4. History: Agriculture

Why agriculture mattered

Food is a necessity. In a predominantly agricultural economy, most people must produce food for themselves and others.

A non-agricultural population can grow only if farmers produce a surplus:

Agricultural surplus → fewer people needed in farming → more people available for manufacturing and services.

Agriculture limits economic growth (Smithian)
– Population depends on the food supply
– Only agricultural surpluses allow people to specialise
– Higher farm productivity supports larger towns and more trade

Industrialisation requires resources (raw materials, labour, capital) and markets (demand for manufactures).
• These conditions rests on high agricultural productivity.
– Higher productivity reduces the demand for farm labour
– It increases the food surplus that can feed growing cities
England and Holland became more urbanised than France or Spain because their farmers were more productive, in two ways.
– Labour productivity: farm output per worker
– Farm yield: farm output per farm area

English agriculture labour productivity increased steadily after 1600. By 1800 England outperformed most european countries. Rising productivity released labour for industry

The Agricultural Revolution’s basic mechanism

After the Black Death:

• Europe’s population had fallen by approximately 40–50%.

• Population recovered slowly.

• Land remained relatively abundant.

• Labour remained comparatively scarce.

• Real wages remained relatively high in northwestern Europe.

Higher-income consumers changed their diets:

• Less reliance on basic grain.

• Greater demand for meat and dairy products.

• More demand for higher-quality food.

Farmers responded by:

• Moving land from arable production toward livestock and pasture.

• Keeping more horses, oxen, cattle and sheep.

• Investing more capital in agriculture.

• Using animals for draft power.

• Using animal manure to improve soil fertility.

→ productivity increases

new sources of growth

Capital: higher farm wages leave money to invest in livestock
– More horses and oxen
– Greater draft power (oxen 10, draft horses 25 times powerful as humans)
– Less labour required
Technology: use of natural fertilisers
– Fodder crops fixed nitrogen
– More manure improved soil fertility
– Higher crop yields
Virtuous cycle of self-sustaining growth:
– More livestock ➔ more draft power + manure ➔ higher labour
productivity and yields ➔ even higher wages ➔ More livestock…

The traditional enclosure explanation

Open-field agriculture

Before enclosure:

• Village land was divided into many scattered strips.

• Individual farmers cultivated strips in several locations.

• Villagers coordinated crop rotations.

• Some land remained fallow to restore fertility.

• Common land was used collectively for grazing.

Enclosures

Enclosure involved:

• Consolidating scattered strips.

• Combining land into larger fields or farms.

• Defining private property using hedges, fences or walls.

• Often converting arable land into pasture.

• Expanding market-oriented, commercial farming.

Approximate chronology:

• 1500: around 45% of English agricultural land enclosed.

• 1750: almost two-thirds enclosed.

• 1760–1830: Parliamentary Enclosures accelerated consolidation.

By the eighteenth century, English agriculture was increasingly dominated by:

• Large estates.

• Commercial tenant farmers.

• Wage labour.

• Market-oriented production.

Why historians thought enclosure caused growth

The traditional interpretation associated open fields with several problems:

-Villagers forced to cooperate ➔ hard to innovate
– Peasants had separate and often far away holdings ➔ costly frictions
– Lands rotated among villagers ➔ no incentive to invest

Enclosed farming supposedly offered:

-Large consolidated holdings ➔ economies of scale
– Tenant farmers invest in capital to economise on labour
– Long lease ➔ tenants interested in improving or maintaining yields

Traditional causal chain

Enclosures → higher productivity → fewer farm workers needed → urbanization → industrialization.

This is the classical view associated with Lord Ernle and other traditional historians.

Measuring Farm output

Problem:
– No agricultural census
– Output must be estimated indirectly from consumption
1. Oldest approach: backward projection of output assuming constant
food consumption per capita
2. New approach: adjust consumption to income levels (based on price
and income elasticities of demand in developing countries)
Allen’s findings:
• Rapid growth before 1730 (changing land use)
• Slow growth during 18th century
• Rapid growth during industrialisation

Enclosed vs open fields

Did enclosed farms outperform open fields?
• Allen compares:
– Adoption of new crops and rotations (technology)
– Land use: shift from arable to grassland
– Crop yields
– Labour productivity
Evidence turns out to be surprisingly mixed:
• advantage of enclosed farming only about 6-15%
• Enclosed and open fields saw big improvements

Decomposing labour productivity

Sources of productivity growth:

-more draft power

-more land per worker

-better farming techniques

The overall agricultural revolution therefore came from several mechanisms—not simply enclosure.

Incentives for growth

Traditional view: agriculture ➔ urbanisation
Allen’s view: urbanisation ➔ agriculture
• Growing cities created demand for agricultural innovation
• Growing trade had led to growing cities (Little Divergence)
Mechanism (Von Thünen 1826)
– Urban demand raised the price of perishable farm products that were expensive to transport.
– Therefore, these goods were produced near the city
Evidence
– Farms near London shifted from arable production to pasture to supply meat and dairy products
– Grain production, by contrast, was spread out

Incentives: wages and prices

• Growing cities
– Higher urban wages
– Higher food prices
• Farmers responded by:
– Consolidating land (enclosures)
– Saving labour (lured into cities) through conversion into pasture
– Investing in productivity (to match London consumption)
• Innovation in agriculture was induced by changing prices

Urban wages and rural labour

Growing cities generated:

• Higher urban wages.

• Rural-to-urban migration.

• Labour scarcity in agriculture.

• Higher opportunity costs of rural work.

Before approximately 1630

During the price revolution:

• Agricultural prices rose strongly.

• Farm incomes could keep pace with urban living standards.

• Farmers had relatively little pressure to change their methods.

The important point is not that labour was abundant in an absolute sense. It is that the urban-rural income gap was not yet large enough to create a powerful new incentive.

After approximately 1630

• Agricultural prices and traditional farm incomes stagnated.

• Urban wages continued rising.

• Workers increasingly moved to towns.

• Rural labour became relatively expensive and difficult to retain.

• The consumer revolution made the urban standard of living more attractive.

• Farmers faced stronger incentives to improve productivity.

Causal chain

Traditional account

Enclosure → higher output and productivity → labour released → cities grow → industrialization.

Allen’s revised account

Atlantic trade and manufacturing grow → cities expand → urban wages and demand rise → workers leave agriculture → farmers face labour scarcity and new consumer aspirations → farmers invest, consolidate land and improve productivity → agricultural surplus supports further urban growth.

Agricultural productivity supported urbanization, but urbanization also induced agricultural productivity growth.