Counterpoint to Ogilvie and Carus - Württemberg
Counterpoint to Ogilvie and Carus - Württemberg
In the book, I take for granted book that institutions are a major driver of economic growth and general improvements in welfare. This is due to the general consensus among economists on this issue. But the fact that there is a general consensus does not mean there is no controversy. Studying some of those controversies will throw more light on both the role of institutions and parliamentarism.
In a chapter in the History of Economic Growth, Ogilvie and Carus survey "the historical evidence on the role of institutions in economic growth and point [...] out weaknesses in a number of stylized facts widely accepted in the growth literature. [P]rivate-order institutions have not historically substituted for public-order ones in enabling markets to function; [...] parliaments representing wealth holders have not invariably been favorable for growth; and [...] the Glorious Revolution of 1688 in England did not mark the sudden emergence of either secure property rights or economic growth."
What is most interesting about the main claims of the text by Ogilvie and Carus is that I agree with all the points. I do not believe that markets can function well without public-order institutions (parliaments being only the most important of them, but by no means the only one); I do not think that the Glorious Revolution mark a "sudden emergence" of property rights or economic growth (I argue otherwise in the book). With respect to the claim "parliaments representing wealth holders have invariably been favorable for growth", if interpreted in the sense the authors use later in the text that "strong parliaments always create good institutions for growth", I don't think anyone makes such a strong claim. I say this because I'm one of the most optimistic people about parliaments and even I wouldn't make such a claim.
This is because social sciences are almost always probabilistic. When we say "A causes B" we mean "A makes B more probable", not "A is a sufficient condition for B". The only claim as strong as Ogilvie and Carus attribute to defenders of the importance of parliaments I can recall is Milton Friedman's take that "inflation is always and everywhere a monetary phenomenon." Parliaments and growth, however, are associated in the way that smoking and cancer are associated (an analogy I also used in the book). Not everyone who smokes will develop cancer; not everyone who has lung cancer has a history of smoking. But smoking causes cancer in the sense that your probability of developing lung cancer if you happen to smoke is much greater than if you do not.
The mere fact that the authors feel the need to refute the claim that "strong parliaments always create good institutions for growth" should actually make people more optimistic about the prospects of parliamentarism than they usually are - a clear case of "praising with faint damns." If you know nothing about the tennis player Rafael Nadal and I say that he does not always win the Roland Garros Grand Slam, this will probably make you (correctly) believe that he is a good player and that he has won it at least a few times. Nadal won 100 of the 102 games he played in Roland Garros. I don't think parliamentarism has such a stellar record, nor does it need to have it to be worth pursuing.
But perhaps the most interesting aspect of their texts is the study of their examples of when parliaments supposedly failed: Württemberg, Holland and Poland. They are interesting because Württemberg and Holland did not fail, and Poland did not have a strong parliament. I will talk about Württemberg on this post, and about Holland and Poland later.
Before reading Ogilvie and Carus' text, I had never heard of Württemberg. But the claim that their history would provide strong evidence against the parliamentary hypothesis made me interested in this region of Germany, which has in Stuttgart its biggest city.
What I learned reading about the history of Württemberg is that they indeed have a comparatively strong parliament before the industrial revolution, but I also learned that historians attribute to that strong parliament an exceptional capacity compared to other states during those times. As Ogilvie herself and Küpker (2015) write, "Württemberg achieved higher and more universal literacy than any other European economy before 1800." Carsten (1959) writes that Württemberg achieved territorial, political, social and constitutional stability. "the position of the peasants was better than in many other parts of Germany. By the end of the Middle Ages sefdom had lost its rigours, and the manorial system had disintegrated"; ". And "The decisive fact was that, in contrast with most other parts of Germany and of Europe, the nobility was not the preponderant social group".
In a pre-industrial Malthusian economy, Württemberg was able to provide sustenance to a relatively large population. As Carsten writes, "it was much more densely populated then [Bradenburg or Prussia]". It also was an area of proto-industrialization of textiles. As Ogilvie writes (1997) "this new industry became the most important single livelihood in many villages and small towns in the region, surpassing the older weaving of heavy woolens for local and regional comsumption. For the next 240 years, the production of light, inexpensive worsted cloths for export would remains one of the two most important industries in Württemberg." But later she writes: "The history of the industry is not an economic success." Why? Because after nine (!) generations, it had a first big expansion, and its workers survival prospects became grim.
Why do Ogilvie and Carus seem so frustrated with Württemberg's economic performance, then? It seems to me it is because the region was not a leader in the industrial revolution, not even in Germany. But that would be far too stringent a demand. I'm not a specialist in German history nor in the history of industrialization, but there could be several reasons why a region would not be a leader of industrialization without it being a political failure. Maybe there were other regions which were closer to coal reserves. Maybe German industrialization was more state-led than the British industrialization and the German authorities did not privilege Württemberg.
The requirement for industrial leadership seems particularly stringent because as Ogilvie herself has documented, Württemberg was a leader in proto-industry, and is to this day a highly industrialized zone, home to companies such as Porsche and Daimler AG and part of the self-styled "four motors of Europe", a "a transnational, interregional network of four highly industrialized and research-oriented regions in Europe."
I insist that the mere fact that we can find examples of failure even where parliaments are strong does not disprove that parliamentary democracy is much better than presidential democracy any more than a heavy smoker living to one hundred years old disprove the lung cancer - smoking link.
Still, let's recapitulate how Württemberg has fared: it was a leader in human capital; it was politically stable; non-noble were freer; it was able to support more people per area in a largely Malthusian world; and it is one of the most successful regions in one of the most successful countries in the world. Many could only dream of failing like that.