The Cambridge Economic History of Modern Europe – Volume 1, 1700-1870 (1)

I’m currently reading this book.

This is not the first economic history text I read on ‘this’ topic; a while back I read the Kenwood and Lougheed text. However as that book ‘only’ covers the time period from 1820-2000 and does not limit the coverage to Europe I’ve felt that I’ve had some gaps in my knowledge base, and reading this book was one way for me to try to fill the gaps. The book also partly bridges the gap between Whittock (coverage ends around 1550) and K&L. K&L is a good text, and although this book is also okay so far I’m far from certain I’ll read the second volume as it seems unnecessary – part of the justification for reading this book was precisely that the time period covered does not perfectly overlap with K&L. Interestingly, without really having had any intention to do so I have actually over the last few years covered a very large chunk of British history (Britain was the biggest player in the game during the Industrial Revolution, so naturally the book spends quite a few pages on her in this book); I’ve also in the past dealt with the Roman invasion of Britain, Harding had relevant stuff about Bronze Age developments, Heather had stuff about both the period under Roman rule and about later Viking Age developments, and of course then there’s Whittock. Include WW1 and WW2 book reading and offbeat books like Bryson’s At Home as well as stuff like Wikipedia’s great (featured) portal about the British Empire, which I’ve also been browsing from time to time, and it starts to add up – thinking about it, I’m probably at the point where I’ve read more (/much more?) British history than I have Danish history…

Anyway, back to the book. It has a lot of data, and I love that. Unfortunately it also spends some pages talking about macro models which have been used to try to make sense of that data (or was that actually what they were meant to do? Sometimes you wonder…), and I don’t like that very much. Most models assume things about the world which are blatantly false (which makes it easy for me to dismiss them and hard for me to take them seriously), a fact which the authors fortunately mention during the coverage (“the “Industrial Revolution in most growth models shares few similarities with the economic events unfolding in England in the 18th century””) – and I consider many of these and similar models to be, well, to a great extent a load of crap. An especially infuriating combination is the one where economic theorists have combined the macro modelling approach and historicism and have tried to identify ‘historical laws’. Mokyr and Voth argue in the first chapter that:

“A closer collaboration between those who want to discern general laws and those who have studied the historical facts and data closely may have a high payoff.”

To which I say: The facts/data guys should stay the hell away from those ‘other people’ (this was where I ended up – I called them different things in earlier drafts of this post). The views of people who’re working on trying to identify general Historical Laws should be disregarded altogether – they’re wasting their time and the time of the people who read their stuff. The people who do should read Popper instead.

The data which is included in the book is nice, and the book has quite a few tables and figures which I had to omit from the coverage. I’d say most people should be able to read the book and get a lot out of it, but people who’re considering reading it should keep in mind that it’s an economic history textbook and not ‘just’ a history text – “The approach is quantitative and makes explicit use of economic analysis, but in a manner that is accessible to undergraduates” – so if you’ve never heard about, say, the Heckscher–Ohlin model for example, there’ll be some stuff which you’ll not understand without looking up some stuff along the way. But I think most people should be able to take a lot away from the book even so. I may be biased/wrong.

Below some observations from the first three chapters, I’ve tried to emphasize key points for the readers who don’t want to read it all:

…

“the transition to modern economic growth was a long-drawn-out process. Even in the lead country, the United Kingdom, the annual growth rate of per capita income remained less than 0.5 percent until well into the nineteenth century. Only after 1820 were rates of growth above 1 percent per annum seen, and then only in a handful of countries.” [a ‘growth argument’ was incidentally, if I remember correctly, part of the reason why K&L decided to limit their coverage to 1820 and later.]

“The population–idea nexus [the idea that larger populations -> more ideas -> higher growth] is key in many unified growth models. How does this square with the historical record? As Crafts (1995) has pointed out, the implications for the cross-section of growth in Europe and around the world are simply not borne out by the facts – bigger countries did not grow faster.[2] Modern data reinforce this conclusion: country size is either negatively related to GDP per capita, or has no effect at all. The negative finding seems plausible, as one of the most reliable correlates of economic growth, the rule of law (Hansson and Olsson, 2006), declines with country size. […] the European experience after 1700 [also] does not suggest that the absolute size of economies is a good predictor of the timing of industrialization.”

“Most “constraints on the executive” took the form of rent-seeking groups ensuring that their share of the pie remained constant. Unsurprisingly, large parts of Europe’s early modern history read like one long tale of gridlock, with interest groups from local lords and merchant lobbies to the Church and the guilds squabbling over the distribution of output. […] None of the groups that offered resistance to the centralizing agendas of rulers in France, Spain, Russia, Sweden, and elsewhere were interested in growth. Where they won, they did not push through sensible, longterm policies. They often replaced arbitrary taxation by the ruler with arbitrary exactions by local monopolies.[18] […] Economically successful but compact units were frequently destroyed by superior military forces or by the costs of having to maintain an army disproportionate to their tax base.[19] The only two areas that escaped this fate enjoyed unusual geographical advantages for repelling foreign invasions – Britain and the northern Netherlands. Even these economies were burdened by high taxation […] A fundamental trade-off [existed]: a powerful central government was more effective in protecting an economy from foreign marauders, but at the same time the least amenable to internal checks and balances.”

“In many models of long-run growth, the transition to self-sustaining growth is almost synonymous with rising returns to education, and a rapid acceleration in skill formation. […] Developments during the Industrial Revolution in Britain appear largely at variance with these predictions. Most evidence is still based on the ability to sign one’s name, arguably a low standard of literacy (Schofield, 1973). British literacy rates during the Industrial Revolution were relatively low and largely stagnant […] School enrollment rates did not increase much before the 1870s […] A recent literature survey, focusing on the ability to sign one’s name in and around 1800, rates this proportion at about 60 percent for British males and 40 percent for females, more or less at a par with Belgium, slightly better than France, but worse than the Netherlands and Germany […] The main conclusion appears to be that, while human-capital-based approaches hold some attractions for the period after 1850, few growth models have much to say about the first escape from low growth.”

“The average population growth rate in Europe in 1700–50 was 3.1 percent, ranging between 0.3 percent in the Netherlands and 8.9 percent in Russia […] Figure 2.1 […] shows two measures of fertility for England, 1540–2000. The first is the gross reproduction rate (GRR), the average number of daughters born per woman who lived through the full reproductive span, by decade. Such a woman would have given birth to nearly five children (daughters plus sons), all the way from the 1540s to the 1890s. Since in England 10–15 percent of each female cohort remained celibate, for married women the average number of births was nearly six. The demographic transition to modern fertility rates began only in the 1870s in England, as in most of Europe, but then progressed rapidly. […] population growth [after 1750] occurred everywhere in Europe. Annual rates of growth were between 0.4 percent and 1.3 percent, except for France and Ireland. Europe’s population more than doubled in 1800–1900, compared with increases of 32 percent in 1500–1600, 13 percent in 1600–1700, and 56 percent in 1700–1800 […] population growth was, at best, weakly associated with economic development […] [From] 1800–1900, France grew by 65 percent, from 29 million to 41 million. In the same period England and Wales grew from under 9 million to over 30 million, and Germany grew from about 25 million to 56 million.”

“Mortality, especially for infants, remained extremely high in eastern Europe. Blum and Troitskaja (1996) estimate that life expectancy at birth in the Moscow region at mid-century [~1850] was about twenty-four years, compared with life expectancies of around forty years in western Europe. Birth rates in eastern Europe were also much higher than in the west.”

“The population of Europe in 1815 was 223 million. By 1913, 40 million people had emigrated to the New World. […] By 1900, more than a million people a year were emigrating to the United States, the primary destination for most Europeans. […] More than half of some nationalities returned to Europe from the United States […] Internally there was substantial migration of population from country to city as incomes rose. From 1815 to 1913 the rural population [in Europe] grew from 197 to 319 million. But the urban population expanded from 26 million in 1815 to about 162 million in 1913 (Bairoch, 1997).” [26 million out of 223 million is roughly 10 percent of Europe’s population living in urban areas at that time; 10 percent is a very small number – it corresponds to the proportion of the English population living in towns around the year 1000 AD… (link).]

“This positive correlation of fertility and income [they talk a little about that stuff in the text but I won’t cover it here – see Bobbi Low’s coverage here if you’re interested, the Swedish pattern is also observed elsewhere] became negative in Europe in the period of the demographic transition after 1870, and there seems to be no association between income and fertility in high-income–low-fertility societies today. The numbers of children present in the households of married women aged 30–42 in both 1980 and 2000 were largely uncorrelated with income in Canada, Finland, Germany, Sweden, the United Kingdom, and the United States […] This suggests that the income–fertility relationship within societies changed dramatically over time.”

“Between 1665 and 1800 total revenue in England rose from 3.4 percent of GDP to at least 12.9 percent. In France, meanwhile, taxes slipped from 9.4 percent in the early eighteenth century to only 6.8 percent in 1788 […] In 1870 central government typically raised only between 20 and 40 percent of their revenue through taxes on wealth or income. The remainder came from customs and, especially after the liberalization of trade in the 1850s and 1860s, excise duties […] In most countries the tax burden was often no higher in 1870 than it had been a century earlier. Most central governments’ taxes still amounted to less than 10 percent of GDP.”

“by 1870 institutions were more different across Europe than they had been in 1700. Suffrage where it existed in 1700 was generally quite restricted. By 1870 there were democracies with universal male suffrage, while other polities had no representation whatsoever. In 1700 public finance was an arcane art and taxation an opaque process nearly everywhere. By 1870 the western half of Europe had adopted many modern principles of taxation, while in the east reforms were very slow.”