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Falling behind and catching up

There are two contrary things which have happened since the instigation of industrialisation two centuries ago. The first is a divergence in income and the second is a convergence in nearly all other measures of human wellbeing.

One of the questions we have to address is “will globalisation lead to convergence or divergence for the world’s citizens?”

The case for convergence.

As markets integrate, some maintain, material inequality will diminish.

  • There is a modernisation argument. Once poor countries get started on industrial development and the insitutions of a modern state they will continue to develop. This view was popular in the 1950s, but has fallen out of favour today.
  • Late-development. As popularised by Rostow and Gerschenkron, they argue that there are certain advantages of backwardness which can be exploited. This allows for faster growth for poorer countries, leading to them converging on the technological limit of wealth which the richest countries have hit.
  • Neoclassical growth theory argues that market integration will lead to price equalisations of land, labour and capital and thus increased demand for the poor world’s labour and resources which will cause convergence in income and prices.
  • New Growth Theory argues that a similar process as described above occurs for the diffusion of knowledge – a non-rivalous, non-excludable public good – which allows countries to catch up.

This leads to closing inequalities.

The case for divergence.

  • Marxist argue that capitalist production involves the extraction of surplus value from labour. Thus it creates and reproduces inequality because a capitalist income is in effect an economic rent, extracted from labour for by owning capital. Market integration leads to this process merely becoming international.
  • Dependency – Labour is not fully marketable and there will always be some degree of coercion between core and peripheral economies which keep the rich rich and poor poor.
  • Geography – (from Krugman) – Different economic processes have different economies of scale, therefore different developmental paths will lead to a differing economic mix. Because some economies enjoy larger returns to scale, and there are not intrinsic reasons certain industries are in certain places, inequality will naturally occur in a global environment.
  • In contrast to the case for convergence, increasing amounts of knowledge are protected and do not diffuse easily. Those with this knowledge will be wealthier than those without it.
  • Complementary factors play a role. Certain industries, skills and workers cluster in certain places. This produces network effects and positive externalities to which the returns are higher.

This leads to increasing inequalities.

What question does this lead us to ask?

  • How has the world distribution of income changed since the beginning of modern economic growth? 
  • What are the reasons for increasing or decreasing inequality in incomes?
  • Did all benchmarks of growth follow similar pathway? Did quality of life follow the same path as income?Ineq

Measuring inequality.

There are two ways of measuring inequality. World inequality and international inequality.International inequality shows us the inequality between the per capita income of average members of different nations. It offers a good measure because we have the relevant data to make this measure useful for a large number of countries across a long timescale. World inequality treats each individual as a unit and takes into account intra and well as international inequality. It gives a better picture but we only have data from the middle of the 20th C.

There are different measures which we can use to describe world and international inequality.

We can sue the Gini Coeffiecent, the Theil Index or a simple ratio of the richest 10% to the poorest 10%. Each tells us something different and has different methodological flaws and benefits.

There are also different Indices which we can measure. Income is one measure of wellbeing, but there are more. For example, literacy, life expectancy at birth and child mortality.

We also have to think about the level of aggregation which we use. We can aggregate the income/life expectancy of the world, down to the aggregate income/health of London, each is useful in certain ways, but each also obscures certain things.

What data do we have on the past?

Next we turn to the data which we have on international and world inequality back into the 19th C and before. Much of this data come from Angus Maddison, good obit here. He trailblazed the study of income of those living in the distant past. Without his work we would have a lot less to work with in Global History and would have to rely a great deal more on conjecture.

There are limits to his data, administration and statistical records are sketchy for much of the past. For example, large land empires like the Muhgal and Ottoman decentralised much of their administration – local administrators had less need for complex statistics and could rely on local knowledge, hence a dearth of records. On top of this locational problem there are difficulties in certain economic sectors too. As most wealth came from land for much of the world’s history, income information from land is well recorded. Handicrafts and transport are both more mobile and harder to tax, so records are scarcer. Both of these lead to a bias in the data, where we have no information it is safest to assume nothing has happened, this biases our view of the poor past towards it being undynamic.

However, the data sets are still magnificent and all we have to work with. 

  1820 1910 1950 1992
Gini coefficient 0.50 0.61 0.64 0.66
Mean world income (PPP at 1992 prices, $) 659 1450 1806 2801
Extreme poverty (headcount %) 84 66 55     24
Number of extreme poor (million) 887 1128 1376 1294
% of world inequality explained by between-country inequality (based on Theil index) 12 37 60 60

A few things stand out. World inequality was high in 1800 but got higher through to the 1950s where it has held steady since. The proportion of the extremely poor as sunk massively. Much of this increase inequality came from international not world changes, in some countries everyone got rich, in some very few or none did.

There is a slow down in 1950. The lead in growth rates between Europe & its offshoots and the rest of the world shrinks, a relative slowdown occurs. Catchup growth begins in Japan, and then later Southeast Asia as a whole. Different clusters of countries drive these changes.

The dominance disequalising force in the 19th C was the relatively slow growth of Asia. Income per capita in India between 1820 and 1950 rose 10% in total, in China over the same period the total was 17%, the US economy expanded 800% over the same period.

This leads us to some otehr questions which we will address.

  • Origins of inequality. When did it begin?
  • Cultural exceptionalism: Did regions have distinct features? Politics (colonialism, despotism)? Institutions? Resources? Scale of trade?
  • European convergence
  • Catching-up does work, or does it?

The period 1950-1992 (from when Maddison’s data ends) shows the effects of catch up in Asia. Three groups of countries; poor countries with low and variable growth, middle income countries with high and variable growth, and the wealthy world with low but steady growth.

The story of the modern era has been one of income divergence, but a subplot (or the main story, depending on your position) has been the convergence of various quality of life indicators.

What is driving this?

  • High-return-to-small-change hypothesis – altering behaviour slightly can massively increase survival, better personal hygeine and widespread, but cheap, vaccinations can massively boost quality of life.
  • Public health hypothesis – public health policy has been directed far better than economic policy in these contries, fewer differing national interests and fewer differences of opinion on what to do.
  • Urbanization hypothesis – as the poor world urbanises, more people more closer to doctors and they benefit from economies of scale.
  • Triumph of globalization hypothesis – the globalisation of knowledge on health and nutrition allow people to live better lives.

Is this divergence between income and other quality of life indicators important or mere trivia? Three quotes 

The income measure has always overplayed the difference between India and the United States.

Kenny, World Development 

Technologies, which appeared to have done little in increasing Third World income, have improved other measures of the quality of life … globalization has been too quickly dismissed by some as a driver of development.

Kenny, World Development 

HDI convergence is more a logical than an empirical result, arising from the index’s definition, and so is of little interest in the debate about world inequality.

Bob Sutcliffe, World Inequality and Globalization Oxford Review of Economic Policy, 20(1), 2004, 15-37.

HDI converges on well known limits, whereas maximum potential income continues to increase at 2/3% a year. HDIs are bound to converge by definition. However, the improvements in wellbeing are not trivial.

What has driven the improvement in people’s quality of life?

  1. Globalisation > Income > Health?
  2. Globalisation > Knowledge > Health?

Each of the above two mechanisms, increased income leading households to better care for themselves, or increased knowledge of best practice leading states and households to alter behaviour at relatively little cost are both viable explanations. 

Above is the Preston curve of life expectancy at birth S.H. Preston, ‘The changing relation between mortality and level of economic development’, Population Studies, 29(2), 1975.

Preston aruges that int data shows that the association between income and health is strong in poorer countries because of public policy failures. People can only afford to increase public policy if income increases. Therefore any improvement income-dependent.

Conclusions:

  • International inequality in income increased 1820 – 1950, remained stable 1950-92.
  • 1820-1950: ‘dominant disequalizing force’ is the stagnation in India and China
  • 1950-1992: Selective catching up.
  • 1992 onward: a faster and broader catch-up?
  • Catching up faster in health and education.
  • Did globalization play a differential role in income (technology of production) and HDI (technology of health)?

EH481: Economic Change in Glbal History: Introductory Lecture

Taught by Alejandra Ingoin nad Tirthanker Roy. Lectures on Thursday Afternoons 3 til 5 in S221. My Seminar is at 5 on a Tuesday. This is a reading intensive course – read, discuss and debate. Seminars will take the form of two 12-15 minute presentations given by students, followed by a discussion. 2 x 1500 word essays will be submitted, non-assessed by they will be returned with comments and an indicitive grade. A 2 hour Exam will take place at the end of May.

This course looks at globalisation, history and economic change. Giddens (1990) says the stretching of social connections between local and distant defines the modern condition.

Global history is a critical response to post-modernism (the past has no core), globalisation defines the present and has consequences for the nation state, for cultrues of trust and for the economy. If the global is a condition of material life that condition has a history. Indentifying the global with the modern is questionable.

The state has been massively changed by globalisation, weakening it in someways and strengthening global checks and balances others. Trust has changed massively; In the past trust was generated by local/personal ties; today that is impossible and trust is instead generated by institutions.

Held argues that globalisation has a history, but that modernity is qualitively unique (a position I share). This is new geography of power and privilige which transcends political borders and regions. Global History does not place the nation state at the centre of its analysis (the only time that is appropriate is when national policies are being compared). Is Global History a different kind of history?

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In O’Rourke and Williamson’s history states are almost absent, instead markets act with little direction from the state. If anything states are subservient to the markets. They emphasise the integration of a North Atlantic economy in the 19th C rather than several national economies. The transport revolution of the 19th C, increased trade and increased migration alead to wage, price and rent convergence across the North Atlantic region. For them the state is irrelevant – however this is a questionable assumption. Key ingredients of this revolution spring from the state, railways, banks, property, law – all the foundations were laid by the state.

It also ignore the continental empires. Statehood that denies selfdetermination but which could work for market inegration. Niall Ferguson has argued that nothing in history has done more for the free movement andd free trade etc. than the British Empire.

Re-Orient is a book by Gunder Frank. In it he argues that there was a global economy as far back as the 1500s wutg a complex division of labour and multilateral trade. Silver, from the New World, lubricated the global economy and led to increase trade in Indonesian pepper, Indian textiles, Chinese tea and so on. A private merchantile drive was driven by silver from the Americas. This argument fails empirical tests. There was little price convergence around the world as late as the 18th C which you would expect to see in a truly functioning global economy.

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Global has a history and one that is driven by market forces. Global History doesn’t ignore the state, but it does not focus on it either. It seeks to offer a cosmopolitan history where the West is not the sole comparitor; rather reciprocal comparisons allow for a decentred view of the human experience. In the 19th C states enforce market linkages. In the 18th Military sates help form local markets. In the 20th century states obstructed market linkages, for example during the Great Depression and the post war era.

Markets cross borders and this has important political, economic and cultural effects. Global and local are not two seperate experiences but interact in different ways. Global needs to context itself against the local.

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There will be different approaches followed on the course. Rational choice, Marxist, Worlds System, Institutionist.

We will examine states and empire.

We will also look at channels through which the global is felt but which are nto factor markets. Ideas, Diseases, Popualtion and ecology.

How do you study Global History? Comparisons, connections, entanglements and Eurocentrism

How do we learn the past? We learn the past by being taught it by someone else, whether orally or by reading.

History is also invented by peoples, tribes, religions who need a common past as a means to define and establish themselves. They need a common (sometimes mythical) common origin to give the group a common destiny. This is done through a process of othering. We can only know something we don’t know through comparison with something we do know.

The other is alien, it is foreign. Everyone is ethnocentric so some extent, it is unavoidable in the way we have been brough up to define others in terms of their differences to you. Identity is a narrative of yourself established in relation to the other. French versus English. Argentinian versus Brazil. Protestant versus Catholic. Hindu versus Muslim. West versus Rest. This is both a historical and Epistemology process.

History of Eurocentrism

Is Eurocentrism Americancentrism and Australiancentrism too?

Notion of Europe emerged out of the Schism in the Christian Church and the emergence of a powerful Muslim civilisation to its south east (the holy land) and south west (Iberia).

Europe was created by the crusades and an ex-post mythology of the crusades. The creation of Europe was also the Christianisation of Europe. The European experience split the world encountered into heretics (cathars) and infidels (Muslims). Through a series of historical contingent events Europeans circumvented the “siege” they were under from Muslims to the south through exploring by sail.

They set out to reach the East via the West. D’oh! They found the New World instead. There they found a new “other” one which was neither infidel nor heretic. In fact, many were unsure if what they found was even human.

European adventurers didn’t treat these people like heretics (they didn’t burn them) or infidels (they didn’t slaughter them) or Africans (they didn’t enslave them). They attempted to civilise them. The Catholic Church said that these people should not be enslaved. They were not infidels or heretics because they hadn’t chosen to be ignorant of Jesus, they were just far away.

Therefore the Europeans treated this new other unlike other others. They saw them as minors, children, to be educated, civilised and converted. Europeans then had to export “europeaness” to the New World. The correct and civilised way to eat, dress, speak, pray were all taught to those of the New World. It reshaped the idea of Europe and the idea of history.

The Enlightenment

The Enlightenment purposefully created a European genealogy which is secular and historical rather than religious or mythological. It turns history into a civilisational project, involving a linear path of development. A European recipe which can be exported (via empire) to the rest of the world. Thus, 18th/19th C empire was different to 16th/17th C empire.

The enlightenment creates a historically centred narrative against which everything else is measured, compared and contrasted (location, chronology and hierarchy).

Progress

European civilisation is seen as a linear process. In this process are grand theories of social development like Spencer and Darwin. This sense of progress defines an ethos of 19th C imperialism. It offers a political economy of space use environment and people, one of modernity. With this the world is divided into core and periphery.

US

The US is the uebermost case of a nation defined on a centred historical and ideological construct. Anyone can become American if they sign up to this founding mythology.

Is Centred History good History?

A centred history has flaws because it must create distinct events in order for its narrative arc to work. However, events are not centred and so each centred history much obscure one thing when it tries to focus on another.

For example, the Renaissance was only possible because the Arabs preserved knowledge of the Ancient Greeks which Europe had lost (I almost wrote “which we lost”, naughty). Focussing on a narrative of the Renaissance risks ignoring the rest of the world.

Are all histories equal? Some would say yes. A Global History Scholar from Malaysia attended a conference on Global History and requested that non-Islamic scholars admit the Koran as a historical source. Is the History of the Koran admissible?

What is good history? Is it a matter of the quantity of sources? The quality of the sources provided? There are a multitude of sources on most subjects saying contrary things, very often from very good authorities too. This way lies rampant relavatism, from which it is difficult to learn anything.

The problem with centred history is that because it is highly specialised and necessarily fragmented it risks only being able to explain itself; it becomes arcane knowledge. History as a discourse  becomes history as rhetoric. History of “exceptionalism” from American to Chinese fails to help us explain the world.

Global History attempts to overcome this by being a completely cosmopolitan exercise. Not only that but by focussing on a very long time scale it avoids the risk of being beholden to a dominant narrative of any one historian or school of historians.

Comparisons, connections, interactions and entanglements

Connections are important because we need to understand the webs and flows of goods, knowledge and people between distant (in space and time) others. This information is revealed in different channels; trade; diffusion of ideas; exchange; encounters; dislocation; aculturation. There are also vectors that determine how these connections are made, technological, scientific and epidemiological.

All history is Comparative history. With reciprocal comparisons we can try to avoid some of the flaws of euro- and western- centric histories. Rather than ask “why didn’t China end up like England,” we can ask “why didn’t England end up like China?” This allows us to surmount the tyranny of local detail. It also prevents us from taking ownership of a topic and allowing this to cloud our judgement. We can aggregate and average features over large areas and examine their similarities and differences.

Interactions and entanglements also give us a way to examine things without a centre. For example, Iberia, Southeast Asia and the US/Mexico border all give us opportunities to look at competing narratives and identities. This is not to accept relavatism, but rather to enable us to accept and analyse the existence of completing and complimentary identities. Global History allows us to examine the diversity of human experience and enables us to challenge the cultural and political enterprises of hegemony.

Virtues of Global History

It revisits common denominators of chronology, concepts and causality across as much of time and space as possible. It helps us to deal with the facts on the grounds while accepting diversity to avoid describing contingent events as universal experiences.

This decentred history helps us to understand the process of change rather than merely explain how we got to where we are, however narrowly or broadly “we” are defined.

HY423: Empire, Colonialism and Globalisation: Introductory Lecture

Why study Empire?

Well, it matters. It determines who rules or ruled the world.

Studying empire is always interesting because they always encompass such a vast amount of time, space and culture. Because they are so vast, the study of empire is often polemical because it is hard to be indifferent to the values under which much of the world is run, especially if they seem alien and immoral to you.

Many people were in the lecture to ask “is the US an Empire?” Don’t bother. There is no definition of empire, so if you want the US to be an empire you define empire in a way that makes the US an empire. Don’t worry about if the US is an empire or not.

Studying empire is an exercise in imagination. It covers all history of all eras. Therefore, do not try to learn everything on this course because all you are doing is this, trying too hard and paying the consequences.

epic fail photos - Throwing FAIL

What you need to learn is the principles and techniques so you can apply them as needed.

A classical description of empire is

Domination of peripheral societies by a metropolitan centre

This is a good definition of the European transoceanic empires, but it is less useful in other ways.

It doesn’t work for land empires because the periphery is very often internal i.e. the most exploited section of the Ottoman empire was Anatolia. There are also many types of empire.

Aristocratic empires are based on class not race, nationality or locality. So in Tsarist Russia nobles from far away were seen as closer than serfs from an hour outside your estate.

Religious empires The Ottoman empire was not defined by class or race or nationality, it was defined by religion. While still a tolerant place for the time if you wanted to be a ruling Ottoman you had to be a Muslim. Parallels with the USSR in that it is an empire built on ideology rather than race etc.

Nomadic empire Around the world commercial centres have been conquered by local nomads/barbarians. Inb Khaldun noted that conquerors are often less developed than the conquered, especially where nomads takeover commercial, usually coastal or riverine towns. Often rather than seeing a dominant culture forced on the conquered the conquerors are subsumed into their new home’s culture. This is what happened to the Manchu Qing, they eventually became Chinese/Han despite being from what is now Manchuria in Northern China.

So, why is our model of empire not more inclusive, why is it so eurocentric?

There is an obvious answer. Anglo-American intellectual hegemony. however, there is a more interesting reason.

Lenin saw imperialism as the highest form of capitalism. Lenin knew there had been empires in the past and had studied them, but he still singled out imperialism as a key component of modern capitalist society. He recognised that there is something different about modern imperialism when compared to the old land, religious and nomadic empires of yesteryear.

We have a eurocentric definition of empire because a eurocentric definition of empire is more useful and relevant to us today.

US Empire vs European Empire

The US is the heir to Anglo/Dutch financial systems and capitalist methods of production. It is also heir to a legal system with its roots in England.

Something which is obvious, but potentially overlooked, is that the US has geopolitical power because it is a continent sized countries sitting between the two great world oceans inbetween the economies of East Asia and Europe.

The UK, Dutch, Portuguese etc empires were exclusionary. We were all Subjects of her majesty but the de facto rights of those born in Britain were far greater than those born abroad. There was no desire to assimilate the new colonies, they were merely useful for prestige and mostly for resources. A prominent school of thought was that what had destroyed Rome was that the culture of the Asiatic holdings had infected the Republic and made it weak.

The Ottoman empire was not like this, there was no exclusion on who could rule, so long as you were Muslim. The height of the Ottoman empire was a time when it was ruled by converted ex-Christian ex-slaves.

The US is more like the Ottoman empire, it is built on an idea (however true) of “America.”

Towards an adequate definition of empire

  1. Polity of great geographic scope
  2. Multi-cultural-multi-national
  3. Not based on the consent of the governed
  4. Power – if you’re not powerful you’re not an empire.

What is Power? Michael Mann, in his Sources of Social Power, identifies four sources of power

  1. Military
  2. Political
  3. Economic
  4. Cultural or Ideological

To these four we can add two more to help describe the power of an empire

  1. Geopolitical
  2. Demographic

Empires use different combinations of these powers to varying degrees throughout their history. At different points at the same time and at different times at the same point different combinations of these sources of power will be deployed. 19th C Australia versus 20th C Algeria. Boston versus Delhi.

Remember, that Military and Economic power are not always connected. Islamic extremists are weak economically, however, if they secure a nuclear weapon the western world could become an even more repressive place. Much as Augustus’s rome became Diocletian’s in the face of barbarian incursions.

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In the mid 19th C the future of the world already looked like it would belong to continental sized great powers. The US and Russia, although poor, were seen as potential superpowers even then.

This prompted the UK and France, both rich countries, to try to grab land  in order to bolster their support base. Germany started two world wars, in part, to try to join this imperial club, as it seemed necessary to survive.

However, the peak of empire coincided with the beginnings of ethnic nationalism and there seemed few ways to reconcile this with empire. States tried to consolidate empires into nations with mixed results.

The USSR attempted to do this with a new ideology rather than an ethnic group, Socialism would hold together then empire. To an extent it did, but only while it could bolster this ideology with military and political power.

We can imagine Scotland as an independent country. But can we imagine an independent Bavaria? Well 150 years ago Bavaria was independent and the idea of an independent Scotland laughable. The Ukraine was part of Russia for a long time, yet in the early 90s it popped into existence as its own nation state.

Why study collapsed empires?

Because you can learn a lot from old empires.

The Eastern Austro-Hungarian Empire was one of the homes of the great civilised idea of tolerance. “Consociational democracy” was born here. Group rights and individual rights were enshrined in law here – in many ways coercive empires can be more free and tolerant than democratic states. The same was true in 15th/16th C Italy – if you wanted a good life you better hope to be the subject of a prince, rather than a democracy.

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Studying Empire teaches us that so much is contingent in life. Two generations after the Qing finally secure the borders of China and bring peace to what had become a violent part of the world the Europeans arrive and change China is ways which were utterly unpredictable, and at the time, unknown to everyone involved.

EH483: The Development and Integration of the World Economy in the 19th and 20th Centuries: Introductory Lecture

Lecturers = Dudly Baines – Albrecht Ritschl – Tirthankar Ray – Kerry Hickson = Monday 1300-1400 in the New Academic Building. Seminars are on Tuesdays.

The coursework for this unit will include two formative essays of 1500 words (pah, my undergrad essays were 4000 words) and one assessed essay of 2500 words. These will be due towards the end of the course. There will also be a three hour exam in May 2011.

All the details and deadlines are in the Notes for Students on Moodle.

Enough admin, to the meat!

There is an element of comparative development of the world economy. The unit is economics focussed and 19th century focussed. The course will be very long run to begin with and we wil then drill down into more detail later.

Objectives of the course

Explain the origins and evolution of  international inequality in the “modern world.”

Comparative elements – Demography, geography, trade, urbanisation, culture, institutions, technology and policy.

Case Study elements – Industrialisation, catch-up, fall behind, factor price integration.

GDP per capita (1990 international $)

  1870 1913 1950 1973 1998
UK 3191 4921 6907 12022 18714
W.Europe 1974 3473 4594 11534 17921
US 2445 5301 9561 16689 27331
Latin America 698 1511 2554 4531 5795
Japan 737 1387 1926 11439 20413
Other Asia 543 640 635 1231 2936
Africa 444 585 852 1365 1368

Shares of World GDP (%)

  1870 1913 1950 1973 1998
UK 9.1 8.3 6.5 4.2 3.3
W.Europe 33.6 33.5 26.3 25.7 20.6
US 8.9 19.1 27.3 22.0 21.9
Latin America 2.5 4.5 7.9 8.7 8.7
Japan 2.3 2.6 3.0 7.7 7.7
Other Asia 36.0 21.9 15.5 16.4 29.5
Africa 3.6 2.7 3.6 3.3 3.1

Every region is richer now then it was in 1870 (the time when a truly modern economy began to appear), but some are regions are richer than others. Two things stand out.

Some areas expereinced rapid growth and some did not. We need to look to the genesis of this rapid growth. It was not an increase in the use of land or other inputs which started this growth, but an increase in productivity.

The world became more unequal and we see a great deal of divergence between economies that industrialised and those that did not.

Growth

Classical economics looked at incereasing inputs to creat more wealth. Growth rested on using inputs more efficiently.

Growth was assumed to run out at some opoint, however, this has evidently not happened.

Marx helped introduce the idea that industry could grow even when land and other inputs became scarce.

Innovation has been treated as exogenous in many growth models driving progress forward. This is of course not good enough. Endogenous growth theories are essential.

Inequality

Economics helps us describe interpersonal inequality, this can be scaled up with some modification to help us look at international inequality.

Key concepts

  • Factor Endowments
  • Factor Rewards

Classical economics looked at three factors, each controlled by a different class: Landlords controlling land, Workers controlling labour, and capitalists controlling finance and physical capital. The distribution of income is dictated by different factor endowments and factor rewards. Labour’s share is dictated by what is required to fulfil its own subsistence and reproduction; the Landlord’s share is dictated by the fertility and scarcity of land; and the capitalist’s share by the demand for loanable funds (However, Marx argued that a capialist’s income was a form of economic rent on the labour of the workers).

Neoclassical economics looks at the world differently. My lecturers argues that the shape of the world changed somewhere around 1850 and the borders between the different classes break down.  Individuals and households are now better described as possessing a portfolio of skills and capital. The market then sets their rewards on the basis of the demand for the productive factors they can supply.

Two issues complicate this

Factor Ownership – Risk and uncertainty – transaction costs – institutions. These shape both the supply and rewards of certain productive facotrs. For example;

  • Gender plays a role in reducing the rewards which women receive in return for their skills.
  • Slaves versus free labour
  • Spain – their two tier labour market

Technology – change alters the composition of skills and factors in demand. This leads to wage inequality. Some factors are complimentary; for example you couldn’t print the Gutenberg Bible without the creation of the wine press. Network externalities – in high density areas the same skills can receive larger rewards because there is a greater interaction with complimentary factors.

You can map this discussion of interpersonal inequality onto international inequality.

Nations have different endowments. Different rewards persist in the presence of trade cost, transaction cost, formal institutions, culture, political system, geography, demography  etc.

Market integration should lead to a convergence of costs, prices and incomes. This however is far from inevitable.

What made the The 19th Century special? The period encompassing the industrial revolution also saw a transport revolution which helped increase trade, Smithian specialisation and productivity advancements:

  • The cost of freight fall

  • Industrialisation
  • The introduction of more uniform legal codes
  • Communications costs plummeted
  • This was the 1st Globalisation
  • trade and mobility of factors
  • population growth
  • urbanization
  • technological and institutional change

Convergence seen in the North Atlantic (and Dominions), but the rest of the world sees Divergence, Big Time.

The course will address the question of why did some areas experience this revolution and why did some not?

  • Marx – markets did not determine rewards – political economy – colonialism
  • Rostow argued that there was one process – modernization – and that this proceeded at different speeds. Parts of the world were merely not yet ready.
  • Some argue that Geography played the most important role. Tropical countries didn’t develop, so it must be harder to develop in the tropics, natural
  • resources like coal helped the UK develop so countries without these natural endowments were not able to develop.
  • Some areas did not develop because of Markets and risks – risks of commodity market fluctuations – risks of financial integration.

Other reasons to be examined include:

  • Some countries had better institutions (property rights, commercial culture, civic mindedness), which allowed them to utilise their endowments.
  • Some areas developed effective contract law and contract design so that the risks of economic activity were reduced.
  • Culture may have played a role. For example there may have been a bias against innovation in some places.

A further part of the course will examine “catch-up” development. What policies, factors and contingent events aided countries in catching up with the developed world.

  • Gerschenkron examined late industrialisers like the US, Germany and Russia and saw how the later the industrialisation, the more the state had to intervene to shape markets.
  • Alice Amsden has argued that Southeast Asia Industrialised by ‘getting prices wrong’. They forced surpluses out of productive agriculture into unproductive activities to prompt industrialisation.
  • “Death of distance.” As space becomes smaller it is easier and easier to trade knowledge, goods and services. This process has accelerated over time, particularly since the 1970s.

The course will also examine on whether growth counts as development. Is a measure like the Human Development Index better? Does equality or equity have an important role to play?

All will be revealed over the next year.

What can I study on LSE’s Global History Course?

This is taken from the Global History page on the LSE website and it illustrates the breadth of the course and what attracted me to it.

Compulsory Courses

(* half unit)

    Choose two from

    Options

    Choose a total of two full units from the following options (if not taken under 2 above)

    (* half unit)

    Global History @ LSE

    This is the first post and is at the moment simply a place holder.

    More will follow, I promise.

    Welcome to Global History @ LSE

    This is the blog of a student taking the Global History MSc at the London School of Economics.

    I am studying part time from October 2010 to September 2012 and I will be posting my lecture notes, seminar notes, reading notes and essays online.

    This is for my benefits so I can revise wherever I am but is open to anyone curious about the course, whether they’re currently studying at LSE or thinking about signing up.

    LecturesLecture in the New Theatre, c1981 by LSE Library.

    SeminarsDr Peter Loizos (left) and students, c1981 by LSE Library.

    ReadingStudent in the library, 1981 by LSE Library.

    EssaysStudent in the library, 1981 by LSE Library.

    You can see my lecture notes etc by clicking on the pictures above. Browsing by courses is also available if you use the links below.

    All images are taken from the LSE archive on Flikr. This site has no official link to the London School of Economics and Political Science. This site cannot verify the content of external links. Some rights reserved under a Creative Commons Attribution-NonCommercial 3.0 Unported License.