THE CAMBRIDGE HISTORY OF CAPITALISM The second volume of The Cambridge History of Capitalism provides an authoritative reference on the spread and impact of capitalism across the world, and the varieties of responses to it. Employing a wide geographical coverage and strong comparative outlook, a team of leading scholars explore the global consequences that capitalism has had for industry, agriculture, and trade, along with the reactions by governments, firms, and markets. The authors consider how World War I halted the initial spread of capitalism, but global capitalism arose again by the close of the twentieth-century. They explore how the responses of labor movements, compounded by the reactions by political regimes, whether defensive or proactive, led to diverse military and welfare consequences. Beneficial results eventually emerged, but the rise and spread of capitalism has not been easy or smooth. This definitive volume will have widespread appeal amongst historians, economists, and political scientists. L ARRY N EAL is Emeritus Professor of Economics at the University of Illinois, Urbana-Champaign, Research Associate of the National Bureau of Economic Research, and Visiting Professor at the London School of Economics and Political Science. Specializing in financial history and European economies, he is author of The Rise of Financial Capitalism: International Capital Markets in the Age of Reason (Cambridge University Press, 1990), The Economics of Europe and the European Union (Cambridge University Press, 2007), and I Am Not Master of Events : The Speculations of John Law and Lord Londonderry in the Mississippi and South Sea Bubbles (2012). He is co-editor of The Origins and Development of Financial Markets and Institutions: From the Seventeenth Century to the Present (Cambridge University Press, 2009). J EFFREY G. WILLIAMSON is Emeritus Laird Bell Professor of Economics, Harvard University, and Honorary Fellow in the Department of Economics, University of Wisconsin-Madison. He is also Research Associate of the National Bureau of Economic Research, Research Fellow at the Centre for Economic Policy Research, and has been a visiting professor at seventeen universities around the world. Professor Williamson specializes in development, inequality, globalization, and history, and he is the author of around 230 scholarly articles and 30 books, his most recent being Trade and Poverty: When the Third World Fell Behind (2011), Globalization and the Poor Periphery before 1950 (2006), Global Migration and the World Economy (2005, with T. Hatton), and Globalization in Historical Perspective (2003, edited with M. Bordo and A. M. Taylor).
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THE CAMBRIDGE HISTORY OF CAPITALISM VOLUME II The Spread of Capitalism: * * Edited by LARRY NEAL and JEFFREY G. WILLIAMSON
University Printing House, Cambridge cb2 8bs, United Kingdom Cambridge University Press is part of the University of Cambridge. It furthers the University s mission by disseminating knowledge in the pursuit of education, learning, and research at the highest international levels of excellence. Information on this title: /9781107019645 Cambridge University Press 2014 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 2014 3rd printing 2015 First paperback edition2 015 2015 Printed in the United Kingdom by TJ International Ltd, Padstow, Cornwall A catalogue record for this publication is available from the British Library isbn 978-1-107-01964-5 Hardback isbn 978-1-107-58335-1 Paperback Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.
Contents List of figures page vii List of tables viii List of contributors ix 1. Introduction: the spread of and resistance to global capitalism 1 kevin h. o rourke and jeffrey g. williamson 2. The spread of manufacturing 22 robert c. allen 3. Growth, specialization, and organization of world agriculture 47 giovanni federico 4. Technology and the spread of capitalism 82 kristine bruland and david c. mowery 5. Spread of legal innovations defining private and public domains 127 ron harris 6. Firms and global capitalism 169 geoffrey jones 7. Enterprise models: freestanding firms versus family pyramids 201 randall morck and bernard yeung 8. Financial capitalism 230 ranald michie v
Contents 9. International capital movements and the global order 264 harold james 10. Capitalism and the colonies 301 gareth austin 11. Capitalism at war 348 mark harrison 12. Modern capitalism: enthusiasts, opponents, and reformers 384 jeffry frieden and ronald rogowski 13. Labor movements 426 michael huberman 14. Private welfare and the welfare state 464 peter h. lindert 15. Capitalism and human welfare 501 leandro prados de la escosura 16. The future of capitalism 530 larry neal and jeffrey g. williamson Index 547 vi
Figures 2.1. The geographical distribution of the world s manufacturing output page 23 3.1. The performance of world agriculture, 1870 2010 (1938=100) 49 3.2. Agricultural prices (1950=100) 51 9.1. Current account positions 1870 2010 (five-year averages) 266 9.2. Capital flow reversals 1924 1939 (aggregated capital flows) 282 9.3. Current account balances 1990 2010 290 11.1 Daily closing values of the Dow Jones Industrial Average 362 11.2. Government purchases, percent of GDP: Sweden and the United Kingdom, 375 1880 1990 14.1. Poor-relief expenditures as a share of national product, Europe and United 475 States, 1750 1880 14.2. Public and private assistance to the needy in the United States, 1850 2009 477 14.3. Public social spending as a share of GDP, OECD countries 1880 2011 478 14.4. Tax collection costs as a percentage of the amounts collected by central 487 government, United States and United Kingdom, 1787/96 2011 14.5. Poverty shares among the old and the young, United States 1959 2010 492 14.6. Bias toward the elderly in public social spending, 1985 2000 492 14.7. Social spending vs. poverty rate, people of working age, c.2005 494 15.1. Sen-Welfare (inequality-adjusted real GDP per head) across world regions 504 15.2. World human development, 1870 2007 509 15.3. World human development and GDP per head growth rates, 1870 2007 (%) 510 15.4. Relative human development across developing regions, 1870 2007 (OECD=1) 511 15.5. Human development (vertical axis) and social transfers (% GDP) (horizontal 513 axis) for a group of OECD countries, 1880 2000 15.6. Human development (vertical axis) and democratization (horizontal axis) in 515 the world, 1950 2007 15.7. Life expectancy Kakwani indices in world regions, 1870 2007 (OECD = 1) 516 15.8. Education Kakwani indices in world regions, 1870 2007 (OECD = 1) 516 15.9. Breakdown of human development growth in the world, 1870 2007 (%) 518 15.10. Breakdown of human development growth in OECD, 1870 2007 (%) 519 15.11. Breakdown of human development growth in the Rest, 1870 2007 (%) 520 vii
Tables 3.1. Workforce page 53 3.2. Acreage 54 3.3. Change in total factor productivity before World War II 56 6.1. World foreign direct investment as a percentage of world 170 output 1913 2010 (%) 6.2. World s largest host economies measured by stock of inward 173 foreign direct investment, 1914, 1929, 1980, 2010 6.3. FDI inward stock as a percentage of GDP 1990 2010 189 11.1. Military spending, 1870 to 1979, percent of GDP, in four countries 359 13.1. World and regional union density rates 427 14.1. Theoretical influences on social insurance and social assistance 468 14.2. Church and private charity for the poor, as shares of national 473 product in the eighteenth and nineteenth centuries 14.3. Recipients philanthropy revenues, United States 1927 and 1970 476 14.4. Private and public social expenditures as shares of GDP, 2007 480 14.5. Relative risks of poverty, by age of individuals in the OECD, mid 1970s to mid 2000s 491 viii
Contributors R OBERT C. ALLEN Professor of Economic History, University of Oxford G ARETH A USTIN Professor of International History, Graduate Institute of International and Development Studies, Geneva K RISTINE B RULAND Professor of Economic History, University of Oslo GIOVANNI F EDERICO Professor of Economic History, Department of Economics and Management, University of Pisa J EFFRY F RIEDEN Stanfield Professor of International Peace, Department of Government, Harvard University R ON H ARRIS Professor of Legal History and Dean, Faculty of Law, Tel-Aviv University M ARK H ARRISON Professor, Department of Economics, University of Warwick, and research fellow at the Hoover Institution, Stanford University M ICHAEL H UBERMAN Professor of Economic History, Faculty of Economics and Social Sciences (SES), Université de Genève H AROLD J AMES Professor of History and International Affairs, Princeton University G EOFFREY J ONES Isidor Straus Professor of Business History, Harvard Business School P ETER H. LINDERT Distinguished Research Professor of Economics, University of California, Davis R ANALD M ICHIE Professor, Department of History, Durham University R ANDALL M ORCK Stephen A. Jarislowsky Distinguished Chair in Finance and University Professor, Alberta School of Business D AVID C. MOWERY William A. & Betty H. Hasler Chair in New Enterprise Development, Haas School of Business, University of Berkeley L ARRY N EAL Professor Emeritus of Economics, University of Illnois, Urbana-Champaign and London School of Economics K EVIN H. O ROURKE Chichele Professor of Economic History, All Souls College, University of Oxford ix
List of contributors L EANDRO P RADOS DE L A E SCOSURA, Professor at the Economic History and Institutions Department, Carlos III University of Madrid RONALD R OGOWSKI Professor of Political Science, University of California, Los Angeles J EFFREY G. WILLIAMSON Laird Bell Professor of Economics, Emeritus, Harvard University, and Honorary Fellow, Department of Economics, University of Wisconsin- Madison B ERNARD Y EUNG Stephen Riady Distinguished Professor and Dean, National University of Singapore Business School x