Grantham: survey of cliometric contributions to french economic history
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Introduction

Cliometrics: blending modern economic theory and econometrics traditional methods of historical analysis: Landes, toutain, Cameron, Newell, Grantham,- culmination of O’Brien and Keyder

Quantitative Foundations

18^th and 19^th century among richest of any country – temporal and geographical span of the data France ideal lab testing hypothesis secular economic processes

The Cliometrics of French Retardation

Bears weight explaioning decline from cultural and political grandeur Louis XIV to Vichy humiliation – 1820 world’s largest economy, 4^th in 1913

Early 20^th century statistics damming = heightened Great Dperession – had France changed since 1880s?

Late 17^th to 20^th century relative epr capita income gap probably constant = explanations poor war performance explain3ed with comparisons to British economy – Wars oF Austrian Succession, Seveen Yearsd and Napoleonic Wars

Start Theorty – 1870 – 1900French GSP 74 of British, 67 American, 118 Germany – 1913 59, 23, 61 – France probably gaining in per capita terms French industrial performance during the WW1 belies all charges of backwardness – despite loss important industrial region – supply soldiers effectively as Germany. See economic backwardness artefact of non-economic concerns – declining role of France in world politics BUT per capita income always less than Britain

Economic Crisis of the 18^th Century – Pre-Revolutionary Debate

Labrousse – smoothed series of prices and wages traced out secular decline in real wages- scientifically measures increasing distress cause social revolution – Growth induced redistribution income from from workers and peasants to capitalists and landlords – imiseration not reversed by arrest expansion as capitalists compensate fall in the rate of profit by increasing the rate of exploitation of the workers – actual event precipitated by long festering agricultural crisis – harvest shortfalls displacement to food stuffs of an already weakened effective demand for manufactures

Merged with new population statistics  -18^th century economy hostage to law of diminishing returns – fall in real wages positive that pre Revolutionary economy blocked

Retardation in the Age of Industry

Marczewski – commodity output per capita had in fact grown as fast as it had in England between 1815 and 1913 – data revealed no take-off – France not fallen behind – confirmed by Levy-Leboyer, Crouzet, Toutain – cf. Britain not an artifact overvalued exchange rate shown by purchasing power parities O and K.

Paradox: France had grown as fast as England without leaving a statistical trace of an industrial revolution – how could France which had not experienced traumatic transition from tradition to modernity be as economically successful as England? – France had modernized without ever leaving the pre-industrial age

Roehl – features of the French economy treated as signs of retardation – such as small farm size, high dependence local informal credit institutions – signified early passage t industrial age.  More backward like Belgium of Germany large-scale state aided industrialization – like Britain crucial transition occurred 18^th century – no growth spurt and less dislocation of labour – does he test position France Gerschenkronian taxonomy – or taxonomy itself? – more likely shows failing G. – not an economic model but impressionistic generalization reformulated taxonomy employed by 19^th century German historical economists empirical contradiction of this thoroughly discredited approach carries no logical implication

Gerschenkron: lack of economic modeling worthy of the name – do the retarded characteristics of the 19^th century French economy reflect optimal adjustments to an emerging intl. Comparative advantage – Crafts says England specializing low cost cotton manufactures + light engineering between 1780 and 1850 – trading partners specialize in something else

Structural Hypotheses

France’s economic performance reflection of the economic performance of her trading patterns at odds with view that deep structural forces determined France’ economic response to the opportunities opened up by the IR

Constancy of gap nicely explained by structural difference –cause cannot be technology, resources, economic institutions – or even institutions forming human capital – equally endowed as Britain – deeper structural reason – three structures for economic retardation:

1.       interventionist policies restricting gains from trade (dirigisme)

That Estates General did not model itself into self-governing parliament restricting personal liberty meant restriction economic liberty – oppressive taxation, over regulation and excessive protection

Taxation – over taxation recurring theme – Mathias and O’Brien 18^th century fiscal effort less strenuous than England’s 10 – 11% commodity output taxes cf. 17-22% England – investment tax, not on consumption and land tax may have penalsied those who improved it

Regulation – question of whether 17^th century income gap caused by over regulation must be considered unanswered – needs clinometric testing.

Protection – Nye reexamines whether protection encouraged survival of inefficient firms – average tariff lower than British- hardly argued French economic development distorted by trade imposed by France.

2.       Anti-capitalist social psychology (mentalite)

Annales 1930s to 1990s inherently rigid structure cosntraing historical outcomes – social values can lead individuals to behave differently from the dictates of market optimization programme – Cliometricians Cox and Nye (women in textiles paid their marginal product), Grantham mixed husbandry profit max response – demonstrate rationality French economic agents – mentalities could not have significantly affected the allocation of resources.

Landes: Industrial enterprises too small owners refuse to dilute control over their enterprises by drawn on external supplies of capital and managerial skills – Nye finds little evidence of economies of scale in 1865 industrial census – Sicsic – French industrial structure not irrationally biased towards small firms – individual industries French firms nor noticeably smaller than British ones – industrial strcutre outcome of endogenous product differentiation by monopolistic comeptiors marketed their local output or well-defined markets

Peasant Farming and Agric. Backwardness

French economic transformation held back by peasant agriculture – O’Brien slows introduction labour-methods in farming. Retarding growth of agricultural productivity – retard emigration of farming population in industrial occupations – slowing industrial expansion – if land holding capitalist system like England agric. Productivity higher – industrial profits and investment higher – as agric. Productivity weakened income and market for manufactures, high industrial wages weakened demand from abroad.

Idea that French economic backwardness due to small scale of peasant farming unexamined premise of scholarly and popular opinion – Bloch sees because greater protection royalty to peasants – Marx see English attempts to block Stuart attempts to block right to reclaim land – adverse effects on economic growth taken for granted – clinometric testing clusters around 3 manifestations:

1.          effects on migration

2.          effect on productivity

3.          persistence and consequences of open-field farming

Migration and Agricultural Markets

Evolution of a domestic rural-wage gap supplies test of the extent to which peasant farming retarded the rural exodus.

Sicsic: French wage gap was narrower than British once – French labour market more perfect than British one! – Postel-Winay and Weir full agricultural wage exceeded wage  - explains why French labourers small parcels of land slow to emigrate – does not explain why gap in wage so small.

Relative importance of demographic factors and economic factors affecting rural migration and agricultural real wages needs to be sorted out – at present the size of the wage gap does not support the view that agricultural retention of labour seriously inhibited French industrial development before WW1.

Agriculture and Industry

Peasant agriculture primary structural cause productivity gap put by O’Brien – ALP worked out dividing share national output produced in agriculture by share of agriculture in national employment – England 50% more productive than France –  O and K conclude growth French economy seriously impeded by failure French farmers to adopt English methods – failure they attribute to largely small size of French farms.

Evidence agricultural inelasticity may have slowed industrial expansion in the 1860s – demand for farm produce faster than supply – Verley mrowing marginal costs of farm produce may have halted the Second Empire’s promising economic expansion – high income elasticty of demand for foodstuffs by French people savings diverted from investment in manufacturing to investment farming – YED high for meat but PED low so ratchet effect

Sharp contrast to O’Brien and Keyder – agricultural labour productivity growth falling from middle 19^th century – O and K see it rising 1880s Grantham – rate of whole 19^th century equal to rate of growth in Britain.

O and K underestimate agric. Productivity as discount workers who only work in agric. Part-time – other jobs

Increase agric. Wages forced many firms to arrest production – unable to meet wages of harvest glut. 0 form of retardation paradoxical that traditional agricultural structures impeded move from low to high productivity employments – implies blockage, if existed, perfection seasonal labour markets.

Symbiotic evolution of forms of manufacturing sufficiently flexible to release a significant proportion of workers into the fields and specialized forms of farming that could achieve high levels of productivity on condition that seasonal supply of labour was large enough to harvest the crop is one of the central characteristics of the development of a more specialized economy between 1500 and 1850.

Magnac and Postel Vinay – elasticity of labour supply agriculture to industry was 0.5% - industrial expansion not limited cost of recruiting workers from agric. –

The perception that 19^th century French industrialization significantly retarded by agrarian structures not been cliometrically confirmed

Growth Agric. Productivity in 19^th century

Grantham backward counting to gain estimate capital agricultural to work out TFP – estimated rates of productivity growth 19^th century – are comparable with those estimated for Britain and the US – 1860s only decade when agricultural supply potential constraint economic expansion – 1800 to 1850and 1860 1915 British AP grew by 05 to .6 %

Increased factor productivity - might have been the effects of the Revolution - - inflation allowed farmers to write off debt 0 some bought land previously rented – rising prices encouraged investment in arming – 1820 – 1870 unprecedented increase agric. Improvements

The paradox of pre-Revolutionary productivity

Hoffman sees 3 centuries before the revolution – 0 productivity, but phases of growth and decline – mainly during wars and falling grain prices – so critical factors affecting productivity growth state of market demand and interference of military operation with farming operations.

Persistence of the open-fields

Uneven improvement agric. Due to open field system stopping diffusion new techniques innovations – open field practices resolved the problems of farming scattered and intermingled plots – abandonment of common plots – rationally accounted for falling net benefit to farmers – practices taken up or neglected in accordance to net benefit – regression turned up no evidence that presence common pasture affected the rater of agricultural innovation – only in 20^th century that pace of technological change accelerated to the point where the field system began to be a significant constraint – farm lay out v. responsive market forces

Gradual economic growth France cf. Britain’s lower pace structural change allowed rental market to adjust farm size and layout without recourse to legislation – Rosenthal thinks revolution lowers cost of this because of salaried officials – possible explanation growth productivity after revolution

Agricultural demand and economic conjuncture

Long period of depressed grain prices after 1670 depressed agricultural investment – Ruttan thinks 19^th century slump prices depressed productivity lessening incentive to invest – Grantham northern France causing problems with lack of demand the relation between total factor productivity and demand appears to be fundamental – high demand prices for produce encourage farmers to engage in more intensive methods of cultivation – presence of strong demand carried farmers over the threshold of profitability – diffusion intensive husbandry in Northern France was sensitive to price meat and dairy products.

Grantham argues that spatially focuses external economies in trade and manufacturing  - AP highest around cities and other foci of concentrated demand – high demand for foodstuffs from high incomes of city residents – stemmed from high productivity, high urban productivity consequence of market externalities spatial concentrations of skilled labour and other specialized inputs – development concentrated opulations may account for parallel development of highly productive farms – urbanization NOT constrained by food supply – simulations 45 KM radius suggests could feed up to 300,.000

Other Notes in this Category

1. Adaptations of the Traditional Sector
2. Conclusions
3. Definitions and Historiography
4. Direct Transfer
5. Economic Growth in france and britain, 1830-1910 –a review of the evidence
6. Grantham: survey of cliometric contributions to french economic history
7. Growth Rates, Data and Methods
8. Indirect, Embodied Transfer
9. Kindelberger’s review of keyder and o’brien
10. Pioneer industrialiser
11. Post 1750 Growth Coke-Smelting Sector
12. Richard roehl – french industrialisation: a reconstruction
13. Structural Change
14. Technological Transfer: failure, partial adaptations, success
15. The Innovations of the coke blast furnace, of puddling and rolling
16. The modern technology breakthrough ‘right down the line’
17. Tom Kemp – industrialization in nineteenth century europe

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