Economic History Practice Flashcards

Vocabulary-style flashcards covering the major themes of economic history from the Malthusian trap and the Great Divergence to the Great Depression and the various paths to recovery used by global powers.

Malthusian Trap

A cyclical process described by Thomas Malthus where population growth outpaces available resources, leading to stagnant living standards as checks like famine, disease, or conflict reduce the population.

The Great Divergence

A term for the large-scale economic inequality that emerged between 1800 and 1913 as Western countries industrialized and grew rich while much of the rest of the world remained underdeveloped.

Mercantilist Era

The period from 1500 to 1800 characterized by global trade expansion, the Triangular Trade, and economic policies focused on accumulating gold and military power through colonies and tariffs.

Triangular Trade

A historical trade system involving the exchange of goods for slaves in Africa, and the movement of slaves and goods between Europe, Africa, and the Americas.

Most-Favored Nation (MFN) Clause

A provision in trade treaties (like those following the Cobden-Chevalier Treaty) stipulating that any tariff reduction negotiated between two countries is automatically extended to all other countries with the same clause.

Subsistence Ratio

A measure developed by Robert Allen to determine if wages cover a 'bare-bones survival basket' of essential food and fuel; a ratio near or below $1$ indicates extreme poverty.

1st Industrial Revolution

Occurring between 1760 and 1830, this period focused on the mechanization of textiles, iron smelting, and the steam engine, typically requiring low financial investment.

2nd Industrial Revolution

Occurring between 1860 and 1910, this period was science-based and capital-intensive, involving sectors like chemicals, electricity, steel, and the internal combustion engine.

Crédit Mobilier Model

A 19th-century French and Belgian banking model based on joint-stock investment banks that pooled public savings to fund long-term infrastructure projects like railroads.

Universal Banking

An integrated banking model common in late 19th-century Germany, Austria, and Italy, where a single institution provides all services including deposits, lending, and equity issuance.

Corn Laws

British tariffs on imported cereals that protected domestic landowners but raised food prices; their repeal in 1846 marked a decisive turn toward free trade.

Gold Standard

A fixed exchange-rate monetary system where a national currency is directly linked to a specific amount of gold and convertibility is guaranteed on demand.

Price-Specie Flow Mechanism

David Hume's theory that trade imbalances under the gold standard are self-correcting: a trade deficit leads to gold outflow and falling prices, eventually making exports more competitive.

Organized Capitalism

A post-WWI institutional setting where industrial relations and economic policies are defined by consultations between the government, large trade unions, and employers' associations.

War Communism

The first Soviet economic experiment (1919-1921) involving nationalization of industry, abolition of currency, food requisitioning, and the suppression of private trade.

New Economic Policy (NEP)

Launched by Lenin in 1921, this model reintroduced market elements by allowing farmers to sell produce and small firms to return to private owners while the state controlled large industry.

Gosplan

The Soviet government bureau established in 1921 responsible for central planning and managing the Five-Year Plans for industrialization.

Soft Budget Constraints

A condition in the Soviet command economy where managers faced little pressure for efficiency because they could rely on the state for bank credit, labor, and materials despite missed targets.

Liquidity Trap

A Keynesian economic situation where monetary policy cannot revive private investment or consumption because individuals prefer holding cash reserves over spending or investing.

New Deal

A series of U.S. reforms introduced by FDR between 1933 and 1945, including the Social Security Act and the creation of the SEC, designed to provide relief, recovery, and reform.

Schacht Plan

An autarkic economic strategy in Nazi Germany that achieved full employment by 1936 through massive public works spending, military build-up, and tight control over prices and wages.

Clearing Agreements

Bilateral deals used during the Great Depression to bypass the need for gold or hard currencies by bartering goods of equal value between countries.

Tripartite Monetary Agreement

A 1936 agreement between France, the UK, and the US that stabilized major currencies and created an international monetary system without returning to the gold standard.

Law of One Price

The principle that in an integrated market, identical goods should sell for the same price in different locations, with differences not exceeding the cost of transportation.