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Shocking Contrasts: Political Responses to Exogenous Supply Shocks, Ronald L. Rogowski

Reviewed by Kevin Hjortshøj O’rourke
 

Ronald Rogowski is a long-standing student of the ways in which the relative endowments of the factors of production—land, labor, and capital—interact with the political system. His book Commerce and Coalitions (Princeton University Press; 1990) essentially took countries’ factor endowments as given and explored the implications of changing exposures to international trade. In his newest volume, five brief historical essays trace the economic and political implications of exogenous shocks to the supplies of the factors themselves. Absent factor price equalization achieved via trade—a possibility he basically ignores in this book—exogenous increases in the supply of a factor will reduce its price, whereas exogenous reductions will increase it. Some classes will win; others will lose. Rogowski is interested in whether the losers will accept their losses or resort to coercion in an attempt to preserve their position, and he argues that acceptance is more likely when losses can be minimized in a noncoercive fashion. This is easier when production can be adjusted to economize on the now-dearer factor of production; when losers can find alternative employment, either in different sectors of the economy or in other jurisdictions; and when new technologies can be invented that use more of the now-cheaper factors and less of the now-dearer on

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