New EHES Working paper

Breaking the Unbreakable Union: Nationalism, Trade Disintegration and the Soviet Economic Collapse 

Why did the Soviet economy collapse so quickly in the late 1980s and early 1990s? A new EHES Working Paper argues that the reason can partly be found in the reemergence of nationalism to the territorial fringes of the Union.

Leaders from Ukraine, Belarus and Russia sign the Belavezha Accords on 8. December 1991, declaring the dissolution of the Soviet Union and the creation of the Commonwealth of Independent States. Picture credit: RIA Novosti Archive.

For decades, planners had striven to construct the Soviet economy as a tightly integrated system, where supply chains spanned domestic boundaries. The Union’s constituent parts- called republics in Soviet parlance- exercised little influence over the allocation of production and trade flows. This changed when Gorbachev took power in 1985. His new political course, which emphasized liberalization over repression, opened up the possibility of republics seceding from the Union. This set in motion a chain of events that ultimately dealt a death blow to an already stumbling system.

A central feature of the planned economy had been the fact that monitoring and control of local elites by the center was incomplete, which left local bodies some degree of discretion. This discretion could be used to tweak the plan, for example by restricting the export of particularly valuable goods to other republics. In normal times this did not happen very frequently, as the prospect of continual interaction placed a limit on the degree to which local elites could exercise their discretion profitably. Once secession became an option, however, it became profitable for local elites to limit the flow of goods between republics. The result was that domestic Soviet trade plunged, supply chains were broken and production plummeted.

The story is supported by a game-theoretical model as well as by data on domestic Soviet trade from 1987 to 1991. Using an adapted version of an empirical gravity model, it is shown that the more likely a republic was to secede- measured by the timing of official declarations of autonomy- the more domestic trade fell. The economic disintegration of the Soviet Union thus predated its official demise in December 1991.

This quantitative effect is strengthened if an instrumental variable procedure is used to account for the possible endogeneity of secessions, for example because republics badly integrated into the Soviet trade system may be more willing to secede. The instrument used is the proportion of textbooks printed in the republican language as opposed to Russian. This reflects the extent of linguistic nationalism present in each locality. Republics who used Russian to a lesser degree were more nationalistic and more eager to secede. They consequently witnessed a stronger fall in trade.

Marvin Suesse is a PhD student at Humboldt-Universität zu Berlin

Finally, the fall in trade caused by a higher disposition to secede had a negative effect on output. On average, withheld trade can explain up to 30% of the variations in GDP growth between Soviet republics during the breakup period. In other words, nationalism in the Soviet and Post-Soviet world may have a strong role to play in explaining the mixed economic experiences of the region after the fall of Socialism.

The working paper can be downloaded here.

Gender in Economic History

Scandinavian Economic History Review launches a Gender in Economic History Virtual Special Issue

Gender’ is a central category in political and social debates on equal rights and opportunities as well as on inequality, and in broader cultural discussions. It seems widely underused and too narrowly used in economic history where the major focus is still on equal wages and participation of women in the labour market. Other aspects of ‘gender’, for example relating to entrepreneurial activity, to the business of sex, to ‘maleness’, to consumption or more generally to social life, which are heavily debated in cultural history and cultural studies, do not yet receive sufficient attention in economic and business history. The Scandinavian Economic History Review, is no exception.

Therefore, Scandinavian Economic History Review, launches a virtual special issue about gender issues. The aim is to make a broader audience aware of present and past research published in the journal. The editors of the journal have selected articles published over the last two decades to show how the discussion has developed over time. The Scandinavian Economic History Review also encourages researchers to further advance the field in new directions and to submit manuscripts dealing with new approaches to ‘gender’ in economic history.

Read more from the journal here.

Jacob Weisdorf, Alfred Reckendrees (editors)

The Kent FRESH meeting

Dinner at Café du Soleil, Canterbury 

The Kent FRESH meeting took place on June 5, 2014 at the University of Kent in Canterbury, UK. The day started with a fascinating keynote lecture given by Patrick Wallis from the LSE on the subject of apprenticeship in early modern England. He was followed by nine excellent presentations, and as is usual at FRESH meetings there was plenty of valuable discussion for each paper. We enjoyed three great graduate student presentations including Pawel Bukowski at CEU Budapest. He demonstrated convincingly how the historical division of Poland into Prussian, Russian, and Austrian regions has had a long term impact on education in that country today. Meng Wu of the LSE outlined an ambitious research program looking at Chinese savings banks, and Oisin Gilmore of Groningen described an early draft of an investigation of the determinants of postwar growth patterns. The day finished with a delicious meal at ‘Café du Soleil’.

This blog post was written by Paul Sharp, associate professor at University of Southern Denmark.

New EHES Working paper:

Just Add Milk: A Productivity Analysis of the Revolutionary Changes in Nineteenth Century Danish Dairying

"Cows on Saltholm" (Theodor Philippsen, 1892), Danish National Gallery

What is it that makes agricultural producers more productive? In this paper, Markus Lampe and Paul Sharp examine the Danish agricultural revolution, a period when first large and then small farmers caught up quickly with and extended the productivity frontier in milk production – most of it being exported in the form of butter and, as a byproduct, bacon, to the growing industrial cities of Britain. Soon, Danish dairying led the world in terms of productivity. Uniquely in a world perspective, high quality micro-level data exist documenting this episode, from surveys of manor/estate farms conducted by leading dairy economists for the Danish periodical Tidsskrift for Landøkonomi (Danish Journal of Agricultural Economics) over a number of years from 1880.

These farm-level data allow the use of the tool of modern agricultural economists, stochastic frontier analysis, to estimate production functions for milk, using mainly cows and feed as inputs, and to estimate simultaneously the extension of the production possibility frontier (about 0.4 percent per year) and the increase in average efficiency, that is, how close the typical farm is to the frontier, or in other words, whether it uses its inputs to arrive at the maximum possible output. Both together allow for a bottom-up calculation of average total factor productivity (TFP) growth of about 1.5 percent per year between 1880 and 1900, with the possibility of distinguishing the contributions of technical progress (a shift in the frontier), such as the introduction of the new Danish Red breed, and more efficient uses of factors of production in modern dairying, as exemplified by concentrate feeding, year-round production through calving in autumn, and the modernity of the farm as proxied by the use of automatic cream separators. 

The working paper is EHES number 55 and can be found here. 

Markus Lampe is associate professor
at Carlos III University of Madrid

Paul Sharp is associate professor at
University
of Southern Denmark

The 9th SOUND Economic History Workshop

The 9th SOUND Economic History Workshop (21^st-22^nd May) is now over but has been an inspiring workshop with a wide range of interesting presentations. The workshop, which has been organized by Alfred Reckendrees and Jacob Weisdorf, took place in the modern facilities of Copenhagen Business School surrounded by the lovely parks and neighborhoods of central Copenhagen.

 

The organizers, Alfred Reckendrees and Jacob Weisdorf

Kevin O’Rourke (All Souls College, University of Oxford) has initiated the workshop with his Wednesday keynote lecture named ‘Coal, colonies and the industrial revolution’ which addresses two largely debated topics of economic history, the role of coal and foreign trade during the industrial revolution. Kevin’s presentation provided an extensive discussion of the current debate on the role of coal in industrial development followed by quantitative evidence which showed a significant impact of coal location on urbanization in Europe. In the second part of his lecture, Kevin then focused on the British continent and the role of foreign trade during the 19^th century industrialization. After the debate following Kevin’s speech, the participants could enjoy a nice lunch and walk in the nearby facilities of Copenhagen Business School.

Kevin O'Rourke

The afternoon session offered then a wide range of topics from economic history. Hana Nielsen (Lund University) built on Kevin’s lecture and presented a country-specific study on the role of coal during the Czech industrialization by drawing on spatial analysis of coal and steam data. Åsa Malmström Rognes (Uppsala University) presented one of articles from her upcoming PhD dissertation focusing on family business groups in South-East Asia. In her presentation, Åsa discussed in more detail the role of capital markets for family business groups and how the Asian crisis changed them. Ursula Hård (Stockholm University) also presented a chapter from her coming PhD thesis which analyses the formal and informal institutional possibilities and obstacles that women business owners and entrepreneurs in rural communities face when they through investment in businesses within locally produced foods.

Åsa Malmström Rognes

After a coffee break, Jacob Weisdorf (South Danish University, Odense) presented results of his co-authored working paper (Jane Humphries, University of Oxford) with long-run series of wages of women in England (1260-1850) with a particular focus on the consequences of the Black Death on women’s wages and its implications for the formation of the European Marriage Pattern regime. Last presentation of the first day went then to Eric Bengtsson (University of Gothenburg) in which Eric has provided some comparative analysis of the distribution of income between capital and labor in Denmark and Norway stretching back to 1830 up until now. Following this inspirational day, the participants have then gathered together for an official conference dinner which took place in a close vicinity of Copenhagen Business School.

The second and last day of the SOUND workshop was again initiated by an interesting lecture of keynote speaker, this time Marc Flandreau from the University of Geneva. Marc then gave an inspirational lecture on the rise of rating agencies in the US and provided also with a comparative perspective on the differences between the US and UK in particular. Thor Berger, another speaker from the Lund University, presented results of his joint working paper (with Kerstin Enflo, Lund University) on another classical topic of economic history – the impact of railroads on the regional growth. In the paper, the authors analyze and provide quantitative evidence on the short- and long-run impacts of railroad on city-growth in Sweden for the past 150 years. 

Karol Jan Borowiecki

Karol Jan Borowiecki (South Danish University, Odense) presented his paper on the well-being and creativity of three famous composers and provided quantitative evidence on the existence of a causal impact of negative emotions on the composers’ creativity.

Again, after a refreshing lunch at Copenhagen Business School, the participants gathered for the last session of the SOUND workshop which started with a presentation by Alfred Reckendrees (Copenhagen Business School). In his presentation, Alfred addressed the proposals of industrialist from the district of Aachen to introduce mandatory pension system and minimum wages in a search to prevent future labor conflicts.  

Hana Nielsen

Kerstin Enflo (Lund University) presented a paper on business cycles in the Nordic countries (1834-1945), a joint work together with Mathias Morys (University of York) where the authors utilize new data sets in the frameworks of the Dynamic Factor Model to construct indices for four Scandinavian countries. Last speaker from Uppsala University, Henric Häggvist, closed up the session with an extraction from his PhD research which analyses development in trade tariffs in Sweden. In his presentation, Henric offered a comparative analysis of trade tariffs in the period of 1780-1830 for Sweden and Denmark.

At the very end of the workshop, Alfred Reckendrees discussed some issues concerning the journal publishing, in particularly focusing on the ‘do’s and don’t’ of academic writing, which was very helpful for many of the workshop participants. The workshop was then officially concluded. 

This blog post was written by Hana Nielsen, PhD student at Lund University

The content and pre-requisites for the ideal economic history course

A homage to my teachers in the distant past

James Foreman-Peck is Professor of
Economics at Cardiff University .
He was the president of EHES 1999-2001

The most exciting course I have ever followed was Peter Lindert and Keith Trace’s final year undergraduate ‘Topics in Economic History’ (I am not certain now that this was the title). It still seems to me to have set out an agenda for many of the themes that are most worthwhile in economic history. Motivated by inspirational teaching, we began by getting our teeth into whether there was a fourteenth century Malthusian crisis and romped through time from there, touching on Hicks’ Theory of Economic History.  We savoured the origins of sixteenth century inflation and surged onwards towards the then present day, with the triggers for the West German post war miracle and Japanese super growth in the nineteen sixties. You could not get more contemporary than this last because the course was taught at the end of the sixties! Apart from the Japanese, and the US (surely the Great Depression as seen by Friedman and Schwartz?) case studies, most of the subject matter was European.

How could such a course be developed if there were suitable customers available today? With almost another half century of economic history behind us since this epochal pedagogic event there must be a wide range of candidate case studies. European de-colonisation is perhaps one. The Russian and/or East European transition is certainly ripe for the mature reflections of members of the European Historical Economics Society and therefore for lively undergraduate study.

Globalisation and shifting centres of economic power have changed Europe’s position in the world. Europe in the last half century is much more likely to be an ‘effect’ than a ‘cause’ – as with OPEC and the oil crises of the 1970s or through the competitive effects of the economic rise of post Mao China.  But the origins and consequences of the European common currency will surely provide many insights for the whole world.
A drawback of such a course on the supply side is that it is unlikely to appeal to the specialised academic country expert. It is much more suitable for an ‘ ideas’ teacher, who in adjacent disciplines with the appropriate technique perhaps might be sought among economists. But would they be found? At the time I was being delighted by the Trace and Lindert course I suspected most of these economics practitioners of being analogous to the glass bead game players of Thomas Mann’s eponymous novel. Either that or they were simply fascinated with ‘intellectual rigour’, which smelled of Freud’s Theory of Money. From these economists’ point of view to teach such a course they would need to find out about history, but this was professionally unnecessary because they could deduce it (and the present) from first principles.

If this is still the case (assuming it was ever) then there may be a gap on the supply side for such a course, always supposing that there is a demand. For the economic history entrepreneur the task is to create such a demand, as well.

Blog post written by: James Foreman-Peck, Professor of Economics at Cardiff University where he does not teach economic history.

Announcement: European Summer School in Economic History

CALL FOR APPLICATIONS 

Humboldt University, Berlin, 1-5 September 2014

The topic of this year’s summer school is Catching up or falling behind? Institutions, geography and economic development of Eastern Europe in the long-run.

Comparative economic development is a dominant topic on the global research agenda and economic history has made important contributions to the debate over the drivers of long-run growth. Why some countries or regions are rich while others are poor is a question that has inspired both economists and historians for a long time. Institutions, geography and resource endowments have all been attributed important roles in the literature explaining diverging trends in the global economy over the last two centuries.

Eastern Europe was heavily affected by the grand transformations of modern history. Old empires had fallen and new ones emerged, and in the twentieth century independent nation states were formed. Not only were the borders in Europe’s eastern periphery redrawn multiple times; formal institutions, the modes and structures of production have been transformed dramatically. Yet, Eastern European economists paid little attention to long-run development, and thus New Economic History that applies social science theory and quantitative analytical tools to studying the past could not make strong inroads into Eastern European scholarship. 

The Summer School, sponsored by the European Historical Economics Society, Humboldt University and the London School of Economics, is dedicated to reversing this trend by bringing together young scholars from different parts of Europe whose research focuses on the economic history of Central, East and South-East Europe (CESEE) or on comparative development across different European regions.

For more information about how to apply, see the following link:

http://www.ehes.org/EHES_Summer_School_Berlin.pdf

EREH new editor: Joan Rosés

Joan Rosés is professor in Economic
History at London School of Economics and
new editor of the EREH

We continue to present the new editors of the European Review of Economic History with an interview with Joan Rosés:

How did you get interested in Economic history?

My interest in History began relatively earlier, during the last years of the primary school. Later, when I was about 16 years old, I discovered economics by chance. I was enthusiastic about two TV series: "Free to Choose" of Milton Friedman and “The Age of Uncertainty” of John Kenneth Galbraith. During my bachelor in History, my favorite subject was, indeed, economic history. Then, it was obvious for me to try to pursue an academic career in the discipline.

Could you describe your carrier briefly?

I finished my bachelor in History and Geography in 1990 at the University of Barcelona. Then, I spent four years as assistant in the Department of Economics at Pompeu Fabra, Barcelona, while I studied a two-year master in Economic History at University of Barcelona. In 1995-96, I moved to the European University Institute, in Florence, where I finished my dissertation in 1998. My supervisor was Jaime Reis. In the same 1998, I published my first article at EREH. After a short stage at UC Berkeley, I came back to Spain and get a post at Universidad Carlos III of Madrid. I was at Carlos III for about 15 years (until September 2013). Since then, I’m professor of Economic History at LSE. From mid-1990s, I published many articles in all major economic history journals. My research interest covers many topics but now I’m most interested in historical economic geography. Typically, I work with a myriad of co-authors and I’m engaged in several projects at the same time.

In general, what do you look for in a submission and why?

It is difficult to say because each submission is special and unique. Broadly speaking, a good submission in economic history should contain good ideas and substantial evidence. Economic history is an applied discipline and we need historical evidence to sustain our arguments. However, we cannot write economic history in isolation. We should know what other disciplines (particularly Economics and History) have already said about our research topic. We cannot accept ahistorical articles or research which ignores the basics of economics or statistics.      

How would you describe the perfect EREH article?

This is certainly a harsh question and I haven’t the definitive answer. From the point of view of the Review, the perfect article is an article that gets many citations. Unfortunately, editors cannot predict ex-ante the amount of citations of any article. Then, the perfect article is an article that combines an original contribution with good scholarship.  Typically, these articles open new avenues for research.

What important changes do you see happening in Economic History research right now? How do you think this will influence future contributions in the journal? 

It seems that the Cliometric Revolution has been firmly established in the profession. Also, in the last five years, a new generation of economists seems increasingly interested in the field and economic history is expanding in many economics departments. Obviously, this opens a new window of opportunity for the profession but also represents a new challenge for us. We need to make the discipline more interdisciplinary and relevant. I expect that the field will interact, even more, with other fields particularly Development Economics and Economic Geography.

If you ask me for the hot topics over the next years I expect to receive more submissions in Historical Economic Geography, inequality and financial-monetary history (particularly articles about crises and failed/successful monetary experiments). Another area which should expand rapidly is economic history of developing countries. We need urgently more research in Asia, Africa, South America and the Caribbean countries.  

EREH new editor: Dan Bogart

The European Review of Economic History will soon have two new editors – Dan Bogart (UC-Irvine) and Joan Rosés (LSE). They will work together with Nikoulas Wolf (Univ. Humboldt) who will remain in office. We managed to get quick interviews both with Dan Bogart and Joan Rosés. First one out is Dan Bogart:

 

Dan Bogart is Associate Professor in Economic History
at UC-Irvine and new editor of the EREH.

How did you get interested in Economic history?

As an undergraduate at the University of Minnesota, I read two books that peaked my interest in economic history. The first was Robert Fogel's Railroads and American Economic Growth: Essays in Econometric History, and the second was Doug North's Structure and Change in Economic History. I thought Fogel's methodology of counter-factual history was very innovative and gave a shocking answer to a big question. I wanted to imitate Fogel's work. North's books was inspiring in that it provided a perspective on the long-run and stimulated my thinking on the role of the state. I have been grappling with this issue ever since. 

As new editor of the EREH, what role will you play in the journal?

My role as editor is three-fold. The first and most important is to ensure that the best papers get published. My second role is to encourage high quality submissions to EREH. Third, is to promote research in economic history more generally.

In general, what do you look for in a submission and how would you describe the perfect EREH article?

In my view the best papers tell us something new about economic history and are well executed. Novelty is important because the field of economic history needs to continually advance. Good execution is also important as we would like the results of published papers to be regarded as credible or believable long into the future.  I should add that in terms of methodology, I don't believe there is any 'right' approach to economic history. I am regularly surprised by new and informative approaches to research. 

What important changes do you see happening in Economic History research right now? How do you think this will influence future contributions in the journal?

For the last decade, there has been a trend in economic history towards greater theoretical rigor and improved identification in econometrics.  I see this trend as continuing for the foreseeable future. However, I would hope that scholars don't focus exclusively on identification when choosing their research questions.  Economic history has always focused on the big questions, like the sources of the Great Divergence, even if a precise answer cannot be given with current data or techniques. There will always be room in the field for more exploratory research. 

Announcement: Call for papers Esbjerg FRESH Meeting

Topic: Ancient Economy and Early Economic Developments

Date: October 1-2, 2014

Hosting Institution: Department of Environmental and Business Economics, University of Southern Denmark, Esbjerg

Keynote Speakers: Erwin Bulte, Wageningen UR; Carl Hampus Lyttkens, Lund University

Local Organizer: Brooks Kaiser

FRESH Organizers: Rowena Gray, Paul Sharp and Martin Uebele

For this meeting we particularly encourage papers on all aspects of ancient economy and early economic developments, but submissions from scholars working in other areas may be considered. 

 Prospective speakers should submit a one-page abstract and a short CV via the link on the FRESH website by May 31.

Notification of acceptance will be given by July 1.

For more information about FRESH meetings, please visit the FRESH website at http://www.sdu.dk/en/ivoe/fresh

please see also the EHES website

http://www.ehes.org

and the HEDG website

http://www.sdu.dk/en/ivoe/hedg