mokyr-allen-mccloskey   21

What explains the formation and decay of clusters of creativity? - Marginal REVOLUTION
Creativity is often highly concentrated in time and space, and across different domains. What explains the formation and decay of clusters of creativity? In this paper we match data on thousands of notable individuals born in Europe between the XIth and the XIXth century with historical data on city institutions and population. After documenting several stylized facts, we show that the formation of creative clusters is not preceded by increases in city size. Instead, the emergence of city institutions protecting economic and political freedoms facilitates the attraction and production of creative talent.

IOW, the opposite of what Dick Florida said.
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january 2018 by nhaliday
King Kong and Cold Fusion: Counterfactual analysis and the History of Technology
How “contingent” is technological history? Relying on models from evolutionary epistemology, I argue for an analogy with Darwinian Biology and thus a much greater degree of contingency than is normally supposed. There are three levels of contingency in technological development. The crucial driving force behind technology is what I call S-knowledge, that is, an understanding of the exploitable regularities of nature (which includes “science” as a subset). The development of techniques depend on the existence of epistemic bases in S. The “inevitability” of technology thus depends crucially on whether we condition it on the existence of the appropriate S-knowledge. Secondly, even if this knowledge emerges, there is nothing automatic about it being transformed into a technique that is, a set of instructions that transforms knowledge into production. Third, even if the techniques are proposed, there is selection which reflects the preferences and biases of an economy and injects another level of indeterminacy and contingency into the technological history of nations.

https://twitter.com/whyvert/status/932451959079972865
https://archive.is/MBmyV
Moslem conquest of Europe, or a Mongol conquest, or a post-1492 epidemic, or a victory of the counter-reformation would have prevented the Industrial Revolution (Joel Mokyr)
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november 2017 by nhaliday
“Editor’s Introduction to The New Economic History and the Industrial Revolution,” J. Mokyr (1998) | A Fine Theorem
I taught a fun three hours on the Industrial Revolution in my innovation PhD course this week. The absolutely incredible change in the condition of mankind that began in a tiny corner of Europe in an otherwise unremarkable 70-or-so years is totally fascinating. Indeed, the Industrial Revolution and its aftermath are so important to human history that I find it strange that we give people PhDs in social science without requiring at least some study of what happened.

My post today draws heavily on Joel Mokyr’s lovely, if lengthy, summary of what we know about the period. You really should read the whole thing, but if you know nothing about the IR, there are really five facts of great importance which you should be aware of.

1) The world was absurdly poor from the dawn of mankind until the late 1800s, everywhere.
2) The average person did not become richer, nor was overall economic growth particularly spectacular, during the Industrial Revolution; indeed, wages may have fallen between 1760 and 1830.
3) Major macro inventions, and growth, of the type seen in England in the late 1700s and early 1800s happened many times in human history.
4) It is hard for us today to understand how revolutionary ideas like “experimentation” or “probability” were.
5) The best explanations for “why England? why in the late 1700s? why did growth continue?” do not involve colonialism, slavery, or famous inventions.
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october 2017 by nhaliday
Enclosure - Wikipedia
Enclosure (sometimes inclosure) was the legal process in England during the 18th century of enclosing a number of small landholdings to create one larger farm.[1] Once enclosed, use of the land became restricted to the owner, and it ceased to be common land for communal use. In England and Wales the term is also used for the process that ended the ancient system of arable farming in open fields. Under enclosure, such land is fenced (enclosed) and deeded or entitled to one or more owners. The process of enclosure began to be a widespread feature of the English agricultural landscape during the 16th century. By the 19th century, unenclosed commons had become largely restricted to rough pasture in mountainous areas and to relatively small parts of the lowlands.

Enclosure could be accomplished by buying the ground rights and all common rights to accomplish exclusive rights of use, which increased the value of the land. The other method was by passing laws causing or forcing enclosure, such as Parliamentary enclosure. The latter process of enclosure was sometimes accompanied by force, resistance, and bloodshed, and remains among the most controversial areas of agricultural and economic history in England. Marxist and neo-Marxist historians argue that rich landowners used their control of state processes to appropriate public land for their private benefit.[2] The process of enclosure created a landless working class that provided the labour required in the new industries developing in the north of England. For example: "In agriculture the years between 1760 and 1820 are the years of wholesale enclosure in which, in village after village, common rights are lost".[3] Thompson argues that "Enclosure (when all the sophistications are allowed for) was a plain enough case of class robbery."[4][5]

Community and Market in England:
Open Fields and Enclosures Revisited: https://www.nuffield.ox.ac.uk/users/allen/community.pdf
Commons Sense: Common Property Rights, Efficiency, and Institutional Change: http://faculty.econ.ucdavis.edu/faculty/gclark/210a/readings/commons1.pdf
Allen’s Enclosure and the Yeoman: the View from Tory Fundamentalism: http://www.deirdremccloskey.com/docs/pdf/Article_52.pdf
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june 2017 by nhaliday
'Capital in the Twenty-First Century' by Thomas Piketty, reviewed | New Republic
by Robert Solow (positive)

The data then exhibit a clear pattern. In France and Great Britain, national capital stood fairly steadily at about seven times national income from 1700 to 1910, then fell sharply from 1910 to 1950, presumably as a result of wars and depression, reaching a low of 2.5 in Britain and a bit less than 3 in France. The capital-income ratio then began to climb in both countries, and reached slightly more than 5 in Britain and slightly less than 6 in France by 2010. The trajectory in the United States was slightly different: it started at just above 3 in 1770, climbed to 5 in 1910, fell slightly in 1920, recovered to a high between 5 and 5.5 in 1930, fell to below 4 in 1950, and was back to 4.5 in 2010.

The wealth-income ratio in the United States has always been lower than in Europe. The main reason in the early years was that land values bulked less in the wide open spaces of North America. There was of course much more land, but it was very cheap. Into the twentieth century and onward, however, the lower capital-income ratio in the United States probably reflects the higher level of productivity: a given amount of capital could support a larger production of output than in Europe. It is no surprise that the two world wars caused much less destruction and dissipation of capital in the United States than in Britain and France. The important observation for Piketty’s argument is that, in all three countries, and elsewhere as well, the wealth-income ratio has been increasing since 1950, and is almost back to nineteenth-century levels. He projects this increase to continue into the current century, with weighty consequences that will be discussed as we go on.

...

Now if you multiply the rate of return on capital by the capital-income ratio, you get the share of capital in the national income. For example, if the rate of return is 5 percent a year and the stock of capital is six years worth of national income, income from capital will be 30 percent of national income, and so income from work will be the remaining 70 percent. At last, after all this preparation, we are beginning to talk about inequality, and in two distinct senses. First, we have arrived at the functional distribution of income—the split between income from work and income from wealth. Second, it is always the case that wealth is more highly concentrated among the rich than income from labor (although recent American history looks rather odd in this respect); and this being so, the larger the share of income from wealth, the more unequal the distribution of income among persons is likely to be. It is this inequality across persons that matters most for good or ill in a society.

...

The data are complicated and not easily comparable across time and space, but here is the flavor of Piketty’s summary picture. Capital is indeed very unequally distributed. Currently in the United States, the top 10 percent own about 70 percent of all the capital, half of that belonging to the top 1 percent; the next 40 percent—who compose the “middle class”—own about a quarter of the total (much of that in the form of housing), and the remaining half of the population owns next to nothing, about 5 percent of total wealth. Even that amount of middle-class property ownership is a new phenomenon in history. The typical European country is a little more egalitarian: the top 1 percent own 25 percent of the total capital, and the middle class 35 percent. (A century ago the European middle class owned essentially no wealth at all.) If the ownership of wealth in fact becomes even more concentrated during the rest of the twenty-first century, the outlook is pretty bleak unless you have a taste for oligarchy.

Income from wealth is probably even more concentrated than wealth itself because, as Piketty notes, large blocks of wealth tend to earn a higher return than small ones. Some of this advantage comes from economies of scale, but more may come from the fact that very big investors have access to a wider range of investment opportunities than smaller investors. Income from work is naturally less concentrated than income from wealth. In Piketty’s stylized picture of the United States today, the top 1 percent earns about 12 percent of all labor income, the next 9 percent earn 23 percent, the middle class gets about 40 percent, and the bottom half about a quarter of income from work. Europe is not very different: the top 10 percent collect somewhat less and the other two groups a little more.

You get the picture: modern capitalism is an unequal society, and the rich-get-richer dynamic strongly suggest that it will get more so. But there is one more loose end to tie up, already hinted at, and it has to do with the advent of very high wage incomes. First, here are some facts about the composition of top incomes. About 60 percent of the income of the top 1 percent in the United States today is labor income. Only when you get to the top tenth of 1 percent does income from capital start to predominate. The income of the top hundredth of 1 percent is 70 percent from capital. The story for France is not very different, though the proportion of labor income is a bit higher at every level. Evidently there are some very high wage incomes, as if you didn’t know.

This is a fairly recent development. In the 1960s, the top 1 percent of wage earners collected a little more than 5 percent of all wage incomes. This fraction has risen pretty steadily until nowadays, when the top 1 percent of wage earners receive 10–12 percent of all wages. This time the story is rather different in France. There the share of total wages going to the top percentile was steady at 6 percent until very recently, when it climbed to 7 percent. The recent surge of extreme inequality at the top of the wage distribution may be primarily an American development. Piketty, who with Emmanuel Saez has made a careful study of high-income tax returns in the United States, attributes this to the rise of what he calls “supermanagers.” The very highest income class consists to a substantial extent of top executives of large corporations, with very rich compensation packages. (A disproportionate number of these, but by no means all of them, come from the financial services industry.) With or without stock options, these large pay packages get converted to wealth and future income from wealth. But the fact remains that much of the increased income (and wealth) inequality in the United States is driven by the rise of these supermanagers.

and Deirdre McCloskey (p critical): https://ejpe.org/journal/article/view/170
nice discussion of empirical economics, economic history, market failures and statism, etc., with several bon mots

Piketty’s great splash will undoubtedly bring many young economically interested scholars to devote their lives to the study of the past. That is good, because economic history is one of the few scientifically quantitative branches of economics. In economic history, as in experimental economics and a few other fields, the economists confront the evidence (as they do not for example in most macroeconomics or industrial organization or international trade theory nowadays).

...

Piketty gives a fine example of how to do it. He does not get entangled as so many economists do in the sole empirical tool they are taught, namely, regression analysis on someone else’s “data” (one of the problems is the word data, meaning “things given”: scientists should deal in capta, “things seized”). Therefore he does not commit one of the two sins of modern economics, the use of meaningless “tests” of statistical significance (he occasionally refers to “statistically insignificant” relations between, say, tax rates and growth rates, but I am hoping he does not suppose that a large coefficient is “insignificant” because R. A. Fisher in 1925 said it was). Piketty constructs or uses statistics of aggregate capital and of inequality and then plots them out for inspection, which is what physicists, for example, also do in dealing with their experiments and observations. Nor does he commit the other sin, which is to waste scientific time on existence theorems. Physicists, again, don’t. If we economists are going to persist in physics envy let us at least learn what physicists actually do. Piketty stays close to the facts, and does not, for example, wander into the pointless worlds of non-cooperative game theory, long demolished by experimental economics. He also does not have recourse to non-computable general equilibrium, which never was of use for quantitative economic science, being a branch of philosophy, and a futile one at that. On both points, bravissimo.

...

Since those founding geniuses of classical economics, a market-tested betterment (a locution to be preferred to “capitalism”, with its erroneous implication that capital accumulation, not innovation, is what made us better off) has enormously enriched large parts of a humanity now seven times larger in population than in 1800, and bids fair in the next fifty years or so to enrich everyone on the planet. [Not SSA or MENA...]

...

Then economists, many on the left but some on the right, in quick succession from 1880 to the present—at the same time that market-tested betterment was driving real wages up and up and up—commenced worrying about, to name a few of the pessimisms concerning “capitalism” they discerned: greed, alienation, racial impurity, workers’ lack of bargaining strength, workers’ bad taste in consumption, immigration of lesser breeds, monopoly, unemployment, business cycles, increasing returns, externalities, under-consumption, monopolistic competition, separation of ownership from control, lack of planning, post-War stagnation, investment spillovers, unbalanced growth, dual labor markets, capital insufficiency (William Easterly calls it “capital fundamentalism”), peasant irrationality, capital-market imperfections, public … [more]
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april 2017 by nhaliday
More frivolously assembled lists of books | pseudoerasmus
some of the forthcoming ones look really good, in particular, stuff still not out:
Allen, The Industrial Revolution: A Very Short Introduction
Ang, How China Escaped the Poverty Trap
Colarelli & Arvey, ed., The Biological Foundations of Organizational Behavior
O’Rourke & Williamson, ed. The Spread of Modern Industry to the Periphery since 1871
Fuller, Paper Tigers, Hidden Dragons: Firms and the Political Economy of China’s Technological Development
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february 2017 by nhaliday
Rolling Stones – spottedtoad
I’m not 100% convinced that dads make a huge difference to their kid’s individual development; there are of course reasonable arguments on either side. But I’ve become convinced that the end of married fatherhood is a hugely politically and socially destabilizing force, and that the particular form of the married family was deeply important to both the rise of capitalism and the gradual expansion of liberty where and when it occurred. There are multiple reasons to doubt Deirdre McCloskey’s sanguine conclusion that The Great Enrichment of capitalist wealth and political equality will expand to every corner of the globe, but this seems like one of the important ones.

THERE ARE TWO AMERICAS…: https://spottedtoad.wordpress.com/2017/10/18/there-are-two-americas/
…with almost wholly separate life histories:

Age Women Have Children by Marital Status: First Births 2016

https://twitter.com/WilcoxNMP/status/931365452999249921
https://archive.is/t3juH
Now for some good news (of a sort). Changes in family structure for kids have largely ground to a halt.
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december 2016 by nhaliday
Random thoughts on critiques of Allen’s theory of the Industrial Revolution | pseudoerasmus
more:
http://spinning-wheel.org/2016/12/spinning-little-stories-about-the-high-wage-economy/
http://bradleyahansen.blogspot.com/2016/12/my-response-to-seth-rockmans-tweetstorm.html

Allen has been advocating for at least 20 years now that England in the 18th century possessed a “high wage economy”. English labour costs relative to continental Europe and Asia were unusually high. This is an important part of his “induced innovation theory” for the invention and adoption of machines in the leading industries of the Industrial Revolution. In short, England’s high wages relative to its cheap energy and low capital costs biased technical innovation in favour of labour-saving equipment, and that is why it was cost-effective to industrialise in England first, before the rest of Europe (let alone Asia).

The theory is appealing, in part, because the technological innovations of the early Industrial Revolution were not exactly rocket science (a phrase used by Allen himself), so one wonders why they weren’t invented earlier and elsewhere. (Mokyr paraphrasing Cardwell said something like nothing invented in the early IR period would have puzzled Archimedes.)

But I’ve always had reasons to doubt it. As Mokyr has tirelessly argued, inventions were too widespread across British society to be a matter of just the right incentives and expanding markets — and this is a point now being massively amplified by Anton Howes.
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december 2016 by nhaliday
Sweet Talk – Putting the soft in soft science
The name of this blog is a tribute to Deirdre McCloskey, a scholar who walks the fine line between these perspectives. On the one hand she is an economist by training who does not believe that the laws of supply and demand are up for negotiation. On the other hand, she believes that persuasion is of the utmost importance in human affairs; she and a co-author attributed one-fourth of America’s GDP to professional persuasion. Moreover, she is currently laying out the case that persuasion and rhetoric were responsible for the Industrial Revolution.

This blog is not committed to McCloskey’s particular ideas, so much as her emphasis on both social science and the humanities, a line we hope to straddle and blur as best we can. Whatever a particular author thinks about the power of conversation to move history, we have all come here because we believe it to be sublime, a pastime worthy for its own sake. We talk, not just because we love the sound of our own voices or the way our words look on a screen, but because we love the art of telling and trading stories. We come to entertain notions as much as to defend them, and to learn from one another as equals as much to win people over to some perceived side of a debate.
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september 2016 by nhaliday

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