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April 24, 2005
David Warsh, Editor
The Man Who Succeeded Gerschenkron
Anyone who hasn't read The Fly Swatter: How My Grandfather Made His Way
in the World, Nicholas Dawidoff's account of the life of Alexander
Gerschenkron, the great 20th-century scholar of economic development, is
missing a good thing.
Anyone who doesn't know about Daron Acemoglu is missing a good thing,
too.
There will be many fewer of the latter now, since Acemoglu last week was
named winner of the John Bates Clark Medal, awarded every two years to
the American economist under 40 judged to have made the greatest
contribution to economics. Acemoglu is the man who, for all practical
purposes, has become the Gerschenkron of present-day economics.
The process by which this succession of scholarship takes place was
described a few years ago by David Kreps (himself a Clark medalist in
1989) in an article, "Economics -- the Current Position," in Daedalus,
the journal of the American Academy of Arts and Sciences.
For the hundred years or so before World War II, wrote Kreps, economics
had been a decentralized discipline, organized around a common core but
with many topical concerns --labor markets, international trade,
industrial organization, money and banking, public finance, development
and so on. These shared a certain amount of vocabulary, but otherwise
concentrated mainly on developing typologies and describing
institutions.
"There were, if you will, a number of regional dialects of 'Economese,'
dialects that were close to being distinct languages," he wrote.
Mathematization conquered the core of economics in the years before,
during and after World War II. Then, both because of the power of formal
reasoning and the prestige they conferred, those who espoused formal
methods tackled the applied fields, one after the other. The
mathematizers were not welcomed like so many liberators; acceptance was
often grudging.
Moreover, as mathematical technique was brought to bear, a reduction in
detail took place. New insights were more easily transferred from field
to field; new tools could be deployed quickly. But the study of
institutions, which before mathematization had loomed so large,
gradually was eclipsed.
"The new dominant dialect of mathematical economics lacked some
topically important vocabulary," wrote Kreps; "rather than speak in an
unfashionable dialect, some things were just not discussed."
Hence the image of an hourglass that had been suggested by his colleague
Paul Romer, with the scope or breadth of topical economics (on the
horizontal axis), plotted against time (on the vertical axis). As the
language of economics is unified, a dramatic narrowing of topical
concerns takes place -- followed in turn by a commensurate widening, as
speakers of the language learn to tackle topics that they had been
temporarily unable to address. Kreps ventured in 1997, "Ã[T]he field now
seems to be returning to something like the breadth of the discipline
before World War II."
Dawidoff's book about his grandfather chronicles the life of a scholar
lived in the first half of the hourglass -- the period of the narrowing
of the subject. It is difficult to exaggerate the merits of his tale.
His previous book, about one-time major-leaguer Moe Berg, The Catcher
was a Spy, exhibits the same story-telling grace and sympathy, but here
Dawidoff is writing about an altogether bigger man, and his grandfather,
to boot.
"My grandfather was said to know all about everything," he writes.
"German historiography, the emigration theory in Romanian history, the
complexities of infinitely divisible time. He understood Kant, Chekhov,
Aristotle and Schopenhauer better than people teaching them at Harvard
for a living, and had once critiqued Vladimir Nabokov with such brio
that the novelist retaliated by lampooning him in his next book.
"Even his vacations were erudite. He spent a pleasant summer with my
grandmothers examining one hundred translations of Hamlet's quatrain to
Ophelia, 'Doubt thou the stars are fire,' in languages ranging from
Catalan to Icelandic to Serbo-Croatian to Bulgarian -- all as
preparation for an essay in which they argued that translation
inevitably distorts meaning."
Dawidoff traces Gerschenkron's flight from the Bolsheviks in the Ukraine
to Vienna, and from the Nazis to Berkeley, California, where wrote,
translated and worked in the shipyards for a time. By 1944, he had found
his way to the Federal Reserve Board in Washington D.C., and then, in
1946, as professor of economic history, to Harvard.
Gerschenkron arrived in Cambridge just as mathematization was beginning
to sweep the profession, emanating from the department in the
institution at the other end of town -- the Massachusetts Institute of
Technology. (He and Paul Samuelson immediately became fast friends.) He
had one big idea, and he made the most of it: the advantages of
backwardness in economic development.
Thorstein Veblen had said as much in telegraphic form in 1915 in
Imperial Germany and the Industrial Revolution: late-adopters could
sometimes move out to the frontiers of development more easily than the
pioneers of the industrial revolution. Gerschenkron now made various
forms of slow economic development his specialty. He himself, with his
late start, having had to learn to work in two new languages as an
adult, exemplified the possibilities. "The more backward a country," he
wrote, "the more complex and exciting its industrial history."
The great thing about The Fly Swatter -- the title refers to the arsenal
of swatters Gerschenkron kept on the porch of his country home in New
Hampshire and the enthusiasm with which he wielded them, certain "that
each swatter had its own particular entomicidal capabilities" -- is that
the author talked to nearly everyone still living who had known his
grandfather, and everyone talked back. In Dawidoff's book you see whole
the career of a great professor in a great university, not just a
handful of insights and a few arguments, but everything the man lived --
the rivalries (Walt Whitman Rostow his longtime bÂte noire), the battles
with his critics (Yale's William Parker said, "The resounding theses of
Gerschenkron tell the size and shape and weave of the stockings the
family hangs out on Christmas eve, but say nothing of when or why Santa
Claus comes down the chimney"), the relationships with his remarkable
students ("he was an armed man; he could hurt you," remarked D.N.
McCloskey), the continual stream of acts of familyship, friendship,
citizenship.
And now all this glorious humanism is to be passed on, reduced, by dint
of having passed through a metaphorical hourglass, to an applied
economist with a knack for manipulating a handful of instrumental
variables?
Not exactly. But when Dawidoff writes, "Fifty years after Economic
Backwardness in Historical Perspectives was published, there is no new
model, and scholars are still tilting at [Gershenkron's]," he is
mistaken.
Daron Acemoglu's good fortune was to graduate from the University of
York at the very moment that the hourglass of development economics was
at its narrowest, when all the complications of economic growth had been
briefly reduced to an argument about the causes of "technical change."
Like Gerschenkron, Acemoglu had been raised in a developing society --
in Istanbul, a Turk of Armenian descent. His father was a professor of
law, later an attorney for banks and corporations. Political economy and
development strategy came naturally to the dinner table.
But his parents died when Acemoglu was in his teens. Political science
at York disappointed him; he switched to economics instead. And when MIT
admitted him to graduate school but failed to offer a scholarship, he
did his doctorate at the London School of Economics instead, writing a
dissertation on a variety of labor and macroeconomic topics. A year
later, MIT hired him to teach -- an intriguing but unknown quantity at
whom they wanted a closer look. Four years later they gave him tenure.
He added dual citizenship as well.
The committee that gave the 38-year-old Acemoglu the Clark medal last
week described him as "extremely broad and productive," noting that in
the course of a dozen years he had made significant contributions to the
study of labor markets before moving on to "especially innovative" ideas
about the role of institutions in development and political economy.
In fact, it was a series of investigations in the history of the
European colonization of much of the rest of the world, beginning in the
15th century, that made Acemoglu's reputation, demonstrating that
institutions of various sorts were more important to development than
economists previously had thought. The "rules of the game" -- the
structure of property rights, the presence of markets, and their various
frictions, the form that governments take -- are key determinants of
what happens next, Acemoglu showed, in some unusually inventive and
convincing ways.
Take the rise of Europe in the first place. The importance of the
Atlantic trade had long been noted, and various reasons for it
advanced. With Simon Johnson of MIT's Sloan School and James Robinson
of the University of California at Berkeley, Acemoglu argued in "The
Rise of Europe: Atlantic Trade, Institutional Change and Economic
Growth" that England and the Netherlands leapt out front because a newly
emergent merchant class benefited most from trade -- and was able to
successfully demand institutions to protect their property and
commerce. In contrast, although they had been the first to discover the
richest lands, Spain and Portugal stagnated because their monarchies had
managed to capture the early returns, they argued -- and thus were able
to thwart their merchants' drive for power.
In "Economic Backwardness in Political Perspective," Acemoglu and
Robinson argued that political elites can be expected to pursue
"blocking" strategies when innovation threatens their monopolies and
when there is little threat to their power from politics. External
threats reduced the temptation to block, they found -- producing a model
that suggested why Britain, German and the United States had
industrialized during the 19th century, while the landed aristocracies
in Russia and Austria-Hungary sought to hold back the tide.
In "Reversal of Fortune," Acemoglu, Johnson and Robinson argued that
colonial powers pursued very different strategies in different lands,
with fateful consequences. In rich and densely populated countries such
as Mexico and Peru, they extracted wealth; in poor and sparsely settled
countries such as British North America and Argentina, they encouraged
investment.
And in "The Colonial Origins of Comparative Development" they
inventively teased evidence from differing mortality rates faced by
Europeans in different countries of how the choices made in those
circumstanced gave rise to different institutions and so to different
development paths.
The Clark committee noted that some of the methods and conclusions were
still being debated -- but that a broad and substantial rethinking of
the development process was underway no matter what. The appearance
this summer of Acemoglu's book with Robinson, The Economic Origins of
Dictatorship and Democracy will stimulate much further discussion. The
MIT course that he teaches with fellow professor Abhijit Bannerjee on
development issues is routinely oversubscribed. And a long list of
projects underway testifies to his staying power.
Thus Acemoglu joins a short list of remarkable economists going back to
MIT's Paul Samuelson, to whom the first Clark medal was awarded in 1947.
The most recent winner, Steven Levitt, of the University of Chicago,
recently published, with journalist Stephen Dubner, Freakonomics: A
Rogue Economist Explores the Hidden Side of Everything.
Other medalists who recently have been in the news include Harvard
University president Lawrence Summers, New York Times columnist and
Princeton University economist Paul Krugman, best-selling author Joseph
Stiglitz of Columbia University and Harvard economists Martin Feldstein
and Andrei Shleifer.
http://www.economicprincipals.com/issues/05.04.24.html
April 24, 2005
David Warsh, Editor
The Man Who Succeeded Gerschenkron
Anyone who hasn't read The Fly Swatter: How My Grandfather Made His Way
in the World, Nicholas Dawidoff's account of the life of Alexander
Gerschenkron, the great 20th-century scholar of economic development, is
missing a good thing.
Anyone who doesn't know about Daron Acemoglu is missing a good thing,
too.
There will be many fewer of the latter now, since Acemoglu last week was
named winner of the John Bates Clark Medal, awarded every two years to
the American economist under 40 judged to have made the greatest
contribution to economics. Acemoglu is the man who, for all practical
purposes, has become the Gerschenkron of present-day economics.
The process by which this succession of scholarship takes place was
described a few years ago by David Kreps (himself a Clark medalist in
1989) in an article, "Economics -- the Current Position," in Daedalus,
the journal of the American Academy of Arts and Sciences.
For the hundred years or so before World War II, wrote Kreps, economics
had been a decentralized discipline, organized around a common core but
with many topical concerns --labor markets, international trade,
industrial organization, money and banking, public finance, development
and so on. These shared a certain amount of vocabulary, but otherwise
concentrated mainly on developing typologies and describing
institutions.
"There were, if you will, a number of regional dialects of 'Economese,'
dialects that were close to being distinct languages," he wrote.
Mathematization conquered the core of economics in the years before,
during and after World War II. Then, both because of the power of formal
reasoning and the prestige they conferred, those who espoused formal
methods tackled the applied fields, one after the other. The
mathematizers were not welcomed like so many liberators; acceptance was
often grudging.
Moreover, as mathematical technique was brought to bear, a reduction in
detail took place. New insights were more easily transferred from field
to field; new tools could be deployed quickly. But the study of
institutions, which before mathematization had loomed so large,
gradually was eclipsed.
"The new dominant dialect of mathematical economics lacked some
topically important vocabulary," wrote Kreps; "rather than speak in an
unfashionable dialect, some things were just not discussed."
Hence the image of an hourglass that had been suggested by his colleague
Paul Romer, with the scope or breadth of topical economics (on the
horizontal axis), plotted against time (on the vertical axis). As the
language of economics is unified, a dramatic narrowing of topical
concerns takes place -- followed in turn by a commensurate widening, as
speakers of the language learn to tackle topics that they had been
temporarily unable to address. Kreps ventured in 1997, "Ã[T]he field now
seems to be returning to something like the breadth of the discipline
before World War II."
Dawidoff's book about his grandfather chronicles the life of a scholar
lived in the first half of the hourglass -- the period of the narrowing
of the subject. It is difficult to exaggerate the merits of his tale.
His previous book, about one-time major-leaguer Moe Berg, The Catcher
was a Spy, exhibits the same story-telling grace and sympathy, but here
Dawidoff is writing about an altogether bigger man, and his grandfather,
to boot.
"My grandfather was said to know all about everything," he writes.
"German historiography, the emigration theory in Romanian history, the
complexities of infinitely divisible time. He understood Kant, Chekhov,
Aristotle and Schopenhauer better than people teaching them at Harvard
for a living, and had once critiqued Vladimir Nabokov with such brio
that the novelist retaliated by lampooning him in his next book.
"Even his vacations were erudite. He spent a pleasant summer with my
grandmothers examining one hundred translations of Hamlet's quatrain to
Ophelia, 'Doubt thou the stars are fire,' in languages ranging from
Catalan to Icelandic to Serbo-Croatian to Bulgarian -- all as
preparation for an essay in which they argued that translation
inevitably distorts meaning."
Dawidoff traces Gerschenkron's flight from the Bolsheviks in the Ukraine
to Vienna, and from the Nazis to Berkeley, California, where wrote,
translated and worked in the shipyards for a time. By 1944, he had found
his way to the Federal Reserve Board in Washington D.C., and then, in
1946, as professor of economic history, to Harvard.
Gerschenkron arrived in Cambridge just as mathematization was beginning
to sweep the profession, emanating from the department in the
institution at the other end of town -- the Massachusetts Institute of
Technology. (He and Paul Samuelson immediately became fast friends.) He
had one big idea, and he made the most of it: the advantages of
backwardness in economic development.
Thorstein Veblen had said as much in telegraphic form in 1915 in
Imperial Germany and the Industrial Revolution: late-adopters could
sometimes move out to the frontiers of development more easily than the
pioneers of the industrial revolution. Gerschenkron now made various
forms of slow economic development his specialty. He himself, with his
late start, having had to learn to work in two new languages as an
adult, exemplified the possibilities. "The more backward a country," he
wrote, "the more complex and exciting its industrial history."
The great thing about The Fly Swatter -- the title refers to the arsenal
of swatters Gerschenkron kept on the porch of his country home in New
Hampshire and the enthusiasm with which he wielded them, certain "that
each swatter had its own particular entomicidal capabilities" -- is that
the author talked to nearly everyone still living who had known his
grandfather, and everyone talked back. In Dawidoff's book you see whole
the career of a great professor in a great university, not just a
handful of insights and a few arguments, but everything the man lived --
the rivalries (Walt Whitman Rostow his longtime bÂte noire), the battles
with his critics (Yale's William Parker said, "The resounding theses of
Gerschenkron tell the size and shape and weave of the stockings the
family hangs out on Christmas eve, but say nothing of when or why Santa
Claus comes down the chimney"), the relationships with his remarkable
students ("he was an armed man; he could hurt you," remarked D.N.
McCloskey), the continual stream of acts of familyship, friendship,
citizenship.
And now all this glorious humanism is to be passed on, reduced, by dint
of having passed through a metaphorical hourglass, to an applied
economist with a knack for manipulating a handful of instrumental
variables?
Not exactly. But when Dawidoff writes, "Fifty years after Economic
Backwardness in Historical Perspectives was published, there is no new
model, and scholars are still tilting at [Gershenkron's]," he is
mistaken.
Daron Acemoglu's good fortune was to graduate from the University of
York at the very moment that the hourglass of development economics was
at its narrowest, when all the complications of economic growth had been
briefly reduced to an argument about the causes of "technical change."
Like Gerschenkron, Acemoglu had been raised in a developing society --
in Istanbul, a Turk of Armenian descent. His father was a professor of
law, later an attorney for banks and corporations. Political economy and
development strategy came naturally to the dinner table.
But his parents died when Acemoglu was in his teens. Political science
at York disappointed him; he switched to economics instead. And when MIT
admitted him to graduate school but failed to offer a scholarship, he
did his doctorate at the London School of Economics instead, writing a
dissertation on a variety of labor and macroeconomic topics. A year
later, MIT hired him to teach -- an intriguing but unknown quantity at
whom they wanted a closer look. Four years later they gave him tenure.
He added dual citizenship as well.
The committee that gave the 38-year-old Acemoglu the Clark medal last
week described him as "extremely broad and productive," noting that in
the course of a dozen years he had made significant contributions to the
study of labor markets before moving on to "especially innovative" ideas
about the role of institutions in development and political economy.
In fact, it was a series of investigations in the history of the
European colonization of much of the rest of the world, beginning in the
15th century, that made Acemoglu's reputation, demonstrating that
institutions of various sorts were more important to development than
economists previously had thought. The "rules of the game" -- the
structure of property rights, the presence of markets, and their various
frictions, the form that governments take -- are key determinants of
what happens next, Acemoglu showed, in some unusually inventive and
convincing ways.
Take the rise of Europe in the first place. The importance of the
Atlantic trade had long been noted, and various reasons for it
advanced. With Simon Johnson of MIT's Sloan School and James Robinson
of the University of California at Berkeley, Acemoglu argued in "The
Rise of Europe: Atlantic Trade, Institutional Change and Economic
Growth" that England and the Netherlands leapt out front because a newly
emergent merchant class benefited most from trade -- and was able to
successfully demand institutions to protect their property and
commerce. In contrast, although they had been the first to discover the
richest lands, Spain and Portugal stagnated because their monarchies had
managed to capture the early returns, they argued -- and thus were able
to thwart their merchants' drive for power.
In "Economic Backwardness in Political Perspective," Acemoglu and
Robinson argued that political elites can be expected to pursue
"blocking" strategies when innovation threatens their monopolies and
when there is little threat to their power from politics. External
threats reduced the temptation to block, they found -- producing a model
that suggested why Britain, German and the United States had
industrialized during the 19th century, while the landed aristocracies
in Russia and Austria-Hungary sought to hold back the tide.
In "Reversal of Fortune," Acemoglu, Johnson and Robinson argued that
colonial powers pursued very different strategies in different lands,
with fateful consequences. In rich and densely populated countries such
as Mexico and Peru, they extracted wealth; in poor and sparsely settled
countries such as British North America and Argentina, they encouraged
investment.
And in "The Colonial Origins of Comparative Development" they
inventively teased evidence from differing mortality rates faced by
Europeans in different countries of how the choices made in those
circumstanced gave rise to different institutions and so to different
development paths.
The Clark committee noted that some of the methods and conclusions were
still being debated -- but that a broad and substantial rethinking of
the development process was underway no matter what. The appearance
this summer of Acemoglu's book with Robinson, The Economic Origins of
Dictatorship and Democracy will stimulate much further discussion. The
MIT course that he teaches with fellow professor Abhijit Bannerjee on
development issues is routinely oversubscribed. And a long list of
projects underway testifies to his staying power.
Thus Acemoglu joins a short list of remarkable economists going back to
MIT's Paul Samuelson, to whom the first Clark medal was awarded in 1947.
The most recent winner, Steven Levitt, of the University of Chicago,
recently published, with journalist Stephen Dubner, Freakonomics: A
Rogue Economist Explores the Hidden Side of Everything.
Other medalists who recently have been in the news include Harvard
University president Lawrence Summers, New York Times columnist and
Princeton University economist Paul Krugman, best-selling author Joseph
Stiglitz of Columbia University and Harvard economists Martin Feldstein
and Andrei Shleifer.
http://www.economicprincipals.com/issues/05.04.24.html