ECONOMICS WITHOUT TIME

ECONOMICS WITHOUT TIME

Also by G. D. Snooks DEPRESSION AND RECOVERY: Western Australia, 1929-1939 DOMESDAY ECONOMY: A New Approach to Anglo-Norman History {with J. McDonald) EXPLORING SOUTHEAST ASIA'S ECONOMIC PAST {edited with A.J.S. Reid and J. J. Pincus)

Economics without Time A Science blind to the Forces of Historical Change Graeme Donald Snooks Coghlan Professor of Economic History Institute of Advanced Studies Australian National University MMACMILLAN

Graeme Donald Snooks 1993 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London WIP 9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. First published 1993 by THE MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 2XS and London Companies and representatives throughout the world ISBN 0-333-55853-7 A catalogue record for this book is available from the British Library. Copy-edited and typeset by Povey-Edmondson Okehampton and Rochdale, England Printed in Great Britain by Ipswich Book Co Ltd Ipswich, Suffolk

To Loma Graham for time shared

Contents List of Tables List of Figures Preface ix x xi Introduction 1 PART I TIME IN ECONOMICS 1 Time Lost 15 Theory and history 15 Then and now 17 From realism to abstraction 20 From the longrun to the shortrun 39 An uncertain future 44 2 Timely Critics 45 The warning bells 45 Historicist criticism 46 The new 'dismal scientists' 63 It's time to take time into account 72 3 The Timeless Approach 73 Growth without time 73 Theory 73 Applied economics 91 Policy 95 Clapping requires two hands 115 4 The Custodians of Real Time 117 Competing traditions 117 The British economic and social tradition 118 The American cliometric contribution 128 The Australian analytical tradition 139 vii

viii Contents PART II ECONOMICS IN TIME 5 Economies 'Lost' in Time 165 Digging up the distant past 165 The feudal economic system 167 A new beginning 175 Reconstructing English feudalism 197 6 Human Motivation Throughout Time 206 Economic man or moral man? 206 Economic man in time 209 A time for economic man 229 7 Accounting for the Very Longrun 231 Is growth a modern invention? 231 Can very longrun growth be measured? 232 Time without growth? 235 Population growth in the very longrun 238 Estimating millennial growth rates 240 Growth during the last millennium 246 Great waves of economic change, AD 1000-2000 256 Charting the past and the future 268 8 Time Regained? 270 Is there a future for a timeless economics? 270 How can time be regained? 273 A responsive economic history? 274 Appendix: Alternative Estimates of National Income (1086) and Growth Rates Notes Bibliography Index

List of Tables 5.1 Recorded workforce in England, 1086 177 5.2 Alternative population estimates for England, 1086 178 5.3 Manorial value added in England by county, 1086 183 5.4 Hypothetical structure of the subsistence household 184 5.5 The energy requirements of the subsistence household 186 5.6 Household consumption in the subsistence (or unfree peasant) sector 190 5.7 A comparison of average income of small free peasants and unfree peasants, England, 1086 191 5.8 The national income of feudal England, 1086 194 5.9 Estimate of demesne surplus entering the market sector 200 5.10 Market and subsistence sectors in the feudal economy of England, 1086 201 6.1 Tax assessment-capacity to pay relationships for Essex and Wiltshire lay manors, 1086 217 6.2 The tax assessment-income relationship for twenty-nine counties in Domesday England, 1086 218 6.3 The annual value-resources relationship for Essex and Wiltshire lay manors, 1086 222 6.4 CES production functions for Essex lay manors, 1086 228 7.1 A weighted price index, England, 1066-1693 245 7.2 The economic condition of England, 1086 and 1688 246 7.3 Growth rates for England, 1086-1688 247 7.4 Growth rates for England, 1086-1987 247 7.5 Approximate growth rates, England 1086-1688 248 7.6 Components of per capita income, 1086 and 1688 250 A.I National income of England, 1086: alternative estimates 278 A.2 Growth rates for England, 1086-1688: alternative estimates 279 IX

List of Figures 3.1 The classical model of growth and distribution 76 3.2 Growth rates of the English economy, 1086-1989 86 5.1 Sample Domesday Book entry: the manor of Codford, Wiltshire 172 5.2 A reconstructed Anglo-Saxon village 188 5.3 Geographical distribution of income per household, England, 1086 195 5.4 A diagrammatic model of the English feudal economy, 1086 203 6.1 The relationship between tax assessments and manorial income, Essex lay manors, 1086 219 7.1 The population of England, 1086-1990 240 7.2 The longrun growth of population and GDP per capita, England, 1086-1990 253 7.3 Great waves of economic change in England during the past millennium 257 7.4 Demand and supply determinants of labour earnings following the Black Death, 1348 259

Preface This is a book about real time in economics, a dimension lost to the leading edge of the profession. This loss, it is argued, has serious implications for the role assumed by economics as the premier policyadvising body for national governments and international organisations. It is also a book about the great waves of economic change that are surging out of the distant past and into the future - waves of change that economists have failed to identify, let alone analyse. This failure has created an intellectual vacuum that natural scientists are currently attempting to fill. It is a book, therefore, that challenges economics to put its house in order before it is engulfed by this rising tide. But the question is, will economics have time? This book is a stepping stone from the past into the future. It is part of a research programme that I began with Domesday Economy and which will proceed beyond Economics without Time to a study of forces that can be expected to influence the future of human society. Underpinning this series of books is work I am conducting on a detailed quantitative study of Britain and Europe over the last millennium. The wider research programme had its origins during study leave in London in 1979 when I began to read and think about the directions in which human society appeared to be moving. It seemed to me at the time that human society was dominated by longrun processes of economic change that stretched back into the distant past and that would continue into an equally distant future. Economics appeared to have little to say about these processes or about the forces that determine them. I came to the conclusion that to see into the future one must look into the past. To do so it seemed essential to embark upon a quantitative study of the longrun. As the best statistical source anywhere in the world for this purpose was Domesday Book compiled by order of William the Conqueror of England in 1086, and as it was part of my leisure-time reading interest in Anglo-Saxon history and language, it became my point of departure. Owing to the remarkable wealth of the Domesday data, I spent longer in the eleventh century than anticipated. But, with the basic work on Domesday Book completed, it was time to move forward in time. xi

xii Preface Along the way I have accumulated many debts. The collaboration of John McDonald in the mid-1980s strengthened the econometric foundations of Domesday Economy. Since then many have listened patiently to my ideas and arguments and have called my attention to unresolved problems. I am grateful for their encouragement and advice. The chief amongst these are Paul David, Mark Elvin, Tim Hatton, Bob Jackson, Paul Johnson, Peter Lindert, Angus Maddison, Avner Offer, Barry Supple and Anthony Waterman. Sir Richard Stone kindly allowed me to read some of the draft chapters of his forthcoming book on the foundations of the empirical social sciences, and graciously discussed some of my earlier ideas. Many others have provided helpful comments in seminars and conferences in Australia, Belgium, New Zealand, and the UK. None, of course, is responsible for any heresies the book contains. Authors always owe a debt of gratitude to those who assist with research and with the preparation of manuscripts for publication. At ANU I am particularly fortunate in having a skilled and dedicated departmental team. In particular I am grateful to Barry Howarth, Lynelle Moon, and Wayne Naughton for research assistance; Jane Berkley and Barry Howarth for copy-editing; and Ann Howarth and Barbara Trewin for wordprocessing and, even more importantly, for organising my time so that this book could be written. Finally I wish to thank the editors of the Australian Economic History Review and the Economic History Review for permission to use material from my articles 'Rational calculation' and 'Cliometric analysis' (with J. McDonald), together with Phillimore and Co. Ltd, for permission to reproduce an extract (Figure 5.1) from Wiltshire Domesday; and Cambridge University Press for permission to reproduce a map (Figure 5.3) from H. C. Darby, Domesday England. All quotations from Milton can be found in Paradise Lost (1667) and Paradise Regained (1671) written, appropriately, at the end of the six centuries of statistical wilderness that stretch between the national accounts of William the Conqueror and those of Gregory King. Sevenoaks Canberra September 1991 G. D. SNOOKS