History helps the dismal science

The appearance of a new journal on European economic history suggests that all is not gloom and despair in a subject that has experienced institutional decay within Britain over the past decade. In the 1960s, separate departments of economic history were created and flourished; in the 1980s and 1990s, they have lost their separate identity in larger schools of history.

Last summer, the Economic History Society called a meeting to discuss the seeming crisis created by a sudden spate of mergers at a number of universities, including the long-established departments at Hull, Liverpool and Birmingham. Not everyone was convinced that it was a matter of regret, for many economic historians flourished within departments of history at Manchester, Cambridge or University College London. Dialogue prevented dogmatic adherence to simple economic assumptions about the past. Indeed, the Economic History Society called a second conference on the renaissance of economic history and, here and there around the historical world, some historians have - sotto voce and cautiously - uttered the heretical thought that a little historical materialism would not come amiss as an antidote to the linguistic turn and postmodernism.

The situation in continental European universities has not reflected the British crisis of identity. There has been greater confidence and optimism, in part reflected in the creation of the Ester network, a European-wide graduate training programme in economic history that brings together research students for intensive short courses. As the editors of the European Review of Economic History remark, growing economic and political cooperation between European countries has been mirrored by "a growing cohesion within the academic community", and economic historians have provided a lead to their fellow historians. The European Historical Economics Society provided a new forum for European-wide academic interchange, and the notion of a new journal emerged in 1994. Meanwhile, a new European society for "social science history" was created, which is about to hold its second major conference. One defining feature of the renaissance was a Europe-wide intellectual community, and this is now being recreated in a way that Erasmus could recognise.

The academic community of Renaissance Europe rested on humanism in the place of scholasticism. The basis of this new Europe-wide cohesion is provided by a common adherence to the rigorous standards and theoretical frameworks of economics. Cynics might protest that the result is a modern form of scholasticism - an arcane discussion for those who accept a particular set of assumptions, which outsiders find incomprehensible and puzzling. The editorial introduction in the Review does express the hope that it will welcome all approaches and methodologies, offering a "genuinely open forum" to any type of historian provided that a clear analytical framework is adopted.

In practice, the papers in the first volume adopt a fairly narrow range of approaches and concentrate on the 19th and 20th centuries. Only Jari Ojala, in his paper on Finnish merchant networks with Europe in the 18th and 19th centuries, covers the period before 1800, and only he starts to consider social factors of kinship and interpersonal networks. Most of the other papers adopt techniques drawn from econometrics, and many historians will be intimidated by the algebra and concerned by the underlying assumptions about rationality and motivation. But they should persevere: there are important insights in these articles that other historians will need to consider. Economic historians will benefit from closer association with other forms of history, but the intellectual traffic should not be one way.

The major theme running through the first volume of the Review is convergence: how far, and why, did European economies converge in labour productivity, real wages and gross domestic product per capita? The measurement of convergence is a contentious issue, for a similar level of per capita GDP could mask wide variations in life expectancy or leisure. Nick Crafts attempts to add these variables to produce a Human Development Index from 1870. As he would be the first to admit, his measures pose conceptual difficulties and are very preliminary, so it is not surprising that other authors focus on more traditional measures.

The most wide-ranging paper, with the greatest implications for future research, is the tour of the European periphery by Kevin O'Rourke and Jeffrey Williamson. They ask how far convergence between 1870 and 1913 can be explained by industrialisation, schooling, trade policy, emigration and capital flows. These variables can be divided into those that are global and have a potential impact on everyone, and those that are idiosyncratic and country specific. There is no simple, tidy explanation: as they comment, "it might be of some value to think a little less like an economist and a little more like a historian". Spain and Portugal failed to converge, and they tried to set themselves apart from the rest of Europe through their trade policy and isolation from international factor markets. But another major element in their relative deterioration was bad schooling. However, schooling cannot explain the pattern in other countries. In Scandinavia it seems that convergence was the result of industrialisation and large capital inflows. In Italy and, above all, Ireland, convergence was the result of mass migration. In a joint paper with Alan Taylor, Williamson suggests that a large part of the dramatic convergence in labour productivity and real wages between 1870 and 1913 was the result of high mass migration, and the virtual cessation of convergence between the wars was, in part, the result of barriers to migration. Cormac O'Grada and O'Rourke apply this insight to Ireland, where emigration after the famine led to a convergence of living standards within Ireland and between Ireland and the rest of the world.

The literature on trade and tariff policy is huge, and Antoni Estevadeordal provides a meticulous measure of the level of protection of different sectors for a range of European countries in 1913. However, O'Rourke and Williamson conclude that the choice between free trade and protection did not matter much.

A somewhat different view emerges from an important paper by S.N. Broadberry on the convergence between British and German labour productivity between 1870 and 1990. In manufacturing, Germany attained British levels of productivity by the late 19th century; for the economy as a whole, Germany did not overtake Britain until the 1960s. Germany's convergence with Britain was not the result of a deterioration in the performance of manufacturing industry and the transfer of technology, as many historians have argued. Rather, it was the result of the performance of agriculture and services: Germany had more workers in agriculture for a longer time, and productivity in agriculture and services was far below British levels. The explanation was, in part, agricultural protection in Germany and the success of British "merchant capitalism".

Although O'Rourke and Williamson are very tentative and provisional in their findings, they are highly suggestive for historians. Why were some countries able to exploit the benefits of mass emigration more than others or to receive massive inflows of foreign capital? Why did some countries fail to provide schooling? Why was investment in public health measures in the mid-19th century low, so that the Human Development Index was affected by high mortality? Why was the service sector in Britain able to achieve such high levels of productivity and keep its lead for so long? As O'Rourke and Williamson admit, the answer to many of these questions remains an "enduring puzzle" and they even have recourse to "cultural mysteries". Their calculations suggest a massive agenda for research for all types of historians. They have reframed the question by turning attention from the debates over trade policy and the performance of industry that have dominated the literature. Instead, they focus on a comparison between the willingness of countries to invest in schooling and public health, their ability to tap capital imports or participate in mass migration and the importance of productivity in the services as well as manufacturing. The solutions might be found in property rights and legal codes that encouraged or blocked capital flows, in strategies of coping with poverty that influenced decisions to migrate, and in public choices over investment in education or health.

The virtues of the articles in this first volume of European Review of Economic History are precision and modesty: they pose questions clearly, and turn to political, social and cultural historians for assistance in providing answers. It is for them to rise to the challenge.

Martin Daunton is professor of economic history, University of Cambridge.