Rough Waters: Life at Sea in the 19th Century

This talk consists of two parts - first part deals with what Jeffrey Bolster called “The Changing Nature of Maritime Insurrection”- and I will tie that into some research that I did on a New York clipper ship called the Contest. The second part of the talk will look at the rise of seafarer’s missions and that will tie Roald Kverndal’s magnum opus Seamen’s Missions: Their Origin and Early Growth into some research that I did on the earliest work done in New York among seafarers that pre-dated the American Seamen’s Friend Society.

The Secret Life of Mundane Transaction Costs

Transaction costs, one often hears, are the economic equivalent of friction in physical systems. Like physicists, economists can sometimes neglect friction in formulating theories; but like engineers, they can never neglect friction in studying how the system actually does let alone should work. Interestingly, however, the present-day economics of organization also ignores friction. That is, almost single-mindedly, the literature analyzes transactions from the point of view of misaligned incentives and (especially) transaction-specific assets. The costs involved are certainly costs of running the economic system in some sense, but they are not obviously frictions. Stories about frictions in trade are not nearly as intriguing as stories about guileful trading partners and expensive assets placed at risk. But I will argue that these seemingly dull categories of cost what Baldwin and Clark (2003) call mundane transaction costs actually have a secret life. They are at least as important as, and quite probably far more important than, the more glamorous costs of asset specificity in explaining the partition between firm and market. These costs also have a secret life in another sense: they have a secret life cycle. I will argue that these mundane transaction costs provide much better material for helping us understanding how the boundaries among firms, markets, and hybrid forms change over time.