Tag Archives: America

Why did Latin America fall behind and what explains its human geography?

Leticia Abad and I recently released a new paper, avaliable here, and which is going to be published as a chapter in an edited volume, Globalization and the Early Modern Era: An Iberian Perspective (eds. R. Doblado and A. Garcia-Hiernaux), Palgrave (forthcoming 2020).

The title of the paper is: The Fruits of El Dorado: The Global Impact of American Precious Metals.

Despite the title of this post, the paper’s ambition is to also explain what happened to other parts of the world as well — such as the little divergence within Western Europe (and we also had something to say about Asia and Africa). Nonetheless, we mostly rely on previous work for that; the most innovative focus of our chapter is our argument about Latin America, hence the title of this post.

Here’s the paper’s abstract:

The quest for precious metals and trade routes during the early modern period fundamentally changed the world. What was the global impact of the large deposits of silver and gold which existed in the Americas? In this chapter, we take a global view. We find that in Europe, England and the Netherlands benefited the most. By contrast, the colonizers par excellence, Spain and Portugal, were unable to profit from their colonial expansion. In Latin America, the exploitation of precious mineral resources enabled the geographic expansion of the empire and shaped labor institutions, the fiscal apparatus, and economic activity. The direct impact on other parts of the world was negligible; but the long-term political consequences of European presence shaped the world as we know it today.

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Leticia Abad

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Nuno Palma

Big debates and economic history: the case of World War II

Economic history matters for big debates. This can be true of even historical national accounting work which to some observers can appear to be as dry a topic as any can be. Here’s an example of why it matters.

In this interview with Tyler Cowen, the notable historian Adam Tooze mentions (from around minute 32) how in writing his celebrated book “Wages of Destruction: the making and breaking of the Nazi economy”, he was critically influenced by the work of top economic historians Angus Maddison and Stephen Broadberry. Their work on productivity comparisons between the USA and Europe, as well as between the UK and continental European countries was of fundamental importance to the formulation of Tooze’s innovative arguments in his book, which relied in part on the rejection of anachronistic assumptions about German economic power prior to (and during) the war.

Tooze’s book rationalizes some of Hitler’s strategic military actions, such as the invasion of the Soviet Union, arguing that it was an ideological but also calculated move to grap resources in antecipation of war with all-mighty USA. The book has at times been criticized for downplaying the role of the UK, but is undeniably brilliant, and it deservingly won the Wolfson History Prize.

Watch the interview here:

“Standards of living in Europe’s Global Empires” session in the WEHC, Paris 2021

This session has been accepted to the World Economic History Conference, which will happen in Paris in 2021.

Session title: “Standards of living in Europe’s Global Empires”

Organizer: Nuno Palma (University of Manchester; ICS, Univ. de Lisboa; CEPR)

Please notice this program is still subject to changes. I will update it as new information arrives.

Asia

Pim de Zwart (Wageningen University) and Jan Lucassen (International Institute of Social History, Amsterdam): Poverty or Prosperity in Northern India? New Evidence on Real Wages, 1590s-1870s.

Jan Lucassen (IISH, Amsterdam): Deep monetization and real wage developments: India C13th-19th

Africa

Calumet Links (LEAP, Department of Economics, Stellenbosch University), Erik Green (LEAP, Department of Economic History, Lund University), and Dieter von Fintel (LEAP, Department of Economics, Stellenbosch University): Does household structure influence inequality estimates: the case of Khoe of Swellendam 1825.

Kleoniki Alexopoulou (Tuebingen University, Germany) and Filipa Ribeiro da Silva (International Institute of Social History, Amsterdam, The Netherlands): Free and unfree labour migration in Portuguese Africa, 19th- 20th century

Latin America

Tommy E. Murphy (Universidad de San Andrés, Argentina) Truly Bare-Bones: What if Bare Bones Baskets Were Not Fixed?

Angelo Carrara (Universidade Federal do Rio de Janeiro): Living standards of the slave population in mining areas of colonial Brazil

Comparative

Ewout Frankema (Wageningen University): Exploring Long-term Colonial Legacies Through the Lens of Independence: What Can We Learn From Ethiopia and Thailand?

Hélder Carvalhal (Cidehus, Univ. Évora), Paulo Teodoro de Matos (ISCTE-IUL), and Nuno Palma (Univ. Manchester, Univ. Lisboa; CEPR):  Welfare Benchmarks for Portugal’s Global Empire, 1660-1700

 

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How important was colonial trade for the rise of Europe?

I recently gave an interview to Garret M. Petersen of the Economics Detective Radio where we discuss some of my work. You can listen to it in this link: Money, Trade and Economic Growth in the Early Modern Period (interview).

In the interview, we discuss at one point the matter of how important was colonial (and otherwise intercontinental) trade for macroeconomic outcomes such as growth and urbanization in Europe. As I notice in the interview, my position on this (see my Cliometrica article for details) stands between two extremes:

  1. that of Eric Hobsbawm or Immanuel Wallerstein, who argue Europeans profited a huge deal from the colonies. This view is very prevalent in some political circles today, if not the person on the street, who often believes that “imperialism” or “colonialism” is what what made the West Rich, through exploitation of the rest of the world. It is related to “dependency theory”.
  2. by contrast, that of many if not most economic historians, who believe that such trade (and the violence that came with it) didn’t matter very much for outcomes back in Europe.

The latter view became the orthodoxy among economists and economic historians after Patrick O’Brien’s 1982 paper, which in one of many of Patrick’s celebrated phrases, claims that “”the periphery vs peripheral” for Europe. He concludes the paper by writing:

“[G]rowth, stagnation, and decay everywhere in Western Europe can be explained mainly by reference to endogenous forces. … for the economic growth of the core, the periphery was peripheral.”

This is the view that remarkable scholars such as N. Crafts, Deirdre McCloskey, or Joel Mokyr repeat today (though Crafts would argue cotton imports would have mattered in a late stage, and my reading of Mokyr is that he has softened his earlier view from the 1980s a little, specifically in the book The Enlightened Economy.) Even recently, Brad deLong has classifyied O’Brien’s 1982 position as “air tight”.

Among economists and economic historians more on the economics side, I would say that O’Brien’s paper was only one of two strong hits against the “Worlds-System” and related schools of thoughts of the 1970s, the other hit being Solow’s earlier conclusion that TFP growth (usually interpreted as technology, though there’s more to it than that) has accounted for economic growth a great deal more than capital accumulation, which is what Hobsbawm and Wallerstein, in their neo-Marxist framework, emphasize.

Let me be clear from the outset that the idea that it was European exploitation of foreign peoples that made it rich is, by itself, highly simplistic, and, in short, nonsense. The view held by many historians and members of the public, that colonialism essentially equals why the west is rich is evidently false. This view is seductive in part because of the nasty violent means and institutions (such as slavery), clearly immoral from the normative standpoint of our times, which was often associated with it. Even if partially true it fails to ask why was Europe the part of the world capable of doing this, which in turn raises the obvious suspicion that the deep causal factor lies elsewhere.

To a degree in the interview I react more against the opposite version, the point (2) above, the idea that it did not matter at all. But this is because I hold the fact that (1) is false as more evident.

One irony with all of this is that for more than a decade now, Patrick O’Brien has changed his mind. He has, indeed refereed to this in writing (as far back as 2006), and several people have witnessed seminars where the speaker mentions “as Patrick O’Brien has concluded, colonies didn’t matter for European development…” only to have Patrick raise and kindly but firmly inform the speaker of his change of heart.

Last year at the American Economic Association meeting in S. Francisco, my good friend Deirdre McCloskey even told me in disappointment how me she feels Patrick should go back to his old view! But I feel there’s good reason for his change of mind. Patrick certainly hasn’t adopted a Hobsbawm-Wallerstein type of position. He is now simply of the view that, at the margin, trade with other parts of the world did matter for European development. It’s does not explain everything, but it mattered a bit. This is what I find empirical support for in my own work.

My discussion has focused on the impact of trade for the European economy.  As Brad deLong notices, a different matter is that of whether such trade had an impact on other parts of the world (positive or negative). Patrick O’Brien sometimes refers to himself as a “mercantilist”. So I conclude by noting that some ideas related to the benefits of protectionism (once an idea almost banished from the realms of “serious” economics), especially as it applies to countries that are not at the frontier, has been taking hold among some young and very competent economic historians, such as Réka Juhász or Luigi Pascali. Perhaps I’ll write more about this in a future post.

 

 

nbm