3 April 2006
Economic History Society Annual Conference 2006: Press briefings
UNDERSTANDING GLOBAL INEQUALITY: HUMAN CHOICES MATTER MORE THAN NATURAL RESOURCES AND TECHNOLOGY
How can we explain the huge differences in wealth and poverty that have existed between countries over centuries? Delivering the 2006 Tawney Lecture, Professor Sheilagh Ogilvie from the
Natural resources and technology affect economic growth, she argues – but only modestly. What really matters are human choices, and the key to these choices are institutions – the humanly-devised rules governing property and transactions.
BIASED GENERAL ELECTION OUTCOMES IN BRITAIN ARE NOTHING NEW
An electoral system that favours one political party over the others is not unique to contemporary elections in Britain, according to new research by Matt Badcock. Over the course of the nineteenth century the Liberal party consistently benefited from the disproportionate operation of the electoral system, gaining up to 20 seats more than their share of the vote warranted.
At present, the electoral system is skewed towards the Labour Party, with the result that the Conservatives would have to secure a disproportionately large share of the vote just to produce a 'hung' parliament. But such inequity is not new: beginning in 1832, the British electoral system began to treat both electors and political parties in an increasingly unfair manner.
A NESTING INSTINCT? WHY WOMEN INVESTORS ARE MORE RISK-AVERSE
Women tend to be more risk averse than men when it comes to savings and investment, according to new research by Janette Rutterford and Josephine Maltby, which looks back at women’s attitude to investment risk across the past three centuries.
But the research also finds that women’s tendency to buy less risky securities than men can be explained by their relative lack of wealth and by their marital status. Rich women were not afraid to speculate on the stock market, for example, during the South Sea Bubble, or to ‘stag’ new issues. And single women have been more risk averse than married women, with the need to provide for old age.
LONDON'S FIRST STOCK MARKET BOOM LAID THE BASIS FOR OUR MODERN FINANCIAL SYSTEM
London’s first stock market boom took place as long ago as the early 1690s, according to new research by Anne Murphy. At that time, London developed an active financial market, which offered a variety of novel outlets for both public and private investment. In particular, a great number of joint-stock companies appeared, offering investors the opportunity to commit their capital to projects ranging from the manufacture of paper to the search for sunken treasure.
The public embraced the new investment opportunities with enthusiasm. And although the boom was typically short-lived, the revolution in finance brought permanent changes in investment habits and the institutions created during this period – the National Debt, the Bank of England and an active stock market – survived, flourished and became the foundation of London’s financial system.
The history of stock exchange development over the past 100 years is not one of American pioneers leading a reluctant Europe to converge on a perfect form of financial organisation at the “end of history.” According to new research by financial historian Professor Leslie Hannah, it is one of dead-ends, reversals, divergence and failed experimentation as new methods are tried everywhere, sometimes failing for reasons – such as war, revolution, nationalisation or other government intervention – unconnected with their intrinsic merits.
The ‘divorce’ of corporate ownership from corporate control that characterised American industrial corporations in the first half of the twentieth century was an exceptional episode not the twentieth century norm. Indeed, it is entirely possible that, globally, the divorce of ownership from control is not significantly more common now than it was in 1900. The current vogue for private equity and criticism of corporate governance (echoing still unresolved 1900 debates) betokens continuing doubts about the merits of such a trend.
WHY POOR COUNTRIES WILL STAY POOR: THE FLAW IN INTERNATIONAL DEVELOPMENT ADVICE
Developing economies are told that only free markets will bring them up to the standard of living of the rich. But according to new research by Victoria Bateman, if markets really are the key to industrialisation and economic growth, the industrial revolution could have happened in the 1400s. Markets were as developed in the 1400s in Britain and Europe as they were in 1750 – yet throughout the 1400s there was minimal economic growth. The industrial revolution and the take-off of the modern economy was clearly not, therefore, fuelled by free markets.
Bateman’s research shows that free (no tariff) trade with the rest of the world is likely to be disastrous for developing countries’ economic growth. Instead, tariffs on foreign imports (and on manufactured goods in particular) form an essential component of a developing countries government’s economic policy to raise incomes and facilitate the transition from an agrarian to an industrial economy.
Most disturbingly, Britain and the West grew rich through using such a strategy. More recently, the ‘East Asian Miracle’ economies steadfastly utilised tariffs to protect and promote nascent industries. Without these, they would not have grown to prominence as the technological manufacturing base of the world.
THE IMF AND THE FORCE OF HISTORY: TEN EVENTS AND TEN IDEAS THAT HAVE SHAPED THE INSTITUTION [link to paper]
The International Monetary Fund (IMF) has changed dramatically in the six decades since its founding at Bretton Woods in 1944. According to a new study by historian of the IMF James Boughton, much of the volume of its lending has become crisis-driven, and the Fund’s involvement in crisis prevention and resolution has correspondingly intensified.
To a large extent, the IMF has become divided into groups of creditor and debtor countries whose membership changes slowly over long periods of time. Its membership is much larger, more diverse, and nearly universal, and its responsibilities in global governance have correspondingly increased. The breadth of its involvement in policy-making in member countries, especially borrowing countries, has vastly increased, though a concerted effort has been made in recent years to circumscribe that role.
WOMEN BEHIND THE WHEEL IN MODERN AMERICA
In the1970s and 1980s, American planners and policy makers attributed the noticeable rise in car driving and ownership to the increase in gainfully employed women. New research by Professor Maggie Walsh examines the relationship between cars and women over the past 35 years and provides a more nuanced view of the diverse roles of the female behind the wheel and reminding us of other frequently male contributors to automobile traffic.
The recent rapid expansion of American population, boosted by immigration, that clusters the newly arrived in the working age brackets, have in part been responsible for more cars on the road. Then male drivers were as likely, if not more likely, to be behind the wheel. The increase in living standards has also witnessed not only the expansion of the two- car family, but more recently the three-car family where the third vehicle is either a specialised vehicle or one for the teenage children.
THE IMPATIENT SOCIETY: WHY OUR AFFLUENCE DOESN'T MAKE US HAPPIER
Our well-being has not kept up with our affluence. Material abundance has been followed by social and personal disorders, including family breakdown, addiction, mental instability, crime, obesity, inequality, economic insecurity, and declining trust. We are three times as rich, but no happier.
But why? In his new book ‘The Challenge of Affluence’, Professor Avner Offer argues that affluence breeds impatience, and impatience undermines well-being. The flow of new rewards can damage the capacity to enjoy them.
HOW THE IDEA OF AMERICAN SUPERIORITY DESTROYED THE BRITISH COMPUTER INDUSTRY
The British computer industry was technically more advanced than the US computer industry at least up till the early 1960s but ultimately ceded market share and technological leadership to the United States. According to new research by Robert Reid, this was largely down to a perceived idea of American technological superiority that was far more powerful than the reality.
The United States enjoys a reputation for superiority, especially in the realms of technology and economy. But this reputation is often as much imagined as it is real. This in turn sets in train a dynamic whereby the rhetoric of American superiority rather than a cool assessment of the situation drives decision making in companies outside the United States.
GROWTH WITH RAPIDLY INCREASING INEQUALITY: THE STORY OF BRITAIN’S INDUSTRIAL REVOLUTION
The macroeconomic data describing the British economy during the industrial revolution show a story of dramatically increasing inequality, according to new research by Professor Bob Allen of Oxford University. Between 1800 and 1840, GDP per worker rose 37%, real wages stagnated and the profit rate doubled. The share of profits in national income expanded at the expense of labour and land.
This is what the Victorian critics of capitalism thought was happening, although they did not have the data to prove the case. Growth with rising inequality is also a feature of today’s economy, so it is important to understand why patterns of development like this have occurred in the past.
Allen’s work finds two factors responsible for the rise in inequality. First, technical change increased the demand for capital and raised the profit rate and capital’s share of national income. The rise in profits, in turn, sustained the industrial revolution by financing the necessary capital accumulation. Second, the population began to grow rapidly after 1750. Investment was necessary to house and equip the greater number of people. Both the acceleration in technical change and population were necessary for the rise in inequality.
BRITAIN’S GREAT INDUSTRIES IN THE FIRST AGE OF GLOBALISATION
The major British export industries – cotton, coal and iron and steel – formed the backbone of the Victorian economy and played a leading role in maintaining Britain’s predominant position in world trade before 1914. New research by Nicholas Dimsdale of Oxford University applies modern statistical techniques to the analysis of these three traditional staple industries, bringing to life the working of the Victorian economy in the same way as the Bank of England explores the impact of changes in monetary policy on the economy.
The experience of the industries varied widely. Cotton remained competitive and dominant on world markets, although its rate of growth was slower that earlier in the 19th century. Iron and steel was subject to growing competition in export markets and rising import penetration at home. The coal mining industry enjoyed rapid growth of demand at home and overseas and was able to pass on increasing costs to its customers. It did, however, suffer from declining labour productivity, wide fluctuations in prices and wages and a history of bitter labour disputes.
THE COSTS OF GOING PUBLIC: HOW BRITAIN’S CAPITAL MARKET FAILED NEW FIRMS
In the 25 years prior to the 1986 deregulation of the Stock Exchange known as ‘Big Bang’, new firms being launched on the market lost of total of £1.4 billion in issue proceeds at 2004 prices. That is the conclusion of new research by David Chambers of Oxford University, which finds that although the tender offer method was the most efficient means for firms to go public during this period, it was adopted by fewer than 1 in 10 firms.
DID SHORTER WORKING HOURS DAMAGE BRITAIN’S INDUSTRIAL COMPETITIVENESS?
Britain experienced particularly poor economic growth during the 1920s, both relative to other industrial nations and its own long-term growth rate. Some commentators have highlighted the introduction of an eight-hour working day (and 48 hour working week) in British industry from 1919 as a major factor undermining the UK’s international competitiveness.
New research by Peter Scott and Anna Spadavecchia shows that in fact, Britain’s 1919 hours reduction was substantially lower than that experienced in most other industrial nations, which also introduced the eight-hour day in 1919 but which hitherto had substantially longer working hours than Britain. The eight-hour day could therefore be expected to improve, rather than erode, Britain’s international competitiveness.
FOOD AS A CAUSE OF CIVIL WARS IN SUB-SAHARAN AFRICA
Why do civil wars erupt in some sub-Saharan African states while others are free of rebels? New research by Alexander Moradi presents evidence for agriculture and nutrition as a significant cause of civil war.
A substantial part of the African population depends on agriculture for their livelihood. African governments often choose policies that undermine food security in the long run. Moreover, Africa is so poor that nutrition might be a likely motivation for poor people to join the rank-and-file of a rebel group.
The Failure of Economic Planning in the Scottish Highlands, 1945-82
Successive UK governments spent billions of pounds on several large-scale industrial developments in the Scottish Highlands for nearly 40 years after the Second World War. According to new research by Niall MacKenzie of the University of Glasgow, each failed in the aim of regeneration.
The study covers the period 1945-82 in Scottish economic history, focusing specifically on four large-scale industrial projects aimed at diversifying industry in the Highlands – at Dounreay, Corpach, Aviemore and Invergordon – all commissioned and supported by the UK government. These developments were promoted as the solution to long-standing economic and social problems in the Highlands but failed to adequately address them.
The research details how and why this was the case and argues that the industrial projects were not about Highland development per se, but were more concerned with contributing to a quick fix solution to UK national economic concerns, resulting in their eventual failure. It is then, essentially about the failure of governmental economic policy in Scotland.
