Peter Temin

Returns to Scale in Research and Development: What Does the Schumpeterian Hypothesis Imply ?

Joseph Schumpeter argued that there are increasing returns in R & D both to size of R & D establishment and to firm size. This has been taken to imply that the combination of small firms into big ones would increase R & D output. Tests have been attempted in the literature looking at the relation between scale and R & D input. The present paper shows that these tests are inappropriate. Moreover, the stated conclusion as to R & D output does not follow from Schumpeters hypothesis. Indeed, it is very nearly true that none of these propositions can be derived from any other.

The Golden Age of European growth reconsidered

I reconsider the growth of Western Europe during the Golden Age of European Economic Growth after the Second World War. The preceding thirty years of conflict and depression impeded the normal path of industrialisation in these countries, and they had too much labour in agriculture for their level of income and stage of development at the end of the war. The disequilibrium added to other more ordinary forces to produce unusually rapid economic growth. This hypothesis explains the speed of economic growth during the Golden Age, differences between growth rates in these years, and the end of this historical episode.

The End of One Big Deflation

Abstract This paper provides a new account of the recovery from the Great Depression in the second quarter of 1933. Our argument is that President Roosevelt established a new macroeconomic policy regime shortly after his inauguration in March 1933 that altered expectations and stimulated investment. The key to this change was Roosevelts devaluation of the dollar and the resulting rise in farm prices and incomes. Hoover had been a financial conservative, adhering to the gold standard, a strong dollar, and fiscal orthodoxy. Roosevelt broke with this ideology, devaluing the dollar within 6 weeks of his inauguration, promoting the New Deal, and championing the virtues of inflation. The devaluation of the dollar was the single biggest signal that the iron grip of the gold standard had been broken. The New Deal emerged in the course of 1933 and reinforced the change in regime symbolized by devaluation.

Two Views of the British Industrial Revolution

There are two views of the British Industrial Revolution in the literature today. The more traditional description, represented by the views of Ashton and Landes, sees the Industrial Revolution as a broad change in the British economy and society. This broad view of the Industrial Revolution has been challenged by Crafts and Harley who see the Industrial Revolution as a much narrower phenomenon, as the result of technical change in a few industries. This paper presents a test of these views using the Ricardian model of international trade with many goods. British trade data are used to implement the test and discriminate between the two views of the Industrial Revolution.

Technology, Regulation, and Market Structure in the Modern Pharmaceutical Industry

This paper describes the transformation of the American pharmaceutical industry into its modern configuration in the 1950s. The industry was faced with new regulatory and technological conditions which changed both the way drugs were marketed and what drugs were marketed. The new conditions led to substantially larger drug firms and increased vertical integration, but not to increased concentration or relative profitability in the drug industry. The reasons for this pattern of development stem from the interaction among the FDAs regulations on drug marketing, the limits of patent protection, and the nature of the new technology.

Is it Kosher to Talk about Culture

This address considers the role of culture in economic history. It argues that AngloSaxon culture was an important factor determining where and when industrialization began and spread. The contrast between Anglo-Saxon individualism and Japan’s more collective culture also is important in understanding the differences between Japanese and American industrial practices today. I predict that Japan’s collective culture may give it an economic edge in the coming years despite its current difficulties. And I advocate greater attention to culture by both economists and historians in the practice of economic history.

The Economy of the Early Roman Empire

Many inhabitants of ancient Rome lived well. Tourists marvel at the temples, baths, roads and aqueducts that they built. Economists also want to understand the existence of a flourishing and apparently prosperous economy two millennia ago. Market institutions and a stable government appear to have been the combination that produced this remarkable result. This essay provides an economists view of the Roman economy that emphasizes the role of markets. I focus on the early Roman Empire, from 27 BCE to around 200 CE. I begin with some indications suggesting that the standard of living in ancient Rome was similar to that of early modern period of seventeenth- and eighteenth-century Europe, an extraordinary achievement for any economy in the ancient world. I then argue that ancient Rome managed to achieve this high standard of living through the combined operation of moderately stable political conditions and markets for goods, labor and capital, which allowed specialization and efficiency. After surveying the labor and financial markets in turn, I return to the broad questions of how the Romans prospered and the economy appears to have grown.

Product Quality and Vertical Integration in the Early Cotton Textile Industry

This article explores differences between the cotton industries in England and America in the early nineteenth century. I show that the two countries produced almost entirely different products: the Enlish made fine fabrics; the Americans, coarse. The cause of this disjunction is found in the American tariff policy, whichwas influenced by the Massachusetts cotton manufacturers. Since coarse spinning promoted vertical integration, the American product structure favored integration. This argument reveals that the variables analyzed were jointly determined, since the Massachusetts firms with the political clout to affect the tariff were vertically integrated.

Financial Intermediation in the Early Roman Empire

I evaluate the effectiveness of financial markets in the early Roman Empire in this article. I review the theory of financial intermediation to describe a hierarchy of financial sources and survey briefly the history of financial intermediation in eighteenth-century Western Europe to provide a standard against which to evaluate the Roman evidence. I then describe the nature of financial arrangements in the early Roman Empire in terms of this hierarchy. This exercise reveals the extent to which the Roman economy resembled more recent societies and sheds light on the prospects for economic growth in the Roman Empire.

Costs and benefits in switching drugs from Rx to OTC

This paper contains an initial inquiry into the benefits and costs of switching some drugs from prescription-only (Rx) status to over-the-counter (OTC) status. It contributes to a discussion of the Food and Drug Administration (FDA) policy of making this change for selected drugs, such as chlorpheniramine (switched in 1976) and topical hydrocortisone (switched in 1979). Costs and benefits are estimated for three representative drugs: (1) topical hydrocortisone, a medicine with limited use and side effects; (2) thiazide diuretics, drugs used on a continuing basis to treat chronic conditions; (3) and oral penicillin, a well-understood anti-infective agent. The purpose of the calculations is to suggest criteria for deciding which drugs could be switched. Reasonably potent drugs are considered to assess the limits of switching policy.