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Socializing Capital: The Rise of the Large Industrial Corporation in America

Author(s):Roy, William G.
Reviewer(s):Levenstein, Margaret

H-NET BOOK REVIEW Published by (August, 1998)

William G. Roy. Socializing Capital: The Rise of the Large Industrial Corporation in America. Princeton, N.J.: Princeton University Press, 1997. xv + 338 pp. Figures, tables, notes, bibliography, and index. $35.00 (cloth), ISBN 0-69-104353- 1.

Reviewed for H-Business by Margaret Levenstein , University of Michigan

This book is extraordinarily ambitious and wide-ranging in its treatment of a very significant topic. At times Roy focuses specifically on the merger wave of the 1890s during which many large firms turned to public capital markets to facilitate mergers. But much of the book, and, from my perspective, the most interesting parts, take a much longer term view, examining changes in property rights and the use of those rights by railroads and then manufacturing firms over the course of the century. Most of the central points of the book I think are correct and many of Roy’s methodological points provide useful correctives to tendencies in business and economic hi story. There were sections of the book that I found insightful bordering on brilliant. There were also sections of the book that I thought were unconvincing, and others that were simply wrong.

The central points of the book can be summarized as follows :

1. The large, widely-held manufacturing corporation is a social creation, not a natural entity.

2. The corporation as it exists today is historically contingent and developed from pre-existing forms. In particular, it evolved from the public corporation, used by the state to accomplish public purposes and was given special privileges (monopoly, eminent domain, limited liability) in order to do so. The happenstance convergence of the economic crisis of 1837, the emergence of the railroad, and the po wer of the “anti-monopoly, anti-state” version of Jacksonian anti-corporatism privatized and democratized the corporation. Thus the corporate form retained many of its privileges (limited liability, alienability of ownership) but made those privileges available to all through general incorporation laws. In doing so, the corporation lost its public purpose and its public accountability (as well as its claim to monopoly).

3. There existed historical alternatives. Manufacturing could have continued to be conducted in firms that were not corporations. The corporate form could have retained its public purpose and its public accountability. The state could have remained a more active economic player in its own right — owning railroads or banks or manufacturing as today the state owns highways. It could have developed a stronger regulatory apparatus, developing the capability to administer public enterprises and assure that those who received the privilege of incorporation fulfilled a public responsibility. In other words, the boundaries between public and private could have been drawn quite differently in many dimensions.

4. Manufacturing firms followed the incorporation practices of railroads because that was required by investment banking firms to get access to large pools of capital, not because the corporate form was demanded by manufacturers to coordinate increasingly complex, large-scale, high-throughput technology.

5. Manufacturing firms (the “trusts”) turned to New Jersey’s incorporation law in order to legalize collusive activities, not to coordinate increasingly complex, large- scale, high-throughput technology.

6. The corporation was privatized – lost its public use and public accountability – and the corporation was socialized – its securities widely owned but no longer controlled by owners – not because this organizational form was the most “efficient” way to organize manufacturing production. Rather, manufacturing firms embrace and continuing use of the corporate form was the result of a “logic of power.”

Roy uses several methods to make his case. He first presents a theoretical argument that a “social logic based on institutional arrangements, including power” (p. 6) is more useful for understanding the dimensions and dynamics of the economy than is an analysis based on “the logic of efficiency.” The latter position he identifies with Chandler, and much of the book is cast as a polemic against Chandler. While I am very sympathetic to his historicizing and “de-naturalizing” of the corporation, I thought this framing of the issue was largely counter- productive. His presentation of Chandler sometimes bordered on caricature. Chandler’s point is not that managers are concerned only with efficiency or that clever managers always pi ck the most efficient organizational design. His point is that it was only in firms where managers made choices that gave the firm a competitive advantage that the firm survived. But Roy ignores the role of competition. He argues that “efficiency theorists” are functionalists, simply providing an ex post rationalization of whatever happened to emerge. While he is certainly correct that some business history is functionalist, and neo-classical economic historians are apt to fall back on “best of all possible worlds” descriptions of whatever institutions exist, the competitive model does provide a story of why it is that we should think that those that survive are different from those that didn’t; their survival is taken as an indication that they are better at competing. Thus it would have been useful to explain how power influenced who survived the competitive process and how power determined the rules of the competitive process. That is, it would have been useful to explain why the firms that survive the competitive process are not necessarily the most efficient. Instead, for the most part, Roy simply ignores competition as a significant force in capitalist economies, arguing that “the social arrangement that governed American industry could only vaguely be described as a market. American businessmen have always been aware that they share common interests at least as much as they compete over conflicting interests” (pp. 176-7). Roy is absolutely correct that American businessmen have often cooperated. But that does not mean that there is no market; it means that those who have been able to cooperate, and better yet, dominate cooperative agreements, are the firms that have survived and prospered. I would dispense with the word “efficiency” altogether. A more useful question is whether firms survived because they were good at inventing new, lower cost technology, good at getting workers to work harder, good at getting tax breaks from local governments, good at increasing demand for their product, good at getting access to others’ property through eminent domain, good at getting cheap capital because of connections to investment bankers. Whether or not any of these particular attributes improves efficiency or is a Good Thing for society as a whole (as if there is such a thing) is an altogether separate question.

Roy then turns to an econometric test of the “power” and “efficiency” explanations. He asks which industries were more likely to adopt the corporate form during the 1890s merger wave (which he measures by their use of publicly-traded securities, thus excluding incorporated firms that were not traded on public exchanges). He finds that average size of the firm and capital intensity are significantly and positively related to an industry’s use of publicly-traded securities. He also finds that labor productivity was negatively related to the use of such securities and that industry growth rates were insignificant. He concludes from this that Chandler and “the efficiency theorists” are wrong. Size matters even when controlling for other things. Labor productivity is lower in “incorporated” industries, so it must not be that incorporation makes firms more efficient. There are several problems with this analysis: he looks only at the 1890s and therefore conflates where the merger wave took place with where the corporate form endured. He groups “Chandlerian” causes of incorporation (growth and capital intensity) with effects (i.e. labor productivity); perhaps the negative relations hip between productivity and incorporation reflects the need for organizational change in low-productivity industries? His unit of analysis is the industry, which groups together large and small firms, and he treats large industries and small industries equivalently. Are we surprised that there are no large firms in the hammock or lapidary works industries despite a faster rate of growth than electrical machinery (p. 30)? Chapter two, which presents this econometric analysis, should be skipped entirely by anyone who has read Naomi Lamoreaux’s The Great Merger Movement (and if you haven’t read it you should). Lamoreaux presents a much more convincing and complete econometric rejection of the Chandlerian contention that the merger wave of the 1890s was motivated by the need for vertical coordination of inherently high-throughput technology. Save your time for the more edifying chapters to come.

In Chapters 3 and 6, Roy compares the history of public enterprise, the legal rights of corporations, and the emerging dominance of “socialized capital” in three states: New Jersey, Pennsylvania, and Ohio. He examines the evolution of the corporation from a tool used by states to encourage economic development and raise revenues to its emergence as a private agent, available to all through general incorporation statutes with no public responsibility or accountability. Roy argues that the differences in the experience of public investment during the canal and early railroad period, as well as the political interpretations placed on that experience, determined the rules under which corporations operated in each state at the end of the century. New Jersey had the most limited experience with public corporations, both quantitatively and qualitatively. It participated as an investor in the Camden and Amboy, and was able to keeps its taxes low as a result, but the railroad controlled the state rather than the other way around. Pennsylvania had both mixed corporations in which it invested and public corporations. Ohio had the most activist policy, both the most successful- the Ohio canal system developed the region and integrated it into the national economy – and the most spectacular failure when logrolling resulted in the expansion of public subsidization of canals and railroads and nearly bankrupted the state. Roy examines the implications of these different experiences for three aspects of corporate law: the permissibility of corporations owning other corporations, the powers of boards of directors (relative to shareholders), and the extent of limited liability. Roy finds that in all three aspects of corporate law, the experience with public and mixed corporations during the canal era shaped state attitudes such that New Jersey’s corporate law was the most “privatized,” allowing corporations broad flexibility in owning other corporations, giving power to corporate boards, and extending unlimited liability through both a general incorporation statute and special charters. Ohioans were at the other end of the spectrum, suspicious of the corporate form, retaining double liability and strictly limiting the activities of corporations to those for which they were chartered. Roy finds that these differences in corporate law led to differences in the importance of corporate capital in the three states. While some of this difference in corporate capital obviously reflects capital mobility – corporations with operations elsewhere chartered in New Jersey to take advantage of its lax laws – Roy’s fundamental point is that business in Ohio was simply less likely to be organized within a corporation. Thus, he suggests, economic activity need not have taken place within the socialized corporation, or at least not within a corporation with no social responsibility . Where the state legislature was unwilling to confer such generous benefits on the corporation, businesses made do with other forms of organization.

This empirical conclusion supports Roy’s argument that there were actually two distinct political responses to the canal crisis within the Jacksonian anti-corporate movement. One demanded more accountability on the part of the quasi-public corporation (i.e. more government) while the other demanded privatization (less government). Roy makes the interesting argument that the privatization ideology won out because it was self-fulfilling. Suspicion of the state led to weak oversight. With no oversight, projects were corrupt or failed; that failure was then interpreted as the failure of public investment (p. 74). But it is not clear from his comparison of the three states that strong state oversight was ever really in consideration. As he shows elsewhere in the book, the choices considered were either democratization of access to corporate privileges through general incorporation statutes or limitation of those privileges by statutes such as Ohio’s requiring double liability and strictly limiting the activities of corporations to those for which they were chartered.

Here and elsewhere, Roy compares the choices made in the United States to those made in France where a strong and competent state apparatus was created. This comparative perspective, though presented more casually than those between the U.S. states, is often very helpful. Unlike the U. S. case where states competed with one another and were, therefore, forced into a prisoner’s dilemma race to the bottom in terms of the social responsibilities of private actors, France was able to chart a very different course. Whether the “strong state ” approach was one that could ever have emerged in the United States will, of course, be debated by many. But that is not Roy’s point. The point is that there is nothing natural or inevitable about the present configuration of rights and responsibilities that constitute the corporation.

Chapters 4 and 5 examine the way that the railroad and investment banking influenced the construction of the corporation. Many of the generalizations he makes in his history of the railroads will not sit well with most economic and business historians. One could read these chapters and think that the railroads were a failure, both privately and publicly. For the most part, neither was the case. And the reader might understandably be confused when he presents Rockefeller’s demand for railroad rebates as an example of how the railroads exercised power. But try to ignore that and focus on the his fundamental point. The financing of railroads was not simply corrupt, or political, or determined by power games among the major players (though all that was certainly the case). The development of institutions to finance railroads determined the set of institutions that industrial corporations could choose from when they needed to finance growth and short term operations. The structure of those inherited institutions favored concentrated over unconcentrated industries, favored incorporation and management-owner separation, perhaps favored some technologies, organizations of work, and regions over others. This point is important and profound. The evidence he gives in its support is not always well organized to make his point. But the challenge that he lays out is clear. The observed choices of corporations are not necessarily the optimal ones in a global sense. They are the choices corporations made given the incentives created by institutions created for a different purpose and as part of deeply politicized process.

Chapters 7 and 8 return to the merger movement of the 1890s. He correctly argues that it is wrong to see this period as one of a shift from a competitive market to an administered or monopolized one. U.S. firms had been cooperating to control prices in many industries throughout the nineteenth century. In fact, he argues, it is only with the emerging dominance of a “free market” ideology that the state makes the strong distinction, now taken for granted in anti-trust law, between contracts promoting trade and those in restraint of trade. Others will argue that there was a long-standing tradition in common law not to enforce contracts in restraint of trade. But there is also a long-standing tradition of allowing quasi- public organizations, such as guilds and corporations, to engage in behavior that we would today think of as monopolistic. Roy perhaps takes this argument too far when he says, “If governments did not enforce contracts between buyers and sellers, markets would collapse by the same sort of opportunism that wrecked the pools” (p. 190). While the current state of the economy in Russia reflects the underlying truth of this statement, we should also recognize that there is not the same inherent incentive to deviate from a mutually beneficial contract to exchange that there is with a contract to restrict output or fix prices. It is true that the state creates and enforces markets, but there is a difference between a self-enforcing contract and one that is inherently a prisoners’ dilemma.

This chapter includes a very interesting section examining the interaction between the first use of the New Jersey incorporation statute and the terms of the statute. He not only shows that the writing of the statute was the result of a complex political process. He also shows that the way that it was used differed substantially even from the purposes of the first corporations for which it was written.

In these chapters he presents the histories of particular industries, arguing that their use of the corporate form cannot be explained by changes in their technology (i.e. by managerial demand). The histories of the sugar and tobacco industries, familiar to business historians, are re-told in a new light. Rather, he argues, the desire for monopoly control and the expectation of financiers that the corporate form would be used, led firms to incorporate. He also makes the interesting argument that the merger wave of the 1890s changed the expectations of investors so that “when a group of entrepreneurs wanted to establish a large-scale industrial enterprise, henceforth the standard procedure would be to mobilize the resources of the corporate institutions by recruiting investment bankers, brokerage houses, and the investment press in order to attract sufficient capital” p. 254. Prior to the 1890s it was deemed acceptable for Andrew Carnegie to operate his steel business as a limited partnership; after the merger wave of the 1890s investors perceived non- corporate firms as higher risk. Trying to operate outside the corporate sphere was now a more costly choice, but only because the prior history had changed investors’ (and investment bankers’ in particular) ideas about how business had to be organized.

The comparison of the three states is intended to suggest that there were various paths that the development of the corporation could have taken. But sin ce the corporation is now firmly ensconced in all three a more overarching point is that competition between the three states limited the power of any individual state to determine the structure of the corporation. The three states are also relatively similar in terms of their level of economic development, industrialization, and integration into the national economy. A slightly different story might have been told, and Roy’s argument made stronger, if he had looked at states that were less developed and continued to have more active state economic development policies throughout the century, including state investment in banks, railroads, and corporations. Did those states making post bellum public investments in corporations demand public accountability? Or had the prevailing ideology of the private corporation so come to dominate by the second half of the century that even where there was substantial and direct state investment the corporation was seen as an autonomous and privately responsible agent?

Roy makes several important methodological points that economic and business historians should heed. First, he emphasizes that actors can exercise power without power being the motivation for their actions. Individuals and groups exercise power when their actions determine the choice set or the constraints faced by others. I think this broad definition of power is very useful and would help economic and business historians to understand and analyze political movements, from late 19th century populism to late 20th century resistance to free trade. But defined this broadly we also have to recognize that the exercise of power is not inherently a bad thing. For example, in a capitalist economy with strong patent protection technological innovation gives the innovator power. Users of older technologies cannot simply continue to operate as they have in the past. This is the creative destruction that Schumpeter celebrated- and it is really does destroy something that someone values. That’s why the technocratic distinction between efficiency and distribution that economists cling to is silly. Any policy choice that has a significant impact on the “efficiency” of the economy will also have distributional consequences. That doesn’t mean that we don’t want technological change. Much of the time we probably do. But this perspective forces us to acknowledge that there are social decisions to be made, not simply private actors doing whatever they please, and that those social decisions require tradeoffs. Second, this book will serve as an enormously useful corrective to the tendency among economists studying the firm, property rights, and institutions generally (a growing trend that is very healthy in and of itself) to follow Oliver Williamson’s “In the beginning, there were markets” approach. Roy argues forcefully, and correctly, that both the market and the firm are social constructions. That does not mean that they are arbitrary or unreal. It means that their structure and their existence are the result of past political decisions and the outcome of social and political conflict. This is also a useful corrective to an approach that conflates the notion of the existence of a market with “rational” behavior by individuals. The existence of a market changes how rational individuals behave. Competitive pressure forces rational individuals to calculate more, and it increases the weight of monetary factors in those calculations relative to very real concerns for community and the quality of human inter action. Economic historians recognize this effect of the market on individual behavior when they can cast it in a positive light (see Sokoloff’s 1992 work on the spread of markets and the rate of patenting, for example), but tend to downplay it otherwise (see Rothenberg 1992, for example).

Third, Roy makes an interesting case for an interplay between contingency and determinacy in the book. He argues for contingency in order to make the case that there is nothing natural or inevitable about the current institution of the corporation. The current configuration of rights and responsibilities that constitute the corporation is the result of highly contingent events in the past. But he does not accept the standard version of path dependence and raises questions that I have long thought were problematic with that approach. He makes clear that while the current construction of the corporation is contingent and path dependent in the sense that it would and could have been different if different events had occurred at key turning points (particularly during the 1830s canal crises), he does not see this as simply the result of chance. The key events were themselves the result of who had power at the time. This approach opens up a whole line of fruitful research in this area. Why was it that the response to the canal crisis was privatization rather than increased regulation? Why was it that some state constitutions were modified to limit direct involvement in economic activity and others weren’t? These were explicitly political decisions that had long term economic ramifications. Understanding the political forces behind these decisions would be very useful. Roy also makes the point, applicable quite generally to the path dependence approach, that what matters is not simply the cost of shifting from one path to another (e.g. from one keyboard to another) but who bears that cost. If those who have the power to make the decisions about whether to switch paths do not bear the costs, then the switch will appear “costless” (see McGuire, Granovetter, and Schwartz, forthcoming).

In making the argument for the contingency of the corporation Roy plays down some forces – powerful forces I am sure he would agree – that led to its current incarnation. On a mundane level he downplays competition among states allowed by the federal structure that led to a spiraling down of public responsibilities for private actors. But on a more basic level, the transformation of assets from things that natural individuals own, use, and are responsible for, to capital personified in the corporation, responsible no longer to the state and barely to its nominal owners, seems to me not a happenstance, contingent event. The corporation gives agency to capital. It’s not for nothing that we call it a capitalist economy.

Finally, Roy’s “de-naturalizing” of the corporation is a giant step forward for business history. So is his problematizing of the boundaries between private and public, the economy and the state, and the rejection of the dichotomy of an “interventionist state” and a “natural market.” As Roy makes clear, the state creates the market, so it is meaningless to talk of it intervening in it. That language simply serves to de-legitimize some actions of the state relative to others. Finally, acknowledging that there are social choices to be made that influence how the economy will function in the future is important, and not simply for academics. Post-cold war ideology presents the corporation not only as natural but all- powerful. It is good to remind people that they can, through social and political action, make choices about how such social creations operate.

Lamoreaux, Naomi R. The Great Merger Movement in American Business, 1895-1904. Cambridge, England: Cambridge University Press, 1985.

McGuire, Patrick, Mark Granovetter, and Michael Schwartz. Forthcoming. The Social Construction of Industry: Human Agency in the Development, Diffusion, and Institutionalization of the Electric Utility Industry. New York, N.Y. and Cambridge, England: Cambridge University Press.

Rothenberg, Winifred (1992). From Market Places to a Market Economy: The Transformation of Rural Massachusetts . Chicago, Ill.: University of Chicago Press.

Sokoloff, Kenneth (1992). “Invention, Innovation, and Manufacturing Productivity Growth in the Antebellum Northeast” in Robert Gallman and John Wallis American Economic Growth and Standards of Living before the Civil War (Chicago, Ill.: University of Chicago Press), pp. 345-378 .

Williamson, Oliver E. (1985). The Economic Institutions of Capitalism. New York, N.Y.: The Free Press.

Subject(s):Markets and Institutions
Geographic Area(s):North America
Time Period(s):19th Century

Consuming Power: A Social History of American Energies

Author(s):Nye, David E.
Reviewer(s):Melosi, Martin V.

Published by and EH.Net (August, 1998)

David E. Nye.

Consuming Power: A Social History of American

Energies. Cambridge, Mass.: MIT Press, 1998. xii + 331 pp. Illustrations, notes, index. $25.00 (cloth), ISBN 0-262-14063-2.

Energies. Cambridge, Mass.: MIT Press, 1998. xii + 331 pp. Illustrations, notes, index. $25.00 (cloth), ISBN 0-262-14063-2.

Reviewed for H-Business by Martin V. Melosi , University of Houston

Energy in Big Gulps

In this synthetic work, David E. Nye not only expands his list of valuable works on energy and technology, but takes the logical step in the existing literature from studying the production of energy to examining the consumption of energy. Surprisingly, in a society like the United States that has always taken the use of energy in big gulps, scholars have most often chosen to focus on the development and growth of energy industries (oil companies, mining companies, lumbering), the technology of production, and the economic consequences of same. Few historians, with the exception of Mark Rose, Harold Platt, and now Nye, have given sufficient attention to how we consume energy and what this tells us about our culture. Nye views consumption of energy in three ways: (1) “the literal demand for energy”; (2) “the rising demand for more goods”; and (3) the possibility that energy demands “can be ecologically destructive” (p. 12). The third view is, however, more of a consequence of the first two than a descriptive category.

Nye intends to give attention to “ordinary activities”–creating businesses, home-making, living in communities, seeking pleasures, purchasing goods–and how they “changed as people constructed new energy systems, from Colonial times to the present.” He disavows the notion that “more energy is better” or that “more energy equals more civilization.” Instead, he intends to make clear that “as Americans incorporated new machines and processes into their lives, they became ensnared in power systems that were not easily changed” (p. 1).

As a good historian of technology, he avoids technological determinism, placing an emphasis on human choice and culture in the selection and use of energy systems. “Human beings select the machines they use and shape them to fit within different cultures” (p. 3). And like other historians before him, Nye accepts Thomas Hughes’s notion of “technological momentum” for large systems which suggests that while these systems have some flexibility in their initial phases, they become less so over time. Some economists call this “path dependance” which emphasizes the notion that choices made early–in the application of a technology in this case–become more difficult to alter over time. Nye also gives primary attention to large energy systems–water power, steam power, electricity, the internal combustion engine, atomic power, and computerization–and their individual technological momenta. The systems approach, shunned for several decades after the 1930s or so, has had a resurgence in recent years as a mechanism for understanding the intersection between technology and culture.

The chronology in the book is driven by a relatively conventional focus on a succession of energy systems–wood, coal, petroleum, electricity–without attempting to suggest discrete stages. Nye emphasizes overlapping series as opposed to an Age of Coal or and Age of Oil. Such a view is a realistic assessment of how energy sources are developed and used. He also makes the insightf ul observation that each energy system “has been used to shape distinctive domestic patterns, work routines, urban structures, and agricultural methods, imparting particular rhythms and contours to the everyday round” (p. 8). This reinforces the notion that energy systems become less flexible as they mature.

The first section of the book, “Expansion,” treats the period of European colonization or conquest in North America. Accepting a tenet of environmental historians, Nye views European settlement from the perspective of redefining nature as resources and then transforming them into commodities–lumbering and the manufacture of iron, for example. The application of energy technologies, such as water power, also disrupted food-producing activity, such as fishing and agriculture (a process of economic trade-offs benefitting the new settlers at the expense of Native-American peoples). These “energies of conquest” also transformed activities like agriculture from subsistence into market economies. While not going as far as Alfred Crosby in suggesting the development of a Neo-Europe in North America, Nye emphasizes how a shift in values the European conquest impulse used energy as a tool to remake the physical and economic environment of aboriginal Amer ica. The production of cotton cloth and woollen goods in the northeast United States through the use of water power in the nineteenth century was an extension of these initial impulses. Cotton cloth and woollen goods were the first mass-produced product s in North America, heavily dependent on an energy-intensive technology, notably the water wheel. This was a regional, as opposed to national, phenomenon, however. In the South, the slave economy continued to rely heavily on muscle power, and in Nye’s view, did not maximize production. He uses this regional dichotomy in the use of energy to reinforce the notion of “the centrality of culture in determining which technologies will be adopted and how they will be used” (p. 59).

In the central section of the book, “Concentration,” Nye turns to the Industrial Revolution. He is particularly interested in how steam power came to the city through transportation and then manufacturing. What begins as a relatively traditional recitation of the impact of the railroad, quickly turns to an examination of differences in regional transformation in the application of coal and steam. Whereas locomotives and other forms of steam power were closely linked to urban development in the North, in the southern states steam was primarily utilized in the countryside in rural sugar mills and sawmills, for example. This is a good observation, although somewhat generalized given the fact that urbanization in the South developed later than in the Northeast and cannot be treated as comparable in status. But Nye makes the point that the new energy technology served many functions and had several consequences. For example, the ability to concentrate factories through the application of steam power produced more destructive envi ronmental consequences than the dispersed waterpower uses of the cotton and saw mills. Of course, the impoundment and redirection of water and the use of rivers and streams as sinks produced their own kinds of environmental threat.

Much to his credit, N ye does not simply focus on the production of goods through the use of coal and steam, but turns attention to the home and to the amenities available in nineteenth-century America. He makes some brief remarks possibly too brief about energy becoming “inc reasingly a matter of social class” (p. 97), and the degree to which some products were most readily available to middle-class white Americans. It might have been valuable, however, to dwell a little longer on economic, as opposed to social, class struct ure as a determinant of energy use. He nonetheless makes a good case about the emerging high-energy society seen not only in the city, but on the farm. The farmer’s tools, his increasing dependence on the railroad, and the rising market economy connected agricultural America to the process of “consuming power.” Nye likewise links energy use to the rise of the corporation, although this argument seems a little strained. No one would doubt the transforming power of corporate concentration, and Nye falls in line with Alfred Chandler, Robert Wiebe, and all the rest in making this point. However, there is somewhat of a chicken-and-egg problem in singling out energy use and development as a core reason for business concentration. Nye seems on stronger ground when he relates the use of coal, steam, oil, and natural gas to the development of industrial systems. Electricity more than Nye’s substantial attention to Ford’s assembly-line technique was particularly influential in the development of sophisticated, complex industrial systems. It also revolutionized the household as Nye rightly contends.

In the third and last section, “Dispersion,” domestic consumption of energy in America’s modern era takes center stage. “Just as electrification transformed the possibilities for manufacturing, it energized the popular culture that was emerging at the end of the nineteenth century” (p. 157). Not only were Americans consuming telephones, radios, and motion pictures, but also attending Coney Island, a place much less effete in its conception of what people wanted than the Columbian Exposition in Chicago. In essence, Nye argues, the new popular culture “did not trickle down from above as a simplified version of elite culture, nor did capitalists and moralizing soc ial reformers impose it. It emerged in response to demands for lively entertainment” (p. 160). And it was made possible through the application of new and abundant sources of energy. The advent of the automobile seemed to have similar roots in popular taste, but not without the superstructure of an industry poised to provide mass-produced motorcars, of course.

Nye follows the consumption trail to present-day America. Along the way, he points to several important changes: Farm life became more comfor table in the high-energy society, but farmers were being marginalized in the food-production and delivery chain. The retail centers of consumption migrated from central cities to suburban malls. New energy sources, such as atomic power and the wider use of natural gas, made the United States “the most highly powered society in the world” (p. 202). Television became an “environment.” Computers were springing up everywhere. Even the much ballyhooed energy crisis of the 1970s faded in memory by the 1990 s. Energy consumption kept apace with the high-energy lifestyle of middle Americans despite changes in international patterns of oil production and transport.

None of these facts are particularly striking or new. But Nye is not attempting to shock us with factual revelations. He is concerned with reinterpreting the familiar, building an historical periodization around themes of energy consumption, and placing great emphasis on choices made “about how people shape technologies” (p. 255). In several re spects, he has succeeded in doing just that with this book. Nye is a talented synthesizer and an important commentator on American society and culture. That he recognizes the intimacy between how American culture evolved and its use of energy is an impo rtant theme too often ignored in more traditional renditions of American history as a political or economic saga. Consuming Power is well-balanced in its chronology, in its treatment of major economic and social changes, and in its efforts to capture the essence of the American consumer culture. The emphasis on “choice” as the central factor in applying and using energy technologies sits squarely at the core of recent thinking about the history of technology that discounts technological determinism and “autonomous technology” and applauds the social construction of technical systems. This is a laudable impulse, but it is one that needs more refining in the book under discussion. A basic question not well answered is “Whose choice?” Is there a percep tible distinction between the decision of the manufacturer who employs electrical power in his factory and the decision of the consumer who buys the product made at that factory? What are the realms of choices available to manufacturers, consumers, and governments when it comes to energy? How can we distinguish between choices? How does the regulatory apparatus of the nation affect energy choices?

Beyond determining the gradations of choice, Nye and indeed the rest of us who do research in this area of history need to balance our understanding of what “choice” means with the realities of path dependence, that is, the constraints placed on choice by imbedded systems not easily modified, removed, or discarded. If David Nye was intent on forcing us to think in different ways about energy, consumption, and society, he has succeeded. Consuming Power, however, should not be the last word on these subjects, but a starting point for additional reflection.

Subject(s):Agriculture, Natural Resources, and Extractive Industries
Geographic Area(s):North America
Time Period(s):General or Comparative

Ships for the Seven Seas: Philadelphia Shipbuilding in the Age of Industrial Capitalism

Author(s):Heinrich, Thomas R.
Reviewer(s):Brown, John K.

Thomas R. Heinrich. Ships for the Seven Seas: Philadelphia Shipbuilding in the Age of Industrial Capitalism. Baltimore: The Johns Hopkins University Press, 1997. x + 290 pp. Illustrations, tables, notes, essay on sources, and index. $39.95 (cloth), ISBN 0-8018-5387-7.

Reviewed by John K. Brown, University of Virginia, for H-Business <

Forty or more years ago, business, economic, and technological historians took a great interest in ships, maritime trade, and shipbuilding, topics of seminal works by Robert G. Albion, Howard I. Chapelle, Louis C. Hunter, John G. B. Hutchins, Samuel Eliot Morison, David B. Tyler, and others. After the fertile work of this World War Two generation of scholars, academic historians turned away from the sea just as earlier Americans did following the War of 1812. But the popular interest in maritime history remains strong on many levels, as evidenced by: the present craze over the Titanic, resurgent interest in maritime museums, Jack Aubrey’s continuing chain of victories over Napoleon’s naval might, and the improbable success of a twelve-volume maritime history encyclopedia. Little wonder. So much of maritime history consists of those transforming events that offer dramatic narratives: humans’ epic struggles with the sea, the rise of successive maritime powers, voyages from old worlds to the New, and technological transformations from wood to iron and steel ships and from sail to engine-driven vessels.

So popular interest in maritime history continues, despite the waning of academic studies. Analysis has dethroned narrative in the work of professional historians, perhaps one reason for their apparently declining interest in maritime topics. But the moment is ripe for a new cadre of Morisons who combine the two approaches. A good story always interests general audiences — indeed a powerful tale can even sway the most rarefied intellectual. Furthermore, many of the analytical approaches and insights of the past forty years of land-based scholarship should travel well. In going to sea they offer new departures for maritime history.

Thomas Heinrich demonstrates this potential for a new maritime history in his Ships for the Seven Seas. Written for a broad range of readers, the book provides a “history of iron and steel shipbuilding in metropolitan Philadelphia . . . from the Civil War to the 1920s” (pp. 2-3). Heinrich takes the stance of an industrial historian — combining threads from political, labor, business, economic, and technological history. This multi-faceted approach is one of the book’s major strengths. For instance cogent summaries of merchant and naval history in each shipbuilding epoch provide admirable technological and economic context about the markets in which the shipbuilders operated. The book is well-designed, nicely illustrated, and free of most proofing errors (although misspelled proper nouns crop up too often). Heinrich tells a good story, and the book deserves the broad readership that its publisher wisely targeted.

Academic historians will find many rewards here too. Throughout the book Heinrich leavens his narrative with analysis, applying to his study of maritime industry the insights offered by labor process studies, Chandlerian business history, and accounts of batch production by Scranton and Zeitlin. On balance, however, Heinrich favors narrative over analysis — a wise choice given the limitations and problems of the original sources available to him. In sum, this is a finely-crafted book on a fascinating period when technical transformations, political compromises, broad economic changes, and world power aspirations reconfigured American shipbuilding. With its skillful blending of narrative and analysis, it is far more comprehensive and insightful than David Tyler’s The American Clyde, written forty years ago, which covered the same period and firms.

Philadelphia-area builders created the American metal shipbuilding industry, they dominated the trade until 1900 or so, and some of the city’s firms remained major players until after World War Two. So Heinrich has ample justification for his geographic focus. The book’s organization places a thematic approach within a chronological narrative. Chapter One provides an overview of wooden shipbuilding. The wooden builders enjoyed notable success for a century-and-a-half, but sank after the 1850s under combined weight of rising British iron shipping (sail and steam), trade disruptions during the Civil War (when Northern shippers registered their vessels under neutral foreign flags), and the broad shifts in investment capital from shipping to railroads, commerce to manufacturing.

In Chapter Two, Heinrich lays out the Civil-War-era foundations for Philadelphia shipbuilders in shifting from sail to steam and wood to iron. In a well-cast and original analysis, he argues that Philadelphia firms’ wartime success in building steam-driven ironclads established embryonic but valuable skills that later served in building iron steamers for the civilian merchant marine. Philadelphia’s strengths in mechanical engineering and metalworking and its proximity to the iron regions provided further advantages to the city’s early iron steamer industry.

Chapter Three focuses on the business history of the leading Philadelphia shipbuilders following the war. Here Heinrich contrasts proprietary capitalism (dominating at the shipyards) with the new corporate managerial capitalism introduced by the railroads. As he observes, the two forms of business organization became mutually dependent when the shipping subsidiaries of major railways became major customers for the shipyards’ iron steamers. Perhaps more insightful are this chapter’s discussions of the integration of marine engineering (design and construction of power plants for vessels) with shipbuilding — a unique attribute of the Philadelphia firms — as well as their disintegrative strategy of relying on extensive sub-contracting.

In his fourth chapter, Heinrich sketches the growing scale of iron shipbuilding firms circa 1875-1885. The American industry never approached the size, specialized capacities, efficiency, or sophistication of its counterpart in Britain. As a result, “American steamship operators paid 25-35 percent more for iron tonnage than their British rivals” circa 1880 (p. 78). But such U.S. builders as Roach, Cramp, and Harlan and Hollingsworth nonetheless achieved growth in this period. Naval construction did not yet amount to much, but Congress gave US shipbuilders a protected market, requiring American-built ships in the coastwise trade (i.e.: all marine freight and passenger traffic within U.S. borders). Although wooden sailing vessels carried most domestic marine commerce, Philadelphia-built iron steamers had few viable competitors in niche markets: oil tankers on routes from Texas to the East coast, overnight passenger steamers on Long Island Sound and Chesapeake Bay, coastwise towboats in the coal trade, and ocean freighters laden with passengers and Hawaiian sugar. On international routes, some American-owned shipping lines chose to buy U.S. vessels, notwithstanding their higher price. Having sketched the “anatomy of a shipbuilding boom” circa 1880 in this chapter, Heinrich then gives an able description of the labor processes involved in iron shipbuilding and marine engineering. From this he briefly considers labor-management relations and class formation in the industry.

By 1885 or so, American iron shipbuilders had established themselves, yet cheap wooden sailing vessels from Maine limited their ability to penetrate the domestic carrying trade, while cheap iron steamers from British yards took most international commerce. So builders like Cramp and Roach turned to the United States Navy after 1885 — the subject of Chapter Five. Here Heinrich ably describes naval procurement policies and the shipbuilders’ lobbying efforts to create a military-industrial complex that would finance plant expansions and the acquisition of subsidiaries while sustaining their yards when the civilian market evaporated, as it often did. Heinrich takes a critical view of naval shipbuilding and its effect on the yards, arguing that builders “preferred private contracts because they involved fewer organizational problems and were usually more profitable.” The yards had little choice — naval work was better than none — but the “potpourri of high-technology naval construction and low-quality commercial shipbuilding was not terribly efficient” for yard managers, workers, or systems (p. 120).

The history of commercial shipping, naval procurement, and steel shipbuilding from 1898 to 1914 occupies Chapter Six. Here themes of earlier chapters are largely reprised: a growing scale of operations despite boom and bust markets, enhanced skill requirements among the workers needed to operate technically-sophisticated production machinery, further innovations in the yards’ products, the challenges of complex and ever-evolving naval work, and the inefficiencies of generalist production in American yards. New issues in the industry circa 1900 included: the rise of competitors (in Philadelphia and elsewhere) seeking to capitalize on America’s new aspirations as a naval power, labor activism and management’s vehement counter thrusts, and a new corporate model of shipyard management. Narrative dominates in the chapter, leaving this reader wishing for a bit more analysis. For instance, Heinrich details a number of problems with the new managerial capitalism adopted at the Cramp shipyard after 1900. Yet he never really offers a verdict on the suitability of corporate management practices in this industry with its vast sales fluctuations, high skill requirements, and circumscribed influence over markets.

World War I occupies Chapter Seven. Beyond the predictable expansions in wartime, here the story centers on Philadelphia’s massive Hog Island Yard. This wartime emergency plant represented a government-funded experiment in standardized ship construction. With its fifty building ways, Hog Island was the world’s largest shipyard. But intractable problems discredited this attempt to produce ships in volume: inadequate transportation from inland fabricating shops to the yard, coordination difficulties once materials did arrive, and an overburdened market for shipbuilding labor in the Philadelphia area. Heinrich has sifted through a multitude of government reports, and he tells this story well.

The book closes out with an eighth chapter on the 1920s depression. The yards came on hard times when the predictable postwar glut in merchant shipping was matched by the novel Washington Naval Disarmament Treaty of 1922 that closed off naval work for a number of years. The shipbuilding depression reached around the world; in Philadelphia the yards responded by further diversifying into non-marine work (the Cramp yard pioneered this strategy circa 1900). Heinrich uses Cramp as a anchor throughout the book, so when that old-line firm dies in 1927, he conducts a detailed autopsy. His verdict: Cramp lost its viability after Averell Harriman merged the builder into his ocean shipping empire. When the Harriman shipping lines foundered, they dragged down Cramp as well. Heinrich also points to excessive competition in the industry and “the lack of an intelligent [federal] merchant marine policy” (p. 212).

A short Epilogue ends the book, wherein Heinrich summarizes his three main analytical points: 1. Naval demand laid foundations for metal steamship construction; thereafter it provided a useful but problematic market, 2. The American merchant marine and its supporting shipbuilders suffered because the federal government failed to pass maritime policies that offered “incentives for investment” for private American firms engaged in international shipping (p. 221), 3. In the absence of those policies, U.S. metal shipbuilders pursued a generalist policy, building whatever tugs, sand barges, passenger liners, or battleships that their markets demanded. This century’s slow withering of America’s merchant marine and the Philadelphia yards closes out the story.

In ways that may not be immediately apparent in this sketch of its contents, Heinrich has pulled off something of a gamble in this book. Despite the fact that essentially no business papers survive from Philadelphia’s metal shipyards, the author has produced a comprehensive history. He builds his portrait from exhaustive searches of periodical records, newspapers, trade and professional society journals, union periodicals, government documents, insurance surveys, and all relevant secondary sources. It is a monumental effort. Still the lack of internal business papers leaves the book with only scattered insights into profits or losses, work force fluctuations and pay rates, capital/labor ratios, the bidding process, cost accounting controls, the quality and severity of price competition, etc.

If the archives had been more forthcoming, it is possible to project a different explanation of American shipbuilders’ inefficiencies. Heinrich explains their shortcomings by pointing to the lack of federal support for U.S. firms in international shipping. This in turn limited the overall market and forced shipyards into an inefficient generalist approach in production. Charles Cramp and other builders made a similar argument in calling for subsidies during the Gilded Age.

While this view has merit, one could advance an argument that I think is equally plausible: namely that the yards’ inefficiencies arose from those federal policies that protected shipbuilders by targeting their chief customers, the shipping lines engaged in domestic commerce. The statutory requirement for American-built ships in coastwise and inland navigation chiefly benefited New England’s wooden yards since their cheap wooden sailing vessels took most of the business. But such slow schooners were simply unsuited to many trades: passenger service, high-value freight traffic, transport of bulk oil, the Hawaiian sugar trade, etc. Through 1900 or so, ship owners seeking metal steamers for these trades had little choice but to deal with the Philadelphia yards. Without protection, these American pioneers in metal shipbuilding would never have begun; with it they never approached the performance of the world’s leading yards in Britain.

Testing this alternate argument would require the sort of internal business papers that simply do not survive. Equally, this perspective and Heinrich’s argument may both be valid. I only raise the point to underscore how the lack of hard data and extensive sources renders any authoritative analysis problematic. Notwithstanding these difficulties, Heinrich has written a detailed, compelling account of iron and steel shipbuilding — an industry vital to America’s economic growth and its rise to world-power status.

Jack Brown

Division of Technology, Culture and Communication School of Engineering and Applied Science Thornton A-216 University of Virginia Charlottesville, VA 22903 (804) 924-6177

Subject(s):Transport and Distribution, Energy, and Other Services
Geographic Area(s):North America
Time Period(s):20th Century: Pre WWII

The Artificial River: The Erie Canal and the Paradox of Progress, 1817-1862

Author(s):Sheriff, Carol
Reviewer(s):Laurent, Jerome K.

Published by EH.NET (July 1997)

Carol Sheriff, The Artificial River: The Erie Canal and the Paradox of Progress, 1817-1862. New York: Hill and Wang, 1996. xvii + 251 pp. $19.95 (cloth), ISBN 0 8090 2753 4.

Reviewed for EH.NET by Jerome K. Laurent, Department of Economics, University of Wisconsin-Whitewater.

This slender volume of 177 pages of text covers the story of the Erie Canal during the antebellum period in a different manner than have prior works on the subject. Carol Sheriff, an historian at the College of William and Mary, differs in her treatment from standard accounts in that she is concerned primarily with the human dimensions of the development and evolution of this medium of transportation in upstate New York. In the words of Sheriff, her study “uses the Erie Canal region as a microcosm in which to explore the relationships between some of the antebellum era’s important transformations: widespread geographic mobility; rapid environmental change; government intervention in economic development; market expansion; the reorganization of work; and moral reform” (p.5). These changes are discussed and evaluated in the context of what the middle classes of the 1817-1862 period would consider to be signs of “progress” or “improvement.” The transformation of this region as a result of the Erie Canal is organized around six topics, each of which is covered by a chapter. They include the “visions of progress,” the “triumph of art over nature,” “reducing distance and time,” the “politics of land and water,” the “politics of business,” and the “perils of progress.” What does the author include under the forgoing headings?

The first details the visions of leading New Yorkers (most prominently Governor DeWitt Clinton) to get the project underway and thereby “represented a growing commitment in the North to the culture of improvement” (p.25). These individuals were what Sheriff calls “adherents to the practical republicanism” who believed that “the nation’s common good depended on prosperity, individual opportunity and an equal emphasis on rural and urban growth” (p.24). A project of the size of the Erie Canal would further their visions of progress, according to Sheriff.

The second chapter details problems in the construction process of the Canal, a project of immense size and complexity for that era. According to the author the Canal was “a tribute to republicanism” and a great “American achievement,” especially for the middle classes.

In chapter 3, the subject of “reducing distance and time” is discussed in terms of the various types of users of Canal services, whether they be tourists, immigrants, business persons or settlers of the region. The Canal had set forth a commercial revolution, encouraged individuals to travel to new areas of the nation and provided a link to those left behind. The hardships of the Canal traveler are detailed. These hardships often made travel an unpleasant experience. Eventually, these problems encouraged travelers and commerce to seek an alternative — the railroad.

Chapter 4, on the “Politics of Land and Water,” is basically a discussion of the state of property rights as found in American society during the period. Professor Sheriff’s example of the Erie Canal region offers insight into how ordinary citizens felt about property, particularly as expressed in their contacts with the Canal Board, the state agency set up to handle various matters relating to the Canal. The Board faced issues relating to compensation for land taken for the Canal route (and changes in the route over time), the use of water resources, and the placement of commercial structures near the Canal. At times the average citizen considered only the negative side of having a canal and neglected the benefits which accrued in having an expanded market. According to Sheriff, many citizens felt that the State had come to serve the special interests of the commercial elite.

The subsequent and related chapter, “The Politics of Business,” also deals with the commercial side of life as relating to the Canal. Many citizens made their living because of the presence of the Canal which brought about issues and problems to be dealt with by the Canal Board. For examples, the State was asked continually to expand the canal system to include connecting canals to the main route; towns had developed along the original route, but some lost out when improvements to the Canal necessitated a shifting of the route to a new location; the level of tolls charged on products and passengers had to be settled upon; and the need to raise enough revenues to pay interest and principal on the Canal debt were topics of concern. Not surprisingly, the business classes claimed to be contributing to the general welfare, whether it was the case or not. In the words of the author, “progress, in their view, did not mean an egalitarian society but rather one in which anyone would have the opportunity to improve in all senses” (p.137).

The final chapter tells us whether the preceding statement was true. In “Perils of Progress,” there were “perils” in having the Canal and this disturbed the middle classes of the region. Many of the Canal workers were children who were taken advantage of every possible way. Wages were low and working and living conditions were poor. Some workers were considered to be a threat to civilized society. As correctly pointed out by Professor Sheriff, the expansion of internal improvements was one of the great changes occurring in the development of a more market-based economy. These changes brought about for many in the middle classes a revivalist fervor in the religious sense. They wished “to convert their sinning brothers and sisters” from undesirable behavior. These reformers sought to bring these workers into the mainstream religious community and some workers had “hopes of elevating their status in a fluid class system” (p.158). Some reformers laid blame for the bad conditions on the business class itself. Thus, some reform groups “reminded the commercial classes that prosperity and progress had their costs,” which needed to be paid (p.170).

By the end of the period (1862, which was the date of the completion of the Erie Canal enlargement project), what Americans had considered to be progress had changed, the Civil War had begun, and the Erie Canal itself had become, in the words of the author, “second nature”. I would agree with this assessment.

Overall, the book is well researched and well written with a light-hearted touch. There is little that I can quibble about. I especially enjoyed reading it as an economist. Nowadays economists leave out many of the topics considered here in researching transportation history. As Peter Temin indicated recently in his presidential address to the Economic History Association, “historians are occupied today with various questions of culture. They are well suited to give us a thick description that can inform economic history. The trick for historians is to tie their investigations of culture into some economic activity” (“Is it Kosher to Talk about Culture?” Journal of Economic History, Vol. 57, No. 2 (June 1997), p. 282). That has been accomplished here. The result is that this slender volume has provided us with a “thick” description and analysis of the culture in a regional setting which has contributed much to transportation history.

Of special note is the exhaustive, but valuable, section on Notes and Sources located at the end of the text material. Professor Sheriff has located and utilized the major available sources for this research effort. In particular, the newly available Canal Board Papers provide an invaluable source of insights into what New Yorkers of the antebellum years thought about their Canal. In addition, other manuscript collections at seventeen different locations in New York and New England were examined.

In short, I would highly recommend The Artificial River to students and scholars alike. Students in American economic history courses should gain by reading this volume; transportation scholars should gain by examining the cultural history of the period as shown in this regional study. Good writing and good research are always appreciated by this economist!

Jerome K. Laurent Department of Economics University of Wisconsin-Whitewater

Jerome Laurent is the author of several articles and papers on Great Lakes transportation history including: “Trade, Transport and Technology: The American Great Lakes, 1866-1910,” Journal of Transport History, Third Series, Vol. 4, No. 1 (March 1983), pp. 1 – 24, and “Trade Associations and Competition in Great Lakes Shipping: The Pre-World War I Years,” International Journal of Maritime History, Vol. 4, No. 2 (December 1992), pp. 117-153.

Subject(s):Transport and Distribution, Energy, and Other Services
Geographic Area(s):North America
Time Period(s):19th Century

The Dynamic Society: Exploring the Sources of Global Change

Author(s):Snooks, Graeme Donald
Reviewer(s):Clark, Gregory

Graeme Donald Snooks, The Dynamic Society: Exploring the Sources of Global Change. New York and London: Routledge, 1996. xvii + 491 pp. $84.95 (cloth), ISBN: 0415137306. $24.95 (paper), ISBN: 0415137314.

Reviewed for EH.Net by Gregory Clark, Department of Economics, University of California- Davis .

For most of the time in any discipline the mundane dominates, and the subject seems to advance at a glacial pace. Old disputes are chewed over, small concessions gained and conceded. There are no sweeping visions, no sustained programs of discovery. The subject is maintained almost as much by institutional inertia as by intellectual passion. Economic history in the eyes of many is firmly stuck on just such hard and unyielding terrain. No one has published a paper yet entitled “The Heights of Norwegians Inferred from a Sample of 23 File Clerks, 1906-1908: A Quantile Bend Estimate,” but given enough time they will.

There is thus always an incipient demand for bolder conjectures, for the big idea that can inject excitement and remake the subject. But pursuing the big idea, seductive as it is, has its dangers. The big idea is inevitably at the beginning ill-formed, and weakly supported. Thus those who venture the big idea need strong egos and selective blindness – they have to withstand the carping of the Lilliputians, and the rejection of the journal referees. But at the same time the ego cannot be too strong, the vision too selective. Therein lies a kind of madness. The innovator has to be able to respond to criticism, but not be overwhelmed by it, to connect with the audience yet not become its servant. The pursuer of the big idea has to walk the thin line between hearing too well and being deaf to reason.

It was thus with some trepidation that I read early in Graeme Snooks’ new book “we need a simple but robust model that can explain the emergence and development of life over the last 4 billion years” (p. 7). It was with even more fear that I noted at the end of the book on page 431 a ten page glossary of “Snookspeak,” including “great linear waves of economic change,” “existential models,” “funnel of transformation,” “strategic- crisis hypothesis” – the new language we need to express the “simple but robust” theory. There was going to be no middle ground for the reviewer of this book – no “a solid contribution to the literature on developments in animal husbandry, which perhaps focuses a little too much on sheep.” Snooks has reached for the big prize. He is either an innovative visionary, or he has crossed over the line into self delusion. For what Snooks attempts in this book, aided only by pen, paper and frequent trips to the glossary, is to produce a theory of life that encompasses and surpasses all of economics, biology, history, psychology, and sociology. To raise the stakes even further this improbable concoction is emblazoned with warm commendations from no less than Douglass North, Nobel Laureate, Baron Herman van der Wee, and Stanley Engerman.

What is Snooks’ new post-Darwinian theory of life and everything? There is at maximum one person who knows, and if he does know, he is unable to communicate it. This is not a case where I can outline the theory, and then ask how well it corresponds to what we know. What the theory is is the central mystery. For example, the theory, Snooks states, employs existential as opposed to deductive models.

“Existential models are empirical models of reality – or models of existence – and can be contrasted with the logical or deductive models of physics and economics, which are merely constructs of the mind….As existential models are based upon dynamic timescapes, they can liberate us from the limitations of deductive thought. They set free the imagination to range over the actual patterns of existence. And in these patterns we can see the dynamic processes of reality” (pp. 433-4).

In California we have many examples of people liberated from the limitations of deductive thought, and often they too have important ideas they need to tell us. So it turns out that Snooks not only wants to rewrite the history of the last 4 billion years, he also, en passant, is introducing entirely new modes of thought, which should, maybe after some refinement, be able to effect a substantial reformation of the physical sciences.

The above example is the book at maximum wackiness. There are many parts, even whole pages, where the exposition is clear: the discussions of crustal formation (yes, the crust of the earth), Hitler’s aims (irrational), the oxygen content of the atmosphere, aggression in men and women (as evidenced by auto accidents), the walls of Jericho, blue-green algae, Henry Thomas Buckle (1821-1862), sea level changes, the Holy Roman Empire, post Keynesians, the ice age, linear time, volcanic eruptions, the nuclear family, Frederick Nietzsche, Joel Mokyr, dinosaurs, dolphins, and the Domesday Book, to name a few examples. The only problem is what the connection of the episode at issue is to the big idea. I know the theory is dynamic, which is why the front cover has charging horses on it, whereas Darwin was static. Dynamism is everywhere – more than one page of the index alone is devoted to dynamism in all its varieties, including “dynamics of the earth: formation of crust.” Change we learn occurs because of dynamism. I also learned that the theory is “economic,” and that it involves “paradigm shifts,” but the theory itself remains hidden from the view of a reviewer trapped in the prison of deductive logic.

To take a specific example, Snooks argues, with some persuasion to someone whose knowledge of the subject is limited to the New York Times, that the attempt by many scientists to explain the extinction of dinosaurs by natural catastrophes is unconvincing. But what is Snooks’ alternative explanation? Dinosaurs were doomed, he assures us, by “having exhausted their dynamic strategies” and further dinosaurs “suffered from over-expansion owing to the exhaustion of their dynamic opportunities” (pp. 77-78). And that’s it. With those trenchant observations, Snooks having dispatched the dinosaur issue between pages 76 and 78 as rapidly as an asteroid impact, marches quickly on to tackle the bigger problems. The survival of some organisms, largely unchanged, from long before the era of the dinosaurs is, I presume, because they did not exhaust their dynamic opportunities to not change. Aristotle, who claimed that objects fell towards the earth because it was in their nature to fall, looks like a model of positivist science compared to Snooks.

Another example, closer to the workaday concerns of economic historians, is “technology as a dominant dynamic strategy.”

“The technological paradigm shift is a widespread human response – occurring in both the Old and New Worlds – to critical episodes in the relationship between population and natural resources owing to the exhaustion of the prevailing technological paradigm. A paradigm shift involves a technological transformation that provides, in a relatively short space of time – when looking forwards rather than backwards – a quantum leap in access to the resources of a niggardly natural world” (pp. 239-240).

Leaving aside the interesting metaphysical claims about time, what is the content of this view? Snooks claims there have been only three technological paradigm shifts: the shift from scavenging to hunting in the Paleolithic, the shift from hunting to agriculture in the Neolithic, and the shift from agriculture to industry in eighteenth century England. He argues that each shift is created by changes in relative factor prices. Now of course, for the first two shifts we know nothing of factor prices. Indeed, again based only on the authority of the New York Times, it has just been discovered that the shift from scavenging to hunting occurred about 100,000 years ago, much earlier than previously thought. Does this matter to Snook’s theory? Not as far as I can tell. When the shift occurred it was undoubtedly the result of population pressure and a stagnant scavenging technological paradigm.

So the only paradigm shift for which we have any evidence on relative scarcities is the Industrial Revolution, the cause of which was “with the growing pressure of population on natural resources, as the old technological paradigm was progressively exhausted, came a rise in prices: of natural resources relative to labour; of labour relative to capital; and of organic relative to inorganic natural resource” (p. 265). This claim is at least clear, but is both theoretically and empirically implausible. Why should population pressure raise the price of labor relative to capital? Why didn’t population pressure in the high middle ages spark an Industrial Revolution? Why wasn’t the Industrial Revolution in China? And empirically the substitution of inorganic for organic resources in Britain before 1850 was a trivial element of the Industrial Revolution, as the work of von Tunzelman, McCloskey, and Crafts clearly shows. But as with the demise of the dinosaurs, Snooks can only allocate about three pages of the book to his discoveries about the Industrial Revolution paradigm shift before he has to rush on to bigger things.

I could go on, but this is enough to convey the point. As we go about the mundane tasks of economic history, trying to prise the occasional nugget of knowledge from hard and stony ground, I am sure we will hear periodically from Graeme Snooks. He will come zooming past, gesticulating wildly and shouting excitedly about new marvelous discoveries made from the comfort of his armchair: discoveries that only he, and possibly Doug North, Herman van der Wee and Stan Engerman, can see and share.

Gregory Clark Department of Economics University of California- Davis

Subject(s):History of Technology, including Technological Change
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative