Where did economic growth come from? Well...that also is a moderately simple question with a moderately simple answer. Economic growth as a new trend began somewhere in Northwest Europe sometime between 1550 and 1800. The Netherlands and England were the primary start-point, and it leaked to America as well. As the new growth economists have pointed out, it's almost all about knowledge growth...and so we have the Industrial revolution.
The question is: Why in England / Holland between 1550 and 1800, and not anywhere else ever before...and specifically, why not in China?
I've heard, now, basically 3 answers to the question. While I have a personal favorite, it's worthwhile to note all three.
- It's the existence of freedom. Peace, limited rule, and ability to exit define the path.
- It's the enlightenment. Newton showed that the natural world was comprehensible, and people started to learn chase that idea. Engineering followed. Business followed that.
- It's the English. They're weird. Greg Clark is the leading voice in this explanation. And this weekend, I read something at Steve Sailer's place (linked through to The Guardian) that furthers the position. Anglos (people from Angleterre) have nuclear families, and have had nuclear families since ~1250AD, unlike all the other people in the world. This supports my prior notion that one of the things preventing Capitalism from succeeding elsewhere is the extended-family hangers-on.
In the early Industrial Revolution (1550-1800), in England and Holland, a peculiar thing happened. For the first time ever, the individual male citizen had an expectation that he could enrich his children by the application not only of his brawn, but also by means of his brain.
The rulers were prevented from predation via various revolutions and constitutions. There was an expectation of peace, and if those failed, the somewhat wealthier family could fly away, overseas or at least across the channel. There was no extended family that one was beholden to. And the great Newton had explained God's work with science, discovered by man. That means I can make a better world for my family by being smart.
Suddenly, and for the first time, individual industriousness, the power of ten million brains, had a payoff. And so it went. Individual, self-interested, all-but anarchic tinkerers made the world a better place...and the rest of us live there.
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9 comments:
I think what you're aiming at, but don't quite name, is property rights - limited sovereign (enforced by exit and revolt) leads to peace and easy taxes (related, historically). Richard Pipes' Property & Freedom offers a great discussion on the role of property in history.
I would take issue with 1550 as a starting point. Europe was overachieving since the 1200's (evidence: Columbus, Goa, la reconquista). I'd put the breakout to the Renaissance, in turn probably sparked by the Arab diaspora after the fall of Baghdad.
Mala,
I love property rights, but I'm becoming more and more convinced by the Coase/Ostrom/de Soto line that bottom-up property rights work better than top down ones. It's when the top-down people leave you alone enough for your home-grown property rights to work (or even better, codify them) that things get cooking.
I think the major libertarian oversight is that violence (state vs. state, or even marauding barons vs. peasants) was a HUGE player in pre-1800s Europe. Indeed, I'd argue that a big chunk of the reason that England gets it's specialness is because the Barons from France couldn't ride over on horseback and maraud.
So...apart from property rights, peace was a much bigger deal than I hear you saying.
I've been trying to work in Portugal into this picture for a while, because it strikes me as if it must be important...and certainly the Rennaissance and Reformation are somehow involved as well. Knowledge as discovered, rather than handed down is part of the key here.
Thanks for the book recc.
Recently I've been reading Carroll Quigley's Tragedy and Hope: A History of the World in Our Time. It's a truly excellent book, and available for free online.
Quigley's explanation is not so libtertarian-friendly as your interpretation:
----------------------------
As an island off the coast of Europe, Britain had security as long as it had control of the narrow seas....In this way, by following balance-of-power tactics, Britain was able to play a decisive role on the Continent, keep the Continent divided and embroiled in its own disputes, and do this with a limited commitment of Britain's own resources, leaving a considerable surplus of energy, manpower, and wealth available for acquiring an empire overseas. In addition, Britain's unique advantage in having security through a limited commitment of resources by control of the sea was one of the contributing factors which allowed Britain to develop its unique social structure, its parliamentary system, its wide range of civil liberties, and its great economic advance.
Britain's position on the Atlantic, combined with her naval control of the sea, gave her a great advantage when the new lands to the west of that ocean became one of the chief sources of commercial and naval wealth in the period after 1588. Lumber, tar, and ships were supplied from the American colonies to Britain in the period before the advent of iron, steam-driven ships (after 1860), and these ships helped to establish Britain's mercantile supremacy. At the same time, Britain's insular position deprived her monarchy of any need for a large professional, mercenary army such as the kings on the Continent used as the chief bulwark of royal absolutism. As a result, the kings of England were unable to prevent the landed gentry from taking over the control of the government in the period 1642-1690, and the kings of England became constitutional monarchs. Britain's security behind her navy allowed this struggle to go to a decision without any important outside interference, and permitted a rivalry between monarch and aristocracy which would have been suicidal on the insecure grounds of continental Europe.
Britain's security combined with the political triumph of the landed oligarchy to create a social tradition entirely unlike that on the Continent. One result of these two factors was that England did not obtain a bureaucracy such as appeared on the Continent. This lack of a separate bureaucracy loyal to the monarch can be seen in the weakness of the professional army (already mentioned) and also in the lack of a bureaucratic judicial system. In England, the gentry and the younger sons of the landed oligarchy studied law in the Inns of Court and obtained a feeling for tradition and the sanctity of due process of law while still remaining a part of the landed class. In fact this class became the landed class in England just because they obtained control of the bar and the bench and were, thus, in a position to judge all disputes about real property in their own favor. Control of the courts and of the Parliament made it possible for this ruling group in England to override the rights of the peasants in land, to eject them from the land, to enclose the open fields of the medieval system, to deprive the cultivators of their manorial rights and thus to reduce them to the condition of landless rural laborers or of tenants. This advance of the enclosure movement in England made possible the Agricultural Revolution, greatly depopulated the rural areas of England (as described in The Deserted Village of Oliver Goldsmith), and provided a surplus population for the cities, the mercantile and naval marine, and for overseas colonization.
(Quigley continued)
Britain's security combined with the political triumph of the landed oligarchy to create
a social tradition entirely unlike that on the Continent. One result of these two factors was
that England did not obtain a bureaucracy such as appeared on the Continent. This lack of
a separate bureaucracy loyal to the monarch can be seen in the weakness of the
professional army (already mentioned) and also in the lack of a bureaucratic judicial
system. In England, the gentry and the younger sons of the landed oligarchy studied law
in the Inns of Court and obtained a feeling for tradition and the sanctity of due process of
law while still remaining a part of the landed class. In fact this class became the landed
class in England just because they obtained control of the bar and the bench and were,
thus, in a position to judge all disputes about real property in their own favor. Control of
the courts and of the Parliament made it possible for this ruling group in England to
override the rights of the peasants in land, to eject them from the land, to enclose the
open fields of the medieval system, to deprive the cultivators of their manorial rights and
thus to reduce them to the condition of landless rural laborers or of tenants. This advance
of the enclosure movement in England made possible the Agricultural Revolution, greatly
depopulated the rural areas of England (as described in The Deserted Village of Oliver
Goldsmith), and provided a surplus population for the cities, the mercantile and naval
marine, and for overseas colonization.
The landed oligarchy which arose in England differed from the landed aristocracy of
continental Europe in the three points already mentioned: (1) it got control of the
government; (2) it was not opposed by a professional army, a bureaucracy, or a
professional judicial system, but, on the contrary, it took over the control of these
adjuncts of government itself, generally serving without pay, and making access to these
positions difficult for outsiders by making such access expensive; and (3) it obtained
complete control of the land as well as political, religious, and social control of the
villages. In addition, the landed oligarchy of England was different from that on the
Continent because it was not a nobility. This lack was reflected in three important factors.
On the Continent a noble was excluded from marrying outside his class or from engaging
in commercial enterprise; moreover, access to the nobility by persons of non-noble birth
was very difficult, and could hardly be achieved in much less than three generations. In
England, the landed oligarchy could engage in any kind of commerce or business and
could marry anyone without question (provided she was rich); moreover, while access to
the gentry in England was a slow process which might require generations of effort
acquiring land-holdings in a single locality, access to the peerage by act of the
government took only a moment, and could be achieved on the basis of either wealth or
service. As a consequence of all these differences, the landed upper class in England was
open to the influx of new talent, new money, and new blood, while the continental
nobility was deprived of these valuable acquisitions.
While the landed upper class of England was unable to become a nobility (that is, a caste based on exalted birth), it was able to become an aristocracy (that is, an upper class distinguished by traditions and behavior). The chief attributes of this aristocratic upper class in England were (1) that it should be trained in an expensive, exclusive, masculine, and relatively Spartan educational system centering about the great boys' schools like Eton, Harrow, or Winchester; (2) that it should imbibe from this educational system certain distinctive attitudes of leadership, courage, sportsmanship, team play, selfsacrifice, disdain for physical comforts, and devotion to duty; (3) that it should be prepared in later life to devote a great deal of time and energy to unpaid tasks of public significance, as justices of the peace, on county councils, in the county militia, or in other services. Since all the sons of the upper classes received the same training, while only the oldest, by primogeniture, was entitled to take over the income-yielding property of the family, all the younger sons had to go out into the world to seek their fortunes, and, as likely as not, would do their seeking overseas. At the same time, the uneventful life of the typical English village or county, completely controlled by the upperclass oligarchy, made it necessary for the more ambitious members of the lower classes to seek advancement outside the county and even outside England. From these two sources were recruited the men who acquired Britain's empire and the men who colonized it.
Ok, that's all of the Quigley quotes.
So in sum, there are both libertarian and anti-libertarian reasons for Britain's success.
a) Culturally Britain benefited from an aristocracy based on wealth rather than birth. It also benefited from the ethic of masculine achievement.
b) The lack of bureaucracy, low taxes, and strong contract and property law system definitely helped. You argue that the lack of bureaucracy was a result of removing a strong, abosolutist king. But really, what happened, is that Britain replaced a weak king with a strong parliament. It is the weak king that creates a bureaucracy, because he cannot control events without it. It is the weak king who taxes via creating guild monopolies, and sees most of the tax get wasted and thus be tall. The strong parliament taxes efficiently, and thus the tax is lower, more direct, and does not get wasted on a bureaucracy.
c) Quigley's explanation that most counters your interpretation is this one: Control of
the courts and of the Parliament made it possible for this ruling group in England to
override the rights of the peasants in land, to eject them from the land, to enclose the
open fields of the medieval system, to deprive the cultivators of their manorial rights and
thus to reduce them to the condition of landless rural laborers or of tenants. This advance
of the enclosure movement in England made possible the Agricultural Revolution, greatly
depopulated the rural areas of England (as described in The Deserted Village of Oliver
Goldsmith), and provided a surplus population for the cities, the mercantile and naval
marine, and for overseas colonization. Your theory is that it was the king that was oppressive, and the beheading of the king resulted in an increase in liberty for the common person, that created growth. But Quigley finds it the opposite. The beheading of the king gave the nobles all the power, and they used that power to oppress the peasants far more than ever before (by kicking them off their land). And it was this oppression, that by breaking the manorial system, that helped create the agricultural and industrial revolutions.
Devin,
As always, your commentary is helpful. We're at least well agreed that Peace was a major player in the system.
And we seem to be agreed that England first, and America second, in the early parts of the 19th century, founded the modern world of growth.
The question is...what features of the English system existed, which created the modern world.
We seem to agree that at least Moldbug's notion of a strong central authority, effective bureaucracy and such were actually missing in both England and America at the time of greatest growth of both countries.
But it can't be the whole deal, because the French parliament was stronger.
I admit to the value of said English aristocratic duty, though I'm not too sure how to bring it in to a cohesive theory, and I want a cohesive theory.
Points of disagreemtn:
I am concerned that Mr. Quigley
(a) underestimates the roles of individual peasants' cottage industry, especially the weavers, as they over-ran the cloth monopolies of the guilds, with no one (guild, parliament, etc.) having the power to stop them,
(b) overestimates the strength of parliament as compared to that of competing power centers.
Aretae,
I'd certainly agree that property rights, like (common or natural) law, is best when its a bottom-up affair. Hayekian knowledge problem and threat of perversion from the top and all.
I do agree that violence was a big player pre-1800s, but I think it's a narrower range; perhaps the 1600s-1800s. The era of absolutism. Before that, monarchs were too weak to mount serious campaigns, while the church (which had authority pre-1600) discouraged warfare.
I'm sympathetic to the island-as-helpful theory on Britain, though I think Netherlands is problematic for it. Perhaps benign neglect on the part of the Spanish gave it peace for a stretch?
Portugal is an odd one. I can't see why it broke from the pack; maybe as simple as Henry the Navigator's personal interest in trade meant Europe's advantages in ships and guns were finally used against techno-backwards (eg Indian Ocean) merchants?
How does Germany play into this time-line/theory?
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