Category Archives: economics

1979, A Turning Point

From Strange Rebels: 1979 and the Birth of the 21st Century, by Christian Caryl (Basic Books, 2014), Kindle Loc. 236-279:

These five stories—rich in event and grand personalities—would be worth telling in themselves. But do they really have that much to do with each other? Surely, Britain’s first female prime minister has nothing in common with Iranian Shiism’s leading militant cleric. And what could possibly unite the bishop of Rome, the budding Islamists of Afghanistan, and the leader of the Chinese Communist Party? The fact that they lived through the same historical inflection point, one might argue, does not mean that their stories are linked. Coincidence is not correlation.

In fact, though, they have much more in common than at first meets the eye. The forces unleashed in 1979 marked the beginning of the end of the great socialist utopias that had dominated so much of the twentieth century. These five stories—the Iranian Revolution, the start of the Afghan jihad, Thatcher’s election victory, the pope’s first Polish pilgrimage, and the launch of China’s economic reforms—deflected the course of history in a radically new direction. It was in 1979 that the twin forces of markets and religion, discounted for so long, came back with a vengeance.

Not all of the historical figures whose fates converged that year necessarily thought of themselves as conservatives, and none of them tried to turn back the clock to some hallowed status quo ante. This is precisely because they were all reacting, in their own ways, to a long period of revolutionary fervor that expressed itself in movements ranging from social democracy to Maoism—and it is striking that they were all variously denounced by their enemies on the Left as “reactionaries,” “obscurantists,” “feudalists,” “counterrevolutionaries,” or “capitalist roaders” who aimed above all to defy the march of progress.

There was a grain of truth to these accusations. The protagonists of 1979 were, in their own ways, participants in a great backlash against revolutionary overreach. Deng Xiaoping rejected the excesses of Mao’s Cultural Revolution in favor of pragmatic economic development—a move that, despite Deng’s disclaimers, entailed a gradual restoration of capitalist institutions. Khomeini’s vision of an Islamic state was fueled by his violent repudiation of the shah’s state-led modernization program (known as the “White Revolution”) as well as the Marxist ideas that dominated Iran’s powerful leftist opposition movements. (The shah, indeed, denounced the Shiite clerics as the “black reaction” in contrast to the “red reaction” of the Marxists.) Afghanistan’s Islamic insurgents took up arms against the Moscow-sponsored government in Kabul. John Paul II used Christian faith as the basis for a moral crusade against the godless materialism of the Soviet system. And Margaret Thatcher aimed to roll back the social democratic consensus that had taken hold in Great Britain after World War II.

At the same time, it was easy to underestimate just how much these leaders had actually absorbed from their opponents on the utopian Left. A conservative can be defined as someone who wants to defend or restore the old order; a counterrevolutionary, by contrast, is a conservative who has learned from the revolution. John Paul II, who had spent most of his adult life under the Communist system, knew the Marxist classics intimately and devoted considerable intellectual and pastoral effort to countering their arguments—knowledge that helped him to shape his program of moral and cultural resistance. (It also left him with an intense interest in the politics of the working class that informed his patronage of the Solidarity movement—as well as feeding a deep skepticism about Western-style capitalism.) Khomeini and his clerical allies appropriated Marxist rhetoric and ideas wherever they could, forging a new brand of religious militancy that railed against colonialism and inequality; socialist notions of nationalization and state management later played a large role in the Islamist government’s postrevolutionary economic policy. (One historian describes the resulting synthesis as “revolutionary traditionalism.”) Afghanistan’s jihadists borrowed from the Communist playbook by building revolutionary political parties and comprehensive ideological systems to go with them. Margaret Thatcher, who studied at Oxford when Marxism was the reigning political fashion, fused her conservative instincts with a most unconservative penchant for crusading rhetoric, ideological aggression, and programmatic litmus tests. It was precisely for this reason that many of the Conservative Party comrades-in-arms who accompanied her into government in 1979 questioned just how “conservative” she really was. As for Deng Xiaoping, he insisted on maintaining the institutional supremacy of the Communist Party even as he charted a course away from central planning and toward state capitalism. Cold War historian Odd Arne Westad describes Deng’s reform program as “a counterrevolution in economics and political orientation the likes of which the world had never seen.”

It was entirely in keeping with this spirit that Thatcher proudly reported to a Conservative Party rally in April 1979 that her political opponents had dubbed her a reactionary. “Well,” she declared, “there’s a lot to react against!” It was, indeed, precisely this peculiar spirit of defiance that gave the year its transformative power. The decisions of these leaders decisively defined the world in which we live—one in which communist and socialist thought has faded, markets dominate economic thinking, and politicized religion looms large. Like it or not, we of the twenty-first century still live in the shadow of 1979.

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British–German Army Rental Contracts, 1776

From Hessians: Mercenaries, Rebels, and the War for British North America, by Brady J. Crytzer (Westholme, 2015), Kindle Loc. 326-348:

By January 1776 the British Empire had drafted agreements with five separate German princes including the regional powerhouse of Hesse-Cassel and its sister state of Hesse-Hanau. Along with these treaties there were also signed agreements with Brunswick-Wolfenbüttel, Anspach-Beyreuth, and the Principality of Waldeck. Later in 1777 the empire would ultimately settle terms with the relatively minor state of Anhalt-Zerbst, bringing their final treaty count to six separate German entities. Although these states would all furnish armies to sail to America and fight George Washington’s Continental Army, like all things in the Holy Roman Empire not all were equal in their contribution. The Landgrave of Hesse-Cassel Frederick II supplied the single largest armed force, 16,992 men, for a total sum of £2,959,800. The Duke of Brunswick provided 5,723 souls for £750,000, and Hesse-Hanau lent 2,422 men for £343,000. Margrave Karl Alexander of Anspach-Bayreuth sent 2,353 men, and signing over the least amount of soldiers were Prince Frederick of Waldeck at 1,225 and Prince Frederick Augustus of Anhalt-Zerbst at 1,160 for £109,120.

The treaties originally signed with the six individual German princes differed from each other in specifics, but all effectively offered the same general terms. The armies were “rented” for a term of six, seven, or eight years and the agreed-upon subsidy would go directly to the landgrave, duke, or margrave who ratified the treaty. The individual soldiers forced to serve in North America would receive none of those funds, but would be paid by the British Empire at roughly the same rate that they would pay their own regular soldiers. While the treaties were agreed upon in principle there were still small line items to be negotiated. One such point of contention was that some of the German princes demanded that London pay the soldiers’ salaries to the princes directly; British administrators balked at this assertion as they were almost certain that the dishonest German rulers would simply pocket the money for themselves. Another issue was the inevitable matter of wartime casualties, in which the British offered to reimburse the states for each man lost. Perhaps the most startling development, though, came from the inclusion of a contracted casualty reimbursement; for every man killed or wounded their prince would be additionally compensated in turn. The German soldier traveled to the New World knowing that he was, quite literally, worth more dead than alive.

By the winter of 1776 the British Empire had contracted nearly eighteen thousand German soldiers to travel to North America and suppress the growing revolt that was stirring in the Atlantic colonies. Of those men over half were provided by Hesse-Cassel, therefore the term “Hessian” would be generically applied to all German auxiliaries employed in the New World. For the unlucky soldier commanded by his feudal lord to travel across the sea and battle the American rebels there was little hope; they were doomed to fight a rebellion for which they stood to gain nothing.

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Europe’s Rent-an-Army Era after 1763

From Hessians: Mercenaries, Rebels, and the War for British North America, by Brady J. Crytzer (Westholme, 2015), Kindle Loc. 280-95:

The close of the Seven Years’ War saw a great reshuffling of Europe’s imperial hierarchy, and with each great power attempting to reestablish itself within the new geopolitical order. The 1763 Peace of Paris established the northern kingdom of Prussia as the supreme German state in the region and its ruler Frederick the Great proved to be a magnetic and respected enlightened politician. To the south Prussia was challenged for regional superiority only by the long-standing European power broker of Austria.

As Prussia and Austria gained prominence in central Europe in the wake of the postwar reorganization, the smaller polities began to do whatever was necessary to maintain relevance in an ever changing world. For those left out of the Austro-Prussian sphere of influence, there were few ways to remain competitive in the international arena. There were few natural resources to sell on the open market and because of their tiny territorial possessions, few found realistic opportunities to expand their wealth. While they lacked the commodities typically associated with increased revenue through wider economic pursuits, it seemed the only true domestic product that many of the smaller states of the Holy Roman Empire had to offer were the people themselves. With a large population held in subjugation due to an adherence to a dying feudal system, many regional German rulers began exploring new ways to turn their otherwise shrinking revenue streams into hefty channels of profit. Their means of doing so became known as Soldatenhandel, or the soldier trade. Typically speaking, the small states of the German empire, like Hesse-Cassel, bolstered their army’s numbers through either conscription or hiring mercenaries themselves, but few ever considered actually renting their armies to outside powers. When it was discovered that there was a market for such an unusual practice as Soldatenhandel, the kings and lords of the German countryside began to dramatically increase their draft totals. By 1776 in the simplest terms the otherwise insignificant German states made themselves relevant to the great powers of Europe by offering their own citizens to the highest bidder.

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Ice as Alternative Currency in North Korea

From The Girl with Seven Names: A North Korean Defector’s Story, by Hyeonseo Lee (William Collins, 2015), Kindle Loc. 2689-2705:

On one occasion, my mother called me with an alarming question. Normally we spoke on the weekends, but this time her call came during the day while I was at work. She sounded excited.

‘I’ve got a few kilos of ice.’

‘What?’ I sank down in my seat, out of sight of my colleagues.

She wanted to know if I had connections in China who could sell it.

Ice, or crystal methamphetamine, had long replaced heroin in North Korea as the foreign-currency earner of choice for the state. It’s a synthetic drug that is not dependent on crops, as heroin is, and can be manufactured to a high purity in state labs. Most of the addicts in China were getting high on crystal meth made in North Korea. Like the opium of the past, crystal meth, though just as illegal, had become an alternative currency in North Korea, and given as gifts and bribes.

‘Omma.’ My voice was a furious whisper. ‘Do you know what that is? It’s highly illegal.’

‘Well, lots of things are illegal.’

In her world, the law was upside down. People had to break the law to live. The prohibition on drug-dealing, a serious crime in most countries, is not viewed in the same way – as protective of society – by North Koreans. It is viewed as a risk, like unauthorized parking. If you can get away with it, where’s the harm? In North Korea the only laws that truly matter, and for which extreme penalties are imposed if they are broken, touch on loyalty to the Kim dynasty. This is well understood by all North Koreans. To my mother, the legality of the ice was a trifling matter. It was just another product to trade.

She said one of the big local traders brought it to the house because he knew I was in China and wondered if I could sell it there.

‘Give it back to him. Never get involved. There are bad people in that trade, and they won’t care if you’re caught.’

She never asked me again.

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Chinese Attitudes to North and South Koreans

From The Girl with Seven Names: A North Korean Defector’s Story, by Hyeonseo Lee (William Collins, 2015), Kindle Loc. 2520-2531:

About a week after receiving my [illegally purchased] ID, I found a job that paid almost four times what I earned as a waitress. I became an interpreter and secretary at a South Korean tech company that made compact discs and LED lights. Its office was in Koreatown. My boss was one of the South Korean directors, and part of my role was to accompany him on visits to clients and manufacturing plants. I noticed that the Chinese looked up to South Koreans and addressed them respectfully. I had usually known them to scowl down their noses at North Koreans.

Everything had happened so fast. Overnight I had gone from waiting tables to sitting in boardrooms, interpreting in negotiations, learning how a modern company operated, and the culture in which business was conducted. I was meeting clients and buyers from Taiwan and Malaysia, and mingling socially with South Korean co-workers. The friends I’d made while waitressing knew me as In-hee. In my new job I used the name on my ID card and documentation, Sun-ja. I would have to take care that these two worlds never collided.

The company’s products were manufactured in a plant that was modern even by Shanghai standards. The process was kept entirely dust-free. To enter we passed through a special machine that blew contaminates from our clothing. The South Koreans treated me well. I could not bear to imagine their reaction if they’d known I’d grown up in the bosom of their archenemy. At times this felt surreal. We were all Koreans, sharing the same language and culture, yet we were technically at war.

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North Korean Career Hopes

From The Girl with Seven Names: A North Korean Defector’s Story, by Hyeonseo Lee (William Collins, 2015), Kindle Loc. 1455-1466:

You would expect between school friends a more honest conversation about our hopes for the future, and what we wanted to do with our lives, and that did happen, to an extent. But by the time we were ready to graduate, we had learned to trim our expectations in line with our songbun. Our choices fell within a certain range. In my class, the few of us with good songbun either took the university entrance exam or, if they were boys, went straight to military service. A few were able, through family connections, to land good jobs with the police or the Bowibu. More than half the students in my class were in the songbun ‘hostile’ category. A list of their names was sent to a government office in Hyesan, where officials assigned them to mines and farms. One girl from this group took the test to enter university, and passed, but was not permitted to go.

My good songbun meant I could plan. My dreams were private and modest. I wanted to be an accordionist. It’s a popular instrument in North Korea and a woman who could play it well had no difficulty making a living. That would be my official career, but, like my mother, I also wanted to trade, start an illicit business, and make money. I thought this would be exciting. I also knew that it would be the only way to ensure that my own family, when one day I had children of my own, would have enough to eat.

My mother fully supported the accordion career choice, and found a musician from the theatre in Hyesan to give me tuition. She said my father would have been pleased, as he’d always enjoyed accordion music. This made me cry.

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Life in a North Korean Border City, 1990s

From The Girl with Seven Names: A North Korean Defector’s Story, by Hyeonseo Lee (William Collins, 2015), Kindle Loc. 296-306:

When I was growing up Hyesan was an exciting place to be. Not because it was lively – nowhere in the country was noted for its theatre scene, restaurants or fashionable subcultures. The city’s appeal lay in its proximity to the narrow Yalu River, Korea’s ancient border with China. In a closed country like North Korea, Hyesan seemed like a city at the edge of the world. To the citizens who lived there it was a portal through which all manner of marvellous foreign-made goods – legal, illegal and highly illegal – entered the country. This made it a thriving hub of trade and smuggling, which brought many benefits and advantages to the locals, not least of which were opportunities to form lucrative partnerships with Chinese merchants on the other side of the river, and make hard currency. At times it could seem like a semi-lawless place where the government’s iron rule was not so strong. This was because almost everyone, from the municipal Party chief to the lowliest border guard, wanted a share of the riches. Occasionally, however, there were crackdowns ordered by Pyongyang, and they could be brutal.

People from Hyesan were therefore more business-minded and often better off than people elsewhere in North Korea. The grown-ups would tell me that we were fortunate to live there. It was the best place in the whole country after Pyongyang, they said.

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‘It was exploitation, but it worked’

From Servants: A Downstairs History of Britain from the Nineteenth Century to Modern Times, by Lucy Lethbridge (Norton, 2013), Kindle Loc. 2690-2710:

Ethel Mannin, the daughter of a postal sorter in Clapham, was a socialist, a feminist, a pacifist, and a leading supporter of progressive theories of education, family and sexuality. In 1920 she was just setting out in life, aged nineteen and married to John Porteous, an advertising copywriter. The couple had set up home in a small semi-detached house in the London suburb of Strawberry Hill. Ethel had a new baby and was a busy writer, at large in the first years of Modernism: ‘Living My Life’, was how she described it in her energetic capitals. A steady stream of romantic novelettes, churned out at a guinea per thousand words, provided Ethel’s income. The household kept a cook-general at thirty shillings a week, a sum Ethel considered generous (the going rate being twenty-five shillings). ‘Cap and apron, of course; blue cotton dress in the mornings; black cloth in the afternoons – and coffee-coloured caps and aprons were just that much smarter than plain white ones.’ Her socialist principles were apparently untroubled by the maid, who called her ‘Madam’ and who referred to her husband as ‘the Master’. As Mannin saw it, domestic help was a necessary component of her freedom. ‘It was snobbish; it was class distinction; it was exploitation but it worked,’ she wrote fifty years later. Educated, perceptive, imaginative, free-thinking, questioning, below the frenetic glitter of ‘the amoral decade, the Sweet and Twenties, the Bitter-Sweet Twenties, the gay Twenties, the Bright Twenties, the Roaring Twenties’, Ethel was more conventional than she had imagined herself at the time: ‘I probably gave [the maid] ten bob at Christmas and the occasional dress I was tired of. Quite intensely I dislike the memory of myself when young; but it’s the way I was. I was of my times; quintessentially.’

Though Ethel Mannin was later to write that ‘the war dealt a great blow to snobbishness’, the old awkwardness, the looming divide between women living under the same roof continued to be considered not just normal but necessary. When Rose Harrison first went to work as a lady’s-maid in the mid-twenties, her charge was Patricia Tufton, who was eighteen, the same age as Rose. ‘My relationship with Miss Patricia isn’t easy for me to describe. We weren’t friends, though if she were asked today she might deny this. We weren’t even acquaintances. We never exchanged confidences, never discussed people, nothing we said brought us closer; my advice might be asked about clothes or bits of shopping, but my opinions were never sought or given on her music, or the people we met or on anything that was personal to either of us, nor did I expect it or miss it at the time.’

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The Psychology of the Servant Problem

From Servants: A Downstairs History of Britain from the Nineteenth Century to Modern Times, by Lucy Lethbridge (Norton, 2013), Kindle Loc. 2733-2769:

The author Ronald Blythe has suggested that in the years after the end of the First World War, a terrible shame and guilt crept over people at the sight of ‘unemployed ex-servicemen and their families, these hordes of shabby young men and women made spiritless, drab and ugly by broken promises, malnutrition and loss of hope’. It produced, Blythe went on, in the middle classes, a ‘contempt for working-class people of a kind quite unknown before the war began’….

Helen Campbell, American author of Household Economics, in 1907 defined one of the central paradoxes of the servant-master relationship, certainly as it was played out in the small home: ‘The condition of domestic servitude allows only the development of a certain degree of ability, not sufficient to perform our complex domestic industries. So there we are. When we find a person able to carry on modern household industries, that person will not be our servant. And when we find a person willing to be our servant, that person is unable to carry on modern household industries.’ Most people preferred not to look closely at the relationship, with its awkwardness and its responsibilities. One woman writer in the early twenties, however, was brave enough to address it full on, and with a refreshing determination to look its contradictions straight in the eye. Under the pseudonym Dion Fortune, Violet Firth went on to became a theosophist, occultist, psychic, a founder of the esoteric society, ‘The Fraternity of the Inner Light’, and the author of now long-forgotten works such as The Goat-Foot God and The Cosmic Doctrine. In the years immediately after the war, however, Firth was also a student of psychoanalysis, practising (under her own name) as a lay psychotherapist in London.

In 1925, she published a remarkable short polemic entitled The Psychology of the Servant Problem, which would be a work of radicalism in any age. Drawing on her years of war work as a gardener for a big country house, Firth examined what lay behind the intractable and inexplicable problem of what domestic service meant to those who had to perform it. She recognised, crucially, that what made service so difficult to define, and therefore to legislate for, was the hazy nature of the relationships in the home. ‘Because I was also a servant and had to come in at the back door, I got to know the minds and feelings of those girls I met during those three years,’ wrote Firth, pointing out that the disinclination of girls to become maids was not a matter only of wages but of something deeper: ‘being a servant is very painful to one’s self-respect and no amount of money will compensate that injury to anyone who has independence of spirit’.

Being a servant was an ‘identity’, not just a job. The Psychology of the Servant Problem was a call to the renewal of education for all women, of all classes, for domestic work to be regarded without sentimentality but with the same respect accorded to any other form of work. Firth actually looked forward to a time ‘when the home-help might freely be able to choose a husband from the family she serves’. The ‘servant problem’, as Firth saw it, was not one simply of demand outstripping supply, or of a failure in the ‘quality’ of the servants available, but of deeply held attitudes, of unexamined habits masquerading as unbreachable social certainties.

Violet Firth was far ahead of her time, grasping the knotty contradictions of domestic labour that were to characterise the theme during the rest of the century. How are women to enjoy the fruits of education and liberation if they are not relieved of the burden of domestic work in the person of another woman? When Frances Marshall, intellectual and Bloomsbury set member, set up home with Ralph Partridge in their first flat in Bloomsbury in the late 1920s, she employed a maid, a ‘frightened, middle-aged spinster’, who came to ‘do for us’: poor shadowy Mabel, one of the lonely civilian casualties of war. Frances took care not to tell her that she and Ralph were unmarried lest her respectable sensibilities be shocked. ‘Who bought the bacon, the butter, the fish? I suspect it was our faithful Mabel. I’ve no recollection of doing it myself.’

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Discovering Hillbilly Identity

From Hillbilly Elegy: A Memoir of a Family and Culture in Crisis, by J. D. Vance (Harper, 2016), pp. 78-80:

Mom was released from jail on bond and prosecuted for a domestic violence misdemeanor. The case rested entirely on me. Yet during the hearing, when asked if Mom had ever threatened me, I said no. The reason was simple: My grandparents were paying a lot of money for the town’s highest-powered lawyer. They were furious with my mother, but they didn’t want their daughter in jail, either. The lawyer never explicitly encouraged dishonesty, but he did make it clear that what I said would either increase or decrease the odds that Mom spent additional time in prison. “You don’t want your mom to go to jail, do you?” he asked. So I lied, with the express understanding that even though Mom would have her liberty, I could live with my grandparents whenever I wished. Mom would officially retain custody, but from that day forward I lived in her house only when I chose to—and Mamaw told me that if Mom had a problem with the arrangement, she could talk to the barrel of Mamaw’s gun. This was hillbilly justice, and it didn’t fail me.

I remember sitting in that busy courtroom, with half a dozen other families all around, and thinking they looked just like us. The moms and dads and grandparents didn’t wear suits like the lawyers and judge. They wore sweatpants and stretchy pants and T-shirts. Their hair was a bit frizzy. And it was the first time I noticed “TV accents”—the neutral accent that so many news anchors had. The social workers and the judge and the lawyer all had TV accents. None of us did. The people who ran the courtroom were different from us. The subjected to it were not.

Identity is an odd thing, and I didn’t understand at the time why I felt such a kinship with these strangers. A few months later, during my first trip to California, I began to understand. Uncle Jimmy flew Lindsay and me to his home in Napa, California. Knowing that I’d be visiting him, I told every person I could that I was headed to California in the summer and, what was more, flying for the first time. The main reaction was disbelief that may uncle had enough money to fly two people—neither of whom were his children—out to California. It is a testament to the class consciousness of my youth that my friends’ thoughts drifted first to the cost of the airplane flight.

For my part, I was overjoyed to travel west and visit Uncle Jimmy, a man I idolized on par with my great-uncles, the Blanton men. Despite the early departure, I didn’t sleep a wink on the six-hour flight from Cincinnati to San Francisco. Everything was just too exciting: the way the earth shrank during takeoff, the look of clouds from close up, the scope and size of the sky, and the way the mountains looked from the stratosphere. The flight attendant took notice, and by the time we hit Colorado, I was making regular visits to the cockpit (this was before 9/11), where the pilot gave me brief lessons in flying an airplane and updated me on our progress.

The adventure had just begun. I had traveled out of state before: I had joined my grandparents on road trips to South Carolina and Texas, and I had visited Kentucky regularly. On those trips, I rarely spoke to anyone except family, and I never noticed anything all that different. Napa was like a different country. In California, every day included a new adventure with my teenage cousins and their friends. During one trip we went to the Castro District of San Francisco so that, in the words of my older cousin Rachael, I could learn that gay people weren’t out to molest me. Another day, we visited a winery. On yet a another day, we helped at my cousin Nate’s high school football practice. It was all very exciting. Everyone I met thought I sounded like I was from Kentucky. Of course, I kind of was from Kentucky. And I loved that people thought I had a funny accent. That said, it became clear to me that California really was something else. I’d visited Pittsburgh, Cleveland, Columbus, and Lexington. I’d spent a considerable amount of time in South Carolina, Kentucky, Tennessee, and even Arkansas. So why was California so different?

The answer, I’d learn, was the same hillbilly highway that brought Mamaw and Papaw from eastern Kentucky to southwest Ohio. Despite the topographical differences and the different regional economies of the South and the industrial Midwest, my travels had been confined largely to places where the people looked and acted like my family. We ate the same foods, watched the same sports, and practiced the same religion. That’s why I felt so much kinship with those people at the courthouse: They were hillbilly transplants in one way or another, just like me.

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