Mason Professor Looks at Historical Events through an Economic Lens

Posted: January 12, 2009 at 1:00 am, Last Updated: November 30, -0001 at 12:00 am

chess pieces
What does chess have to do with economics? Mason professor John Nye’s study of economic history uncovered the Soviets’ system for dominating the game.

By Devon Madison

At first glance, French wine imports, Filipino colonial history, and Soviet chess players wouldn’t seem to have a whole lot to do with the economy — but they do. According to Mason economist John Nye, they are all fertile ground for historical economic research.

John Nye
John Nye
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“Economists are more and more touching on questions that sociologists and political scientists think of as their own,” says Nye, a professor in the Economics Department and the Frederic Bastiat Chair in Political Economy at the Mercatus Center.

The ordinary view of economics limits it to the study of inflation or the unemployment rate, Nye explains. “But that’s only a small subset of what economists study.”

What can be learned from looking at historical events through an economic lens?

According to Nye, a lot. For example, looking at the past could explain how certain countries prospered while others did not.

It can also demonstrate how behaviors that paved the way for cultural traditions are often born out of economic necessity and not out of preference as many would like to believe.

Creating a Nation of Beer Drinkers

In his 2007 book, “War, Wine, and Taxes: The Political Economy of Anglo-French Trade, 1689–1900” (Princeton University Press), Nye investigates how British tariffs on French wine shaped both fiscal policy and drinking habits in the 18th and 19th centuries.

While history textbooks have characterized Britain as the leading free trader for most of the 19th century, in his research, Nye found evidence that ran to the contrary. In looking at official published data, Nye was shocked to find that when he compared British tariffs with those of her great rival France, British policies were far more protectionist than previously believed. This fueled an expansion of the British state and — given the high cost of wine — the creation of a nation of beer drinkers.

How could generations of historians and economists have portrayed Britain as the leading free trader when this really wasn’t the case?

According to Nye, the main problem was that no one bothered to look at the statistics and compare them with those of other countries. The second problem was that people were led to believe the British were free traders because the British said they were.

The Rise and Fall of Nations

Nye’s latest research focuses on the colonial history of the Philippines. He’s investigating why the country went from being one of the richest in Asia at the end of World War II to one of the poorest in the region today.

In doing so, Nye hopes to answer a more general question: How does one create sustainable reforms that promote growth in successful countries and reverse stagnation in unsuccessful countries?

Too many naively blame the Philippines’ failure on some vague notion of local culture without first investigating how specific policies retarded growth and promoted negative social norms (such as antiforeign laws directed at Filipino-born Chinese).

Nye believes that economic history is the perfect field in which to pose these larger questions.

“Economic history, which is one of the smaller and less well-known fields of economics, attracted me because I think it is a broader canvas on which to study many of the great questions,” he says.

Chess and Collusion

Nye has also used statistical research methods to investigate more uncommon issues, such as collusion in professional tournaments.

In one study, Nye and his colleague, Charles Moul, used statistical analysis to conclude that between the late 1940s and early 1960s Soviet chess players agreed to draws among themselves.

Chess can be strenuous, and by agreeing to draws, the Soviet players were able to conserve energy and reduce fatigue levels. When competing against non-Soviet players who were not using such energy-conserving tactics, the Soviets often won.

Not only did Nye’s analysis conclude that Soviet players had been drawing among themselves, it also showed that the draws affected the outcome of the tournaments.

During this period of Soviet dominance, American chess champion Bobby Fischer accused the Soviets of collaborating, prompting chess officials to change the rules by introducing a knockout tournament. As soon as this happened, Soviet domination of these tournaments ended.

It is this kind of phenomena that Nye is trying to better understand — how rule changes affect behavior changes and, ultimately, outcomes.

Whether such phenomena are studied through the lens of offbeat topics such as chess tournament collusion or more frequently discussed issues such as colonial history, Nye believes that one thing is certain: Economic history covers many subjects of interest to noneconomists. And for this reason, one of the strengths of economic history is that its reach goes far beyond the arcane realm of academics.

“I think economic history, even with the most esoteric things I do, can be more easily tied to things that I think are of natural interest to people,” he says. “If it’s done correctly, we have a natural audience for our material.”

This article appeared in a slightly different form in Mason Research 2009.

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