Economic History

The great myth of Baron Haussmann is that 'modernity' began with his monumental reconstruction of Paris in the second half of the nineteenth century. Constructing Paris in the Age of Revolution argues that 'Haussmannisation before Haussmann' in the late 1700s also made Paris the capital of the eighteenth century. In particular, due to the persistence of the black legend of uninterrupted revolutionary vandalism, few historians have researched the construction of revolutionary Paris, yet if formed a core sector of revolutionary urban, social, labour and industrial policy. Allan Potofsky thus rehabilitates the vitality of building during the Revolution, and - while architectural and urban historians have often treated the history of construction through the exclusive optic of careers and tastes of architects and urban planners, or through the structure and aesthetics of buildings, streets, and cities – his book examines the social and political history of workers and entrepreneurs engaged in constructing the French capital, in the period, 1763 to 1815.

This paper looks at the evolution of the terms of trade between commodities and manufactures in the twentieth century. A statistical analysis of the relative price series for 24 commodities and of eight indices reveals a significant deterioration in their barter terms of trade over the course of the twentieth century. This decline was neither continuous, nor was it distributed evenly among individual products, however. The data show that the far-reaching changes that the world economy underwent around 1920 and again around 1980 led to a stepwise deterioration which, over the long term, was reflected in a decline of nearly 1% per year in aggregate real prices for raw materials.

"In general, in developing countries, unfortunately, markets do not perform well. Hernando
de Soto (2003) has pointed out the "hard" conditions such as the absence of property rights
and the high cost of obtaining operating permits. Amartya Sen (1999) citing Adam Smith’s
Theory of Moral Sentiments (1759) has emphasized the "soft" conditions connected to
behavioural and institutional obstacles, in particular the role of trust for a functioning
market economy. Sen conceptualizes trust as one of the principal conditions for a
functioning market economy,
First, we analyzed the concept of trust in Adam Smith’s writings. He places trust as a central
element in all human interactions, including production, consumption and trade. In his view,
the enforcement of contracts by the state causes trust levels to rise, markets to function,
and trustworthy behaviour to increase. Conversely, trust is also a necessary condition for
successful functioning of markets. We know from recent advances in complexity economics,
that positive feedback loops can have quite substantial effects in complex systems
(Beinhocker 2006), and therefore the positive feedback of trusting and trustworthy
behaviour could be quite substantial. It seems Smith had an intuitive and quite sophisticated
understanding of this.
Regarding the role of trust in a market economy the direction of the causality is hard to
determine. Do functioning markets develop trust, or does higher trust level cause stronger
development of market institutions?
In order to investigate this, we carried out a classical trust experiment (Berg, Dickhaut and
McCabe 1995)in Costa Rica, comparing trust level and experienced market operators and
inexperienced operators, i.e. economics undergraduates (Alpízar 2004). Indeed, relatively
low trust levels were found among the students, but experience market operators exhibited
high trust levels. There are implications for educational policy in business education. A
possible extension of this work is to measure trust levels among inexperienced market
operators in developing and developed economies before and after market training.
Next, we undertook an analysis of a series of trust experiments in developing countries.
From this literature evidence emerges functioning markets create trust, and not the other
way around. We would recommend therefore that policy focus primarily on creating the
appropriate "hard" conditions for market functioning, rather than attempting to influence
trust levels in “soft” ways, by promoting dialogue of business codes of good behaviour.
Results from economic experiments therefore show that Amartya Sen, but not Adam Smith
seem to have confused too narrowly on trust as a condition, and fails to contemplate the
effects of trusting and trustworthy behaviour on the functioning of markets.
2
References
Alpízar, F., Till Requate and Albert Schram (2004). "Collective versus Random Fining: An Experimental
Study on Controlling Non-Point Pollution." Environmental and Resource Economics 29(2):
231-52.
Beinhocker, E. D. (2006). The Origin of Wealth. Evolution, Complexity and the Radical Remaking of
Economics. London, Random House.
Berg, J., J. Dickhaut, et al. (1995). "Trust, Reciprocity, and Social History." Games and Economic
Behavior 10: 122-42.
De Soto, H. (2003). The Mystery of Capital Why Capitalism Triumphs in the West and Fails
Everywhere Else. New York, Basic Books.
Sen, A. (1999). Development as Freedom. New York, Oxford University Press.
Smith, A. (1759). The Theory of Moral Sentiments. London, A. Millar."

Il 22 febbraio 1951 una colonna di carabinieri si presentò alla fattoria di Verrazzano, nei pressi di Greve in Chianti, per sfrattare una famiglia di mezzadri. La popolazione del paese non rimase a guardare. I campi vennero invasi da una folla pacifica di lavoratori, operai e mezzadri, decisi a manifestare la propria solidarietà agli sfrattati. Nonostante la massiccia mobilitazione di popolo, la famiglia alla fine venne allontanata dal proprio podere. Si trattava di una grave sconfitta per il movimento contadino di Greve, preludio ad un fenomeno di più ampia portata: la fuga dei mezzadri verso la città.
Leo Goretti parte da questo episodio per ricostruire la parabola novecentesca della mezzadria chiantigiana, dall’ “età dell’oro” di inizio secolo alla grave crisi apertasi negli anni Venti con il crollo della produzione del vino Chianti, vero e proprio perno dell’economia locale. Combinando diverse tipologie di fonti (interviste con ex mezzadri, inchieste agrarie, periodici, documenti d’archivio), l’autore cerca di ricostruire la dinamica che portò - tra la fine degli anni Cinquanta e i primi anni Sessanta - al crollo e alla disgregazione della mezzadria. Scompariva così, per l’irresistibile richiamo della modernità, un mondo fatto di vincoli e valori, di miserie e solidarietà forse troppo in fretta dimenticati. Questo libro vuole essere, prima di tutto, un invito a riscoprirli, e a ripensarli.



La tesi di laurea, di cui il libro è una rielaborazione, ha vinto ex aequo il Premio Daniel Granger bandito dal Dipartimento di Studi Storici e Geografici dell'Università di Firenze per la miglior tesi di laurea specialistica in storia discussa tra l'autunno 2006 e quello 2008.

Review by Fabrizio Loreto (p. 185):
http://www.sissco.it/fileadmin/user_upload/Pubblicazioni/Mestiere_di_storico/2-2009/schede_a_z.pdf

Review by Francesco Apergi (pp.16-20):
http://www.annodeimezzadri.it/wp/wp-content/uploads/2010/07/F.Apergi_Antropologia_rivisitata.pdf

Historiographical debates on the causes and implications of early modern and early industrial settlement legislation, which determined the locality where one could apply for poor relief, have so far focused mainly on England and Wales. These regions are deemed exceptional for the national character and universality of their Poor Laws (1601), associated Act of Settlement (1662) and later amendments. However, if the focus is shifted from the national legislative framework to actual practice, several continental regions had relief and settlement arrangements that bore many resemblances to those in England and Wales. This article draws on existing literature and archival research to explore the evolution of settlement law and practice in the Southern Netherlands, i.e. present-day Belgium, from the seventeenth to the late nineteenth centuries, and compares its main features with the situation in England and Wales. This comparative exercise brings to the fore a number of striking resemblances and remarkable differences, which question the precise nature of the British exception. While further research is needed to gauge fully the causes and consequences of the observed similarities and differences, this article aims to demonstrate how a comparative approach towards issues of settlement and relief not only elucidates our understanding of the particularities and generalities of the English/Welsh case, but also widens our insight into the social, economic, and cultural implications of settlement arrangements in general.

This thesis examines Finland‘s transition from a solar based energy system to a  fossil fuel based one, and the environmental consequences of this transition. The  period under examination is from the beginning of the 19th  century to the present,  covering Finland's transition from a proto-industrial agricultural society to a --post-  industrial| society.

The theoretical starting point has been the environmental Kuznets curve hypothesis,  which proposes that some pollution or measures of environmental degradation  would follow an inverted U-curve related to incomes, increasing at low income  levels and decreasing at high income levels. Based on the historical approach used  in this thesis, two new explanations for the existence of an environmental Kuznets  curve are added: 1) The severity of environmental degradation might itself create a  turning point for the emissions, or in some cases fear of severe effects. 2) What at a  first glance seems to be a genuine environmental improvement might just be a  transformation of one environmental problem into another.

Some proponents of economic growth go as far as claiming that economic growth is  a necessary condition for proper protection of the environment. This thesis turns the  argument around, claiming that the causal connection goes in an opposite direction:  proper environmental standards and conservation comprise a necessary condition for  economic growth in the long run.

Finland industrialized by means of renewable, indigenous energy sources. The  switch to imported fossil fuels in the 1960s led to exceptionally fast growth of  carbon and sulphur dioxide emissions. The emissions of sulphur dioxide started to  decline in the 1970s while the emission growth of carbon dioxide only slowed  down. The initial decline of sulphur dioxide emissions was mainly a side-effect of  changes in industrial processes rather than an outcome of a deliberate policy.  Furthermore, anxiety about large and widespread damage to the forests was a major  reason for active measures to decrease sulphur dioxide emissions since the mid-  1980s. Thus the emissions themselves provoked their downturn.

Quantitative calculations on the use of natural resources provide valuable tools,  which can give new insights to old questions and raise new questions. Burning  cultivation of peatlands, which has been neglected in historical research, was found  to be the greatest source of carbon dioxide in Finland during the whole of the  nineteenth century and at the beginning of the twentieth century. Another neglected  occupation, the production of potash might have consumed as much wood during  the 19th century as the production of tar.

The paper considers all the problems related to the planning of a computerised tool for archiving and processing faunal remains. We present a database management system used by the Prehistorical Section and by the Medieval Archaeology Area of the Archaeology and Art History Department of the University of Siena. The solution, open and flexible, has been created  after the experience of the LIAAM (Laboratory of Information Technology Applied to Medieval Archaeology ; http://archeologiamedievale.unisi.it). Evolution of the database since 1996, detailed description of its functionalities and possibilities connected with the use of it are dealt under an archaeozoological perspective. The paper faces also aspects related to information technology, such as data architecture, normalization of language, programming of user interfaces and automation utilities.
In conclusion, the DBMS we are proposing has proved to be efficient in the practice of archaeozoological research; digital recording reduces the occurrence of errors during data entry, allows comparison between different contexts and, above all, it provides powerful tools for real time processing of one or more samples.
Keywords: Archaeozoology, database management system, Medieval Archaeology.

This timely volume examines the commitments of historicism in the wake of New Historicism. It contributes to the construction of a materialist historicism while, at the same time, proposing that discussions of work need not be limited to the clash between labor and capital. To this end, the essays offer more than a strictly historical view of the complex terms, social and literary, within which labor was treated in the medieval period. Several of the essays strive to reformulate the very critical language we use to think about the categories of labor and work through a continually doubled engagement with modern theories of labor and medieval theories and practices of labor.

Praise

"This collection of essays examines a favorite topic of medievalists, breathing new life into its analysis. Robertson and Uebel have achieved something remarkable here. The essays are wide-ranging, innovative, and provocative. Medieval labor is granted a complexity and an expansiveness that readers will likely find inspiring. Consistently engaging, lucidly composed, and full of insight, the work gathered in this important book constitutes essential reading for all those interested in the critical reexamination of the past."--Jeffrey J. Cohen, Department of English, George Washington University

Table of Contents

Conceptualizing Labor in the Middle Ages--Michael Uebel * The Idioms of Women's Work and Thomas Hoccleve's Travails--Catherine Batt * "As If She Were Single"--Brian Gastle * "The Workman is Worth his Mede"--Kate Crassons * The Carpenters Company and Lay Spirituality in Late Medieval England--Mark Addison Amos * Reconstructing English Labor Laws--Anthony Musson * Branding and the Technologies of Labor Regulation--Kellie Robertson * The Displacement of Labor in Wynnere and Wastoure--Britton Harwood * Scribal Hermeneutics and the Genres of Social Organization in Piers Plowman--Andrew Cole * Poetic Work and Scribal Labor in Hoccleve and Langland--Ethan Knapp * The Erasure of Labor: Hoccleve, Caxton, and the Information Age--William Kuskin

In 1989 some proclaimed the imminent universal triumph of a particular state form -- the modern liberal state. Since then, others proclaim the imminent demise of the modern nation state under advancing globalization. Yet modern states continue to be formed -- from the former Yugoslavia to the new East Timor. One thing is clear in these developments. Despite the global promotion of science and commerce, culture in various forms had and has a major if not central role in state formation, from ancient times to the present. The four volumes of Culture and the State address all these issues, and more. Organized around a set of flexible themes, the series considers the role of culture variously defined -- high and low, elite and popular, local and global, historical and contemporary -- in the creation, maintenance, transformation, and demise of states.

How much is needed to get us out of the crisis? From the historical evidence, a lot more than we’ve seen so far.
Obama’s stimulus, at five per cent of GDP, outstrips all others in the Western world – which on its own sheds doubt on them. Yet even this may not be enough.
This short paper compares what happened in 1929 with what's happening now, and concludes that economists still 'misunderestimate' the crisis, and how much things will have to change to get out of it
Originally posted on http://debtonation.org/guest-bloggers/, this PDF contains the text as a self-contained file. It is also available here as iPaper.

Στο άρθρο αυτό ερευνώνται η χρόνια σταφιδική κρίση, τα αποτελέσματά της και η επίδρασή της στην ελληνική αγροτική οικονομία. Η χρόνια κρίση υπερπαραγωγής της σταφίδας (1893 κ.ε.) μεταφράστηκε σε οξεία κρίση εισοδημάτων μεγάλου μέρους της ελληνικής ενδοχώρας (για το σύνολο σχεδόν της Πελοποννήσου και ορισμένων νήσων των Ιονίων και επαρχιών της ορεινής Στερεάς Ελλάδας) και σε κτηματική κρίση στις σταφιδικές παράλιες επαρχίες. Έπληξε επίσης τους μεγάλους εξαγωγικούς οίκους και αποδιάρθρωσε το εμπορικό κύκλωμα. Η στρατηγική σημασία της σταφιδικής εξαγωγικής οικονομίας για τον κοινωνική αναπαραγωγή της ελληνικής υπαίθρου, την εισροή πολύτιμου συναλλάγματος και την εξισορρόπηση του εξωτερικού εμπορίου, υποχρέωσε τις δημόσιες αρχές να αναλάβουν για πρώτη φορά, και αντίθετα από τις μέχρι τότε κυριαρχούσες μεταξύ των δημοσίων λειτουργών αντιλήψεις περί οικονομικής πολιτικής, τη διαμόρφωση μίας παρεμβατικής πολιτικής ενίσχυσης των τιμών του εξαγόμενου προϊόντος και των εισοδημάτων των παραγωγών, αρχικά μέσω του ελέγχου του όγκου και της ποιότητας του εξαγόμενου προϊόντος και στη συνέχεια μέσω της υποκατάστασης των λειτουργιών του εμπορικού κυκλώματος ως πιστωτών των παραγωγών. Η χρεοκοπία της δημοσίων συμφερόντων Σταφιδικής Τράπεζας άνοιξε στα 1905 τον δρόμο για τη δημιουργία της «Ενιαίας», μίας ιδιωτικής προνομιούχου Εταιρείας, ελεγχόμενης από την Τράπεζα Αθηνών, η οποία θα ελέγξει το σύνολο του μη-εξαγόμενου προϊόντος εξασφαλίζοντας στους παραγωγούς πιστώσεις και μια κατώτατη τιμή ασφαλείας του προϊόντος. Στα 1910 η σταφιδική κρίση είχε πλέον τιθασευτεί. Η Τράπεζα Αθηνών χρησιμοποίησε επιδέξια την «Ενιαία» για να τροφοδοτήσει τις βιομηχανικές εταιρείες οίνων και οινοπνευμάτων που έλεγχε με φθηνή πρώτη ύλη.

Στο άρθρο αυτό, αφού εξετάζονται οι μέχρι σήμερα διαμορφωμένες απόψεις σχετικά με τα αίτια της υπερατλαντικής μετανάστευσης των ετών 1898-1923 (η οποία κυριολεκτικά αφαίμαξε την ελληνική αγροτική οικονομία από τις ζωτικότερες δυνάμεις της), επιχειρείται η ανασκευή μερικών από αυτές και υπογραμμίζεται ιδιαίτερα ο πολυαιτιακός χαρακτήρας του φαινομένου. Προσδιορίζονται οι ποικίλες μορφές με τις οποίες οι Έλληνες γεωργοί αντέδρασαν στην οξεία κρίση εισοδημάτων (αποτέλεσμα, μεταξύ άλλων, της χρόνιας κρίσης υπερπαραγωγής της κορινθιακής σταφίδας) του τέλους του 19ου αιώνα. Η κρίση αυτή έπληξε τις πηγές των απαραίτητων συμπληρωματικών εισοδημάτων σε περιοχές με διαφορετικά αγροτικά συστήματα, από τις οποίες η κάθε μία διαμόρφωσε και ιδιαίτερη στρατηγική αντιμετώπισής της. Η υπερωκεάνια μετανάστευση αποτέλεσε μία από αυτές τις πολλαπλές μορφές αντιμετώπισης της κρίσης εισοδημάτων, η οποία όμως γρήγορα έλαβε επιπρόσθετα τον χαρακτήρα ενεργητικής επιλογής από τα στρώματα εκείνα του αγροτικού πληθυσμού που, μιμούμενα τους πρώτους επιτυχημένους μετανάστες, επιχείρησαν να συσσωρεύσουν γρήγορα το κεφάλαιο εκείνο που θεωρούσαν για δίφορους λόγους αναγκαίο. Η μικρή αγροτική ιδιοκτησία συνδέθηκε έτσι στενότερα με την παγκόσμιο αγορά αλλά ταυτόχρονα ανοίχτηκε ο στενός τοπικός ορίζοντας των αγροτών μεταναστών. Κατά την τελευταία περίοδο, εξωοικονομικά πιθανόν αίτια συντέλεσαν στη μονιμοποίηση της εγκατάστασης (παρά την αρχική τους θέληση) μεγάλου μέρους των μεταναστών στις ΗΠΑ.

Il dibattito sul tema della continuità e discontinuità tra tardoantico ed altomedioevo è un argomento di discussione affermatosi da tempo, ma non certo esaurito, nella ricerca archeologica e storica medievale. L'origine dei paesaggi medievali , le trasformazioni delle città , i processi di metamorfosi dei manufatti e le implicazioni economiche , sono solo alcuni dei temi affrontati nell'ultimo ventennio di ricerca. Queste problematiche hanno fatto sì che la ricerca archeologica affinasse i propri strumenti di analisi attraverso un'osservazione sempre più attenta delle sequenze stratigrafiche sui cantieri, dei paesaggi fossilizzati nei survey ed, infine, dei resti della cultura materiale nelle analisi archeometriche. Il presente contributo intende accostarsi al dibattito per mezzo di quest'ultimo complesso di informazioni, ed il titolo indica chiaramente lo studio dei resti osteologici animali quale punto di partenza o lente di ingrandimento attraverso cui osservare il momento di passaggio tra il mondo tardoantico e quello altomedievale. Nell'ultimo convegno SAMI (SALVADORI 2003) era stato presentato un articolo in cui si proponevano alcuni spunti di riflessione scaturiti dalla composizione di campioni osteologici animali rinvenuti in siti rurali di età tardoantica. Le idee proposte avevano origine da un lato dal confronto sincronico tra campioni afferenti a contesti cronologicamente ben delineati (V-VI secolo), dall'altro da una comparazione diacronica con insediamenti di età medievale. Le conclusioni, tracciate in forma assai sintetica, costituiscono il terreno sul quale discutere il tema di questo contributo. Sulla scorta delle evidenze zoologiche emerse dai resti osteologici si ipotizzava la persistenza di un'economia agricola intensiva fino almeno agli inizi del VI secolo, oltre il limite proposto dagli storici (ANDREOLLI, MONTANARI 1985;) e recentemente ribadito, anche se in forme di crisi più o meno accentuate a seconda degli insediamenti, dai risultati di sistematiche ricerche archeologiche . In base alle evidenze documentarie, quindi, il sistema delle ville decade definitivamente già nel corso del V secolo, ed a questi si sostituisce un modello di azienda autosufficiente connotata da un'economia definita naturalizzata, cioè da un aumento consistente dell'incolto a scapito dei campi a produzione cerealicola. Sulla scorta dei dati archeologici, invece, nonostante il generale epilogo architettonico delle ville, in alcuni insediamenti si rinvengono indicatori di un persistere dell'economia di scambio . L'idea a suo tempo elaborata sulle evidenze osteologiche per cui il sistema agrario di derivazione romana, sembra essere proseguito per buona parte del VI secolo (sostanzialmente fino alla guerra greco-gotica) si basava sulla convergenza di una serie di dati derivati direttamente da diversi tipi di analisi archeozoologiche . Tali informazioni riguardano la distribuzione tassonomica, in particolare l'alta percentuale di resti osteologici bovini non riscontrata nei campioni altomedievali italiani, l'età di decesso generalmente adulta della specie bovina, la presenza tra questi animali di patologie derivate da stress da lavoro (principalmente Villa Clelia e Calvatone), la distribuzione dei sessi connotata, nei campioni più consistenti, da una preminenza di soggetti maschi o castrati, infine, l'osteometria. L'insieme di questi dati, quindi, suggeriva l'ipotesi di una presenza diffusa nelle zone rurali di specie bovine (distribuzione tassonomica), generalmente sfruttate come forza lavoro (patologie, osteometria, frequenza di castrati e maschi) e consumate quando il loro apporto produttivo decadeva (età adulta), in quanto essenziali ad un tipo di economia volta ad una produzione cerealicola intensiva. In definitiva i bovini assicuravano, con gli schiavi ed i contadini in affitto nelle aziende rurali in decadenza dell'aristocrazia romana, la forza lavoro

Claiming that Russian Federation has regained its superpower position
enabling some of its influence through energy policy and using not only changes in its
security concept but also the examples of latest events such as Iran nuclear
programme, U.S.A. intention to deploy missiles and radar systems in Poland and
Czech Republic, Kosovo’s status and other, author argues within realist discourse that
one of the greatest security challenges in this century will be situation similar to Cold
War. Difference that brings concerns that this „Second Cold War“ might be even
more dangerous is the fact that there are control mechanisms which no longer
function. Those control mechanisms are not only Organization of United Nations
(OUN), but also international law as basic limitation factor reached through consensus
which is now lost and disappearance of buffer zone. Power perception which served
as one of the tools to maintain status quo during Cold War is now impaired with the
fact that Russia has to fight for its, once lost, position in international scene which if
not addressed properly might increase probability of conflict.

"The article tests a hypothesis claiming that the gaseous emissions of energy
production follow an inverted U-curve related to income. The hypothesis is
known as the ‘environmental Kuznets curve’ (EKC). The tested data contain
Finnish emissions in the period 1800-2003 using newly constructed emission
series. Although the carbon dioxide emissions from Finnish energy production
increased at the beginning of the period under study according to the EKC
hypothesis, a steady decline of these emissions at high income levels could
not be found. We find a genuine support for the EKC hypothesis only for
sulphur dioxide emissions and, with some reservations, also for nitrogen
oxides.
Finally we bring up some problems related to the interpretation of the EKC.
First, an inverted U-shape may be found in some cases, but the vital question
is: which part of the curve are we in at this particular moment? If there is a long
way up to the turning point, economic growth will cause environmental
damage for a considerable period of time. Second, it is questionable whether
economic growth has an automatic tendency to diminish environmental
damage at high-income levels. A limitation of the reduced-form approach
used is that it is unclear why the estimated relationship between pollution and
income exists. Finally we question whether the severity of environmental
degradation might itself create a turning point for the emissions."

Chile and Mexico experienced severe economic crises in the early 1980s. This paper analyzes four possible explanations for why Chile recovered much faster than did Mexico. Comparing data from the two countries allows us to rule out a monetarist explanation, an explanation based on falls in real wages and real exchange rates, and a debt overhang explanation. Using growth accounting and a calibrated growth model, we find that the difference in the performance of Chile and Mexico was driven not by differences in inputs of capital and labor stressed by traditional theories of depressions, but rather by differences with which these inputs were used, measured as total factor productivity (TFP). Using economic theory to interpret historical evidence, we conclude that the crucial difference between the two countries was earlier reforms in government policy in Chile. The most crucial of these reforms were in banking and bankruptcy procedures.

We revisit Western Europe's record with labor-productivity convergence and tentatively extrapolate its implications for the future path of Eastern Europe. The poorer Western European countries caught up with the richer ones through both higher rates of physical capital accumulation and greater total factor productivity (TFP) gains. These (relatively) high rates of capital accumulation and TFP growth reflect convergence along two margins. One margin (between industries) is a massive reallocation of labor from agriculture to manufacturing and services, which have higher capital intensity and use resources more efficiently. The other margin (within industries) reflects capital deepening and technology catch-up at the industry level. In Eastern Europe the employment share of agriculture is typically quite large, and agriculture is particularly unproductive. Thus, there are potential gains from sectoral reallocation. However, quantitatively, the betweenindustry component of the East's income gap is quite small. Therefore, the East seems to have only one real margin to exploit: the within-industry one. Coupled with the fact that within-industry productivity gaps are enormous, this suggests that convergence will take a long time. On the positive side, however, Eastern Europe already has levels of human capital similar to those of Western Europe. This is good news because human capital gaps have proved very persistent in Western Europe's experience. Hence, Eastern Europe does start out without the handicap that is harder to overcome.

If democracy is to have any of the good effects said to justify it, it must be self-enforcing. Those who control the government must want to hold regular, competitive elections for the highest offices, and all parties must be willing to comply with the results. I consider a model in which citizens can always protest or rebel against the current ruler, but can unseat the ruler only if enough people rebel. When individuals privately observe a signal of the government's performance (e.g., their own welfare), they face a difficult problem of how to coordinate to pose a credible threat of rebellion necessary to keep the ruler from stealing. Further, if the signals are noisy, inefficient rebellions must occur in equilibrium to keep the ruler honest. Allowing for the possibility of elections makes for equilibria that eliminate both problems. The convention of holding elections at particular times provides a public signal for coordinating rebellion in the event that elections are suspended or blatantly rigged. The electoral results themselves aggregate private information about the ruler's performance, providing the ruler an incentive to stick to the terms. In the case of noisy signals of government performance, the electoral results act as a cheap talk signal that allows the public to commit to rebel if a losing ruler does not step down, avoiding the need for costly rebellions. These arguments pose an explanation for self-enforcing democracy, whereas the several models in the literature do not because they do not explain why anyone would want to use elections to allocate power.

While financial globalization has created powerful incentives for Latin American governments to privatize old age pension systems, reliance on short-term capital flows has also constrained the ability of cash-strapped governments to enact that reform. Analysis of the technocratic process of pension reform in Argentina and Brazil provides evidence. Instead of simply generating unidirectional pressures for structural pension reform, financial globalization has created a double bind for Latin America's capital-scarce governments, fostering long-term incentives to privatize pension systems while heightening the risk of punishment in the short term. LATIN AMERICAN POLITICS AND SOCIETY 49: 4