Ronald Rogowski Commerce and Coalitions Randall W Stone

Ronald Rogowski Commerce and Coalitions © Randall W. Stone, 2002

Rogowski I: 1840 -1914 • Real trade: increased 4 times 18401870, 2 times 1870 -1900 • Railroads decreased transportation costs by 85 -95% • Steamships decreased transportation costs by 50% © Randall W. Stone, 2002

Trade and Cleavages Land-Labor ratio High (land) High K Low (labor) (class (urban- conflict) rural) (urban- (class rural) conflict) Cleavages shift when: – Relative factor endowments change (development: K increases) Power shifts when: –Trade increases/decreases © Randall W. Stone, 2002

Trade and Cleavages, 1840 -1914 Land-Labor ratio High (land) Low (labor) UK, Fr High K Low K US, Canada before W W I Germany Austria, Italy Russia: High land, High labor, Low capital 1875 US grain Change occurs when: – Trade increases (transport costs decrease) – Relative factor endowments change (development: K increases) © Randall W. Stone, 2002

1914 -Present Land-Labor ratio High (land) High K US 20 th century, Canada, Aus, NZ, SU 1960’s Class Conflict Low (labor) Rural H-H L-L England 19 th, W. Europe 20 th EE 60’s, Japan 60’s Norway Sweden green Urban Low K US 19 th cent. LA, Africa after W W II Germany 19 th Japan until 1960 China, Vietnam, Spain, EE, India red Russia & Africa until WW II © Randall W. Stone, 2002

Structure of an argument Assumptions Logic Hypotheses Research design Evidence Conclusions - - - - Generality - - - ? ? ? Confidence Scope How would you attack Rogowski? © Randall W. Stone, 2002

Objections: assumptions Assumptions of Stolper-Samuelson model violated: • Capital flows internationally • Capital, labor locked in specific sectors – Frieden: specific assets - incentives to lobby; everybody benefits from industryspecific protection • Country size (Katzenstein) © Randall W. Stone, 2002

Objections: assumptions • Firms vary in their international position Milner: - export- vs. import-oriented - multinational vulnerability Export dependency Low IV Multi - H nationality L Selective protection I Global protection High III Most free trade II Strategic trade Compare: 1920’s & 1970’s; US & France (subsumed by Rogowski? A finer cut? ) © Randall W. Stone, 2002

Objections: hypotheses • Not a test –What would falsify hypothesis? • Outcomes? Most interesting claims not testable • Cleavages • Right-wing authoritarianism with contracting trade. Left-wing revolution with expanding trade © Randall W. Stone, 2002

Objections: research design Fuzziness of key variables • Independent variables: land, labor, capital intensity • Dependent variables: – what is evidence of a cleavage? – expectations about timing of trade expanding/contracting and political shifts © Randall W. Stone, 2002

Objections: evidence • US New Deal (decline of trade – strong labor) – But why switch to Democrats if Republicans are protectionists? – Rogowski claims New Deal was not very free trade. • Problem: business switched to free trade after Smoot-Hawley © Randall W. Stone, 2002

Objections: evidence Bureaucratic-Authoritarianism in Latin America in the 1970 s (trade increased; land + foreign capital ally for free trade) • But: Mexico & Brazil vs. Chile & Argentina. • Collapse of regimes after ’ 82 reforms, not protection © Randall W. Stone, 2002

Objections: treatment of exceptions Why no revolution in India? (Trade contracts – fascism; trade expands – revolution; why not in India? ) Rogowski: too satisfied to revolt – Building roads relieves pressure – Congress represents a land-capital coalition, pays off peasants – protectionist Ad hoc? © Randall W. Stone, 2002

Objections: scope of theory Soviet Union and Eastern Europe Stolper-Samuelson does not apply to planned economies • no free markets; • no comparative advantage; • no convertible money; • no profit incentive © Randall W. Stone, 2002

Conclusions? © Randall W. Stone, 2002