Proposal preview

Why labour relations matter: Global Labour History and New Institutional Economic History

The undeniably big achievement of New Institutional Economic History (NIEH) is that it returned the historical and political dimensions to the economic discipline. Dimensions, that despite their centrality in the work of Smith and Marx have been notoriously neglected in neo-classical economics. NIEH has developed the ambition to explain why certain national economies show a better long-term performance than others. Acemoglu’s and Johnson’s definition of property rights as institutions that ‘provide citizens protection against government and elite appropriation’ has given further focus to discussions and research projects on how colonial exploitation might have impinged upon long-term economic growth prospects.
Interestingly enough, the way in which NIEH views the effects of rapacious colonialism is not that different from the Dependencia scholars; the divergence pertains rather to the purported mechanisms of this rapaciousness. Whereas the latter focus on power as the key variable and attribute a major role to exogenous factors, the institutionalist taking an endogenising approach by attributing a central role to ‘extractive institutions’. These are defined as the exact opposite of the property rights. This is not a contentious point for those who agree that colonial conquest is about disrespect for existing property rights and about withholding citizen rights. What merits further discussion, however, is what mechanisms cause these extractive institutions and what mechanisms of transmission makes them persistent. This is still a black box. There are roughly two strategies to deal with that. One is the strategy proposed by Douglas North 20 years ago to include more and more variables in a macro-scale analysis in the hope to find the golden bullet or, alternatively, to scale down the unit of analysis and hypothesise historically discrete causes.
The latter strategy can build upon the early work of Engerman and Sokoloff who developed the notion of plantations as key vehicles in what they termed a reversal of fortune for resource rich tropical environments. This is an obvious point of entrance for labour historians. It is also an exciting strand of research among economic historians. The long-lasting consequences of systems of forced labour coercion have been examined by Nunn and Dell, for example. Yet they found out that correlations between extent of extraction of wealth and severe labour coercion and contemporary poverty may sound plausible but they can sometimes be inverse and that the mechanisms of transmission are not that obvious and sometimes counter-intuitive.
The good news is that labour relations matter and do seem to be an important explanatory factor for long-term economic development, but the bad news is that we still have no consistent theory or set of theoretical notions about how they do. In our view there is room for theoretical reflexion and hypothesis building on how labour relations matter for long-term economic growth and what mechanisms of transmission are involved.

Organizer(s)

  • Marcel van der Linden International Social History Association mvl@iisg.nl Netherlands

Session members

  • Gareth Austin, University of Cambridge
  • Karin Hofmeester, International Institute of Social History
  • Nathan Nunn, Harvard University

Discussant(s)

  • Ulbe Bosma Vrije Universiteit Amsterdam ubo@iisg.nl

Papers

Panel abstract

The New Institutional Economic History has brought the historical and political dimensions back to the economic discipline. But it is confronted with major problems, such as which mechanisms cause extractive institutions and cause their persistence. This panel will reflect on one important factor: the impact of changing labor relations.

1st half

Global Labour History and Rational-choice Institutional Economics: the Potential Benefits of an Unlikely Marriage

Gareth Austin

Global Labour History and Rational-choice Institutional Economics: the Potential Benefits of an Unlikely Marriage Gareth Austin University of Cambridge Abstract This paper discusses the evolution and current trajectories of these two rich, partly contrasting, intellectual traditions. ‘New Institutionalism’ offered labour historians a theory of induced institutional innovation to explain changes and continuities in their principal object of study, labour relations. While this theory proved of genuine heuristic value, especially for clarifying trade-offs, it has quite limited predictive power. In the present century, both intellectual traditions have responded to the challenge of the much greater diversity of historical experience revealed when researchers widen their interests beyond Western Europe and North America. However, the two traditions have done so in contrasting ways, regarding both fundamental concepts and their respective choice of quantitative techniques. Recent institutionalist works have reinforced the old tendency to ‘naturalize’ the particular institutional evolution of Britain and the United...

Global Labour History and Rational-choice Institutional Economics: the Potential Benefits of an Unlikely Marriage Gareth Austin University of Cambridge Abstract This paper discusses the evolution and current trajectories of these two rich, partly contrasting, intellectual traditions. ‘New Institutionalism’ offered labour historians a theory of induced institutional innovation to explain changes and continuities in their principal object of study, labour relations. While this theory proved of genuine heuristic value, especially for clarifying trade-offs, it has quite limited predictive power. In the present century, both intellectual traditions have responded to the challenge of the much greater diversity of historical experience revealed when researchers widen their interests beyond Western Europe and North America. However, the two traditions have done so in contrasting ways, regarding both fundamental concepts and their respective choice of quantitative techniques. Recent institutionalist works have reinforced the old tendency to ‘naturalize’ the particular institutional evolution of Britain and the United States as a model against which other cases are judged, whereas ‘global’ labour history has rejected this.

Global Labour History and Rational-choice Institutional Economics: the Potential Benefits of an Unlikely Marriage

Gareth Austin

Global Labour History and Rational-choice Institutional Economics: the Potential Benefits of an Unlikely Marriage Gareth Austin University of Cambridge Extended Abstract This paper reflects on the evolution and current trajectories of these two rich and partly contrasting intellectual traditions, focussing on theory, method, and substantive historical conclusions. Labour history is in the intersection set of social and economic history, often with an emphasis on the former. As a result, many (though far from all) of its exponents have always tended to scepticism about methodological individualism. Rational-choice institutionalism, whose central tendency may be defined as the project of extending the economizing logic of neoclassical economics to explain the institutions within which economic activity occurs, is situated within the frame of methodological individualism, albeit certain of its leading exponents have repeatedly shown willingness to at least complicate their uses of that framework in pursuit of fuller explanations (e.g. Bates 1995, North 2005)....

Global Labour History and Rational-choice Institutional Economics: the Potential Benefits of an Unlikely Marriage Gareth Austin University of Cambridge Extended Abstract This paper reflects on the evolution and current trajectories of these two rich and partly contrasting intellectual traditions, focussing on theory, method, and substantive historical conclusions. Labour history is in the intersection set of social and economic history, often with an emphasis on the former. As a result, many (though far from all) of its exponents have always tended to scepticism about methodological individualism. Rational-choice institutionalism, whose central tendency may be defined as the project of extending the economizing logic of neoclassical economics to explain the institutions within which economic activity occurs, is situated within the frame of methodological individualism, albeit certain of its leading exponents have repeatedly shown willingness to at least complicate their uses of that framework in pursuit of fuller explanations (e.g. Bates 1995, North 2005). Labour relations being the focus of labour history, and being themselves institutions, ‘New Institutionalism’ offered labour historians a theory of induced institutional innovation to account for changes and continuities in their principal object of study. In my view, in general labour history stands to gain more from economic theory than many labour historians are willing to accept. In the case of induced institutional innovation, however, thinking for example of cases from twentieth-century West Africa and Southeast Asia, while the theory turns out to be of genuine heuristic value, especially for clarifying trade-offs, it has very limited predictive power, because it captures only one of the major determinants of this kind of change (Grabowski 1988; Austin 2005). Conversely, while new institutionalist economic history has drawn to some extent on labour history, for example in relation to serfdom, it is arguable that its main metanarrative has focussed on institutions of land and capital more than of labour, treating labour relations as a dependent and rarely an independent variable (e.g. North and Weingast; Acemoglu and Robinson 2012). In the present century, both intellectual traditions have increasingly responded to the challenge of the much greater diversity of historical experience revealed when researchers widen their interests beyond their traditional focus on Western Europe and North America to seek more genuinely global understanding. However, their approaches have tended to be very different. At least some labour historians have sought explicitly to reject the past practice among historians of labour and the working class, of treating a model derived from reflections on Western experience – the notion of an almost teleological tendency towards the dominance of the male proletarian as the leading figure in the modern workplace – as a template against which to judge, nonreciprocally, the record of other places. Instead, global labour history adopts a broader concept of ‘commodified labour’, which flexibly includes all forms of work for the market. This is intended to encompass the diverse paths along which labour relations have changed in recent centuries around the world (Van der Linden 2008). In contrast, recent works from institutionalist economists have tended to reinforce the old ‘new institutionalist’ tendency to ‘naturalize’ the particular institutional evolution of Britain and what became the United States as a model against which other cases are judged (North and Thomas 1973; Acemoglu and Robinson 2012). This contrast of approaches is apparent also in the ways in which they have pursued the common goal of greater quantitative precision. The commitment to long-term cross-regression analysis has perhaps contributed to a tendency among many institutionalist economists to simplify the calculations (and interpretations) by reducing already simplified but essential distinctions (such as the many varieties of colonial economy) to binaries (such as ‘extractive’ v. ‘inclusive’), in a way which arguably obscures rather than illuminates (Austin 2008). This is very different from the Global Collaboratory on the History of Labour Relations (https://collab.iisg.nl/web/labourrelations) based at the International Institute of Social History in Amsterdam, which also seeks to use data from all inhabited continents, but within a much wider set of categories which, having been developed through discussion between specialists in different regions, attempts to achieve commensurability across the world while preserving the variety of historical specificities. While emphasising the richness of both approaches, and applauding the intention of bringing them ‘into conversation’ (this current cliche is exactly applicable here), the paper will end with an appeal concerning the institutional context of scientific exchange. It will be cautiously suggested that the present organisation of knowledge production in both economics and history unnecessarily constrains the free market in ideas and information, making it harder to realize the potential of cross-fertilization between different research traditions. Acemoglu, D. and J.A. Robinson. 2012. Why Nations Failed: the Origins of Power, Prosperity, and Poverty (New York: Crown). Austin, G. 2005. Labour, Land and Capital in Ghana: From Slavery to Free Labour in Asante, 18071956 (Rochester NY: University of Rochester Press). Austin, G. 2008. ‘The “reversal of fortune” thesis and the compression of history: perspectives from African and comparative economic history’, Journal of International Development, 20: 8, 9961027. Bates, R.H. 1995. ‘Social dilemmas and rational individuals: an assessment of the new institutionalism’, in J. Harriss, J. Hunter and C.M. Lewis (eds), The New Institutional Economics and Third World Development (London: Routledge), 17-26. Grabowski, R. 1988. ‘The theory of induced institutional innovation: a critique’, World Develoment, 16:3, 385-94. North, D.C. 2005. Understanding the Process of Economic Change (Princeton: Princeton University Press). North, D.C. and R.P. Thomas. 1973. The Rise of the Western World (Cambridge: Cambridge University Press). North, D.C. and B. Weingast. 1989. ‘Constitutions and commitments: evolution of institutions governing public choice in seventeenth-century England’, Journal of Economic History, 49:4, 803-32 Van der Linden, M. 2008. Workers of the World: Essays Toward a Global Labor History (Leiden: Brill).

The Importance of History for Contemporary Development Policy

Nathan Nunn

The Importance of History for Contemporary Development Policy Abstract. The presentation will examine the extent to which history and historical context are important for development policies today. The talk will focus particularly on policies that are aimed at improving the lives of the global poor. While history may be important for understanding the root causes of the world’s current income distribution, it is far from clear that history helps us understand what we should do moving forward. The presentation will discuss these issues, illustrating how a firm understanding of the local history, by helping to understand the cultural and social context, is crucial for the well-functioning and effective development policies.

The Importance of History for Contemporary Development Policy Abstract. The presentation will examine the extent to which history and historical context are important for development policies today. The talk will focus particularly on policies that are aimed at improving the lives of the global poor. While history may be important for understanding the root causes of the world’s current income distribution, it is far from clear that history helps us understand what we should do moving forward. The presentation will discuss these issues, illustrating how a firm understanding of the local history, by helping to understand the cultural and social context, is crucial for the well-functioning and effective development policies.

Colonial Institutions and Shifts in Labour Relations

Karin Hofmeester

Colonial Institutions and Shifts in Labour Relations Karin Hofmeester Daron Acemoglu, Simon Johnson, and James A. Robinson have suggested that those countries colonized by European powers that were relatively rich 500 years ago, are now relatively poor – and vice versa – and argue that this reversal reflects an “institutional reversal” caused by the colonial powers. Their work has been highly influential and has prompted economists to take more seriously the role of the history of institutions, especially of colonial institutions in the Global South. Historians have pointed out the rather a-historical approach taken up by these “historical” economists. Institutions were clearly not the same over this long period of time (half a millennium), and nor were the consequences of these institutions. Furthermore, the works that try to show the persistent effects of colonial institutions primarily focus on economic growth and how to explain it. While labour and labour relations...

Colonial Institutions and Shifts in Labour Relations Karin Hofmeester Daron Acemoglu, Simon Johnson, and James A. Robinson have suggested that those countries colonized by European powers that were relatively rich 500 years ago, are now relatively poor – and vice versa – and argue that this reversal reflects an “institutional reversal” caused by the colonial powers. Their work has been highly influential and has prompted economists to take more seriously the role of the history of institutions, especially of colonial institutions in the Global South. Historians have pointed out the rather a-historical approach taken up by these “historical” economists. Institutions were clearly not the same over this long period of time (half a millennium), and nor were the consequences of these institutions. Furthermore, the works that try to show the persistent effects of colonial institutions primarily focus on economic growth and how to explain it. While labour and labour relations do play a role in these works, it is always described from this perspective, and often in a static and generic manner. To give just one important example: the availability and allocation of labour is generally not discussed as a variable. In my presentation I will follow up on such critiques and investigate the relationship between institutions and labour relations over time, focusing on changes that took place both in institutions, for example in response to indigenous reactions, and their effects as time progressed.

2nd half