Shocking Contrasts: Political Responses to Exogenous Supply Shocks

In the fourteenth century, the Black Death killed as much as two-thirds of Europe's population, the introduction of moveable-type printing expanded Europe's supply of human capital, Russia's population almost tripled, and World War I starved 800,000 Germans. This book examines parsimonious models of factor returns, relative costs, and technological innovation and argues that its implications extend far beyond these specific cases to any period of human history.

Format: Hardback
Length: 225 pages
Publication date: 30 June 2023
Publisher: Cambridge University Press

In the fourteenth century, the Black Death caused a devastating toll on Europe's population, claiming the lives of approximately two-thirds. However, the fifteenth century brought about a significant shift with the introduction of moveable-type printing, which rapidly expanded Europe's supply of human capital. Between 1850 and 1914, Russia experienced a remarkable population growth, nearly tripling its size. Moreover, during World War I, the British blockade led to the starvation of around 800,000 Germans, highlighting the profound impact of supply shocks on societies.

Shocking Contrasts, by economist Robert Solow, delves into these historical events and explores how they affected the supply of crucial factors of production. The book argues that each of these shocks, whether positive or negative, elicited one of four main responses: factor substitution, factor movement to different sectors or regions, technological innovation, or political action, sometimes including coercion or conquest.

The book examines parsimonious models of factor returns, relative costs, and technological innovation to gain insights into the dynamics of supply shocks and their consequences. It offers a framework for understanding the role of supply shocks in major political conflicts and their implications throughout human history.

One of the key insights from the book is that supply shocks can have far-reaching effects beyond the immediate impact on a particular sector or region. They can disrupt economic equilibrium, lead to social unrest, and even trigger political upheavals. For example, the Black Death led to a significant shift in labor markets, as many workers died, leading to labor shortages and wage increases. Similarly, the introduction of moveable-type printing disrupted the traditional publishing industry, leading to new job opportunities and economic growth.

Furthermore, the book emphasizes the importance of policy responses to supply shocks. Governments can implement measures such as subsidies, tariffs, or regulations to mitigate the negative effects of shocks and promote economic stability. However, the effectiveness of these policies depends on the specific circumstances and the political will of policymakers.

In conclusion, Shocking Contrasts provides a valuable perspective on the impact of supply shocks on societies and economies throughout history. By examining the historical cases of the Black Death, moveable-type printing, Russia's population growth, and World War I, the book offers insights into the mechanisms behind these shocks and their consequences. It emphasizes the importance of understanding the role of supply shocks in major political conflicts and their implications for policymaking.

Weight: 520g
Dimension: 160 x 239 x 22 (mm)
ISBN-13: 9781316510704