The political economy of social identity in 19th century Germany

European Review of Economic History, 27, 635–637 © The Author(s) 2022. Published by Oxford University Press on behalf of the European Historical Economics Society. This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/ licenses/by-nc/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited. For commercial re-use, please contact doi:10.1093/ereh/heac015 Advance Access Publication Date: November 9, 2022 The political economy of social identity in 19th century Germany This essay summarises my PhD thesis composed of four chapters, which deal with various aspects of social identity in 19th century Germany. The first chapter analyzes the effect of nation-building in cities that became part of Prussia in 1815. The second chapter investigates the effect of Bismarck’s carrot and stick policies on the electoral success of the socialist party. The third chapter studies the “China shock” of the first globalisation (1880– 1913)—the “grain invasion”—coming from the Americas into Europe. The fourth chapter revisits Max Weber’s hypothesis on the role of Protestantism in economic development in its contemporary context. On the eve of World War I, the two largest mass organisations of Imperial Germany, the trade unions and the nationalist Kriegervereine, had a combined membership of about 6 million persons (relative to a population of 64 million). In 1907, almost 50,000 pupils of the Polish-speaking minority in the province of Poznan went on strike in protest against the fact that an ever-increasing number had to take religious instruction in German. These examples are first signs that new social identities, i.e., class and national identity, gained importance during this century. The social identities, their economic and political causes as well as economic consequences are the subject of this dissertation. Social identity is defined here as the idea that people value their membership in social groups, and that such valuations are interdependent and changing over time. These changes in social identities also show economic significance: from drastic examples such as the (partial) enthusiasm for World War I over the demand for more protectionism to the willingness to strike for higher wages. There are numerous important questions related to this topic. Was the nation-state able to shape its citizens by using different tools like propaganda or repression or using new policies like redistribution? Which role did economic shocks play in changing social identities? While historians have been eager to address these questions, not least in the Sonderweg debate, empirical evidence on these questions remains scant and unsatisfactory. An empirical angle, combined with knowledge about the historical context, helps to understand the relative significance of events, evolutions, and causes. In this sense, this dissertation illustrates the contributions that economic history research can make to a better understanding of the political economy of social identities. The first two chapters study attempts by the government to change social identities. Specifically, Nikolaus Wolf and I investigate the effect of shaping social identities by nationbuilding policies at the end of Napoleon’s era when the Prussian king first propagated the idea of a “German nation” (Kersting and Wolf 2021). To elicit changes in identity at the level of individuals, we classify first names based on their philological origin and use data on first FELIX KERSTING School of Business and Economics, Humboldt-Universitat zu Berlin, Germany, 636 European Review of Economic History names given in over 40,000 families in German cities. Using changes in the Prussian territory as well as variation within the same families over time shows strong positive effects of this early attempt of nation-building. The main chapter analyses Bismarck’s policies of carrot and stick against the socialist party (Kersting 2022). Famously, Bismarck introduced anti-socialist laws and social insurance to reduce the support for the socialist party and strengthen the support for the government. This narrative of Zuckerbrot und Peitsche is relatively uncontested in the historiography, explaining the origins of one of the first welfare states in history with a political manoeuvre. However, few have asked whether Bismarck was successful. To overcome identification challenges, I exploit local and industry-specific insurance schemes that existed before the introduction of Bismarck’s public scheme and control for the share of blue-collar workers. Collecting data on forbidden socialist organisations allows me to capture the anti-socialist law. Contrary to what one (and Bismarck for that matter) would expect, the results consistently suggest that Bismarck was not successful with his policies to reduce the electoral support for the socialist party. To rationalise this paradoxical result, I put together quantitative and qualitative evidence. Based on archival material, I show that the socialist party was able to evade the stick by distributing an illegal newspaper. With this newspaper at hand, the party was able to dominate the narrative about the welfare reform by highlighting its weaknesses, demanding more while still claiming the credits for the reform, which even Bismarck acknowledged in parliament. What is more, the socialist party used a loophole in the implementation of the public health insurance, namely mutual health funds, as a new form of political organisation. The third chapter (together with Richard Bräuer and Wolf-Fabian Hungerland) turns to economic drivers of changes in identities (Bräuer et al.2021). It does so by exploring the role of trade shocks driven by the first globalisation on labour markets and electoral outcomes. One prominent narrative links the decline of agricultural areas driven by international pressure to the rise of more radical nationalist and anti-liberal forces in Germany, especially at the end of the 1870s. Similarly, today many scholars argue that globalisation shocks lead to more support for nationalist parties. This chapter partially confirms these patterns: the trade shock of the first globalisation, the famous “grain invasion” from the Americas, led to substantial migration and income effects. However, we do not see a corresponding effect on income per capita and political outcomes. We attribute the findings to the higher level of migration as an adjustment mechanism. Workers in counties hit by the shock in agriculture moved to the booming industrial centres and found many jobs that did not require a lot of human capital. In the fourth chapter, Iris Wohnsiedler, Nikolaus Wolf, and I show the importance of national identity for understanding and testing one of the most prominent hypotheses in social science, namely Max Weber’s Protestant Ethic (Kersting et al. 2020) (...truncated)