Economics and World History: Myths and Paradoxes.

The timing of this work could not be better. With the awarding of the Nobel Prize in Economics to North and Fogel for their work in the area of economic history, this collection of short essays by Bairoch, Professor of Economic History at the University of Geneva, provides additional examples of commonly held myths and, at the same time, supports the movement that students of economics need to be exposed to more applications, not less, of economic theory to important events in economic history. Bairoch employs a very simple yet very elegant three-part methodology. First, state the myth. Second, provide the reader with some brief background notes to the myth. Third, use empirical data and recently published materials to "prove" that the myth is, in fact, an inaccurate representation of the historical event being examined. Two examples may be cited.

The first principal myth is associated with individuals which ". . . could be described (with some exaggeration) as a conservative group that romanticizes the nineteenth century and makes free trade almost into a sacred doctrine".(1) This myth is addressed in Chapters 1-4. Chapter 2 investigates the myth of free trade from the European perspective: "Was there a Golden Era of European Free Trade?". The specific point which Bairoch investigates is the idea that in European economic history during the period of the Pax Britannica, 1815-1914, free trade was the role and protection the exception. After dividing this period into five sub-periods, 1815-1846, 1846-1860, 1860-1879, 1879-1892, and 1892-1914, presenting and evaluating the available evidence, Bairoch draws three conclusions.

First, the idea that "free trade is the rule, protection the exception" is a myth. This idea is valid only for the third sub-period, 1860-1879. For the entire period, 1815-1914, the reality is that protection is the rule and free trade the exception. Second, according to Bairoch, the ability of this myth to cloud people's vision of reality can be traced to the influence which Smith and Ricardo had on the writers of the economic history. Bairoch forces the reader to recall the path taken by Britain: protection of the home market until British firms dominated the industries associated with the First Industrial Revolution. Only then did Britain become an advocate of free trade. Third, outside of Britain, when it came time to make decisions about international trade and protection of the home market, the writings of List, The Natural System of Political Economy [3] and The National System of Political Economy [4], of his American counterpart, Alexander Hamilton, The Report on Manufactures [2], had more influence.(2)

The second principal myth is associated with a group ". . . which can (also with some exaggeration) be described as leftist or radical economists, see (sic) the history of colonialization as one of whites becoming rich by oppressing the Third World".(3) In Chapter 7 Bairoch investigates this particular myth from the perspective the interrelationship between the industrialization of Europe and the United States and the colonialization of other parts of the earth. Specifically, "Was Colonialism Important in Triggering the Industrial Revolution?". The basis of the myth is the idea that the less developed nations export raw materials and semi-finished goods to the developed nations and import hi-tech manufactured products from the developed nations. If this is the case, then colonies must have been an important element in triggering the Industrial Revolution. The empirical evidence marshaled against this myth demonstrates clearly that during the early phases of the Industrial Revolution, the nations which participated in this epoch-making process were, for the most part, self-sufficient in the key raw materials, or could obtain these raw materials from sources located in Europe. Bairoch draws two conclusions from his investigation. First, the idea that colonialism triggered the Industrial Revolution is a myth. The reality is that the Industrial Revolution was triggered by forces which were internal to Europe and to the United States. Second, Bairoch broaches the idea that the Industrial Revolution may have triggered colonialism.(4)

While this book provides the reader with a review of some of the more interesting events in economic history of the world, two problems remain. First, there is the problem of minor editorial errors: misspelled words and unclear textual references to specific dates. Second, there are the problems presented by the paradoxes. For example, the period 1860-1879 appears to be the high tide of the free trade movement in Europe; yet the origins of the Great European Depression may be found during this time span. This particular paradox is discussed, albeit very briefly, in Chapter 4. To be fair, I must say that a thorough discussion of this paradox is beyond a strict definition of the scope of this collection of essays. And yet, at least two questions come to mind. Is there a casual link between the two elements of this paradox: free trade and the Great European Depression? What are the other forces which may provide clues essential for solving this paradox? For the serious student of economic history, the question raised by this paradox, and the other paradoxes noted throughout the essays, provide an interesting research agenda. For those readers who are merely interested in economic history, this collection of essays would be a valuable addition to their libraries.

Tom Cate Northern Kentucky University 

1. I use the term "principal myth" because each of the two principal myths identified by Bairoch, free trade and colonialism, are subdivided into smaller more manageable questions.

2. Students of British economic history are familiar with this line of reasoning: it is very similar to the one used by Mantoux in his tour de force, The Industrial Revolution in the Eighteenth Century [5]. In a recent article in The Atlantic, James Fallows [1] continues the line of reasoning used by Bairoch and Mantoux. The theme developed by Fallows is that the path followed by the United States, and later Japan, is the same one blazed by England. The myth that free trade stimulated the economic growth and development of this nation is alive and well in 1994. We have chosen to ignore the economic history of this nation.

3. Given the recent changes which have occurred in Eastern Europe, the terms First, Second and Third Worlds have become dated. Perhaps one should employ other designations such as developed and less developed areas of the globe, terms used in the subdiscipline of developmental economics.

4. Japan may be used as an example of this particular point. Access to key raw materials has been an important element in the economic history of Japan.

References

1. Fallows, James, "How the World Works". The Atlantic Monthly. December, 1993, pp. 61-87.

2. Hamilton, Alexander. Report on the Subject of Manufactures. December 5, 1791.

3. List, Friedrich. The Natural System of Political Economy. 1837.

4. -----. The National System of Political Economy. Fairfield, New Jersey: Augustus M. Kelley, Publishers. Reprint of 1885 edition.

5. Mantoux, Paul. The Industrial Revolution of the Eighteenth Century. Chicago: University of Chicago Press, 1983.