From: J. Adam Tooze <jat27@cam.ac.uk>

Subject: FORUM: Do we need a new economic history of Germany?

Date: Thursday, June 21, 2006

 

Economic history certainly does offer at least three master narratives around which to organize the narration of a grand sweep of history from the early modern to the modern period and indeed over a longer period than that. There are undoubtedly more interpretive options on offer. But at the risk of absurd caricature let me attempt to summarize just three:

 

Firstly, the narrative of the escape from the Malthusian trap: The story of the truly staggering explosion in both Europe 's and the world's population achieved not with stagnating or declining per capita incomes, but with a simultaneous and enormous increase in the average level of income. This is a story to which recent histories of consumption undoubtedly contribute. But it is pre-eminently a story of production, labor and technology. The result has been an unprecedented standard of living in Europe and its "offshoots", but also unprecedented levels of international inequality. Nor should one forget that the story of economic growth is also of course the story of the increase in our destructive power. And it is furthermore conditional on the unprecedented mobilization of natural resources the consequences of which confront us today in the environmental problematic.

 

Secondly, there is the narrative for which we may use "globalization" as a perhaps euphemistic short-hand: This is the story of the worldwide interactions created through global flows of commodities, capital, labor and information. In many cases these interactions were of course accompanied by violence, sometimes extreme violence, much of it directed by states. Whether political, cultural or economic interactions had priority in early globalization is a question recently reopened by Chris Bayly.[1] However, there can certainly be no question that by the 19th century, the dynamic of global capitalism had become dominant. Hobsbawm's "age of extremes" (1914-1990) superimposed a powerful dynamic of global military confrontation. After the end of the cold war it remains an open question how the balance between the increasingly multipolar world economy and the remarkable dominance of the United States as a military power will play out.

 

More heterogeneous than either of the stories sketched above are a cluster of theories about the interaction within capitalist societies between economic development and political development. One such model which has recently attracted some attention is the effort to understand the relationship between the development of public credit and parliamentary institutions, a model which has been fruitfully applied to British, French and American history first by Douglass North and has since been popularized by Niall Ferguson, James Macdonald and others.[2] For interpretations of twentieth-century economic crises a model that has attracted much attention, particularly through the influence of Barry Eichengreen's work, is the so-called Trilemma. This seeks to analyze the mounting tension from the late nineteenth century onwards between growing popular participation in politics (democratization for short) and two of the most basic institutional structures of nineteenth-century capitalism: the international gold standard and the unfettered mobility of capital.[3] Largely through Eichengreen's inspiration this has become a powerful tool for understanding both the crises of the interwar period and Europe 's subsequent development towards monetary union at the end of the twentieth century. Finally, models of societal modernization remain full of problems but also virtually impossible to dispense with. And in the hands of a practitioner such as Charles Maier they can become a useful tool for narrating both the history of interwar Europe and the crises of the late twentieth century, above all in Eastern Europe.

 

The question begged so far is how these three narratives relate to German history in particular. But before turning briefly to that question it is worth driving home a further point. These three research agendas are not merely topics of scholarly interest. They are attempts to provide a historical backdrop against which to grapple with some of the defining themes of global politics today -- environmental challenges, global inequality and poverty, and the potential realignment of power between Europe , the United States and the emerging superpowers of Asia . So pressing are these issues and so general is the interest in them that historians who have taken up one or other of these themes have found themselves with surprisingly wide audiences stretching from the broadsheet press, via the IMF and the World Bank, to the more select but no less desirable readership of the New Left Review or Le Monde Diplomatique. Furthermore, so pressing are these issues and so imperative is the need for historical orientation that whether or not scholars in history departments in Europe and America choose to address themselves to these issues, they will be taken up by thinkers and writers in other locations inside and outside the academy. Indeed, one cannot help but worry that a failure by historians to engage with these issues will lead to their increasing perception as remote from the most pressing concerns of our day, and not only the concerns of those with power and money. My point here is certainly not to demand absolute conformity to some imaginary "global agenda." And there is no question that talking to institutions like the IMF comes at a price since they dictate the terms on which such communication takes place. My more basic point is simply that in addressing the importance of economic history it would be na´ve for historians to imagine that their intellectual choices are entirely unconstrained by the world around them and that they can pick or choose as they like. The hierarchies of status and value prevailing in particular types of academic institutions may be a very poor guide to what matters to potential interlocutors beyond the sphere of H-German. Economic history matters, whether humanities scholars like it or not.

 

All three of the general approaches sketched above clearly have some purchase on German history in particular. As very general models, however, they clearly deemphasize the particular in Germany 's experience and place that country as one national case alongside a variety of others. Some practitioners of German history will welcome this opening to wider horizons. And beyond the general imperative to think global there may be particularly German reasons for wishing for such an opening. Perhaps the German historiography, without the obvious imperative of a global empire to deal with, has been too parochial for too long. Others on the other hand may fear dilution. It is worth considering very briefly therefore what the specific pay- off for German historians might be from adopting some of the perspectives offered above. I will focus on the first and third approaches since the theme of globalization has been covered so extensively recently by others better qualified than myself, notably Sebastian Conrad.[4]

 

Was there anything peculiar about Germany 's experience of economic growth? This seems to me to be a question that though obvious and once a classic topic for student essays is in fact in need of reassessment. Certainly in many accounts of Germany 's uneven modernization there was a strong assumption that the modernity of its economy at least was not in question. Indeed, in some interpretations of Europe 's economic development, claims were made for a peculiar sophistication of the German economy. And yet from a vantage point at the end of the twentieth century Germany 's long-run economic trajectory surely looks less distinctive than previously thought. During the era of steel, chemicals and heavy electrical engineering German industrialism was no doubt surrounded by a formidable aura. And it certainly was a considerable industrial competitor. However, even then these dramatic elements of industrialism formed only a part of economic life in Germany . And their status as defining elements of economic modernity was not set to last. Certainly insofar as the post- war Wirtschaftswunder is concerned, the moment of Germany 's greatest economic triumph was precisely the moment at which its experience was in fact least distinctive and was in fact exceeded in its drama by what was happening in Italy and France , not to mention Japan . This on the one hand opens up the possibility for new descriptions of the relationship between economic capacity and political ambition, as attempted in my recent book on Nazi Germany. Furthermore, it also opens the door to a thorough-going historicization of our previous perceptions of German economic development, which goes further even than that attempted, for instance, by Gary Herrigel.[5]

 

Turning to the third theme above: Of the various literatures discussed here, there is no question that the work on monetary policy, exchange rates, capital mobility and democracy is amongst the most technically forbidding. Albrecht Ritschl's recent habilitation masterpiece on the crisis of the Weimar Republic , which makes use of the latest time series techniques, taxes even those with a fairly solid grounding in economics.[6] However, there is no doubt that this literature has enormously expanded our understanding of the Weimar crisis. Particularly because it builds upon one of the most productive debates in recent German historiography: that surrounding Knut Borchardt's controversial re-evaluation of the options open to Chancellor Bruening during the 1930s crisis. Whereas the initial phase of the Borchardt debate was indeed fairly parochial and was fought out amidst the ruins of what used to be called the "postwar Keynesian consensus", what the work by Eichengreen and Ritschl has done is to insert the German story into a truly internationalized historiography of the Great Depression, to match that pushed forward by Gerald Feldman and others on the earlier period of the hyperinflation. Furthermore, as Eichengreen has demonstrated the same basic analytical toolkit can also be applied to the reconstructed fixed exchange rate system of the "Bretton Woods" era.[7] Technical this material may be. But it is undeniably important in providing one of the most powerful analytical frameworks for understanding the crises that convulsed Germany 's political economy up to 1945 and the period of remarkable stability and prosperity that followed. Furthermore, it will help in future to illuminate the end of Germany 's separate economic history in the process of convergence around European monetary union that followed in the wake of the break up of Bretton Woods in the early 1970s. This will provide something more than merely a useful context for our interpretation of this final phase of the twentieth century.

 

From the above I hope that it is clear that I consider a transnational perspective nothing but invigorating. I will therefore move from the editor's first to the third group of questions concerning training. It is certainly possible to construct a reading list of economic theory greats along the lines suggested by the editors and sketched by Rubin. And if the purpose is to introduce students to economic theory as a body of social theory in its historical context such a course will certainly serve. However, if the aim is to equip students to read the Economic History Review or the Journal of Economic History, let alone to contribute to them, then such an approach would be at best inefficient and quite possibly counterproductive. It would also fail to convey one of the most fundamental differences between economics as a discipline and the human sciences more familiar to most historians. Economics, understanding itself as an ever-advancing science along the lines of biology or physics, does not use "great books" as major reference points. The frontier of knowledge is accessed above all through the mass of grey literature, working papers, etc., which proliferate in an abundance unknown to historians. Knowledge moves on too fast in this competitive world for people to wait for the belated appearance of refereed journal articles. Filling the space in behind is the well-developed world of textbooks and a multi-tiered structure of taught courses for undergraduates and graduates. The level of mathematical expectation varies with sophistication of the course. But, again, most economics faculties have well developed courses to provide the necessary mathematical skills. If one is serious about acquiring a real facility in economics then there is simply nothing for it but to pick one's way through these offerings, even if this does involve an occasional outing to the netherworld of the applied economics building. Realistically, learning even one sub set of economics or econometrics therefore requires a commitment of time and effort that is more akin to learning a foreign language than attending a great books course even at graduate level. On the other hand, if one is actually serious about understanding an author as complex as Michel Foucault then one is also being unrealistic if one imagines that one can do so without an extended intellectual detour through Hegel, Nietzsche and Heidegger, a course of study that is hardly less arduous. In any case, as European historians we surely consider the acquisition and development of language skills as a reasonable expectation of both our students and ourselves. Certainly, the provision that used to exist at least in some American graduate schools of allowing a language requirement to be dropped in favor of a training element in quantitative methods, seems a very reasonable compromise.

 

My aim here is not a counsel of perfection, but to sound a note of realism. It is unrealistic to imagine that one can impart a familiarity with the "real existing" world of economics through a great books course. And yes a serious study of economic problems does require solid quantitative foundations, not necessarily in the most advanced branches of econometrics, but certainly in basic quantitative methods. So, the difficulties of such a dialogue are real. But they are certainly not insurmountable. In the UK and perhaps to a lesser extent in Germany economic history is routinely taught to large numbers of undergraduates in both economics and history faculties. A number of Universities in the UK offer one or two year M. Phil. courses in economic and social history that every year attract large numbers of students from all over the world. They take undergraduate historians with little or no background in either mathematics or economics and turn them into competent economic historians or at least historians who are unafraid of a dialogue with economists and hard-core economic historians. Those looking for ideas about how to teach quantitative methods may wish to consult the website of Joerg Baten at Tuebingen, which presents a number of interesting pedagogic strategies in an extremely pragmatic spirit. As a textbook one might consider Charles H. Feinstein and Mark Thomas's Making History Count.[8]

 

[1]. See, for example, C. A. Bayly, The Birth of the Modern World: Global Connections and Comparisons (Malden , MA : Blackwell, 2004).

 

[2]. Douglass C. North, Structure and Change in Economic History (New York: Norton, 1981); Niall Ferguson, The Cash Nexus: Money and Power in the Modern World, 1700-2000 (New York: Basic Books, 2001); James Macdonald, A Free Nation Deep in Debt: The Financial Roots of Democracy (New York: Farrar, Straus and Giroux, 2003).

 

[3]. Barry Eichengreen, Golden Fetters: The Gold Standard and the Great Depression, 1919-1939 ( New York: Oxford University Press, 1992); Eichengreen, Globalizing Capital: A History of the International Monetary System ( Princeton: Princeton University Press, 1996).

 

[4]. Sebastian Conrad, Globalisierung und Nation im deutschen Kaiserreich (Munich: C. H. Beck, 2006).

 

[5]. Gary Herrigel, Industrial Constructions: The Sources of German Industrial Power (New York: Cambridge University Press, 1996).

 

[6]. Albrecht Ritschl, Deutschlands Krise und Konjunktur 1924-1934. Binnenkonjunktur, Auslandsverschuldung und Reparationsproblem zwischen Dawes-Plan und Transfersperre (Berlin: Akademie Verlag, 2002).

 

[7]. Barry Eichengreen, Global Imbalances and the Lessons of Bretton Woods (Cambridge: MIT Press, 2007).

 

[8]. Charles H. Feinstein and Mark Thomas, Making History Count: A Primer in Quantitative Methods for Historians (New York: Cambridge University Press, 2002).

 

 

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