Europe in the International Economy 1500 - 1800
Interpretation of European Success
Europe in World Economy 2017

Big Questions
•Explanation for preeminence of Europe before 1800:
–probability of global dominance before 1500?
–
•Rise of the market economy: under which conditions could become capitalism dominant?
–Classical economists view – growth is natural and will occur whenever opportunity and security;
–(VS.)
–Freedom from aggression is necessary but not sufficient condition: enterprise is not to be taken
for granted;
–What was the role of violence (advantage in organization of military power; imperialism)?
–
–

Growth as a norm?
-Today: the growth is reflected as a norm;
-but, for millenniums the growth has been rather excess – stagnation was the reality.
•
-Colonialism is usually viewed as an external intervention:
-Did really interrupted spontaneous development?
•
-… was the economic development and growth outcome of specific self-reinforcing process which is a
unique European/Western feature?
•
-What role did the violent expansion played in development of European nation state (economic,
political, military elements)?







1000
1500
1820
1998
Western Europe
8,7
17,9
23,6
20,6
Western offshoots
0,7
0,5
1,9
25,1
Japan
2,7
3,1
3,0
7,7
Asia (excl. Japan)
67,6
62,1
56,2
29,5
Latin America
3,9
2,9
2,0
8,7
EE + USSR
4,6
5,9
8,8
5,3
Africa
11,8
7,4
4,5
3,1
•Share of World Product by Regions (%) (Maddison)




-The acceleration of population growth: (Maddison)
-Decline in mortality before 1820;
-Sharp decline in mortality and slower decline in fertility after 1820.
-
-Year 1000: average life expectation at the world level was 24 years;
-By 1820, increased to about 26 years (24-36 in North);
-since 1820 has risen to 78 years;
-
-In South were no improvements between 1000 and 1820;
-By 2000 it had grown dramatically to an average 64 years.
-
-There were major disasters (6th, 14th, 17th century).
-Until the 19th century population growth was repeatedly interrupted by crises:
-Hunger due to harvest failure -> waves of infectious disease and/or war -> … Black death 1348 –
consequences…
-Society operated near to subsistence levels.

•Level of Per Capita GDP 1000-2000 (1990 international USD)
1000
1500
1600
1700
1820
1998
North
405
704
805
907
1 130
2 1470
South
440
535
548
551
573
3 102
•GDP of Groups A and B (billion 1990 international USD)
1000
1500
1600
1700
1820
1998
North
14,1
53,2
76,1
100,0
198,0
17 998
South
102,7
194,0
252,9
271,8
496,5
15 727
•
•Great North-South Divergence

•
•Europe always thought of itself as different from the East;
•
•„Oriental despotism“: (Landes) (Ming China 1368-1644)
–Ruler as a god, different from his subjects, could do as he pleased with their lives;
–Marital aristocracy had monopoly of weapons (also Japan);
•this stifles enterprise and stuns development;
–Ordinary people:
•Exist to „enhance the pleasure of the rulers“;
•Their duty is to pay and obey whoever rule them (Balkh/Bactra);
–
•Economic development – Western invention (?);
–Aristocratic empires: did not think in term of gains in productivity –…pressed harder;
–
–Ancient Greece, Rome
•Fell into tyrannical autocracy – resembled the civilization to the east;
•Dissenters – republican ideal;
•Property rights had to be rediscovered (Germanic tribes);
•

•Christian church (Landes)
•Judaistic-christian tradition in European political consciousness:
•Reminding rulers that they held their wealth and power from God – on condition of good behavior;
•Earthly rulers were not free to do as they pleased – split between secular and religious.
–
•Also a custodian of knowledge:
•To free clerics from time-consuming earthly tasks – diffusion of power machinery + hiring of lay
brothers;
•Employment - attention to time and productivity;
•Monastic estates – remarkable assemblages of powered machinery (1150);
•
•Subordination of nature to man – departure from animistic beliefs;
•Sense of linear time – other societies‘ (hindu) time as cyclical (returning to earlier stages and
starting over again);
•

•Islam
–From Spain to the Indies (1000-1500);
–Science and technology surpassed those of Europe ;
–Later - denounced as heresy by religious authorities (Landes);
–European expansion – role of reconquista/crusade + „el Dorado“ /plunder + business/efficiency;
•
•China
–Wheelbarrow, compass, paper, printing, gunpowder, porcelain;
–Textile: anticipated Europe:  water-driven spinning – 12th;
–Iron manufacture used coal and coke, smelting iron –11th equal to Britain‘s 1600;
–Knowledge cumulative (?) – example of technological regression - coal/coke smelting , iron
industry …;
–Absence of a free market and institutionalized property rights (?):
•state interfering with private enterprise;
•Ming dynasty (1368-1644) state attempted to prohibit all trade overseas;
•
–Totalitarianism: (Landes, Ming)
•hold of the state over all activities of social life – no private initiative,
•state monopolies comprise the great consumption staples: salt, iron, tea, alcohol, foreign trade;
•monopoly of education, clothing regulations, housing regulations;
•atmosphere of routine, traditionalism and of immobility;
•
•

Dynasty
Era
Qin
221-206 BC
Han
206 BC – 220 AD
Wei
386–534
Sui
581–618
Tang
618–907
Song
960–1279
Yuan (Mongol)
1271–1368
Ming
1368–1644
Qing (Manchu)
1644–1911

•
•Europe
•Despotism mitigated by law, territorial partitions, division of power between center (crown) and
local authority;
•Fortune(?): fall of Rome and the weakness and division:
–Dream of unity persisted to the present, fragmentation generally seen as a great misfortune (EU?);
–Fragmentation strongest brake on oppression;
–Europe safe form single-stroke conquest;
•Mongols 13th;
•Turks – twice at the walls of Vienna (1529, 1683);
–
•Europeans reasonably secure were able to pursue their own advantage;
•
•Period of population increase and economic growth up to 1350;
–Black Death – 1/3 or more died – till 1500 period of rebuilding;
–Increase in wages, rationalization of agri (animal production) -> raw materials for industry,
higher demand;
–West – specialization, cities, nuclear family vs. East – political oppression, second serfdom;
(Findlay, O‘Rourke)
–
•
•

Specifically European phenomenon – semi autonomous city;
•Cities whenever sufficient surplus to sustain population of nonfood producers (rulers, soldiers,
craftsman);
•…nothing like the commune: governments of the merchants with exceptional civil power – Landes:
gateways to freedom;
•Migration to the cities improved also income of those left behind – linkages to serf emancipation;
Why did rulers grant rights:
•Trade, crafts, markets brought revenue and power (Tilly);
•Free farmers and townsmen (bourgeois) were natural enemies of the landed aristocracy and would
support the crown)
•Tax (on property, flows) vs. kind … (violence; credit - Tilly);

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•
•Medieval agricultural revolution innovation rather than invention:
•
–Wheeled plow with deep cutting iron share (Germanic tribes);
–Opened rich river valleys – turned land reclaimed form forest into fertile fields;
•Heavy clayey soil resisted the Roman wooden scratch plow;
–
–Animals to match – oxen, horses (land-rich, labor scarce economy);
–Intensive cultivations – shift form two-field to a three-field system of crop rotations (winter
grain, spring grain and fallow)
–Ability to support livestock –> supply of fertilizer -> ascending cycle;
–Windmill – key to successful pumping of fens and polders (made Holland);
•




•Commercialization of Agriculture
-
-Why did peasants in West begin to work for the market while rest of Europe no sooner than in
18th and 19th? (vs. DCs 20th, 21th)
-
-Decision market vs. subsistence: (Aldcroft)
–Small local market - sharply declining demand curve:
•Lower price can be compensated by specialization and productivity growth - after certain point
commercialization is a self-reinforcing process;
•Subsistence – no scale, no learning, no technological change;
–West: cities and employment outside agriculture - bigger markets and technological change (ToT in
favor of agriculture);
–
–Institutional structure of society… (Aldcroft)
•Less developed market have higher transaction costs (transport, tolls, middlemen, information) –
preference to subsistence or provision locally;
•Transition costs of transformation from autarky to commercial farming (switch back costly);
•New forms of dependence – middlemen (supply capital in return for buying crops in advance);
•