The Box - Marc Levinson [10]
Some scholars have argued that reductions in transport costs are at best marginal improvements that have had negligible effects on trade flows. This book disputes that view. In the decade after the container first came into international use, in 1966, the volume of international trade in manufactured goods grew more than twice as fast as the volume of global manufacturing production, and two and a half times as fast as global economic output. Something was accelerating the growth of trade even though the economic expansion that normally stimulates trade was weak. Something was driving a vast increase in international commerce in manufactured goods even though oil shocks were making the world economy sluggish. While attributing the vast changes in the world economy to a single cause would be foolhardy, we should not dismiss out of hand the possibility that the extremely sharp drop in freight costs played a major role in increasing the integration of the global economy.10
The subject of this book lies at the confluence of several major streams of research. One delves into the impact of changes in transportation technology, a venerable subject for both historians and economists. The steamship, invented in the 1780s and put to regular use by 1807, strengthened New York’s prominence as a port, and the Erie Canal, an undertaking of unprecedented size, had an even greater impact. The radical decline in ocean freight rates during the nineteenth century, the result of technological change and improved navigation techniques, encouraged a huge increase in world trade and added to Europe’s eagerness to found colonies. The connection between railroad development and U.S. economic growth has been debated strenuously, but there is little dispute that lower rail freight rates increased agricultural productivity, knitted the North together before the Civil War, and eventually made Chicago the hub of a region stretching a thousand miles to the west. A transport innovation of the 1880s, the refrigerated railcar, made meat affordable for average households by allowing meat companies to ship carcasses rather than live animals across the country. The truck and the passenger car reshaped urban development starting in the 1920s, and more recently commercial aviation redrew the economic map by bringing formerly isolated communities within a few hours of major cities. This book will argue that container shipping has had a similarly large effect in stimulating trade and economic development—and that, as with steamships, railroads, and airplanes, government intervention both encouraged and deterred its growth.11
The importance of innovation is at the center of a second, and rapidly growing, body of research. Capital, labor, and land, the basic factors of production, have lost much of their fascination for those looking to understand why economies grow and prosper. The key question asked today is no longer how much capital and labor an economy can amass, but how innovation helps employ those resources more effectively to produce more goods and services. This line of research makes clear that new technology, by itself, has little economic benefit. As economist Nathan Rosenberg observed, “innovations in their early stages are usually exceedingly ill-adapted to the wide range of more specialised uses to which they are eventually put.” Resistance to new methods can impede their adoption. Potential users may avoid commitments until the future is more certain; as early buyers of Betamax video players can attest, it is risky to bet on a technology that turns