The great inventions of the past and their effect on history form a subject that everyone talks about, and no one thinks about, or precious few ever think hard about. So I consider this a good subject for economic historians to do some hard thinking about now. It is not enough just to schematize the subject philosophically; we should replace and improve some ideas of history that are very popular. Particularly in need of examination is the idea of materialistic Karl Marx, which has spread to such respectable professors and other well-heeled gentlemen that Marx would shudder at his associates—the idea that invention, technologic change, determines economic life and hence all history.

The purpose of this paper is to present some of the findings and contentions of our forthcoming study of shipping, distribution, and overseas trade in colonial America from the middle of the seventeenth century to the American Revolution, with emphasis upon the later years. In order to provide an explanation of the contribution of overseas trade to colonial growth, we begin the study by proposing a simple theoretical framework for viewing economic development in the colonies. Then, to provide some perspective for the study, we examine the long-term trends in output, population, and overseas trade (subject to fairly severe data limitations, which allow us to make only tentative statements about these long-term trends, and which largely limit us to the eighteenth century). Next we examine the costs of shipping and distributing commodities in overseas trade and show that these costs declined over the long run. The increased productivity in shipping is explicitly measured, and the sources of these advances analyzed. Finally, a balance-of-payments study is presented for 1768 through 1772, the only years in the colonial period for which we have statistics of all legal overseas trade.

It is not chauvinism or instinctive egocentrism that leads Americans to believe they have evolved a beneficent form of economic organization. For despite all its shortcomings, and, alas, they are all too many, our volitional economy has demonstrated a capacity to stimulate human effort, increase investment, improve productivity, and gradually erode diat greatest evil of all commonwealths, perceived since Plato's days: the coexistence of great wealth and abject poverty. It is therefore entirely appropriate this year, when we are commemorating two great experiments in democratic public policy, that we should examine once again the origins of our polity, for I am convinced that it was the conscious and unashamed acceptance of a system of politico-economic pluralism that made possible the vigor and the catholicity of our developing institutions. The play of these pluralistic forces again and again has saved us from hardened dogma, so that the real virtue of our history—political, economic, and intellectual—has been our flexibility, our capacity to adapt ideas and instrumentalities to tasks of high social urgency. In the process we have created an economy so complex that it almost defies description, but one so tolerant ideologically that it can be called essentially private by those who find happiness in that ascription although there can be no burking the very obvious fact that it is today inherently socialistic. For whereas one can demonstrate statistically that two thirds of all capital formation is private, by an equally plausible demonstration it can be shown that, adding corporate and personal income taxes only, more than two thirds of the revenues of American enterprise are socialized. This mixed economy is, therefore, the great, ever-improving American invention, based on the quintessential content of our variant of democracy whose trinitarian elements have been well defined as shared respect, shared power, and shared knowledge.

In the middle of the nineteenth century, a handful of societies began creating and enforcing impersonal rules, rules that treat everyone the same, on a broad scale. The existing institutional literatures, while appreciating the importance of impersonal rules for the rule of law, have not understood how they contribute to economic and political development through rules that are enforced but not followed: default rules. The conceptual importance of impersonal default rules is drawn out and then applied to better understand both economic and political development in the late nineteenth and early twentieth centuries.

These two books have one element in common, the International Monetary Fund. For the rest, they differ in virtually every dimension. James Boughton, Assistant Director of the fund's Policy Development and Review Department, writes a colossal history of the institution for the period 1979–1989; his insider's perspective is inherently sympathetic to the institution and its main actors. Paul Blustein, a financial journalist of the Washington Post, describes the fund's handling of the financial crises of 1997–1999 in Thailand, South Korea, Indonesia, Russia, and Brazil; as an outsider, he has no institutional allegiance and, as a matter of fact, his assessment of the fund is negative. There are other differences, to be sure: Boughton's is a heavily researched history, rich not only in institutional knowledge but also in theories and policy debates; Blustein's focuses almost exclusively on the policy aspect. Boughton relies primarily on archival material, whereas Blustein on interviews with key policy makers, both inside and outside the fund. Boughton writes for an audience of economists and policy makers, Blustein for the educated but unspecialized. Boughton's work reads like a treatise, Blustein's like a novel.

The Solow growth and the Heckscher-Ohlin trade models describe two competing processes through which regional incomes converge over time. Solow's model attributes rising productivity of labor to additional regional capital investments. Heckscher-Ohlin's trade model ascribes the relocation of high value industries to regions with low wage rates. On the other hand Paul Krugman expects incomes to diverge over time as regions with an initial advantage maintain it through ever increasing external economies of scale. The Solow and Heckscher-Ohlin models imply that incomes converge through the movement of high quality labor and capital and high value goods and services into low income regions respectively.

In 1719, French commander Jean-Baptiste Benard, Sieur de la Harpe, together with nine men, ventured into the Prairie Plains, a region previously unvisited by Europeans, to establish trading alliances with the Plains Indians. His journey took him to what is now eastern Oklahoma, where his men spent ten days at an Indian village interacting with peoples of various tribes who later merged into the Wichita tribe. The village was the principal home of the Tawakoni, the most powerful of the Wichita-related tribes. In La Harpe's Post, George H. Odell documents the initial contact between La Harpe's party and these peoples, thereby potentially adding a crucial chapter to the history of the Plains Indians during the early eighteenth century. The information regarding the native population is considered the most significant consequence from this event. Odell takes much of his information from findings obtained during an excavation of the presumed site of the Tawakoni village. Odell ambitiously uses this information to write a reevaluation of the general history of the eastern Plains during this period. The technical aspects of the archeological research, such as the excavation data and statistical analyses, are located in 11 appendixes, as his book is intended for a wide audience.

Movies might appropriately be the defining genre for the twentieth century. There were no movies before the twentieth century. Knowing what movies were made and seen by whom over time, and which messages and symbols were conveyed tells us a great deal about the American Century and about how people saw capitalists and capitalism. We argue that American movie culture evolved at a time when the debate about wealth and poverty and structural change was transforming the economy, and when most people could not explain or understand the revolutionary changes underway. We also suggest that who made the movies and how they made them mattered: a majority of the early movies were made by immigrant groups, such as Jews, and that mattered to how the movies perceived the outsiders and the insiders and how they portrayed capitalism and capitalists.

The history of coffee is a tale of romance and complexity, sometimes bitter, sometimes enlightened. Mark Pendergrast weaves this tale with the art of a master storyteller. From its legendary discovery in the ancient land of Abyssinia (now Ethiopia), coffee became a source of stimulus for new ideas, work, and social controversy. Traded throughout the Ottoman Empire in the sixteenth century, the curious beverage was brought to the hands of Pope Clement VIII by priests who wanted to ban it. He tasted and replied: “Why, this Satan's drink is so delicious,… it would be a pity to let the infidels have exclusive use of it” (p. 8). So the Western European romance with it began. By the eighteenth century, coffeehouses provided an egalitarian meeting place and a social context for emerging liberal institutions and the American and French Revolutions.

How long did it take for early rapid capitalist transformations to benefit the majority of the population? This essay examines three presumed success cases, concluding that rapid capitalist development took at least five decades to benefit the majority. A neglected political force for success was the effectiveness of local public and quasi-public institutions in creating wide networks of transportation and other public investments responsive to changing market requirements. Economists today should pay close attention to distributional benefits and local government effectiveness before urging western brands of capitalism on countries where failures to benefit the majority threaten severe political instability.

“Someday you guys are going to need to tell me how we ended up with a system like this….we're not doing something right if we're stuck with these miserable choices.” President Bush, to Henry Paulson and Ben Bernanke, after his briefing on September 16, 20081

The extension of social insurance during the twentieth century did not translate into homogeneous pension provision. Using a new database, this article analyzes the evolution of pensions in the long run for a sample of welfare states. The convergence in old age benefits as a share of earnings is only found for all earnings levels between 1970 and 1990. The results also underline the role as determinants of pension policy of both domestic and external factors. In line with previous literature, income per capita and the share of old people are key drivers of pensions. However, the effect of globalization is negative, especially for low and medium earnings levels.