This book, crammed with characteristically Baumolian insights, encompasses three main parts: one explaining how oligopolists' virtuous rent seeking has been the engine propelling long-term economic growth in free-market economies; one showing how the tools of microeconomics can be applied to analyze technological innovation; and one proposing a macroeconomic endogenous growth model with richer innovation-dependent features than those found in the models pioneered by Paul Romer (Journal of Political Economy, October 1990) and others.

David Parish is remembered today by readers of historical fiction as a colorful character in Hervey Allen's picaresque novel, Anthony Adverse, and students of American history know him as an underwriter of one of the loans that enabled the United States to wage the War of 1812. His career was far more important than his present-day reputation would suggest; for he was an international financial adventurer of the type that flourished during the Napoleonic era, when the spirit of nationalism had only begun to shackle men's thoughts and actions.

It is not chauvinism or instinctive egocentrism that leads Americans to believe they have evolved a beneficent form of economic organization. For despite all its shortcomings, and, alas, they are all too many, our volitional economy has demonstrated a capacity to stimulate human effort, increase investment, improve productivity, and gradually erode diat greatest evil of all commonwealths, perceived since Plato's days: the coexistence of great wealth and abject poverty. It is therefore entirely appropriate this year, when we are commemorating two great experiments in democratic public policy, that we should examine once again the origins of our polity, for I am convinced that it was the conscious and unashamed acceptance of a system of politico-economic pluralism that made possible the vigor and the catholicity of our developing institutions. The play of these pluralistic forces again and again has saved us from hardened dogma, so that the real virtue of our history—political, economic, and intellectual—has been our flexibility, our capacity to adapt ideas and instrumentalities to tasks of high social urgency. In the process we have created an economy so complex that it almost defies description, but one so tolerant ideologically that it can be called essentially private by those who find happiness in that ascription although there can be no burking the very obvious fact that it is today inherently socialistic. For whereas one can demonstrate statistically that two thirds of all capital formation is private, by an equally plausible demonstration it can be shown that, adding corporate and personal income taxes only, more than two thirds of the revenues of American enterprise are socialized. This mixed economy is, therefore, the great, ever-improving American invention, based on the quintessential content of our variant of democracy whose trinitarian elements have been well defined as shared respect, shared power, and shared knowledge.

For reasons that were exogenous or predetermined, the ex ante propensity to invest out of income in the United States declined in the 1920s while the ex ante propensity to save increased. The consequent ex ante surplus available for saving drove up asset prices. Higher asset prices produced a substantial wealth effect on consumption, converting ex ante saving into ex post consumption. Output was consequently maintained at high employment. Eventually asset markets reacted to excessive price levels. Then the momentum of falling asset prices released and reinforced the weight of “surplus” saving.

The effect of the commercialization of traditional agriculture on the levels of living of peasant households is examined through a case study of El Palmar, Colombia. While there appear to have been widespread, positive, short-mn effects, the long-run consequences appear to be more problematic. It is suggested that commercialization and its consequences are more complex than can be grasped from available aggregate data, and a historical, case-study approach to this topic is recommended to complement macroeconomic studies.

This study examines Great Britain's adaptation in the 1920s and 1930s to the decline in the market for its nineteenth-century exports: cotton textiles, ships, iron and steel products, and coal. Continued growth in a mature economy depends at certain points upon structural change, in this case a movement from declining to expanding industries. At such times, I contend, the developing sector tends to grow independently, rather than through transformation of existing productive structures. Growth does not occur primarily through a reallocation of capital and labor from declining to expanding industries and regions.

The downside of Chandler's success is that it has placed the large enterprise and the American economy on a pedestal, next to which eveiy other case appears a fumbling effort towards their apparent virtues. As some of the individual country studies in CAH show, well before even Chandler set out on this mission, American management consultants such as McKinsey were “exporting” the M-form company structure as their nostrum for all the world's business ills. As is shown in Fear's chapter and in several others, this involved a very simplistic diagnosis ofwhat those ills consisted of. The M-form conferred substantial advantages at a certain time and place in the evolution of industry, but it was no panacea. Furthermore, as I have suggested previously, its aetiology for comprehending its own prognoses was too shallow.

Historical demography is indeed what Father Mols calls it, a “science des confines” (Vol. I, Introduction, p. xvi), a discipline which is doomed to cultivate the boulder-strewn and not easily accessible borderlands between half a dozen fields of learning. In a territory such as this the first clearings are of necessity a matter of small-scale enterprise; that is to say, local research predominates. But this has been proceeding on a broad front; the difficulties encountered have not been great enough to discourage the pioneers. Indeed, the amount of labor expended on local or regional investigations into problems of historical demography beggars description: antiquaries and genealogists, statisticians and students of medical history, sociologists and economic historians have combed thousands of records and accumulated mountains of quantitative as well as symptomatic evidence regarding past populations.

In 1928 Hans Proesler, whom we shall meet in the course of this study, assumed the presidency, that is, became the Rector, of what can 1928 Hans Proesler, whom we shall meet in the course of thisbe described as the Niirnberg school of economics (Hochschule für Wirtschafts- und Sozialwissenschaften). The address he delivered on that occasion can properly serve as the starting point for my own presentation, for it dealt with German economic history, its development and problems. In his talk Proesler pointed out that it was the eighteenth-century enlightenment that opened the road to economic history by assigning to studies pointing in this direction a niche in the lecture hall of general cultural history. In Germany such men as Justus Möser, Gottfried Herder, and some members of the then-famous Göttingen school of historians, Schlözer, Gatterer, Heeren, von Anton, and Fischer, are considered by the historian of economic and social history as having stood at the cradle. Although German Romanticism had done much for historiography in general, its role for economic history was very limited. Romanticist historians were not primarily interested in things economic, although in the frame of legal and constitutional history on the one hand, and in connection with classical studies on the other, scholars of that period and the decades following made contributions to this field of knowledge. I might mention Savigny, Eich-horn, Waitz, Böckh, Otfried Müller, Mommsen; and a few minor figures, such as Hüllmann and Hannssen, even devoted themselves to special problems in the area, that is, financial and agrarian history, respectively. Georg von Below, the renowned German historian, treating Proesler's topic a few years before the latter, emphasized the contribution of the Prussian archivist, Georg Wilhelm von Raumer (1806-1856). Not only did the latter take an interest in matters economic but his ideas even tended toward what we would today call a materialistic interpretation of history.

A low rate of growth of world demand for cotton figures prominently in recent attempts to understand the post-bellum retardation of the southern economy. Gavin Wright, especially, stresses this factor in several articles and a recent book.1 Using-sophisticated regression techniques to estimate the rate of growth of demand for American cotton during both the ante- and post-bellum eras and the magnitude of the change in the rate between them, Wright finds a decline of more than two thirds. Such an occurrence could hardly have helped the South make a prompt recovery from the Civil War.

Foreign money remained in widespread use in the United States until the middle of the nineteenth century. Several foreign coins were provided legal tender status in order to supplement the scanty American specie supply. A particular disadvantage was the perpetuation of non-decimal units of account, especially in New York. When the U.S. enacted a subsidiary silver standard in 1853, the expedient bases for the lawful status of foreign coin was removed. In 1857, the United States coinage was finally reformed to secure an exclusive national currency.

Contemporary reaction to the Homestead Act was complex in the United States, and the judgment of posterity has included much negative criticism. Whatever the real merits and defects of the Act, its impact on public opinion in Europe was not necessarily in keeping with the facts as they unfolded in America. European reactions to the famous Act are much less known than is the case with American public and expert opinion on the same subject. Standard literature on emigration and on the American image in Europe invariably stresses political freedom and economic opportunity as main motives for emigration. The Homestead Act is in most cases mentioned only in passing, as one among several factors in the motivation of prospective emigrants. In some cases it is claimed to have been a major motive but without evidence to bear out how important it was.