The Vassiliev Notebooks are an important new source of information on Soviet intelligence operations in the United States from 1930 to 1950. Though the KGB’s archive remains closed, former KGB officer turned journalist Alexander Vassiliev was given the unique opportunity to spend two years poring over materials from the KGB archive taking detailed notes–including extended verbatim quotes–on some of the KGB’s most sensitive files.

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Though Vassiliev’s access was not unfettered, the 1,115 pages of densely handwritten notes that he was able to take shed new and important light on such critical individuals and topics as Alger Hiss, the Rosenberg case, and “Enormous,” the massive Soviet effort to gather intelligence on the Anglo-American atomic bomb project.

Alexander Vassiliev has donated his original copies of the handwritten notebooks to the Library of Congress with no restriction on access. They are available to researchers in the Manuscript Division. Electronic copies of the original notebooks, transcribed Russian versions, and translated English versions are available for download free of charge from http://www.wilsoncenter.org/CWIHP/VassilievNotebooks.

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Brad DeLong posts a copy of a syllabus for a first-year PhD class titled Financial Crises, Bubbles, and Crashes. I had to have my own copy, so here it is…

An excerpt:

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There were at least three causes that in confluence led to World War I. Let’s take them one at a time and put them together a little later.

1. Germany unable to feed itself

In his book The Economic Consequences of the Peace (1919), J.M. Keynes cited contemporary estimates suggesting that immediately before the war, Germany had a population of 67 million, while producing enough food to feed about 40 million. Austria was in a qualitatively similar position. This state of affairs was largely caused by the legacy of feudal land ownership, whereby the aristocracy controlled vast amounts of land and extracted substantial rents from them.

2. The gold standard

Under the gold standard, a nation can expand its money supply only as far as its gold stock allows. To expand its gold stock, a nation must have a trade surplus. So expanding the money supply under the gold standard is only possible if a nation has a trade surplus.

Expanding money supply is the quickest way of ending recessions and thus keeping the population gainfully employed and reasonably happy. But under the gold standard, it is only possible if a nation has a trade surplus, so governments, instead of abandoning the gold standard (which was considered the holy cow of economic policy back then), started working on ensuring that their nations always have a trade surplus.

3. The continuing rule of the military aristocracy

All major European countries (with possible exception of Britain) were de-facto ruled by the military aristocracy, educated, if at all, in humanities and the art of war, not in economics (which, having begun in earnest with Marshall’s Principles published in 1890, was barely out of diapers in 1913). Three things were the direct result of this, (1) the ruling class, unable to comprehend the evils of the gold standard, upheld it, (2) the ruling class, being a military elite, actively sought military solutions to economic problems, and (3) the ruling class extracted substantial rents from its vast land holdings, making domestic agriculture prohibitively expensive compared to that of U.S., Canada, Australia, or Argentina.

Put all three together, and what do you get?

To keep the growing urban population employed, you need to expand money supply, which, under the gold standard, is only possible if your country has a trade surplus. To ensure that you have a trade surplus, you begin pressuring other countries into opening their markets for your exports while keeping imports off your domestic market using tariffs or non-tariff barriers. The pressure tactics gradually escalate from diplomacy to the threat or war, until Europe is completely polarized, with all major countries joining one of the two blocs that eventually went to war with each other. Germany, which desperately needs to export manufactures in order to pay for food, is especially aggressive in its attempts to secure export markets for its manufactures. So Europe becomes a powder keg that sits there waiting for a random spark to ignite its explosion. That spark was the assassination of Franz Ferdinand, the heir to the Austrian throne, by a group of Serbian conspirators. Had it not happened, another “cause” (having as little to do with the real causes as the assassination of Franz Ferdinand did) would have been found in a pretty short order…

The graph below shows a 10-year moving average of the number of wars and domestic conflict in continental Europe for the half millennium between 1450 and 1950. It depicts various intriguing facts, some of which have been identified long ago and some others that are recently surfacing.

For starters, the 18th century was the most peaceful on record. In fact, as the political science literature established in the 1960s, this trend holds true not only for Europe, but also for violent confrontations globally.

But why did violent conflicts rise in the 20th century as they did after a remarkable decline commensurate with Europe’s economic ascend in the 17th and 18th centuries? How will a reshuffling and steady evolution of the world political order affect these patterns (remember the League of Nations)?

And how does technological change influence the propensity to engage in conflicts? Here is an intriguing paper by Nippe Lagerlof which attempts to deal with that question.

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What would you have done to prevent the October Revolution of Russia?

Who is the “you” you’re referring to? Assuming you refer to the Provisional Government that itself ascended to power after an earlier revolution of February 1917, its policy options were severely limited. Whatever they could do would be too little too late… And many things they could do, they wouldn’t…

The country was extremely overextended due to the lunacy of the Romanovs and their advisors. Too many people, instead of growing food in their villages, were feeding fleas in the trenches of World War I, too much gold that could be used to buy food was wasted on the war. The country needed peace and food. Theoretically, both goals could be achieved by immediately concluding a separate peace with the Central Powers and sending farmers home in time for planting, but in practice, it took the Bolsheviks, who were even more desperate, nine weeks to negotiate such separate peace in 1918. So even if the Provisional Government did decide to negotiate it immediately after taking power in February (and it had no such intentions; instead, it proclaimed that the war would be fought “until the victorious end”), it would be too late to get the farmers back home in time for planting.

But even if by some miracle the farmers did make it home in time for planting, what would they plant? The country was basically eating through its seed supply… And on what land? The majority of land was owned by the royal family and other noble families…

Whichever way you turn it, some combination of food aid, peace treaty, and land reform was long overdue. The problem was, the only country rich enough to provide food aid, the U.S., was also the ally in the hopeless war. So food aid and peace could not be had together. But the Provisional Government, while maintaining an aggressive stance on war, made no attempts at either food aid or land reform…

Needless to say, at this point the Bolsheviks, with their program of immediate separate peace, nationalization of agricultural lands, and distribution of use rights to farmers rent-free, started looking mighty attractive, especially because 80% of Russian population at the time were farmers… The city-dwellers could also be persuaded by the fear of German occupation (after all, the German army literally stood at the outskirts of St. Petersburg)…

Why did the assassination of Franz Ferdinand lead to WW1?
or why did they assassinate him?

It didn’t. What really led to WWI was the gold standard. I’ve written about this repeatedly. See this for example…

Assassination of Franz Ferdinand was just a pretext. If it didn’t happen, another pretext would be found in a short order… Recall that ultimately, WWI was not about Austria or Serbia; it was about Germany and its ability to feed 40 million people while having population of 63 million. This was the real problem German government faced, and being comprised of military aristocracy, it knew only one way of solving it, through war. German exports had to be forced on France and Britain (and gold thus obtained used to buy food in Argentina and Australia), while German agriculture had to be expanded into the Ukraine to lessen the need for food imports. The alternatives (such as industrialization of agriculture) were far less attractive, because they would lead to the rising prominence of German commercial class and the eventual loss of political power by the military aristocracy (German aristocrats needed only to look at Britain and France to see what history has in store for them).

As to why Franz Ferdinand was assassinated, that’s a convoluted story…

…According to the provisions of the 1878 Treaty of Berlin, Austria-Hungary occupied and administed the former Ottoman provinces of Bosnia and Herzegovina. Serbia, meanwhile, was recognized as a sovereign state. The problem was that this arrangement left plenty of Serbs outside Serbia. For a while, nobody did anything about it, but in 1903, King Alexander and Queen Draga of Serbia were killed during a palace coup. The Obrenović dynasty to which King Alexander belonged ended; the conspirators installed Peter Karađorđević (who lived in exile at the time) as the new king crowned Peter I (a side note: the blood feud between the Karađorđević and Obrenović families goes back to 1817, when Đorđe Petrović, aka Karađorđe, the founder of the Karađorđević dynasty, was killed by Miloš Obrenović).

Peter reversed pretty much every policy that Alexander had in place. His ultimate goal was to expand Serbia to its 14th century borders. In that, he got a lot of moral support from faraway Russia, whose government would gladly underwrite anything that could spite the Austrians as long as it wasn’t too expensive. France, where Peter lived most of his life (and even served in the French army during the Franco-Prussian war of 1871) also supported him, but less openly.

As a result of two Balkan wars (1912-1913), Serbia reclaimed Macedonia and Kosovo from the Ottoman Empire and Bulgaria. Bosnia and Herzegovina were next in line. Population there was not particularly happy with the Austrian rule, which led to a series of peasant riots, the last one happening in 1910. But Franz Ferdinand, the heir to the Austrian throne, came up with a plan than could eventually make union with Serbia unattractive to Bosnia and Herzegovina. He thought that all Slavic lands under Austrian rule could be reorganized into the third kingdom within the empire (Austria and Hungary being the first two). Had that come to pass, Bosnian Serbs and Muslims would no longer be second-class citizens, which could render Serbian unification rhetoric significantly less attractive. As a result, Serbian unionists perceived Franz Ferdinand as a threat to their agenda; eventually, colonel Dragutin Dimitrijević (aka Apis), head of Serbian military intelligence, tentatively tagged him for elimination.  A small group of (mostly Bosnian) operatives was formed to assassinate Franz Ferdinand or, failing that, general Oskar Potiorek, the Austrian governor of Bosnia and Herzegovina…

Will higher fuel prices lead to more manufacturing and agriculture in the US.?

For decades cheap transportation has made globalization possible. Quality manufacturers were always global. You still have to go to Italy to get the best shoes. At one point do risk combined with fuel costs make it cheaper to have it made locally again?

You seem to be under an impression that in the recent years there has somehow been less manufacturing and agriculture in the U.S. than before. This is simply not true. There is more manufacturing and agriculture in the U.S. today than ever before. However, both manufacturing and agriculture in the U.S. are increasingly mechanized and automated, so expansion in manufacturing and agriculture is accompanied by job loss. Since early 1960s, the contribution of manufacturing to GDP remains stable (16-17%), while the percentage of workforce employed in manufacturing fell from 27.7% in 1962 to 11.5% in 2002. Agricultural employment has shrunk even more dramatically. In 1870, half of the U.S. workforce was employed in agriculture. By 1920, the percentage dropped to a quarter. Now, it’s about 3%.

The process is global and affects both high- and low-income countries. Between 1995 and 2002, the world’s manufacturing output increased 30 percent, while the number of manufacturing jobs worldwide has decreased (the number of manufacturing jobs fell by 11% in the U.S., by 12% in both Russia and South Korea, by 15% in China, by 16% in Japan, and by 20% in Brazil).

To return to your question, to have something “made locally again” would generally require more transportation. You brought up shoes, so let’s think about shoes. Right now, shoes are transported internationally. The alternative is to transport internationally cow hides, plastics, and glue, which weigh more than shoes… In the long-run, local supply chains could re-emerge in response to rising transportation costs (beef slaughter and leather tanning could become local again, thus enabling local shoemaking), but that would be a process that can easily take decades… One thing to think about though is that the centralization of beef slaughter has occurred all the way back in mid-19th century, when transportation costs were way higher than today, so in order for the centralization to reverse, transportation costs must rise to pre-1850 levels.

I’ve been getting some correspondence asking me where today’s resource concerns fit with the old “Limits to growth” stuff that received a lot of publicity 30+ years ago. Actually, there’s a bit of a backstory there.

In 1973-4, my junior and senior years in college, I was Bill Nordhaus’s research assistant, working on energy issues. (This is the same Bill Nordhaus who warned back in 2002 that the cost of the Iraq war would probably be a lot higher than the Bushies were letting on.) I spent much of the summer of 1973, in particular, in Yale’s wonderful geology library — though the real import of what I learned there didn’t sink in for a while, as I’ll explain in a bit.

Nordhaus, among other things, wrote a hostile review of Jay Forrester’s World Dynamics, which led to the later Limits to Growth. The essential story there was one of hard-science arrogance: Forrester, an eminent professor of engineering, decided to try his hand at economics, and basically said, “I’m going to do economics with equations! And run them on a computer! I’m sure those stupid economists have never thought of that!” And he didn’t walk over to the east side of campus to ask whether, in fact, any economists ever had thought of that, and what they had learned. (Economists tend to do the same thing to sociologists and political scientists. The general rule to remember is that if some discipline seems less developed than your own, it’s probably not because the researchers aren’t as smart as you are, it’s because the subject is harder.)

As a result, the study was a classic case of garbage-in-garbage-out: Forrester didn’t know anything about the empirical evidence on economic growth or the history of past modeling efforts, and it showed. The insistence of his acolytes that the work must be scientific, because it came out of a computer, only made things worse.

All this is old history. But there’s something else I learned from that summer, which is important.

Much of what I did back then was look for estimates of the cost of alternative energy sources, which played a big role in Nordhaus’s big paper that year. (Readers with access to JSTOR might want to look at the acknowledgments on the first page.) And the estimates — mainly from Bureau of Mines publications — were optimistic. Shale oil, coal gasification, and eventually the breeder reactor would satisfy our energy needs at not-too-high prices when the conventional oil ran out.

None of it happened. OK, Athabasca tar sands have finally become a significant oil source, but even there it’s much more expensive — and environmentally destructive — than anyone seemed to envision in the early 70s.

You might say that this is my answer to those who cheerfully assert that human ingenuity and technological progress will solve all our problems. For the last 35 years, progress on energy technologies has consistently fallen below expectations.

I’d actually suggest that this is true not just for energy but for our ability to manipulate the physical world in general: 2001 didn’t look much like 2001, and in general material life has been relatively static. (How do the changes in the way we live between 1958 and 2008 compare with the changes between 1908 and 1958? I think the answer is obvious.)

But anyway, while the Limits to Growth stuff of the 1970s was a mess, the history of energy technology doesn’t support extreme optimism, either.

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Luther and Suleyman

Abstract
Various historical accounts have suggested that the Ottomans’ rise helped the Protestant Reform movement as well as its offshoots, such as Zwinglianism, Anabaptism, and Calvinism, survive their infancy and mature. Utilizing a comprehensive dataset on violent confrontations for the interval between 1401 and 1700, I show that the incidence of military engagements between the Protestant Reformers and the Counter-Reformation forces between the 1520s and 1650s depended negatively on Ottomans’ military activities in Europe. Furthermore, I document that the impact of the Ottomans on Europe went beyond suppressing ecclesiastical conflicts only: at the turn of the 16th century, Ottoman conquests lowered the number of all newly-initiated conflicts among the Europeans roughly by 25 percent, while they dampened all longer-running feuds by more than 15 percent. The Ottomans’ military activities influenced the length of intra-European feuds too, with each Ottoman-European military engagement shortening the duration of intra-European conflicts by more than 50 percent. Thus, while the Protestant Reformation might have benefitted from – and perhaps even capitalized on – the Ottoman advances in Europe, the latter seems to have played some role in reducing conflicts within Europe more generally.

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