Russia economy: a very short introduction - Book review (EH net)

 Published by EH.Net (November 2020)

Richard Connolly, The Russian Economy: A Very Short Introduction. Oxford: Oxford University Press, 2020. xv + 151 pp. $12 (paperback), ISBN: 978-0-198-84890-5.

Reviewed for EH.Net by Ilya Voskoboynikov, Department of Economics, HSE University.

The Russian economy is, modifying Winston Churchill (1939), “a riddle wrapped in a mystery inside an enigma”; Russian economic performance is volatile. In the last three decades its institutional environment changed from a command to a market economy. Its industrial structure shifted from overinvestment in manufacturing and agriculture in the late 1980s to market services and mining (Voskoboynikov 2020). Trade conditions seem to be unpredictable. This is a sensitive issue for the economy, which depends on oil and gas exports. How can one understand the Russian development pattern over its centuries-old history and, possibly, outline Russia’s prospects for the future?

Perhaps there is a key. Richard Connolly dubs that key the “Russian system of political economy” — the System. For centuries, Russia could be characterized by (1) the weakness of its legal system, (2) the underdevelopment of modern economic activities, (3) technological underdevelopment and (4) lower living standards in comparison with major developed economies. The System explains why these features have proven to be so persistent.

Connolly departs from the system of political economy of Robert Gilpin, who highlights three main respects of any economy: the primary purpose of economic activity, the role of the state in the economy and the structure of private business. Historically, in Russia, this purpose was the subordination of economic activity to national security, both external and internal. This has predetermined the primary role of the state in the economy, reallocating resources to national security. Consequently, the position of private business is relatively weak and is characterized by weak property rights. To be successful, it is much more important to connect with state officials and block competition, rather than to produce competitive products.

The System explains the persistence of features (1)–(4). The central state delegated to the so-called state agents — pomeshchiki (landowners), governors or individual communist party bureaucrats — power to extract and reallocate resources and match target objectives at the cost of other activities. The central state granting agents autonomy and overlooking some abuses of power fueled the weakness of the legal system and of property rights. The threat of expropriations reduced the incentives of local private businesses to invest in new production, qualified workers, new technology and innovation. As a consequence, modern economic activities remained underinvested and technology underdeveloped. All these factors impacted productivity growth negatively and led to the deterioration of living standards.

The chapters of the book demonstrate effectively how this framework was formed and how it has worked throughout Russian history. Chapter 1 covers the four centuries from the formation of the Tsardom of Russia (later the Russian Empire) in sixteenth century to the October Revolution in 1917. This period demonstrates that the subordination of economic activities to national security originated from threats from several strong powers in the West and nomadic raiders in South and East. Russia was not alone in dealing with such external pressures, but with no natural geographically defined borders, such as mountains, coastlines, border lakes or rivers, the challenge for Russia was much stronger than for other Eurasian empires. Chapter 2 shows that the Soviet system of political economy, which formed by the mid-1930s and remained unchanged until the end of 1980s, turned out to be the extreme version of the traditional Russian System. Chapters 3, 4, and 5 discuss the formation of the modern system of political economy, which passed through the stages of market stabilization, liberalization and privatization in 1990s; the recovery of the role of the state in 2000s, accompanied by soaring growth rates; and the economic stagnation of 2010s.

The book is worth reading for economic historians. It provides a very simple and consistent conceptual framework, which helps to deal with the wealth of facts and data on the last five centuries of Russian economic history. This framework also demonstrates the difference between modern Russia and its predecessors – the Soviet Union and, to a lesser extent, the Russian Empire. Although national security remains one of the priorities for modern Russia, general social and macroeconomic stability are also the priorities (pp. 78, 85-89). The level of inflation is now at the historically lowest level since 1990. The budget deficit and unemployment are more than reasonable (pp. 83, 87).

The real challenges for Russia are demography, energy dependence and, probably the biggest, the weak legal system. The origins of this weakness are of specific interest and are of my main concern about the book. Connolly states (pp. 6-9) that the use of agents helps the central government to extract revenue, control vast territories and the population, and mobilize resources in times of the crisis with few formal controls. Most of the time the agents ruled their areas as their own domain and sometimes ignored the law. The central government needed the agents and controlled them weakly. As a result, national laws and informal local rules co-existed and collided, weakening the legal system and fueling the conflict between the central government and its agents for centuries.

A related issue is the lack of clarity on the ambiguous concept of the state in the book – specifically, a lack of clarity about the role of the state or its agents in proizvol (the arbitrary treatment) of serfs by their landlords or of a collective farmer by the local Communist Party authority. The same conflict appears in relations among the Soviet government, the ministries and managers of state enterprises (Gregory and Harrison 2005) and in the illusion of State Planning Committee control (p. 14). In all these cases, the state is both strong and weak. It is strong, because the landlord in eighteenth century and the local Communist Party authority in the Soviet era had power within their responsibilities or communities. It is weak, because the central government usually lacked the capacity to keep such agents under control and overlooked the abuse of law by its agents.

The central government made multiple attempts to enforce law and bind its agents. Kormlenie (feeding — the practice in pre-modern Russia of maintaining local officials at the expense of those they governed) was cancelled in sixteenth century. These attempts can also be seen in the constraints of serfdom up to the Emancipation Manifesto (1861) of Aleksandr II, which abolished serfdom. Unfortunately, the abolition of serfdom and its consequences are not discussed in the book, except the short paragraph of consequences of reforms after the Crimean War (p. 11). Scholars link Russian economic growth in the second half of nineteenth and early twentieth centuries to these reforms, including the abolition of serfdom and the subsequent progressive judicial reform. This was an important step forward, which improved the legal system and had a strong impact on economic performance (see, e.g., Markevich and Zhuravskaya (2018)). That is also an important lesson for Russia today.

Another concern is the issue of human capital, closely connected with the middle class and prospective future growth and development. Connolly notices that the Russian population now is highly educated by global standards (p. 114). I would add that the advances of education at all levels and healthcare system are achievements of the Soviet period (see, e.g., Nove 1992, pp. 359–62). This legacy of the Soviet Union makes the position of modern Russia in the global economy different from the Russian empire. In the early twentieth century, the illiteracy rate in Russia was 60% (1913) versus 11% (1900) in the US (Gregory and Stuart 2001, tab. 2.5).

These aspects, however, do not diminish the merits of the book, which helps us reflect on the centuries of Russian economic history and outline its future. Demography, energy dependence and the weak legal system (chapter 7) are particular challenges. The latter was explicitly exposed by the case of Russian oligarch Mikhail Khodorkovsky (pp. 44-45, 60-61) with the questionable legacy of privatization of oil company Yukos in the early 1990s, his payments to deputies in Russia’s parliament to support legislation of his business interests in the early 2000s and the transfer of the main oil-producing arm within Yukos to the state-owned company Rosneft. However, the Russian economy now is in a better position in comparison with 1917 or 1991. In spite of the importance of security issues and the high military expenditure, nobody seriously considers the big push approach or mass property confiscations and deportations, similar to the industrialization or collectivization of late 1920s–early 1930s. The primary purpose of the state is not only security. The role of the state is high, probably excessive, but not as high as three decades ago, and the chances of returning to a Soviet-like planned economy are negligible. In contrast with the period of the empire, the level of education in Russia now is much higher. In contrast with the Soviet period, the middle class, formed in 1990s, is also remarkable. Success will come when not only the government, but also Russian citizens, start considering improvements to the legal system as the top priority. The new book of Richard Connolly is very supportive of this idea.

References:

Churchill, Winston. 1939.  \”The Russian Enigma.\” London: BBC. The Churchill Society. http://churchill-society-london.org.uk/RusnEnig.html.

Gregory, Paul, and Mark Harrison. 2005. “Allocation under Dictatorship: Research in Stalin’s Archives.” Journal of Economic Literature 43 (3): 721–61.

Gregory, Paul, and Robert Stuart. 2001. Russian and Soviet Economic Performance and Structure. 7th ed. Boston, MA: Addison-Wesley.

Markevich, Andrei, and Ekaterina Zhuravskaya. 2018. “Economic Effects of the Abolition of Serfdom: Evidence from the Russian Empire.” American Economic Review 108 (4–5): 1074–1117.

Nove, Alec. 1992. An Economic History of the USSR. 1917-1991. 3d ed. Penguin Books.

Voskoboynikov, Ilya B. 2020. “Economic Growth and Sectoral Developments, 1990-2008.” In The Economic History of Central, East and South-East Europe: 1800 to the Present, edited by Matthias Morys, 520. Routledge (forthcoming).

 

Ilya Voskoboynikov is a Leading Research Fellow and an Assistant Professor at National Research University Higher School of Economics in Moscow. He is currently focuses on consequences of a command economy period for development and long run growth.

Copyright (c) 2020 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (November 2020). All EH.Net reviews are archived at http://www.eh.net/BookReview.

6th Brazilian Economic History Workshop - INSPER, SP, 8-9/08/2019

6º Workshop de História Econômica Brasileira

6th Brazilian Economic History Workshop

Programação do 6º Workshop de História Econômica/6th Brazilian Economic History Workshop, no Insper, nos dias 8 e 9 de agosto.

6º Workshop de História Econômica /6th Brazilian Economic History Workshop

Insper, São Paulo

Dias 8 e 9 de agosto de 2018 

Programação

Insper – Sala 407 – Prédio 1

Dia 8 de agosto

8:45  –  Abertura – Marcos Lisboa (Presidente do Insper) e Delfim Netto (USP)

9:00 – Coşkun Tunçer (University College London) e Leonardo Weller (EESP-Fundação Getúlio Vargas), Democracy, autocracy and sovereign debt: how polity influenced country risk in the first financial globalisation

10:00 – Intervalo

10:15 – Ellen Fonseca de Assis e Michel Marson (Universidade Federal de Alfenas), As origens do financiamento industrial no Brasil, 1891-1940: um estudo da Companhia Antarctica Paulista

11:15 – Intervalo

11:30 – Rafael R. Guthmann (University of Minnesota), Growth over the long run: historical national accounts in international comparison

12:30 – Almoço

14:00 – Thales Zamberlan Pereira (Universidade Franciscana), Taxation and the stagnation of cotton exports in Brazil, 1800 – 1860 

15:00 – Intervalo

15:15 – Elissa Pereira (Universidade de São Paulo), Estratégias de assimilação, ascensão e mitigação de risco: atores cristãos novos no Rio de Janeiro – 1685-1770

16:15 – Intervalo

16:30 – Thomas Kang e Isabela Menetrier (Universidade Federal do Rio Grande do Sul), Export incentives, state level expenditures and primary education in Brazil, 1967-1985

Dia 9 de agosto

8:30 – Edmilson Varejão (EPGE-Fundação Getúlio Vargas), Samuel Pessoa (IBRE-Fundação Getúlio Vargas) e William Summerhill (University of California, Los Angeles), Economic consequences of educational backwardness in twentieth-century Brazil

9:30 – Intervalo

9:45 –  Ariel Kessel Akerman (EESP-Fundação Getúlio Vargas), US geopolitical goals and IMF conditionality: was Cold War relevant?

10:45 – Intervalo

11:00 –  Eustáquio Reis (IPEA), Fretes e custos de transportes no Brasil, 1830-1930

12:00 – Almoço

13:30 – Renato L. Marcondes e Lélio Luiz de Oliveira (Universidade de São Paulo-Ribeirão Preto), Credit as an economic growth determinant: mortgages in Brazil, 1893-1939

14:30 – Intervalo

14:45 – Bruno Gabriel Witzel de Souza (University of Göttingen), The rationale of sharecropping: immigrant bonded laborers and the transition from slavery in Brazil, 1830-1890

Obs: participação aberta a alunos de pós-graduação e pós-graduados, com vagas limitadas.

Informações e inscrições via e-mail: workshophist@gmail.com

Founding fathers of the Fed, by Richard A. Naclerio - Book review by Mary Tone Rodgers

Richard A. Naclerio, The Federal Reserve and its Founders: Money, Politics and Power, Newcastle upon Tyne: Agenda Publishing, 2018. vii + 226 pp. $22.50 (paperback), ISBN: 978-1-78821-078-2.

Reviewed for EH.Net by Mary Tone Rodgers, Department of Finance, State University of New York at Oswego.

Scholars have been keenly interested in the Federal Reserve system since its inception, and the subject has motivated many books. Authors’ tones, viewpoints and theses about the Fed are understandably shaded by the political discourse of the period in which they write. Richard Naclerio writes The Federal Reserve and its Founders: Money Politics and Power in 2018, a time of rising populist sentiment and, while not explicitly identifying himself as a populist, Naclerio argues the populist viewpoint. The book’s thesis is that the Federal Reserve was formed by elites to preserve their informational advantages over the “little guy,” primarily by preserving a monopolistic structure of the banking industry. He supports his argument by providing biographical evidence that six men who suggested critical features of the Federal Reserve Act disdained the common man, perceived themselves to be elite and were interested in extracting profits for the central bank from elevated interest rates charged on loans to the “little guy.”

This book is permeated with the rhetoric of economic populism providing an “us versus them” framework for the author’s writing style. The approach is not the traditional one taken by economic historians; it does not test theories of political economy, industry structure, formation of efficient financial systems, or financial panics by examining past quantitative data. Instead, it uses qualitative archival evidence from personal writings, contemporary critiques and newspaper stories for thesis support. Its primary contributions are for the reader to understand, first, how the populist viewpoint may be informed by biographical evidence, and second, what the implications of populism for the future of Federal Reserve might be. Naclerio argues that from the “American people’s” viewpoint a central bank that does not bail out banks, does not profit from high interest rates charged to the “little guy,” and that has oversight by non-elites appears to be the type of institution a populist might prefer.

Naclerio devotes one chapter to each of the six men who attended a private conference at Jekyll Island in 1910 to draft policy proposals to create an American central bank. He also writes a chapter about J. Pierpont Morgan who did not attend the conference but who Naclerio considers a central historical figure epitomizing the elite who formed the central bank. After examining the seven men’s attitudes toward the “little guy,” Naclerio then argues that those attitudes were institutionalized in the legislation that formed the Federal Reserve Act of 1913. A chapter devoted to a post-2008 interview with one journalist at Bloomberg News is used as evidence that elitist attitudes continue to drive Fed policy in the present period. The interview explores how Bloomberg News found it difficult to obtain information from the Fed about loans the Fed made during the 2008 crisis.

The seven chapters about the Jekyll Island attendees and Morgan comprise about two-thirds of the book. Each chapter presents biographical evidence that each man embodied the populist lament that the “little guy” is disadvantaged by elite who create opacity and monopoly for self-aggrandizement. Nelson Aldrich eliminated small sugar producers and refiners by changing the tariff structure for sugar imports, benefitting his family’s wholesale grocery business. Felix Warburg’s proposal to allow the central bank to discount commercial paper disadvantaged small bankers and gave preference to large banks. Benjamin Strong’s efforts to coordinate Europe’s post-World War I reconstruction created a Western monopoly of central banks in defiance of each government’s citizenry and was achieved using loopholes in the Charter of the League of Nations. Strong’s venom toward small bankers is supported by his characterization of them as an “unorganized mob.” Henry Davison persuaded Woodrow Wilson to break his promise to the average American to stay out of World War I – so that loans to France and Britain organized by Davison at J. P. Morgan & Co. could be paid off. Davison’s efforts to preserve Morgan’s profits would be at the expense of the “European working class” whose taxes would pay the interest and principal on war loans. A. Piatt Andrew’s suggestion that the central bank would support itself by charging rates to banks on loans it provided meant that small businessmen’s and farmers’ rates would be higher, benefitting the elites in money center banks. Frank Vanderlip’s assessment that borrowers must sign loan contracts but small depositors earned no such reciprocal contract from the banker was evidence that elite bankers supported the inequity and imbalance of power inherent in the banking business model. J. P. Morgan’s takeovers of weak trust companies and corporations after the Panic of 1907 is evidence of an unscrupulous act of self-dealing. (Morgan is referred to as a “pirate” in the chapter title.)

The book’s populist argument is not completely convincing because it does not explore how concern about the “little guy” was indeed part of the policy formation process; it does not adequately describe how the grassroots debate had been ongoing since at least the Baltimore plan of 1894 and the Indianapolis Monetary Convention of 1896. Rather, Naclerio seems to attribute most of the policy formation process to the seven men showcased in the book.

Nor does the book describe how the “little guy” benefitted from the formation of the Fed. The book does not explore how achieving economies of scale in information production and liquidity coordination became overwhelming tasks for a fragmented banking system during the period of industrialization and urbanization that accompanied technological advancement that opened up opportunities for the “little guy” of the early twentieth century.

Furthermore, Naclerio does not suggest how populists of the day, such as William Jennings Bryan or Theodore Roosevelt. might have managed the problems of providing a lender of last resort in periods of exogenous economic shocks any differently than the “elitist” Wall Street bankers did. The difficulty in compelling collective action in the absence of a lender of last resort was not the purview of the federal government at the time, nor was it easily managed by private actors in an increasingly complex economy.

Naclerio interprets the Great Depression as evidence that the Fed reneged on its promise to shield the “little guy” from shocks to the economy and fluctuations in the business cycle from 1921 through the late 1930’s, without describing the remedial changes to the Fed’s policy formation process made during the subsequent Franklin Roosevelt administration that improved the institution’s future capabilities to become more responsive.

Naclerio pays scant attention to how the Federal Reserve Act was influenced by politicians to include a decentralized system of twelve regional banks that served twelve distinct regions of the country, an effort to give voice to the “little guy.”

The shortcomings of the book do not mar the usefulness of the references it provides to see the Federal Reserve system through the eyes of a twenty-first century populist. Giving voice to those who have felt alienated from or disillusioned by the system can support constructive institutional change going forward.

(Naclerio has worked extensively in business operations and real estate investment in New York City and Denver. While continuing to manage his own real estate companies and stock portfolios, he is pursuing a Ph.D. in history at the CUNY Graduate Center. He worked as an adjunct instructor and academic advisor at Sacred Heart University and Monroe College.)

Mary Tone Rodgers, DPS, CFA, is the Marcia Belmar Willock Professor of Finance and Director of the Gordon Lenz Center for Finance and Risk Management at the State University of New York at Oswego. She has published several articles in financial history, including “Monetary Policy and the Copper Price Bust: A Reassessment of the Causes of the Panic of 1907” with James E. Payne” in Review of Economic History. She is currently working on a book with Jon R. Moen (University of Mississippi) on J. Pierpont Morgan’s role as lender of last resort in the pre-Federal Reserve period.

Copyright (c) 2019 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (February 2019). All EH.Netreviews are archived at http://www.eh.net/BookReview.

Roosevelt e o abandono da clausula ouro nos EUA - Mark Pulliam (Law and Liberty)

Estou lendo o livro citado de Sebastian Edwards: American Default (2018), uma história da maior decisão econômica da administração Roosevelt. (PRA)

Abandoning Gold and the Constitution?

by Mark Pulliam

Law and Liberty, February 25, 2019

https://www.lawliberty.org/2019/02/25/abandoning-gold-and-the-constitution/

Constitutional law scholars tend to focus on decisions involving abortion, same-sex marriage, desegregation, and administrative law, ignoring one of the 20th century’s most contentious legal battles: creditors’ challenge to President Franklin D. Roosevelt’s abrogation of the gold standard, and contemporaneous invalidation of “gold clauses” in contractual debt obligations, in 1933.  The New Deal spawned many events of interest to constitutional historians—such as FDR’s court-packing scheme, the abandonment of the Lochner line of cases, and the Carolene Products decision—but until the publication of Sebastian Edwards’s American Default in 2018, the great debt default of 1933-1935 had unaccountably been largely overlooked. [1] In the pre-“woke” era, constitutional battles were over economics, not culture, and no aspect of the economy is more fundamental than money.  

In response to the Great Depression, one of Roosevelt’s first acts as President, after taking office in March 1933, [2] was to ban the private ownership of gold—in the form of coins, bullion, or gold certificates—and to require all private gold holdings to be sold to the federal government at a set price. This unprecedented edict was quickly followed by taking the nation off the gold standard. Then, on June 5, 1933, at FDR’s behest Congress passed Joint Resolution No. 10, unilaterally annulling all “gold clauses”—contractual provisions requiring repayment of debts in gold, used in most bonds and mortgages since the Civil War to protect lenders against devaluation of paper money—in all past and future debt contracts, public and private. As the coup de grace, in January 1934, FDR devalued the currency by fixing a new price for gold almost 70 percent higher than its century-old price. 

Thus, to aid distressed farmers, debtors were allowed to repay their obligations with watered-down dollars, despite gold-denominated repayment obligations. Beleaguered rural voters favored inflation. (To remedy crippling deflation, FDR’s overarching goal was to increase domestic prices, especially for farm products.) Through these combined actions, the President and Congress had effectively wiped out more than 40 percent of all existing debt. Creditors were livid.  Bold holders who had purchased securities protected by gold clauses challenged the annulment as unconstitutional. This became one of the first skirmishes over the New Deal to be decided by the Supreme Court. In early 1935, following three days of argument, in a trio of related decisions [3] the Court upheld the federal government’s actions in a series of 5-4 decisions written by Chief Justice Charles Evan Hughes, with the conservative “Four Horsemen” dissenting. 

The majority blithely upheld the Joint Resolution invalidating gold clauses in private contracts, citing broad congressional power to regulate the economy and, with respect to the impairment of government obligations, denying that bond holders had been damaged by the taking. The rationale of Hughes’s opinion in the public debt cases was that annulment of the gold clause caused no economic injury to the bondholders because—even had the debt been repaid in gold coin—other features of FDR’s monetary reforms would have required that the gold be surrendered at a fixed price (less than actual market value). [4] The dissenters, who viewed FDR’s scheme as an abhorrent and dishonorable repudiation of contractual obligations, scoffed at this reasoning: “Obligations cannot be legally avoided by prohibiting the creditor from receiving the thing promised.” Justice James Clark McReynolds delivered the unitary dissent, departing from the prepared opinion to scornfully declare that the Constitution “is gone,” bitterly lamenting that “Shame and humiliation are upon us now.” 

This long-forgotten showdown occurred two years before the fateful “switch in time that saved nine,” but after the evisceration of the Contract Clause in Home Building & Loan Association v. Blaisdell (in another 5-4  opinion, also penned by Hughes). [5] To some extent, the result in the closely-watched Gold Clause Cases was pre-ordained: many financial analysts had publicly predicted that a ruling against the FDR administration would plunge the country into a catastrophic crisis. According to Edwards, it was “plainly clear” that invalidating the Joint Resolution “would create chaos, including millions of bankruptcies across the country.” 

American Default tells a fascinating story. Edwards, who teaches international economics at UCLA, brings a sophisticated knowledge of finance to his analysis of the chaotic conditions underlying the Great Depression, the circumstances leading up to FDR’s decision to nullify the gold clauses, and the international implications of this action. (The author casually name-drops prominent economists with whom he has rubbed elbows over the years, including Milton Friedman, Anna Schwartz, and Allan Meltzer.) His account goes behind the scenes in 1933, which he suggests is “possibly the most eventful year in American history during times of peace.”  The full cast of characters who played a role in the vaunted “First 100 Days” are often over-shadowed by FDR himself. Edwards explores the personalities of Roosevelt’s New Deal advisers, especially the economists and so-called Brains Trust. 

Edwards suggests that FDR’s team was ill-equipped to manage the intricacies of monetary policy. Much of what the would-be central planners did was a haphazard experiment. Indeed, FDR did not choose his Secretary of the Treasury until shortly before he was sworn in as President. Most of FDR’s agenda during the “Hundred Days” has been panned by economists and historians. The Agricultural Adjustment Act and National Industrial Recovery Act, both struck down as unconstitutional, accomplished little. The Great Depression continued throughout the decade of the 1930s. Nevertheless, Edwards maintains that FDR’s tempestuous monetary reforms in 1933-34 arrested the nation’s economic freefall and boosted prices. Moreover, Edwards concludes—albeit with qualifying caveats—that the debt default engineered by FDR had no apparent deleterious effect on America’s economy in the long run. In both cases, Edwards offers charts and technical data (complete with “M1”) in support of his position. Friedman and Schwartz reached the opposite conclusion in their 1963 book A Monetary History of the United States, 1867-1960.

How well does the book, subtitled The Untold Story of FDR, the Supreme Court, and the Battle Over Gold, hold up as legal history or constitutional analysis? We have become inured to fiat currency and monetary gimmicks on the part of the Federal Reserve, but are these innovations consistent with an originalist understanding of the Constitution? What did the Framers mean when granting to Congress the power to “coin money [and] regulate the value thereof”? [6] Were FDR’s reforms within the purview of the Constitution’s “necessary and proper” clause? [7] Were the Reconstruction-era Legal Tender Cases [8] correctly decided? These questions deserve comprehensive treatment. That argument isn’t contained in Edwards’ book. In contrast to Edwards’ economic analysis, his legal narrative is somewhat superficial, derived in large part from contemporaneous accounts, some historical archives, and William Leuchtenberg’s 1995 book The FDR Years: On Roosevelt and His Legacy, which he describes as “the standard work on the Supreme Court during the time of Roosevelt.”  

Edwards acknowledges that the statutory authority for declaring a national bank holiday was “doubtful,” and notes that acting Treasury Secretary Dean Acheson resigned his post because of his concerns that the administration’s policies were illegal.  Beyond this, his largely journalistic rendition of the Supreme Court litigation is informative and may satisfy a general audience, but does not break new ground as legal scholarship. In fairness, this was not the author’s intent; yet, an account of the Gold Clause Cases is incomplete without a reckoning of the larger constitutional questions. [9] 

Although FDR’s abandonment of the gold standard is a bell that even Robert Bork conceded was impossible to un-ring, the efficacy of economic policy does not necessarily determine its constitutionality.  

[1] A prominent exception is Kenneth Dam’s article, “From the Gold Clause Cases to the Gold Commission: A Half Century of American Monetary Law,” 50 U. of Chicago Law Review 504 (1983).

[2] Presidential inaugurations were moved to January following adoption of the 20thAmendment.

[3] Norman v. Baltimore & Ohio Railroad Co., 294 U.S. 240 (1935) (consolidated with United States v. Bankers Trust Co.); Nortz v. United States, 294 U.S. 317 (1935); and Perry v. United States, 294 U.S. 330 (1935). 

[4] Harvard Law School professor Henry Hart opined that “[f]ew more baffling pronouncements, it is fair to say, have ever issued from the United States Supreme Court.”

[5] 290 U.S. 398 (1934).

[6] Article I, section 8.

[7] Id.

[8] Knox v. Lee and Parker v. Davis, 79 U.S. 457 (1871) (overruling Hepburn v. Griswold, 75 U.S. 603 (1870)). See Robert G. Natelson, “Paper Money and the Original Understanding of the Coinage Clause,” 31 Harvard Journal of Law & Public Policy 1017 (2008).

[9] Gerard N. Magliocca, “The Gold Clause Cases and Constitutional Necessity,” 64 Florida Law Review 1243 (2012).

Mendeley: um excelente instrumento de pesquisa

Eu já conheço o Mendeley há muitos anos, mas nunca tinha usado, simplesmente por falta de tempo e de vontade para aprender as normas e técnicas de funcionamento (sou arredio a ler manuais).
Agora resolvi instalar o programa e ver o que se poderia obter como informação útil para meus trabalhos de pesquisa.
Sendo assim, coloquei um termo de busca – Economic History – na janela de pesquisa e esperei o resultado.
Deu o que vai abaixo. Acho que está mais do que satisfatório...
Só preciso encontrar tempo para pesquisar.
Depois de terminar uma resenha de livro – Juca Paranhos: o barão do Rio Branco, de L. C. Villafañe G. Santos – de 13 páginas às 3h50 da manhã, eu me prometi a mim mesmo dormir cedo nesta quinta (que já passou). Agora já são 01h51 da sexta feira e ainda estou aqui.
Bem, vejamos o que apareceu em Mendeley sobre Economic History:

Springer, S. (2007). A Brief History of Neoliberalism. Journal of Peace Research. http://doi.org/10.1177/002234330704400117

Godden, C. (2015). Economic History. In International Encyclopedia of the Social & Behavioral Sciences: Second Edition. http://doi.org/10.1016/B978-0-08-097086-8.62109-8

World Economic Forum. (2017). The Global Risks Report 2017 12th Edition. The Global Competitiveness and Risks Team.

Berg, J., Dickhaut, J., & McCabe, K. (1995). Trust, reciprocity, and social history. Games and Economic Behavior. http://doi.org/10.1006/game.1995.1027

Nunn, N. (2011). The Importance of History for Economic Development. SSRN.

Millward, R., & North, D. C. (1983). Structure and Change in Economic History. The Economic Journal. http://doi.org/10.2307/2232785

Schumpeter, J. A. (1947). The Creative Response in Economic History. The Journal of Economic History. http://doi.org/10.1017/S0022050700054279

Baerwald, F. (1937). History of Economic Thought. Thought. http://doi.org/10.5840/thought193712333

Clark, G. (2009). Economic History Association. Source: The Journal of Economic History. http://doi.org/10.1016/0009-2797(73)90016-1

Moser, P. (2012). Patents and Innovation: Evidence from Economic History. SSRN.

Rees., J. F. (1930). GENERAL ECONOMIC HISTORY. History. http://doi.org/10.1111/j.1468-229X.1930.tb00609.x

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Choques do petróleo e crise de Bretton Woods - book review

Published by EH.Net (October 2018)

Simone Selva, Before the Neoliberal Turn: The Rise of Energy Finance and the Limits to U.S. Foreign Economic Policy. London: Palgrave Macmillan, 2017. xv + 423 pp. $75 (hardcover), ISBN: 978-1-137-57442-8.

Reviewed for EH.Net by Alain Naef, Department of Economics, University of Cambridge.

An abundant literature focuses on Bretton Woods on the one hand, or the liberalization of markets and exchange rates in the 1970s and 1980s on the other. Little is known on the transition between these two periods, however. Simone Selva’s book attempts to make sense of this transition before the “Neoliberal Turn” in the late 1970s, by giving an account of U.S. currency and the functioning of the international monetary system. A Research Fellow in the history of international economic relations at the University of Naples L’Orientale, Selva brings an interesting approach to the subject, specifically tracking the role of the dollar from the 1950s to the late 1970s. Indeed, U.S. balance of payments issues first found their roots in Europe and were linked to postwar loans in the 1960s before the problem moved to Gulf countries in the 1970s. Petrodollars accumulated by oil producing countries had to be disposed of without causing the dollar to suffer. The book explores the struggles of different U.S. presidents to manage both their balance of payments and the dollar.

Chapter 2 describes how American balance of payment deficits in the 1960s conflicted with the country’s military objectives across the world. The Vietnam War was one of these commitments and was a strong inflationary force. As the Federal Reserve increased the money supply to support the Vietnam War in the late 1960s, the dollar weakened, eroding the U.S. competitive position in global markets. Chapter 3 shows how successive devaluations in Europe put more pressure on the U.S. balance of payments. The 1967 devaluation of sterling especially destabilized U.S. policies. This chapter also offers a detailed narrative of the gold crisis in 1967-68, when the price of gold surged and the Gold Pool was disbanded. The author nicely shows how troubles in the USSR prompted the regime to sell gold on the international gold market.

In Chapter 4, Selva argues that inflationary pressures were building up long before the first oil crisis of 1973 — arguing in effect that not all 1970s inflation can be blamed on the price of oil. He describes the Nixon Administration struggling to understand the link between developments in energy markets and the international monetary system. The chapter also offers an interesting account of how U.S. policymakers pushed American banks to open branches in Gulf countries, in an attempt to increase U.S. manufacturing and financial service exports to dollar surplus countries. These U.S. banks then channeled money into the Eurodollar (or Eurocurrency) market in London, where it was then loaned to European countries with balance of payments deficits. This was possible only as long as the Eurodollar market was capable of absorbing currency from oil producing countries.

Around 1974 OPEC countries shifted their investment from short-term (mainly Eurodollar) investments, to long-term ones (mainly loans to governments). Chapter 5 explores what happened when OPEC dollar surpluses overtook the Eurodollar market’s ability to absorb them. Oil producing countries began offering loans directly to governments starting with Egypt, Syria, and France, expanding to other Western countries. The American administration realized that direct investments in the U.S. would have a less detrimental effect on the dollar. Despite public outcry and fears of oil producing countries taking over U.S. firms, the Ford administration promoted direct petrodollar investment into the country. The Treasury actively encouraged OPEC investments in the US, which Selva illustrates with the example of a $100 million investment in telecoms giant AT&T, “openly approved by the Ford Administration” (p. 301).

The research is well documented with archival material across Europe and the U.S. Beyond the archives from international financial institutions, governments, and central banks, the author also relies on archives from the CIA which offer an objective and strategic assessment of the international monetary questions at the time. Selva does not shy away from the complexity of the international monetary system and manages to connect the domestic situation in the U.S. to the troubles of the international monetary system with skill. However, he sometimes lets this complexity cloud the clarity of his argument. The writing is dense. Some paragraphs extend over many pages, some sentences over many lines.

Nonetheless, Simone Selva’s contribution is a solid piece of serious scholarship that helps better understand the origins of the 1970s oil crisis, and how the U.S. managed its balance of payments. It offers a review of American policies at the point when markets became more open and oil production took the center stage in international finance. As such, this detailed analysis will benefit financial historians of the period as well as scholars interested in energy finance and modern American historians.

Alain Naef is a teaching fellow at the Economics Faculty of the University of Cambridge, where he is finishing a PhD on the role of reserve currencies during the Bretton Woods period. His latest working paper on the Gold Pool with Michael Bordo and Eric Monnet is available at https://ideas.repec.org/p/nbr/nberwo/24016.html and his work on central bank intervention is available at https://ideas.repec.org/p/cmh/wpaper/32.html.

Copyright (c) 2018 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.NetAdministrator (administrator@eh.net). Published by EH.Net (October 2018). All EH.Net reviews are archived at http://www.eh.net/BookReview.

A eterna luta entre o comerciante e o burocrata - Guglielmo Palombini (Mises Institute)

The Eternal Struggle Between the Merchant and the Bureaucrat

• 

Guglielmo Piombini 

Translated from the Italian by Bernardo Ferrero

[This article has been translated from Piombini's Italian original by Bernardo Ferrero.]
https://mises.org/blog/eternal-struggle-between-merchant-and-bureaucrat

Before the State

For a very extended period of time primitive men lived in small groups of hunters and gatherers at a time in which there was no state. The modus vivendi of these clans was such that after having exhausted all nature-given resources in a particular area, they would move elsewhere in search of other available food supplies. This system of nomadic life could endure as long as the human race was limited and the vast majority of land remained uninhabited. Yet, this lifestyle was not sustainable, and within a short period of time the intensification of these hunting activities provoked an ecological crisis that spread across Europe, the Middle East and America, causing the extinction of 32 animal species [that had been an important food source].
The disappearance of the megafauna inaugurated, around the year 10,000 B.C. the transition to a mode of production based on agriculture. The Neolithic revolution could in fact be described as the pragmatic response to the exhaustion of resources that resulted from the intensified exploitation of the system based on hunting and gathering. Even though the lives of the farmers were admittedly harder than those of the hunters, requiring long and heavy hours of labor in the fields, the sedentary life of the village made it possible for a far greater number of mouths to be fed: thanks to appropriations and to the cultivation of land, the human population increased considerably, giving birth to the first civilizations.

The Violent Origins of the State

According to historian William Durant:

Agriculture teaches men pacific ways, inures them to a prosaic routine, and exhausts them with the long day’s toil; such men accumulate wealth, but they forget the arts and sentiments of war. The hunter and the herder, accustomed to danger and skilled in killing, look upon war as but another form of chase, and hardly more perilous, when the woods cease to give them abundant game, or flocks decrease through a thinning pasture, they look with envy upon the ripe fields of the village, they invent with modern ease some plausible reason for attack, they invade, conquer, enslave and rule.

The first states emerged when these nomadic tribes of hunters and herders understood that the systematic exploitation of agricultural villages through taxation constituted a far more efficient and lucrative system than the old one of plunder and extermination. That the state was born in a brutal fashion is confirmed by every historical and anthropological research. On this matter, Friedrich Nietzsche wrote:

a race of conquerors which, aggressive, powerful and organized, pounces with its most horrid claws on an unsuspecting population, one which in numbers may be tremendously superior, but is still undisciplined and nomadic. Such is the origin of the ‘"state."

According to Sociologist Lester Ward,

The state as distinct from tribal organization begins with the conquest of one race by another.

Similarly, wrote the Austrian general and sociologist Gustav Ratzenhofer,

Violence is the agent which has created the state.

and as Franz Oppenheimer observed,

Everywhere we find some warlike tribe breaking through the boundaries of some less warlike people, settling down as nobility, and founding its state.

The concept of State above mentioned is meant in a sociological, rather than in a political sense. In the field of political science one intends the state to be a particular type of political organization that emerged in Europe at the end of the middle ages. According to the more generic definition used in sociology, instead, one talks about the existence of a state whenever society is divided in two distinct classes: a productive majority who gets by through the employment of economic means (production and exchange) and a ruling elite who gets by through the employment of political means (taxation and expropriation). The typical order of a state and the inevitable division in social classes which defines it emerge simultaneously, according to sociologist Franz Oppenheimer, in that very crucial historical instant in which for the first time the conqueror decides to save the conquered from immediate annihilation in order to exploit him permanently in the years to come.

The Struggle between Merchants and Bureaucrats Begins

From that moment onwards, writes the anthropologist Marvin Harris, producers have precipitated in a dramatic condition of servitude from which they have never really escaped:

For the first time there appeared on earth kings, dictators, high priests, emperors, prime ministers, presidents, governors, mayors, generals, admirals, police chiefs, judges, lawyers, and jailers, along with dungeons, jails, penitentiaries, and concentration camps. Under the tutelage of the state, human beings learned for the first time how to bow, grove, kneel and kowtow. In many ways, the rise of the state was the descent of the world from freedom to slavery.

The birth of the state was then accompanied by a real class struggle between producers and bureaucrats, a struggle which to a great extent remains alive to this day: while the first group desires to keep the fruits of its own labor, the second aspires to come into possession of those fruits through force and inaugurate a system of rule and exploitation. The eternal conflict throughout history is therefore that between men of freedom and men of administration, between social power on the one hand and state power on the other. As will be illustrated in the examples that follow, the progress or decadence of civilization are determined by the trend of this struggle.

Societies of Bureaucrats

1. The Ancient Empires
Since the early days of recorded History, the great majority of people lived miserably under the most tyrannical empires (the Babylonian, Egyptian, Chinese, Persian, Indian, Late-Roman, Arab, ottoman, Incas, Aztec) which extended themselves across large areas. In these ancient empires progress was so slow as to go unnoticed and the reasons for such stagnation were the following: Political power in those empires did not have any need to innovate, rather innovation was fought due to the fear that new discoveries would disrupt the established system; the bureaucratic and military elite that ruled used to come into possession, through force, of every surplus of production repressing every small sign of resistance; every autonomous social force was nipped in the bud and nothing escaped the control of the despot who was the absolute owner of all goods of the reign and of all its inhabitants; finally the people were submitted not only to a confiscatory level of taxation but to forced labor for the construction of grandiose public works such as canals, city walls, pyramids and buildings.
These ancient empires were agglomerates of illiterate peasants who toiled from the morning to the night just to be able to provide for themselves vegetables without protein. Not surprisingly, they were not in a much better condition than their oxen, and at the same time they were completely subjugated to the commands of their superiors who could read and who were the only ones possessing the right of manufacturing and using war like instruments. The fact that these societies have lasted thousands of years sounds like a severe warning: there is no intrinsic force to human activities that can assure material and moral progress.
2. A Perfect Example: the Chinese Empire
The millenary empire of China can serve as a typical example of a closed society, that was completely dominated by a cast of intellectuals and bureaucrats. As the greatest historian of ancient China, Etienne Balasz, has explained, the Confucian state was decisively totalitarian. No private initiative was allowed and no expression of the public life could escape official regulation: clothing, private and public constructions, music, parties, and even the colors that one was allowed to wear were subject to the rigid control of the state. In addition, there were prescriptions of birth and death and the state surveilled with terrifying attention every step of its subjects, from the cradle to the grave.
China in the days of the mandarins was an environment of changeless patterns, routines, characterized by traditionalism and immobility and therefore suspicious towards any possible kind of innovation and initiative, let alone free research and entrepreneurship. The ingenious and inventive spirit that was not foreign to the Chinese would have doubtlessly enriched the country, but it was the state that impeded the country to embark upon an age of technical progress and economic development, by crushing every kind of private initiative just because it was thought to collide with the interests of the bureaucratic cast.
It is not surprising that throughout Chinese history technical and economic progress have coincided only with those phases of relative weakness of the central power, like in the period of the warring states (453-221 B.C), probably the richest and most brilliant of all Chinese history, or the period of the three reigns (220-280 A.D.). Even after 907 A.D. when the Tang dynasty collapsed and the period of endless wars for supremacy began, during the so-called period of the five dynasties and the five reigns, the country experimented a striking explosion of inventions and prosperity due to the lack of centralization.
3. A Modern Case: The Soviet Union
In our epoch, communist regimes have brought back, albeit in a bloodier form, the totalitarian control that was so characteristic of the ancient oriental despotisms. Marxist ideology with its radical hostility towards property, commerce and free enterprise, revealed itself to be the most suitable paradigm in satisfying the will to power of the parasitic classes. In every country where the political and bureaucratic classes have sought to destroy the productive sector, they have found it useful to uphold Marxist ideology as their mantra.
The extreme exploitation perpetrated by the communist bureaucracies against the productive classes, which in the case of the kulaks reached the stage of physical extermination, was denounced by Lev Trotzkij, Ante Ciliga, Milovan Gilas, Mihail Voslensky. Yet the most penetrating and most insightful analysis of the bureaucratic exploitation that took place under communism has come to us from the works of Bruno Rizzi, an ingenious, self-taught Italian scholar. Rizzi was arguably the first to comprehend that a parasitic class of bureaucrats had taken power in 1917, composed as he wrote of “state officials, policeman, writers, union mandarins and all the communist party in block” that kept plundering the workers in the most ferocious way ever to be seen.
The post-1917 Soviet State, Rizzi noted, had been drastically inflated. The bureaucrats with their respective families constituted a mass of 15 million people who had stuck to the upper levels of the administrative throne with the only job of sucking a great portion of the national product. In the Kolchoz, the state owned agricultural enterprises, only 37% of production remained in the hands of the workers, while the remaining went to the state who then turned it over to the bureaucracy. State functionaries, in addition, continuously made deals at the expense of ordinary citizens by fixing wages and prices for various products and by treating the “workers” as its “forced clients”, obliging them to acquire products in state owned stores with a markup that at times reached 120%.
Officials of the state in addition, obtained notable advantages by being able to destine many of the accumulated capital funds, set aside for the construction of public works, in projects that went to the exclusive benefit of their own class, a lucid example being the headquarters of the bureaucracy, the sumptuous 360 meter’s tall house of the soviets (the workers, meanwhile, had to cope with a home that was 5 meters squared on average). By having total control of the economic levers, guaranteed by an extremely invasive police state in the USSR, the bureaucracy was really omnipotent and every action on her part was aimed at maintaining its political hegemony and its well-established economic privileges.

Societies of Merchants

1. The Phoenicians and the Greeks
Around the year 1200 B.C. the empires of the bronze age (the Egyptian, Minoan, Mycenaean, Hittite and Assyrian empires) succumbed into a period of stagnation caused by the progressive suffocation of productive and mercantile activities. The crisis of the central powers gave freedom of action to certain commercial people in the Middle East coming mainly from modern Lebanon, who, with their ships, began to sail the sea transporting goods and products of any kind. For the first time in history one saw the development, in the Mediterranean basin, of a catallactic system based on an integrated division of labor where markets and ports began to grow up to the point of becoming established cities. Commerce soon became the fly wheel of innovation: The Philistines invented iron; the Canaanites the alphabet; the Phoenicians discovered glass and at the same time improved boats, navigational knowledge and accounting systems.
“In truth, writes Matt Ridley, was there ever a more admirable people than the Phoenicians?” Those ancient merchants connected not only the entire Mediterranean, but also the accessible coasts of the Atlantic, the Red Sea and the overland routes of Asia, and yet they never had an emperor and never participated in a memorable battle. In order to prosper the Phoenician cities of Tyre, Byblos, Sidon, Carthage and Gadir did not feel the need of uniting into a single political entity, and therefore never went beyond a very modest federation.
In the words of Matt Ridley:

The Phoenician diaspora is one of the great untold stories of history- untold because Tyre and its books were so utterly destroyed by thugs like Nebuchadnezzar, Cyrus and Alexander, and Carthage by the Scipios, so the story comes to us only through snippets from snobbish and envious neighbors.

Even the Greek miracle confirms the important lesson, first formulated by David Hume, that political fragmentation, by putting a break on the extension of political power, is the real ally of economic progress. The extraordinary dissemination of prosperity and of Greek culture between the years 600 B.C. and 300 B.C presents us with a development similar to that of the Phoenician cities: Miletus, Athens and the other hundred independent cities of Magna Grecia, enriched themselves through the extension of commercial relationships without being part of a single empire. Furthermore, the circulation of ideas that the increased trade made possible, gave birth to the grandiose discoveries of the time. The lesson of the Greek miracle is the following: It is always the merchant who opens the door to the philosopher, not the other way around, by enriching the city and opening it, through foreign trade, to new ideas. Unfortunately, this period of Greek enlightenment died out as soon as new empires began to ascend: first the Athenian, then the Macedonian, and ultimately the Roman.
2. The Communes of Medieval Europe
The fall of the Roman Empire in 476 A.D. represented the luckiest event in the history of the old continent. Thanks to circumstances that one could describe as miraculous, Europe never returned to being a unified political entity, after the repeated failures of Charlemagne and the Germanic emperors. The lack of political unity enabled a widespread social experimentation that unleashed into a creative competition between thousands of independent political units of which the byproduct was rapid economic, social and cultural progress. The weakness of the central authority favored the cities which became the leaders in the 11^th century of a political and commercial revolution that would mark the European institutional setting for centuries to come. In fights that lasted even hundreds of years, the inhabitants of the cities escaped the dominion of emperors and feudal lords, rebuilding society through self-government from the bottom up. The inhabitants of these communes oriented themselves toward the economy and not toward politics because, unlike those of the ancient cities they lacked a great mass of slaves at their disposal: they found themselves forced to abandon predation (which had been the common means of increasing one’s own well-being up to those days) and engage in manufacturing activities and commerce. In this manner, the medieval bourgeois extended the market economy beyond the limits of the feudal world and by the year 1200 A.D. Europe was a region inundated by working men, farmers, entrepreneurs, artisans and merchants who exchanged the fruits of their own labor at the many annual fairs: this was a very different scenario from the one that prevailed in other areas of the civilized world, where the masses continued to be subjugated by omnipotent imperial bureaucracies.
3. 3 Modern Cases: Holland, England, and the United States
In the 17^th century the incredible success of the little country of Holland and the disastrous ruin of the Spanish empire, stands to confirm, in the eyes of contemporary historians, the superiority of the commercial society over the bureaucratic one. In Spain, during those years, a new anti-bourgeois ideology had developed among its elite, an ideology that saw with great scorn and contempt the accumulation of wealth through value enhancing work. The Spanish bureaucratic state as a consequence began to be directed by men who were completely foreign to the world of economics and business and who pushed the country into adopting economic policies that played out to be a disaster for commerce and industry.
In the United Provinces at the time, matters were different. Laissez-faire was a consolidated and fully legitimized praxis, and the success that Holland derived from the adoption of free trade caused a mix of admiration, amazement, and envy all around Europe. In 1670, the Dutch were by far the biggest players in the international trade arena to the point that their merchant navy was bigger and mightier than those of France, Scotland, Germany, Spain and Portugal put together. Holland, in the 1600s was a laboratory in which one could observe and study the capitalistic and bourgeois society in its purest form. Its example showed the path toward self-propelled development: ignoring the Dutch reality meant condemning oneself to continued stagnation.
The English were the first to understand how the prosperity of Holland was closely connected to the liberty that individuals and economic agents enjoyed over there, and it was by imitating the Dutch, that they began to build the basis of their world supremacy. In the 19^th century then, England adopted unilaterally a series of measures that opened its harbors to the rest of the globe and such a drastic and unprecedented move provoked a reduction of custom tariffs in all major countries, via a competitive process. Finally, humanity was able to experience the birth of a free and authentic market economy that operated internationally: a Phoenician experiment on a planetary scale. Each country that participated in this international division of labor benefited, and this is shown by the fact that the world economy throughout this period grew by 3 times. But It was in the two most free-market countries, namely England and the United States, where economic growth surpassed by far that of the rest of the world: from 1820 to 1913 the gross domestic product of England increased six-fold, while the American one grew by 41 times.
Decisive for the success of Victorian England and the young United States, according to economic historian Deirdre McCloskey, was the consolidation at the social level in those years of a bourgeois mentality that praised and honored the common man who created his fortune through work, commitment, creativity and ingenuity. Nothing probably better symbolizes the cultural victory of the productive classes of society than the statue placed in Westminster abbey in 1825 in honor of James Watt, inventor of the steam engine.

For a Libertarian Historiography

One can therefore see how the great intellectual and material creations that have elevated human civilization through the ages have not been the product of bureaucrats, but of producers, merchants, entrepreneurs, some of whom have been obscured, exploited, mistreated and others who have simply been forgotten. The protagonists of human development are not the emperors, kings, presidents, ministers or generals who most often appear in our conventional history books, but the farmers, artisans, entrepreneurs and merchants who improved the many arts, techniques and professions. The bravest among these have defended freedom and civilization arms in hand, refusing to be subjugated by the powers of their day.
The common thread in human history is the endless conflict between tax payers and tax consumers which brings us to the following conclusion: Libertarian scholars should narrate historical events through the lenses of those men who represented the ideas of freedom, not those of power. Civilization, ought to be remembered, has been edified by those men who have resisted power, not by those who have exercised it.

Guglielmo Piombini is an Italian journalist who has collaborated in various magazines and newspapers including Liberal, il Domenicale, and Elite.  His articles have also appeared at Ludwig von Mises Italia. Piombini is also the founder of Tramedoro: the online platform that provides a detailed overview of every major classic of the social sciences. Specializing in medieval institutions he is the author of the book “Prima dello Stato, il medioevo della liberta” (“Before the State: The Middle Ages Of Liberty”).