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All Things Reconsidered: The Life-Cycle Perspective and the Third Task of Economic History

Published online by Cambridge University Press:  03 March 2009

Richard Sutch
Richard Sutch
Affiliation:
Professor of Economics and History and Director of the Institute of Business and Economic Research, University of California, Berkeley, CA 94720
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Abstract

I suggest that converting economic history from a topic to a discipline requires three steps: economic theory and quantitative methodology must be relevant and required for writing and teaching good economic history; economic history and historical statistics must be relevant and necessary for writing and teaching good economic theory; and economic history must be relevant and required for writing and teaching good history. Over the past 50 years the first task has been accomplished and the second nearly so. The third task remains, but incorporating the life-cycle perspective into economic history would hasten its successsful completion.

Type
Papers Presented at the Fiftieth Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 51 , Issue 2 , June 1991 , pp. 271 - 288
Copyright
Copyright © The Economic History Association 1991

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References

These remarks have been revised and edited since they were delivered in Montreal. I would like to thank Susan Carter, Naomi Lamoreaux, Mary Schweitzer, and Susie Sutch for wise counsel and good ideas. A most unique debt of gratitude is owed to my friend Roger Ransom. Our long collaboration has energized and sustained me academically, professionally, and personally. The ideas herein were given birth and have taken form in our conversations about economic history.Google Scholar

1 It is not irrelevant to note that my dissertation advisor, Franco Modigliani, is best known by economists for introducing the life-cycle concept into economic theory; see Abel, Andrew, ed., The Collected Papers of Franco Modigliani. Vol. 2: “The Life Cycle Hypothesis of Saving” (Cambridge, MA, 1980).Google Scholar

2 My contribution to this effort was a collaboration with Roger Ransom that attempted to explain why freedom from slavery did not bring more economic progress and prosperity to black Americans than it did and why the American South remained economically backward and stagnant for so long; see One Kind of Freedom: The Economic Consequences of Emancipation (Cambridge, 1977). Our book was not only a reaction to the civil rights movement, but also an attempt to focus attention on the inadequacies of the then-current economic theories of racial discrimination, institutional change, and regional development.Google Scholar

3 Bruchey, Stuart first called attention to this unfinished business a few years ago in “Economy and Society in an Earlier America,” this Journal, 47 (06 1987), pp. 299–320.Google Scholar

4 In my view, a serious mistake made by Fogel, Robert William and Engerman, Stanley L., in Time on the Cross: The Economics of American Negro Slavery (Boston, 1974), was to attack the historians.Google ScholarAt least part of the explosive reaction to Time on the Cross can be attributed to the feeling of Fogel and Engerman's critics that the history profession was not the enemy; see David, Paul A. et al. , Reckoning with Slavery: A Critical Study in the Quantitative History of American Negro Slavery (New York, 1976). Today, as then, what is needed is not a renewed attack on historians but a synthesis with history.Google Scholar

5 The revolution in economic theory that I am describing in no small part was stimulated and propelled by economic historians. As the new economic historians had insisted all along, a historical perspective was necessary for good theory. Unfortunately, many historians practicing today formed their opinions about the value of economic theory to history long before these improvements were evident. I would hope that they might look again at what economic theory can offer history. Meanwhile, economic historians, by patiently persisting, by writing good history, and by struggling to keep their work accessible, can hope to persuade historians, or at least persuade their students, that economics has much to give.Google Scholar

6 The paradigm was set in Davis, Lance E. et al. , American Economic Growth: An Economist's History of the United States (New York, 1972). This is still the best single-volume reference.Google Scholar

7 Solow, Robert, “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics, 39 (08 1957), pp. 312–20,CrossRefGoogle Scholarand “Technical Progress, Capital Formation, and Economic Growth,” American Economic Review, 52 (05 1962), pp. 76–86.Google Scholar

8 A great deal of work and ingenuity was engaged in measuring the growth of the factors of production and the parameters of the aggregate production function; see National Bureau of Economic Research, Trends in the American Economy in the Nineteenth Century and Output, Employment, and Productivity in the United States after 1800, Studies in Income and Wealth, vols. 24 and 30 (Princeton, 1960 and 1966).Google Scholar

9 Solow, Robert, “A Contribution to the Theory of Growth,” Quarterly Journal of Economics, 70 (02 1956), pp. 65–94.CrossRefGoogle Scholar

10 In this version of the story, the organizational innovations of management, marketing, and industrial structure are seen as fortuitous and exogenous inventions rather than as endogenous developments of a natural evolutionary process. Consider, for example, the treatment of management by Chandler, Alfred P. Jr, The Visible Hand: The Managerial Revolution in American Business (Cambridge, MA, 1977).Google Scholar

11 The seminal work on interregional trade is North, Douglass C., The Economic Growth of the United States 1790 to 1860 (Englewood Cliffs, NY, 1961).Google ScholarThe most influential work on capital markets was done by Davis, Lance and reported in many journal articles, some of which have been reprinted in Purdue Faculty Papers in Economic History, 1956–1966 (Homewood, IL, 1967), part 5.Google Scholar

12 For a sampling of the influential work on the government's role, see Taylor, George Rogers, The Transportation Revolution, 1815–1860 (New York, 1951);Google ScholarGoodrich, Carter, Government Promotion of American Canals and Railroads, 1800–1890 (New York, 1960);Google Scholarand Friedman, Milton and Schwartz, Anna Jacobson, A Monetary History of the United States, 1867–1960 (Princeton, 1963).Google Scholar

13 Henretta, James has been the most articulate proponent of the view that colonial Americans embraced the premodern mentalité in “Families and Farms: Mentalité in Pre-Industrial America,” William and Mary Quarterly, 35 (01 1978), pp. 3–32.CrossRefGoogle ScholarFolbre, Nancy has also made the same argument from an economist's perspective in “The Wealth of Patriarchs: Deerfield, Massachusetts, 1760–1840,” Journal of Interdisciplinary History, 16 (Autumn 1985), pp. 199–220.CrossRefGoogle ScholarTwo important discussions of the transition to a modern “capitalistic” view are by Clark, Christopher, “Household Economy, Market Exchange and the Rise of Capitalism in the Connecticut Valley, 1800–1860,” Journal of Social History, 13 (Winter 1979), pp. 169–89;CrossRefGoogle Scholarand Rothenberg, Winifred, “The Market and Massachusetts Farmers, 1750–1855,” this Journal, 41 (06 1981), pp. 283–314.Google Scholar

14 Furstenberg, Frank F. Jr, “Industrialization and the American Family: A Look Backward,” American Sociological Review, 31 (06 1966), pp. 326–37;CrossRefGoogle ScholarBrown, Richard D., Modernization: The Transformation of American Life, 1600–1865 (New York, 1976);Google ScholarFischer, David Hackett, Growing Old in America: The Bland-Lee Lectures Delivered at Clark University (New York, expanded edn., 1978), pp. 77–79;Google ScholarDegler, Carl N., At Odds: Women and Family in America from the Revolution to the Present (New York, 1980), p. 8;Google ScholarVinovskis, Maris A., Fertility in Massachusetts from the Revolution to the Civil War (New York, 1981), pp. 117–22;CrossRefGoogle ScholarWells, Robert V., Revolutions in Americans' Lives: A Demographic Perspective on the History of Americans, Their Families, and Their Society (New York, 1982), pp. 5–6;Google Scholarand Smith, Daniel Scott, “Child-Naming Practices, Kinship Ties, and Change in Family Attitudes in Hingham, Massachusetts, 1641 to 1880,” Journal of Social History, 18 (Summer 1985), pp. 541–66.CrossRefGoogle Scholar

15 Slavery in the South makes it a special case.Google Scholar

16 To some extent the exact boundaries that set off one age period in the life course from the others are culturally and economically determined. Biology sets upper and lower limits but leaves a wide range for cultural and economic differences. Indeed, a major source of resilience and adaptability in human societies is the potential to change the relative proportions of the population that are productive and dependent.Google Scholar

17 Nugent, Jeffrey B., “The Old-Age Security Motive for Fertility,” Population and Development Review, 11 (03 1985), pp. 75–97, esp. p. 76;CrossRefGoogle ScholarSundstrom, William A. and David, Paul A., “Old-Age Security Motives, Labor Markets, and Farm Family Fertility in Antebellum America” (Stanford Project on the History of Fertility Control Working Paper No. 17, Feb. 1986), pp. 19–30;Google ScholarGreven, Philip J. Jr, Four Generations: Population, Land, and Family in Colonial Andover, Massachusetts (Ithaca, 1970);Google ScholarSmith, Daniel Scott, “Parental Power and Marriage Patterns: An Analysis of Historical Trends in Hingham, Massachusetts,” Journal of Marriage and the Family, 35 (08 1973), pp. 419–28;CrossRefGoogle ScholarFischer, Growing Old, pp. 52–58; and Henretta, “Families and Farms.”Google Scholar

18 The labor constraint was felt only during the brief seasonal periods devoted to planting and harvesting, but that was sufficient to control the scale of the farm.Google Scholar

19 Since raising children entailed costs, fertility in this premodern world can be modeled as an investment decision; see Lindert, Peter H., Fertility and Scarcity in America (Princeton, 1978).Google Scholar

20 Benjamin Franklin and Adam Smith also explained the high American birth rate by the abundance of land and on that basis predicted the continuation of high birth rates for many generations. Had they foreseen the American acquisition of the trans-Mississippi territory or the coming transportation revolution, it would have only strengthened their confidence in the argument.Google Scholar

21 The outmigration of young adults was equivalent to default on an implicit agreement to provide support and comfort to their parents in old age; see Williamson, Jeffrey G., “Fertility Decline, Emigration and Child Default: Evidence from 19th Century Rural England” (Tenth University of California Conference on Economic History, Laguna Beach, May 2–4, 1986).Google Scholar

22 Smith, “Parental Power”; Smith, Daniel Scott and Hindus, Michael S., “Premarital Pregnancy in America, 1640–1971: An Overview and Interpretation,” Journal of Interdisciplinary History, 5 (Spring 1975), pp. 537–70; and Folbre, “The Wealth.”CrossRefGoogle Scholar

23 Fishlow, Albert, “The American Common School Revival: Fact or Fancy?” in Rosovsky, Henry, ed., Industrialization in Two Systems: Essays in Honor of Alexander Gerschenkron (New York, 1966), pp. 40–67,Google Scholarand “Levels of Nineteenth-Century American Investment in Education,” this Journal, 26 (12 1966), pp. 418–36;Google Scholarand Kaestle, Carl F. and Vinovskis, Maris A., Education and Social Change in Nineteenth-Century Massachusetts (Cambridge, 1980).CrossRefGoogle Scholar

24 Newell, William H., “Inheritance on the Maturing Frontier: Butler County, Ohio, 1803–1865” (Conference on Research in Income and Wealth, Williamsburg,03. 22–24, 1984).Google Scholar

25 Ransom, Roger L. and Sutch, Richard, “Domestic Saving as an Active Constraint on Capital Formation in the American Economy, 1839–1928: A Provisional Theory” (Working Papers on the History of Saving No. 1, Dec. 1984),Google Scholarand “A System of Life-Cycle National Accounts: Provisional Estimates, 1839–1938” (Working Papers on the History of Saving No. 2, Dec. 1984).Google Scholar

26 Zelinsky, Wilbur, “The Hypothesis of the Mobility Transition,” Geographical Review, 61 (04 1971), pp. 219–49.CrossRefGoogle Scholar

27 Ransom, Roger L. and Sutch, Richard, “The Labor of Older Americans: Retirement of Men On and Off the Job, 1870–1937,” this Journal, 46 (03 1986), pp. 1–30.Google Scholar

28 The choice of where to make the original cut is, of course, not really arbitrary. I have chosen the initiating cause (a change in federal land policy) and the ultimate consequence (industrialization) carefully. In part, I am being deliberately provocative. Most of the literature of economic history makes industrialization the prime mover and the inevitable consequence of technological discovery. I find this unsatisfying as a theory and ahistoric. One way to emphasize these inadequacies is to rhetorically reverse the conventional causal arrows and thus demonstrate that the result is a more satisfying and more faithful depiction of the historical record.Google Scholar