A fascinating look at whaling, innovation, and the 19th century American economy. With lessons for America in the 21st century! How’s that for a daily double?
The standard explanation for the decline of whaling in the second half of the century is a pat two-parter consisting of falling demand (from alternative sources for energy) and falling supply (from over-hunting). But according to Leviathan, the standard explanation is wrong.
To be sure, energy preferences had been flowing to another source of oil: petroleum. In 1859, the US produced no more than 2,000 barrels of the stuff a year. Forty years later, we were producing 2,000 barrels every 17 minutes.
But demand doesn’t tell the whole story. In the middle of the 19th century, whale oil prices increased, which should have led to more production. But output never recovered after the 1850s even as whaling continued to grow around the world. Why did Americans give up?
The answer from Davis, Gallman, and Gleiter will also look familiar to a modern business audience: US workers got too darn expensive, and other countries stole our share of the whale business.
Thanks to the dry-land industrial revolution, “higher wages, higher opportunity costs of capital, and a plethora of entrepreneurial alternatives turned Americans toward the domestic economy,” the authors write. Meanwhile, slower growth overseas made whaling more attractive to other countries. “Lower wages, lower opportunity costs of capital, and a lack of entrepreneurial alternatives pushed [people like the] Norwegians into exploiting the whale stocks,” they continue.
Of course, whaling has little to do with economics anymore. It’s much more about cultural identity, nationalism, and a bankrupt view of man’s dominion over the planet. The true innovation here would be to treat whales as if they had a right to life, liberty, and the pursuit of happiness.