Tag Archives: review

Hot grease and cotton dust

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Joshua Freeman’s Behemoth: A History of the Factory and the Making of the Modern World starts – of course- with the cotton mills of northern England during the Industrial Revolution. The early chapters had a (reverse-)Proustian effect, reminding me of the distinctive assault on the senses of taking my dad his lunch in his spinning mill, where he was a mule operator, or going to see my aunties in their weaving shed: the rhythmic clatter of the machines, the smell of hot grease and cotton dust. But they were small factories. The book’s theme is the economic and cultural role of giant factoriesm behemoths.

It’s an engrossing read, progressing from Manchester in England – inspiration for Marx and Engels (the latter running a mill there) – to the New England textile industry and the American System; the late 19th century enthusiasm for factories and manufactures with the Crystal Palace Exhibition and other grand fairs; Ford and Fordism; Soviet Gigantism; the Cold War era of mass production; and ending with the giant plants in China and elsewhere in Asia today.

The book notes the magnetic appeal of big factories, even for their social critics. This started early. In the 19th century, campaigners’ indignation focused on conditions of work in the new factories, including their use of child labour. Quite right too. Yet, Freeman notes, “The novelty of the factory system drew attention to the exploitation of its workforce, while the long-standing exploitation of agricultural workers, domestic producers, servants (encompassing twice as many women as in the textile industry) and others went largely unnoted by politicians, journalists and writers, who had little interest in the lower classes.” (The same is true now of the commentariat’s focus on ‘gig’ work via digital platforms; there are lots of worse jobs around.)

For much of their history, factories have been seen as symbols of modernity – including in the arts, especially by photographers such as Margaret Bourke-White or Alexander Rodchenko. In the late 19th century again, the structures of industry represented the Sublime. The link of the huge factory complex with modernity was particularly striking in the newly industrialising Soviet Union – and one of the things I learned from the book was how much that had depended on American engineers, designers, foremen, trainers in the 1920s and 1930s. The Soviet sphere continued to manufacture on a giant scale until 1989. As a journalist in 1990, I visited the Ganz Elecrtic plant near Budapest, up for sale to western investors. Steel went in at one end, everything from buses and lightbulbs emerged at the other. Some giant plants even had steel mills, integrating the entire vertical chain.

Yet in the US the biggest companies moved away from their emphasis on huge plants like Ford’s River Rouge – a tourist destination and much photographed and celebrated – in part to reduce their vulnerability to organised labour and industrial action. The need for labour and the constant to and fro in power relations is one of the threads running through the book. Freeman argues that unionization and labour power get too little attention in the economic literature on industrial location, which I think is right. The communist countries were able to continue on the behemothic scale because unions were part of the social state.

The book ends with China’s giants, such as Foxconn City. Why are they still so big, Freeman asks? These are not long and complex production lines like those involved in building a modern car or an aircraft. And there are diseconomies of scale in terms of management and organisation – not to mention hiring and managing such a large workforce – which one might have expected to lead to production on a smaller scale. His answer is that scale today serves the retailers, not the manufacturers. The focus on marketing and branding by the likes of Apple or Nike means they want consistent, timely and huge runs of new products. Modern communications – virtual and physical – have made contract manufacturing possible on this immense scale. Many western manufacturers outsourced their manufacturing from the mid-1990s. So whereas 19th and 20th century giant factories were public marvels – criticised, yes, but also admired, visited, debated – 21st century factories in China are dull boxes surrounded by walls and rarely photographed.

Still less do they inspire poets like Walt Whitman, who wrote of the sublimeness of steam power. The poetry quoted here is by a young Foxconn worker who committed suicide: “They’ve trained me to become docile/Don’t know how to shout or rebel/How to complain or denounce/Only how to silently suffer exhaustion.”

Being a factory worker has always been exhausting, draining, deafening, dangerous – for all that there are worse alternatives. Although unions briefly won great gains for (male, long-term) factory workers in the mid-20th century, leading some people now to romanticise blue collar jobs and factory communities, I’m happy to see robots taking over ever-more of the work. And yet, and yet, factories are still fascinating.

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Euro-vision

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Benn Steil’s The Marshall Plan: Dawn of the Cold War reminded me at times of the movie 13 Days (about the scary 1961-62 confrontation between the US and USSR over Soviet missiles heading for Cuba): you know how the story ends, but even so the dramatic tension of men in suits talking in a room is almost unbearable. The dawn of the Cold War – particularly the status of Berlin and the airlift – was one of those extraordinary turning points too. Steil is also a terrific writer. For example, here he describes Kennan: “George Kennan would make a career out of repeatedly testing his powers of persuasion and then recoiling from the consequences.”

It’s also particularly poignant to read this book in Brexit Britain, for it makes clear the Marshall Plan’s bold vision of political cooperation and growing economic links between all of the western European nations, and the achievement of American politicians and diplomats in enabling this in a continent devastated by the war and not surprisingly beset by mutual suspicion. Prosperity and security for the whole were inextricably linked – hence the biggest challenge in launching the plan was to overcome the Europeans’ pursuit of individual national aims when the whole could be so much bigger than the sum of the parts. This went for making steel more efficiently and also for collective defence. It was difficult for the French in particular to see the (west) Germans and the Ruhr in this light. Kennan and others were clear that outside a new intergrated western Europe, “Britain would appear to have no future.” It depresses me utterly that we are turning our back on the vision that kept western Europe at peace and prospering since 1945 – this time without the Americans to set us straight.

The Marshall vision, however, also in a way sowed some Cold War seeds, for the Soviets were just as keen as the French to ensure German industry could not recover to its own benefit, but only to the extent that its outputs could be shipped to the USSR as reparations. The main issue was still Stalin’s desire to extend Soviet control as far as possible, including encouraging the Communist parties in France and Italy to engage in economic sabotage; but it’s fascinating to see how often questions of politics and influence were played out in seemingly dry economic issues such as the right to print currency, and whose versions of different currencies circulating in Berlin could be used to purchase which goods.

The essence of the Marshall Plan, Steil writes, was that the US taxpayers would sustain a minimum standard of living in the beneficiary countries in return for economic liberalization and integration to kick start the war-devastated economies and the momentum for continuing growth. “In essence the State Department was tendering the largest foreign aid program in history as a social shock absorber for the largest structural adjustment program in history.” The book covers the American political debate in detail, revealing new (to me) heroes, notably Arthur Vandenburg, the Republican senator who ensured President Truman got Congressional approval for the deal. And new villains: we all know Philby, Burgess and Maclean spied for the Soviets but they’ve been too sanitised by literature.

There are loads of nice details in the book too – for instance, when Molotov visited London on 1942 to negotiate an Anglo-Soviet treaty, he distrusted his hosts so much he slept with a revolver next to his bed. (If he were visiting London now, of course, he’d be having to distrust his compatriots more.)

A highly recommended read (and given the appendices and footnotes, not as daunting as its size suggests!)

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The culture of finance

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Shelia Kolhatkar’s Black Edge is a cracking good read about how the growth of hedge funds was rocket-fuelled by their extensive reliance on insider trading. The focus of the story is Steve Cohen’s SAC capital. The abuse was enabled by the fact that the regulators were slow to cotton on to the scale and interconnections of the sector, and by the presence at the head of the SEC at the time a Bush-appointed free marketeer who thought the government should keep out of the way of the markets. The book reads like a thriller (leaving just the usual slight uneasiness about how the author knows what people were feeling, and wondering who spilled the beans out of two people in a reported conversation).

It left me reflecting about the culture of financial markets and how quickly and extensively unethical and illegal behaviour spread, like a rampant infection, after the deregulatory turn in the US and UK. Perhaps the obvious conclusion is that a culture of eternal vigilance is necessary in finance, and there was something sensible about the extremely strong cultural prohibitions applying to finance in times past. It is interesting, and sobering, to note how much the main characters in this sorry saga act just like homo economicus.

The authorities did eventually charge Cohen with failing to prevent insider trading; SAC was fined Capital and the fund was closed. Cohen is active again in the markets and a super-wealthy man.

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Economic development in 150 pages

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It sounds an impossible challenge, but Ian Goldin does an impressive job combining clarity and conciseness in his Development: A Very Short Introduction, one of the well-known OUP series. The book seems to be a version of his longer book from a couple of years ago, The Pursuit of Development. Its six chapters cover: what it is, how it happens, why some countries are poor and others rich, aid, sustainable development, and globalization. The book manages to give a reasonable capsule description of the debates among economists and some sense of how development economics has changed over time. It studiously avoids reacinh strong conclusions on the efficacy of aid, this being a rather factual chapter.

There’s a useful list of further reading at the end. I think someone knowing more or less nothing about the subject would come away with a rounded overview and the capacity – and interest, probably – to read more. I like the pay-off too: “Development is not simply or mainly about the lives of others. It is about ourselves and what we care about. Development is about who we are and our collective future.

My quibble would be that the charts aren’t all that illuminating and only partly because they’re in black & white. Maybe all charts from now on should be left to Max Roser and his team at Our World in Data.

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Economies in space and time

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There’s a section of Economic Geography: A Critical Introduction by Trevor Barnes and Brett Christophers about the richness of border zones – not physical ones as these tend to be quite the opposite when it comes to economic activity, but intellectual. Interdisciplinarity has been a buzzword for a long time, and immensely hard to achieve within conventional academic structures. But perhaps its moment has come. At any rate, the number of in-principle interdisciplinary research centres is increasing (including the new Institute for Public Policy at Cambridge, which I join tomorrow). Perhaps more important, more and more people appreciate that solving pressing challenges – ageing, the consequences of climate change, trade wars, technological change – requires multiple social science, humanities and scientific perspectives.

Besides, I’ve always found the borders of economics interesting, including economic geography. The gap between economists who do geography and geographers who think about the economy has perhaps been narrowing in recent times. The book – a textbook but one accessible outside the framework of a university course – makes surprisingly little of what I think must be one of the main reasons for this. Which is that the technology-driven changes in the structure of production and consumption have made face-to-face interaction more valuable. The digital economy is an economy of clusters and dense cities, as well as one of globalisation. The classic Marshallian spillovers are bigger, the more important tacit knowledge (which, it turns out, is often complementary to codified knowledge, rather than a substitute for it). The evident importance of city regions is boosting urban economics and what is typically described as the ‘new economic geography’.

The geographer authors are understandably wary of the way economics is expanding into this territory. We economists do have a habit of presenting as marvellous new insights things other disciplines have known for ages, albeit wrapped in some nice econometrics. However – and inevitably there are some frictions in this process of inter-disciplinary engagement – it’s bemusing-to-painful to see how economics is perceived. The book describes (mainstream) economics as being only about constrained optimisation, which is the kind of reductionist statement an economist might make (and anyway, constrained optimisation under conditions of asymmetric information is everywhere in nature). It also defines the economy and economics as being essentially about ‘materiality’, material resources. Surely this can’t be literally intended? But in that case I’m not sure what this means.

Finally, the book notes – rightly – that economists insist on the importance of models, but conflates this with the use of mathematics. A lot of economists cheered Paul Romer’s assault on ‘mathiness’, but we like non-mathy maths because it is a concise way of trying to ensure models have a certain logical internal consistency and clarity. One could write many of them out in words instead – just as historians do when they model the causes of the first world war or literary critics when they theorize about the imperial perspective in late 19th century English novels. All scholars use models whether good or bad ones, and whether they know – or like – it or not.

These gripes aside, I enjoyed the book a lot. It’s a clear and comprehensive survey of the territory (sorry) of economic geography and at the same time manages the difficult feat of stepping outside the substance to deliver the critique promised in the subtitle. The first half of the book discusses the definition, history, boundaries and theorising/methodology in economic geography. The second half covers topics such as globalization, cities, finance, the environment and technological change. These topics chapters would make useful stand-alone readings for economics courses on the relevant subjects, giving students a healthy alternative perspective. In any discipline, we quickly socialise our students into our usual ways of thinking. Extending their frame of reference must be a useful contribution to their education.

It’s interesting that economic history is clearly enjoying something of a revival in economics, albeit from a base sadly diminished since before my PhD days, when most doctoral programmes had an economic history requirement (mine, at Harvard, still did but I think many others had already dropped it by the early 80s). There is much talk (and some action) now about ensuring economic history is in the standard economics curriculum, and the CORE course for one weaves some throughout the whole text. Economic geography doesn’t have that traction, but I’d be happy to see options at least for economic geography and economic sociology. I for one am also happy to try to explain to other social scientists #whateconomistsdo as long as they will be as patient with me.

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PS I also applaud the sensible pricing of this book by the publisher (WILEY Blackwell), in contrast to many textbooks.