2014-2015 LSE-Economic-History-Review PDF

The LSE Economic History
Review 2014/2015
A collection of social and economic history essays
!
2014/2015 Editorial Board

Editors-in-Chief:
Jay Pan
Shem Ng
Designer:
Yash Lad
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LSE Economic History Review
Letter from the Editors

Dear Readers,
Welcome to the first edition of the LSE Economic History Review. As the LSESU
Economic History Society has gone through somewhat of a renaissance in the past
year, we decided that it would be appropriate to remodel the old LSESU Economic
History Society Student Journal. However, the purpose of our new Journal remains
the same: to showcase the outstanding works on social and economic history by LSE
students.
In keeping with LSEs international outlook, this journal seeks to engage in the
discourse regarding the making of the modern world. The works here take us around
the globe.
We start off in Britain. Bethany Bloomers winning submission compares the gender
neutrality of the business cycle in London and Blackburn during the interwar period.
An example of outstanding research, the Head of the LSE Economic History
Department, Max Schulze comments that her work addresses an important question
in economic history, reflects an excellent understanding of the historical context, and
displays critical engagement with source materials. Moreover, it emphasises the
importance of considering regional differences when trying to understand a
significant social issue such as unemployment.
Crossing the Atlantic, Eveline Smeets discusses the implication of Americas lack of
expansionary fiscal policy in the 1930s. In this article, Eveline skillfully argues for the
importance of Keynesian economics in a depressed economy by highlighting the
failure of the New Deal. Her argument is undoubtedly a direct rebuke of todays
debate on austerity, and one worth considering.
Our next three papers shift the focus to Asia.
Rui Dings paper examines the sources of agricultural growth in Japan during the late
nineteenth and early twentieth centuries. Her work should be of interest to anyone
concerned with development and modernisation. She raises pertinent issues regarding
growth accounting and argues that effective dissemination of information and
protectionist policies aided agricultural growth in the country.
Chris Pearce examines the modernisation of Asia later in the twentieth century. His
work highlights the negative ramifications of the growing free-market mandate of
the WTO on developing nations. Chris writes a powerful counterfactual study,
arguing that Koreas adoption of WTO regulations such as TRIMS and TRIPS would
have stifled its economic growth post-1960s.
As our desire to understand China grows alongside its increasing influence on the
international system, Josh Carsons work cannot be better timed as it gives light to a
facet of traditional Chinese societies. Critically, he highlights the pitfalls of imposing
Western concepts of adjudicative legality on the traditional Chinese system. By
studying the Qing legal order of traditions and cultural imperatives, Josh shows that
Chinas legal tradition prioritises the concept of discipline, command and the rule of
man.
The two papers that follow examine the global political economy as a whole.
Anil Menon investigates the impact of the interwar gold standard on economic growth
and recovery. Anil argues convincingly that although the golden straitjacket was
culpable for slow economic growth, it was neither feasible nor desirable for nations to
abandon it in the 1930s. His work shows us the complexity of the international
political economy and will no doubt resonate with keen observers of the Eurozone
crisis.
Isobel Clares work also resonates with another current global crisis; principally the
growing anti-immigration rhetoric spread across the developed world. By
demonstrating how unregulated globalisation, exemplified by mass immigration and
free trade, was the primary cause of early twentieth century deglobalisation, one is
forced to wonder about an impending backlash against the current wave of
globalisation.
Last but not least, Lauren Pipers essay assesses the legacy of colonialism. She
questions whether the continuation of the CFA franc zone in West Africa was a
continuation of French colonialism. Lauren makes a compelling argument that France
and the nations of the CFA franc zone moved away from their colonial relationships
towards a more inclusive and open albeit unequal alliance.
We hope that you will enjoy reading this edition as much as we have enjoyed putting
it together. We look forward to showcasing more works in our next edition.
Congratulations to all the authors whose work is featured here, and many thanks to
everyone who submitted their papers. Additionally, we would like to thank the entire
editorial board for their tireless work and the LSE Economic History Department for
their generous guidance and support.
Shem Ng and Jay Pan
Editors-in-Chief
Contents
5 The Gender Breakdown of Unemployment in London and Blackburn,

1926-1938 Bethany Bloomer
17 Catalyst of Revival; Drop in the Ocean or Utter Nonsense?

Remedies for the Depressed Economy: Assessing Fiscal Policy in the
Thirties Eveline Smeets
27 The Sources of Agricultural Growth in the late Nineteenth-Century

and Early Twentieth-Century Japan Rui Ding
35 Implications of the growing WTO mandate for Development in

Poor Countries: a Counterfactual History of South Korea Chris Pearce
44 Characterising the Nature of the Legal system in Traditional China

Josh Carson
51 To Leave or Not to Leave: The Gold Standard in the 1930s

Anil Menon
57 Did Globalisation in the Nineteenth-Century plant the seeds of its

own Destruction? Isobel Clare
62 CFA Franc Zone: a Transformation of French Colonial Rule in

Africa Lauren Piper
68 Submission Guidelines
The Gender Breakdown of Unemployment in London and

Blackburn, 1926-1938
By Bethany Bloomer
__________________________________________________
The impact of the business cycle on unemployment is a well-understood and researched
subject. While structural and frictional unemployment have their individual causes, cyclical
unemployment is caused by the business cycle; high unemployment implies a recession,
while low unemployment is a result of a boom. However a less well researched but closely
related question is how this effect differs for male and female unemployment; does the
business cycle demonstrate gender neutrality, or does it have a greater impact on one gender?
Although several authors have been considered the general question over the gender
neutrality of the business cycle, it has been limited to the more general question of
demographic biases. For example, by regressing the logarithm of labour participation rates on
aggregate demand, Clark and Summers found that young workers in general are more
affected by the business cycle than older ones, and that of these young workers, female
workers are more likely than male workers to withdraw from the labour force rather than
become unemployed.1 The most common conclusion of the few papers that have focused on
gender in particular seems to be that the effect of cyclical shocks is clearly stronger on male
unemployment than on female unemployment, especially in the UK. 2 This is considered to
be largely due to the concentration of men in industries that are typically worst hit by
economic downturns, such as manufacturing. However, few, if any, papers researched further
back than the 1960s, and most concentrate on the decades after the 1980s. A study of the
gender breakdown of unemployment in interwar Britain and how it relates to the business
cycle is therefore an interesting opportunity. Levels of female labour force participation were
substantial enough by this time to allow for analysis, there are unemployment benefit records
which provide the data to make this analysis possible, and there are many economic
fluctuations within one relatively short time period. The specific dates of 1926-1938 were
chosen due to time limitations. Those 12 years contained both a drastic fall and subsequent
1
K. Clark and L. Summers, The Dynamics of Youth Unemployment, in Richard B. Freeman and David A.
Wise (eds.), The Youth Labor Market Problem: Its Nature, Causes, and Consequences, (University of Chicago
Press, 1982), p.204.
2
A. Peir, J. Franch, and M. Gonzalo, Unemployment, cycle and gender, Journal of Macroeconomics 34, no.
4. , (2012): p.1170.
Bethany Bloomer
rise of the business cycle, making them most relevant for this project. Furthermore, the data
seemed to become less consistent with more gaps prior to 1926.
The main source for unemployment benefits was the claimant count between 1926 and
1938 in London and Blackburn, which is available at the National Archives in the form of
returns of the number of workers registered as unemployed, sent by local offices to the
Ministry of Labour on a weekly or monthly basis. The data is exceedingly useful as it is
disaggregated by gender, age, and region, allowing my analysis to take place on a number of
levels. Data was collected for each month for those classified as Men/Women or Young
Men/Women, therefore adults 18 and over. This essay focused on the wholly unemployed
category as it had the most consistently available data; the methods of classifying and
recording the unemployment, particularly more temporary unemployment, repeatedly
changed over the timespan covered by this project. London is an obvious choice as a case
study due to the sheer size of its population and the variety of occupations and industries
available making it a balanced and large sample. Blackburn, whilst a much smaller sample, is
interesting due to the traditionally high availability of paid work for women in the large
Blackburn cotton weaving industry. During this time period, the national average for female
labour force participation was under a third, but Blackburn had an unusually high rate of
62%.3
There are disadvantages to this dataset. For instance, the claimant count is not
necessarily an accurate indicator of true unemployment, as not all who become unemployed
chose to register for or are entitled to benefits. The claimant count outright disqualifies
certain groups who would otherwise have counted in the unemployment figures, thus
providing an underestimate of total unemployment. For example, agriculture and domestic
servants were excluded. An issue with an even greater potential impact on this study is that
there were greater restrictions in place for women to qualify for claiming unemployment
insurance relative to men; for instance, the Anomalies Regulations of October 1931 greatly
increased the eligibility requirements for married women relative to other categories of
workers. This resulted in a dramatic fall in the recorded unemployment rate of married
women, possibly indicating a return to employment as Benjamin and Kochin argued, but
more likely reflecting married women who were not entitled to benefits simply dropping out
3
T.J. Hatton and R.E. Bailey, Female Labour Force Participation in Interwar Britain, Oxford Economic
Papers, New Series 40, No. 4, (1988): p. 708.
The Gender Breakdown of Unemployment in London and Blackburn, 1926-1938

of the labour force rather than registering as unemployed.4 Thus it is important to be aware of
the potential distortion that regulation changes could have on unemployment as measured by
the claimant count.
Furthermore, women typically had a relatively low labour attachment during this time
period, both in comparison to modern day women and contemporary men. They may thus
have been more likely to respond to a downturn by leaving the labour force and becoming
discouraged workers than by claiming unemployment benefits, as Clark and Summers found
for young female workers in the US in 1968-1976.5 This may distort the results of the
investigation; by reducing the claimant count figures and pushing the unemployment rate of
women below what it would otherwise have been. It also is possible that the added worker
effect, wherein a typically dependent person joins the labour force in response to the
breadwinner becoming unemployed, may have been stronger for women and resulted in an
upswing in female participation during the heights of the depression. For instance, Margo
found that in the US in 1940, a wife was 59% more likely to participate in the labour market
if the husband was unemployed than if he held a full time job.6 This effect may have
therefore increased the female labour force size and consequently resulted in lower
unemployment rates. Thus it is difficult to assess precisely how the response of female labour
differed from the typically more steady labour force participation rates of men.
Choosing Blackburn as a case study could potentially limit some of these effects due to
the high percentage of paid female labour. Economic incentives to work were reinforced by
social norms, to the point where it became almost unthinkable for women not to work.7
This work tended towards relatively skilled work in the cotton weaving industry. Wage
differentials between men and women were also limited in Blackburn, particularly in
comparison to other weaving areas; there was only a 5.3% gap in Blackburn, compared to a
33.3% gap in Bolton. The opportunity cost for women to not work was therefore relatively
high. This has two implications. Firstly, the added and discouraged worker effects likely had
a more limited effect on womens unemployment rates in Blackburn, more comparable to
4
M. Collins, Unemployment in Interwar Britain: Still Searching for an Explanation, Journal of Political
Economy 90, no. 2, (1982): p.372.
5
Clark and Summers, The Dynamics of Youth Unemployment, p. 203.
6
R Margo in B Eichengreen and T.Hatton (eds.), Interwar Unemployment in International Perspective,
(Cambridge: Springer, 1988), p.348.
7
J. Liddington, Women cotton workers and the suffrage campaign: the suffragists in Lancashire 1893-1914 in
S. Burnman (ed.), Fit Work for Women, (London: Croom Helm, 1979), pp. 98-99.
Bethany Bloomer
that on mens. Secondly, women in Blackburn were more likely to participate in the
insurance schemes, and therefore show up in the figures. Therefore this reduces some of the
inherently problematic aspects when looking into female unemployment in the interwar
period.
Using the dataset compiled from the monthly claimant count returns, and the yearly
economic activity rates from the census data of 1921, 1931, and 1951 collected by the
University of Portsmouth, the author created an unemployment rate for men and women for
each month of 1924 to 1938.8 A comparison of unemployment rates both to each other and to
GDP in the form of graphs will be made. Moreover, calculations to the moving averages of
each series in order to ascertain the main trends, while simultaneously using this to create a
de-trended version to directly compare seasonal and random variations will also be enacted.
Calculating and comparing the coefficient of variation for the moving averages may also
reveal interesting implications; one would expect to see similar coefficients for male and
female unemployment if their reactions to the business cycle over time are of a similar
magnitude.
One major issue with this methodology is that creating an unemployment rate for men
and women separately is difficult due to the lack of information available regarding the
labour force size. The obvious means of creating an unemployment rate from the claimant
count is to use the total number of insured workers as a denominator, and this total can be
found in the Ministry of Labour Gazette; however this data is rarely provided disaggregated
by gender, and therefore separate rates for men and women cannot be created. Modern
unemployment rates often rely on labour force surveys, yet the only roughly similar
contemporary survey, the New Survey of London Life and Labour, only covers 1929-1931.
8
GB Historical GIS, Blackburn CB/MB through time, GB Historical GIS / University of Portsmouth, Last
accessed: 26th April, 2014,
http://www.visionofbritain.org.uk/unit/10179622/cube/CENSUS_ACTIVE_GEN
GB Historical GIS, Blackburn With Darwen UA through time, GB Historical GIS / University of Portsmouth,
Last accessed: 26th April, 2014,
GB Historical GIS, Inner London through time, GB Historical GIS / University of Portsmouth, Last accessed:
26th April, 2014, http://www.visionofbritain.org.uk/unit/10076845/cube/CENSUS_ACTIVE_GEN
GB Historical GIS, Outer London through time,| GB Historical GIS / University of Portsmouth, Last
accessed: 26th April, 2014,
An alternative, and the one used in this essay, is to take the figures for economically
active men and women from the census data. This labour force size data is made slightly
complicated by the retrospective adjustments for boundary changes, meaning there is no
consistent data available for 1921, 1931 and 1951. Calculating the difference between the
data for 1931 within the initial administrative boundary and the adjusted 1931 data for the
new boundary and then removing this difference from the 1951 data gives a rough estimate of
the economically active population without the administrative boundary change. This essay
assumed a linear relationship between the labour force size at each point in time, and thus
created estimates for each year in this study. This approach is problematic, as the assumption
of linearity leads to simplified labour force figures which ignore potentially important short
term variations. However this problem is made even more prominent in this case due to the
lack of a census in 1941, meaning the data has to be drawn from the 1931 and 1951 censuses.
Given the devastating impact of the Second World War, particularly on the male labour force
size, it is highly likely that the unemployment rate for men is overstated. Meanwhile, the
female unemployment rate is likely to be understated as rapid labour force growth that
occurred during the war years is being attributed to earlier years. However this effect will be
subdued by the fact that some of the increased female participation during the war was
transitory, and by 1951 a portion of the new female workers had returned to the domestic
sphere.
Furthermore, the claimant count underestimated unemployment due to excluding some
workers entirely, as discussed before, yet the census data for labour force size is based off the
entire population. Therefore it is important to note that the unemployment rates produced
here will be an underestimate compared to those produced by comparing the claimant count
to the number of insured workers, or the census data for unemployment to the census data for
labour force size. Nevertheless, this should not greatly affect a comparison between male and
female unemployment rates when produced using the same method.
Bethany Bloomer
12
10
8
6
4
Male
Jul-38
Jul-37
Jan-38
Jul-36
Jan-37
Jan-36
Jul-35
Jan-35
Jul-34
Jan-34
Jul-33
Jan-33
Jul-32
Jan-32
Jul-31
Jul-30
Jan-31
Jul-29
Jan-30
Jul-28
Jan-29
Jan-28
Jul-27
Jan-27
Jul-26
2
Jan-26
Unemployment rate (%)
Male and female unemployment rates in London,

1926-1938
Female
Figure 1.
This methodology allowed for the production of Figure 1, which compares male and
female unemployment rates in London between 1926 and 1938. The immediate conclusion to
draw from this is that male unemployment was persistently higher across the entirety of the
12 years, with an unemployment rate often twice as high as the rate for women.
Indexing these unemployment rates to a base month enables us to directly compare the
month-on-month percentage change in unemployment over the course of the business cycle.
As shown in Figure 2, by placing this alongside the monthly GDP data produced by Mitchell
et al. (2012), it is possible to see how slight changes in GDP levels produced differing
GDP, mn, in 1938 market prices
Nov-38
Apr-38
Sep-37
Feb-37
Jul-36
Oct-34
GDP
Dec-35
Female
May-35
Male
Mar-34
80
Aug-33
Jan-33
90
Jun-32
50
Nov-31
100
Apr-31
100
Sep-30
110
Feb-30
150
Jul-29
120
Dec-28
200
May-28
130
Oct-27
250
Mar-27
140
Aug-26
Unemployment rates in London and UK GDP, set to base

month of January 1926
300
Jan-26
Unemployment rates
reactions in the male and female unemployment figures.
Figure 2. GDP data from Mitchell et al. (2012)
10

Thus, the depression had a more similar effect on the unemployment rate of both men
and women than Figure 1 suggests; both rates more than doubled between the end of 1929
and the end of 1931, and never reached their former level again for the rest of the period
considered. However the reaction of the female unemployment rate to the onset of the
depression was faster, reaching double at the beginning of 1931. As GDP slows down in
1938, this pattern begins to repeat, with the female unemployment rate rising faster and the
male rate catching up towards the end of the year.
One interesting point is the extent to which the effects of the Anomalies Regulations of
October 1931 are apparent; having reached over 250% of January 1926 levels by October
1931, this figure falls to 189% over the following 2 months alone. Given that male
unemployment dips by a comparatively minuscule amount of only 1 percentage point, and
that there is no other obvious explanation for a fall in female unemployment, it is likely that a
large proportion of this fall is due to the policy shock. This is therefore highly distortionary.
140
250
130
200
120
150
110
100
100
50
90
80
Male
Female
GDP (mn, at 1938 market pries)
300
Jul-26
Jan-27
Jul-27
Jan-28
Jul-28
Jan-29
Jul-29
Jan-30
Jul-30
Jan-31
Jul-31
Jan-32
Jul-32
Jan-33
Jul-33
Jan-34
Jul-34
Jan-35
Jul-35
Jan-36
Jul-36
Jan-37
Jul-37
Jan-38
Unemployment rate
Moving averages of London unemployment rates and UK GDP,

1926-1938 (base month set at July 1926)
GDP
Figure 3. GDP data from Mitchell et. al (2012).
Creating the moving averages of unemployment and GDP reveals a more accurate
picture of how unemployment responded to the business cycle by smoothing out the
distortions caused by seasonal and random fluctuations, as shown in Figure 3. The clear
relationship between unemployment and the business cycle is obvious. Overall, it would
appear that there was a largely gender neutral response; for example, for the 1926-1933
11
Bethany Bloomer
cycle, the trough and peak of the female unemployment rate are 186.1 percentage points
apart, compared to 181.1 percentage points for the male unemployment rate. The coefficient
of variation for each unemployment series, by calculating relative dispersion, reveals the
extent to which unemployment varies over the business cycle for men and for women. When
calculated based off the moving average series, the coefficient of variation for men is 0.337
(3 d.p.) compared to 0.349 (3 d.p.) for women. Therefore the response to the business cycle
for male and female unemployment was largely similar, despite the overall higher rates of
male unemployment.
1.4
1.3
1.2
1.1
1
0.9
0.8
Jul-37
Jan-38
Jan-37
Jul-36
Jan-36
Jul-35
Jul-34
Jan-35
Jan-34
Jul-33
Jan-33
Jul-32
Jul-31
Male
Jan-32
Jan-31
Jul-30
Jan-30
Jul-29
Jan-29
Jul-28
Jul-27
Jan-28
0.6
Jan-27
0.7
Jul-26
Variations in Unemployment Rates (%)
Detrended Male and Female Unemployment Rates in

London, 1924-1938
Female
Figure 4.
Figure 4 shows the de-trended variations of male and female unemployment in London.
A pattern of seasonal variation is prominent, with unemployment spiking in January/February
and falling to a low during the third quarter. Surprisingly, the impact seems to be slightly
worse for women, despite the fact that seasonal work is often associated with more male
dominated trades such as building. A potential explanation lies in the traditional London
season, which drew the rich and powerful into London in droves between March and
August and consequently affected several trades in which female workers were
concentrated.9 For instance, by 1931, women constituted almost 50% of retail assistants.10
10
S. Todd, Young women, work and family in inter-war rural England, the Agricultural History Review 52,
no.1 (2004): p. 94.
12

Given the relatively small female labour force size, the upswings in retail employment over
the London season and in the run up to Christmas would have a proportionally greater impact
on female unemployment.
Male
Jul-38
Jan-38
Jul-37
Jan-37
Jul-36
Jul-35
Jan-36
Jul-34
Jan-35
Jul-33
Jan-34
Jul-32
Jan-33
Jan-32
Jul-31
Jan-31
Jul-30
Jul-29
Jan-30
Jul-28
Jan-29
Jul-27
Jan-28
Jan-27
Jul-26
45
40
35
30
25
20
15
10
5
0
Jan-26
Unemployment Rate (%)
Female and Male Unemployment Rates in Blackburn,

1926-1938
Female
Figure 5. The gap in July 1931 is caused by missing data in the original source.
The results for Blackburn are visibly different to the London results, both in terms of
general unemployment levels and the gender unemployment gap. Given the dependence of
Blackburn on the British cotton weaving industry, which was persistently suffering during the
interwar period, this is unsurprising. Hence unemployment begins to steadily rise even before
the onset of the depression, and from March 1930 onwards, neither of the unemployment
rates fall below 10%. Yet tbe most dramatic impact is clearly on female unemployment,
which undergoes a meteoric rise to over 40% at the start of 1931, almost double that of male
unemployment.
13
Bethany Bloomer
35
30
25
20
15
10
5
0
Male MA
Female MA
480
460
440
420
400
380
360
340
320
300
GDP, mn, at 1938 market prices
40
Jul-26
Jan-27
Jul-27
Jan-28
Jul-28
Jan-29
Jul-29
Jan-30
Jul-30
Jan-31
Jul-31
Jan-32
Jul-32
Jan-33
Jul-33
Jan-34
Jul-34
Jan-35
Jul-35
Jan-36
Jul-36
Jan-37
Jul-37
Jan-38
Unemployment rate (%)
12 month moving average of male and female

unemployment rates in Blackburn, compared to 12
month moving average of UK GDP, 1926-1938
GDP MA
Figure 6: GDP data is from Mitchell et al. (2012)
When moving averages are compared, female unemployment in Blackburn clearly

responds by a much greater amount to the fluctuations of the business cycle; the peaks and
troughs of the female unemployment rate trend line are at least 20 percentage points apart,
compared to a maximum of just over 15 percentage points on the male trend. This is most
likely due to the discrimination and occupational segregation women faced in this period,
even in an area with such high participation rates. In such a highly specialised town,
alternatives to the cotton industry were already limited, and women had far fewer alternatives
than men.11 This supports the conclusions in the modern literature, wherein men tend to
suffer from greater unemployment due to their concentration in the industries that are hit
hardest; albeit in this particular rare case, this effect was impacting women rather than men.
A similarity to the London graphs lies in the speed with which the unemployment rates
respond to changes in the business cycle; again, the female unemployment rate increases
faster than the male rate in response to GDP downturns, both at the end of 1929 and at the
start of 1938. A possible explanation for this pattern is the discriminatory practice of
choosing to fire women first in the eventuality of selective redundancies.12 A common
assumption of the time was that male unemployment was caused by female employment, and
11
J. Walton, A Social History of Lancashire, 1558-1939, (Manchester: Manchester University Press, 1986),
p.339.
12
Ibid., p.339.
14

therefore women were easier targets when companies were required to downsize in response
to the depression. In particular, the Marriage Bar was common practice in several
occupations, including for government employees and teachers, and impacted on married
womens employment by enabling employers to fire them upon marriage.
In conclusion, due to the problematic aspects of researching gender gaps in a period of
low female participation, discriminatory benefit policies and limited data records, it is
difficult to draw many definite answers with regards to the gender neutrality. However three
tentative conclusions can be drawn from this investigation. Firstly, in interwar Britain, the
case of London suggests that the average experience was of a roughly gender neutral
response to the business cycle; despite male unemployment rates being higher in general, the
two rates increased and fell by relatively similar amounts. Secondly, the exceedingly severe
female unemployment in Blackburn supports the notion that the unemployment gender gap
over the course of the business cycle is due to occupational factors. Studies focusing on
recent eras have found that male unemployment demonstrates a greater response to a
depression because men are typically concentrated in industries that are most vulnerable,
such as manufacturing; Blackburn in the interwar period is an interesting example of this
effect working in the opposite direction. Women were more concentrated in the declining
cotton industry due to occupational segregation and thus experienced higher unemployment.
Finally, in both Blackburn and London, the female unemployment rate increased faster in
response to the depression in 1929 and the slowdown in 1938, possibly indicating the impact
of the discriminatory labour policies of the time.
REFERENCES
Clark, K. and Summers, L. The Dynamics of Youth Unemployment, in Richard B. Freeman
and David A. Wise (eds.), The Youth Labour Market Problem: Its Nature, Causes, and
Consequences. Chicago: University of Chicago Press, 1982.
Collins, M., Unemployment in Interwar Britain: Still Searching for an Explanation. Journal
of Political Economy 90, no.2 (1982): p.369-379.
GB Historical GIS. A vision of Britain through time. GB Historical GIS / University of
Portsmouth, Last accessed: 26th April 2014.
15
Bethany Bloomer
Hatton, T. and Bailey, R. Female Labour Force Participation in Interwar Britain. Oxford
Economic Papers, New Series 40, No. 4 (1988): p.695-718.
Liddington, J. Women cotton workers and the suffrage campaign: the suffragists in
Lancashire 1893-1914. in S. Burnman (ed.), Fit Work for Women. London: Croom Helm,
1979.
Margo, Robert, in Barry J. Eichengreen and T.J. Hatton (eds.), Interwar Unemployment in
International Perspective. Cambridge: Springer, 1988.
Mitchell, J., Solomou, S. and Weale, M. Monthly GDP estimates for inter-war Britain.
Explorations in Economic History, no.49 (2012): p. 1-30.
Todd, S. Young women, work and family in inter-war rural England, the Agricultural
History Review 52, no.1 (2004): p. 1-286.
Walton, J. A Social History of Lancashire, 1558-1939. Manchester: Manchester University
Press, 1986.
16
Catalyst of Revival; Drop in the Ocean or Utter Nonsense?

Remedies for the Depressed Economy: Assessing Fiscal
Policy in the Thirties
By Eveline Smeets
__________________________________________________
The dispute between the Keynesian and the Classical schools is one inherent to the
macroeconomic discipline. It has been so in the past, and, as is evidenced by the current
austerity-debates amongst euro-member states, it is still so today. Although the answer to this
pertinent question has often resolved into the practice of offering arguments with an
ideological tradition, what is vital is instead a pragmatic assessment based on empirical
considerations. One method available from the toolbox of the Economic Historian is the
examination of a historical case study. A setting that has frequently been the subject of
investigation is that of the Great Depression, which captured the world economy throughout
the 1930s, and is often considered the most comparable case to that of the recent Great
Recession. Although mostly considered a monetary phenomenon, this essay will instead
study the fiscal aspects of the Depression. Of particular interest is the use of fiscal policy as a
tool for recovery. A commonly embraced assessment of fiscal policy in the thirties has been
that by E. Cary Brown.1
Fiscal policy [] seems to have been an unsuccessful recovery device in the thirties not
because it did not work, but because it was not tried.
This essay will analyse and expand on the supporting evidence for this conclusion and
consequently aims to identify the role of fiscal policy in the recovery process after the Great
Depression in the United States. Firstly, the paper offers a brief theoretical view of fiscal
policy as a tool for reviving the depressed economy. These theoretical concepts are
subsequently compared to the actual impact of fiscal policy in the thirties. The third and
fourth chapters then uncover why this impact has seemed negligible the former from a
structural point of view, and the latter from a historical perspective. Finally, a concluding
note will provide a brief assessment of Post-Depression outlooks on fiscal policy.
1
E. Brown, Fiscal Policy in the 'Thirties: A Reappraisal, The American Economic Review 46, no. 5 (1956),
pp. 863-866.
17
Eveline Smeets
Theoretical Framework
The thirties are often referred to as a defining moment for the US economy; a turning
point that saw a redefinition of the policy making process.2 A particularly prominent legacy
would be the emergence of demand-side economics and Keynesian theory as a method to
analyse macro-economic phenomena. In Browns essay, this theory is used to explain the
(fiscal) policy patterns in the thirties.3 This section briefly reiterates the principal facets of the
closed economy model in Figure 1, where the x-axis is defined as output of the economy, and
the y-axis captures the (internal) demand for this output. The starting point is line B, which
includes the private demand from Consumption (C) and Investment (I). This line
subsequently rotates and decreases in slope as a result of taxation, which implies that the
government expropriates a specified tax rate of the total demand. This post-taxation scenario
is displayed as line A. But the government is not just an external factor that curbs demand; in
addition to taxing, it also spends and stimulates demand. It does so by committing to
government expenditures (G), which constitutes demand-line C.
Therefore, when qualifying a policy as
trying fiscal policy, one needs to take two
separate
elements
into
account:
(1)
government spending, and (2) taxation. What

ultimately defines the utilization of fiscal
policy is the balance of the budget, often
measured as a share of GDP. In the case that
the government chooses to commit to a budget
deficit (G exceeds T, here assumed to be
financed through debt), we consider this an
expansionary fiscal policy. However, for
fiscal
stimulus
to
be
considered
truly
Figure 1: The Keynesian Cross1
expansionary, it is required to be sizeable for it

for it to have an impact.
14
M. Bordo, C. Goldin and E. White, The Defining Moment: the Great Depression and the American Economy
in the Twentieth Century (Chicago: University of Chicago Press, 1998), pp.1-20.
15
Brown, Fiscal Policy in the Thirties, p.860.
18
Catalyst of Revival; Drop in the Ocean or Utter Nonsense? Remedies for the Depressed
Economy: Assessing Fiscal Policy in the Thirties
A final feature is the multiplier effect, as defined by the slope of the aggregate demand
lines. This effect captures the notion that government expenditures do not simply have a oneto-one effect on the economy. Instead, the impact should be larger: an exogenous increase in
G will respectively increase demand, output, income and subsequently again augment
demand for consumption (i.e. C is a function of income). This concept, dubbed the fiscal
multiplier, implies that an autonomous increase in government expenditures actually has a
larger than one-to-one effect on demand. The green lines in Figure 1 demonstrate this,
whereby the length of each line equals the rise in G. If the impact were one-to-one, the
economy would end up with output Y0, but in reality, Y1 is reached after the multiplier
effect.
Fiscal Policy in the 1930s

The Keynesian model would thus suggest that the appropriate way to combat the
depressed economy, where aggregate demand is insufficient, would be to cushion the shock
to aggregate demand. This can be done through (a combination of) two tools: (1) lenient
monetary policy, and (2) fiscal stimulus. The latter countercyclical policy, which is the focus
of this essay, can be achieved through increasing government disbursements and decreasing
tax rates. Yet, as Romer long a leading authority on the effectiveness of New Deal policies
poses, it was a monetary development that proved to be the crucial source of the recovery.4
Instead, before 1942, the low fiscal multiplier would imply that fiscal policy mattered little in
the recovery process of the depressed US economy. Almunia et al. propose a more optimistic
scenario; using more advanced econometric techniques, the academics conclude that fiscal
multipliers were substantial, suggesting a significantly positive impact of government
expenditure on GDP during the interwar period.5 Nevertheless, fiscal policy, as suggested by
Brown and Peppers, had little impact overall because it was not deployed on the requisite
scale.6
16
C. Romer, "What Ended the Great Depression?," The Journal of Economic History 52, no. 4 (1992), pp.758759. Romer suggests that the swelling of the money stock was not a result of active, expansionary monetary
policy, but rather due to huge gold inflows in the mid- and late 1930s after (1) the 1933 devaluation of the dollar
and (2) capital flight from politically unstable Europe. Therefore, she presumes that a self-correcting response of
the US economy to low output (as suggested by advocates for supply-side economics) was weak or non-existent
in the 1930s.
17
M. Almunia, Agustn Bntrix, Barry Eichengreen, Kevin H. ORourke, and Gisela Rua. "From Great
Depression to Great Credit Crisis: Similarities, Differences and Lessons," Economic Policy 25, no. 62 (2010):
pp.239-241.
18
L. Peppers, "Full-employment Surplus Analysis and Structural Change: The 1930s," Explorations in
Economic History 10, no. 2 (1973): pp.200-209.
19
Eveline Smeets
Although both streams of literature have not argued that fiscal stimuli proved a manna
from heaven that would immediately cure the depressed economy, there is one main
takeaway from both articles: fiscal policy did not behave according to what would be
advocated by Keynesian theory. Then how would this rhyme with the conventional
presumption that the 1930s would go down in US history for its substantial government
expenditures in response to the Depression? It is evidently of great macro-economic
relevance to investigate the structure of fiscal policy and what it actually meant for the US
economy.
Structural Explanations for Fiscal Policy in the 1930s

Certainly, after Roosevelt had been elected in 1933, the New Deal was launched; a
massive government expenditure program that the US economy had not witnessed before.7
Nonetheless, several historians have questioned whether the New Deal was actually such a
coherent, integrated plan.8 Rather, it should be interpreted as a pragmatic plan that consisted
of ad hoc responses, not primarily adopted for the purpose of economic recovery. The Deal
came to include not only general measures to increase aggregate demands for output but
also a myriad of specific [relief] measures to support individual sectors, at times responding
to the demands of specific interest groups. Chandler consequently conceives that a better
alternative would have been to rely upon generalized monetary and fiscal policies to achieve
a revitalization of the economy.9 That is, the implementation of specific actions, although
certainly needed, would never become an adequate substitute for a generic policy framework
that could induce demand. However, as will be clarified later in this article, this course would
have been politically unacceptable under the conditions of the time.
This mixture of fiscal stimuli did not prove a sufficient catalyst for an economic
revival, and evidently forms a first structural factor to explain why fiscal policy was not
tried. What other factors are responsible for the lack of expansionary effects after the
instalment of New Deal programs? One can open this black box by studying the structure of
the fiscal budget during the thirties. Figures 2 and 3 allow one to identify two additional
reasons for the governments deficiency in mitigating the backlash in aggregate demand.
19
G. Eggertsson, "Great Expectations and the End of the Depression," American Economic Review 98, no. 4
(2008): p. 1476.
20
P. Fishback and J. Wallis, Chapter 10: What was New about the New Deal? in Nicholas Crafts and Peter
Fearon, The Great Depression of the 1930s: Lessons for Today (2013): pp.291-327.
21
L. Chandler, America's Greatest Depression, 1929-1941 (London: Harper & Row, 1970), p.134.
20
Both would imply that, indeed, fiscal policy was not tried and one could not consider New
Deal to be part of a broader Keynesian agenda.
Such an agenda would call for budget deficits. Although federal expenditures did
increase throughout the period under consideration, Figure 2 also attests to the fact that this
policy was first countervailed by a simultaneous increase in federal taxation. This would curb
the expansionary effect of augmented government expenditures that emerges in the
Keynesian framework. The reason for committing to such devices was a consequence of the
budget balance inertia that captured the ideas of policy makers.10 The staunch advocacy for
balanced budgets meant that the gap between expenditures and taxes was minimal at the
federal level, and of insufficient scale to qualify as trying fiscal policy. This limited scale
proved insignificant to recapitalize the economy and a strong causal force in understanding as
to why the fiscal multiplier merely fluctuated between -0.4% and 2.5%.11
State & Local Budget
Expenditures
Taxes
10
-5
Deficit
Expenditures
Taxes
1941
1940
1939
1938
1937
1936
1934
1935
1933
1932
1931
1941
1940
1939
1938
1937
1936
1934
1935
-5
1933
1932
1931
1930
15
1930
10
20
1929
15
Fiscal tools (in billion $, current prices)
20
1929
Fiscal tools (in billion $, current prices)
Federal Budget
Deficit
Figure 2 and 3: Government Budgets throughout the Thirties - based on data from Chandler 12.
This persistently high level of taxation was a phenomenon that occurred at all levels of
government.13 Budgets of decentralized government entities in Figure 3 do display a different
picture from that in Figure 2. Decentralized spending is not only weak, but it is more than
offset by the co-movements of taxation. This would suggest a lack of coordination amongst
10
This issue will be dealt with at a later stage. It suffices to say that this inertia prevailed both under Hoover and
Roosevelt.
11
24
Chandler, America's Greatest Depression, p.121.
13
P. Fishback, "US Monetary and Fiscal Policy in the 1930s," Oxford Review of Economic Policy 26, no. 3
(2010): pp.401-406.
21
Eveline Smeets
the federal and decentralized government organs, which forms a vital element of fiscal policy
and particularly so when ensuring that fiscal stimulus trickles down and is able to exert
influence onto the entire economy. This lack of coherence between federal and localized
fiscal policies forms the second factor that counterbalances potential stimulating effects of
federal activity. In effect, throughout the 1930s, its contribution to total demand ranges
between -0.3% and 2%.14 This can be explained by the observation that budget surpluses
prevailed; Figure 3 indicates that taxation and spending were not just similar in terms of
levels, but also in their behaviour and direction overtime.
Historical Explanations for Fiscal Policy in the 1930s

Together these structural features define the obstacles to the pursuit of adequate fiscal
stimulus and why it remained weakly expansionary at best. Indeed, Keynes retrospectively
analysed the fiscal structure under FDR and contended that it would not actually qualify as an
adequate example of the Keynesian fiscal tool.15 This still does not explain, however, why
expansionary policy, which would have been the obvious answer to the adverse shock on
aggregate demand, was not actively pursued. The answer to this pivotal problem is placed in
the assessment of the historical context; the playing field of the economic historian. Doing so
delivers three solutions. The first is attributable to the contemporary mind-set. A primary
aspect of this mind-set is that it ranks the fiscal straitjacket high on the list of priorities. At
the onset of the Depression countercyclical policy was unheard of; only the wartime economy
would employ budget deficits as a method of financing war-related investments. 16 The
contemporary holy grail of macroeconomics balanced budgets had its origins in both illconceived economic doctrines and a generic fear of consequences. The former entails a
conviction that governments should not interfere with the natural process of liquidation and
adjustment (i.e. overinvestment theory), which prevailed amongst contemporary
economists.17 Few held the conviction that deficits would be successful stabilization policies
and instead presumed that such a device would crowd out any funds available to the private
sector. A second aspect involves both fears of economic (i.e. excessive debt in an otherwise
healthy economy) and political (i.e. the destruction of political credit) consequences.18 A last
factor, which also proved instrumental for the restrictive monetary policies that had been
14

Fishback, US Monetary and Fiscal Policy, pp.403-404.
16
Bordo, Goldin and White, The defining moment, pp.67-70.
17
Chandler, Monetary and Fiscal Policies, pp.112-113.
18
Bordo, Goldin and White, The defining moment, pp.70-74.
15
22
employed throughout the Hoover administration, is indicative of the contemporary
idealization of maintaining the gold standard. Almunia et al. refer to how in the 1930s,
countries remaining on the gold standard were reluctant to apply fiscal stimulus since this
could lead to a drain of reserves by attracting imports. 19 These influences together
characterize the broad mind-set throughout the thirties, a first stumbling block to the active
adoption of expansionary fiscal policy.
A second obstacle exacerbated this utter nonsense -view on expansionary fiscal
policy: the fact that macroeconomic theory was still at an infancy stage. The theoretical
rationale that has been discussed in the early paragraphs of this essay was issued only in
1936, in Keynes General Theory of Employment, Interest and Money.20 And, as with every
theory, there is a considerable time laps between its initiation and the general acceptance of
the model. In the absence of some comprehensive and generally accepted theory of income
behaviour, it was almost inevitable that the advice offered by economists would be
conflicting, of limited usefulness, and often wrong. 21 Specific to the relevance of the
Keynesian theory was the multiplier concept described in the early stages of this essay; the
idea that expansionary fiscal policy would not just have a one-to-one effect on aggregate
demand, but rather a snowball-effect that strengthens private demand until the multiplier
fizzles out.
These complementary factors explain why the strive for balanced budgets persisted for
so long. This bias was well reflected in the design of government policy, both under the
Hoover and under the Roosevelt administration. At the onset of the economic malaise the
Hoover administration did opt for limited fiscal expenditures on public works, but only as
long as the budget remained in surplus. Nonetheless, as soon as federal tax receipts proved
disappointing in response to the setback in aggregate demand, the administration adopted
the 1932 Revenue Act in order to prevent the surplus from turning into a deficit.
Simultaneously, federal expenditures were curbed and the accidental expansionary policy
proved to become a temporary feature. Budget deficits remained an annoyance at the
31
Almunia et al., From Great Depression to Great Credit Crisis, p.233.

J. Keynes, The General Theory of Employment Interest and Money (London: Macmillan and Co, 1936)
33
Chandler, Monetary and Fiscal Policies, pp.122-124.
32
23
Eveline Smeets
commencement of the FDR administration; the ambition for conservative budgets persisted.22
In fact, only in 1934, 1936 and 1939 did Roosevelts budget deficits exceed those of Hoover
in 1932 and 1933.23 Although federal expenditures increased significantly, the 1932 Act that
became fully effective in 1933 implied a significant hike in the taxation rates. Throughout
FDRs term, these tax levels remained stable, and were even amplified at times. An example
is the period of 1936-1937 in figure 3; an instance in which fiscal policy shifted into a
contractionary mode, precipitating the 1937 recession that severely stalled the process of
economic recovery.24
But, with greater willingness and knowledge, would Hoover and FDR have been able
to substantiate a strong impulse on aggregate demand? A third contextual factor is the size of
the government, which questions whether the state was in a position to catalyse a recovery
through fiscal policy in the first place. An effective fiscal policy would hinge on its scale,
which was remarkably limited prior to the thirties. In 1929, fiscal budgets at the federal level
would amount to a mere 2.5% of GNP.25 Therefore, both politically and administratively, it
would have been rather difficult to adopt a more extensive fiscal policy. Accordingly,
DeLong attests that fiscal policy can be stabilizing only if government spending is large
enough to act as a plausible sea anchor for aggregate demand. 26
Conclusion
Overall, the New Deal and associated policies could not have had the impact as a
catalyst of revival. Although it provided instrumental relief on a microeconomic scale (that
is, it mitigated some of the issues dealt with by the poor), macro-economically, it turned out
to be a drop in the ocean, due to constraints inherent to the economy of the time. The three
structural factors that obstructed the realization of budget deficits, as suggested by the
Keynesian framework, were (1) the lack of a coherent plan, (2) the increased taxation at the
22
This might seem at odds with the predominant thinking about FDR and New Deal stimulus, but at the onset of
his 1933 administration Roosevelt actually discloses: Too often in recent history liberal governments have
been wrecked on rocks of loose fiscal policy. We must avoid this danger. (Roosevelt, Message to Congress,
p.1). Similarly, Chandler argues that the idea that FDR had formulated a definite expansionary policy is a myth
(Chandler, The Period of Recovery, p.136). Lastly, John Maynard Keynes himself advocated for even greater
stimulus: With [] enlargements of your existing policies, I should expect a successful outcome with great
confidence. (Keynes, From Keynes to Roosevelt, p.6).
23
Fishback, US Monetary and Fiscal Policy, p.403.
24
Chandler, The Period of Recovery, p.138. Note that the cuts in federal spending and tax amplifications were
accompanied by a contractionary monetary policy (resulting from an increase in reserve requirements).
37
Bordo, Goldin and White, The defining moment, p.81.
38
Ibid., pp.80-81.
24
federal level, and (3) sustained budget surpluses at the state and local levels. These three
policy factors were an outcome of the broader historical context that formed the institutional
backdrop to the policy making process in the thirties. These entail (1) an ideological mind-set
that favoured balanced budgets, (2) the infancy of macroeconomic theory, and (3) the generic
problem of the small size of the government.
Browns statement therefore seems a plausible explanation as to why New Deal
strategies did not prove to be a catalyst for revival. As Krugman notes, what eventually
saved the economy, and the New Deal, was the enormous public works project known as
World War II, which finally provided a fiscal stimulus adequate to the economys needs.27
Furthermore, in cases where fiscal policy was indeed expansionary and sizeable, we indeed
see that it proved greatly important in sustaining the recovery.28 Fitting examples are the
cases of Japan and Italy, where large relief efforts and military expenditures financed
through borrowing induced an economic revival within the two countries.29 Thus, if there is
one thing that the 1930s should teach us, it is that pure laissez-faire and relying on a natural
recovery process knows significant limitations, particularly against the backdrop of a
depressed economy. The period can therefore still be considered a defining moment for the
US economy. The pertinent question is, however, for how long this lesson will prevail or
has prevailed. In fact, as asserted by DeLong, the shadow of fiscal policy cast by the Great
Depression has already faded away; the Keynesian Era is a thing of the past. 30 Our
experiences with the recent Great Crisis, however, might just have demonstrated that
demand-side economics and fiscal stimulus should not just be regarded a plausible theory,
but a powerful and crucial notion instead.
39
P. Krugman, Franklin Delano Obama? New York Times, November 10, 2008. Accessed March 31, 2015,
http://www.nytimes.com/2008/11/10/opinion/10krugman.html?_r=0.
40
R. Gordon and R. Krenn. The End of the Great Depression 1939-41: Policy Contributions and Fiscal
Multipliers. Cambridge, Massachusetts: National Bureau of Economic Research (2010): p.37.
41
Almunia et al., From Great Depression to Great Credit Crisis, pp.250-251.
42
Bordo, Goldin and White, The defining moment, p.84.
25
Eveline Smeets
REFERENCES
Almunia, M., Bntrix, A., Eichengreen, B., ORourke, K., and Rua, G. "From Great
Depression to Great Credit Crisis: Similarities, Differences and Lessons." Economic Policy
25, no. 62 (2010): p.219-p.265.
Bordo, M., Goldin, C. and White, E. The Defining Moment: the Great Depression and the
American Economy in the Twentieth Century. Chicago: University of Chicago Press, 1998.
Brown, C. "Fiscal Policy in the 'Thirties: A Reappraisal." The American Economic Review
46, no. 5 (1956): p.799-p.857.
Chandler, L. America's Greatest Depression, 1929-1941. London: Harper & Row, 1970.
Eggertsson, G. "Great Expectations and the End of the Depression." American Economic
Review 98, no. 4 (2008): p.476-p.516.
Fishback, P. "US Monetary and Fiscal Policy in the 1930s." Oxford Review of Economic
Policy 26, no. 3 (2010): p.385-p.413.
Fishback, P. and Wallis, J. Chapter 10: What was New about the New Deal? In Crafts, N.
F. R., and Fearon, Peter. The Great Depression of the 1930s: Lessons for Today (2013)
Gordon, R. and Krenn, R. The End of the Great Depression 1939-41: Policy Contributions
and Fiscal Multipliers. Cambridge, Massachusetts: National Bureau of Economic Research
(2010)
Keynes, J. From Keynes to Roosevelt: Our Recovery Plan Assayed, New York Times,
December31,1933.AccessedMarch31,2015.http://www.naomiklein.org/files/resources/pdfs/k
eynes-roosevelt-1933.pdf.
Keynes, J. The General Theory of Employment Interest and Money. London: Macmillan and
Co, 1936.
Krugman, P. Franklin Delano Obama? New York Times, November 10, 2008. Accessed
March 31, 2015, http://www.nytimes.com/2008/11/10/opinion/10krugman.html?_r=0.
Peppers, L. "Full-employment Surplus Analysis and Structural Change: The 1930s."
Explorations in Economic History 10, no. 2 (1973): p.197-p.210.
Romer, C. "What Ended the Great Depression?" The Journal of Economic History 52, no. 4
(1992): p.757-p.844.
Roosevelt, F. Message to Congress on Economies in Government. March 10, 1933.
Gerhard Peters and John T. Woolley, The American Presidency Project University of
California,Santa Barbara. Accessed March 31, 2015, http://www.presidency.ucsb.edu/ws/?pi
26
The Sources of Agricultural Growth in the Late NineteenthCentury and Early Twentieth-Century Japan
By Rui Ding
__________________________________________________
The impressive and sustained rate of Japanese agricultural growth from the late 19th
century to the early 20th century has often been cited by traditional literature despite this
coming under dispute: nevertheless, it was a remarkable feat signifying Japans ascendancy
into modernity and economic success. The continuing economic significance of the
agricultural sector in this period, but also in the preceding and following periods, makes it
necessary to address both the origins and limits of Japanese agricultural growth. The sources
of agricultural growth can be found in the technological developments and subsequent
improvements in land and labour productivity. This was enabled by the support of the Meiji
government, with the land tax reform in 1876 incentivizing and breaking down barriers to the
technological developments. Agricultural growth in this period was sustained by the
dissemination of information and the mutually dependent relationship between agriculture
and industry in Japan as the latter expanded significantly. However, it would be easy to
overstate the extent of agricultural growth in this period without sufficient context. Not only
does the two-sector approach to the Japanese economy undermine other factors but the events
and policies after World War I would exemplify the limits of agricultural growth, and the
sector itself.
Before addressing the sources of agricultural growth, it is essential to discuss the
growth debate and clarify exactly the extent of such growth in this period. While revisionist
Japanese historians have highlighted the impressive rate of agricultural growth in this period,
the existence of such growth has been questioned and undermined. Early Japanese historians
saw agricultural growth reaching rates of near 3%, based on GRJE estimates that used official
statistics.1 However, Hayami & Yamada pointed out that this overestimated the growth rate
as farmers often underreported the rice yield and area of their land to government officials,
thus underestimating growth rates at the beginning of the Meiji period, which was much
closer to 1.6-1.8%. Much of the earlier literature was based on the narrative that the late
Y.Hayami and S. Yamada, Agriculture, in Patterns of Japanese Economic Development, ed. K Ohkawa and
M Shinohara (New Haven: Yale University Press, 1979), pp. 99-100.
27
Rui Ding
Tokugawa period was merely an era of statis for rural areas, with little or no
economic growth.2 However, more recent literature has indicated that this was not the case.
While more recent estimates have indicated a lower agricultural growth rate over this period
(due to a higher output level at the end of the Tokugawa period), the extent of slow growth
should not be overstated. Hayami & Yamada estimated that Japanese agricultural output grew
at an annual compound rate of about 1.6% in the years 1800-1965,3 which is notable on
several grounds. The fact that the agricultural sector in Japan managed to sustain such a
respectable rate of output growth despite rapid industrialisation and expansion in the
secondary and tertiary sectors was impressive. This is evident from output data covering the
period 1880-1939 in 5 year averages that show consistent and substantial increases across a
variety of agricultural goods, from rice to fish and silkworm cocoons.4 Furthermore, the
continued importance of the Japanese agricultural sector because of its growth and its
contribution to total output and employment (comparatively large for an industrializing
economy) means that the sources of such growth need to be examined in further detail.
The significance of the Meiji land tax reform in incentivizing productivity and
development of technology in agriculture was a significant factor that enabled agricultural
growth in the late nineteenth century. The land tax reform replaced the old Tokugawa tax
system that was not only overly complex but also inequitable, where certain regions
shouldered a much higher tax burden.5 The new tax system was based on levying tax on the
real value of land as determined by productivity, which was adopted following an extensive
land survey conducted over three years. Not only did it allow the government to meet its
fiscal needs for revenues, it also had several long-term effects that helped to foster
agricultural growth. Yamamura argued that the fixed cash tax rather than payment in rice
gave strong incentives for farmers working on their own land to increase the productivity of
land via capital investment without increasing their tax burden.6 Furthermore, with a free land
market and their positions as direct sellers of rice, farmers became more market-oriented
P. Francks, Rural economic development in Japan: from the nineteenth century to the Pacific War (London:
Routledge, 2006), p.25.
3
Hayami and Yamada, Agriculture, p.85
4
R. Miwa and A.Hara, Kingendai Nihon Keizai Shi Yoran. (Tokyo: University of Tokyo Press, 2007), p.40.
5
K. Yamamura, The Meiji Land Tax Reform and its Effects, in Japan in Transition: from Tokugawa to Meiji,
ed. M Jansen and G Rozman (Princeton: Princeton University Press, 1986), p.382.
6
Ibid., p.391.
28
The Sources of Agricultural Growth in the Late Nineteenth-Century and Early TwentiethCentury Japan
and gave increased access to economic information to make informed economic decisions.7
This allowed those working in the agricultural sector strong incentives to increase
productivity and efficiency in order to maximize the gains to be made from the land and
behave as active economic agents rather than being restrained under the old system. This
certainly contributed to the commitment of farmers to improve land and labour productivity
and develop appropriate technologies in this period as will be discussed later. However, the
supportive but partially damaging role of the Meiji government to the agricultural sector is
exemplified in its policy of imperial self-sufficiency, in its attempts to ensure sufficient
supply of Japanese-style rice and more importantly, the survival of the household as the basic
unit of agricultural production.
The government protected small-scale agricultural
households from foreign competitors that would have lowered the price of rice substantially
and crippled rice-producing farmers but also forced efficiency in the long-term. The
somewhat unintentional damaging effect of government policies is echoed with the land tax
reform also. The rise of high rent landlordism and the decreasing bargaining power of
tenant farmers were particularly consequential in the poorer and less productive eastern
regions.9 The change to real tax burden meant that small eastern landowners were deprived of
the economic margin they had had in the Tokugawa period needed to overcome economic
hardships with lower productivity. However the effect this would have had on agricultural
growth itself in this period is likely to have been limited, although it would have had serious
implications on the disparities in rural standards of living.
The most significant source of actual agricultural growth in this period is accounted by
the developments in agricultural technology, and a commitment and achievement of
increasing land productivity as much as possible. Hayami & Yamada highlighted the way in
which the increase in the output growth rate in the periods 1880-1900 to 1900-1920 was
largely the result of productivity growth rather than input driven growth.10 This is further
supported by the fact that in the Meiji period, arable land increased by just 25% but land
productivity increased by 80% demonstrating the importance of land saving technological
innovations. 11 Such improvements in productivity were largely achieved through four
Ibid., p.392.
Francks, Rice for the masses, p.127.
9
Yamamura, The Meiji Land Tax Reform and its Effects, pp.396-7.
10
Hayami, and Yamada Agriculture, p.91.
11
K. Ohikawa and H. Rosovsky, The Role of Agriculture in Modern Japanese Development, Economic
Development and Cultural Change 9, no. 1, (1960): p.44.
8
29
Rui Ding
channels: irrigation and agricultural infrastructure, fertilizer, higher-yielding seed varieties
and the dissemination of information. The package that incorporated these elements and
complemented a new set of economic and technical practices, known as Meiji Noho,12 was
necessitated by the relative scarcity of land as a factor of production. Rice production, as the
most important agricultural activity even in the early 20th century, greatly benefited from the
technological progress in drainage and double cropping that allowed for better crop
cultivation.13 The rapid increase in the use of fertilizer thanks to the spread of information but
also the commercialization of it as a chemical product contributed to agricultural growth, as
did the spread of seed varieties that generated a higher yield. The active effort by farmers and
agricultural scientists to invest in working capital and develop new land-intensive
technologies in order to maximize returns to land was certainly impressive. It is important to
note that the spread of such technology and production methods was a result of the successful
dissemination of information. Francks described in detail the factors that facilitated the extent
of such information diffusion, considering that some production methods and technologies
were already developed in the earlier Tokugawa period. The breakdown of the Tokugawa
daimyo system and investment into transport and infrastructure enabled the scope for
communication between agriculturalists. 14 While the state was the first to promote the
diffusion of improved agricultural technology, the formation of agricultural discussion groups
by private and local initiatives and relatively high levels of literacy allowed the continuous
increase in agricultural productivity as information diffused across Japan. Therefore, it is
clearly evident that the actual source of agricultural growth in this period was the consistent
improvement in productivity. This was due to a combination of more efficient production
methods, technology and inputs and the ability to spread this technology/information
throughout Japan.
The unique process by which the Japanese agricultural and industrial sectors grew side by
side was not only an important source of agricultural growth, but also one that prevented it
from being stifled by industrialisation and mechanization. The unique way in which the
agricultural sector remained a relatively large part of the Japanese economy in this period
despite industrialisation and modernization as well as the persistence of the small-scale
household unit for agricultural production is the result of several factors. The nature of rice
12
P. Francks, Japanese Economic Development (London: Routledge, 1999), p.132.

Francks, Rural economic development in Japan, p.30.
14
Francks, Japanese Economic Development, p.136.
13

30
cultivation is one, but in examining why this dominance changed so little when the economy
underwent so much change is rooted in the harmonious relationship of agriculture and
industry in Japan. The unusual juxtaposition of progress in the two dominant sectors
fostered largely advantages for both.15 The process of industrialisation particularly in the
early 20th century did not see a devastating transition of labour surplus into industrial
employment, largely thanks to a high consistent rate of population growth. However the
growth of industrialisation, and government support for manufacturing in the form of the
factory system created a domestic market and demand for basic crops and other agricultural
products. Increasing incomes and the simultaneous expansion of the urban population
provided a large domestic product for primary products such as rice, promoting the
consumption and thus cultivation of other crops amongst the rural population such as
wheat.16 Ohkawa & Rosovsky saw a positive feedback loop between the two sectors of the
economy through labour surplus in agriculture, but also through the way the farm labour
force was a source of saving for the economy, and therefore investment and capital
formation.17 And yet, the industrial sector managed to flourish in this period, in part thanks to
the agricultural sector. Not only did it provide sufficient tax revenue for government
subsidies to promote industrialisation and the development of heavy industries, the size of the
Japanese agricultural sector also enabled it to provide enough employment to prevent the
large-scale drift to the towns with which developing countries struggle to cope with in the
present day. 18 What is apparent is that the unique structure and size of the Japanese
agricultural sector was not constrained and suppressed by the growth of the industrial sector
in terms of output and employment, but rather the opposite. The mutually supportive
relationship of Japanese agriculture and industry through the mediums of employment,
domestic demand and capital formation was a clear source of agricultural growth and a factor
that allowed its persistence well into the twentieth century.
Finally, while the extent and sources of agricultural growth have been discussed
thoroughly, the limitations of this growth and the unique characteristics of its sources need to
be addressed. The first is the importance in non-agricultural output in this period, i.e. the rural
15
Ohikawa and Rosovsky,The Role of Agriculture in Modern Japanese Development, p.66.

Francks, Rural Economic Development, p.27.
17
Ohikawa. and Rosovsky.,The Role of Agriculture in Modern Japanese Development, p.60.
18
Francks, Japanese Economic Development, p.161.
16
31
Rui Ding
industry. Francks emphasized the importance of going beyond the dual economy model in the
case of Japan.19 The seasonal nature of labour demand in the case of rice cultivation and the
way agricultural production was largely organised in household units gave incentives for
farm workers to combine agricultural and industrial activity to supplement their income.20
The unique path of proto-industrialisation or production of z goods is well covered by the
literature. In the case of agricultural growth, it exemplifies the importance of the structure
and size of the agricultural sector and positive spillover effects. To focus on the purely
primary products in agriculture would undermine the importance of a wide range of other
goods, ranging from paper products to ceramics that were all produced in the household.
With the expanding domestic market due to rising incomes and urbanization, demand for
such products increased over the period. The shift from urban to rural industries with the
decline in the growth of cities in the late 19th century exemplifies the limits of the dual
economy model. Japan demonstrates the non-exclusivity of agricultural and industrial
growth, and in fact the strong interlink between the two. Another limitation that undermines
the sources and extent of agricultural growth in this period that is worth mentioning is the
extent of efficiency and competitiveness. The persistence of the household as the dominant
unit of production in agriculture stifled the gains to be made from mechanization and
economies of scale. This is reflected in the way that rice exports were only substantial for a
few years before the 1890s, which thereafter fell into insignificance, that could be explained
by exhaustion of the potential of the Meiji Noho package.21 The gains made from land and
labour productivity were constrained by diminishing returns in the small-scale household
unit. The inability to meet domestic demand for rice clearly demonstrates this, and the
eventual policy of imperial self-sufficiency following World War I only protected the
agricultural sector from more efficient foreign competitors in the short run. Agricultural
growth in this period was by all means considerable. However, by the eve of World War I,
the limitations of the Japanese style of agricultural growth and its extent were becoming
increasingly apparent.
19
P.Francks, Peasantry, Proletariat or Private Enterprise? The Japanese farmer in the Industrialisation
Process. Japan Forum 2, no. 1 (1990): p.92.
20
Ibid., p.90.
21
Francks, Rice for the masses, p.129.

32
In conclusion, the immediate sources of Japanese agricultural growth in the late
nineteenth to early twentieth century were a combination of technological developments and
improved production methods that encouraged productivity and the mutually supportive
relationship of agriculture and industry, in the background of a supportive Meiji government.
In particular, the impressive improvements in land productivity and the land tax reform
should be noted. The ability to disseminate information and the protection of the agricultural
sector from foreign competitors allowed this agricultural growth to persist well into the early
twentieth century. While the growth debate paints a more optimistic picture of agricultural
growth in the Tokugawa period, this does not undermine the significance of such growth in
this period. Japan provides an insightful example of the limits of the dual-economy model
and the way in which farmers adapted to changing market and general conditions, allowing
the household as the dominant unit of production in agriculture to continue. However at the
same time, the limitations of praising the agricultural growth in pre-war Japan must be
highlighted. The role of non-agricultural growth in rural areas demonstrates that farmers were
not solely reliant on agricultural products and that factors that caused a sustained growth in
agriculture had positive spillover effects. More importantly, it is difficult to say if this period
of agricultural growth was sustainable and efficient by international standards. The pre-war
period was one of unprecedented globalisation, and the consequences of this openness and
integration to the global market were already putting a significant strain on Japanese
agriculture.
REFERENCES
Francks, P. Peasantry, Proletariat or Private Enterprise? The Japanese farmer in the
Industrialisation Process. Japan Forum 2(1), (1990): pp. 91-104.
Francks, P. Japanese Economic Development. London: Routledge, 1999.
Francks, P. Rice for the masses: food policy and the adoption of imperial self-sufficiency in
early twentieth-century Japan Japan Forum 15(1), (2003), pp.125-146.
Francks, P. Rural economic development in Japan: from the nineteenth century to the Pacific
War. London: Routledge, 2006.
Hayami, Y. and Yamada, S. Agriculture, in Patterns of Japanese Economic Development,
edited by K Ohkawa and M Shinohara, pp. 85-103. New Haven: Yale University Press,
1979.
Miwa, R. and Hara, A. Kingendai Nihon Keizai Shi Yoran. Tokyo: University of Tokyo
Press, 2007.
33
Rui Ding
Ohikawa, K. and Rosovsky, H. The Role of Agriculture in Modern Japanese Development,
Economic Development and Cultural Change 9, no. 1 (1960), pp.43-67.
Yamamura K, The Meiji Land Tax Reform and its Effects, in Japan in Transition: from
Tokugawa to Meiji, edited by M.Jansen & G.Rozman, pp.382-399. Princeton: Princeton
University Press, 1986.

34
Implications of the growing WTO mandate for Development

in Poor Countries: a Counterfactual History of South Korea
By Chris Pearce
__________________________________________________
The developmental implications of the WTOs growing mandate, or the proliferation
of international market-opening and technology-rent-producing regulations are contested. 1
For instance, Wade contends that the WTOs increasing mandate constitutes a shrinking of
development space for developing countries, 2 while Shadlen suggests that WTO
membership involves trade-offs, in that developing countries gain increased market access
and opportunities for specialisation in exchange for diminished space for use of industrial
policy instruments.3 A useful method for contributing to this debate is to assess whether
South Korea (Korea), could have used the policies through which it developed, if constrained
by the WTO in the same way as todays developing countries. Given the views of some that
Korea developed in spite of its interventionist policies rather than because of them,4 one
cannot categorically say that the counterfactual of following todays liberal WTO regulations
would have harmed Koreas development. However, this author takes the view of scholars
including Amsden and Kohli that the Korean governments trade and investment policies
were crucial drivers of its rapid development. Therefore it will be argued that using todays
WTO-approved policies, rather than the policies that Korea actually used, would have had a
less positive effect on Koreas development. Prior to introducing the policies explored below,
following Parks coup in 1961, Korea was a poor country as per-capita GDP of South
Korea in 1960 was inferior to that of Senegal.5 The dramatic improvements in Koreas GDP
following Parks economic reforms until policy liberalisation in the 1997 financial crisis
R. Wade, What strategies are viable for developing countries today? The World Trade Organization and the
shrinking of development space. Review of International Political Economy, no. 10 (2003): p.622.
2
Ibid, p,640.
3
K. Shadlen, Exchanging development for market access? Deep integration and industrial policy under
multilateral and regional-bilateral trade agreements. Review of International Political Economy, no. 12 (2005):
p.750.
4
J. Ang, Research, technological change and financial liberalization in South Korea, Journal of
Macroeconomics, no. 32 (2010): p.217.
5
F. Garcia Blanch, An Empirical Inquiry into the Nature of South Korean Economic Growth, Center for
International Development at Harvard University: Working Papers, no. 74 (2001): p.1.
35
Chris Pearce
are shown in Figure 1.6 The implication for development in poor countries today is that under
WTO regulations they cannot use the policies used successfully by Korea, another poor
country, to catch up with developed countries. Korea joined the GATT in 1947 and, its
successor, the WTO in 1995, when both organisations were established.7 Consequently, due
to the single undertaking, Korea has been subject to the institutions full mandate throughout
its development, but crucially this mandate has increased, especially since the WTOs
establishment when Korea already had high GDP per capita. To allow for analytical depth
this study will focus on the WTOs mandate, and not regional trade agreements. However, all
aspects of the WTOs current mandate will be considered in relation to the constraints these
rules would have placed on Koreas development, including rules on tariffs, TRIMS and
TRIPS.
First, it is important to consider Koreas development in relation to the WTOs mandate

of facilitating trade liberalisation through a reduced use of tariffs, subsidies and non-tariff
barriers. Continuing with the GATTs liberalising Rounds, the Uruguay Round, which
founded the WTO in 1995, led to countries commitments to cut tariffs and to bind their
customs duty rates.8 Another WTO policy to reduce trade distortions was time-restricting
C. Kyung-Sup, B. Fine and L. Weiss, Developmental Politics in Transition. (New York: Palgrave Macmillan,
2012), p.243.
7
WTOb, Tariffs. WTO. Last Accessed 2 March 2015.
https://www.wto.org/english/tratop_e/tariffs_e/tariffs_e.htm
8
WTOb, Tariffs, WTO [Online]
36
Implications of the growing WTO mandate for Development in Poor Countries: a

Counterfactual History of South Korea
certain kinds of subsidies under the Subsidies and Countervailing Measures agreements. 9
Increasing WTO restrictions such as these are argued by some to undermine the ability of
developing countries to create comparative advantage for industries not yet able to compete
in world markets10. Chang argues that WTO rules should allow more active use of infant
industry promotion tools.11. Indeed, Korea used subsidies in the early 1960s to increase its
firms international competitiveness and protected selected infant industries behind tariffs to
create comparative advantage. 12 Consequently it could be argued that under the WTOs
current mandate Korea would have struggled to protect and promote inefficient firms behind
lower bounded tariffs, and with only timed subsidies, harming its development.
On the other hand, Korea may have benefited from todays WTO mandate. Krueger
argued that trade liberalisation effectively provides incentives that IIP cannot provide.13 By
this view, full trade liberalisation may have prevented Koreas disastrous HCI drive14 as
inefficient firms would not be able to compete on price and quality internationally, forcing
Korea to return to its static comparative advantage. Furthermore, there was a massive fall in
tariffs in industrial countries under the WTO, perhaps suggesting that Korean exporters
would have benefited through more unrestricted market access, albeit based on Korean
exporters static comparative advantage15. Alternatively, Findlay and ORourke argue that the
WTO has failed to regulate quotas and NTBs,16 so in todays WTO mandate Korea would
have retained some trade policy tools. Finally, under the Doha Declaration, if Korea were
considered an LDC it would face less than full reciprocity in reduction commitments on
tariffs and subsidies.17 However, such Special and Differential Treatment (SDT) proposals
R. Narula and J. Dunning, Industrial Development, Globalization and Multinational Enterprises: New
Realities for Developing Countries, Oxford Development Studies, no. 28 (2000): p. 157.
10
Ibid., p.59.
11
H. Chang, Kicking Away the Ladder (London: Anthem Press, 2003), p.141.
12
A. Amsden, Third World Industrialisation: 'Global Fordism' or a new Model? New Left Review, no. 182
(1990): p. 20.
76
A. Krueger, Why Trade Liberalisation is Good for Growth, Economic Journal, no. 108 (1998): p.152.
77
S. Collins, Lessons from Korean economic growth, The American Economic Review, no. 80 (1990): p.105.
15
World Institute for Development Economics Research. Transnational Corporations and Technology Flows.
By S. Lall, (Helsinki: Finland: United Nations University, 2002): p.95.
16
R.Findlay and K. O'Rourke, Power and plenty. (Princeton, 2009), p.500.

WTO, WTO Doha Declarations. WTO. Last Accessed 17 February 2015.
https://www.wto.org/english/res_e/booksp_e/ddec_e.pdf.
17
37
Chris Pearce
are no longer seen as a priority by any group18 suggesting that despite the WTOs emphasis
on SDTs in Doha they have minimal developmental benefits. On balance, it is difficult to
conclude whether Koreas development would have been harmed under todays WTO
policies to liberalise trade.
The impact of TRIMS agreements will now be considered in relation to Koreas
development. Trade-related Investment Measures (TRIMS), another product of the Uruguay
Round, limits the development space of developing countries. the TRIMS agreement bans
performance requirements related to local content, trade balancing and export
requirements.19 Much like the bound tariff system mentioned above, the illustrative list of
TRIMS include SDT through allowing longer time periods to abolish TRIMS for developing
countries.20 Wade criticises SDT in TRIMS, arguing that it is purely bureaucratic and has
nothing to do with the time needed to nurture infant industries21, TRIMS and SDT are not
seen as developmental. That being said, through SDT, Korea would have had five or seven
years to abolish TRIMS, depending on whether it was considered a developing country or
LDC.22 Narula and Dunning argue that reductions in TRIM usage are meeting the objective
of the WTO in FDI as MNEs are increasingly accorded national treatment by their host
governments.23 In liberalising to appease the WTO, the new TRIMS laws would have
prevented Korea from using export targets, which were placed on many firms, including
those that had received FDI.24 The rationale behind export targets was to increase market
incentives, to encourage productivity improvements, for industries in which Korea was trying
to foster comparative advantage behind initial protectionist barriers, 25 opposing Kruegers
inefficiency criticism above. Countering Narula and Dunnings argument that TRIM
performance requirements tend to have minimal impact on creation of domestic
capability, Lall suggests that these banned TRIMS were crucial in Koreas development by
incentivising firms to invest in costly learning to achieve best practice levels of technology
18
S. Page, M. Cal and D. Velde. Development package at the WTO? What do developing countries want from
the Doha round? ODI (2008): p.11.
19
Wade, What strategies are viable for developing countries today?, p.621.
20
Ibid, p.640.
21
Ibid, p.628.
22
WTOc, Agreement on Trade Related Investment Measures (TRIMS). WTO. Last Accessed 3 March 2015.
https://www.wto.org/english/tratop_e/trims_e.htm
23
Narula and Dunning, Industrial Development, Globalization and Multinational Enterprises , p.157.
24
J. Page, The East Asian Miracle: Four Lessons for Development Policy, NBER Macroeconomics Annual,
no. 9 (1994), p.235.
25
J. Stiglitz and S. Yusuf. Rethinking the East Asian Miracle. (Washington, D.C.: World Bank, 2001), p.7.
38

and management
26
which increased the quality of FDI and its subsequent impact.
Consequently, the WTOs rules blocking export target TRIMS would have harmed Koreas
development.
Koreas development will be considered in relation to the view by some that the
abolition of TRIMS reduced the spread of technology from FDI to developing countries. The
EU and US want to expand the TRIMS agreement to ban performance requirements on
technology transfer, and research and development.27 Furthermore, the more powerful
developed countries are able to impose such bans now on developing countries through
threatening foreign aid cuts.28 Technological learning from FDI through TRIMS was a key
source of technology for Korea, the government stipulated that foreign contractors transfer
their design knowledge to local firms.29 Hirst and Thompson argue that R&D is more
concentrated than ever in OECD countries but FDI extends the benefits of this to other
countries30, consequently the expansion of TRIMS agreements may have reduced the ability
for Korea to capture these benefits. That is, WTO TRIMS rules may reduce the spillovers
defined as positive externalities that benefit domestic firms with presence of FDI, which can
result in productivity increases among domestic firms. 31 Therefore, expanding TRIMS rules
may have harmed Koreas development by reducing its ability to extract technology from
FDI.
The WTOs rules on TRIPS (trade-related aspects of intellectual property rights) will
be considered in relation to Koreas development. Emerging from a time of no international
regulation on IPR, 32 the TRIPS Agreement of 1995 established minimal international
standards on IPR, especially on patents.33 Whereas countries could previously deny patents
to certain types of inventions so to encourage reverse-engineering now countries must
26
Lall, Transnational Corporations and Technology Flows, p.86.

Wade, What strategies are viable for developing countries today?, p.627.
28
Ibid, p.628.
29
S. Lall, Selective Industrial and Trade Policies in Developing Countries: Theoretical and Empirical Issues,
QEH Working Paper Series, no. 48 (2000): p.12.
30
P. Hirst and G. Thompson. Globalization in question (Cambridge: Cambridge University Press, 1999), p.90.
31
Y. Zhang, H. Li, Y. Li and L. Zhou. FDI spillovers in an emerging market: the role of foreign firms' country
origin diversity and domestic firms' absorptive capacity, Strategic Management Journal, no. 31 (2010): p.969.
32
Shadlen, Exchanging development for market access?, p.760.
33
WTOd, Overview: the TRIPS Agreement. WTO. Last Accessed 3 March 2015.
https://www.wto.org/english/tratop_e/trips_e/intel2_e.htm
27
39
Chris Pearce
offer patents in virtually all fields.34 Watkins and Fowler suggest that TRIPS are antidevelopmental, as stringent protection of patents will increase the costs of technological
transfer.35 It is almost indisputable that Koreas development would have suffered if the
WTOs TRIPS agreements existed when Park took control. The primary cause of Koreas
technological upgrading was the imitation of foreign technology,36 Korea did not respect
patents meaning that it would have been subject to WTO dispute settlement under the TRIPS
agreement.37 Lall points out that Koreas government encouraged reverse engineering by
technology importing firms to develop indigenous technological capabilities.38 Given the
importance of technological imitation to Korean competiveness, it seems highly likely that
Korean firms technological capabilities would have been far lower had they not been able to
breach patents and leapfrog others innovations. Being subject to the WTOs increased
mandate into TRIPS would have harmed Koreas development.
Prior to concluding it is worth briefly emphasising that the WTOs extended mandate
may have left some policy space for Koreas development. Weiss suggests that contemporary
developing countries create convenient loopholes and escape routes around the WTO
regulations discussed above.39 For instance, even in the restrictive constraints of TRIPS rules,
it is still possible to design patent laws taking into account broader developmental objectives
and, particularly, the creation of a legal environment to promote innovation and technology
transfer. 40 Consequently, while Koreas development space would have been reduced under
the WTOs current mandate, with enough determination from policy makers some space
could have been retained. 41
34
Shadlen, Exchanging development for market access?, p.761.

K. Watkins and P. Fowler, Rigged Rules and Double Standards: Trade, globalisation and the fight against
power, Oxfam Campaign Reports (2002): p.14.
36
V. Valli, The economic ascent of a technological power: South Korea, Universit di Torino Department of
Economics "S. Cognetti de Mariss" Working Paper Series, no. 14 (2010). p.8.
37
E. Kim, P. Kim and J. Kim, From development to development cooperation: foreign aid, country ownership,
and the developmental state in South Korea, The Pacific Review, no. 26 (2013): p.332.
38
Lall, Transnational Corporations and Technology Flows, p.90.
39
L. Weiss, Global Governance, National Strategies: How Industrialized States Make Room to Move under the
WTO, Review of International Political Economy, no. 12 (2005): p.730.
40
Shadlen, Exchanging development for market access? p.761.
41
Wade, What strategies are viable for developing countries today? p.622.
35
40

To assess the implications of the WTOs growing mandate the test essentially is: if the
GATT had the WTOs current mandate when Park came to power in 1961, could Korea have
used the policies it did to develop so successfully? If Koreas development would likely have
been worse under todays rules, then the WTOs growing mandate can be said to have largely
negative implications for todays developing countries because they are subject todays WTO
mandate. That is, if Koreas development was more successful under the policies it actually
used than the counterfactual, developing countries would prefer to emulate Korean
development policies but the WTO restricts them from doing so. First it was argued that
adopting todays lower bounded tariffs and timed subsidies would have harmed Koreas
development as IIP to create comparative advantage would be more difficult. However,
several arguments suggesting that Korea would benefit from this were detailed e.g. it would
have better market access and receive SDT. Consequently it is difficult to conclude whether
lowering tariffs and restricting subsidies would have harmed Koreas development. Enacting
todays TRIMS agreements would have slowed Koreas development as its successful export
targets could not be used, and technological spillovers from FDI would have been reduced
without encouragement of technological transfer in FDI. Korea relied extensively on
technological imitation, which would have been banned under TRIPS agreements, reducing
the competitive advantages Korea gained by leapfrogging others technological innovations.
While Korea may have mitigated some of these negative effects through finding policy
loopholes, on balance Korea could not have used its successful policies under todays
WTO rules. The implication is that Korea benefited from avoiding this counterfactual, the
implication for todays developing countries is that they too would likely benefit from the far
less restrictive international trade rules under which Korea developed.
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Chris Pearce
Chang, H. Kicking Away the Ladder. London: Anthem Press, 2003.
Collins, S. Lessons from Korean economic growth. The American Economic Review, no.
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Findlay, R. and O'Rourke, K. Power and Plenty. Princeton: Princeton University Press, 2009.
Garcia-Blanch, F. An Empirical Inquiry into the Nature of South Korean Economic Growth.
Center for International Development at Harvard University: Working Papers, no. 74
(2001): pp.1-57.
Heo, Y. Development strategy in Korea reexamined: an interventionist perspective. The
Social Science Journal, no. 38 (2001): pp.217-231.
Hirst, P. and Thompson, G. Globalization in question. Cambridge: Cambridge University
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Kim, E., Kim, P. and Kim, J. From development to development cooperation: foreign aid,
country ownership, and the developmental state in South Korea. The Pacific Review, no. 26
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Kohli, A. State-Directed Development: Political Power and Industrialisation in the Global
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Krueger, A. Why Trade Liberalisation is Good for Growth. Economic Journal, no. 108
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Kyung-Sup, C., Fine, B. and Weiss, I. Developmental Politics in Transition. 1st ed. New
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Lall, S. Selective Industrial and Trade Policies in Developing Countries: Theoretical and
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Page, J. The East Asian Miracle: Four Lessons for Development Policy. NBER
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Page, S., Cal, M. and Velde, D. Development package at the WTO? What do developing
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Rhee, Y., Pursell, G. and Larson, R. B. Korea's Competitive Edge. 1st ed. Baltimore: Johns
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Valli, V. The economic ascent of a technological power: South Korea. Universit di
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Wade, R. What strategies are viable for developing countries today? The World Trade
Organization and the shrinking of development space. Review of International Political
Economy, no. 10 (2003): pp.621-644.
Watkins, K. and Fowler, P. Rigged Rules and Double Standards: Trade, globalisation and
the fight against poverty. Oxfam Campaign Reports (2002): pp.1-18.
Weiss, L. Global Governance, National Strategies: How Industrialized States Make Room to
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February
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Zhang, Y., Li, H., Li, Y. and Zhou, L. FDI spillovers in an emerging market: the role of
foreign firms' country origin diversity and domestic firms' absorptive capacity. Strategic
ManagementJournal,no.31(2010),pp.969-989.
43
Characterising the Nature of the Legal System in Traditional

China
By Josh Carson
__________________________________________________
INTRODUCTION
In the eyes of many scholars, traditional Chinese law is better avoided than discussed.1
Though a deeper understanding of the mechanisms of Chinas unique legal framework would
be beneficial in rethinking the way law is conceptualised, the historical and theoretical basis
of Chinese law has proven difficult to analyse. A confusing mix of uncodified statutory
provisions, traditions, and cultural imperatives act as a deterrent to minds schooled in more
familiar Western concepts of adjudication, constitutional rights, and jurisprudence. The
product of distinct histories and institutions, traditional Chinas legal system is difficult to
interpret through the lens of Western juristic thought.2
THE INCOMPATIBILITY OF WESTERN CONCEPTS
Interpretation of the traditional Chinese legal system is complicated first and foremost
by the limitations of translation. As Eastern definitions and politico-legal jargon often dont
have Western equivalents, the peculiarities of the traditional legal culture are not fully
captured. For some linguists the challenge starts with the definition of law (fa ), where
the English interpretation (a system of rules regulating proper conduct) differs widely from
Mandarin (where law had traditionally been synonymous with punishment). Similar
difficulties occur when addressing the substantial difference between relationship and
guanxi (). As observed by Fan3 and King4, the notion of harmony is uniquely different in
the West and East, as are attempts to achieve balance. Whereas Western adjudicative systems
see
codes
of
rigid
and
universal
imperatives
as
instrumental
to
order,
D. Bodde, Basic concepts of Chinese Law: the genesis and evolution of legal thought in traditional china
(Philadelphia: American Philosophical Society, 1963), p. 10.
2
T.B. Stephens, The Shanghai Mixed Court, 1911-1927, Order and Discipline in China (Washington:
University of Washington Press, 1992), p. 4.
3
Y. Fan, Questioning Guanxi: Definition, classification and implications, International Business Review Vol.
11, No. 5 (2002): p. 543.
4
A.Y. King, Kuan-hsi and Network Building: A Sociological Interpretation, The Living Tree: The Changing
Meaning of Being Chinese Today (Stanford: Stanford University Press, 1991), p. 63.
44
Josh Carson
the Imperial Chinese legal framework is predicated on command, obedience, and
indoctrination.5
Alongside context-dependent meanings lost in translation, pre-Republican China views
of law, its values, and its implementation varied from Western understanding. For the
Emperors of dynasties, law was an extension of their power, helping to reaffirm vertical
hierarchy between classes (Gemeinschaft). Its value lay in establishing unilateral ties of duty,
a superior-inferior complex in toto. Discipline equated to balance. Stephens6 describes the
behavioural guidelines of traditional Chinese law as similar to those of the armed forces, but
a state of mind realised on all layers of society (education, business, lineage). Its
implementation would be top-down 7 , dispute resolution inquisitorial as opposed to the
Western adversarial litigation format.8 The individual on trial would be guilty until proven
innocent (inferior to judgement), contrary to original protection under Western fundamental
human rights (superior to judgement). Historically Chinese law had been modelled on the
family and kinship, and its fundamental unequal distribution of power was to be incompatible
with Western conceptions of justice.
Issues with direct translation of both definitions and traditional Chinese concepts
explain why Western codified common law found it difficult to take root in Shanghai and
Hong Kong. In the Western world law was appropriate to an individualistic society, mutual
rights designed to give equal opportunities to law-abiders (whether personal or business).
Parties are on equal footing under overarching natural authority9, enshrined in the British
rule against perpetuities common law (that property could not be vested for an indefinite
time). Thus, when confronted by the traditional Chinese trusts such as the tong, British
imperialists could not understand a foreign concept that had flexible and alien historical
underpinnings which could not be captured and categorised by the Western legal paradigm.
Subsequent rulings against the tong as a legal person in British Malaya and the Hong Kong
Court of Justice such as Choa Cheow Neoh v. Spottiswoode (1869), Yeap Cheah Neo v. Ong
Stephens, The Shanghai Mixed Court, 1911-1927, p. 11.

Stephens, The Shanghai Mixed Court, 1911-1927 , p. 14.
7
D. Ma, Law and Economic Change in Traditional China: A Comparative Perspective, Working Papers No.
124/09 (2009): p. 5.
8
J. Wallace and D. Twitchett, Criminal Procedure in Tang China, Asia Major (Taiwan: Institute of History
and Philosophy, Academia Sinica, 1993), p. 114.
9
6
45
Characterising the Nature of the Legal System in Traditional China

Chen Neo (1875), and Li Chok Hung v. Li Pui Choi (1910)10 affirm that the traditional
Chinese legal system was not (and disputably still is not) well understood by Western
outsiders.
CHARACTERISING THE CHINESE LEGAL ORDER
We have so far established the limitations of characterising the traditional Chinese
judicial system, of which a complex trichotomy of language, culture, and tradition play a
substantial role. Western methodology is ineffective in explaining the social order of the
traditional Chinese legal system. It simply does not yield to treatment in terms of Western
jurisprudence and legal theory.11 As such, a different approach is needed to characterise the
Chinese legal order, one that is built around disciplinary systems of order, control,
interpersonal relations (kuan-zhi) and moral obligation. 12 Only when the dichotomy
between East and West conceptions of justice is acknowledged, can we begin to correctly
analyse the nature of the legal system in traditional China.
Traditional Chinese law grounds itself in the rulers fiat.13 As the source of law, the
Emperors decision-making form new sub-statutes under the mandate of heaven. Whereas
the likes of Western law give precedence to a divine natural law that is transcendent of the
state, the legal issues of China are sui generis positive law (instituted by the executive). The
concept of rule of law, that arbitrary decisions by individual government officials should not
govern a nation, is not existent. In much the same way as the canon law of the Catholic
papacy dictates that the Pope has legislative, executive, and judicial power, the Emperor of
China has absolute legal authority; separation of powers was unknown until the early-20th
century. 14 Administrative law had been constructed hierarchically to ensure that juristic
power would not be devolved away from the Emperor.
The Confucian philosophy of social control ensured that the Emperor could delegate
and administer his legal authority to a subordinate bureaucracy. This was not say that powers
10
K.S. Sandhu and P. Wheatley, Management of Success: The Moulding of Modern Singapore (Singapore:
Institute of Southeast Asian Studies, 1990), p. 612.
11
12
J. Yau and J.G. Smetana, Conceptions of Moral, Social-Conventional and Personal Events among Chinese
Preschoolers in Hong Kong, Child Development Vol. 74, No. 3 (2003): p. 647.
13
J.K. Fairbank and M. Goldman, China: A New History, Second Enlarged Edition (Cambridge: Belknap Press,
2006), p. 13.
14
F. Michael, The Role of Law in Traditional, Nationalist, and Communist China, The China Quarterly, no. 9
(1962): p. 124.
46
Josh Carson
had been devolved; government officials would maintain social cohesion on behalf of the
Emperor.15 Legal codes organised in a nodal format of ministers (government, revenue,
justice, ceremony, military, and works) safeguarded the indispensability of his administrative
position de jure. In part, this explains why the system can be characterised as a extension and
fortification of the Emperors rule, and why discipline remained at its core.
Legal codes did exist and were to a certain extent codified in official law, but these
were penal. Originating in the Sui Dynasty, the Kaihuang Code was adopted and later
developed by the Tang and Qing.16 Enshrined in these series of law were five forms of
corporal punishment (flogging, caning, imprisonment, exile, and death) and Ten
Abominations, acting as guidelines for bureaucratic officials. Leniency was to be applied
according to Eight Deliberations, extrapolated from legalist and Confucian ideals of moral
obligation and social harmony (tianxia ). The character of administrative and penal law
was well-established and mutually reinforcing.
In the absence of civil and commercial law, property rights saw no mention in official
law. Though the state did uphold regulations prohibiting monopolies and market
manipulation, it was foremost explicitly concerned with discipline and intermediation, rather
than adjudication and the promulgation of precedent to protect individual business owners. In
some cases, government officials were sceptical towards trading activities and would
intervene in the accumulation of wealth.17 Protective coverage of enterprise could not be
guaranteed by the state; unlimited liability ensured that risk could not be diversified.
To fill the legal vacuum, business was conducted through webs of kinship, religion,
and relative bloodlines.18 Popular among alternative institutions to law was the familial
lineage cooperative (tong ), which provided a distinctively Chinese substitute to company
law in the West. By utilising interpersonal networks, the lineage could mobilise capital,
establish commercial ties, and see patronage to protect their activities.19 In a similar fashion
15
Fairbank and Goldman, China: A New History, p. 17.

M. Dalby, Revenge and the Law in Traditional China, The American Journal of Legal History Vol. 25, No.
4 (1981): pp. 267-270.
17
S. Chung, Chinese Tong as British Trust: Institutional Collisions and Legal Disputes in Urban Hong Kong,
1860s-1980s, Modern Asian Studies Vol. 44 No. 6 (2010): pp. 1411-1413.
18
S.Y. Teng, The Role of the Family in the Chinese Legal System, Journal of Asian History Vol. 11, No. 2
(1977): pp. 122.
19
Chung, Chinese Tong as British Trust, p. 1416.
16
47

to historical coalitions such as the 11th century Maghribi traders20 and the Guilds of Florence
during the Middle Ages, collective responsibility bonded members to the business entity (in
this case, filial piety). Corporation was possible by collective ritual practice21; big firms were
family affairs.22
Interestingly, current scholarship suggests that the legal system did little to facilitate
business: the birth of Company Law (1904) was the first attempt to regulate private economic
activity. However, while this article does not debate the absence of commercial law and
business safeguards, disciplinary Chinese legal culture installed moral responsibility in
commercial actions that, even if inadvertently, regulated private economic activity. The
Confucian state of mind applied as much to business as it did to social relations. Partnership
forms before 1904 relied on unquestionable cooperation, involving managerial discipline.
Unlimited liability as non-legal entities engendered sacrifice, overt obedience, and collective
punishment - tenets of the state penal code. The nature of the traditional system was in
essence an attempt to establish a moral framework, to which it was effective in sustaining,
but not facilitating business.
CONCLUSION
The example of the Zigong Salt Yard shows that the traditional legal system - in being
characteristically status-orientated - doubled as a privilege system. Personal relations and
political networks in part allowed the tong to maintain its dominant position as a monopoly
despite regulations prohibiting fettered markets. Hierarchical structures were not new to the
West, they too had armies which filed in ranks and legions.23 But where it was applicable to
education systems where the relationship was parent-child, teacher-student, officer-soldier,
the West could not fundamentally understand how a legal culture could be disciplinary rather
than adjudicative. The very nature of the legal system in China until the disintegration of the
Qing and the replacement of the Great Qing Code in 1913 would be discipline, command,
and the rule of man.
20
A. Grief, Contract Enforceability and Economic Institutions in Early Trade: The Maghribi Traders
Coalition, The American Economic Review Vol. 83, No, 3 (1993): pp. 525-530.
21
W.C Kirby, China Unincorporated: Company Law and Business Enterprise in 20th Century China, The
Journal of Asian Studies Vol. 54, No. 1 (1995): pp. 43-63.
22
D. Faure, The Lineage as Business Company: Patronage versus Law in the Development of Chinese
Business, The Second Conference on Modern Chinese Economic History (1989): p. 3.
23
J.H. Gray and W.G Gregor, China, a history of the laws, manners, and customs of the people (London:
Macmillan, 1878), pp. 5-10.
48
Josh Carson
REFERENCES
Bodde, D. Basic concepts of Chinese Law: the genesis and evolution of legal thought in
traditional china. Philadelphia: American Philosophical Society, 1963, pp. 10-216.
Chung, S, Chinese Tong as British Trust: Institutional Collisions and Legal Disputes in
Urban Hong Kong, 1860s-1980s. Modern Asian Studies 44, No. 6 (2010): pp. 1409-1432.
Claessens, S., Djankov S., and Lang, L. The Separation of Ownership and Control in East
Asian Corporations. Journal of Financial Economics 58, No. 1-2 (2000): pp. 81-112.
Dalby, M. Revenge and the Law in Traditional China The American Journal of Legal
History 25, No. 4 (1981): pp. 267-307.
Fairbank, J., and Goldman, M. China: A New History, Second Enlarged Edition. Cambridge:
Belknap Press, 2006, pp. 1-640.
Fairbank, J., and Teng, S. Ching Administration: Three Studies, Harvard-Yenching Institute
Studies (Boston: Harvard University Press, 1960) pp. 1-228.
Fan, Y. Questioning Guanxi: Definition, classification and implications International
Business Review 11, No. 5 (2002): pp. 543-561.
Faure, D. The Lineage as Business Company: Patronage versus Law in the Development of
Chinese Business The Second Conference on Modern Chinese Economic History. Taiwan:
Institute of Economics, Academia Sinica, 1989, pp. 1-33.
Gray, J., and Gregor, W. China, a history of the laws, manners, and customs of the people.
London, UK: Macmillan, 1878, pp. 5-10.
Grief, A. Contract Enforceability and Economic Institutions in Early Trade: The Maghribi
Traders Coalition The American Economic Review 83, No, 3 (1993) pp. 525-548.
Huang, P. Civil Justice in China: Representation and Practice in the Qing. Stanford:
Stanford University Press, 1996, pp. 1-288.
King, A. Y. Kuan-hsi and Network Building: A Sociological Interpretation, The Living
Tree: The Changing Meaning of Being Chinese Today. Stanford: Stanford University Press,
1991, pp. 63-84.
Kirby, W. C.China Unincorporated: Company Law and Business Enterprise in 20th Century
China The Journal of Asian Studies 54, No. 1 (1995): pp. 43-63.
49

Ma, D. Law and Economic Change in Traditional China: A Comparative Perspective
Working Papers No. 124/09 (2009): pp. 1-39.
Michael, F. The Role of Law in Traditional, Nationalist, and Communist China The China
Quarterly No. 9 (1962): pp. 124-148.
Sandhu, K., and Wheatley, P. Management of Success: The Moulding of Modern Singapore.
Panjang, Singapore: Institute of Southeast Asian Studies, 1990, pp. v-1123.
Stephens, T. B. The Shanghai Mixed Court, 1911-1927 Order and Discipline in China.
Washington: University of Washington Press, 1992, pp. 1-176.
Teng, S. Y. The Role of the Family in the Chinese Legal System Journal of Asian History
11, No. 2 (1977): pp. 121-155.
Wallace, J, and Twitchett D. Criminal Procedure in Tang China Asia Major. Taiwan:
Institute of History and Philosophy, Academia Sinica, 1993, pp. 113-146.
Yau, J, and Smetana, J. Conceptions of Moral, Social-Conventional and Personal Events
among Chinese Preschoolers in Hong Kong Child Development 74, No. 3 (2003): pp. 647658.
Zhao-hui, F., and Schiller, H. A Critical Reflection on the Systematics of Traditional
Chinese Learning Philosophy East and West 52, No.1(2002): pp. 36-49.
50
To Leave or Not to Leave: The Gold Standard in the 1930s

By Anil Menon
______________________________________________
Governmental reactions to the Great Depression were markedly diverse, both in their
scope and timing. Studies about the period, armed with the benefit of hindsight, have
criticized this failure of coordination and collaboration among nations for having produced
the haphazard and often counterproductive global responses that prolonged and deepened the
economic downturn. A steadfast adherence to the gold standard by most major economic
powers of the day limited opportunities for inter-country policy collaboration. Path breaking
research from recent decades suggests that a countrys early departure from gold was
rewarded with a less severe downturn and a faster recovery. Departure from the gold standard
afforded countries greater monetary policy flexibility, which in turn was essential to combat
deflationary pressures within the economy. Individual departures from gold thus proffered
great benefits to the departing nation. However, such departures were considered beggarthy-neighbour devaluations as they advanced the interests of one nation at the expense of
others. Meanwhile, a simultaneous departure from the gold standard by all nations would
have proven politically unattainable given its popular contemporary support. Even if
successful, such a measure might have produced unforeseen network effects or allowed for
the return of the economic chaos of the previous decade. A feasible alternative might have
been to simultaneously devalue all national currencies relative to gold while mostly
maintaining the exchange rates between currencies. The reduced parity with gold would
permit the same amount of gold reserves to support a greater money supply. Increased
domestic money supplies would have allowed countries to engage in expansionary monetary
policy without fear of breaching its commitment to the gold standard. Thus, recent academic
insights from our study of the Great Depression suggests that a planned devaluation by all
countries, while remaining within the framework of the gold standard, could have helped
eased the deflationary pressures that were depressing world markets and hastened economy
recovery in the early 1930s.
Any assessment of how a complete abandonment of the interwar gold standard would
have affected the world economy should begin with an examination of its origins and
functioning. Countries did not immediately return to gold parity at the completion of the
51
Anil Menon
Great War. The United States resumed gold convertibility in 1919 while the United
Kingdom, France and Japan did not return to the fold till 1925, 1926 and 1930 respectively.1
Many nations, among them Germany and France, had experienced high or hyperinflation
since the end of World War I. The chaotic economic performances of the 1920s galvanized
support for the reestablishment of the gold standard, which in the classical gold standard
period (1870-1913) had been a beacon of economic stability. However, as forcefully argued
by Eichengreen in Golden Fetters the interwar gold standard differed greatly from its
classical counterpart.2 The Great War had transformed relations between world powers and
cooperation and coordination, which were hallmarks of the pre-war standard, were absent
from the system that succeeded it.3 Moreover, as countries returned to gold they did so
mostly at their pre-war parities, not accounting for the wartime inflation that had increased
their price levels.4 A return to parity at a higher price level without a proportional increase in
gold reserves meant that a country could only support a smaller money supply with the same
amount of gold. A proposed and partially adopted solution to this bottleneck involved
supplementing a countrys gold stock with foreign exchange holdings.5 However, countries
like France preferred maintaining their reserves in gold and engaged in heavy sales of their
foreign currency reserves in exchange for gold during the closing years of the 1920s.6
Meanwhile, a tightening of monetary policy by the then fledgling Federal Reserve
transformed the United States into another sink for gold.7 Such actions curbed the world
stock of monetizable gold and transformed the pre-war bedrock of economic stability into a
golden straightjacket.8
The golden straightjacket together with orthodox notions of contemporary political
economy greatly restricted an individual countrys ability to engage in expansionary
monetary and fiscal policy. The scope of eliciting recovery through monetary manipulation
was constrained by the mechanics of the gold standard. A decision to lower interest rates, a
1
B. Eichengreen and D. Irwin, The Slide to Protectionism in the Great Depression: Who Succumbed and
Why? The Journal of Economic History, Vol. 70, No. 4 (2010): p.880.
2
B. Eichengreen, Golden Fetters: The Gold Standard and the Great Depression 19191939 (New York: Oxford
University Press, 1992), p.12.
3
Ibid., p. 9.
4
N. Crafts and P. Fearon, The Great Depression of the 1930s: Lessons for Today (Oxford: Oxford University
Press, 2013), p.7.
5
D. Irwin, Did France Cause the Great Depression? Working Paper Series, National Bureau of Economic
Research (2010): p. 6.
6
Ibid., p. 7.
7
Eichengreen, Golden Fetters, p. 12.
8
D. Rodrik, Feasible Globalizations, Working Paper Series, National Bureau of Economic Research (2002),
p.16.
52

classic expansionary tool of recent times, would have resulted in the outflow of gold reserves
from the domestic economy.9 Meanwhile, fiscal spending was frowned upon due to the
orthodoxy that governments should run balanced budgets even in downturns.10 Thus, gold
standard countries found themselves ill equipped to tackle the deflationary pressures that
assaulted their economies at the onset of the Great Depression.
Absent monetary and fiscal discretion gold standard countries relied on increased
tariffs, quotas and/or exchange controls to combat their respective economic downturns.11
These second-best macroeconomic tool(s) were deployed frequently and sometimes
aggressively.12 The passing of the Smoot-Hawley import tariffs by the United States in the
1930s is a canonical example of the protectionist environment of the times. This legislation
prompted retaliatory tariff increases from countries like Canada, France and the United
Kingdom among others. 13 Meanwhile, members of the gold bloc including France,
Belgium, Netherlands and Switzerland resorted to strict quotas in an effort to protect their
domestic economies.14 Exchange control measures adopted by Germany, Italy, Hungary and
Denmark also represent attempts to limit the outflow of domestic gold reserves into
international markets.15 These diverse country level reactions were aimed at maintaining their
individual gold parities and were motivated by a desire for greater monetary stability after the
tumultuous experiences of the 1920s. However, the aggressive nature of many such measures
fuelled a self-reinforcing vitriolic feedback loop, whereby countries retaliated to
protectionism with further bouts of protectionism.16 Such quid pro quo behaviour effectively
chocked international trade and failed to resuscitate ailing domestic economies.
Thus, our examination of the renewed gold standard reveals a cumbersome monetary
framework that aided considerably in spreading the financial contagion of the Great
Depression. In hindsight, disconnecting a countrys economy from the gold standard would
appear the best course of action. Yet, uncoordinated and oftentimes unexpected departures
from the gold standard by individual nations were viewed by contemporaries as beggar-thy-
Eichengreen and Irwin, The Slide to Protectionism in the Great Depression, p. 874.
Ibid., p. 874.
11
Ibid., p. 871.
12
Ibid., p. 872.
13
Ibid., pp. 875-876.
14
Ibid., p. 888.
15
Ibid., p. 888.
16
Eichengreen, Golden Fetters, pp. 22-23.
10
53
Anil Menon
neighbor devaluations.17 The devaluing country did benefit from greater monetary and fiscal
discretion and gained an export advantage relative to countries that remained on gold.
However, the magnitude of benefits arising from these currency devaluations was curbed
due to their successive and sequential nature, whereby countries devalued overtime and
in response to other devaluations.18 Countries that remained on gold saw their specie reserves
dwindling at an increasing rate as their economic situation continued its downward spiral. In
retaliation these nations resorted to yet more protectionism, thereby dampening the potential
gains from currency devaluation.
The limited benefits derived from individual departures and the consequent
intensification of the crisis for remaining nations would suggest that gains were to be had
from a simultaneous departure from gold by all nations. However, countries clung to their
gold parities with stubborn determination despite their worsening economic outlooks. Only
the exhaustion of domestic gold reserves, as was the case with the United Kingdom in 1931,
or the departure of close trading partners, as illustrated by the devaluations of the sterling and
gold blocs, prompted countries to devalue.19 This seemingly suicidal attachment to the gold
standard appears less intractable when studied through the lens of the economic experiences
of the previous decade. As observed earlier, the economic chaos of the 1920s was
instrumental in garnering support for a return to the gold standard. Contemporary observers
believed that the economic prosperity of the pre-war decades was founded upon the monetary
stability afforded by the gold standard.20 Consequently, they also believed that a return to and
compliance with gold parity would promote economic prosperity.21 Given this mind-set, a
coordinated departure from the gold standard by all nations might have proved politically
unattainable.
Moreover, the economic ramifications of all countries leaving the gold standard, if such
a counterfactual did prove permissible to contemporary policymakers, are not immediately
obvious. The short term impact of a coordinated departure would be to return monetary and
fiscal policy discretion to individual governments. This would have prompted universal
currency devaluations and an increase in the global money supply. Increased monetary flows
17
B. Eichengreen and J. Sachs, Exchange Rates and Economic Recovery in the 1930s, The Journal of
Economic History 45, no. 4 (1985): p. 925.
18
Ibid., p. 945.
19
Eichengreen and Irwin, The Slide to Protectionism in the Great Depression, p. 880.
20
Crafts and Fearon, The Great Depression of the 1930s, p. 6.
21
Ibid.,p. 6.
54

would in turn have countered the deflationary pressures of the early 1930s and reduced the
severity of the Great Depression. However, the sudden removal of the gold standard
framework might have re-introduced the economic uncertainties and volatilities that plagued
economies during the 1920s. A move from strict monetary management to a free floating
exchange might have created incentives for rampant speculation, increasing volatility within
an already compromised system.
A potential alternative, providing economic stability and allowing for monetary
expansion, would have been the simultaneous devaluation of all currencies while remaining
under the auspices of the gold standard framework. As indicated above, a major critique of
the reborn gold standard was the continued use of elevated pre-war gold parities by some
nations upon their return to gold. A calculated and coordinated devaluation would have
allowed for necessary exchange rate adjustments to be made based on expert assessments
regarding the relative economic strengths of various national economies. Careful
recalibration might also have removed the sizable exchange rate advantage enjoyed by
France in the late 1920s, which had allowed it to accumulate vast quantities of gold.22 This in
turn would have increased the global stock of monetizeable gold as Frances sterilized
reserves re-entered global circulation through specie outflows. Thus, the ability to increase
domestic money supplies bolstered by lower gold parities and a global increase in gold
reserves would have aided nations in battling deflationary pressures.23
Recent scholarship on the origins of the Great Depression attribute significant
culpability for the severity and duration of the economic downturn to the interwar gold
standard.24 A religious commitment to maintaining gold parity reduced the likelihood for
constructive collaboration across state lines. Leaving the gold standard afforded benefits to
the departing nations but the magnitude of such benefits was dampened due to the sequential
and successive nature of such actions. At this juncture a dangerous conclusion might be
arrived at; that a simultaneous departure from the gold standard by all nations at the start of
the 1930s might have benefited the world economy. However, such a proposition fails to
appreciate the popular support enjoyed globally by the gold standard during this period. A
further concern revolves around the speculative excesses that might have resulted from a
22
Irwin, Did France Cause the Great Depression? Working Paper Series, p. 7.
Eichengreen and Sachs, Exchange Rates and Economic Recovery in the 1930s, p. 944.
24
Eichengreen, Golden Fetters, p. 19.
23
55
Anil Menon
sudden disbandment of the gold standard framework. The alternative suggested above, and
mentioned by Eichengreen and Sachs in their seminal work, might have afforded greater
relief to the global economy. However, even this recommendation should be received with
studied caution. The interwar global economy was an extremely complex and dynamic
system. Counterfactual policy recommendations might have produced unintended and
unsolicited outcomes worse than the ones currently inscribed within the annals of history.
REFERENCES
Crafts, N. and Fearon, P. The Great Depression of the 1930s: Lessons for Today. Oxford
University Press, 2013.
Eichengreen, B. and Sachs, P. Exchange Rates and Economic Recovery in the 1930s. The
Journal of Economic History 45, no. 4 (1985): 2546.
Eichengreen, B. Golden Fetters: The Gold Standard and the Great Depression, 19191939.
New York: Oxford University Press, 1992.
Eichengreen, B. and Irwin, D. The Slide to Protectionism in the Great Depression: Who
Succumbed and Why? The Journal of Economic History, Vol. 70, No. 4 (2010): 871-897
Eichengreen, B. and Temin, P. Fetters of Gold and Paper, in N. Crafts and P. Fearon (eds.),
The Great Depression of the 1930s: Lessons for Today. Oxford: Oxford University Press.
Grossman, R. and Imai, P. Japans return to gold: Turning points in the value of the yen
during the 1920s. Explorations in Economic History 46 (2009): 314-323.
Irwin, D. Did France Cause the Great Depression?, Working Paper Series, National Bureau
of Economic Research, 2010.
Rodrik, D. Feasible Globalizations, Working Paper Series, National Bureau of Economic
Research, 2002.
56
Did Globalisation in the Nineteenth-Century plant the seeds of

its own Destruction?
By Isobel Clare
__________________________________________________
This essay will show that the unregulated nature of the globalisation during the 1800s
and especially in the latter part of the century, led to the deglobalisation that characterised the
next fifty or so years. Unregulated globalisation, rather than the rise of nationalism or
international instability caused by the First World War, was the primary cause of early
twentieth century deglobalisation. The essay will then go onto examine the two major parts of
the deglobalisation the fall in immigration and reduction of international trade and their
causes, which will show that globalisation planted the seeds of its own destruction. This is
particularly of interest in light of the current period of globalisation and possible signs of a
future deglobalisation, such as the rise of nationalism in some countries, especially Western
Europe.1
Some scholars attribute the period of deglobalisation in the early 1900s to the First
World War.2 Ferguson cites the rise of nationalist wishes for isolationism and the instability
of the alliance system of the Great War as a major reason for the collapse of globalisation.3
Martel agrees with this analysis, stating that post-war instability produced a climate
unfavourable for private trade and investment,4 and that this led to governmental restriction
of trade and movement of people. This argument would suggest that the war was to blame for
deglobalisation, and thus that without the war deglobalisation would not have occurred.
However, this argument ignores the discussions around restrictive policy on globalisation that
occurred for many decades prior to the First World War in many countries.5 Policy formation
did not happen overnight; instead it reflected changes in attitudes and conditions that
happened over a much longer time period. The major shift in policy seen in the 1910s-1930s
was not simply a result of tensions around the war; for an answer as to why deglobalisation
occurred in this period it is vital to look further back.
1
A. Ellinas, The Media and the Far Right in Western Europe: Playing the Nationalist Card, (Cambridge:
Cambridge University Press, 2010), p. 3.
2
G. Martel, A Companion to International History 1900-2001, (London: Blackwell, 2007), p. 441.
3
N. Ferguson, Sinking Globalisation, Foreign Affairs 84, no.2 (2005): p. 68.
4
Martel, International History, p. 441.
5
J. Williams, Globalisation, Labour Markets and Policy Backlash in the Past, The Journal of Economic
Perspectives 12, no.4 (1998): p. 51.
57
Isobel Clare
The most striking element of the deglobalisation of this time period is the restriction of
immigration to the New World. This was directly linked to the previous centurys
unrestricted globalisation. As Williams demonstrates, 6 the unrestricted immigration of
unskilled labour to the New World led to a lowering of relative (or real) wages for unskilled
workers in the New World. This was due to a more abundant supply of labour; workers could
be expected to work for less or be replaced. As a result, there was a strong popular demand
for stricter immigration policies against unskilled labourers. This popular demand was
boosted by the sharp rise in Trade Union membership towards the end of the nineteenth
century. 7 Trade Unions were instrumental in the demands for increased restrictions on
immigration and their strength resulted in new policies such as the Immigration Act of 1917,
when the USA introduced a literacy test for those over the age of 16.8 This was clearly a
restriction of unskilled labour, as it did not limit those who were literate and were therefore
more likely to be skilled labourers. Koven and Gtzke also clearly demonstrate that this was
not just due to a reaction to the First World War but the culmination of a long struggle by
those wishing to restrict immigration.9 As data from the U.S. census shows this caused a
dramatic fall in the levels of immigration. 10 This is clear evidence that in the U.S. one of the
major components of the globalisation of the 1800s, unrestricted immigration, led to its own
destruction through undesirable effects on real wages of a large section of the populace
creating a successful movement for restricted immigration.
The rise of anti-immigration feeling causing restrictive immigration policy was not
restricted to just the U.S., but permeated much of the New World. New World countries such
as Argentina, Australia, Brazil, and Canada all saw sharp rises in immigration in the late
1800s.11 They then put in place restrictive immigration policies in the early 1900s, although
these were often less severe than in the U.S.12 Evidence of this can be seen in Australias
1901 Immigration Restriction Act, 13 which gave immigration officers massive powers to
refuse immigrants based on language skills, and in the Canadian Immigration Act of 1910,
6
Ibid, p. 65.
E. Arnesen, Encyclopedia of U.S. Labour and Working-class History, (New York: Routledge, 2007), p. 667.
8
Steven G. Koven, Frank Gtzke, American Immigration Policy: Confronting the Nations Challenges, (New
York: Springer Verlag, 2010), p. 130.
9
Ibid, p. 130.
10
U.S. Census Bureau. No. HS-8. ImmigrationNumber and Rate: 1900 to 200, (2003).
11
M. Bordo, Alan M. Taylor, Jeffery G. Williamson, Globalisation in Historical Perspective, (Chicago:
University of Chicago Press, 2003), p. 69.
12
Williams, Globalisation, Labour Markets, p. 63.
13
F. Hawkins, Critical Years in Immigration: Canada and Australia Compared, (Montreal: McGill Queens
Press, 1991), p. 16.
7
58
Did Globalisation in the Nineteenth-Century plant the seeds of its own Destruction?
which expanded the powers that could be used by the government to discriminate against
immigrants. 14 This led to a fall in migration to these countries a major part of the
deglobalisation of the early 1900s. These Acts show that the rest of the New World also
tended to implement policies of deglobalisation. Thus, not just in the U.S., but all across the
New World the unregulated nature of the globalisation of the 1800s planted the seeds of its
own destruction.
The other major element of deglobalisation in this period is the increase of tariffs and
other protectionist policies, in the Old World in particular, which led to a massive reduction
in international trading. This was also due to the unregulated globalisation of the 1800s.
There was much integration of the land-abundant New World economies with the land-scarce
Old World at this time. As Williams shows,15 this led to a rise in imports of the cheaper
heavily land dependent goods, such as grain, from the New World to Europe; the landowners
in the Old World could not compete with the low prices of the New World. This then led to
European agricultural interests lobbying for protection. They were particularly successful in
France which introduced punishing16 import tariffs in the late 1890s, and in Germany,17
which led to a fall in imports to these countries.18 This was not the case throughout all of
Europe though; in Britain in particular tariffs were not raised and so the agricultural sector
continued its decline.19 However, although not all European economies responded to the
high imports of heavily land dependent goods with tariffs, it is clear that some did, and that
this was due to the undesirable effects of the imports. Therefore, in many parts of the Old
World, unregulated globalisation did cause later deglobalisation.
Globalisation did plant the seeds of its own destruction. The first significant
characteristic of globalisation, mass immigration, led to a closing of borders in the New
World. Unregulated immigration from the Old World to the new led to anti-immigration
policy, which created a sharp drop in immigration to the New World. The land-dependant
imports from the New World lowered the price of these goods in Europe to levels which
landowners could not compete with. This led to policies, such as high tariffs, which reduced
14
Ibid., p. 16.
16
A. Conklin, Sarah Fishman, Robert Zaretsky, France and Its Empire Since 1870, (Oxford: Oxford University
Press, 2011), p. 122.
17
C. Fischer, Europe between Democracy and Dictatorship: 1900-1945, (London: Wiley Blackwell, 2011), p.
91.
18
Conklin et al, France and Its Empire, p. 122.
19
15
59
Isobel Clare
international trade the second major characteristic of globalisation in the 1800s. It is clear,
then, that the major cause of deglobalisation at the beginning of the last century was the
unregulated globalisation of the preceding century. Unrestricted nineteenth century
globalisation in terms of immigration and trade resulted in calls from workers and
landowners alike for tighter regulation, and this led to a slowing down of globalisation in the
early 1900s.
It is interesting to compare the global situation a century ago with the current situation,
where we also see increasing nationalism and a push for anti-immigration policies across
Europe.20 Scholars such as Ferguson21 have argued that such parallels signal that we are on
the brink of a second period of deglobalisation. However, the differences in the global
political and economic situation today such as the increased power and reach of multinational
corporations and the decreased ability of any nation state to pursue isolationist policies, as
well as the advanced global communications infrastructure, mean that such claims should be
treated with some caution. One hundred years after the First World War, it is much more
difficult to retreat from the far-reaching global economic and political networks that have
developed in recent decades.
REFERENCES
Arnesen, Eric, Encyclopedia of U.S. Labour and Working-class History. New York:
Routledge, 2007.
Bartlett, J., Birdwell, J. and Littler, M. The New Face of Digital Populism. London: Demos,
2011.
Bhagwati, Jagdish. and Irwin, D.The Return of the Reciprocitarians US Trade Policy
Today. The World Economy, 10:2, (1987): pp. 109-130.
Bordo, M., Taylor, A. and Williamson, J.Globalisation in Historical Perspective. Chicago:
University of Chicago Press, 2003.
Conklin, A., Fishman, S. and Zaretsky, R., France and Its Empire Since 1870, Oxford:
Oxford University Press, 2011.
20
Jamie Bartlett, Jonathan Birdwell and Mark Littler, The New Face of Digital Populism, (England, 2011), p.
15.
21
Ferguson, Sinking Globalisation, p. 75.
60
Did Globalisation in the Nineteenth-Century plant the seeds of its own Destruction?
Ellinas, A., The Media and the Far Right in Western Europe: Playing the Nationalist Card.
Cambridge: Cambridge University Press, 2010.
Ferguson, N. Sinking Globalisation. Foreign Affairs 84, no.2 (2005): pp. 64-77.
Fischer, C. Europe between Democracy and Dictatorship: 1900-1945. London: Wiley
Blackwell, 2011.
Hawkins, F. Critical Years in Immigration: Canada and Australia Compared. Montreal:
McGill Queens Press, 1991.
Koven, Steven G. and Gtzke, Frank., American Immigration Policy: Confronting the
Nations Challenges. New York: Springer Verlag , 2010.
Martel, Gorden. A Companion to International History 1900-2001, (London: Blackwell,
2007).
ORourke, K. The European Grain Invasion, 1870-1913. The Journal of Economic History,
57:4, (1997): pp. 775-801.
U.S. Census Bureau. No. HS-8. ImmigrationNumber and Rate: 1900 to 2001. 2003,
Accessed 10 December 2014. https://www.census.gov/statab/hist/HS-08.pdf.
Williams, J. Globalisation, Labour Markets and Policy Backlash in the Past. The Journal of
Economic Perspectives, 12:4, (1998): pp. 51-72.
61
CFA Franc Zone: a Transformation of French Colonial Rule

in Africa
By Lauren Piper
__________________________________________________
The economic and political relationship between France and previous French colonies
in West Africa began during the early colonial period and still exists today, a unique
federation that has been both applauded and derided. The CFA Franc zone was established in
1945, during colonial rule, and has continually been upheld in most of the former French
West African colonies.1 After independence and a Referendum vote in 1958, this monetary
relationship remained intact, although through its existence the federation has transformed
and evolved from both internal and external pressures. In the decades after colonial
independence, there were strong remnants of French colonial influence, which included the
continuation of the CFA Franc Zone. With this being said, it is not accurate to describe the
CFA Franc as a continuation of French colonial rule, as there was a highly invested and
supportive African elite class and polity; there were not highly invested French political
interests in the area after independence and French businesses in West Africa were not
initially supportive of either the measure or the continuation and strength of the federation
long after its foundation.
The remnants of French power will be shown through the case of Guinea, the only
country that said no to the 1958 referendum, as well as views of dependence theories and
their potential impact on West African Development. Ultimately, it is not accurate to describe
the CFA Franc zone as a continuation of traditional French colonial rule as it has
predominantly been supported and championed by African elites and should be instead seen
as a transformation of the dynamic, although not fully equal, relationship between these two
regions.
The perception of the 1958 referendum and monetary federations with Africa during
this period were widely positive, with many African people actively supporting and pursuing
these economic relationships, both within Africa and with foreign countries. Frederick
Cooper states that although Guinea was widely considered the most radical with its vote for
Anne-Marie Gulde and Charalambos Tsangarides, The CFA Franc Zone: Common Currency, Uncommon
Challenges (London: International Monetary Fund 2008), pp. 6-7.
62
Lauren Piper
independence, there were others who saw the decision to keep a relationship with France as
the more progressive and promising decision. 2 Guinea, the only country to deny the
referendum vote, will be considered later in more detail. The countries that voted to stay in
the federation did not widely view their decision as an extension of colonial rule. Notably,
Cooper questions the restrictive descriptions of colonial relationships that have often been
used post- independence, which he argued often approach history from a detached vantage
point, rather than reflecting accurately the feelings and ideas of people at the time.3 His
critique of post-colonial historiography highlights the later perception, especially during the
restrictive economic position of the 1980s, that France had pursued a continued colonial
relationship with West Africa post-independence. Attempting to understand the way people,
both elites and the public, were considering the vote and the CFA Franc zone at the time is
very important to an understanding of its social implications and results.
National interests, both in France and in West Africa, show that there were benefits for
both French and African political elites, and that there were actually French businesses that
had previously been successful in Africa but were impacted negatively by the formation of
the Franc zone. African political interest and support for the CFA Franc zone are clear
evidence in support of the argument that the CFA Franc zone cannot be considered a
continuation of traditional colonial rule. Although difficult to empirically weigh popular
sentiment and economic benefit, the agreement provided the Francophone countries with a
stable exchange rate and support in case of external or internal threats and that, African
elites have had a direct interest in an overvalued currency.4 Furthermore, Stasavage argued
that it was a result of intentional political strategies rather than a structural or systematic
constraint when discussing French-African trading ties in this region. 5 The political
sovereignty of the newly independent African states cannot be completely discounted when
considering the formation of the CFA Franc zone, especially in the period immediately
following the 1958 referendum. In the years following independence, some African leaders
made it a deliberate policy to keep French advisors on their payroll for political reasons.6
Indeed, the role of African political elites cannot be dismissed when considering economic or
F. Cooper, Possibility and constraint: African independence in historical perspective, Journal of African
History, no. 49 (2008), p. 167.
3
Ibid., p. 188.
4
Stasavage, The Political Economy of a Common Currency: The CFA franc Zone Since 1945, p. 77.
5
Ibid., p. 78.
6
Ibid., p. 122.
63
CFA Franc Zone: a Transformation of French Colonial Rule in Africa

political implications of the CFA Franc zone and their predominant support of the measures
shows that it was not a forced imposition by the French.
A fixed exchange rate was widely seen to support French national interests in both
investment and trade, however there were no increases in exports from Francophone Africa
post-independence and there were only minimal increases in French private investment in the
region during the 1970s.7 Furthermore, Stasavage stated that French political interests might
have been related to Cold War factionalism or international prestige, although he ultimately
states that the political intentions of French-African relations were difficult to define.8 There
was not a clear political interest in France concerning West Africa, which questions the
continuation of a clear colonial relationship as there were various, evolving opinions about
the relationship between the two regions during this period. During the 1940s and 50s,
private French businesses in West Africa were opposed to the creation of the Franc zone as it
did not support their own interests.9 The scope of French private businesses in West Africa
was relatively small, but it is important to consider that the creation and continuation of the
Franc zone did not necessarily always benefit French elites within Africa.
The case of Guinea, as the only country to vote no on the 1958 Referendum, serves as
an example of the internal political interests that prompted differences in voting, the
perception of this decision in other African countries, as well as the political consequences
for denying France this economic relationship. Stasavage argued that Skuo Tour, the leader
of Guinea, had a weaker relationship with France than other West African leaders and that his
domestic political rivals conversely had quite strong French ties, promoting a break with this
foreign relationship to strengthen domestic power back home. 10 The internal political
situation influencing the referendum vote and Guineas ability to vote no without
considerable political or economic retaliations emphasises that West African countries did
ultimately get to choose whether they would be involved or not. John Springhall noted
though that France did immediately leave Guinea after this vote, leaving the country in a
disadvantaged infrastructural position, which does imply that France had a significant amount
of interest in countries voting yes and then retaliated when the country voted no. 11
7
D. Stasavage, The Political Economy of a Common Currency, pp. 71-73.

Ibid., pp. 74-75.
9
Ibid., p. 82.
10
Ibid., p. 115.
11
J. Springhall, Decolonization since 1945 (New York: Palgrave 2001), p. 121.
8
64
Lauren Piper
Nevertheless, the French leaving Guinea following the vote does not seem to necessarily
constitute retaliation and could arguably be an example of the French allowing Guinean
sovereignty after they had voted to become both politically and economically independent.
Although the ultimate argument of this paper is that the CFA Franc Zone was not a
continuation of traditional French colonial rule, the relationship was not equal between
France and the Francophone African countries. French economic policies in Africa, similar to
other European interests, were primary commodity export heavy and the methods of
financing the growth of the Ivory Coast economy involved serious threats for the future
due to the high remuneration of foreign capital and the high rates of re-exported profits.12
The stability that the French policies and a fixed exchange rate initially allowed also
restricted the political sovereignty of the individual African nations to decide their own
monetary and economic policies. The trade relationships and export dependence on West
Africa, beginning in the colonial period, remained after independence, although it began
declining after the referendum.13 The relationship transformed after the 1958 Referendum
and restructured in ways that had positive and negative implications for both France and the
CFA Franc zone countries in West Africa.
Following independence, these West African countries were still receiving relatively
large aid packages from France, although authors like Amin argue that the overall impact of
these economic conditions was negative for the involved African countries. In the period of
1959-68, 35% of foreign aid to Senegal came from France itself but Amin argued that the
final balance of payments showed that the transfer of value all but negated this foreign aid,
that the transfer of value was in the opposite direction: from Senegal to the developed
world.14 His work highlights that the export-based industry in Senegal negated the aid that
was coming from France. Although an interesting qualitative idea, the comparison of relative
value is subject to some questioning. Nonetheless, the relationship between France and
Senegal did seem to be more beneficial to France during the post-colonial period, although
this does not necessarily suggest a continuation of French colonial rule.
12
S. Amin, Neo-Colonialism in West Africa (New York: Monthly Review Press, 1973), p. 56.
D. Stasavage, The Political Economy of a Common Currency, p. 81.
14
S .Amin, Neo-Colonialism in West Africa, pp. 165-166.
13
65
CFA Franc Zone: a Transformation of French Colonial Rule in Africa

Regarding these concepts of unequal relations and their colonial implications, it is
useful to consider Dependency theory and its broader implications for the changing
relationship between France and West Africa. Simply, Dependency theory is the concept that
commodities and resources flow from peripheral underdeveloped areas to wealthier core
areas, including large cities, which benefit the already wealthy places and hurt the poorer
areas where the resources came from.15 Omotayo Olaniyan considered this as a potential
explanation for continued unequal relations in post-colonial countries and promoted the idea
of self-reliance and internal growth as an alternative.16 Collier also supported this idea of
internal institutional strengthening within Franc zone countries to cushion against external
monetary fluctuations and unbalanced trade relationships.17 Although scholars have promoted
an emphasis on self-reliance, which is important for strengthening internal systems, it is
incorrect to characterise the relationship as a continuation of colonialism. Cooper emphasised
the need to look at the colonial relationship within a historical framework and its
transformational nature over time, as well as highlighting that many Africans did not see
French colonialism and independence in the dichotomous way that some social scientists now
see it. 18 This conception of a transformation shows the complexity of the relationship
between France and West Africa and its dynamic, wide-ranging characteristics.
The continuation of the CFA Franc zone and its evolution to the present day highlights
the idea that the West African nations involved ultimately want to be a part of the federation.
Temitope Oshikoya writing about both the benefits and the costs of monetary union stated
that the countries involved have continually called to strengthen the federation, although
some countries have left or re-entered.19 Therefore, it is ultimately most appropriate to
consider the relationship between France and its West African colonies a transformation,
rather than a continuation of French colonial rule. This paper has argued this by stating the
importance of a highly invested and supportive African elite class and polity; the impact of
economic success in the period after independence; as well as the continuation of the
federation long after its foundation. Ultimately, the nations that were and are a part of the
15
S Amin, Unequal Development: An Essay on the Social Formations of Peripheral Capitalism (New York:
Monthly Review Press, 1976), p.50.
16
O. Olaniyan, Foreign Aid, Self-Reliance, and Economic Development in West Africa (Westport: Praeger.
1996), pp. 18-20.
17
P. Collier, Africas external economic relations, 1960-1990, African Affairs, no. 90, (1991), pp. 339-56.
18
F. Cooper, Possibility and constraint, pp. 174-175.
19
Temitope W. Oshikoya, Monetary and Financial Integration in West Africa (New York: Routledge. 2010), p.
13.
66
Lauren Piper
CFA Franc zone and its later manifestations chose to be there and have continually voted to
remain members of the zone. Rather than a traditional colonial relationship categorized by
force and one-sidedness, the monetary federation, especially after the 1958 referendum,
showed a new relationship that although not equal, was more inclusive and open.
REFERENCES
Amin, Samir. Neo-Colonialism in West Africa. New York: Monthly Review Press, 1973.
Amin, Samir. Unequal Development: An Essay on the Social Formations of Peripheral
Capitalism. New York: Monthly Review Press, 1976.
Collier, P. Africas external economic relations, 1960-1990, African Affairs, no.
90 (1991): 339-56.
Cooper, F. Possibility and constraint: African independence in historical
perspective, Journal of African History, no. 49 (2008): 167-96.
International Monetary Fund, The CFA Franc Zone: Common Currency, Uncommon
Challenges, Edited by Anne-Marie Gulde and Charalambos Tsangarides, London:
International Monetary Fund, 2008.
Mamdani, Mahmood. Citizen and Subject: Contemporary Africa and the Legacy of Late
Colonialism. Princeton: Princeton University Press, 2006.
Olaniyan, Omotayo R. Foreign Aid, Self-Reliance, and Economic Development in West
Africa. Westport: Praeger, 1996.
Oshikoya, Temitope W. Monetary and Financial Integration in West Africa. New York:
Routeledge, 2010.
Springhall, John. Decolonization since 1945. New York: Palgrave, 2001.
Stasavage, D. The Political Economy of a Common Currency: The CFA franc Zone Since
1945. Aldershot: Ashgate, 2003.
67
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5 The Gender Breakdown of Unemployment in London and Blackburn,

17 Catalyst of Revival; Drop in the Ocean or Utter Nonsense?

27 The Sources of Agricultural Growth in the late Nineteenth-Century

35 Implications of the growing WTO mandate for Development in

44 Characterising the Nature of the Legal system in Traditional China

51 To Leave or Not to Leave: The Gold Standard in the 1930s

57 Did Globalisation in the Nineteenth-Century plant the seeds of its

62 CFA Franc Zone: a Transformation of French Colonial Rule in

The Gender Breakdown of Unemployment in London and

LSE Economic History Review

LSE Economic History Review

The Gender Breakdown of Unemployment in London and Blackburn, 1926-1938

LSE Economic History Review

LSE Economic History Review

The Gender Breakdown of Unemployment in London and Blackburn, 1926-1938

LSE Economic History Review

Unemployment rate (%)

Male and female unemployment rates in London,

GDP, mn, in 1938 market prices

Unemployment rates in London and UK GDP, set to base

reactions in the male and female unemployment figures.

Figure 2. GDP data from Mitchell et al. (2012)

LSE Economic History Review

The Gender Breakdown of Unemployment in London and Blackburn, 1926-1938

GDP (mn, at 1938 market pries)

Moving averages of London unemployment rates and UK GDP,

Figure 3. GDP data from Mitchell et. al (2012).

Variations in Unemployment Rates (%)

Detrended Male and Female Unemployment Rates in

LSE Economic History Review

The Gender Breakdown of Unemployment in London and Blackburn, 1926-1938

Unemployment Rate (%)

Female and Male Unemployment Rates in Blackburn,

LSE Economic History Review

GDP, mn, at 1938 market prices

Unemployment rate (%)

12 month moving average of male and female

Figure 6: GDP data is from Mitchell et al. (2012)

When moving averages are compared, female unemployment in Blackburn clearly

LSE Economic History Review

The Gender Breakdown of Unemployment in London and Blackburn, 1926-1938

LSE Economic History Review

LSE Economic History Review

Catalyst of Revival; Drop in the Ocean or Utter Nonsense?

LSE Economic History Review

government spending, and (2) taxation. What

Figure 1: The Keynesian Cross1

expansionary, it is required to be sizeable for it

LSE Economic History Review

Fiscal Policy in the 1930s

LSE Economic History Review

Structural Explanations for Fiscal Policy in the 1930s

LSE Economic History Review