Economic History Partial One

What are the two main changes the industrial revolution brought to our world

1. Technological advancements

2. Labor intensive economies changed into machine based economies

Why did the West industrialize first (Overview)

The conditions for growth in the early modern period were fundamentally different in Western Europe in terms of:

1. Social Structure

2. Political Institutions

3. Science and culture

4. Demography

5. Economic Incentives

What are the main topics that explain the difference in social structure in western europe

• Karl Marx’s theory of capitalism

• Property and labour relationships

What are the stages in Marx’s schematic account of historical development

1. Primitive communism

2. Slave society

3. Feudalism

4. Capitalism

5. Socialism (Predicted)

Explain the origin of capitalism

• The origin of capitalism was set in motion by capital accumulation, which happened due to:

  • Dispossession of the peasant class, which meant there was a free propertyless working class

  • The existence of mercantile capital due to surplus extracted from the colonial trading system

Explain what Marxist theory attributed the path of eocnomic development to

• Marxist theory contended that property and labour relations are what determine the path of economic development

  • The medieval economy was based on serfdom, and so it limited labor mobility and capital markets

  • And so the modern economy, which was based on industry and commerce, could only develop with capital institutions like free markets and a landless working class

Critiques on the Marxist theory of capitalism

• Vibrant trade in medieval cities has already demonstrated capital features

• Serfdom was not a “blanket of tradition”

  • Markets existed, and peasants responded to commercial opportunities

  • Serfdom was flexible: Landlords demanded tribute in kind, money, or labor

What are the main topics that explain how European Political institutions were different from the rest of the world?

• Liberal political economy theory

• European state centralization

• Doorstep conditions for democratic transition

Explain the liberal political economy theory

• Economic development is determined by political institutions: Secure property rights and limited government

• Key work: North and Weingast (1989)

• The Glorious Revolution in England created a parliament, which is good because

  • They could impose taxes and abolish monopolies, business friendly culture

  • Kings could not remove judges, which meant secure property rights

  • The king could only issue new debt guaranteed by parliament which increased fiscal capacity and public investment

Critique on the liberal political economy theory

• Secure property rights existed in places like France and China yet no growth was seen there

• England wasted high taxes and public debt on global warfare

How was Europe different when it came to state centralization?

1. Medieval kings relied on feudal armies

2. First consolidated nation-states with centralized governments

3. Absolutism: The crown, along with the parliament, formed a monopoly of power

   1. Royal absolutism: Portugal, France, and Spain

   2. Parliamentary absolutism: England

Describe centralization in Europe in the 17th century

• State consolidation along the atlantic and north sea, so lots of centralization around Europe

• Italy and Germany fragmented until the 1860s

What are the doorstep conditions for democratic transition?

1. Equality before the law

2. Permanent institutions to regulate social conflict

3. State monopoly of violence

All three conditions require state centralization, so the new model that achieved this centralization was called the fiscal-military state

What are the main topics that explain how Europe’s science and culture was different from the rest of the world

• Cultural change favoring growth

• Human capital growth

• The printing press

• Apprenticeships

What culture change favoring growth did Europe portray

• Protestant revolution

  • Weber: The rise of the West was explained by Western rationality that arose from protestant theology

  • However, the empirical evidence is unconvincing

• Scientific revolution

  • Modern technology

  • Mokyr: Industrial Enlightenment

    • Western exceptionalism: The scientific approach was widely used in Europe, but not elsewhere

    • Useful knowledge: Scientific method was applied to the study of tech

• Bourgeois identity

  • Mccloskey: English society valued knowledge and entrepreneurialism

Explain the rise of human capital growth in Europe

• Key to economic growth

• Cities and the printing press increased literacy

• Rising numeracy, since they now had books on math and geometry

• Manufacturing skills

  • Apprenticeships taught urban crafts

  • England trained the most skilled artisans

What was the key science and culture invention in Europe, explain

• The printing press

• Invented by Gutenberg in 1448

• Printing quickly diffused in Germany

• By 1480: It was well established in Western capitals

• Until 1650: It spread in Europe and not beyond

• Overall, from 1450-1650, we had widely facilitated printing in Europe

Evidence on literacy and the critique

• Extreme literacy growth between 1500 and 1800, tracked by seeing those who could sign their name

• However, the usefulness of literacy before 1800 is widely contested

Apprenticeships: State the effects and why it was attractive

• Industrial skills developed slowly

  • Accumulation of industrial skills

  • Diffusion of proto-industries

• Apprenticeship was attractive in England because

  • There was competition (Best masters)

  • Integration (People moved from rural areas to London)

  • Social mobility (All social classes could participate)

How was demography different in western europe

The Malthusian theory: When income increases, fertility increases and mortality decreases, but population growth depresses average well-being. While restricted fertility means higher living standards.

Explain the Malthusian trap

Growth in pre-industrial Europe was limited by a self-equilibrating mechanism:

1. Birth rate was constant, only increasing if real wages increased

2. Death rate declined with rising real incomes

3. Real incomes declined if the population increased

soo growth of both the population and living standards was unsustainable