I've now read the paper by Link & @NMaggor forthcoming in Past & Present, "The United States as a Developing
Nation: Revisiting the Peculiarities of American History". Ofc I have some criticisms! but it's very interesting & you should read it (why the no-working-paper norm???)https://twitter.com/lewisdefrates/status/1184175893603856384 …
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Once again I applaud the effort to ‘provincialise’ US economic history & situate it in global comparative perspective. I particularly liked the motivating comparison of the USA & Argentina which you don't see much of. Normally Argentina is compared with Australia and New Zealand.
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But is Argentina the best comparison? Because surely the developmental experience most comparable with the USA’s was Canada’s and Australia’s. The latter two did not even become industrial exporters, but industrialised nevertheless!
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Pre-revolutionary Russia (as a 'failed' case) is another frontier economy with natural resources one might have profitably compared the USA with. Russia is also more populous than the other non-USA frontier economies, and also has a history of unfree labour.
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Link & Maggor want to conceptualise the “American developmental state” along the lines of the “East Asian developmental state” on which there is so much literature in political economy of development.
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L&M (correctly) see the USA as a primary exporter in the 19th century and therefore as part of the global agrarian periphery. So the problem is how the USA escaped this role as the supplier of cash crops in the global division of labour, unlike China or India in the 19th century
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(1) When it comes to East Asia, one can make several definitive observations: (a) at the beginning of the ‘developmental’ period, East Asia lacked the manufacturing knowledge to make industrial goods for the world market;
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(b) at the beginning of the period, they also lacked skilled workers; (c) the very low wages did not compensate for the low productivity when they began the industrialisation process;
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but eventually (d) East Asian countries converged with the rich countries by acquiring / learning / developing technical processes, and raising productivity levels
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**** BUT BUT BUT **** (2) US manufacturing *may* have *always* been as productive as British manufacturing from the early 19th century. There’s some evidence that perhaps it was even *more* productive than the UK early on. Evidence on this is not completely conclusive but...
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And the USA seems to have always had as much technical knowledge and skilled labour as the UK — and possibly more, since universal schooling came earlier to the USA than the UK.
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*** VERY IMPORTANT *** What made Britain competitive in the 19th century (vis-à-vis the USA) was that its labour and raw material costs were low!!! and American labour & raw material costs were too high!
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{ This is of course well known and one might even say obvious from the Habakkuk debate. }
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Today we associate low labour costs with the less industrialised country, but in the 19th c. the USA was the high wage yet less industrialised country and the UK the low wage but more industrialised country. (The UK was the high wage country compared with the rest of the world.)
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naturally, this is the precise opposite of the East Asia pattern described earlier.
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(3) In such a situation, is there really a puzzle of US industrialisation, as Link and Maggor claim? As long as tariffs and/or physical distance raised the price of British goods, it was profitable to manufacture industrial goods in America.
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If American geography and/or American federal commercial policy prevented cheap-labour British industry from wiping out expensive-labour American industries, what's exactly the puzzle?
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Link & Maggor mention tariffs just once in their paper, in order to say Latin America also used tariffs, but did not industrialise as rapidly as the USA. But LA also lacked mechanics, engineers, & other skilled workers compared with the USA. Didn't have as much as schooling early
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By all means, do perform an analysis of the political economy of the traditionally identified policies promoting US industrialisation — tariffs, education, infrastructure, transportation, resource exploitation, territorial expansion, and banking. (
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{ although US banking was primitive and ‘backward’ till the 20th century, by European standards. }
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But I don’t think there is anything particuarly puzzling about the USA when it comes to the political economy of those policies? The European catch-up industrialisers did the same thing, except for the US-specific frontier-relevant policies (expansion/immigration/settlement).
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(5) I’m also sceptical that talking about an “American developmental state” in the same vein as the East Asian developmental state is particularly useful (NB: DeLong and Cohen have made the same comparison )
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EAsia had an industrial planning bureaucracy picking industries to move into & creating domestic supply chains; forcing companies to meet export targets; financial repress to suppress consumption & raise investment; & controlled foreign investment to maximise technical knowledge
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YET there was NOTHING like that in the USA during the 19th century!
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Interestingly, Link & Maggor argue that individual American states acted as mini developmental states. In fact that’s their novel contribution. In some parts of their paper, they come close to arguing each state pursued its own industrial policy with regard to ‘domestic’ firms!!
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They do actually state explicitly that the State of Michigan“state policies tipped the scale in favour of local producers”. But the point is not elaborated — I suppose that’s their research for the future!
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NB: I'm deliberately avoiding the tariffs-&-US-industrialisation debate. I mention them only because Link & Maggor barely do!! (W/o tariffs the USA might have specialised in very different industries from the UK & industrialised nevertheless. Or maybe not)https://twitter.com/pseudoerasmus/status/1212023284595904519 …
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