Markets and Governments in Economic History

Since the economic reforms of the 1990s, India’s economy has grown rapidly. To sustain growth and foreign investment over the long run requires a well-developed legal infrastructure for conducting business, including cheap and reliable contract enforcement and secure property rights. But it’s widely acknowledged that India’s legal infrastructure is in urgent need of reform, plagued by problems, including slow enforcement of contracts and land laws that differ from state to state. How has this situation arisen, and what can boost business confidence and encourage long-run economic growth?

Tirthankar Roy and Anand V. Swamy trace the beginnings of the current Indian legal system to the years of British colonial rule. They show how India inherited an elaborate legal system from the British colonial administration, which incorporated elements from both British Common Law and indigenous institutions. In the case of property law, especially as it applied to agricultural land, indigenous laws and local political expediency were more influential in law-making than concepts borrowed from European legal theory. Conversely, with commercial law, there was considerable borrowing from Europe. In all cases, the British struggled with limited capacity to enforce their laws and an insufficient knowledge of the enormous diversity and differentiation within Indian society. A disorderly body of laws, not conducive to production and trade, evolved over time. Roy and Swamy’s careful analysis not only sheds new light on the development of legal institutions in India, but also offers insights for India and other emerging countries through a look at what fosters the types of institutions that are key to economic growth.

Relative to the other habited places on our planet, Hawai‘i has a very short history. The Hawaiian archipelago was the last major land area on the planet to be settled, with Polynesians making the long voyage just under a millennium ago. Our understanding of the social, political, and economic changes that have unfolded since has been limited until recently by how little we knew about the first five centuries of settlement.

Building on new archaeological and historical research, Sumner La Croix assembles here the economic history of Hawai‘i from the first Polynesian settlements in 1200 through US colonization, the formation of statehood, and to the present day. He shows how the political and economic institutions that emerged and evolved in Hawai‘i during its three centuries of global isolation allowed an economically and culturally rich society to emerge, flourish, and ultimately survive annexation and colonization by the United States. The story of a small, open economy struggling to adapt its institutions to changes in the global economy, Hawai‘i offers broadly instructive conclusions about economic evolution and development, political institutions, and native Hawaiian rights.

The National Industrial Recovery Act (NIRA) was enacted by Congress in June of 1933 to assist the nation’s recovery during the Great Depression. Its passage ushered in a unique experiment in US economic history: under the NIRA, the federal government explicitly supported, and in some cases enforced, alliances within industries. Antitrust laws were suspended, and companies were required to agree upon industry-level “codes of fair competition” that regulated wages and hours and could implement anti-competitive provisions such as those fixing prices, establishing production quotas, and imposing restrictions on new productive capacity.
The NIRA is generally viewed as a monolithic program, its dramatic and sweeping effects best measurable through a macroeconomic lens. In this pioneering book, however, Jason E. Taylor examines the act instead using microeconomic tools, probing the uneven implementation of the act’s codes and the radical heterogeneity of its impact across industries and time. Deconstructing the Monolith employs a mixture of archival and empirical research to enrich our understanding of how the program affected the behavior and well-being of workers and firms during the two years NIRA existed as well as in the period immediately following its demise.

Who and what a government taxes, and how the government spends the money collected, are questions of primary concern to governments large and small, national and local. When public revenues pay for high-quality infrastructure and social services, citizens thrive and crises are averted. When public revenues are inadequate to provide those goods, inequality thrives and communities can verge into unrest—as evidenced by the riots during Greece’s financial meltdown and by the needless loss of life in Haiti’s collapse in the wake of the earthquake.

In The Public Good and the Brazilian State, Anne G. Hanley assembles an economic history of public revenues as they developed in nineteenth-century Brazil. Specifically, Hanley investigates the financial life of the municipality—a district comparable to the county in the United States—to understand how the local state organized and prioritized the provision of public services, what revenues paid for those services, and what happened when the revenues collected failed to satisfy local needs. Through detailed analyses of municipal ordinances, mayoral reports, citizen complaints, and financial documents, Hanley sheds light on the evolution of public finance and its effect on the early economic development of Brazilian society. This deeply researched book offers valuable insights for anyone seeking to better understand how municipal finance informs histories of inequality and underdevelopment.

How and why does Denmark have one of the richest, most equal, and happiest societies in the world today? Historians have often pointed to developments from the late nineteenth century, when small peasant farmers worked together through agricultural cooperatives, whose exports of butter and bacon rapidly gained a strong foothold on the British market.

This book presents a radical retelling of this story, placing (largely German-speaking) landed elites—rather than the Danish peasantry—at center stage. After acquiring estates in Denmark, these elites imported and adapted new practices from outside the kingdom, thus embarking on an ambitious program of agricultural reform and sparking a chain of events that eventually led to the emergence of Denmark’s famous peasant cooperatives in 1882. A Land of Milk and Butter presents a new interpretation of the origin of these cooperatives with striking implications for developing countries today.

We remember Thomas Edison as the inventor of the incandescent light bulb, but he deserves credit for something much larger, an even more singular invention that profoundly changed the way the world works: the modern electric utility industry. Edison’s light bulb was the first to work within a system where a utility generated electricity and distributed it to customers for lighting. The story of how electric utilities went within one generation from prototype to an indispensable part of most Americans’ lives is a story about the relationships between political and technological change.

John L. Neufeld offers a comprehensive historical treatment of the economics that shaped electric utilities. Compared with most industries, the organization of the electric utility industry is not—and cannot be—economically efficient. Most industries are kept by law in a state of fair competition, but the capital necessary to start an electric company—generators, transmission and distribution systems, and land and buildings—is so substantial that few companies can enter the market and compete. Therefore, the natural state of the electric utility industry since its inception has been a monopoly subject to government oversight. These characteristics of electric utilities—and electricity’s importance—have created over time sharp political controversies, and changing public policies have dramatically changed the industry’s structure to an extent matched by few other industries. Neufeld outlines the struggles that shaped the industry’s development, and shows how the experience of electric utilities provides insight into the design of economic institutions, including today’s new large-scale markets.

Fresh water has become scarce and will become even more so in the coming years, as continued population growth places ever greater demands on the supply of fresh water. At the same time, options for increasing that supply look to be ever more limited. No longer can we rely on technological solutions to meet growing demand. What we need is better management of the available water supply to ensure it goes further toward meeting basic human needs. But better management requires that we both understand the history underlying our current water regulation regime and think seriously about what changes to the law could be beneficial.

For Golden Rules, Mark Kanazawa draws on previously untapped historical sources to trace the emergence of the current framework for resolving water-rights issues to California in the 1850s, when Gold Rush miners flooded the newly formed state. The need to circumscribe water use on private property in support of broader societal objectives brought to light a number of fundamental issues about how water rights ought to be defined and enforced through a system of laws. Many of these issues reverberate in today’s contentious debates about the relative merits of government and market regulation. By understanding how these laws developed across California’s mining camps and common-law courts, we can also gain a better sense of the challenges associated with adopting new property-rights regimes in the twenty-first century.

The United States is among the wealthiest nations in the world. But that wealth hasn't translated to a higher life expectancy, an area where the United States still ranks thirty-eighth—behind Cuba, Chile, Costa Rica, and Greece, among many others. Some fault the absence of universal health care or the persistence of social inequalities. Others blame unhealthy lifestyles. But these emphases on present-day behaviors and policies miss a much more fundamental determinant of societal health: the state.

Werner Troesken looks at the history of the United States with a focus on three diseases—smallpox, typhoid fever, and yellow fever—to show how constitutional rules and provisions that promoted individual liberty and economic prosperity also influenced, for good and for bad, the country’s ability to eradicate infectious disease. Ranging from federalism under the Commerce Clause to the Contract Clause and the Fourteenth Amendment, Troesken argues persuasively that many institutions intended to promote desirable political or economic outcomes also hindered the provision of public health. We are unhealthy, in other words, at least in part because our political and legal institutions function well. Offering a compelling new perspective, The Pox of Liberty challenges many traditional claims that infectious diseases are inexorable forces in human history, beyond the control of individual actors or the state, revealing them instead to be the result of public and private choices.

The first public orphanage in America, the Charleston Orphan House saw to the welfare and education of thousands of children from poor white families in the urban South. From wealthy benefactors to the families who sought its assistance to the artisans and merchants who relied on its charges as apprentices, the Orphan House was a critical component of the city’s social fabric. By bringing together white citizens from all levels of society, it also played a powerful political role in maintaining the prevailing social order.

John E. Murray tells the story of the Charleston Orphan House for the first time through the words of those who lived there or had family members who did. Through their letters and petitions, the book follows the families from the events and decisions that led them to the Charleston Orphan House through the children’s time spent there to, in a few cases, their later adult lives. What these accounts reveal are families struggling to maintain ties after catastrophic loss and to preserve bonds with children who no longer lived under their roofs.

An intimate glimpse into the lives of the white poor in early American history, The Charleston Orphan House is moreover an illuminating look at social welfare provision in the antebellum South.