Posts filed under ‘Institutions’
Pirrong on Speculation
| Peter Klein |
Following up Dick’s post on speculation, Craig Pirrong had a nice piece in Friday’s WSJ providng more details on oil markets. Notes Craig:
The unprecedented run-up in oil prices is painful for consumers around the world. But the focus on speculation is misguided, and represents a convenient distraction from an understanding of the real, underlying causes of high oil prices — most notably continuing demand growth in the face of stagnant production, supply disruptions and the weakening dollar.
More restrictions and regulations of energy markets, in the vain belief that such actions will bring price relief, are counterproductive. They will make the energy markets less efficient, rather than more so.
The pointer is from Mike Giberson, who provides more information and links to Craig’s (brilliantly named) blog, Streetwise Professor. Craig testified Friday on oil-market speculation before the US House Agriculture Committee; you can read his remarks here. And for a classic paen to speculation more generally, see Victor Niederhoffer’s classic “The Speculator as Hero.”
Note to graduate students: If you haven’t read Craig’s classic papers on bulk shipping, introducing the concept of “temporal specificity,” your education is incomplete. Check ’em out:
Pirrong, Stephen C. 1992. “An Application of Core Theory to the Study of Ocean Shipping Markets.” Journal of Law and Economics 35: 89–131.
Pirrong, Stephen C. 1993. “Contracting Practices in Bulk Shipping Markets: A Transactions Cost Explanation.” Journal of Law and Economics 36: 937–76.
The Ecconomics of Organizing Economists
| Peter Klein |
Most regulatory agencies are staffed by a mix of attorneys and economists. Members of these groups do not always play well together. How, then, should such an agency be organized — functionally, putting the economists in a single unit, reporting to a chief economist, or divisionally, spreading the economists throughout divisions organized by legal issue, industry sector, geographic region, etc. and having them report to an attorney in charge of each division? An interesting application of the U-form versus M-form problem posed by Chandler (1962).
An analysis of organizational structure at US and European competition agencies by Luke Froeb, Paul Pautler, and Lars-Hendrik Roller (via Dan Sokol) finds that
the main advantage of a functional organization is higher quality economic analysis while the disadvantage is that the analysis may not be focused on legal questions of concern, and is less easily communicated to the ultimate decision makers. Likewise, the advantages of a divisional organization are decentralized, and faster, decision making; however, the quality of the economic analysis is likely to be lower and can result in less information reaching the ultimate decision makers.
Froeb, Pautler, and Roller suggest that hybrid forms, such as (a) functional organizations with strong horizontal links between economists and attorneys or (b) divisional organizations with strong vertical links between economists and attorneys, and managers trained in both law and economics, are best.
My own experience at the CEA confirms the importance of both the vertical and horizontal links. We economists were organized into a focused unit for major projects like the Economic Report of the President but were also assigned to ad hoc, inter-Agency teams working on specific policy issues (I dealt with spectrum auctions, the pricing of air traffic control, and foreign ownership of domestic telecom assets, among other things). I was typically the lone economist (though hardly the nerdiest member) on each team.
More on the File Sharing Contretemps
| Peter Klein |
Stan Liebowitz has posted another comment on the JPE file sharing controversy. Stan ups the ante by including, as appendices, a synopsis of the controversy, copies of correspondence between himself and the authors of the original article, and copies of the JPE referee reports and editor Steve Levitt’s rejection letter. Readers outside of academia may enjoy this rare window into the arcane world of peer review. (Via Craig Newmark.)
Question: If the authors of the original paper, Oberholzer-Gee and Strumpf, published their response to Stan, would we refer to it as OS/2?
Update: Stan reminds me to emphasize that the negative referee report from the JPE, the basis of Levitt’s rejection decision, was, in fact, written by Oberholzer-Gee and Strumpf. In other words, there is an OS/2, and you can read it as one of Stan’s appendices. The core of Stan’s paper is a detailed reply to OS/2, arguing that they don’t have a legitimate response to the critiques in his original comment.
IRBs and Social-Science Research
| Peter Klein |
Most US research universities have an Institutional Review Board, or IRB, tasked with supervising “human-subjects” research. Unfortunately, the performance of the typical IRB is nothing short of disastrous, as we’ve noted before. IRB officials are trained to work with the physical and biomedical sciences, and have little knowledge of social-science research, though their mandate usually covers all research done at the university.
The July 2008 issue of Political Science & Politics, published by the American Political Science Association, contains a symposium on “Protecting Human Research Participants, IRBs, and Political Science Redux.” As editor Robert J-P. Hauck notes in his introduction:
By the 1990s, “IRBs had expanded their mission to include all research, not just research funded by the federal government, enhancing their scope of authority while slowing the timeliness of reviews. Similarly, and with the same result, IRBs were evaluating secondary research as well as primary research. Although the federal legislation provided for a nuanced assessment of risk, the distinction between potentially risk-laden research necessitating a full IRB review and research posing minimal or no risk that could be either exempted or given expedited review was disappearing. The length of the review process threatened the beginning or completion of course work and degree programs. IRBs were judging the merits of research projects rather than the risks involved. This trend was especially problematic because representation on many IRBs was skewed toward biological and behavioral scientists often unfamiliar with the methods and fields of political science and the other social sciences. And the list went on.
In the years that followed there have been several efforts to reform human subject regulation. . . . In the face of these and other efforts, are IRBs better able to effectively and efficiently protect human subjects in social science research?
Judging from the comments of the symposium authors, the answer is no. Now as in the past, IRBs have no consistently applied metric for measuring risk and corresponding levels of IRB review. Mitchell Seligson, Felice Levine and Paula Skedsvold, and Dvora Yanow and Peregrine Schwartz-Shea confirm that the review process has not and perhaps cannot accommodate survey methods and ethnographic and field research. The pace of the IRB review process continues to hinder undergraduate and graduate empirical research. IRBs’ rigid interpretations of requirements produce logically inconsistent directives such as when researchers are told to destroy data they diligently collected and anticipated sharing in order to protect research subjects’ anonymity (Seligson 2008; Yanow and Schwartz-Shea 2008; and Levine and Skedsvold 2008).
The pointer is from Zachary Schrag, who promises to comment on each article in the symposium.
Greif Responds to Edwards and Ogilvie
| Peter Klein |
I blogged earlier on Jeremy Edwards and Sheilagh Ogilvie’s provocative claim that Avner Greif misread the Geniza documents in constructing his influential account of the emergence of long-distance trade. Edwards and Ogilvie claim that formal law, not norms and custom, governed the behavior of the Maghribi traders.
Greif has prepared a formal response, now available on SSRN. Here’s the abstract:
Edwards and Ogilvie (2008) dispute the empirical basis for the view (Greif, e.g., 1989, 1994, 2006) that multilateral reputation mechanism mitigated agency problems among the eleventh-century Maghribi traders. Specifically, they assert that the relations among merchants and agents were law-based. This paper refutes this assertion and vindicates the position that the legal system had a marginal role in mitigating agency problems in long-distance trade in this historical era. The claim that merchants’ relations with their overseas agents were law-based is wrong.
The evidence presented here is based on quantitative analyses of the corpuses containing the hundreds of documents on which the literature relies and a careful review of the documents and the literature Edwards and Ogilvie cite. Their assertion is shown to be based on unrepresentative and irrelevant examples, an inaccurate description of the literature, and a consistent misreading of the few sources they consulted. This paper thereby reaffirms the empirical basis for the multilateral reputation view. Indeed, this empirical basis is stronger than originally perceived. In addition, this paper sheds light on the roles of the legal system and reputation mechanism during this period.
Whither Chicago Economics?
| Peter Klein |
Steve Levitt, writing on the controversy surrounding the University of Chicago’s proposed Milton Friedman Institute, says this:
The Chicago economics department views the world differently than anyone else, even other economics departments. Having learned my economics at Harvard and M.I.T., I took my first teaching job at Chicago with the very explicit idea that I would spend two or three years in Chicago to get to “know the enemy.” After I figured out how they thought, I would escape back to more comfortable surroundings.
Well two things happened that I didn’t expect. First, it turned out that it wasn’t so easy to learn to think like a Chicago economist. I’ve been trying to learn for more than a decade and I still have learned only the rudiments. Every day my colleagues teach me something I should know, but don’t. Second, I decided that the Chicago approach to economics was the right one for me, even though I am not that good at it.
I wish Levitt would elaborate on the differences between contemporary Chicago economics and the economics of Harvard, MIT, Princeton, and Stanford, because I don’t see any. The Chicago economics of 1970 or even 1980 was distinct from that of its East and West coast rivals. The Journal of Political Economy, and even more so the Journal of Law and Economics, had a unique style and approach. Chicago-influenced economics departments at UCLA, Washington, Texas A&M, Clemson, and elsewhere were disseminating (and deepening) the brand. But that’s all gone. It’s hard to see any unique vision today. Indeed, the diversity among US economics departments seems a thing of the past, as I noted before. They are all mini-MITs. How, exactly, is Chicago economics any different?
Controversy Over JPE Paper on File Sharing
| Peter Klein |
Stan Liebowitz, no stranger to controversy (1, 2), maintains that the Oberholzer-Gee and Strumpf paper on file sharing, published last year in the Journal of Political Economy, is fundamentally flawed. Stan submitted a comment (longer version here) to the JPE which was rejected by editor Steve Levitt. Stan believes that Oberholzer-Gee and Strumpf are guilty not merely of sloppiness, but academic dishonesty, and is upset that they refuse to share their data. The German newspaper Handelsblatt has written an article about the controversy. Handelsblatt focuses on Levitt’s decision to ask Strumpf to write a reply and then to use the reply as an anonymous referee report in rejecting Liebowitz’s comment. That doesn’t trouble me as much as the authors’ unwillingness to share the data (and the JPE’s refusal to insist on it). More generally, notes the newspaper:
The impression that procedural standards of economics journals are not particularly strict is widely shared in the profession. Zurich-based economist Ernst Fehr, an associate editor of the top-five journal “Quarterly Journal of Economics” and of “Science” points to a lack of clear rules as to when an editor should recuse himself because of potential prejudice. Science journals also seem to deal more openly with the competition among scientists. “Authors who submit an article to a science journal can say who they do not want to review their article”, praises Fehr, a choice which is typically not given to economists.
One internationally renowned economist, who did not want to be named, expresses the complaint more bluntly: “Little scandals and big scandals are commonplace: editors who publish articles in their own journals, referees or editors who decide about articles submitted by their own doctoral students.”
The pointer is from Craig Newmark, who writes: “Until important empirical results in economics are, as a matter of routine, carefully scrutinized and until they are provably replicable, economics will never get the respect that physics and biology and chemistry get. And that’s a shame.”
Update: Additional comments from John Lott and John Palmer.
Niche Business School Programs
| Peter Klein |
I’m surprised that the niche strategy isn’t used more in academia. Most economics departments at research universities strive to be the “MIT of [fill-in-the-blank].” Business schools tend to value the same set of academic journals, teach from the same set of cases, and hire faculty from the same set of top schools. Not only is this strategy unlikely to work for the typical mid-tier university, it has the undesirable social consequence of creating a bland conformism in which every department in Field X looks pretty much like every other department in Field X. The virtues of experimentation and learning are lost. Herd behavior is the order of the day.
Business Week recently ran an interesting piece about several undergraduate business programs that are trying the niche strategy. The University of Louisville runs a successful equine management program. Belmont University in Nashville offers a specialized music business degree. The University of Houston trains students for the energy industry. And Florida State University has a Professional Golf Management program.
What are your experiences with niche programs, where the niche is defined by applied focus (as in the above examples), by research method or approach, by a particular theoretical focus, or otherwise?
Mike Jensen Explains SSRN
| Peter Klein |
Mike Jensen, the distinguished financial economist and co-founder of SSRN, is interviewed here by Growthology’s Tim Kane. Everyone knows that electronic distribution of working papers has been extremely important for academic research in business and the social sciences. By the time most papers are published, they’ve already been read by many, if not most, of the target readers, from working-paper circulation, conference presentations, informal discussions, and the like. Jensen points out that electronic distribution has also had an important democratization effect. The elites always had access to cutting-edge research in advance of publication through informal networks, NBER workshops, and the like. “In my own field, I was part of a very small group doing cutting-edge work in the early days of modern finance, and I noticed that elites in all fields were 2-3 years ahead of other scholars just because they knew about research that took so much time to get distributed widely. The Internet allowed everyone to see the frontier.”
Note also Jensen’s comments about behavioral finance:
In the 1970s, I began to receive [as editor of the Journal of Financial Economics] quite a few papers challenging the efficient market hypothesis. The referees rejected them and I rejected them. Any one of these articles standing alone could be rejected, but I began to feel that as a package they cannot be ignored. The authors were onto something, even if we didn’t see it. Sometime around 1975, over the objection of my referees — many of them close friends — we published a special issue with a collection of those papers. That was controversial but proved to have great value. Subsequent to that, behavioral financial economics evolved.
In creating SSRN, I envisioned an alternative distribution vehicle.
Jensen has also been an important friend of and advisor to CORI, delivering the annual CORI Distinguished Lecture in 2005.
More on Agricultural Adaptation: Johnny Appleseed
| Dick Langlois |
The abstract of a new paper called “Alertness, Local Knowledge, and Johnny Appleseed” recently crossed my computer screen. By a grad student at George Mason called David Skarbek, the paper applies a Kirznerian account of entrepreneurship to the case of Johnny Appleseed, aka John Chapman (1774-1845). The entrepreneurial part will no doubt be of interest to many readers, including my estimable co-bloggers. But I’m more interested in the historical and institutional angle.
Skarbek points out that, contrary to the Disney-fueled myth, Johnny Appleseed didn’t scatter apple seeds randomly throughout Appalachia and the midwestern frontier. He planted clearly defined apple groves, totaling some 1,200 acres by the time of his death. This turned out to be crucial for homesteading, since under American state law the planting of fruit trees was one way to create a property right (in Lockean fashion) out of unowned land. Chapman was thus an institutional entrepreneur.
What Skarbek doens’t say, however, is something I learned at the NBER conference I wrote about earlier. In addition to having what we would nowadays call mental health issues, Chapman was also an evangelical Swedenborgian who shared with Thoreau the view that apples should aways be grown from seeds. (For documentation, see for example here.) In fact, apple trees grown from seeds are good for only one thing — cider — and, indeed, the Johnny Appleseed legend got a boost in Appalachia during Prohibition as the fruits (as it were) of his efforts were used for hard cider. Apple cultivation normally requires grafting, a form of hybridization known for centuries and practiced in Appleseed’s lifetime by the likes of Thomas Jefferson. The point is that Chapman saw hybridization as unnatural and immoral, and his quest was animated as much or more by this religious view as by environmentalist zeal or entrepreneurial insight. As the mention of Thoreau suggests, however, distaste for “unnatural” breeding methods is not exclusive to religious fundamentalists, and indeed today it is followers of Thoreau not (generally) Christian evangelicals who object to genetically modified organisms.
Climate (Change) and Agricultural Adaptation
| Dick Langlois |
Just for the fun of it, I drove up to Cambridge on Friday to take in one day of an interesting NBER conference on Climate Change: Past and Present. The conference was organized by Gary Libecap, whom I’ve known for years, and Richard Steckel, whose work I have always read with interest. Steckel is one of the people who have pioneered the use of archaeological techniques in economic history, notably measuring the heights of skeletons for evidence on nutrition in historical populations. This time he talked about using tree rings in historical research involving climate.
There were several excellent papers, which are available at the conference website. The two I liked the best have a flavor of evolutionary economics as well as evolutionary biology. Richard Sutch talked about the history of hybrid corn in the U. S. An important figure in the story is Henry Wallace, who founded one of the earliest hybrid-corn seed companies and, as Secretary of Agriculture, evangelized for hybrid corn and higher corn yields at the same time he was implementing pro-cyclical New Deal farm policies that restricted agricultural output in other commodities. But the main story is one of evolutionary learning. The major midwestern droughts of 1934 and 1936 accidentally revealed the (unintended) benefits of one kind of hybrid corn that was resistant to drought, thus changing the perceived payoffs to farmers of adopting the new technology, whose primary benefit was ultimately increasing yields. (more…)
Mike and Me on Externalities
| Peter Klein |
Mike Moffatt responds to my post on externalities. I questioned the Pigouvian approach of using taxes as efficient remedies for negative externalities. I said if, say, carbon taxes are a good idea, then Pigouvian taxes on a range of activities that generate negative externalities should be even better. And what about Pigouvian subsidies? I rarely see members of the Pigou club explain what activities they would subsidize, at what rates, and with what resources.
Mike’s response, based on more detailed comments here, is interesting, but to my mind misses the main point. Pigouvian taxes aren’t perfect, Mike says, but neither are income taxes or excise taxes or any other taxes. Fine, I say, but the relevant comparison isn’t between Pigouvian taxes and other taxes, but between Pigouvian taxes and alternative institutions for dealing with externalities such as cap-and-trade, common-law tort remedies, etc. (more…)
Remixed Movie Trailers
| Peter Klein |
As I noted in my review of Yochai Benkler’s The Wealth of Networks, I think that Web 2.0 enthusiasts tend to overstate the novelty of “user-generated content.” It’s true that the costs of creating and disseminating movies, music, and even the written word have, in many settings, fallen dramatically (look at blogging, for goodness’ sake). On the other hand, as Paul Cantor, Tyler Cowen, and others have pointed out, commercial culture has always been, in an important sense, consumer culture. Benkler tends to portray twentieth-century consumers as passive recipients of culture, easily manipulated by Hollywood and Madison Avenue. Yet individuals have always played an active role in shaping the plays, books, songs, and shows made available to them, in their decisions to buy or not to buy, to patronize or not to patronize, to support or reject particular artistic producers and particular products.
Having said this, I do enjoy clever bits of user-generated content. For instance, check out this trailer for Sleepless in Seattle — number 5 on this list of The 20 Worst Chick Flicks of All Time — remixed as a horror movie. It reminds me of the brilliant Brokeback to the Future trailer from a couple of years back.
Of course, the greatest of all such parody shorts is Kevin Rubio’s Troops, now more than a decade old. And don’t miss George Lucas in Love.
An Organization and a Market
| Randy Westgren |
Yesterday I visited a unique auction in the small town of Roeselare, in Western Flanders. A cooperative organization of vegetable and strawberry growers, REO Veiling, operates a 7 hectare receiving and shipping facility that serves their members and buyers (wholesale, supermarkets, export) from all over northern Europe. The trading floor has six electronic Dutch auction clocks that operate simultaneously, two for the Roeselare site, two for a sister site in Mechelen, and two for small lots/direct delivery. Mechelen has a matching facility and there are dozens of remote terminals for buyers. Prices are pooled across lots within a given crop and quality category; all growers receive an identical payout, even if their particular lot of a given quality drew a higher/lower bid. All transactions clear within the day. All product is turned and shipped within 18 hours of delivery. The combined exchange has a 95% market share for Belgium.
The grower/owners pay the exchange costs from their revenues. This includes third-party grading and sorting and third-party production monitoring.They own a brand name in common for the top quality shipped from the facility (which earns a significant premium) and individual growers may pack for a private label and accept the pool price from the day of delivery. The exchange will collect from the private label buyer upon shipment from the auction warehouse.
A very innovative hybrid organization. I’ll have to formalize a case study.
Me on Benkler
| Peter Klein |
Here is my review of Yochai Benkler’s The Wealth of Networks: How Social Production Transforms Markets and Freedom (Yale University Press, 2006). It will appear in the Fall 2008 issue of The Independent Review. Benkler has written a fine book, though I have some reservations, as explained in the review.
Something to Abuse Graduate Students
| Randy Westgren |
I carried a few articles along with me to punctuate the tedium of consuming as many Belgian beers as one can, in tacit competition with 24 20-year olds. One of these is “The Sociology of Markets” by Neil Fligstein and Luke Dauter, from the 2007 Annual Review of Sociology (ungated version here). Those of you who throw brickbats at sociology will find this an interesting read, as Fligstein and Dauter describe the three major camps and a few lesser cabals as a “cacophony of voices” talking past each other. For others, the piece is a useful entry point for students to see the clear expositions of the development of network theory (i.e. Burt, White, and Granovetter) and institutional theory (i.e. DiMaggio and Powell, Durkheim, and Fligstein, himself). They also review the performativity school — unfortunately named and unfortunately constituted. They tie the review to March and Simon, Williamson, and some of the corporate governance literature, and discuss the roles efficiency plays in the alternative conceptions of markets.There is also some useful allusion to equilibrium and disequilibrium conceptions of markets. This is worth a read, or at least, worth making your grad students read. The entree to seminal literature that undergirds current articles in the management journals is useful.
I’d fault the review only for its insistence on trying to make population ecology appear to be a useful piece of sociology for the study of markets, though the authors admit it really isn’t true. Pop ecology should, like an overly large litter of unwanted kittens, be placed in a burlap sack with a large stone and cast into a deep river.
Manne on Ideology and the Law-and-Economics Movement
| Peter Klein |
Josh Wright has written a thoughtful and informative series on the future of law and economics (1, 2, 3, 4). Key issues include the increasing formalism of L&E scholarship, the place of L&E within law schools (as opposed to economics departments), and the influence of L&E on legal practice and public policy.
The latest entry focuses on a response to Josh by Henry Manne, the founder of the modern law-and-economics movement (and, I might add, a regular reader of O&M). Manne argues that ideology, more than genuine scientific disagreement, explains the often-hostile reaction to L&E within the legal establishment, a theme we’ve explored in several posts (1, 2, 3, 4, 5).
I think that the major issues are now, as they were fifty years ago, mainly ideological, and I believe that the causes forcing L&E out of the law schools today are the very same ones that operated to prevent my getting better jobs in the 1960s and for most senior law professors to think that what I was advocating was sheer nonsense, “to the right of Genghis Kahn,” as they used to be so stupidly amused at repeating ad nauseum. They were protecting their intellectual investment in skills and ideology against the threat of a new paradigm in which they could not share the rents, and I do believe that that is exactly what is still happening. While you and I see enormous social benefits from a legal system based on the idea of property rights and their protection, all they see is less role for the government and themselves. Perhaps this acts at an unconscious level, but it unmistakably is at work whatever the source of the peculiar leftist ideology of most academics.
What I am saying is that it is impossible to separate completely a discussion of the role of L&E in legal education from the ideological aspects of the subject. I honestly believe that at some level the turn of L&E to econometrics and empirical work is a flight from the implications of a thoroughgoing Alchianesque kind of economics. Perhaps that is even more clear with the current popularity of Behavioral Economics, and of late I even notice in the literature a somewhat open attack on the very idea of freedom of contract. I do not think these developments are accidental or random; I believe that they are inherent in the very structure of modern universities and law schools.
Toyota the Innovator
| Peter Klein |
Jim Surowiecki’s latest New Yorker column focuses on Toyota and makes several important points about innovation.
- Process innovation is at least as important as, though less visible than, product innovation.
- Innovation can be an incremental process in which “the goal is not to make huge, sudden leaps but, rather, to make things better on a daily basis.”
- Process innovations often bubble up from the bottom, rather than the top, of the hierarchy.
- Cumulative, bottom-up, process innovation is really hard to imitate. “[T]he fundamental ethos of kaizen — slow and steady improvement — runs counter to the way that most companies think about change. Corporations hope that the right concept will turn things around overnight. This is what you might call the crash-diet approach: starve yourself for a few days and you’ll be thin for life. The Toyota approach is more like a regular, sustained diet — less immediately dramatic but, as everyone knows, much harder to sustain.”
These points are well known in the innovation literature but Surowiecki’s succinct and elegant presentation is well worth a read, even by specialists.
See also Steve Postrel’s earlier post on Toyota.
2008 Kauffman Data Symposium
| Peter Klein |
Next Tuesday, 13 May, is the proposal deadline for the 2008 Kauffman Symposium on Entrepreneurship and Innovation Data. I participated in the 2007 version and got a lot out of it. This year’s event takes place in Washington, DC instead of Kauffman headquarters in Kansas City.
Documents from the 2007 symposium can be reviewed at SSRN.
A personal note: While driving to last year’s symposium I found myself on Kansas City’s Volker Boulevard, named for the great philanthropist William Volker, whose support was instrumental in the rebirth of Austrian economics in the US during the 1950s and 1960s. The Volker Fund paid all or part of the salaries of Mises at NYU and Hayek at Chicago and employed Murray Rothbard as a consultant, book reviewer, and talent scout while he was writing Man, Economy, and State and America’s Great Depression. Wikipedia has some background information on the Volker Fund; you can find more in Hülsmann’s Last Knight (pp. 867-68 and passim) and Brian Doherty’s Radicals for Capitalism (pp. 181-87 and passim). In Kansas City Volker is remembered as a generous philanthropist who supported schools and hospitals, developed a program for prison reform, and was a major benefactor of the University of Kansas City (now the University of Missouri – Kansas City).
It would be nice to have a full-scale Volker biography. Anybody up to the task? Volker’s company and foundation records are housed at UMKC. Herb Cournelle wrote a short biography in 1951, Mr. Anonymous: The Story of William Volker, but I haven’t been able to locate a copy.
Are Brand Names a Modern Phenomenon?
| Peter Klein |
Not at all, says Gary Richardson, in a new NBER paper, “Brand Names Before the Industrial Revolution.” Branding has long been the target of largely uncomprehending critique from the likes of Veblen, Galbraith and sociologists such as Daniel Bell but its role in maintaining quality and reliability and securing contractual performance is now generally understood. Importantly, shows Gary (my former grad-school classmate), the use of seller-specific markers was widespread even before the Industrial Revolution and played an important role in facilitating the emergence of long-distance trade:
In medieval Europe, manufacturers sold durable goods to anonymous consumers in distant markets, this essay argues, by making products with conspicuous characteristics. Examples of these unique, observable traits included cloth of distinctive colors, fabric with unmistakable weaves, and pewter that resonated at a particular pitch. These attributes identified merchandise because consumers could observe them readily, but counterfeiters could copy them only at great cost, if at all. Conspicuous characteristics fulfilled many of the functions that patents, trademarks, and brand names do today. The words that referred to products with conspicuous characteristics served as brand names in the Middle Ages. Data drawn from an array of industries corroborates this conjecture. The abundance of evidence suggests that conspicuous characteristics played a key role in the expansion of manufacturing before the Industrial Revolution.
See also Gary’s EH.Net Encyclopedia entry on guilds.
Organizations and Markets 
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