion)  a key role to this crisis in the creation of the Canadian confederation, the migration of the French-Canadians to the United States and the politics of Canada until today. Another debate that I have been involved in relates to the Quiet Revolution in Québec (see my book here) which is argued to be a watershed moment in the history of the province. According to many, it marked a breaking point when Quebec caught up dramatically with the rest of  Canada (I disagreed and proposed that it actually slowed down a rapid convergence in the decade and a half that preceded it). I picked the question because the moment is central to all political narratives presently existing in Quebec and every politician ushers the words “Quiet Revolution” when given the chance.

In both cases, they mattered to understanding what Canada was and what it has become. I used theory to sort out what mattered and what did not matter. As such, I used theory to explain history and in the process I brought theory to life in a way that was relevant to readers (I hope).  The key point is to use theory and history together to bring both to life! That is the craft of the economic historian.

The other difficulty (on top of selecting questions and understanding theories that may be relevant) for the economic historian is the time-consuming nature of data collection. Economic historians are basically monks (and in my case, I have both the shape and the haircut of friar Tuck) who patiently collect and assemble new data for research. This is a high fixed cost of entering in the trade. In my case, I spent two years in a religious congregation (literally with religious officials) collecting prices, wages, piece rates, farm data to create a wide empirical portrait of the Canadian economy.  This was a long and arduous process.

However, thanks to the lists of questions I had assembled by reading theory and history, I saw the many steps of research I could generate by assembling data. Armed with some knowledge of what I could do, the data I collected told me of other questions that I could assemble. Once I had finish my data collection (18 months), I had assembled a roadmap of twenty-something papers in order to answer a wide array of questions on Canadian economic history: was there an agricultural crisis; were French-Canadians the inefficient farmers they were portrayed to be; why did the British tolerate catholic and French institutions when they conquered French Canada; did seigneurial tenure explain the poverty of French Canada; did the conquest of Canada matter to future growth; what was the role of free banking in stimulating growth in Canada etc.

It is necessary for the economic historian to collect a ton of data and assemble a large base of theoretical knowledge to guide the data towards relevant questions. For those reasons, the economic historian takes a longer time to mature. It simply takes more time. Yet, once the maturation is over (I feel that mine is far from being over to be honest), you get scholars like Joel Mokyr, Deirdre McCloskey, Robert Fogel, Douglass North, Barry Weingast, Sheilagh Ogilvie and Ronald Coase (yes, I consider Coase to be an economic historian but that is for another post) who are able to produce on a wide-ranging set of topics with great depth and understanding.


The craft of the economic historian is one that requires a long period of apprenticeship (there is an inside joke here, sorry about that). It requires heavy investment in theoretical understanding beyond the main field of interest that must be complemented with a diligent accumulation of potential research questions to guide the efforts at data collection. Yet, in the end, it generates research that is likely to resonate with the wider public and impact our understanding of theory. History brings theory to life indeed!

On Evonomics, Spelling and Basic Economic Concepts

I am a big fan of exploring economic ideas into greater depth rather than remaining on the surface of knowledge that I accumulated through my studies. As such, I am always happy when I see people trying to promote “alternatives” within the field of economics (e.g. neuroeconomics, behavioral economics, economic history, evolutionary economics, feminist economics etc.). I do not always agree, but it is enjoyable to think about some of the core tenets of the field through the work of places like the Institute for New Economic Thinking. However, things like Evonomics do not qualify for this.

And this is in spite of the fact that the core motivation of the webzine is correct: there are problems with the way we do economics today (on average). However, discomfort towards the existing state of affairs is no excuse for shoddy work and holding up strawmen that can be burned at the stake followed by a vindictive celebratory dance. The most common feature of those who write for Evonomics is to hold such a strawman with regards to rationality. It presents a caricature where humans calculate everything with precision and argue that if, post-facto, all turns out well then it was a rational process. No one, I mean no one, believes that. The most succinct summary  of rationality according to economists is presented by Vernon Smith in his Rationality in Economics: Constructivist and Ecological Forms. 

Such practices have led me to discount much of what is said on Evonomics and it is close to the threshold where the time costs of sorting the wheat from the chaff outweighs the intellectual benefits.

This recent article on “Dierdre” McCloskey may have pushed it over that threshold. I say “Dierdre” because the author of the article could not even be bothered to write correctly the name of the person he is criticizing. Indeed, it is “Deirdre” McCloskey and not “Dierdre”. While, ethymologically, Dierdre is a variant of Deirdre from the Celtic legend that shares similarities to Tristan and Isolde, the latter form is more frequent. More importantly, Dierdre is name more familiar to players of Guild Wars. 

A minor irritant which, unfortunately, compounds my poor view of the webzine. But then, the author of the article in question goes into full strawman mode. He singles out a passage from McCloskey regarding the effects of redistributing income from the top to the bottom. In that passage, McCloskey merely points out that the effects of equalizing incomes would be minimal.  The author’s reply? Focus on wealth and accuse McCloskey of shoddy mathematics.

Now, this is just poor understanding of basic economic concepts and it matters to the author’s whole point. Income is a flux variable and wealth is a stock variable. The two things are thus dramatically different. True, the flux can help build up the stock, but the people with the top incomes (flux) are not necessarily those with the top wealths (stock). For example, most students have negative net worth (negative stock) when they graduate. However, thanks to their human capital (Bryan Caplan would say signal here), they have higher earnings. Thus, they’re closer to the top of the income distribution and closer to the very bottom of the wealth distribution.  My grandpa is the actual reverse. Before he passed away, my grandpa was probably at the top of the wealth distribution, but since he passed most of his time doing  no paid work whatsoever, he was at the bottom of the income distribution.

Nevermind that the author of the Evonomics article misses the basic point of McCloskey (which is that we should care more about the actual welfare of people rather than the egalitarian distribution), this basic flaw in understanding why the difference between a stock and flux leads him astray.

To be fair, I can see why some people disagree with McCloskey. However, if you can’t pass the basic ideological Turing test, you should not write in rebuttal.

The End of the Past

On Branko Milanovic’s recommendation, I read Aldo Schiavone’s The End of the Past. Scholarly and elegantly written, it provides one of the best imaginative reconstructions of the ancient Roman economy.

Previous posts have touched on the economies of late antiquity, the modernist primitivist debate, and diagnosed problems in many recent assessments of the ancient economy (here, here, here, and here). I want to use Schiavone’s book to revisit a question raised by Peter Temin in The Roman Market Economy. How advanced was the Roman economy? Specifically, how did it compare to the economy of Europe in late medieval or early modern times? Was the Roman economy only as developed as that of Europe circa 1300 or was it as advanced as that of western Europe on the eve of the Industrial Revolution in say 1700.

This question is not mere idle speculation. It matters for our understanding of the causes of long-run economic growth whether an industrial revolution could have happened in Song China or ancient Rome. This type of counterfactual history is crucial for pinning down the casual mechanisms responsible for sustained growth, especially as historians like Bas van Bavel are now proposing explicitly cyclical accounts of growth in societies as varied as early medieval Iraq and the Dutch Republic (see The Invisible Hand? (OUP, 2016))

Temin’s GDP estimates suggest that Roman Italy had comparable per capita income to the Dutch Republic in 1600. The Empire as a whole, he suggests, may have been comparable to Europe in 1700 (Temin 2013, 261). My gut reaction is that this is plausible as an upper-bound. Schiavone (who was writing several years before Temin), however, raises important points that I had fully not considered previously.

Schiavone opens with an account of a speech given by Aelius Aristides celebrating the wealth of the Roman empire in the mid-2nd century AD.

“Whatever each culture grows and manufactures cannot fail to be here at all times and in great profusion. Here merchant vessels arrive carrying these many commodities from every region in every season and even at every equinox, so that the city takes on the appearance of a sort of common market for the world. One can see cargoes from India and even from southern Arabia in such numbers that one must conclude that the trees in those lands have been stripped bare, and if the inhabitants of those lands need anything, they must come here to beg for a share of what they have produced….

Your farmlands are Egypt, Sicily, and all of cultivated Africa. Seaborne arrivals and departures are ceaseless, to the point that the wonder is, not so much that the harbor has insufficient space for all these merchant vessels, but that the sea has enough space (if it really does). Just as there is a common channel where all waters of the Ocean have a single source and destination, so that there is a common channel to Rome and all meet here: trade, shipping, agriculture, metallurgy— all the arts and crafts that are or ever were and all things that are produced or spring from the earth. What one does not see here does not exist” (Aristides, The Roman Oration).

This is a panegyric addressed to flatter the emperor but its emphasis on long-distance trade, commerce, manufacturing is highly suggestive. Such a speech is all but impossible to imagine in an predominantly rural and autarkic society. Aristides is painting a picture of a highly developed commercialized economy that linked together the entire Mediterranean and beyond. Even if he is grossly exaggerates, the imagine he depicts must have been plausible to his audience. In evaluating the Roman economy in the age of Aristides, Schaivone notes that:

“Until at least mid-seventeenth century Amsterdam, so expertly described by Simon Schama — the city of Rembrandt, Spinoza, and the great sea-trade companies, the product of the Dutch miracle and the first real “globalization of the economy — or at least, until the Spanish empire of Philip II, the total wealth accumulated and produced in the various regions of Europe reached levels that were not too far from those of the ancient world” (Schiavone, 2000, 94).

This is the point Temin makes. Whether measured in terms of the size of its largest cities — Rome in 100 AD was larger than any European city in 1700 — or in the volume of grain, wine, and olive oil imported into Italy, the scale of the Roman economy was vast by any premodern standard. Quantitatively, then, the Roman economy looks as large and prosperous as that the early modern European economy.

Qualitatively, however, there are important differences that Schiavone draws out and which have been obscured in recent quantitative debates about GDP estimates.

Observe that Roman history leaves no traces of great mercantile companies like the Bardi, the Peruzzi or the Medici. There are no records of commercial manuals of the sort that are abundant from Renaissance Italy; no evidence of “class-struggle” as we have from late medieval Europe; and no political economy or “economics”, that is, no attempts to systematize one’s thoughts and insights concerning the commercial world. The ancient world, in this view, only superficially resembled that of early modern Europe. Seen from this perspective, the latter contained the potential for sustained growth; the former did not. Why is this?

The most obvious institutional difference between the ancient world and the modern was slavery. Recently historians have tried to elevate slavery and labor coercion as crucial causal mechanism in explaining the industrial revolution. These attempts are unconvincing (see this post) but slavery certainly did dominate the ancient economy.

In its attempt to draw together the various strands through which slavery permeated the ancient economy, Schiavone’s chapter “Slaves, Nature, Machines” is a tour de force. At once he captures the ubiquity of slavery in the ancient economy, its unremitting brutality—for instance, private firms that specialized in branding, retrieving, and punishing runaway slaves — and, at the same time, touches the central economic questions raised by ancient slavery: to what extent was slavery crucial to the economic expansion of period between 200 BCE and 150 AD? And did the prevalence of slavery impede innovation?

It is impossible to do justice to the argument in a single post. Suffice to say that after much discussion, and many fascinating interludes, Schiavone suggests that ultimately the economic stagnation of the ancient world was due to a peculiar equilibrium that centered around slavery.

One can think of this equilibrium as resting on a two legs. The first is the observation that the apparent modernity of the ancient economy — its manufacturing, trade, and commerce rested largely on slave labor. The expansion of trade and commerce in the Mediterranean after 200 BC both rested on, and drove, the expansion of slavery. Here Schiavone note that the ancient reliance on slaves as human automatons — machines with souls — removed or at least weakened, the incentive to develop machines for productive purposes.

The existence of slavery, however, was not the only reason for the neglect of productive innovation. There was also a specific cultural attitude that formed the second leg of the equilibrium:

“None of the great engineers and architects, none of the incomparable builders of bridges, roads, and aqueducts, none of the experts in the employment of the apparatus of war, and none of their customers, either in the public administration or in the large landowning families, understood that the most advantageous arena for the use and improvement of machines — devices that were either already in use or easily created by association, or that could be designed to meet existing needs — would have been farms and workshops”

The relevance of slavery colored ancient attitudes towards almost all forms of manual work or craftsmanship. The dominant cultural meme was as follows: since such work was usually done by the unfree, it must be lowly, dirty and demeaning:

“technology, cooperative production, the various kinds of manual labor that were different from the solitary exertion of the peasants on his land — could not but end up socially and intellectually abandoned to the lowliest members of the community, in direct contact with the exploitation of the slaves, for whom the necessity and demand increased out of all proportion . . . the labor of slaves was in symmetry with and concealed behind (so to speak) the freedom of the aristocratic thought, while this in turn was in symmetry with the flight from a mechanical and quantitative vision of nature”

Thus this attitude also manifest itself in the disdain the ancients had for practical mechanics:

Similar condescension was shown to small businessmen and to most trade (only truly largely-scale trade was free from this taint). The ancient world does not seem to have produced self-reproducing mercantile elites. Plausible this was in part because of the cultural dominance of the landowning aristocracy.

The phenomenon coined by Fernand Braudel, the “Betrayal of the Bourgeois,” was particularly powerful in ancient Rome. Great merchants flourished, but “in order to be truly valued, they eventually had to become rentiers, as Cicero affirmed without hesitation: ‘Nay, it even seems to deserve the highest respect, if those who are engaged in it [trade], satiated, or rather , I should say, satisfied with the fortunes they have made, make their way from port to a country estate, as they have often made it from the sea into port. But of all the occupations by which gain is secured, none is better than agriculture, none more delightful, none more becoming to a freeman’” (Schiavone, 2000, 103).

Such a cultural argument fits perfectly with Deirdre McCloskey’s claim in her recent trilogy that it was the adoption of bourgeois cultural norms and specifically bourgeois rhetoric that distinguished and caused the rise of north-western Europe after 1650 (here, here, and here).

Having taken note of the existence of such a powerful equilibrium — one resting on both material and cultural foundations, we can now return to Schiavone’s argument for why a modern capitalist economy did not develop in antiquity. He argues that given the prominence of slavery and the prestige of the landowning elite, economic expansion and growth of the kind that took place between c. 200 BCE to 150 CE was not self-reinforcing. It generated a growth efflorescence that lasted several centuries, but it ultimately undermined itself because it was based on an intensification of the slave economy that, in turn, reinforced the cultural supremacy of the landowning aristocracy and this cultural supremacy in turn eroded the incentives responsible for driving growth.

Compare and contrast with early modern Europe. The most advanced economies of early modern Europe, say England in 1700, were on the surface not too dissimilar to that of ancient Rome. But beneath the surface they contained the “coiled spring”, or at least the possibility, of sustained economic growth — growth driven by the emergence of innovation (a culture of improvement) and a commercial or even capitalist culture. According to Schiavone’s assessment, the Roman economy at least by 100 CE contained no such coiled spring.

We are not yet at the point when we can decisively assess this argument. But the importance of culture and the manner in which cultural and material factors interacted is clearly crucial. The argument that the slave economy and the easy assumptions of aristocratic superiority reinforced one another is a powerful one. For whatever historical reasons these cultural elements in the Roman economy were relatively undisturbed by the rise of merchants, traders and money grubbing equites. Likewise slavery did not undermine itself and give rise to wage labor.

Why this was the case can be left to future analysis. The full answer to the question why this was the case and a more careful consideration of the counterfactual “could it have been otherwise” are topics deserving their own blog post.