World Economic History: Detailed Study Notes

Universitat Autònoma de Barcelona

World Economic History

Lesson 1: The Pre-Industrial Economy

Instructor: Anna Solé

Contents

  • The limits of population growth: the "Malthusian ceiling"

  • Agriculture, trade, and manufacturing

Historical Context

  • Time Periods:

    • Ancient Age: 120,000 BC to 3000 BC

    • Medieval Age: 3000 BC to 474 BC

    • Modern Age: 474 BC to 1492 BC

    • Contemporary Age: 1492 to 1789 BC

World Economic Growth

  • Annual Growth Rates:

    • 1500-1820: 0.05%

    • 1820-2000: Each generation enjoyed a 1/3 higher income, on average, than the previous one.

  • World GDP per Capita (in 1990 US dollars):

    • Significant historical statistics represented graphically.

World GDP

A History of World GDP

  • Percentage of Total (1990 USD at PPP):

    • From historical years such as 1000, 1500, 1600, 1700, to 2008.

  • Notable Contributors:

    • China, India, Japan, US, France, Germany, Italy, Britain.

Preindustrial Economies

  • Organic Economies:

    • Production based on organic raw materials and energy sources (solar radiation converted into biomass).

    • Growth Constraints:

    • Competing demands for fertile land.

    • Limited land quality and availability.

    • Diminishing returns.

  • Diminishing Returns Explained: Classical economists concluded that enduring diminishing returns lead to a stationary phase in the long-term economy.

Diminishing Returns: Classical Economists

  • Definitions of Diminishing Returns:

    • Adam Smith (1776):

    • A country achieving full wealth won't advance further; low labor wages and stock profits hence emerge.

    • David Ricardo (1817):

    • Poor lands cultivated lead to less production returns. Increased labor proportion ends up reducing profits significantly.

The Malthusian Theory of Population

  • Key Text: An Essay on the Principles of Population (1798)

  • Historical Reaction:

    • In contrast to radical optimists like Godwin and Condorcet, who believed in progressive perfectibility through institutional reform.

  • Economic Context: - Rising English population pressures, poor urban conditions, and substantial import increases post-1790.

  • Central Question:

    • Can humanity improve living conditions or are they fated for misery?

Core Tenets of Malthusian Theory

  • Food Production vs. Population Growth:

    • Population grows geometrically while food production increases arithmetically; hence population growth outstrips food production capacity.

  • Adjustment Mechanisms:

    • Preventive Checks: Reduction in birth rates.

    • Positive Checks: Increase in mortality rates.

  • Conclusion:

    • The inclination for reproduction ensures that most of humanity remains in misery.

Implications of the Malthusian Theory

  • Impact on the Poor:

    • Poor populations suffer most from misfortune due to their inability to save.

    • Efforts to improve their conditions are ultimately deemed futile.

  • Wage Theory:

    • Malthusian population theory combined with the wage fund theory results in real wages that tend to align with subsistence levels.

    • Economic scholarship identifies political economy as a "dismal science" (Thomas Carlyle).

Population and Real Wages in England (1300-1860)

  • Graphical Data Representation:

    • Population and real wages illustrated over the centuries.

Malthusian Theory in Practice: Poor Laws Reform

  • 1834 Reforms in England:

    • Figures illustrating poor-relief expenditures as a percentage of national product in various countries from 1750 to 1880.

Traditional Agriculture

  • Economic Activity Characteristics:

    • Self-sufficient agriculture with productivity limited by technological stagnation and feudal obligations.

    • Description of feudal income, low specialization, and communal land usage.

Medieval Trade

  • Challenges & Operations:

    • Precarious transport methodologies, small market dimensions, high transaction costs, lack of specialization.

    • 13th-century emergence of commercial companies and a gradual increase in scale during the 14th century.

Expansion of Overseas Trade

  • Permanent Joint Stock Companies:

    • Connection of political, financial, and economic interests leading to state intervention and dominance in colonial trade.

  • Triangular Trade Impact:

    • Initial monopolies replaced by private traders by the 18th-century liberalization.

Manufacturing: The Guild System

  • Roles of Guilds:

    • Labor organization, quality control, training control, and monopoly formation that restricted entry into labor markets.

  • Guild Challenges:

    • By the end of the 18th-century, they faced pressures from absolutist states and emerging market-oriented industries.

Manufacturing: Putting-Out System

  • Manufacturing Diffusion:

    • Movement of production processes from towns to the countryside to bypass guild constraints.

Manufacturing: Technology and Organization

  • Labour Intensive Practices:

    • Key materials utilized in production; techniques leading to the "industrious revolution" and preparatory proto-industrialization.

Lesson 2: The Industrial Revolution

  • Upcoming Topics: Agrarian Revolution, Demographic Transition, Key Determinants, Modern Economic Growth.

Agrarian Revolution (1700s)

  • Transition in the Netherlands and England from self-sufficient agriculture to market agriculture characterized by management, intensification, and technological change.