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Following an unprecedented economic boom fed by foreign investment, the Russian Revolution triggered the worst sovereign default in history. This book tells the dramatic story of this boom and bust, chronicling the forgotten experiences of leading financiers of the age. Shedding critical new light on the decision making of the powerful personalities who acted as the gatekeepers of international finance, the book explains how they channeled foreign capital into Russia in the late nineteenth and early twentieth centuries. While economists have long relied on quantitative analysis to grapple with questions relating to the drivers of cross-border capital flows, this book adopts an historical approach, drawing on banking and government archives in four countries. It provides rare insights into the thinking of influential figures in world finance as they sought to navigate one of the most challenging and lucrative markets of the first modern age of globalization. The book reveals how a complex web of factors—from government interventions to competitive dynamics and cultural influences—drove a large inflow of capital during this tumultuous period in world history. The book demonstrates how the realms of finance and politics—of bankers and Bolsheviks—grew increasingly intertwined, and how investing in Russia became a political act with unforeseen repercussions.

This book develops a model of institutional change in European commerce based on urban competition. Cities continuously competed with each other by adapting commercial, legal, and fin ancial institutions to the evolving needs of merchants. The book traces the successive rise of Bruges, Antwerp, and Amsterdam as commercial cities between 1250 and 1650, showing how dominant cities feared being displaced by challengers while lesser ones sought to keep up by cultivating policies favorable to trade. It argues that it was this competitive urban network that promoted open access institutions in the Low Countries, and emphasizes the central role played by the urban magistrates in fostering these inclusive institutional arrangements. The book describes how the city fathers resisted the predatory or reckless actions of their territorial rulers, and how their nonrestrictive approach to commercial life succeeded in attracting merchants from all over Europe. It intervenes in an important debate on the growth of trade in Europe before the Industrial Revolution. Challenging influential theories that attribute this commercial expansion to the political strength of merchants, the book demonstrates how urban competition fostered the creation of inclusive institutions in international trade.

From 1940 to 1970, nearly four million black migrants left the American rural South to settle in the industrial cities of the North and West. This book provides a comprehensive account of the long-lasting effects of the influx of black workers on labor markets and urban space in receiving areas. Traditionally, the Great Black Migration has been lauded as a path to general black economic progress. This book challenges this view, arguing instead that the migration produced winners and losers within the black community. The book shows that migrants themselves gained tremendously, more than doubling their earnings by moving North. But these new arrivals competed with existing black workers, limiting black–white wage convergence in Northern labor markets and slowing black economic growth. Furthermore, many white households responded to the black migration by relocating to the suburbs. White flight was motivated not only by neighborhood racial change but also by the desire on the part of white residents to avoid participating in the local public services and fiscal obligations of increasingly diverse cities. Employing historical census data and state-of-the-art econometric methods, this book revises our understanding of the Great Black Migration and its role in the transformation of American society.

Throughout the world, the rule against price fixing is competition law's most important and least controversial prohibition. Yet there is far less consensus than meets the eye on what constitutes price fixing, and prevalent understandings conflict with the teachings of oligopoly theory that supposedly underlie modern competition policy. This book offers a fresh, in-depth exploration of competition law's horizontal agreement requirement, presents a systematic analysis of how best to address the problem of coordinated oligopolistic price elevation, and compares the resulting direct approach to the orthodox prohibition. The book elaborates the relevant benefits and costs of potential solutions, investigates how coordinated price elevation is best detected in light of the error costs associated with different types of proof, and examines appropriate sanctions. Existing literature devotes remarkably little attention to these key subjects and instead concerns itself with limiting penalties to certain sorts of interfirm communications. Challenging conventional wisdom, the book shows how this circumscribed view is less well grounded in the statutes, principles, and precedents of competition law than is a more direct, functional proscription. More important, by comparison to the communications-based prohibition, the book explains how the direct approach targets situations that involve both greater social harm and less risk of chilling desirable behavior—and is also easier to apply.

Today's wine industry is characterized by regional differences not only in the wines themselves but also in the business models by which these wines are produced, marketed, and distributed. In Old World countries such as France, Spain, and Italy, small family vineyards and cooperative wineries abound. In New World regions like the United States and Australia, the industry is dominated by a handful of very large producers. This is the first book to trace the economic and historical forces that gave rise to very distinctive regional approaches to creating wine. The book shows how the wine industry was transformed in the decades leading up to the First World War. Population growth, rising wages, and the railways all contributed to soaring European consumption even as many vineyards were decimated by the vine disease phylloxera. At the same time, new technologies led to a major shift in production away from Europe's traditional winemaking regions. Small family producers in Europe developed institutions such as regional appellations and cooperatives to protect their commercial interests as large integrated companies built new markets in America and elsewhere. The book examines how Old and New World producers employed diverging strategies to adapt to the changing global wine industry. The book includes chapters on Europe's cheap commodity wine industry; the markets for sherry, port, claret, and champagne; and the new wine industries in California, Australia, and Argentina.

Even before the United States became a country, laws prioritizing access to credit set colonial America apart from the rest of the world. This book examines how the drive to expand credit shaped property laws and legal institutions in the colonial and founding eras of the republic. The book describes how the British Parliament departed from the customary ways that English law protected land and inheritance, enacting laws for the colonies that privileged creditors by defining land and slaves as commodities available to satisfy debts. Colonial governments, in turn, created local legal institutions that enabled people to further leverage their assets to obtain credit. The book shows how loans backed with slaves as property fueled slavery from the colonial era through the Civil War, and that increased access to credit was key to the explosive growth of capitalism in nineteenth-century America. The book presents a new vision of American economic history, one where credit markets and liquidity were prioritized from the outset, where property rights and slaves became commodities for creditors' claims, and where legal institutions played a critical role in the Stamp Act crisis and other political episodes of the founding period.

Spain's development from a premodern society into a modern unified nation-state with an integrated economy was painfully slow and varied widely by region. Economic historians have long argued that high internal transportation costs limited domestic market integration, while at the same time the Castilian capital city of Madrid drew resources from surrounding Spanish regions as it pursued its quest for centralization. According to this view, powerful Madrid thwarted trade over large geographic distances by destroying an integrated network of manufacturing towns in the Spanish interior. Challenging this long-held view, this book argues that decentralization, not a strong and powerful Madrid, is to blame for Spain's slow march to modernity. Through a groundbreaking analysis of the market for bacalao—dried and salted codfish that was a transatlantic commodity and staple food during this period—the book shows how peripheral historic territories and powerful interior towns obstructed Spain's economic development through jurisdictional obstacles to trade, which exacerbated already high transport costs. The book reveals how the early phases of globalization made these regions much more externally focused, and how coastal elites that were engaged in trade outside Spain sought to sustain their positions of power in relation to Madrid. The book offers a needed reassessment of the haphazard and regionally diverse process of state formation and market integration in early modern Spain, showing how local and regional agency paradoxically led to legitimate governance but economic backwardness.

This book presents a compelling and accessible history of economic ideas, from Aristotle through the twentieth century. Examining theories of the past that have a continuing modern resonance, the book shows that economics is not a timeless, objective science, but is continually evolving as it is shaped by specific times and places. From Adam Smith's theories during the Industrial Revolution to those of John Maynard Keynes after the Great Depression, the book demonstrates that if economic ideas are to remain relevant, they must continually adapt to the world they inhabit. A lively examination of economic thought in historical context, the book shows how the field has evolved across the centuries.

Guilds ruled many crafts and trades from the Middle Ages to the Industrial Revolution, and have always attracted debate and controversy. They were sometimes viewed as efficient institutions that guaranteed quality and skills. But they also excluded competitors, manipulated markets, and blocked innovations. Did the benefits of guilds outweigh their costs? Analyzing thousands of guilds that dominated European economies from 1000 to 1880, this book uses vivid examples and clear economic reasoning to answer that question. The book features the voices of honourable guild masters, underpaid journeymen, exploited apprentices, shady officials, and outraged customers, and follows the stories of the “vile encroachers”—women, migrants, Jews, gypsies, bastards, and many others—desperate to work but hunted down by the guilds as illicit competitors. It investigates the benefits of guilds but also shines a light on their dark side. Guilds sometimes provided important services, but they also manipulated markets to profit their members. They regulated quality but prevented poor consumers from buying goods cheaply. They fostered work skills but denied apprenticeships to outsiders. They transmitted useful techniques but blocked innovations that posed a threat. Guilds existed widely not because they corrected market failures or served the common good, but because they benefited two powerful groups—guild members and political elites. The book shows how privileged institutions and exclusive networks shape the wider economy—for good or ill.

Although political and legal institutions are essential to any nation's economic development, the forces that have shaped these institutions are poorly understood. Drawing on rich evidence about the development of the American states from the mid-nineteenth to the late twentieth century, this book documents the mechanisms through which geographical and historical conditions—such as climate, access to water transportation, and early legal systems—impacted political and judicial institutions and economic growth. The book shows how a state's geography and climate influenced whether elites based their wealth in agriculture or trade. States with more occupationally diverse elites in 1860 had greater levels of political competition in their legislature from 1866 to 2000. The book also examines the effects of early legal systems. Because of their colonial history, thirteen states had an operational civil-law legal system prior to statehood. All of these states except Louisiana would later adopt common law. By the late eighteenth century, the two legal systems differed in their balances of power. In civil-law systems, judiciaries were subordinate to legislatures, whereas in common-law systems, the two were more equal. Former civil-law states and common-law states exhibit persistent differences in the structure of their courts, the retention of judges, and judicial budgets. Moreover, changes in court structures, retention procedures, and budgets occur under very different conditions in civil-law and common-law states. This book illustrates how initial geographical and historical conditions can determine the evolution of political and legal institutions and long-run growth.

This book is an intellectual biography of the British economist A. C. Pigou (1877–1959), a founder of welfare economics and one of the twentieth century's most important and original thinkers. Though long overshadowed by his intellectual rival John Maynard Keynes, Pigou was instrumental in focusing economics on the public welfare. And his reputation is experiencing a renaissance today, in part because his idea of “externalities” or spillover costs is the basis of carbon taxes. The book tells how Pigou reshaped the way the public thinks about the economic role of government and the way economists think about the public good. Setting Pigou's ideas in their personal, political, social, and ethical context, the book follows him as he evolved from a liberal Edwardian bon vivant to a reserved but reform-minded economics professor. With World War I, Pigou entered government service, but soon became disenchanted with the state he encountered. As his ideas were challenged in the interwar period, he found himself increasingly alienated from his profession. But with the rise of the Labour Party following World War II, the elderly Pigou re-embraced a mind-set that inspired a colleague to describe him as “the first serious optimist.” The story is not just of Pigou but also of twentieth-century economics, the book explores the biographical and historical origins of some of the most important economic ideas of the past hundred years. It is a timely reminder of the ethical roots of economics and the discipline's long history as an active intermediary between the state and the market.

Before the seventeenth century, trade across Eurasia was mostly conducted in short segments along the Silk Route and Indian Ocean. Business was organized in family firms, merchant networks, and state-owned enterprises, and dominated by Chinese, Indian, and Arabic traders. However, around 1600 the first two joint-stock corporations, the English and Dutch East India Companies, were established. This book tells the story of overland and maritime trade without Europeans, of European Cape Route trade without corporations, and of how new, large-scale, and impersonal organizations arose in Europe to control long-distance trade for more than three centuries. It shows that by 1700, the scene and methods for global trade had dramatically changed: Dutch and English merchants shepherded goods directly from China and India to northwestern Europe. To understand this transformation, the book compares the organizational forms used in four major regions: China, India, the Middle East, and Western Europe. The English and Dutch were the last to leap into Eurasian trade, and they innovated in order to compete. They raised capital from passive investors through impersonal stock markets and their joint-stock corporations deployed more capital, ships, and agents to deliver goods from their origins to consumers. The book explores the history behind a cornerstone of the modern economy, and how this organizational revolution contributed to the formation of global trade and the creation of the business corporation as a key factor in Europe's economic rise.

Since the 1970s, American unions have shrunk dramatically, as has their economic clout. This book traces the search for new sources of power, showing how unions turned financialization to their advantage. The book catalogs the array of allies and finance-based tactics labor deployed to stanch membership losses in the private sector. By leveraging pension capital, unions restructured corporate governance around issues like executive pay and accountability. In Congress, they drew on their political influence to press for corporate reforms in the wake of business scandals and the financial crisis. The effort restrained imperial CEOs but could not bridge the divide between workers and owners. Wages lagged behind investor returns, feeding the inequality identified by Occupy Wall Street. And labor's slide continued. The book explores the paradox of capital bestowing power to labor in the tumultuous era of Enron, Lehman Brothers, and Dodd-Frank.

Why do lenders time and again loan money to sovereign borrowers who promptly go bankrupt? When can this type of lending work? As the United States and many European nations struggle with mountains of debt, historical precedents can offer valuable insights. This book looks at one famous case—the debts and defaults of Philip II of Spain. Ruling over one of the largest and most powerful empires in history, King Philip defaulted four times. Yet he never lost access to capital markets and could borrow again within a year or two of each default. Exploring the shrewd reasoning of the lenders who continued to offer money, the book analyzes the lessons from this historical example. Using detailed new evidence collected from sixteenth-century archives, the book examines the incentives and returns of lenders. It provides powerful evidence that in the right situations, lenders not only survive despite defaults—they thrive. It also demonstrates that debt markets cope well, despite massive fluctuations in expenditure and revenue, when lending functions like insurance. The book unearths unique sixteenth-century loan contracts that offered highly effective risk sharing between the king and his lenders, with payment obligations reduced in bad times. A fascinating story of finance and empire, this book offers an intelligent model for keeping economies safe in times of sovereign debt crises and defaults.

Our confidence in markets comes from economics, and our confidence in economics is underpinned by the Nobel Prize in Economics, which was first awarded in 1969. Was it a coincidence that the prize and the rise of free-market liberalism began at the same time? This is the first book to describe the origins and power of the most important prize in economics. It tells how the prize, created by the Swedish central bank, emerged from a conflict between central bank orthodoxy and Sweden's social democracy. The aim was to use the halo of the Nobel brand to influence the future of Sweden and the rest of the developed world by enhancing the bank's authority and the prestige of market-friendly economics. And the strategy has worked spectacularly — with sometimes disastrous results for societies striving to cope with the requirements of economic theory and deregulated markets. Drawing on previously untapped archives and providing a unique analysis of the sway of prizewinners, the book offers an unprecedented account of the real-world consequences of economics and its greatest prize.

The Smoot–Hawley tariff of 1930, which raised U.S. duties on hundreds of imported goods to record levels, is America's most infamous trade law. It is often associated with—and sometimes blamed for—the onset of the Great Depression, the collapse of world trade, and the global spread of protectionism in the 1930s. Even today, the ghosts of congressmen Reed Smoot and Willis Hawley haunt anyone arguing for higher trade barriers; almost single-handedly, they made protectionism an insult rather than a compliment. This book provides the first comprehensive history of the causes and effects of this notorious measure, explaining why it largely deserves its reputation for combining bad politics and bad economics and harming the U.S. and world economies during the Depression. The book presents an authoritative account of the politics behind Smoot–Hawley, its economic consequences, the foreign reaction it provoked, and its aftermath and legacy. Starting as a Republican ploy to win the farm vote in the 1928 election by increasing duties on agricultural imports, the tariff quickly grew into a logrolling, pork barrel free for all in which duties were increased all around, regardless of the interests of consumers and exporters. After Herbert Hoover signed the bill, U.S. imports fell sharply and other countries retaliated by increasing tariffs on American goods, leading U.S. exports to shrivel as well. While Smoot–Hawley was hardly responsible for the Great Depression, the book argues, it contributed to a decline in world trade and provoked discrimination against U.S. exports that lasted decades. The book tells a fascinating story filled with valuable lessons for trade policy today.

This book challenges the hold that cliometrics—an approach to economic history that employs the analytical tools of economists—has exerted on the study of our economic past. This book calls for the reconstruction of economic history, one in which history and the social sciences are brought to bear on economics, and not the other way around. The book questions the appeal of economics over history—which it identifies as a distinctly American attitude—exposing its errors and hidden ideologies, and revealing how it fails to explain economic behavior itself. The book shows how the misguided reliance on economic reasoning to interpret history has come at the expense of insights from the humanities and has led to a rejection of valuable past historical research. Developing a better alternative to new institutional economics and the rational choice approach, the book builds on the extraordinary accomplishments of twentieth-century European historians and social thinkers to offer fresh ideas for the renewal of the field. Economic history needs to rediscover the true relationship between economy and culture, and promote an authentic alliance with the social sciences, starting with sociology and anthropology. It must resume its dialogue with the humanities, but without shrinking away from theory when constructing its models. This book demonstrates why history must exert its own creative power on economics.

This book examines the varied but interconnected relationships between energy consumption and economic development in Europe over the last five centuries. It describes how the traditional energy economy of medieval and early modern Europe was marked by stable or falling per capita energy consumption, and how the First Industrial Revolution in the eighteenth century—fueled by coal and steam engines—redrew the economic, social, and geopolitical map of Europe and the world. The Second Industrial Revolution continued this energy expansion and social transformation through the use of oil and electricity, but after 1970 Europe entered a new stage in which energy consumption has stabilized. This book challenges the view that the outsourcing of heavy industry overseas is the cause, arguing that a Third Industrial Revolution driven by new information and communication technologies has played a major stabilizing role. It offers new perspectives on the challenges posed today by climate change and peak oil, demonstrating that although the path of modern economic development has vastly increased our energy use, it has not been a story of ever-rising and continuous consumption. The book sheds light on the often lengthy and complex changes needed for new energy systems to emerge, the role of energy resources in economic growth, and the importance of energy efficiency in promoting growth and reducing future energy demand.

This collection of essays uses the lens of rational expectations theory to examine how governments anticipate and plan for inflation, and provides insight into the pioneering research for which the author was awarded the 2011 Nobel Prize in economics. Rational expectations theory is based on the simple premise that people will use all the information available to them in making economic decisions, yet applying the theory to macroeconomics and econometrics is technically demanding. This book engages with practical problems in economics in a less formal, noneconometric way, demonstrating how rational expectations can satisfactorily interpret a range of historical and contemporary events. It focuses on periods of actual or threatened depreciation in the value of a nation's currency. Drawing on historical attempts to counter inflation, from the French Revolution and the aftermath of World War I to the economic policies of Margaret Thatcher and Ronald Reagan, the book finds that there is no purely monetary cure for inflation; rather, monetary and fiscal policies must be coordinated. This fully expanded edition includes the author's 2011 Nobel lecture, “United States Then, Europe Now.” It also features new articles on the macroeconomics of the French Revolution and government budget deficits.

This book provides the first comprehensive look at the joint development of representative assemblies and public borrowing in Europe during the medieval and early modern eras. It argues that unique advances in political representation allowed certain European states to gain early and advantageous access to credit, but the emergence of an active form of political representation itself depended on two underlying factors: compact geography and a strong mercantile presence. The book shows that active representative assemblies were more likely to be sustained in geographically small polities. These assemblies, dominated by mercantile groups that lent to governments, were in turn more likely to preserve access to credit. Given these conditions, smaller European city-states, such as Genoa and Cologne, had an advantage over larger territorial states, including France and Castile, because mercantile elites structured political institutions in order to effectively monitor public credit. While creditor oversight of public funds became an asset for city-states in need of finance, the book suggests that the long-run implications were more ambiguous. City-states with the best access to credit often had the most closed and oligarchic systems of representation, hindering their ability to accept new economic innovations. This eventually transformed certain city-states from economic dynamos into rentier republics. Exploring the links between representation and debt in medieval and early modern Europe, the book contributes to broad debates about state formation and Europe's economic rise.