Monthly Archives: July 2014

Corruption and consumption

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Teju Cole’s [amazon_link id=”0571307922″ target=”_blank” ]Every Day Is For The Thief[/amazon_link] is an absolutely terrific book – his [amazon_link id=”0571279430″ target=”_blank” ]Open City[/amazon_link] is now on my wish list. It is a portrait of Nigeria – Lagos, rather – by a returned Nigerian. One of his main preoccupations is the absolutely pervasive bribery, which he tries to resist but rarely successfully; another the texture of institutional failure and what that means for the country – and how it is linked to the absence of a sense of why history is important. Highly relevant reading for anybody interested in development economics, not to mention a wonderfully written, moving, fascinating book.

[amazon_image id=”0571307922″ link=”true” target=”_blank” size=”medium” ]Every Day is for the Thief[/amazon_image]

Cole writes: “For many Nigerians, the giving and receiving of bribes, tips, extortion money or alms – the categories are fluid – is not thought of in moral terms. It is either seen as a mild irritant, or as an opportunity. It is a way of getting things done, neither more nor less than what money is there for.”  This is subtly different from Katherine Boo’s explanation for corruption in her book in life in an Indian slum, [amazon_link id=”1846274516″ target=”_blank” ]Behind the Beautiful Forevers[/amazon_link], where she shows that people are too poor to give up any opportunity to make some money.

Other snippets from [amazon_link id=”0571307922″ target=”_blank” ]Every Day is for the Thief[/amazon_link]: “One goes to the market to participate in the world. As with all things that concern the world, being in the market requires caution. The market – as the essence of the city – is always alive with possibility and danger. Strangers encounter each other in the world’s infinite variety, vigilance is needed. Everyone is there not merely to buy or sell but because it is a duty.”

“The oil and gas business rakes in lurid profits, there has been a great increase in cellphone use, and the banking sector is frenetic. The newspapers are full of mergers and acquisitions. These are the limits of the boom. It is good news in the sense that increased commerce is creating jobs, that the economy is active, and certain practical needs of the people are being met. Things are not as stagnant as they were in the dark days of the early and mid-90s. But there are now mores erious discrepancies in income levels, even among people with comparable educational qualifications. There is little incentive for people to go into professions that are not lucrative. Consumption, among those who can afford it, is conspicuous.”

And you ask, as I suppose you are meant to, who are the thieves.

Technology in history

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I’ll collate the economic history suggestions another time. Meanwhile, though, seeing a recommendation for David Edgerton‘s influential [amazon_link id=”1861973063″ target=”_blank” ]The Shock of the Old: Technology and Global History since 1900[/amazon_link] sent me to both that – which insists that there is too much cheerleading about invention and not enough focus on the implementation of technologies in specific historical contexts – and to his subsequent book, [amazon_link id=”0141026103″ target=”_blank” ]Britain’s War Machine: Weapons, Resources and Experts in the Second World War[/amazon_link].

The latter makes some contrarian arguments about the war. Edgerton argues that (a) Britain was the richest and most powerful combatant thanks to its imperial resources – it is a mistake to think of it as a beleagured nation standing alone begging for American charity, and Germany would (and did) struggle to combat it; and (b) the ‘declinist’ histories about Britain after the war (notably Corelli Barnett in [amazon_link id=”033034790X” target=”_blank” ]The Audit of War[/amazon_link] and  [amazon_link id=”0333480457″ target=”_blank” ]The Lost Victory [/amazon_link]etc) are mistaken, as relative decline was due largely to strong growth in other countries.

[amazon_image id=”0141026103″ link=”true” target=”_blank” size=”medium” ]Britain’s War Machine: Weapons, Resources and Experts in the Second World War[/amazon_image]

Edgerton’s argument is pinned on a materialist account of the resources and technology developed and used by Britain. Some of this evidence is very striking. One example is a graphic showing the vastly, vastly greater tonnage of bombs the UK dropped on Germany compared with German bombing of the UK – the horrors of the firestorms and mythology of the Blitz notwithstanding. It’s all very interesting. Britain’s early defeats led to a huge emphasis on increasing production, he writes, saying there was a “powerful sense that the war was a war of production,” with contemporary debate focusing on industrial efficiency, or the lack of it.

The importance of scientific advance in the conflict is obviously a well-known part of the story, from codebreaking (my favourite account is R.V Jones’s [amazon_link id=”185326699X” target=”_blank” ]Most Secret War)[/amazon_link] to the Manhattan Project. Edgerton adds to this the sense of Imperial power and the availability of material resources.

[amazon_image id=”185326699X” link=”true” target=”_blank” size=”medium” ]Most Secret War (Wordsworth Military Library)[/amazon_image]

His reinterpretation is certainly interesting, and it must always be fruitful to test received wisdom. His claim that postwar decline is misinterpreted is less convincing, however. Surely the loss of Empire is a decline, whether you think it was a good thing or not? And the transition to US superpowerdom postwar is clear.

I see from his website that Prof Edgerton is working on currently working on Capitalism, Empire and Nation: a new history of twentieth-century Britain, a forthcoming book for Penguin. That will be an essential read.

What economic history do economists need to know?

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There’s an interesting VoxEU column by Coen Teulings about the economic history economics students ought to know. The list is terrific for learning about economic growth and development, including for example Jared Diamond’s classic [amazon_link id=”0141024488″ target=”_blank” ]Guns, Germs and Steel [/amazon_link]and Paul Bairoch’s [amazon_link id=”B009NO0MH0″ target=”_blank” ]Cities and Economic Development[/amazon_link], as well as more recent entries like Acemoglu and Robinson’s [amazon_link id=”1846684307″ target=”_blank” ]Why Nations Fail[/amazon_link]. However, there are some obvious omissions – David Landes’ [amazon_link id=”0349111669″ target=”_blank” ]Wealth and Poverty of Nations[/amazon_link], Joel Mokyr’s [amazon_link id=”0691120137″ target=”_blank” ]Gifts of Athena[/amazon_link], [amazon_link id=”0691090106″ target=”_blank” ]The Great Divergence[/amazon_link] by Kenneth Pomeranz, not to mention some straightforward histories of the Industrial Revolution such as Bob Allen’s [amazon_link id=”0521687853″ target=”_blank” ]The Industrial Revolution in Global Perspective[/amazon_link]. There are some less obvious omissions too – James Scott’s [amazon_link id=”0300078153″ target=”_blank” ]Seeing Like A State[/amazon_link], maybe?

[amazon_image id=”1846684307″ link=”true” target=”_blank” size=”medium” ]Why Nations Fail: The Origins of Power, Prosperity and Poverty[/amazon_image]

Economics students certainly need to have more history included in their courses – I would favour weaving it in as well as offering separate courses, because much as students claim to want to study economic history, I’m not at all sure they walk the talk in large numbers. However, the list in the VoxEU column is only one strand of economic history. For industrial organisation courses, for example, what’s needed is business history. The Mokyr book might feature, but so also Alfred Chandler’s [amazon_link id=”B00BR5MIXY” target=”_blank” ]The Visible Hand[/amazon_link], or his [amazon_link id=”B00L6K91RG” target=”_blank” ]book about DuPont[/amazon_link], say, or a terrific book I read recently about Bell Labs, Jon Gertner’s [amazon_link id=”1594203288″ target=”_blank” ]The Idea Factory[/amazon_link].

[amazon_image id=”1594203288″ link=”true” target=”_blank” size=”medium” ]The Idea Factory: Bell Labs and the Great Age of American Innovation[/amazon_image]

I’m sure there are lots of other good suggestions out there – both books, and how to weave economic history into economic teaching. This summer I’m finalising my Public Policy Economics course to teach at the University of Manchester in the autumn so econ history suggestions for that are especially welcome.

Fact and fiction

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With a brief holiday after my NZAE conference and then 24 hours of travel back from Australia to the UK, I managed to read two chunky books as well as the others described in my last post.

One was [amazon_link id=”0007213964″ target=”_blank” ]The Pike [/amazon_link]by Lucy Hughes-Hallett, the biography of the extraordinary Gabriele D’Annunzio. It educated me about the Italian role in the First World War – something unsurprisingly not much covered in the centenary materials here in the UK – and the way the aftermath paved the way for Mussolini. I’d known next to nothing about D’Annunzio before reading this prize-winning biography. He was an extraordinary character, and the story is supremely well told in this book, which while clearly based on exhaustive historical research indeed reads like a novel.

[amazon_image id=”0007213964″ link=”true” target=”_blank” size=”medium” ]The Pike[/amazon_image]

The other was Donna Tartt’s epic novel, [amazon_link id=”0349139636″ target=”_blank” ]The Goldfinch[/amazon_link], a nearly 900-page page-turner. It’s a novel with an economics lesson at its heart. The protagonist, Theo, goes into the antiques trade. He observes: “I also learned a lesson; a lesson which sifted down to me only by degrees but which was in fact the truest thing at the heart of the business. It was the secret no-one told you, that in the antiques trade there was really no such thing as a ‘correct’ price. Objective value – list value – was meaningless. … An object – any object – was worth whatever you could get somebody to pay for it.” An excellent lesson in applying behavioural insights to pricing antiques follows. The entire novel is about value, both market value (at its most brutal, in the criminal world as well as the antiques trade) and inherent or moral value.

[amazon_image id=”0349139636″ link=”true” target=”_blank” size=”medium” ]The Goldfinch[/amazon_image]

The right kind of free markets

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As I’m travelling, I’ve been doing a lot of frivolous reading – [amazon_link id=”1781681678″ target=”_blank” ]Altai[/amazon_link] by Wu Ming (fabulous), [amazon_link id=”1847084826″ target=”_blank” ]Secrecy[/amazon_link] by Rupert Thomson, John Le Carre’s [amazon_link id=”0241965187″ target=”_blank” ]A Delicate Truth[/amazon_link] (oh dear, he’s lost the use of shades of grey in character), and in non-fiction Mary Beard’s [amazon_link id=”1781250499″ target=”_blank” ]Confronting The Classics[/amazon_link] (very interesting and enjoyable), [amazon_link id=”0099584255″ target=”_blank” ]Italian Ways [/amazon_link] by Tim Parks (funny, and all-too-plusible about Italy) and, just finished, Jesse Norman’s [amazon_link id=”0007489641″ target=”_blank” ]Edmund Burke.[/amazon_link]

[amazon_image id=”0007489641″ link=”true” target=”_blank” size=”medium” ]Edmund Burke: The Visionary who Invented Modern Politics[/amazon_image]

I’ve found this very interesting, especially the last chapter on what light reading Burke can shed on the philosophy shaping modern political debate, namely liberal (UK sense) individualism and its counterpart in economics, the neoclassical free market model. The book argues that the assumptions of self-interest and individualism in economic models have spilled outside their proper domain of technical economic analysis: “What starts with an economist’s assumption ends up as a deep cultural pathology.” There is furthermore the loss of the basic trust uniting the generations, Burke’s famous point about the “partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born.” Those who are to be born, in particular, cannot participate in the free market,

The book concludes: “Burke offers a profound critique of the market fundamentalism now prevalent in modern society. But he does so not from the left of the political spectrum but from the right. … Understood conservatively, markets are not idolized but treated as cultural artefacts mediated by trust and tradition. Capitalism becomes, not a one size fits all ideology of consumption but a spectrum of different models to be evaluated on their own merits. Burke would note the extraordinary greed and self-dealing seen over the past decade by the modern nabobs of banking and finance in a series of cartels disguised as markets…”

I haven’t read much by Burke, and that little over 30 years ago. I rather suspect he’s an author one approaches differently with age and experience. Anyway, Jesse Norman’s book was a great (re-)introduction.