American Economic History: Introduction
No Grand Narrative allowed: An episodic approach to American economic history, vaguely grouped around the center point of "American Exceptionalism"...
No Grand Narrative allowed: An episodic approach to American economic history, vaguely grouped around the center point of "American Exceptionalism"...
Another new semester begins, and here I am—at the age of 64—preparing to teach a brand-new course for the first time, and not one that I am terribly excited at teaching: American Economic History. Clearly I am a complete failure at academic workload gamesmanship…
What do I hope to do?
Marty Olney—who was the last member of the permanent faculty here at Berkeley to teach this, when she did so nearly a decade ago, says: do not try to tell a narrative, with the beginning, a middle, and a fitting and suitable an at today making the whole thing hang together. The students simply do not have the background historical knowledge for any kind of Grand Narrative approach to American Economic History to be comprehensible to them. (And, of course, there is the fact that all Grand Narratives are false albeit some can be useful.)
So I have decided to go week by week, with themes, questions, and tools with which those can be addressed:
If there is going to be an overarching theme, kind of sort of tying everything together, it is going to be "American Exceptionalism”: Is America an exceptional country? Or rather, in what sense is America an exceptional country? And how can the fact that it is exceptional in some senses for good and bad, how can that be useful to us as we try to think about the way things work?
We will jump. roughly chronologically, from major topic to major topic—from colonization and industrialization to the2008 financial crisis and the rise of Silicon Valley. Whether overarching themes will emerge along the way is anyone’s guess. Whether this is a useful way of building student analytical skills is something we will have to wait to see.
I do hope to make even the non-STEM majors in the course dip their toes into data science—how we can clean data and then count things to see whether and how economic models can provide insight, and also whether and how looking seriously at history can challenge economists’ assumptions about how the world must work.
Wish me luck!
Slides:
And, below the fold, a lightly-edited rough lecture transcript:
Rough Lightly-Edited Lecture Transcript:
Pre-class digression on the importance of accounting as a subject:
What was the most interesting class you went to yesterday?
Audience Member: I went to managerial accounting.
And why was it interesting?
Audience Member: I took a financial accounting class last semester, and I found this class was very different from the first one.
Financial accounting being how are the shareholders and bondholders going to get their money or the money they want to get. And how accounting serves as an information system in order to make that happen or for people to try to not make that happen. Controlling financial accounting gives you the opportunity to do absolutely amazing things to control the flow of information. While for managerial accounting, you try to use money flows to figure out how to actually run a large organization of people all doing different things.
Both are absolutely essential, you know, and both are massively undervalued in the culture we have. There was a piece of the Financial Times relatively recently in which one of their reporters was trying to ease people into the idea that right now the very big tech platform oligopolists are spending absolute fortunes building out data centers, and these are not showing up as costs in their financial accounting today. Depreciation allowances are only one-third of what they well be. And yet an awful lot of financial analysts are saying these companies will maintain their margins, even as their running capital costs triple when current data center expenditures that are already made show up in the accounting.
It is very important. Anyone interested in money flows from a public policy or a private profit or even a managerial organization perspective should take accounting: I recommend it highly.
Pre-class digression on the importance of data science in the context of a true “liberal” education:
Anyone else went to something particularly interesting yesterday that they think people should be aware of? What was the most interesting thing you went to yesterday?
Audience Member: One of my classes was pretty interesting because you were quoted in it.
Oh, wow. Which class was that?
Audience Member: Econ 148.
Okay. And who’s teaching that this semester?
Audience Member: I don’t remember the last name. Eric Van…
Van Dusen?
Audience Member: Yes.
Econ 148 is Eric van Dusen’s one-man crusade to bring economics closer to the great data science consortium and effort here at Berkeley. I confess the need to bring things closer puzzles me. It certainly seems to me that statistics and economics are the two disciplines that have the greatest claim to naturally be “data science”. As Nobel Prize winning Chicago economic historian Robert Fogel said, the killer app of an economic historian is simply the ability to count. And data science is all about how to count, how to count things well, and how to use our machines to count for us.
I thus highly recommend data science.
Think back to when universities as we know them were first started, perhaps a thousand years ago in Naples, in Bologna, in Paris, in Europe. You had a feudal system on the secular side running from peasants who were serfs and craftsmen who were either serfs or small contractors up to squires and knights who provided “protection”, more or less, and who took a third of the crop. Above those we had nobles, barons, kings—and lots of wars. On the ecclesiastical side we had good Christian parishioners, monks and nuns, priests, bishops and a pope. These were two very hierarchical organizations. People had their places, and were largely born into their places, and had obligations and also privileges depending on those places.
And so it was pretty clear what everyone ought to do. The peasant ought to work and pay taxes and tithes. The priest ought to bless the congregation and intercede with them for God. The knight ought to “protect”, and also provide rough justice.
But there were the people who didn’t really fit in—the people who were not tied by obligations but were, instead, in the Latin of the day, “liberi”—free. They were free in the sense that they didn’t owe anyone any time or labor or kind of work. But they also were free in the sense that they had no ties that gave them privileges which enabled them to demand resources from others. And so these people, these “liber” had to live by their wits. So how do you do that?
The answer is: with the increasing growth of civilization, powerful people need bureaucrats—judges, accountants, theologians—and professionals—doctors, lawyers, astrologers, and so forth. Administrators. So these free people who had the blessing of being able to choose and the curse of having to find their place—these “liber” people could go to the university and there learn skill that made them useful to the powerful who needed staff. To gain those skills, they would study the “liberal” “arts”. “Liberal” in the sense that they were what a “liber” person needed. “Arts” not in the sense of painting or sculpture but in the sense of knowledge and skills needed to do something—in this case, something that would make you useful to someone powerful, and so allow you to find a place.
Thus in its origins the liberal arts curriculum was very much a technical, job-related curriculum. You would study logic—how to reason—rhetoric—how to persuade—grammar—how to write things down—arithmetic—so that you could count things—geometry—so you could understand distances and do a little surveying—astrology—so that you could forecast the future—and music an harmony. It is not clear to me how music and harmony made it into the standardcurriculum, but they did.
However, in the process, you would learn to write a fine chancery hand, how to take the ink and the parchment of the day and the bad pens they had and produce a document that looked authoritative and that other people could easily read. And if, at the university, you learned to write a fine chancery hand, this gave you a huge leg up over other people because you could prepare your own documents. That gave you a superpower as someone who might be useful to the bishop or the king or the high noble who needed an administrator.
Today, almost all of us have to make our living by our wits, one way or the other. Almost all of us have to build our human capital in order to figure out how to do things that are going to be useful to others—and hopefully useful to society, help us to understand the world, and enable us to live a good life. We need to learn our disciplines. We still need to learn how to think, speak, write, count, measure, and forecast. But also we really need to learn how to use our computers to do the counting and measuring and analysis for us. That is data science.
Just as the secret curriculum of the mediæval university of the Middle Ages was learning how to write a document so that it would look authoritative and other people could read it, so the data science skills are the secret curriculum of the modern university. Just as a generation ago knowing how to make Microsoft Excel dance was a superpower that some acquired in university and others did not, so today gaining data science skills is a key component of a liberal education—that is, the education appropriate for a free person who has to find a place in society by making themself useful, and seeks a white-collar place.
Thus ends this commercial for data science as a useful thing for you to learn, and a good thing for this university to be betting its resources on.
Lecture Introduction: Administrivia
This course, American Economic History, should show up for you on the bCourses website: <
http://bcourses.berkeley.edu
>. If it does not, the key thing to remember is 1540241—that is this course’s bCourses ID number. If you find that you do have access to the site for some reason, email me at <delong@econ.berkeley.edu> or email Linda or Matthias—no, it’s not Matthias, it’s Matheus—I’m back-translating your name out of Brazilian Portuguese into Aramaic, what it was 2000 years ago. And we will try to sort it out.
Course readings. This is a history course. This means there are readings. Serious readings. But the readings are not overwhelming. I have taken a chainsaw to my reading list and cut it by two-thirds. If you want the triple-sized reading list, I can give it to you. But I would urge you to read the non-overwhelming assigned readings with attention and intent, rather than skimming a larger set. I am, finally, taking the advice Christy Romer gave me when I arrived here in 1995 and she said: “Brad, that, they won’t read that much”.
So: Do the readings. They are not overwhelming. They are important. They are all to be found under the “Files” tab in the “Readings” folder of the bCourses website: <https://bcourses.berkeley.edu/courses/1540241/files/folder/Readings>. There is, however, still a very strong sense in which having a print copy is very useful for things you are going to reread and think about often, if only because it is still easier to flip through a print book than to scroll through a long web document.
In addition to Readings <https://bcourses.berkeley.edu/courses/1540241/files/folder/Readings>, it is important to note the lecture slides in Other Course Files <https://bcourses.berkeley.edu/courses/1540241/files/folder/Course%20Files> and to stay current on Announcements <https://bcourses.berkeley.edu/courses/1540241/announcements>. That is how I am going to communicate with you.
Lecture Introduction: Why This Course?:
Why are we doing this? Why are we here? Why are we here to study American economic history?
This is a real question. To my knowledge, we have not taught American economic history in five years. No permanent member of the faculty has taught it in a decade, since Marty Olney last took on the job.
We are an overloaded economics department with too few faculty: we have 30 and the university’s standard metrics say we ought to have 50. But we’re expensive for the social sciences dean to commit funds to. And also—since are underpaid relative to our peers at universities with larger endowments than God—we have bargained for relatively light teaching loads. Hence, effectively, we are at half-strength. And so lots of things we should teach and lots of things we should teach in smaller class sizes, we do not. American economic history has been one of the eggs we have dropped in our juggling over the past decade.
Now we are actually teaching American economic history. And with no recent syllabus to draw from, I am taking a fresh look at the subject.
This Will Be an “Episodic” Course:
The first conclusion that I have reached is that I really can’t do what I do with 20th century economic history or the history of economic growth—tell a single integrated story with a beginning, a middle, and an end that is fitting and proper, given the entire story; tell a Grand Narrative and use it to structure the course, for it is useful even though it is false, for all Grand Narratives are false.
But for that to work in this class, I would have to be able to base my presentations on the launching pad that is your knowledge of general non-economic history, and you simply do not have that knowledge. I would have to be able to make a reference to, say, President Andrew Jackson and the Nullification Crisis, and you would have to then know what I meant. And you don’t. In fact, how many of you have heard of President Andrew Jackson? Three-quarters, great! But how many of you have heard of his Bank War? One-tenth. How many of you have heard of the Nullification Crisis of 1832? One-fifth. Not so good. A very key moment on the road that led to America’s Civil War, as Vice President John C. Calhoun rallied pro-nullification southern politicians against the congress, its tariff, and President Jackson. And how many of you have heard of the Cherokee Trail of Tears? Four-fifths. Great! The Cherokee and their 1830s tragedy are doing better in getting into your minds than either the bankers or the Confederate secessionists of South Carolina from the 1830s.
Of these, I would argue that it was the Nullification Crisis that was the most significant. 700,000 people died and 700,000 people were maimed in America’s 1861–5 Civil War—that’s 9% of the adult male population, and the confederacy share was 50% of the confederacy white adult male population. As my teacher Claudia Goldin once calculated, for the resources and treasure expended in the Civil War—leaving all the blood and death to one side—you could have paid peak-market prices to buy up and free every slave in America in 1860, plus buy for each slave family 40 acres of good land and a mule. Andrew Jackson said to the end of his days that the biggest mistake he had ever made as president was not shooting his vice president, John C. Calhoun, dead on the White House lawn. Given Calhoun’s role in setting America on the path toward that tragedy rather than a path of peaceful emancipation and abolition as virtually every other country did.
You would have to know things like that for me to be able to center this course around any kind of Grand Narrative of economic history as counterpoint. And you don’t. So I can’t.
Therefore this course is going to be “episodic”. We are going to do a bunch of different things—a different thing each week. Each week will have some themes, an important historical question or two, and an analytical base in a subdiscipline or set of models in economics that we will use to try to gain insight into those questions and themes. We will cover:
“American Exceptionalism”: Is it a valid thing?
America’s Economy in Historical-Comparative Perspective: How is it exceptional? Counting & guesstimating.
Settlements, Colonizations, & the Resource-Conquest-Expansion Economy: How important and significant was the long trans-Appalachian march to the Pacific? Growth theory & growth accounting.
Slavery, Civil War, & After: Who really benefited most from the Peculiar Institution? Competitive economies & the economics of well-being.
American Exceptionalism: How does a resource-advantaged economy become an industry- and technology-advantaged one, anyway? Comparative advantage & economic development.
The Second Industrial Revolution: Where did Modern Economic Growth come from? Roots of technological invention and innovation.
Immigration: Who benefited, & how much? Labor economics.
Feminism: Was High Patriarchy surprisingly persistent or surprisingly fragile here in America?
The Mass Production Economy: Oligopolies & countervailing power. Increasing returns & industrial organization.
The Social-Democratic New Deal Order: Questions of Political Economy. Linking the economic base to the political-socio superstructure.
The Rise of Silicon Valley: Why such extraordinary geographic concentration? Invention, innovation, & finance.
Inequality & Economic Mobility: Stratification economics. Human capital theory & its inadequacies.
The Global Financial Crisis & After: Why, after two centuries, can’t we maintain full employment? Macroeconomics & finance.
The Attention Info-Bio Tech Economy & The Future: Where are we going? Political economy & woo-woo…
Conclusion: Does it all hang together? Or not?
Perhaps there is one particular theme that does something to tie all of these episodes together. It is: Is America an exceptional country? Or rather, in what sense is America an exceptional country? And how can the fact that it is exceptional in some senses for good and bad, how can that be useful to us as we try to think about the way things work?
Takes on “American Exceptionalism”: Henry Luce:
For today I wanted to assign you three relatively short pieces: an editorial by Henry Luce, a book chapter by Leon Trotsky, and a scholarly academic article by Robert Allen. How many people have read them? One-tenth. And that’s not great. Lectures will make more sense if you do the readings beforehand. And, as I say, this time, for once in a course taught by me, they’re not overwhelming in length. Although some—Allen today—are rather dense.
I am going to warm call on Maggie Lamb, who is… clearly I need new glasses. Yes, there you are. So what does Luce mean by the term the American century?
Audience member: The idea that the 20th century should be dominated by an America that will spread its ideals throughout the world, and overcome domestic forces arguing for “isolation”.
Right. That America ought to be the boss nation over the entire world, in some sense, for the 20th century. And how does Luce get to this particular position? We’re very far away from the Eurasian heartlan where most all of the people live. And, by and large, previous attempts by other nations to be boss nation certainly had not turned out very well. So how does he get to that conclusion?
Audience member: That the US is leading in GDP, andreally strong in manufacturing, so that it has the power to influence events. And you are also set apart from other countries because of your pursuing of democratic ideals.
So economic power on the one hand, and democratic ideals on the other. Ideals which Luce says are massively good. But George Washington, back at the start of the United States, the first president, said that we needed to avoid foreign entanglements. And that the job of America and Americans was to make a good society here and so spread good values of democracy and freedom by our example, rather than send out armies and fleets all over the globe to make people behave in the way we thought that they should behave. Leadership by the example of being a free and well-governed country, in which people are not oppressed. Not leading by actually telling people, “Do what we want,” or else, because we have the power to do so. So how does Luce get to a very different thing? How does America, he thinks, get the right to become a boss nation?
Audience member: I think he presents it not as a right, but as a necessity. He looks back at the first 40 years of the 20th century, when America was in a position to take very consequential decisions for the benefit of humanity but decided to retreat into isolationism instead. And that led to the very unsatisfactory situation of the world in 1941, with Europe shaking itself to pieces.
Let’s say: so not so much a right as an obligation, as a necessity. The entire rest of the world was turning into a shit show. Famine, war, and death:
Famine threatened: the rapid population explosion that is greatly shrinking farm sizes around the world in the middle of the 20th century, without concomitant rises in technology to allow people to support themselves on the size of farms they would have, and America could bring better farming technologies. As late as 1970, we had Paul Ehrlich over at Stanford saying: The Indian subcontinent and Southeast Asia need to be triaged. Providing them with resources will simply lead to a further population explosion, to a larger and more miserable population on the point of starvation, and to even greater famines when the system breaks down. A famine, Ehrlich thought, that would dwarf in absolute and even relative terms the Irish Potato Famine of the 1840s, when one-quarter of the population died. There was nothing the rest of the world could do to stop or ameliorate this, Ehrlich thought, save not to provide resources so that the disaster would be a little smaller. Ehrlich was completely wrong, of course. But his existence serves as a marker of how much Luce and others thought the rest of the world needed American technological aidAnd also, the military point.
There was war. A sideshow in WWII was Chiang Kai-shek’s decision to blow the dikes on the Yellow River to try to delay the advance of the Japanese imperialists—as Japan had caught the imperialism virus from Europe, and its government had decide that it needed an empire. As a tactic for delay, it did not work. One million people or so died. Perhaps five times as many lost their homes. More than 60 million people died in World War II. More than 10 million died in World War I.
And then there was the Great Depression as the greatest economic catastrophe of human history.
Plus there was death due to tyranny. There is a 50 million club composed of political leaders who provided over tyrannical régimes that killed, directly and indirectly, more than 50 million people. It has three members: Hitler, Stalin, and Mao. (Apologists for Mao say that the bulk of Mao’s death toll comes from the “Hungry Ghosts” famine that followed the failure of the Great Leap Forward crash-industrialization program, and that that was not an outcome that Mao desired but rather something that happened because the Politburo was given bad information by underlings. This defense is strongly undermined by noting that the most prominent bringer of good information—that brave military genius Marshall Peng Dehuai—was immediately purged, and then died during the Great Proletarian Cultural Revolution.) Régimes that were objectively nastier than anyone ever before, yet extraordinarily capable in that they were able to use modern technology to run their societies of domination more effectively than anyone ever before.
That was the world Luce looked out at, at 1941. He thought: By fortune chance, the United States has become very rich and very powerful. Plus in domestic affairs it had institutions that enabled a relatively large amount of individual freedom—the ability for people to live their own lives without being taken away at midnight by the secret police, and so offering ordinary people much better lives. The combination of American power and values on the one hand and the sheer magnitude of the global terror outside convinced Luce that America was under a moral obligation to take a stand to make a better world. And we had the power—economic, and thus economic could be turned into military power and cultural power—to set the world to rights.
Takes on “American Exceptionalism”: Leon Trotsky:
I also assigned this little article by Leon Trotsky, Russian revolutionary, who managed to spend three or so months in New York City during World War I.
Audience: [Silence]
No? You know, people—well, there are participation points. Participation is going to be graded in this class. That means unless you satisfy Matheus and me and Linda that there has been effort to participate, to think about the course in a timely fashion, and to assist your fellow students in learning about it, it’s going to be well-nigh impossible to pull a straight A in this course if we judge you haven’t punched your participation points.
Come February 1917, Leon Trotsky has been chased from Russia to, I think, Vienna to Paris, and was it Madrid?, and then chased to the United States as country after country decides to exile him as a disturbing element. So there he sits. And then he turns around and he takes a ship back to Russia in February 1917 rather than staying in New York.
So the first question is why does he leave? Why does he leave New York for Russia in February 1917? Yes?
Audience Member: He leaves New York for Russia because there’s news that the Reds have taken over the Russian government, and that means he can go back.
Yes. Russian politics is on the move. There’s been a revolt. The Tsar has abdicated. A caretaker democratic-socialist government has been formed under Kerensky. They’re trying to figure out how to construct a democratic and socialist Russia on the principles of free elections and enlightened modern politics. Trotsky is one of the leading Russian communist revolutionary, second only to Vladimir Lenin in status. So Trotsky wants to get back to Russia so he can do his thing and try to build a utopia in Russia, rather than stay in the United States as great many earlier revolutionaries had.
The European socialist democratic revolutionaries who fled Germany in 1848 with the failure of that revolution, for example. A lot of them washed up in the United States. A lot of those showed up in St. Louis. And when the Civil War started in 1861, the fact that there was a large critical mass of German immigrant democratic socialist revolutionary types hanging out in St. Louis was essential in allowing the Union to take control of St. Louis. Thus St. Louis rather than Chicago became the major Union logistics base in the West, perhaps shaving nine months off the total duration of the war. Having to do a St. Louis campaign before a Vicksburg campaign as U.S. Grant’s army moved down the Mississippi would have been costly and time consuming.
They stayed. Trotsky went back. But he went back, he said, with some regret. The chapter I gave you to read concludes with the line that he left with a feeling that he had only a glimpse into the forge where the future was being made.
So why did he think the United States was the forge where the future was being made? That Russia was not—that even a communist Russia led by the forward-looking Lenin (and Trotsky) could not be? Yes?
Audience Member: Because of luxuries like electricity and heating were provided far more cheaply in America.
Yes. As Vladimir Lenin was to say after the Russian Revolution, socialism equals soviet power plus electrification. What you have to do to get true socialism, Lenin thought, was to make the country rich and industrial by electrifying everything—building up modern technology into a rich and prosperous economy. You had to have that economy. And you also had to have the polity governed in a system based on soviet. That meant, according to Lenin, that people would not elect representatives to some kind of parliament that would boss a bureaucracy as the representatives lost touch with the people, and began to tell them lies. Instead, according to Lenin, you needed to avoid the cretinism of parliaments. You needed a system that would be based on overlapping, upward-stepping sets of councils by which people inside a particular shop or in a particular neighborhood would make decisions about truly local issues, and then choose a delegate to a higher-order soviet that would then decide higher-order coordination issues, and so on all the way up. At every stage the people who were making decisions would either be the people directly involved or people very closely linked to those directly involved. That, plus electrification, were what Lenin thought he had to do in order to turn the Russia, the Soviet Union, into a utopia.
Needless to say, absolutely catastrophic failure.
From Trotsky’s point of view, America was already doing the first—electrification, as a synecdoche for productive modern technology. Trotsky lived in a working class neighborhood in New York, as opposed to the middle-class neighborhoods that he had lived in in Vienna and Paris. And yet in those working-class American neighborhoods he had electric lights, gas stoves, elevators. There was even someone who had an automobile, and the chauffeur was eager to give his children rides. America was doing the “industrial prosperity” part. It was making a corrupt plutocratic Gilded Age hash of the “responsive democracy” part. But the play was ongoing.
Trotsky is not on Henry Luce’s page. Luce thought that America had the obligation to set the world to rights because it has done well in economic power and also done well in sociopolitical organization, and the rest of the world was such a shit show that America had to take on the responsibility to make it a better place.
Trotsky thinks America is exceptional. But the exceptionality does not give it a global role. Instead, it needs to focus on its internal struggle. America is forging the future, and it could be for good or ill. It could go either way precisely because America’s industrial might is not matched by its doing the right thing to build a utopia in terms of its political and social organization.
And there is lots wrong with America:
The racial caste system—although Trotsky was very happy that Black anger was, he thought, directed against the bosses rather than against the white working class, even though the white working class was racist as hell.
Media sensationalism—a source of amusement, but Trotsky also felt great frustration and anger at the fabrications of the clickbait-focused American press.
Nativist blindness: The fact that non-immigrant Americans really didn’t understand what the important issues were. They thought they were free, rather than being systematically dominated and constrained by the plutocrat-pleasing and plutocrat-guided market system.
Takes on “American Exceptionalism”: Bob Allen:
Last of the three articles was Bob Allen’s piece on American exceptionalism. How many people read that? A tenth. How many people think they understood that? Maybe three. OK, too dense. Useful to know. Im going to go back and I’m going to spend some time going through what the big argument of it is in several weeks.
Allen says that given where America was and what it did, its economic development was more normal rather than exceptional. Why do you think he reaches that conclusion?
Audience Member: Allen says that while it is true that the West is exceptional compared to other non-Western nations, but it’s not necessarily true that the US is exceptional compared to its western counterparts. All have the combination of high wages and low energy costs that incentivize the use technology to reduce minimize labor costs.
Right. Bob Allen’s position, which I think is much more right than wrong, is there is a city at the very southeastern corner of the island of England called Dover, the port of Dover. And within a circle of 400 miles radius around Dover, a lot of very interesting things happen starting around the year 1500. In the year 1500 the economies and societies within the Dover Circle are not especially prosperous and not especially well organized, compared to these societies elsewhere in the world. It is hard to think of a worse and more brutal king in the 1500s than England’s Henry VIII. Yes, the Dover Circle does have a small advantage in terms of making precision machinery and using gunpowder technology, but the use of gunpowder technology is largely to blow things up and kill people—a subtraction rather than addition to your economic output.
Plus they are disorganized. Other High Xivilizations tend to have a sense of who is what and how the whole system hangs together to maintain internal peace while also managing to grab a third of the crop for the predatory elite. In China, you’re a landlord, who thus has the resources to educate your children, who can thus pass the exams, who can thus get a job in the government, who can then not just earn their salary but collect bribes, and rise in the power structure, and then you use the bribes an your earnings to buy more land so your children can be landlords, and then have the resources to educate their children. And you have a very nice bureaucratic-landlord-scholar-technocrat-aristocratic circle for a society of domination, aided by a little military power.
Similarly, in the Middle East, you had a very nice system of– well, not always slave soldiers, but nomad soldiers on horseback working for sultans, collecting taxes from merchants, blessed by the umma, in terms of how the society was supposed to and did work.
But in Dover Circle, you did not. You had all kinds of overlapping competitors for power: king, church, assembled merchants, feudal hierarchies, and so forth. And yet, out of the Dover Circle comes modern industrial civilization as we know it. The societies there, the societies with large numbers of settlers coming from there bringing the institutions, and the societies like Japan that make every effort to imitate the Dover Circle. And, from Allen’s perspective, the United States is simply one of those societies. It’s part of the global north, part of the Dover Circle Plus, rather than being something really exceptional compared to the rest of the rich.
But there is a second-order question: The rich economies of the world were divided. There are industrial powerhouses: Germany and Britain and France, with Japan too. Ad there are there are resource powerhouses. Australia, New Zealand, Canada. Australia has long been fabulously rich, but Australia is fabulously rich not because it is a manufacturing powerhouse, but because it uses extremely high technology to amass a huge amount of resources.
The United States ought to have been the same. The logic of economic comparative advantage means you’re supposed to specialize in what you’re good at. And with the United States, its extraordinary resource base means that it ought to be a bigger Canada, a bigger Australia.
Instead, around 1900, while the United States remained the agricultural and mining powerhouse it had been, it also became a manufacturing and technology powerhouse. That is a very exceptional thing for an economy to do.vIt went very much against what economists would say is the normal comparative advantage evolution of market economies.
So that’s the key to the course: We are going to be asking, week after week:
Is America exceptional?
How is America exceptional relative to other societies and economies?
And what lessons can we draw from that exceptionality that are useful for us?
Are There Uses of History?:
And then there’s the deeper question, right? Why do we have history courses? Why should you take history?
The normal economist thing is that you start by introspecting as to how people behave. You then write down some model that assumes that people are kind of law-abiding (at least where the law is enforced) and generally want to get more good things on their own by working and trading. You use that model of how they interact to study an economic situation. Where does history come in?
Well, one natural question is: which models? Our economic theorists are now so damned ingenious that they can build a model of anything, and do. So you need to pick out the models that are useful in explaining things. How do you figure out what models are useful in explaining things? You have got to look at the past in order to try to pick out a model that might be useful for the present.
Plus, building a model and analyzing a situation from scratch is a very cognitively demanding thing. We are East African Plains Apeswho are barely smart enough to remember where we left our keys last night. In fact, I have to attach my keys to my jacket in order not to leave them behind when I leave the lecture. Aand remind me at the end of the lecture to take off the microphone—because I walked away with the microphone twice last semester.
An East African Plains Ape that has managed to come down from the trees and is roaming around—we are still remarkably cognitively inept. So we have constructed huge amounts of auxiliary aids to help us think at all. Running through lists of potentially analogous cases that other people have worked up and saying, “Yeah, this is applicable, no, this isn’t,” is a much, much easier cognitive task, and one we can hope to accomplish. Plus, whenever we look at a situation out there in the world today, well, there’s an awful lot about how a society and economy is working right now that truly is opaque if you just look at the situation today, but becomes transparent if you ask the question, "Where did this come from?
Tthere’s also the fact that such use of history as a potential source of models and analogies is almost surely a good thing to do because people in their social human interactions are indeed much the same across cultures, across times. And looking at how people have interacted and acted in the past can only be of help in trying to figure out the interpretation of the future. For, as the historian Thucydides wrote, “In the course of human nature and things, the future must resemble the past.” This is the reason why Thucydides decided to spend his time writing his History of the Peloponnesian War, the second history book we have.
And he was an arrogant bastard: He said that his book is a treasure for all time. That he was not simply writing a story to amuse when read out in public, or not doing a careerist ticket punch. But rather, was creating something that is a treasure for all time if you study it carefully.
That is a hell of an arrogant thing to say. That is especially the case if you were fired from your job as admiral and exiled from Athens for failing to prevent the conquest of Amphipolis by the Spartan general Brasidas. That is an arrogant thing to say if you are living an exiled life far from your home and your friends, just scribbling down things.
Course Mechanics
The one important thing to say about course mechanics is that I’m going to talk about it next Monday.
As a preview, I think:
Mondays I will be doing normal, general lectures.
Wednesdays I’m going to try to—we will see if it works—put some money down on my belief that data science skills are important by doing interesting live calculations that tell you important things about the economy.
Fridays I’m going to use for catchup. And I’m also going to take a bunch of Fridays and simply not have class, but instead devote the prep time and the lecture time to one-on-one conversations with you via zoom.
Why? Because I think the university broke during the plague. It became a much more distant, a much less interactive, a much less people talk and think in real time. We are now much mor passive absorbers of media that wash over us, and much less active participants in a human scholarly community. Being passive absorbers of media that wash over us is not an effective way to learn.
150 of you. 10 minutes per person. 150 divided by 6. That’s 25 hours of one-on-one office-hour mandatory zoom meetings—that is something I can definitely do this semester. And that you’re going to have to talk to me about the course one-on-one at some time during it is going to greatly incentivize you to think about it, and so have views and questions so you can sound coherent.
Thus expect an email from me giving you a time and asking you to suggest a different time if that’s not going to work.
Hence: No class on Friday. I am going to start this up right now.
See you next on Monday, where we’re going to talk about the history of the world from the year –8,000 to today.
References: Required Readings & Others:
Trotsky, Leon. 1930. My Life: An Attempt at an Autobiography. New York: Charles Scribner's Sons. <https://archive.org/details/in.ernet.dli.2015.175689>. Forward & ch. 22 (“New York”).
Luce, Henry. 1941. “The American Century”. Life. February 17. <https://archive.org/details/americancentury0000unse>
Allen, Robert C. 2014. “American Exceptionalism as a Problem in Global History”. The Journal of Economic History. 74:2 (June), pp. 309-350. <https://doi.org/10.1017/S002205071400028X>.
Davies, Dan. 2023. “The Valve Amplifier of History.” Back of Mind. May 3. <https://backofmind.substack.com/p/the-valve-amplifier-of-history>.
DeLong, J. Bradford. 2024. “What Had I Hoped to Teach This Just-Past Semester?” Grasping Reality. December 16. Accessed January 21, 2025. <https://braddelong.substack.com/p/what-had-i-hoped-to-teach-this-just>.
Matuschak, Andy. 2019. "Why Books Don’t Work." May 11. <https://andymatuschak.org/books/>.
Ober, Josiah. 2022. The Greeks and the Rational: The Discovery of Practical Reason. Oakland: University of California Press. <https://archive.org/details/greeksandrational>.
Rawlings, Hunter. 2016. “Ktêma Te Es Aiei... Akouein.” Transactions of the American Philological Association. 146 (2): 309–324. <https://www.jstor.org/stable/26543677>.
Solow, Robert. 1985. “Economic History and Economics.” American Economic Review. 75 (2): 328–331. <https://economicsociology.org/wp-content/uploads/2018/07/economic-history-and-economics..pdf>.
Thoukydides. -431. The Peloponnesian War. Trans. Richard Crawley. London: J.M. Dent & Sons. <https://archive.org/details/peloponnesianwar0000thuc>.
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Does anyone want to set up a group-study course based on Prof. DeLong’s lecture notes? His past notes have been amazingly thorough. I’m actually more interested in his innovation lectures in previous semesters, but we could decide what to study as we get started.
Luce again:
"Plus in domestic affairs it had institutions that enabled a relatively large amount of individual freedom—the ability for people to live their own lives without being taken away at midnight by the secret police."
Some citizens with the wrong color of skin could be taken away in broad daylight. Seems that in our current day, the government is setting up to do the same for people without papers.