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Early modern Europe was an exceptionally violent place. The historian J. R. Hale once wrote that "[t]here was probably no single year... in which there was neither a war nor occurrences that looked and felt remarkably like it" (Hale 1985, p. 21). During the horrific century of 1550-1650, the Great Powers—England, France, Austria, Sweden, Brandenburg, Russia, and Spain—were at war more than three-quarters of the time. This paroxysm of brutality culminated in the Thirty Years' War (1618-48), in which as many as eight million people, the vast majority civilians, died of massacre, disease, and famine. Fields were burned, stores plundered, and towns erased from the map. No place was truly immune; even England may have been at war in over half of years between the Norman Conquest and the Congress of Vienna.

Yet Europe's internecine struggles ended not in anarchy and poverty, but in industrialization and empire. Western Europe, the site of so many sieges and sacks, was a rapidly-growing commercial hub increasingly capable of projecting power overseas. Historians, economists, and political scientists have long been transfixed by the obvious question: what relationship did Europe's brutal past have with its subsequent rise to 'greatness'?

Perhaps the most influential interpretation of European military history is the "military revolution" thesis, first promulgated by Michael Roberts in 1956. Roberts argued that the exigencies of the early modern warfare led Maurice of Nassau and Gustavus Adolphus of Sweden to adopt Roman linear formations of shot-armed infantry, supported by cavalry charges and light field artillery. These tactical innovations required better-trained and disciplined soldiers to execute the new maneuvers, leading to the general adoption of drill, uniforms, and large professional armies organized into small, standardized units commanded by capable officers. The increasing size of armies, in turn, drove the financial innovations that led to state formation in early modern Europe.

Roberts' essay inspired and anticipated much subsequent historical work on the relationship between European Great Power conflict and military innovation. The basic concept shows up in books by authors like Paul Kennedy, William McNeill, and Jared Diamond. But the ‘military revolution’ really came into its own in the writings of Geoffrey Parker, whose book The Military Revolution extends Roberts’ arguments into an explanation of European imperial success. The Roberts-Parker thesis merged with ‘bellicist’ theories of state formation to create a dominant paradigm in modern economic history. A characteristic example is Philip Hoffman's Why did Europe Conquer the World? (2016), which argues that learning-by-doing from constant military competition gave Europeans a comparative advantage in war-making that permitted imperial expansion during the early modern period.

Yet other historians, many adopting global and comparative perspectives, have made strong and compelling critiques of the 'military revolution' thesis. Tonio Andrade (2016), for example, suggests that East Asian nations maintained military parity with the West from 1550-1700. J. C. Sharman's recent Empires of the Weak, meanwhile, argues that the 'military revolution' tactics and technologies that characterized internal European conflicts were absent or unuseful abroad. He contends that such overseas imperial success as was achieved prior to the Industrial Revolution should be attributed to indigenous political conditions and private adventurers. Moreover, he takes issue with the learning and selection models of technical change embodied in the ‘bellicist’ research programme.

This is the first of what will become a series of posts evaluating the "military revolution" thesis advanced by Roberts and Parker. That thesis has two parts:

1. Interminable warfare led European polities to develop increasingly expensive technologies and tactics for conquering their neighbors. Larger, better-equipped armies forced states to build up their fiscal systems or risk subjugation by those who did. The result was the characteristic 'national state' of the late eighteenth century, which combined an intrusive tax bureaucracy with extensive sovereign borrowing.

2. The key technological, organizational, and tactical innovations of the classic 'military revolution' phase allowed Europeans to seize territory overseas, from Acapulco to Beijing.

Here, I focus on the domestic portion of the argument—evaluating whether military competition led to larger, better armies; bigger, bloodier wars; and stronger, more effective states. I'll argue that:

1. The ‘military revolution’ thesis gets many of details wrong; for example

   1. The vaunted innovations in infantry tactics emphasized by these were not limited to 1560-1660 and weren’t even as useful as argued.

   2. Artillery-infantry-cavalry combinations didn’t work as seamlessly and Roberts and Parker assumed—blowing holes in enemy lines with cannon and riding through with cavalry was as much a myth in 1614 as in 1914. .

   3. Fortresses could hinder as well as help state growth and centralization.

2. Some key aspects of the ‘military revolution’ are correct, especially that

   1. The 'artillery fortress' contributed to army size and state expansion, though less than Parker emphasized.

   2. Army sizes did expand as a result of interstate warfare in (but not exclusively in) the 'Roberts century' 1560-1660, and this growth was a primary impetus for the development of the fiscal state

      1. War wasn't the only cause of state growth, and in turn politically-motivated centralization and the rise of absolutism also enhanced military prowess.

3. The 'military revolution' is better understood as encompassing the centuries-long co-evolution of military technology/tactics and political organization that resulted (under the duress of military competition) in the eighteenth-century fiscal-military state (rather than any one sharp discontinuity).

First, I'll describe the historiography of the 'military revolution' thesis. Second, I'll examine the major lines of criticism mustered against it. Finally, I lay out a few scattered thoughts on what to make of the literature.1

The Case for a Military Revolution

Roberts's manifesto, entitled "The Military Revolution, 1560-1660" (1956), argued that the late Renaissance witnessed four changes to the so-called ‘Western way of war.’ On the one hand, these innovations were fundamentally solutions to the classic problem of infantry tactics: how to combine close engagement with missile fire. But the ‘military revolution’ was also a response to the recent technological revolution in firearms—or rather, to its deepest flaw: the early modern firearm seemed promising but still wasn't very effective.

In the late middle ages, Roberts, argues, large-scale infantry engagements were conducted by vast squares of pikemen (the Spanish tercios). Though small-caliber firearms appeared on European battlefields in the fourteenth century, they were so cumbersome (heavy, slow, unreliable) and expensive that they were little used until the last decades of the fifteenth. Gradually, and especially after the 1550s debut of the musket, fire infantry began to displace other foot soldiers. The pikemen remained; but while the pike square was proof against cavalry attack, it was vulnerable to long-range fire by artillery and handguns. The solution was to add gunners to pike regiments -- in proportions that increased until the gunners outnumbered the pikemen.

One problem remained: the low rate of fire (about one volley every two minutes) offered by practically all early modern handguns. Thus an infantry formation would only be able to fire once at an onrushing cavalry charge. The innovative Dutch commander Maurice of Nassau devised a solution. He restored the Roman practice of linear formations, drawing his men up in thinly-packed ranks (at most 10 men deep) of long lines. The first rank would fire, then retire to the rear to reload; then the second rank, now at the front, would unleash its volley and then perform the same maneuver. By rotating through lines, a Maurician army could theoretically sustain an almost continuous barrage.

Maurician tactics were demanding of the average soldier, now tasked both with performing coordinated actions with his comrades and standing firm in the face of enemy fire. The panacea was drill: practicing march and countermarch maneuvers. To facilitate this, Maurice divided his forces into smaller units and increased the ratio of officers to men. Companies of 250 with eleven officers were reduced to 120 men with twelve officers; regiments of 2,000 were replaced by battalions of 580. The diary of Anthonis Duyck, a member of the Dutch general staff, reveals a life spent constantly on exercises, supervising troops as they practiced forming and reforming ranks and marching in formation. These motions were codified by Maurice's cousin John in an illustrated manual that sketched out how to use key infantry weapons. In 1599, Maurice also received sufficient funds to equip the Dutch army with firearms of standardized size and caliber. Standardization of uniforms followed.

It was not the Counts of Nassau, however, but rather Gustavus Adolphus of Sweden, who translated the 'revolution in tactics' into battlefield success. Thanks to extensive drilling, he improved his forces' rate of fire until only six ranks were needed to maintain a continuous barrage. To the Maurician infantry he then appended two key innovations: a massive battery of field artillery and the cavalry charge. Where the Dutch had brought just four field guns to the battle of Turnhout (1597), Gustavus carried 80 (standardized on three calibers) into Germany in 1630. And where German horsemen had tended to skirmish with pistols and carbines from a distance, Gustavus had his Swedish cavalry charge enemy lines with swords drawn. The apotheosis of the new tactics came at the battle of Breitenfeld, outside Leipzig, in 1631, when an Imperial army under Count Tilly—drawn up in square formations—faced a Swedish force of similar size, but with a larger artillery train. After two hours of fighting, nearly half of the Imperial contingent had been killed, wounded, or captured, with much of the remainder succumbing over the following days.

The 'revolution in tactics' led to a 'revolution in strategy.' Better troops could follow more complex strategies involving multiple field armies and wouldn't run away during decisive battles. Gustavus Adolphus pioneered the concept during his German campaigns. But this necessitated much larger deployments of men to execute; thus the third pillar of the "military revolution" thesis was an acceleration in the growth of armies. The Dutch army more than doubled in size, growing from 25,000-33,000 men in 1600 to 70,000 in 1625. The Swedish army, meanwhile, exploded from 15,000 men in 1590 to a peak of 150,000 in 1639—equal in size to France's and nearly as big as Spain's.

But larger armies, whether mercenary or conscript, were expensive. Paying for expansion and professionalization placed enormous demands on the primitive financial systems of European states. Rulers met these challenges by extending executive authority and increasing tax burdens (as well as corvees), which in turn required the creation of a new bureaucracy of administrative officials. The men had to be recruited, equipped, paid, and fed. They needed barracks, clothes, and roads—outside Italy, there weren't enough roads capable of moving a large army, its supply train, and artillery. Thus, for Roberts, the modern centralized nation-state originated in international military competition—helping to set a paradigm for Charles Tilly, Michael Mann, and the rest of the 'bellicist' school of state formation scholars.

Roberts' thesis, which melded military with social/political history, was immediately popular among historians. George Clark, for example, borrows the 'military revolution' for his War and Society in the Seventeenth Century (1958). It wasn't until 1976 that Geoffrey Parker, in "The 'Military Revolution, 1560-1660'—A Myth?", offered a sustained critique. Parker did not reject the Roberts thesis; instead, he argued that the military revolution should be pushed back to 1530 and that it should include innovations in Italy and Spain. "Many of the developments described by Roberts," Parker wrote, "also characterized warfare in Renaissance Italy: professional standing armies, regularly mustered, organized into small units of standard size with uniform armament and sometimes uniform dress, quartered sometimes in specially constructed barracks" (Parker 1976, p. 38). The Habsburg Spanish armies, meanwhile, were not the dilapidated relics described by Parker, but rather early adopters of gun warfare, infantry organization, and administration (at least outside Spain). While increasing army sizes provided some of the impetus for state transformation, that trend had preceded the Maurician reforms and could thus not be attributed to them.

Parker's 'military revolution' was instead initiated by the emergence of the trace italienne fortress—a new design for city defense using thick (rather than high and vertical) walls, quadrilateral bastions, and large counter-batteries of cannon. Massive and massively expensive, the trace italienne was itself a response to developments in artillery during the fifteenth century, which rendered preceding fortifications obsolete and led vulnerable countries (Lombardy, the Low Countries, Hungary) to spend copious amounts on building new ones. States that could not afford the expense could be steamrollered by larger neighbors. Victorious polities, especially France, demolished as many interior fortresses as possible—partly as an economy measure, and partly as a centralizing measure to reduce the efficacy of future revolts.

The imperviousness of the 'miracle' works to artillery barrage and infantry assault handed the advantage in wars back to the defender. Campaigns were prolonged into chains of endless sieges, in which attackers required greater numbers of disciplined troops (to completely surround the walls and defend themselves against relieving armies) and defenders a panoply of guns. In 1639, half of the Spanish Army of Flanders and most of their Dutch opponent were sitting in garrisons. Battles became "irrelevant—and therefore unusual" as "[w]hoever controlled the towns controlled the countryside." None of the great victories of Gustavus Adolphus had proved decisive during the Thirty Years' War. Indeed, the sheer length of the Thirty Years' War was symptomatic of a shift in military strategy toward attrition, where supplies and morale gave out before the armies did.

Parker's paper created a paradigm in military history, linking military and social-economic factors in unprecedentedly convincing fashion. His arguments were famously influential for William McNeill, his editor at the Journal of Modern History, who incorporated military-revolution mechanisms throughout his survey The Pursuit of Power (1976). Nevertheless, the Parker paradigm, centered on the 1530-1700 revolution in fortress design, infantry organization, and state formation, was eventually challenged by military historians. Some pushed back on the details of Parker's claims; others presented entirely new paradigms.

In the following sections, I outline the major lines of attack against the ‘military revolution’ thesis.

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Fortresses

John A. Lynn (1991) concurred with Parker's assertion that army growth drove state formation, but disagreed that the development of the trace italienne induced army growth. Defensive works had four goals: to 1) stop infantry from storming the fort 2) absorb bombardment 3) protect defenders 4) shell attackers. The 'bastioned trace' was, Lynn writes, essential only to (1); the real innovations were artillery, thick walls, and the surrounding ditches. Similarly, it was not the size of the fortress but the range of cannon that force attackers to build lines of circum- and contravallation so far around the fortresses. When the allies besieged Lille in 1708, their forces were only slightly larger than those that had stormed it in 1667—before Vauban had fortified it. Indeed, he marshals data suggesting that the size of besieging armies remained stable, at 20,000-40,000, from the fifteenth to the early eighteenth century.

One might argue that better fortresses increased the length of sieges and thus consumed larger armies, but on average individual sieges did not appear to have lasted longer or caused more casualties over time. Nor did the French commit to multiple simultaneous sieges; with few exceptions, both they and their enemies rarely fought more than one siege at a time across multiple theaters and almost never in one. Instead, Lynn argues that French economic and demographic expansion made larger armies possible and that Louis XIV's aggressive diplomacy (which forced France to fight multiple coalitions) made them necessary. Undoubtedly both were important factors, but it’s unclear to me that either surged rapidly enough to account to the growth the French army. Further, Lynn neglects Parker’s point about the importance of garrisoning (rather than just besieging) the fortresses.

Thomas Arnold (1995), studying the Duchies of Mantua and Montferrat, agreed with Parker that the trace italienne was an especially powerful fortification, but suggested that A) small states could afford them and B) they thus proved a hindrance to expansionist and centralizing royal governments. The fortification drive ensured the success of the Dutch and Huguenot revolts and prolonged German fragmentation. Yet Arnold's critique seems to substantially miss the point—conflating the construction of territorial empires with the creation of effective states. Fortresses helped to preserve the landward flank of the Dutch Republic—Europe's most efficient early modern fiscal-military power, if not a French-style absolutism.

Tactics

The most damaging direct critique of the 'military revolution' school, in my view, is David Parrott's “Strategy and tactics in the Thirty Years War: the ‘military revolution’” (1985). Parrott pours continuous volleys of fire onto the Roberts-Parker synthesis, asserting that A) no one actually used the ‘new tactics’ and B) they weren't effective anyway. First, he dismisses Maurice's reduction in unit size (from 1,500 to squadrons of 550 men, discussed above). While Parrott concedes that firearms made the initial fall from 3,000 to 1,500 inevitable, this second shift, he argued, was essential neither to the training (by increasing the officer/man ratio) nor the flexible deployment of armies. Adding more officers just increased expense, when so much of the actual training was carried out by veterans.

Seventeenth-century battles did not vindicate Maurician tactics. According to Parrott, the small-unit Saxon army nearly lost the battle of Breitenfeld for Gustavus Adolphus. The similarly-ordered German Protestant states, organized so due to a lack of veterans, suffered reverse after reverse until the Swedes' arrival. And Gustavus himself eventually abandoned the squadron, collating 3-4 into brigades. While effective unit sizes did continue to fall, this development was not welcomed—due more to disease and desertion than to intent.

Moreover, 'conservative' units were not closely-packed mobs of pikemen. Instead, six rows of pikemen—spaced liberally to permit mobility—presented arms to the enemy with 10 more in reserve; gunners started off to the sides, raced out in front the pike squares to fire, and then retreated backward through or sideways around the pikemen as the enemy closed. Pike squares, in the rare cases when they were deployed, had their purpose as a stable defensive formation. Parker and Roberts' preference for Maurician tactics, Parrott says, was ultimately founded on contemporary propaganda, not facts.

Finally, Roberts had asserted the importance of the Swedish salvo—the simultaneous discharges of several rows of artillery—in 'blowing holes' in enemy lines. But Parrott asserts that this wouldn't have worked: blasting away at opposing infantry would just pile up bodies in front of one's own advance, and most gaps could be plugged by the application of reserves. The potentially revolutionary change would have been the creation of a mobile horse artillery; but while Gustavus had produced a light three-pounder cannon that could be moved by a single horse in theory, they weren't actually moved in practice.

Parrott's broader point is simply that tactical changes were irrelevant by comparison with A) the increasing potency of infantry on the defensive and B) the size and experience of an army. A massive force could overwhelm a well-placed defense, while a novitiate force employing Maurician tactics would still be broken by a veteran command.2 The way to win a battle was not by complex infantry maneuvers, but by combining an intense infantry assault on the center with flanking raids by cavalry that could end up in the enemy rear.

Strategy

Parrott (1985) also criticized Roberts' suggestion of a 'revolution in strategy.' During the Thirty Years' War, he contends,"[t]he overriding need to pay and supply armies inflated beyond the capacities of their states, reduced strategy to a crude concern with territorial occupation or its denial to the enemy. Inadequate administration, or the limited Contribution-potential of the main campaign theatres sharply constrained the commanders' freedom of action" (242). With primitive logistics and desertion rampant, wastage rates of 50-57% were common for European armies.3 Consequently, commanders had only two options: A) to occupy territories that promised plunder or B) to remain close to centers of supply. Both constrained strategic decision-making.

Campaigns became about seizing regions with supply-potential and were divorced from political imperatives. After his decisive victory at Breitenfeld, for example, Gustavus chose to move slowly through the Rhineland imposing Contribution-system payments on its rich principalities rather than trying to end the war. This was in spite of the tensions the move created with the French. The practice of fielding multiple simultaneous armies, meanwhile, was likely due more to the impossibility of supplying the whole force in a single staging area.

Parker dissented. For example, he notes that in the fall of 1552, there were at least three simultaneous theaters involving the French: 1) a 6000-man garrison besieged at Metz by Charles V 2) a French field army sitting in Champagne, threatening Flanders 3) another army in Italy, first defending of Parma and then suppressing revolts in Siena. Large garrisons also occupied Savoy and the Pyrenees. Charles V was similarly engaged. King Henri II had arranged for the German Protestants and the Turkish Sultan to launch simultaneous attacks on the Habsburgs, who had to deploy armies and garrisons in Germany, Lorraine, the Netherlands, Italy, Spain, and North Africa—148,000 men in all. "[N]o state had ever maintained armed forces in so many different theatres at the same time before" (345).

Chronology

Clifford Rogers (1995) accepts the importance of the 'fortification revolution' emphasized by Parker and the 'administrative revolution' advanced by Roberts. But Rogers argues that there were two revolutions preceding 1560 that were equally important in shaping the 'western way of war': the "infantry revolution" of the Hundred Years' War and the "artillery revolution" of the subsequent century.

The High Middle Ages were, quite literally, the age of knights on horseback; many major battles were decided by charges of heavy cavalry. The man-at-arms was almost invulnerable—encased in armor, physically puissant thanks to a superior diet, and able to A) choose his time and place for battle and B) escape reverses. He was also costly to outfit (40 times that of an exceedingly well-armed bowman) and consequently the populous, rich, and feudal land of France had the most and best.

The supremacy of the knight forced France's rivals—England, the Flemish, and the Swiss—to find a solution. The English developed the six-foot longbow, which was 25 percent more powerful than opposing models for a given draw strength, and combined train bands of yeomen archers with dismounted men-at-arms. Recruiting from the commoners (rather than just the aristocracy) significantly increased the cost-effectiveness of the fighting man and the size of armies. At Courtrai in 1302, the county of Flanders alone mustered an army greater than the French force of men-at-arms and won a decisive victory. With the disposable commoner doing more of the fighting, and with the importance of holding tight pike formations, the taking and ransoming of prisoners waned and battles became bloodier.

After the Infantry Revolution came the Artillery Revolution. Gunpowder artillery was initially small (but cheap), and in siegecraft was primarily used to shell the town (rather than penetrate the walls). Consequently, a fortress could last for over six months even against a force with dozens of guns (albeit at some cost). But innovations in artillery technology shifted the balance between attack and defense. First, barrel length was more than doubled, increasing the accuracy, muzzle velocity, and range of the shot. Second, the long guns began to be manufactured by fastening together iron staves with bands of white-hot iron (like the hoops of a barrel) while the addition of limestone made iron (and thus guns) cheaper. Stronger guns were compatible with engrained powder—which augmented the charge's explosive force—which replaced the traditional "sifted" version over 1400-30. Soon, the great powers were spending colossal amounts on artillery trains, which were proving adept at leveling medieval castles. Fortresses that had taken months to starve out now fell in weeks or even days. To this development Rogers attributes the formation of Spain and France—the former reducing Granada in 'only' ten years; the latter snapping up Aquitaine, Normandy, Burgundy, and Brittany.

Jeremy Black (1991) goes further, arguing that "the 'revolutionary' periods were c. 1470-c. 1530, c. 1660-c. 1720 and (primarily because of the levée on masse rather than tactics) 1792-1815. Roberts' emphasis on 1560-1660 is incorrect" Parker, Roberts, and Rogers had failed to recognize the consequences of innovations after 1660. On land, the 1660-1720 period saw the replacement of the pike by the socket bayonet (which allowed a gun to discharge with bayonet fixed) and the matchlock by the flintlock, as well as the introduction of the pre-packaged cartridge. The real increases in standing armies, meanwhile, occurred after the Roberts period.

Though Rogers and Black contest the chronology of the 'military revolution', neither really challenges the paradigm. Warfare and state-building interact in a positive feedback loop:

[C]entral governments of large states could afford artillery trains and large armies. The artillery trains counteracted centrifugal forces and enabled the central governments to increase their control over outlying areas of their realms, or to expand at the expense of their weaker neighbors. This increased their tax revenues, enabling them to support bigger artillery trains and armies, enabling them to increase their centralization of control and their tax revenues still further, and so on.

Whether technology and tactics evolve through punctuated equilibria or in centuries-long 'revolutions' (the difference is imprecise), the challenges of inter-state military competition remain pivotal for the expansion of tax-raising bureaucracies.

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Technology

Bert Hall and Kelly DeVries (1990), in a critical review of Parker's book, emphasize his careless descriptions of technological evolution. First, they dismiss his claim that Spanish muskets could penetrate plate armor at a range of 100 meters. Even in the 16th century, they argue, the armor and speed of cavalry allowed them to charge and scatter infantry while reloading; pikes were necessary to protect musketeers, and remained so until (as Black noted) the invention of the bayonet. Second, Hall and DeVries argue that Parker confused volley fire with the countermarch in order to inflate the importance of the Dutch reforms. More fundamentally, they accuse Parker of technological determinism—reviving a 'Whiggish' narrative in which gunpowder "blasts away" the feudal order.

In a 1998 paper, the authors contested the arguments of the expensive artillery train for state formation—that only central treasuries (rather than nobles) could afford cannon, and that only centralized monarchies could afford a significant number of them. France and Burgundy conformed to this pattern, monopolizing the use of gunpowder weapons and deploying them for the reduction of local power. The English Crown had a monopoly on gunpowder weapons, but refused to use it against domestic actors and eventually lost it during the Wars of the Roses. Hall and DeVries interpret these differences as demonstrating the predominance of political considerations over technologically-determined decision-making.

Other authors have criticized the models of technological diffusion implicit in the military revolution thesis. J. C. Sharman, for example, approvingly quotes Jeremy Black, Wayne Lee, and Jon Elster in disparaging the ‘learning’ framework employed in Hoffman’s Why Europe Conquered the World (2016). Black wrote that military historians of a Parkerian cast subscribe to “a somewhat crude belief that societies adapt in order to optimize their military capability and peformance” and a “some mechanistic, if not automatic, search for efficiency.” Lee likens this ‘rational choice’ reasoning to ‘challenge-and-response’ theories of technical change: “The implicit dynamic . . . is one of direct conscious response: historical actors determined the need for a new system or a new technology and therefore developed one.” Elster and Sharman rejoin that a Clauswitzian ‘fog of war’ prevents historical actors from identifying superior technologies or even the causes of victory with any degree of certainty.

Similarly, Sharman and Lee accuse ‘military revolution’ scholars of subscribing to an unreconstructed Darwinian-selection-based view of technical change. In essence, states are supposed either to adapt military innovations or face conquest by neighbors—in both ways driving out inefficient forms of military organization. They suggest that the ‘Darwinian’ requires three assumptions: “the ‘death rate’ amongst organizations has to be very high, the differences in effectiveness have to be large and consistent, and the environment has to stay fairly constant” (Sharman 2019, p. 22). None of the three, they claim, was true of early modern Europe. States were durable; battles were rarely decisive and were influenced by multiple factors; and some innovations weren’t universally useful across environments. This isn’t precisely a straw man, but it’s an accurate characterization of neither Parker nor Hoffman. The latter centers “glory,” not “extinction risk,” as the primary motivation for rulers to improve militarily; Parker, meanwhile, recognizes causes of warfare ranging from the religious to the political-dynastic. It is doubtful that either Parker or Hoffman would deny the importance of the ‘cultural’ factors—ranging from religion to political economy!—emphasized by Sharman. Indeed, one of Parker’s contributions was to devalue the decisive battle and center the contribution of finance and logistics to victory in attritional wars. Thus Sharman’s critique misses the mark here.4

Army Size and State Formation

The pressures of war-making obviously did not immediately crystallize in Weberian bureaucracies. Parrott and others point out that the classic 'military revolution' phase was the age of the military entrepreneur—the roving merchant of death who raised and hired out bands of mercenaries to fill out the ranks of absolutist powers. It was men like Wallenstein who raised forces on their personal capital and credit facilities, not the war departments of the absolutist states. The Thirty Years' War was fought by mercenary, not national, armies wielded by pre-tax fiscal states. These facts are taken to imply a weak correlation between army recruitment and state mobilization.

This argument misses the point. In the military revolution model, the fiscal pressures generated by the expansion of army sizes induces the creation of the bureaucratic tax state. Parrott's own case study, France, is instructive here. Colin Jones describes how the French army was initially recruited by decentralized and corrupt officials. Colonels were responsible for raising regiments through voluntary enlistment, selling captaincies to high bidders who then went around collecting men—some seigneurial lords rounding up their peasants, and other men raiding hospitals and prisons. These 'military contractors' were also charged with disbursing payments (which they reduced for their own profit), providing clothes and arms, and giving medical care to their troops. Faced with this perverse incentive, the commanders skimped on their responsibilities and flagrantly overcharged for what they did provide. Starvation and disease were rampant in the camps, from which desertion was equally common.

What held this motley crew together was not patriotism, but plunder—the opportunity to loot on campaign and thus replace what income the financially-inept French state would provide. Richelieu encouraged plunder as an incentive for better performance. Towns could be nailed again under the 'Contribution System', pioneered by Portuguese pirates in the Indian Ocean, which allowed towns to pay cash in exchange for exemption from plunder. Beyond open loot and heavy taxes, citizens—in lieu of centralized barracks—were also forced to billet soldiers in their homes and provide them with food and bedding.

The increasing costs of raising large armies without adequate logistical systems induced state formation. As armies grew, they required larger foraging areas—effectively an invitation for foraging parties to desert. Desertion prevented the training essential to the function of a modern combat infantry and thus had to be stopped. The only remedy was improving systems of centralized taxation and supply.5

Centralization remained imperfect and incomplete. Taxes were farmed out or collected by men who bought their offices, and thus Intendants had to be appointed to supervise revenue officials. They also aided in the recruitment of the regular army and militia and helped to reorganize France's parlous logistics. By creating non-venal posts in the high command, Richelieu and the heads of the War Department gradually subordinated the officer class and introduced promotion by merit. Weapons production was standardized and centralized in state arms factories; magazines were established to supply the troops on home soil; French officers took responsibility for raising foreign troops; and in 1763 recruitment was made a royal monopoly.

A similar process took place in England. Absent in the Hundred Years' War, the English army remained small until the Nine Years' War (1689-97), though key shifts in sixteenth-century fiscal policy—the 'Tudor Revolution in Government'—were in large part efforts to fund military spending. After 1585, foreign military expeditions increasingly required to Parliamentary taxation (Braddick 2000). But fiscal innovations began in earnest during the English Civil War, when Parliament created the excise administration—collecting taxes on the production of a wide range of goods—to fund a standing army which reached 70,000 men under the Commonwealth. The demands of the navy were similarly exigent; the fleet added 217 vessels from 1646 to 1659 and 25 battleships were started after the Restoration amid wars with the Dutch for commercial pre-eminence in the North Sea.

Retrenchment ensued during the Restoration, but the advent of the 'Second Hundred Years' War' after the Glorious Revolution forced the English to centralize and expand their tax bureaucracy. As John Brewer notes, average annual tax revenues were £3.64 million during the Nine Years' War, roughly double the state’s tax income before the Glorious Revolution. Forty years later, during the War of Austrian Succession, annual revenue exceeded £6.4 million, and £12.0 million by the American Revolution. By the late eighteenth century, the British were likely the most-taxed people in the world, in possession of a colossal public debt—but also an effective navy, a passable army, and an efficient fiscal apparatus.

While fortifications and armies were expensive, I would argue that a broader definition of the military revolution—embracing the influence of military competition on the quality and scale of European war machines—simply fits the evidence better.

The Fiscal-Military State

The rise of the 'fiscal-military state' in Europe—implying a symbiotic relationship between militarization and state formation—is one of the better-established points in early modern economic history. This literature is in part derivative of two pathbreaking works: John Brewer's The Sinews of Power (1988), which analyzed the rise of the fiscal state in Britain, and Charles Tilly's Coercion, Capital, and European States, 990–1992 (1992).6 Brewer's 'sinews' are state finances, and his work is a case study that lays out the origins of the British fiscal-military state along the lines described above—the extension and rationalization of the excise and customs administrations in response to the intense fiscal pressures of war with France.

It is to Tilly, meanwhile, that we owe the dictum: "war made the state, and the state made war."7 More specifically, he writes that "War and preparation for war involved rulers in extracting the means of war from others who held the essential resources - men, arms, supplies, or money to buy them... extraction and struggle over the means of war created the central organizational structures of states" (Tilly 1992, p. 15). Modes of state formation differed between 'capital-intensive' regions with plentiful cities and markets, and 'coercion-intensive' regions with large agrarian hinterlands and little commercial development. In the end, the exigencies of large-scale interstate conflict led to convergence on the 'national state,' combining sizable rural populations, capitalists, and market activity. This hybrid had the men to field a standing army and the funds to pay it. Competition produced bigger states and costlier wars, which in turn demanded ever-greater investments in long-term taxation and borrowing capacity.

Surveys and case-study evidence abound in the works of Bonney (1999), Glete (2002), and Storrs (2012). While national development paths varied, military pressure clearly produced incentives for improving systems of taxation and public finance. Storrs concludes that "all are agreed that the European way of war and the military establishments which the various states maintained were very different in 1700 from what they had been in 1500. Armies were much larger, more complex in composition and structure, and more permanent; they were also much more expensive, not least because they required a whole range of services - arms, provisions and other supplies" (3).

Dincecco (2012, 2015, 2016, 2018) has written extensively on the interaction between war and the rise of the fiscal state. He credits the fragmentation of Europe with 'externalizing' conflict and created 'multidirectional' threats, which in turn forced rulers to call Parliaments to negotiate with elites for revenue. Further, the threat of conflict drives urbanization through a 'safe harbor' effect; this leads in turn to the development of urban institutions, the protection of property rights, the accretion of human capital, and innovation.8

The workhorse model of European state capacity, Besley and Persson (2009), similarly centers warfare. Their argument, citing Tilly, posits that war-making is a public good and thus that increased demand for its provision leads to an increase in state capacity. Gennaioli and Voth (2015), in another heavily-cited paper, qualify the Besley-Persson perspective, suggesting that the development of fiscal capacity depends on whether success in conflict is contingent (or at least perceived as contingent) on the attainment of increased revenue.

None of this is to say that the 'fiscal-military state' model is unimpeachable or unchallenged. But the major lines of criticism—that states did more than just spend on war, and that non-Weberian forms of recruitment and revenue generation augmented bureaucracy—do not really undermine the fundamental point: that European states, whether via coercion or compromise, found the pressures of inter-state conflict the most compelling demand for increasing their tax-raising capacity.

Conclusion

It's important not to exaggerate the significance of early modern technological change. Just as economic growth rates prior to the Industrial Revolution were low compared to those of the last two centuries, so too the rate of innovation in military technology and organization of 1400-1750 paled before that of 1815-1989. Nevertheless, significant improvements (if they may be so termed) in the art of killing did take place. A modest force of French musketeers in 1750 would have wiped the floor with the flower of French knighthood from four centuries before; Wellington’s Coldstream Guards would have made short work of Elizabethan bowmen; and Nelson's Trafalgar-vintage squadron would have torn apart the combined might of the English and Spanish armadas of 1588.

This increase in firepower was not merely a technological phenomenon. Weapons improved, of course, but so did training, organization, supply, and infrastructure—altering the nature of warfare forever. The causes of this revolution in military capability9 were multifarious, ranging from geography to intellect not excepting plain luck. But it seems absurd to suggest that, in this pre-scientific age, the greatest force advancing the war-making ability of states was anything other than war itself. Whether inter-state conflict was a 'Darwinian struggle' (as critics like Sharman can seem to caricature the MR hypothesis) or a tournament of rulers (as Hoffman contends),10 the incentives to improve at fighting were powerful. Larger, better-financed states absorbed smaller, weaker ones; small states that did pursue successful strategies of finance and organization (e.g. the Dutch Republic) persisted and adapted. Surviving losers—and other interested parties—copied perceived winners.

I'm not arguing that ideology and politics were irrelevant. As multiplayer games of EU4 so aptly demonstrate, national motivations for conflict were bizarre, convoluted, and often irrational. Hoffman's model has rulers chiefly pursuing 'glory,' taking Louis XIV as an exemplar. The terms of 'survival' for the Habsburg or Bourbon dynasties might be defined differently for Tudor England and the Dutch Republic, let alone the minor Italian states. Religious, dynastic, and commercial disputes might be cast as life-or-death struggles by interested parties when the risk of state annihilation was low. But whether European states wanted or needed to fight, they had to prepare for it all the same—the more men and money thrown at the problem the better.

Nevertheless, it's not clear that we can pick out any century as one of exceptionally rapid change in technology, tactics, and organization. Roberts was incorrect in giving priority to the performances of the Swedish army in the Thirty Years' War, but Black was equally errant in dismissing Roberts' century and asserting the importance of the two bracketing it. I find Rogers's formulation, in which technology evolves slowly through 'punctuated equilibria' over several centuries, to be a bit more compelling. I might go further: to eschew any particular model beyond the state-system's competition mechanism.

Of course, there’s a great deal of ambiguity in that framework. Is there an optimal number and size of competing states for promoting military innovation? A panoply of tiny states might be highly competitive; on the other hand, micro-states might lack the capital to invest in new technologies and sufficient manpower to execute mass warfare. Larger proto-national states were abundantly supplied with (at least the potential to amass) both, but a few major players in the state system fundamentally changes competition dynamics: spheres of interest, tacit limits on conflict severity, and dynastic unions can all diminish the ‘necessity’ of innovation.11 Some states might just be too large to swallow, whether because of the logistical challenges of the initial conquest or the impossibility of long-term military occupation and territorial absorption. The competition model is also conditional on a range of underlying economic, cultural, and political factors: the existing productive/population bases of participants, religious dispositions to conquest and conversion, and the ability to forge alliances. For the Dutch Republic and Britain, the creation of an efficient fiscal-military state was never going to end in the re-establishment of Burgundy or the Angevin Empire—in one sense, survival and independence from French geopolitical. influence were victories in themselves. Those outcomes were also to some extent dependent on geographical impediments on invasion routes. The contest between population and technology/efficiency and the mediation of geography will be central to succeeding posts on the global effects of the military revolution.

There are three ultimate factors behind the emotional reaction to Diamond’s work. First, academic cancel culture frowns on attempts to attribute cross-country economic outcomes to intrinsic factors—anything that might make rich Europeans appear superior to the rest. But Guns, Germs, and Steel—which is explicitly anti-racist—does the opposite. It tries to explain "why history unfold[ed] differently on different continents" with answers that don't "involve human racial differences" (9). Geography is just dumb luck.1 Diamond doesn’t believe in any innate European ‘superiority’: the opening passages of the book actually suggest that New Guineans might be smarter than Western readers! Second, academics—myself included—tend to vilify “outsiders” who cross disciplinary boundaries without understanding our local scholarship norms. Finally, there’s just some plain envy. Diamond has written an ambitious and popular book, something that many fields don’t manage in decades.

But emotion, while understandable, doesn’t lead to good scholarship. And while Guns, Germs, and Steel (henceforth GGS) isn’t perfect—there are perfectly reasonable issues one can take with every chapter—it’s not wrong in some of the ways that its legions of critics seem to think. I am not making a full-throated defense of the book’s factual accuracy, and indeed, as a 26-year-old work of popular science, I’d be shocked if specialists hadn’t revealed inaccuracies in the intervening years. But GGS’s detractors are often mistaken about why the book is flawed. In this essay, I will deal with four kinds of common but errant critiques:

1. Diamond is a geographical determinist: that is, he writes a monocausal history of the world in which A) the environment is the only factor and B) human beings have no agency.

2. Diamond absolves Europeans of blame for the crimes of imperialism through his geographical determinism, since the conquerors couldn’t help but seize the helpless Americas.

3. Diamond excuses Europeans for the destruction of New World populations by overemphasizing disease (rather than colonialism) as the chief killing agent.

4. Diamond is a Eurocentrist, vaunting the West above the backward Rest and suggesting that the Great Divergence was inevitable. Europe’s technological advantages were limited.

   1. Europe’s geography did not make fragmentation into a competitive state system more likely.

Given the bad press that Diamond’s received over the years, you might be surprised to learn that each line of criticism is (almost embarrassingly) wrong. Here’s why.

1. Diamond is no more a geographical determinist than the “approved” authors on the Great Divergence and the Columbian Exchange, from Alfred Crosby to Ken Pomeranz. Furthermore, his thesis is neither monocausal nor deterministic. His other works clearly emphasize the role of human agency in history.

2. Diamond isn’t a geographical determinist in the first place (see above) and suggests that cultural factors stoked Europeans’ crusading zeal. Either way, positing an explanation for why Europeans were able to conquer the Americas does not excuse them for doing so, and with such brutality.

3. Diamond’s critics conflate the role of virgin-soil epidemics in the conquest with their role in the decline of Indigenous populations. Diamond is mostly interested in the former, so the fact that VSEs may not completely explain the New World demographic catastrophe does not invalidate his argument concerning disease’s centrality to Iberian imperial success.

4. Diamond self-evidently is not a Eurocentrist—GGS focuses on the rise of Eurasia—and is skeptical about the merits of Western civilization. But military histories of the conquest support the assertion that the small parties of Spanish soldiers were able to defeat much larger Native armies thanks primarily to their superior steel weapons and organizational capacity, in line with Diamond’s argument.

   1. Recent economic history research suggests that Europe’s geography (mountains, lakes, bays, and discrete agricultural cores) made fragmentation likely, if not inevitable.

I’ll briefly summarize the book (GGS) and then dismantle each of the above four-and-a-half arguments in detail.

Guns, Germs, and Steel: An Executive Summary

I want to pause and outline Diamond's thesis, because I’m convinced that simply understanding the argument should dispel all of the above claims. Diamond attempts to answer "Yali's question", the crown jewel of the social sciences: what explains the enormous international inequalities in technology, wealth, and power that persist in today's world? In 2020, to illustrate, GDP per capita was $59,920 in the US, $14,064 in Brazil, and just $936 in the Central African Republic. The official languages of these countries are English, Portuguese, and French—the languages of their colonial conquerors. The official currency of the CAR is the CFA franc, imposed on French colonies in 1945, pegged to the euro, and still said to impede economic development.

Diamond's explanation is deceptively simple, and it's probably this that got him into trouble in the first place.2 Out of the sites in which agriculture was independently invented—New Guinea, China, the Middle East, North America, Mesoamerica, and the Andes (and more recently, appending North/East Africa and India to the list)—Mesopotamia had the easiest to tame, fastest-growing, and largest-seeded plants. Eurasia in general also had a bunch of large animals, like horses, donkeys, aurochs, sheep, and goats, that could be domesticated for productivity increases. Diamond counted 13 species of domesticable animals over 100 pounds in Eurasia, one in South America, and none whatsoever in the rest of the world. Human hunters killed off the potential candidates in North America and Australasia during the Pleistocene, and the remaining African species, like zebras, onagers, and the African elephant, either proved untameable or difficult to breed in captivity.

Eurasia's east-west supercontinental orientation facilitated the relatively rapid diffusion of "technologies" to its poles, whereas traversing vertically-oriented3 continents like Africa and the Americas required innovations to pass through new ecological zones at different latitudes (rainforests, deserts, pampas, etc.). Further, these continents contained chokepoints (i.e. the isthmus of Panama) and outright "ecological barriers" in which agriculture was unsuitable. "As a result," writes Diamond, "there was no diffusion of domestic animals, writing, or political entities, and limited or slow diffusion of crops and technology, between the New World centers of Mesoamerica, the eastern United States, and the Andes and Amazonia" (366). Similar story in Africa. But in Eurasia, Mesopotamian plants, animals, and agricultural techniques reached the Mediterranean by the first millennium BC and Europe by the first millennium AD.

Concentrations of domesticable plants and animals permitted the accumulation of food surpluses, which in turn allowed societies to support members working outside agriculture. This meant craftsmen and scribes, whose labors accelerated technological progress, as well as priests, kings, and bureaucrats, who created hierarchies and states. Food surpluses also permitted more dense settlements, with the result that Eurasia received the bulk of the world's population and the majority of the inventions. Combine high population density, proximity to animals, and long-range trade networks, and one also gets the devastatingly toxic Eurasian disease pool—smallpox, influenza, measles, etc. Eurasians developed immunity to many pathogens, but the Americas, excluded from the periodically devastating plagues, did not. Thus guns, germs, (writing,) (states,) and steel.

Thus Diamond argues that the early European colonists of the Americas hit unprepared native societies like a whirlwind. Deadly plagues ripped ahead of the conquistadors, who then toppled the already-weakened American polities via brutal conquest and massacre, aided by local allies. Africa was harder to seize, in part thanks to its links with the Eurasian disease pool via southern Asia. But the "technological and political differences of A.D. 1500 were the immediate cause of the modern world's inequalities. Empires with steel weapons were able to conquer or exterminate tribes with weapons of stone and wood."

Diamond also attempts to explain why European, rather than Chinese, conquerors were the ones who did all the colonizing. This is a simple balkanization theory—Europe divided into many areas conducive to states, China formed a great homogenous core—that does not need lengthy restatement. Europe has a highly indented coastline with multiple large peninsulas, all of which developed independent languages, ethnic groups, and governments, plus two large islands. The Chinese heartland, meanwhile, is connected by two large river valleys—the Yangtze and Yellow Rivers—from east to west, and bound from north to south by relatively easy transit between those two tributaries. Europe, consequently, boasts many independent core regions that have been impossible to unify, even under the Romans; China has only been politically fragmented for (relatively) brief spells since 221 B.C. Consequently, Europe received the benefits of interstate competition for power (rise of the fiscal-military state), entrepreneurs, and inventors; China's rule by single autocrats left it vulnerable to lock-in on bad decision paths.

If you're wondering what infuriates Diamond's critics, you're not alone. Not only are some of his ideas standard fare in the social sciences, as well as familiar tropes in popular culture, but many of them also aren't originally his. Indeed, we'll see that Diamond's thesis draws heavily upon—and is no more execrable than—the writings of the historian Alfred Crosby, whose name has escaped similar disrepute.

Geographical Determinism

What is a geographical determinist? It's one of the criticisms most often leveled at Diamond, so we should know what the term means. On the one hand, you might say that it's the belief that "all of the important differences between human societies, all of the differences that led some societies to prosper and progress and others to fail, are due to the nature of each society's local environment and to its geographical location"—the view James Blaut ascribes to Diamond. Man is helpless in the face of the world's physical and ecological features, the true blind watchmakers that set history running. On the other hand, though, you could be deemed a geographical determinist because you think that environmental factors are the uncaused variables in your model of historical change—that is, that they are exogenous. In this sense, most economic historians are geographical determinists. There's very little a person or a country can do about the size of their continent. But they can adapt in the face of their constraints. Exogenous causes can have small effects.

Diamond would absolutely repudiate the first, stronger position:

But mention of these environmental differences invites among historians the label 'geographic determinism,' which raises hackles. The label seems to have unpleasant connotations, such as that human creativity counts for nothing, or that we humans are passive robots helplessly programmed by climate, fauna, and flora. Of course these fears are misplaced. Without human inventiveness, all of us today would still be cutting our meat with stone tools and eating it raw, like our ancestors of a million years ago. (408).

As he writes in the Introduction, "geography obviously has some effect on history; the open question concerns how much effect, and whether geography can account for history's broad pattern" (26). On the spectrum between "geography has no effect" and "geography has a big effect," Diamond's obviously closer to the latter—that's the whole point of the book. But he explicitly leaves open channels for other factors, from culture and institutions to contingency and plain luck. Diamond himself writes that "[o]ther factors relevant to answering Yali's question, cultural factors and influences of individual people loom large" (417). Consider the end of the great Chinese treasure voyages of 1405-33. It was not geography that stopped them from happening, but rather the outcome of a political struggle that became path-dependent because of China's unification. A different choice might have locked in another outcome. Indeed, geography in this case accentuated the salience of individual choice and political conflict.

As regards culture, Diamond suggests that environmental factors may have played a minor role in the manifestation of the Indian caste system, Confucian philosophy and cultural conservatism in China, and the distinctive colonizing tendencies of Christianity and Islam. Together, these forces—at least in the accounts of many traditional comparative historians—shaped much of early modern history. That's some concession, barely watered down by Diamond's insistence that geographical factors be taken into account first.

The actions of individual people matter, too. Had the Stauffenberg plot succeeded, for example, the Cold War (per Diamond) might have played out differently, resulting in an alternative postwar map of Eastern Europe. In explaining history's broadest long-term patterns, however, individuals have little influence—"[p]erhaps Alexander the Great did nudge the course of western Eurasia's already literate, food-producing, iron-equipped states, but he had nothing to do with the fact that western Eurasia already supported literate, food-producing, iron-equipped states at a time when Australia still supported only non-literate hunter-gatherer tribes lacking metal tools” (42).

Moreover, Diamond explicitly eschews a deterministic, physics-envying approach to a "science of history." Scientia, he reminds us, means knowledge, and each discipline has its own special means of attaining it. However, his description of the means available to historians probably helps to get him into trouble. History, he claims, has four dissimilarities to the hard sciences: methodology, causation, prediction, and complexity. That doesn’t mean that historians are forbidden from producing systematic knowledge about the past. Scientists can do experiments, while historians can't—but they can exploit ‘natural experiments’, leveraging variation in a treatment between cases to assess its effects. Second, historians (per Diamond) can and should aspire to uncover the ultimate causes underlying why events obtain.

As a non-historian, however, Diamond was probably less conscious of the trend in the discipline away from the kind of research that he advocates. While economic historians have adopted natural experiments and the estimation of causal effects as a paradigm, many standard historians have become wary of even loosely asserting causation (though they no doubt do so implicitly). Indeed, some believe that the implication that X causes Y asserts a deterministic relationship between the two variables—that if X is some geographical or environmental factor in a country, then outcome Y will always obtain, regardless of human agency. Of course, this isn't true. The social scientific definition of a causal effect is basically the counterfactual change in the strength of the effect if the cause were to be removed. When Diamond talks about geographical causes, he means geographical influences on populations over time, shaping human incentives. Causation isn't determinism.

Diamond rightly complains about this in an essay (published on his website) entitled "Geographic Determinism":

Today, no scholar would be silly enough to deny that culture, history, and individual choices play a big role in many human phenomena.  Scholars don’t react to cultural, historical, and individual-agent explanations by denouncing 'cultural determinism,' 'historical determinism,' or 'individual determinism,' and then thinking no further.  But many scholars do react to any explanation invoking some geographic role, by denouncing 'geographic determinism' and then thinking no further, on the assumption that all their listeners and readers agree that geographic explanations play no role and should be dismissed.

His assertion that geography is one of the many factors influencing historical processes, and that in some cases it has overwhelming and in others minimal causal effect, is perfectly anodyne. In fact, it's often the critics who adopt monocausal explanations; for example, James Blaut defines "environmentalism" as the "practice of falsely claiming that the natural experiment explains some fact of human life when the real causes, the important causes, are cultural" (Blaut 2000, p. 149). If only he could see the irony.

If you still believe that Diamond is a “geographical determinist”, it may be helpful to meet a real one. Take the Stanford archaeologist Ian Morris, for example, whose most recent book is literally entitled Geography is Destiny. Morris endeavors to show how Britain's island status interacted with the state of technology to determine its role in the world—rising from backwater in antiquity to commercial powerhouse in the age of mercantilism. His magnum opus, Why the West Rules—For Now, is predicated on the principle since that human biology and sociology are basically the same across world regions, the main differences between societies result from geographical factors. People respond just about uniformly to their material—geographical, economic, and technological—constraints. The rise of Europe is attributed to its isolation at the frigid tip of Eurasia, which encouraged the proliferation of maritime technologies and a mechanistic worldview, both crucial to turning English coalfields into industrial dynamism. Geography promoted institutions—banks, limited government, representation—suitable for growth and boosted the returns through access to foreign trade and colonies. Culture, meanwhile, is discounted entirely:

Culture is less a voice in our heads telling us what to do than a town hall where we argue about our options. Each age gets the thought it needs, dictated by the kind of problems that geography and social development force on it… This would explain why the histories of Eastern and Western thought have been broadly similar across the last five thousand years… because there was only one path by which social development could keep rising.

Diamond, as we've seen, argued that culture is an important aspect underlying economic development—and even that culture, in the form of Christian imperialism, propelled Europe to conquer the Americas.4 Morris, meanwhile, even adds that China's lack of coal reserves doomed it to agrarian stasis in the absence of Western development and 'computes' a half-baked index of civilizational development—something Diamond was much too circumspect to do.

In any event, GGS is no more deterministic than the works of Alfred Crosby, the still-venerated (if now obscure) historian whose research clearly informed Diamond’s own. Across two famous texts, The Columbian Exchange (1972) and Ecological Imperialism (1986), Crosby tried to convince environmental historians to view nature as an agent and cause of historical change, not just a passive recipient of human action. Crosby wanted to understand the rise of neo-Europes in the world's temperate zones, colonized both by white European settlers and by European flora and fauna. Moreover, the neo-Europes—places like America, Argentina, Uruguay, and New Zealand—exported vast quantities of foodstuffs, including $13 billion of the world's $18 billion in wheat. European settlement was driven by land shortage, nation-state rivalry, and religious persecution, and enabled by improvements in transportation technology. But why were certain regions so amenable to European settlement, despite military efforts by the colonized to resist it?

His explanations for Europe's imperial triumphs are, of course, ecological—and unsurprisingly reminiscent of Diamond's. Millions of years ago, the "seams of Pangaea" opened, splitting the great supercontinent into the blocks that eventually became Eurasia, Africa, Oceania, and the Americas. Now and then, land bridges connected the continents, but for the most part, each played host to independent biological development. The biotas of the neo-Europes, however, were "simpler" (having fewer species) than those of Europe, which was linked to the vast geographical complex of Asia (many of the original inhabitants being drowned, as Diamond would later suggest, by the tide of early indigenous settlement). Since humans were alien to the Americas and Australasia at the time of their arrival, there were few parasites in existence that had adapted to prey upon them. Consequently, no major human diseases (to Crosby's knowledge) had originated in Australasia and few in North America, besides the uncertain case of syphilis. Their populations—like any invasive species—grew rapidly, and they were able to quickly adapt their hunting techniques to wipe out unprepared native megafauna, from the mammoth to the moa.

The destruction of native biodiversity in the later-settled regions meant that they were more susceptible to the introduction of new species when the first European settlers arrived. On the South African veldt, where many large species of browsers and carnivores survived, the early Dutch migrants struggled to increase their livestock; on the Argentine pampas, where indigenous megafauna had been exterminated, Spanish horses bred like rabbits. So the success of Europe's biological invasion, to Crosby, comes down in large part to Paul S. Martin's venerable "overkill hypothesis"—as deterministic an ecological explanation as anything in Diamond. The original settlers of the Americas were fated to slaughter native animal life, which could not adapt in time to fend off this new predator. This laid the ground for rapid reproduction of European species. Does the above narrative leave more room for agency and choice in native behavior? Crosby certainly does not indict the soon-to-be indigenes for overhunting the mammoth and the saber-toothed cat, nor should he have. Diamond follows this account, but emphasizes instead the destruction of potentially domesticable species, in line with his own mechanisms.

Europe, thanks to its geography, had a surfeit of domesticable animals and diseases, not to mention iron and steel weapons, while the Amerindians were still developing metallurgy. "Why," asks Crosby, "was the New World so tardily civilized?" (51). The answers to the question are deeply reminiscent of Diamond's. It's because the long axis of the Americas runs north-south, meaning that American food crops had to cross multiple biomes to diffuse across the continent, whereas Eurasian crops could travel laterally across similarly temperate terrain! And because American corn was far less domesticable than wheat, which yielded high returns immediately! "The first maize could not support large urban populations; the first wheat could, and so Old World civilization bounded a thousand years ahead of that in the New World" (49). Indeed, it seems possible that Diamond lifted all of this, with some tweaking, from Crosby. The two do differ slightly on the domestication of wild animals; Diamond cites the greater number of candidates in Eurasia, while Crosby suggests that differences in population pressure between the two continents may offer the real explanation—Eurasia had run out of room for continued extensive growth.

Either way, for Crosby the initial ecological conditions in Eurasia led to the early adoption of agriculture and the domestication of large animals like cows, sheep, and goats for meat and for traction power. Living in close proximity to livestock imposed a heavy disease burden on Eurasian farmers, but those who developed biological resistances and survived "prospered and multiplied," building cities, states, and empires. These societies could build ocean-going ships, and Iberian sailors, poised on the outmost tip of Europe, were best placed to master the wind patterns of the Atlantic. China's adverse regime changes snuffed out its dreams of empire, even though it too had the maritime technology—a concession to politics and human agency, true, but one that Diamond also makes.

For Crosby, as with Diamond, geography explains where Europeans conquered. Asian and Middle Eastern civilizations had equally benefited from the Old World Neolithic Revolution, and raised great fortresses, cannons, and janissaries against European advances. In the "torrid zones" of West Africa and Southeast Asia, Europeans found the climate unsuitable either for habitation—thanks to preference and disease—or for their crops and grazers, who met with competition from abundant wildlife. But in the temperate parts of the Americas and Australasia, the conquerors inadvertently found the conditions ripe for invasion—salutary climates with few diseases, soils suitable for the cultivation of wheat and barley, natives without the weaponry to effectively resist assault, and plains open for the herding of cattle. In these regions, European people, animals, and crops wiped out their counterparts and established Neo-Europes with "portmanteau biota" half-resembling the Old World.

Diamond's question is slightly different, so his answers and emphases are as well. But given the enormous structural similarities between the two works and the fact that Crosby explicitly seeks to downplay human agency in favor of natural causes, I fail to see how GGS can be regarded as more deterministic. And yet, despite the immense popularity of Ecological Imperialism, the popular outcry against geographical determinism has been levied against Diamond and not Crosby. Indeed, Crosby sometimes gets offered up as an alternative to Diamond that's more politically palatable. Perhaps Crosby, whose staunch anti-colonialism comes through loud and clear, speaks in a language that resonates more with Diamond's critics, who often share Crosby's political proclivities. But one cannot simultaneously argue that Diamond borrowed large parts of Crosby's argument and that the former is somehow more deterministic.

One work that has been suggested as an anti-Diamond "big history" combining a materialist analysis with "contingency and agency" is Kenneth Pomeranz's famous The Great Divergence (2000). Written three years after GGS, the book tries to explain economic inequalities within Eurasia—why Europe, and specifically Britain, was the heartland of industrialization rather than India or China (specifically the Yangtze Delta). To the naive reader, Diamond and Pomeranz couldn't be more different; the former is the paragon of the "long-term lock-in" school, while the latter is the modern champion of "short-term accident" theories of Western development, positing that the leading edge of Europe (Britain) was no more advanced than Asia's (the Yangtze Delta) as late as 1800.5

But such a shallow interpretation would be deeply misleading. Pomeranz emphasizes accidents, true—but geographical accidents. Like Diamond, Pomeranz wants to flatten differences between the West and the Rest—in institutions, science and technology, and internal ecology—to isolate a couple of key dissimilarities. Europe and China are shown to have similar institutions, and Pomeranz repeatedly pushes his thesis that Chinese markets more closely approached the Smithian ideal of perfect competition. Europe may have had an edge in capital accumulation, but ultimately it could only substitute for and increase the stock of land to a limited extent. You can have all the inclusive institutions, joint-stock companies, and mercantilism that you want, but if you can't find fuel and industrial raw materials, you can't have economic development. Ecological bottlenecks are poverty traps: when piece rates fall in proto-industrial sectors, workers increase output to maintain their consumption of food, glutting the market with cloth (say) and reducing prices even further. Coupled with rising populations, the land must be worked more intensively, "which with the technologies then available meant higher farm-product prices, lower per capita productivity, and a drag on industrial growth" (59).

So the eastern and western poles of Eurasia faced similar ecological constraints in terms of land and energy availability, in the face of which both would have been consigned to Asian-style labor-intensive production without some form of "external" relief. Though Pomeranz will admit some institutional and technological advantages on the European side, they were all but irrelevant in the face of the resource problem:

[W]hatever advantages Europe had—whether from a more developed “capitalism” and “consumerism,” the slack left by institutional barriers to more intensive land use, or even technological innovations—were nowhere near to pointing a way out of a fundamental set of ecological constraints shared by various “core” areas of the Old World. Moreover, purely consensual trade with less densely populated parts of the Old World—a strategy being pursued by all the core areas of Eurasia, often on a far larger scale than pre-1800 western Europe could manage—had limited potential for relieving these resource bottlenecks.

But Europe got that ecological relief—horizontally in the form of the New World's land endowment, and vertically, via England's easily-accessible coal reserves. American "ghost acreages" were secured by exactly the same mechanism as Diamond suggests: "epidemics seriously weakened resistance to European appropriation of these lands," followed by a wave of violent conquest by societies with military advantages. In Southeast Asia, already exposed to the Eurasia disease pool, "virgin soil epidemics" of the kind that Crosby and Diamond both emphasized did not sufficiently attenuate local political-military capacity to permit China to remake the region as a colonial dependency. Yes, Pomeranz does discuss institutional differences between the European and Chinese periphery—Europe used slavery and could thus choose the crop mix; China's peripheries were free and internal, replicating "core" production and blocking specialization—but the colonizers would never have been able to deploy slavery without the prior conquest of the Americas. Indeed, slavery is necessitated by the collapse of native populations; following Barbara Solow, Pomeranz argues that free labor was too expensive and Europeans were too poor to pay their own way, so Africans had to be coerced to take their place. The exploitation of British coal, meanwhile, was of course (for Pomeranz, at least) a stroke of good geographical fortune rather than a fruit of British ingenuity. That is, fuel reserves determined industrial success irrespective of human agency.

Coal and colonies, ecology and geography. If Pomeranz will not argue that India and China somehow failed to overcome their ecological constraints by making avoidable mistakes, then by the standards applied to GGS, his narrative does have its own elements of geographical determinism. Indeed, the shorter span over which his explanation operates actually makes it more binding than Diamond's framework, which permits fluctuations in the relative technological position of Europe and China as a result of contingent political factors, and operates chiefly on the broader divergences between Eurasia, Africa, and the Americas in the extremely long run up to 1500. Indeed, geography, which is static, can be more plausibly seen to "determine" events across extremely wide time horizons than upon sharp and shorter-run outcomes.

Of course, I am not asserting that Pomeranz is a geographical determinist per se. I don’t really think that he is. But he does make several claims which, by the standards applied to Diamond, would certainly make him one. Indeed, the condemnation of Diamond's determinism is even more laughable if you've read any of his other works. Collapse, for example, is literally subtitled "How Societies Choose [emphasis mine] To Fail and Succeed." Diamond urges his readers to take action to build a more sustainable future in the face of our present climatological disaster, which is of course avoidable. Entire sections are devoted to what people can do as individuals and what policies countries can implement to stave off deforestation, pollution, and global warming. He gives examples—some of which, admittedly, are wrong, which makes it even funnier—of human communities facing up to ecological challenges and creating prosperity nonetheless. How have those societies chosen to succeed? By making "bold, courageous, anticipatory decisions at a time when problems have become perceptible but before they have reached crisis proportions." If that's not a dramatic assertion of human agency, then I haven't a clue what is.

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Excuses and Epidemics

Accusations of geographical determinism, however, would fall flat on the reading public if they didn't contain a more inflammatory insinuation. Armchair critics of Marx, for example, rarely expostulate (solely) about his deterministic framework; the same could be said of the foes of neoclassical economics. Even Milton Friedman, incidentally, would struggle to match the legions of anonymous Redditors dedicated to denouncing GGS every time it is mentioned. And even Friedman has his legions of diehard fans.6 Their rambling critiques drip with scorn and fury. r/AskHistorians has an entire section of its FAQ dedicated to them. A recent query about historians' views on the book got the following reply: "Take it back to the bookshop and ask for your money back. Then chat up Kronos and see if you can get back the time you spent reading." Yikes! Why, then, do academics (and adjacent) just despise Jared Diamond?

One historian, to popular Twitter acclaim, suggested that the main problem with Diamond is that "[h]e uses geography to explain horrible things done by colonialism, which makes this stuff natural and not anyone's fault." This is a catastrophic error, reflecting a basic, likely wilful misreading of Diamond's work. As I have noted before, his explicit aim is to explain the rise of Eurasia, and specifically Europe, without reference to inherent European biological and cultural advantages. He explicitly condemns popular histories that emphasize biological and cultural superiority as racist. Guns, germs, seeds, or steel did not make it inevitable that Europeans would invade the Americas and annihilate native populations. I mean, why would Diamond even want to argue this? But it reflects a strain of GGS ripostes that have seized the academic imagination since the book's publication.

Anthropologists appear to be the most infuriated by Diamond's publishing success. Indeed, a 2006 meeting of the American Anthropological Association was convened to debunk Diamond's work, resulting in a volume called Questioning Collapse. It's as though the American Economic Association called a special session to discuss methods of purging the heresies of Marx from modern society. The anthropologist Barbara J. King speculated that the reason may merely be that Diamond has written "big books" about early human history while anthropologists haven't (at least since the 1980s).

Antrosio

The anthropologist Jason Antrosio really hates GGS, calling it "academic porn" and demanding that it be stricken from introductory college anthropology courses. His critique—if one can call it that—revolves around his suggestion that Diamond puts the causes of European imperialism in the distant past and attributes them to geography, which removes the blame for their misdeeds. He approvingly quotes another scholar: "For Diamond, guns and steel were just technologies that happened to fall into the hands of one’s collective ancestors. And, just to make things fair, they only marginally benefited Westerners over their Indigenous foes in the New World because the real conquest was accomplished by other forces floating free in the cosmic lottery–submicroscopic pathogens" (Wilcox 2010, p. 123). Incredibly, Antrosio tendentiously explains that "[w]hat Diamond glosses over is that just because you have guns and steel does not mean you should use them for colonial and imperial purposes."

Unfortunately, Antrosio never actually quotes Diamond, whose books I presume he is afraid to remove from the standing desk in his office.7 If he had tried to read them, he might have changed his views (I am being a little charitable, granted), because even a cursory glance at the text reveals that his interpretation is sheer invention. Diamond's goal is to "identify the chain of proximate factors that enabled Pizarro to capture Atahuallpa, and that operated in European conquests of other Native American societies as well" (28). That's right, enabled Pizarro, not forced Pizarro. He is careful to use the word "permitted" on the following page. The conquistadors were not compelled by the swords and guns to sail across the Atlantic and spread disease, but by the desire for land and loot. "Once Spain had... launched the European colonization of America, other European states saw the wealth flowing into Spain, and six more joined in colonizing America" (413). He even suggests that Western culture, namely Christianity, was a "driving force" behind European expansionism.

In discussing specific instances, Diamond speculates that "Pizarro's men," he writes "formed the spearhead of a force bent on permanent conquest" (79). He unsparingly describes how Pizarro reneged on his promise to Atahualpa and executed him after extracting an enormous ransom. Of the collapse of the native populations "discovered" by Columbus, Diamond writes that "the island Indians, whose estimated population at the time of their "discovery" exceeded a million, were rapidly exterminated by disease, dispossession, enslavement, warfare, and casual murder" (373). Of the conquest of Australia: "The reason we think of Aborigines as desert people is simply that Europeans killed or drove them out of the most desirable areas, leaving the last intact Aboriginal populations only in areas that Europeans didn't want" (310). For those complaining that Diamond doeesn't take "sides," well, there's more where that came from.

Antrosio further indicts Diamond because he "has almost nothing to say about the political decisions made in order to pursue European imperialism, to manufacture steel and guns, and to use disease as a weapon." GGS is not a political history, and neither Antrosio nor Diamond is a political historian, so this remark is puzzling. Nevertheless, the latter directly addresses this point (i.e. that the extermination of native populations was in some part the result of political decisions):

We know from our recent history that English did not come to replace U.S. Indian languages merely because English sounded musical to Indians' ears. Instead, the replacement entailed English-speaking immigrants' killing most Indians by war, murder, and introduced diseases, and the surviving Indians' being pressured into adopting English, the new majority language (328).

Native Allies

Finally, Antrosio argues that Diamond underplays (deliberately, in his suggestions of malice) the role of native allies in the Spanish conquest. This reading, however, demonstrates a failure to understand the distinction between proximate and ultimate causes. Diamond does not discount the fact that native allies assisted the Spaniards in seizing the Americas. He is more concerned that Spanish victories should not be "written off as due merely [emphasis mine] to the help of Native American allies" (75) and a range of other non-material factors. Native forces had some part to play, as they self-evidently did in most European imperial settings. If no one cooperated with an invading force, and if everyone joined the resistance, it would be difficult indeed to suppress a settled agrarian civilization. Nazi occupation in Europe would not have succeeded without collaborators and quiescence from locals just trying to stay out of the way.

Nevertheless, Diamond's suggestion is that Native peoples would have found it irrational to help tiny bands of Spaniards if they did not possess some military advantages. Contrary to many Reddit screeds against the book, he does not emphasize firearms. Instead, he attributes the Spanish combat advantage primarily to steel:

In the Spanish conquest of the Incas, guns played only a minor role. The guns of those times (so-called harquebuses) were difficult to load and fire, and Pizarro had only a dozen of them. They did produce a big psychological effect on those occasions when they managed to fire. Far more important were the Spaniards' steel swords, lances, and daggers, strong sharp weapons that slaughtered thinly armored Indians. In contrast, Indian blunt clubs, while capable of battering and wounding Spaniards and their horses, rarely succeeded in killing them (76).

Even Matthew Restall, whose Seven Myths of the Spanish Conquest (2003) is supposed to be the "better" conquest history, argues that the steel sword (after disease!) was a key factor in Spanish military success.

It's true that Diamond's focus on the dramatic destruction of the Inca empire elides the more difficult task facing Cortes against the Aztecs, and how his force may have faced annihilation without the aid of several Tlaxcalan factions (who thought an alliance profitable in the midst of their civil war). Yet even Charles Mann, another critics' favorite, writes that "[t]hanks to their guns, horses, and steel blades, the foreigners won every battle, even with Tlaxcala’s huge numerical advantage" (191). Instead of trying to wipe out Cortes, which might have succeeded, albeit at great cost, the Tlaxcalans made a "win-win" pact with the Spaniards to take down their mutual foes. This is exactly the mechanism that Diamond is talking about! Small military force wins initial victories thanks to initial military superiority, convincing allies to join on their side.

Incidentally, Native allies did not reverse the Spaniards' numerical disadvantage. When the Spaniards escaped Tenochtitlan, they numbered at most 1,300, many sick or wounded, along with just 96 horses. They were aided by 5,000-6,000 Tlaxcalans, who were unlikely to have many martial advantages over trained Aztec warriors. The city's population was estimated at the time to have been over 200,000. If just ten percent were fighting-age males, the Spanish faced difficult odds. A week later, at the battle of Otumba, 425 Spaniards and 3,000-3,500 Tlaxcalans defeated an Aztec force of 200,000—a feat that would still be impressive if the Spanish exaggerated their enemies' numbers by ten times. At Cajamarca, the Spanish defeated Atahualpa's bodyguard of over 5,000 with only 168 men, just 62 mounted. At Quito, an Inca army of 50,000 was reportedly defeated by 200 Spaniards and 3,000 Cuzco allies.

Neither Diamond nor I suggest that Native soldiers, acting for their own advantage, were unimportant to Spanish success. That question is unanswerable on the basis of the existing evidence. But Diamond's more conservative point—not just Native allies—seems reasonable on the basis of the facts that we do have. It would have been remarkable if native uprisings just happened to topple the ancient and powerful Inca and Aztec civilizations precisely at the moment the Spanish arrived. Why hadn't they done so earlier—especially if disease was already suppurating across the Americas?

Virgin Soil Theory

Amazingly, some critics have also argued that Diamond also "naturalizes" global inequalities by supporting Crosby's theory of "microbial determinism." That is, arguing that waves of smallpox killed the preponderance of Native Americans before the conquistadors reached and established control over many regions is said to be akin to exculpating the Spanish. The American historian Jeffrey Ostler, for example, argues that "virgin-soil epidemics were not as common as previously believed" and that we should focus on "how diseases repeatedly attacked Native communities in the decades and centuries after Europeans first arrived." This temporal shift allows us to show that "[p]ost-contact diseases were crippling not so much because indigenous people lacked immunity, but because the conditions created by European and U.S. colonialism made Native communities vulnerable." Thomas Lecaque, writing in Foreign Policy, echoes this point, citing three different works... by the same historian... as evidence of a literature showing that the "virgin-soil thesis" has been "debunked." Diseases weren't a historical accident; the Spanish and the US government did it on purpose.

What is the revisionist position, and what's the evidence behind it? Ostler and Lecaque's pieces are digressive and expostulatory, so it's difficult to sort between evidence and invective. Ostler's article admits that there were some virgin soil epidemics. But those that did happen, he claims, were exacerbated or deliberately carried out by the colonial powers. The De Soto expedition, for instance, caused dysentery outbreaks because of its "violent warfare," but didn't just accidentally spread smallpox, as some previous (and uncited) scholars alleged. Ostler neglects to mention, however, that members of the party reported “large vacant towns grown up in grass that appeared as if no people had lived in them for a long time. The Indians said that two years before, there had been a pest in the land, and that the inhabitants had moved away to other towns” (quoted in Harper 2021, p. 278). De Soto's own contacts, meanwhile, were too limited to have done much to spread disease. In other words, epidemics (at least in the US Southeast) raced in advance of the conquistadors—as the virgin soil thesis would have it.

Ostler contends that smallpox itself did not reach (some) communities in the Ohio Valley and Great Lakes regions until the 1750s (this seems difficult to corroborate), and it only arrived because of Native fighters returning from participating in the French and Indian War. Even if he's right, war's role is inconsequential here and in no way contradicts Diamond's version of the VST. Natives moving along trade routes passed European diseases along to their neighbors, producing devastation often (not always) without European help. Thus the conquerors found once-proud civilizations easier to defeat when they arrived in person.

Ostler then flashes forward in time, to discuss the interactions between natives, disease, and the US government. He makes the point that in the 19th century, smallpox virulence correlated not with a lack of prior exposure, but with poverty. "These same conditions," he writes, "would also make Native communities susceptible to a host of other diseases, including cholera, typhus, malaria, dysentery, tuberculosis, scrofula, and alcoholism. Native vulnerability had—and has—nothing to do with racial inferiority or, since those initial incidents, lack of immunity; rather, it has everything to do with concrete policies pursued by the United States government, its states, and its citizens." I am a little bit dismayed by the moral code that leads the revisionists to feel that "vulnerability to pathogens they've never experienced before" would render the natives "inferior"—am I an ubermensch because I never get sick? Ostler then writes of the Trail of Tears, where 25 percent of 16,000 Cherokee died during relocation from the US Southeast. 85 percent of the Sauks and Mesquakies of Western Illinois died or disappeared between 1832 and 1869, though it's not clear what the proportions attributable to disease, murder, slackened fertility, and out-migration are.

The problem is that Ostler is talking about the wrong time period. No doubt Native populations inside and outside the American colonial empires continued to decline after the conquest, in large part thanks to the horrific behavior of the conquerors. But Diamond and Crosby are chiefly concerned with the initial waves of disease that swept out in front and raced alongside the conquering bands of Spaniards as they rampaged across the Americas. They seek to explain the initial European victories against much more populous Indigenous civilizations; thus referencing the Trail of Tears—a tragic and significant event in a later story—is at best a red herring in this one. Qualitative narrative data exists in abundance to corroborate the role of disease in this first encounter. On Hispaniola, for example, there were epidemics in 1493-94, 1496, 1498, 1500, 1502, and 1507. By 1520, Spanish observers were reporting that the island had been substantially depopulated, and by the end of the decade, there were virtually no native inhabitants at all, out of an original population that may have been in the low millions. Since only a few thousand Spaniards ever settled in the Caribbean at large (many of whom were largely inoffensive priests), it seems implausible to attribute all or even most of this to murder, fertility decline, or the forced-labor system. And even if you embrace an interaction between brutality and plague mortality, I don’t think that you thereby torpedo Diamond’s hypothesis.

In 1518-19, a smallpox epidemic broke out in the Caribbean, and in 1520, thanks to the Cortes and Narvaez expeditions, it spread into Mexico. By the end of the year, a letter to Charles V already documented high levels of depopulation resulting from disease. The Florentine Codex, written by Bernard de Sahagun, who learned Nahuatl (the Aztec language) for the project, reports Aztec testimony about the events: “Before the Spaniards had risen against us, first there came to be prevalent a great sickness, a plague . . . there spread over the people a great destruction of men. Some it indeed covered [with pustules]; they were spread everywhere, on one’s face, on one’s head, on one’s breast, etc.” The following year, Cortes returned to Tenochtitlan (from which he had retreated in 1520) to find the city's defenders decimated by disease—indeed, many of the leaders had died. With smallpox coursing ahead of him along Aztec trade routes, Cortes quickly consolidated his conquests. In the Andes, meanwhile, an outbreak of smallpox apparently killed the Inca emperor Huanya Capac, most of his court, and his heir-designate Ninan Cuyuchi, precipitating a succession war between Atahualpa (who was defeated by Pizarro) and his half-brother Huascar. Given that the leaders of the Aztec and Incan empires were likely the least impoverished individuals in the Americas, the fact that both cadres suffered badly from disease indicates the severity of the epidemics loosed by the Spaniards.

Lecaque, making a similar point, rests his case (he just cites the same guy over again) on a similar body of research, spearheaded by the historian Paul Kelton. Kelton co-edited a compilation of articles—Beyond Germs (2015)—disparaging the virgin soil hypothesis (VSH) on the grounds that a range of social factors (usually colonialism) are as if not more important. The volume and its essays are not coherent and demonstrate a weak understanding of the VSH. Kelton's own article, for example, deals with the Cherokee experience of smallpox during the American Revolution, and argues that the evidence for disease damaging population sizes is weak; instead, the scorched-earth tactics of American armies was more important (at least per Cherokee testimony). That may be, but he's talking about an event that occurred over 250 years after the Spanish arrived in the Americas. It has absolutely nothing to do with the explanation for why European states were so militarily successful in the first place.

The only essay in the book that really tries to systematically confront the VSH is that of David S. Jones. Jones, a former medical student, appears to have rankled at the suggestion that Native Americans had "no immunity" to European disease, responding with the incredibly banal point that everyone has an immune system. His essay complains about the prevalence of the genetic determinist school of explanations for native depopulation, cataloging case studies of instances in which exposure to disease appears to have followed the implementation of colonial violence. Some of these examples are either weak or irrelevant: Indigenous Canadians, for example, saw lower mortality rates (according to studies that he cites!) largely because of their low population densities and the cold climate surrounding Hudson's Bay. Even still, Carlos and Lewis (2011) note that the limited population declines noted by European explorers are highly uncertain because... disease traveled out in front of them.

But Jones concludes that even low pre-contact population estimates imply enormous rates of mortality, on the order of 75%. He suggests that there are two possible explanations: “shared genetic vulnerability, whose final intensity was shaped by social variables” and “pre-existing nutritional stress exacerbated by the widespread chaos of encounter and colonization” (40-41). Referring back to his 2003 survey essay on the same topic, Jones repeats his prior conclusion that high mortality was “a likely consequence of encounter,” but not “necessarily” the inevitable result of immunological vulnerability to European diseases. This, he concedes, was a "hedge," and he notes that he had and has no way to answer the question. To say that either the "determinists" or the contingency school could be right, but that the evidence doesn't support a definitive conclusion, is pretty weak stuff insofar as a VSH critique goes. It’s also telling that Jones actually sacrifices the argument that the Americas were populous and prosperous prior to contact to advance his view that genetic vulnerability was a non-factor.

The authors frequently base their arguments on the suggestion that without the effects of European settlement that followed the disease outbreaks, native populations would have recovered. But again, that's beside the point. Diamond, and to some extent Crosby, focus on why Native Americans were unable to resist the small, unprofessional bands of conquistadors, and not why their populations continued to decline. The authors of Beyond Germs and their intellectual fellow travelers, by contrast, just assume European supremacy and start looking for effects. Diamond is concerned with why forced labor regimes and deliberate depopulation could be conducted in the first place.

No doubt some crude right-leaning histories, for instance, Jeffrey Flynn-Paul's Not Stolen (2023),8 attempt this historical gambit, but Diamond does not. In no way does he dance around the question of agency in the destruction of native populations. On page 15, for example, he writes that "the aboriginal inhabitants of Australia, the Americas, and southernmost Africa, are no longer even masters of their own lands but have been decimated, and in some cases even exterminated by European colonialists" (15). Two pages later, he adds that "many other indigenous populations—such as native Hawaiians, Aboriginal Australians, native Siberians, and Indians in the United States, Canada, Brazil, Argentina, and Chile—became so reduced in numbers by genocide and disease that they are now greatly outnumbered by the descendants of invaders" (17). That's right—genocide and disease, working in tandem.

Respected accounts of the conquest—those proposed as alternatives to Diamond—also heavily emphasize disease, seeking to dispel the suggestion that European technological advantages were significant. Charles C. Mann writes in his oft-acclaimed 1491 (2005) that "the pain and death caused from the deliberate epidemics, lethal cruelty, and egregious racism pale in comparison to those caused by the great waves of disease, a means of subjugation that the Europeans could not control and in many cases did not know they had" (200). Indeed, deliberate attempts to exterminate indigenous populations generally postdated the initial phases of the Spanish conquest; during this phase, the Spanish were actually mortified that their supplies of cheap labor were dwindling so rapidly, plunging the colonies into economic depression. He memorably relates the debate between the High Counters and the Low Counters on the pre-contact population of the Americas, suggesting that the former—those with numbers ranging from 40 to 100 million—have gained the ascendancy. The higher the count, the stronger the case for plagues sweeping ahead of the conquistadors and leveling their foes, and vice versa. For Mann, only calamitous epidemics could explain why kingdoms that resembled European states fell to small bands of armed thugs and their local allies. And since many scholars have reverse-engineered pre-conquest populations from assumed death rate, the greater the mortality, the larger the original population.

Matthew Restall's Seven Myths of the Spanish Conquest (2003), another oft-mooted Diamond surrogate, also accords a central role to disease. He uses the great plagues to dispel the "Myth of Superiority" cultivated by the conquistadors and their defenders. He writes quite succinctly that

For ten millennia the Americas had been isolated from the rest of the world. The greater numbers of people in the Old World, and the greater variety of domesticated animals from which such diseases as smallpox, measles, and flu originated, meant that Europeans and Africans arrived in the New World with a deadly array of germs. These germs still killed Old World peoples, but they had developed relatively high levels of immunity compared to Native Americans, who died rapidly and in staggeringly high numbers. During the century and a half after Columbus’s first voyage, the Native American population fell by as much as 90 percent (141).

For that passage, he cites... Jared Diamond. Incidentally, he also follows Diamond in emphasizing the importance of steel swords and the relative paucity of firearms, and in general, his criticisms of GGS are relatively mild.

The most coherent critique I've read of the VSH is Livi-Bacci (2006). The demographer applies some basic epidemiological logic to the problem and then backs it up with regional case studies. Much of that analysis is based on his assertion that, in a "virgin" population, the lethality of smallpox is 20-50 percent (contingent on age), rather than the 80 percent rate wrought by plague. That's quite a step, mind you, because it rejects out of hand—without much supporting evidence—the possibility of achieving the 95 percent decline figure offered by Diamond (who cites Dobyns).

He then applies this figure to a hypothetical population of 1000. 400 die in the first wave. Assuming that birth rates maintain the population at 600 over the next 15 years, a second and third outbreak will reduce the number of survivors to 423—a 60 percent decline in 30 years. But these assumptions are unrealistic. 40 percent is at the high end of (note: observed) mortality figures. Not everyone in the community will be infected. And population would be unlikely to remain stationary between the pandemics unless some outside force (read: the Spanish) curtailed fertility. Assuming 70 percent infection rates, a declining case mortality rate (40 percent in the first wave, 30 percent thereafter), and 1 percent population growth per year, the size of the population should stand at 901 individuals after thirty years and three epidemics. That's a tragedy, but still a far cry from 95 percent.

But this model does not fit the historical context particularly well. First, Livi-Bacci's estimates (derived from Dixon (1962)) of the fatality rate of smallpox are more recent observations that may be contaminated by built-up resistance to the disease. There's a reason why the Spanish didn't die as frequently! Second, the model does not incorporate the interaction of smallpox with the raft of other diseases that wracked the New World during the Spanish conquest, from plague and measles to typhus, typhoid, and various fevers. The interaction between these pathogens may have significantly elevated their respective fatality rates by overloading immune systems and hitting populations with higher frequency than one disease alone could have. Finally, epidemics did occur more frequently than fifteen years at a time. On Hispaniola (see above), disease struck every two years during the terrible 1490s. These excluded factors suggest that Livi-Bacci substantially underestimates disease mortality.

Livi-Bacci develops three case studies to illustrate his point, comparing the demographic effects of "good" and "bad" Spanish institutions in the New World. Of the Taino people of Hispaniola, he argues that the disastrous mortality that they suffered need not be explained by either the "Black Legend" of "exceptional" Spanish cruelty or the virgin-soil paradigm, but rather by the "confiscation" of native labor. In addition, the Spanish took many Taino women as wives and concubines, unbalancing the gender ratio, while social dislocation—worsening living standards and the disruption of family and village ties—reduced the fertility of those who weren't removed from the marital pool.

Livi-Bacci also disputes the suggestion that smallpox invaded the Inca Empire ahead of Pizarro. He asserts that "[e]pidemiologists would characterize this hypothesis [that disease could spread rapidly across thousands of miles overland by face-to-face contact] as improbable, if not impossible." While disease did eventually arrive, and while sixteenth-century mortality was probably catastrophic in Peru—the Huanca tribe fell from 27,000 members in the 1520s to 7,200 in 1572; the Chupachos of Huanuco from 4,000 to 800 over a similar span—the cause was probably (or at least partly) civil war. Livi-Bacci's evidence is sparse, mostly consisting of a single traveler's account, but he also shows that the Huanca had, by 1558, lent out 27,000 men to the Spanish armies (1,800 per year) out of an original population of 12,000 (declining to 2,500 by 1548). The Spanish had also taken large quantities of foodstuffs and pack animals.

His counterfactual is the relatively good institutional matrix of Guarani Paraguay, where Jesuit missions protected the Indios from the ravages of Portuguese slave traders. Under the auspices of the fathers, who kept their converts in planned villages under strict administration, the Guarani population increased from 40,000 to over 140,000 from the 1640s to the 1730s. Despite high mortality events, Livi-Bacci argues, the institution of early and monogamous marriages led to a high fertility rate (7.7 births per woman) that allowed swift recovery from demographic shocks.

But is this counterfactual appropriate? Livi-Bacci does not have data prior to the mid-17th century, and so is unable to make particular claims about the true effect of Jesuit institutions on Guarani demography. What did fertility patterns look like among the Guarani prior to the implementation of written Spanish records? Nor is he able to precisely gauge the effects of smallpox during the 16th century and how that may have dampened the effects of the disease during the period in which data is available. Nor, finally, is Paraguay a particularly good counterfactual for the main American civilizations that are the focus of Diamond's work. The Guarani were, by Livi-Bacci's own telling, an isolated and sparse group with minimal integration with the outside world. Prior to the Jesuit missions, their nomadic populations could simply relocate to escape outbreaks of disease. A similar situation prevailed in northern Canada, where (as noted above) the Cree (probably) escaped smallpox until the late eighteenth century thanks to low population densities and a frigid climate. There's reason to believe that these groups were not representative of the civilizations that faced the initial Spanish conquests.

Diamond's critics would like to have it both ways. On the one hand, they refuse to concede that Europeans had any significant technological or military advantage over Native American civilizations, because that would connote some kind of intrinsic superiority of the former over the latter. On the other hand, however, they want to show that deliberate European manipulation and control over Indigenous peoples led to population decline—a level of imperial mastery that could only have been maintained with some sort of military disparity. Diamond's explanation is much simpler: Europeans won initial victories because of guns, germs, and steel (plus horses, literacy, and ships) and then, after establishing their own colonial regimes, induced further depopulation through impoverishment, coercion, and outright murder—yes, he calls it genocide. Europeans committed horrific crimes that were not inevitable and germs enabled them to do it.

As an aside, it takes a very strange ethical system to claim that lowering the direct casualties of Spanish conquest from 15 million to 150000 (for instance) is somehow an ‘excuse’ for imperialism. Everyone agrees on the fact that the Spaniards did conquer the Americas, shatter indigenous customs, and implement forced-labor regimes. Those policies were horrific regardless of whether the number of victims is large or astronomical, and whether or not they led to the Spanish conquest of the Americas is, in my view, a drop in a bucket of moral sludge. But since Diamond doesn't even attempt these rhetorical gymnastics, the criticism is wrong either way. Moreover, whether Diamond is factually correct about the 95 percent mortality figure is not that relevant to his main question—why Europeans prevailed in the first place.

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Eurocentrism

We've already met one of Diamond's more prominent and earliest academic critics, James Blaut, also an anthropologist. Blaut includes Diamond in his Eight Eurocentric Historians (2000), alongside Max Weber, Lynn White, Robert Brenner, Eric Jones, Michael Mann, John A. Hall, and David Landes. It's somewhat perplexing to tar GGS with the brush of Eurocentrism, considering that it's primarily focused on Eurasia rather than Europe per se.9 Diamond's vice is "Euro-environmentalism," or falsely claiming that Europe's environment is superior to those of other continents. Blaut's reading, however, is pure fantasy—the language of "superiority" and "inferiority" is his own insertion into a book devoid of such terms. Why would the fragmented geography of Europe make it a "better" place to live than China?

Blaut is enraged by commonplace aspects of the book's language. For example: "'Environment molds history,' says Diamond flatly and without qualification" (150). Is this supposed to be some sort of gotcha? If you don't think that the environment has an effect on historical trajectories, which is all that Diamond is saying, then you're actually making a stronger and more controversial (not to mention incorrect) claim. In addition, Blaut objects to Diamond's use of the phrase "natural experiment" to describe a comparison between two societies operating in nearby but different ecological zones. Yet this is a standard methodology in the social sciences for estimating causal effects.

Next, Blaut fulminates against Diamond's explanation of the origins of agriculture. He makes the bizarre objection that the Americas are almost as wide as Eurasia, and that Eurasia is almost as tall as it is wide, ignoring the equally important points in GGS concerning the importance of ecological barriers to technological diffusion. His objection that Eurasia is full of trackless deserts is mostly irrelevant, as Diamond actually suggests that Europe and the Indus Valley got their agriculture from the Near East, while China supplied East Asia with some assistance from Mesopotamia. Indeed, Diamond himself writes that the "temperate areas of China were isolated from western Eurasian areas with similar climates by the combination of the Central Asian desert, Tibetan plateau, and Himalayas" (189). Blaut then tries to create uncertainty about the archeological record, complaining that archaeologists have been digging in Mesopotamia for longer and speculating that other sites will eventually reveal much earlier dates—including another site in Southeast Asia that, around 7,000 years ago, might have sunk like Atlantis into the sea!

Blaut claims that Diamond does not explain why the Mediterranean climate zone is particularly suited for the origins of agriculture; on the contrary, Diamond does, emphasizing that Mediterranean crops grow rapidly with the first winter rains and that they have large, edible seeds that can be stored. He does not deny that large-seeded crops grew elsewhere (see above) or that crops without large seeds could be domesticated. Eurasia just had the weight of numbers: of the 56 known large-seeded grass species, 32 could be found in the Mediterranean and just 11 in all of the Americas combined. Of the 14 species of ancestrally domesticated animals, 13 lived in Eurasia, none in Sub-Saharan Africa, and just one in the Americas. Seven of the Eurasian species were resident in or near the Fertile Crescent. In any event, the main significance of the Mediterranean climate zone was as a vector for the spread of agriculture.

Blaut then claims that Diamond is "not satisfied" with the "conventional scholarly answer" to the question of why Europeans conquered the Americas—that is, that the Americas suffered in part from lower technology vis-a-vis the Spaniards, but more from diseases. Diamond's explanation is if anything A) a moderate reweighting of the two factors and B) a revision of the ultimate causes behind them. Blaut thinks that the real answer is that the Americas were settled later than Eurasia. Fine. But how does that explain the disease disparity? And how does that do more to escape the trap of environmental determinism? Indeed, it poses an even stricter relationship between geography and technology—later-settled regions are behind earlier-settled ones in proportion to the difference in dates of settlement.

Blaut goes on to suggest that there is no desert barrier between northern Mexico and the central-eastern US. In fact, the Mexico-US border is almost entirely covered by three desert ecoregions: the Sonoran Desert to the west, the Chihuahuan Desert in the center, and the narrow band of the Tamaulipan Mezquital (still a desert) on the eastern side. His claim that Diamond "wants to show that Eurasia's importance in animal domestication was one of the primary reasons why temperate Eurasia (supposedly) gained superiority in subsequent cultural evolution" (163) is bemusing: Diamond is trying to extirpate the notion that Europe's cultural evolution was particularly important. He frequently resorts to historical anachronism: suggesting pathetically that the only attempt to domesticate the zebra was a 19th-century European failure (why hadn't it been domesticated in the previous few millennia?) and that modified disease-resistant cattle thrived in Africa (reminder to any time lords in the vicinity to teach pastoralists about germ theory).

After dismissing Diamond's arguments about continental axes and the scientific evidence on the origins of agriculture, Blaut concludes that there's not much left of Diamond's thesis. Unfortunately, the same can be said of Blaut—after we reject his dismissals, there is really nothing of substance left in his critique. Blaut concludes that "[g]eography is important, but not that important" (165). How important is that important?

Finally, we reach the only part of GGS that can justifiably be included in a critique of "Eurocentric" historians: Diamond's short epilogue comparing Europe and China. Aside from Blaut's sloppy characterization of the "development of a merchant class, capitalism, and patent protection for inventions" as cultural factors, I agree that they constitute a classically "Eurocentric" set of causes for European economic development. That doesn't necessarily mean that they're not important, but they are things that Eurocentric historians say. Blaut has Diamond saying that China was unified 2,000 years ago because it does not have high mountains like the Alps or a coastline with large bays and inlets that divided regions into separate cores; Europe, by contrast, could never be unified because of these features. Since empires must always be despotic, Chinese emperors oppressed and overtaxed their people, while Europeans slouched toward democracy. The former produced stagnation, the latter capitalist development.

Is that really what Diamond says? No, he doesn't just discuss "capes and bays," as Blaut suggests. Instead, Europe had five large peninsulas that developed into political, cultural, and linguistic zones, against East Asia's one (Korea), along with two large islands that were reasonably close to the mainland. European fragmentation was also facilitated by several mountain ranges—the Alps, Carpathians, Pyrenees, and Norwegian border ranges—that assisted in core formation. China's eastern mountain ranges were not as divisive. Additionally, the Yangtze and Yellow Rivers bound together the Chinese heartland with two fertile alluvial basins from east to west, and transit north-south between them was relatively straightforward (and eased by the construction of canals). Europe's two largest rivers, the Rhine and the Danube, are smaller and do not travel in directions that would assist in interconnecting core regions. Thus "China very early became dominated by two huge geographic core areas of high productivity, themselves only weakly separated from each other and eventually fused into a single core... Unlike China, Europe has many scattered small core areas, none big enough to dominate the others for long, and each the center of chronically independent states" (414).

Blaut completely misunderstands the argument. "[T]he historical processes Diamond is discussing pertain to the last 500 years of history, and most of the major developments of this period, those that are relevant to his argument, occurred mainly in northern and western Europe, which is rather flat" (169). But the four great powers of early modern Western Europe—Spain, France, the Dutch Republic, and England—can attribute their existence in part to the exact geographical boundaries that Diamond describes.10 Blaut adds that "[t]he idea that the pattern of multiple states somehow favored democracy is a misconception: each of these states was as despotic as—probably more despotic than—China" (169). This is not only a red herring—Diamond is not talking about democracy, but rather that interstate competition allowed innovators to escape to more friendly polities—but also just wrong. Early modern Europe housed multiple states that were much less despotic than China, Bourbon France, and Habsburg Spain, from the Dutch and Venetian Republics to, well, England. Interstate competition was, at least in some cases, a catalyst for democratization—the huge expenses incurred by raising militaries required monarchs to gain Parliamentary approval on extraordinary taxes.

Blaut compounds these errors by arguing—sans citation—that domestic peace and the lack of internal borders encouraged market development and innovation in China. But the critics of the "bellicist" view espoused by Diamond have contended the exact opposite—that China was at war just as much as Europe. According to Hoffman (2015), China was at war 56% of the time between 1500 and 1799; England 53%; France 52%; Spain 81%; and Austria 24%. And even if there was a common market effect, Blaut offers no evidence (just extrapolation even wilder than Diamond's) that it counterbalanced the "despotism" drag (or the simple disadvantage of only being able to try one style of economic policy at a time). In short, Blaut's critique fails in large part because he exacerbates Diamond's tendency to make unfounded generalizations about specialist historical literatures.

Like Blaut, many GGS critics seize upon the final chapter and claim that its weaknesses damn the book. That's a shoddy bit of legerdemain. While Diamond's discussion of the rise of Europe is undoubtedly one of the weaker parts of the book, it's also basically tangential to his main thesis, which is directed at the long-term origins of Eurasian political-economic primacy in the 16th century. Diamond himself calls it an "extension" of the model. Aaron Jakes, for example, just dismisses the first 410 pages—"a decent synthesis of existing literature on the historical conditions of differential immunity and technological endowments at the moment Europeans encountered the 'New World'"—to focus on pages 409-417 (assuming he read either segment).

Aaron Jakes on Twitter: "@carlosfnorena On the basis of Diamond’s arguments, one would be led to assume that Iraq and Egypt would be among the wealthiest and most powerful countries in the world. Eventually he has to acknowledge the problem, at which point he introduces the absurd speculations about bumpy coastlines." / Twitter

Diamond explains the ecological difficulties of the Near East without recourse to "speculations about bumpy coastlines." Low rainfall meant that plant growth could not keep up with the rate of overgrazing and deforestation; this in turn led to erosion, the silting up of valleys, and salt accumulation. Forests and grasslands became deserts—thanks not to innate characteristics of Middle Eastern farmers, but a common tendency to deplete the environment interacted with a climate that was more sensitive to long-term exploitation (and got worse over time).

But how stupid are Diamond's "speculations" on the causes of European economic hegemony? The "fractured-land hypothesis" has bounced in and out of favor, but seems to have returned. Fernandez-Villaverde et al. (2022) recently revisited the question. Dividing the world into a hexagonal grid of polities to represent a world prior to state formation, they construct a probabilistic model of military conflict and territorial acquisition in which the productivity of each grid-cell influences the chance that the controlling polity will be able to absorb neighbors. The authors simulate the model and show that, lo and behold, this simple framework produces a very Diamond-like world by 1500. French, British, German, Iberian, and Northern Italian polities occupy the obvious core areas of Europe; an Ottoman Empire covers eastern Anatolia and the Levant; and super-states stretch across northern India and eastern China. The model—driven by agricultural productivity and topography—is almost blind to stylized historical facts that would tend to bias it toward the actual paths of agglomeration and fragmentation; thus its ability to produce European fragmentation and Asian integration along Diamond-esque lines (and for the same reasons) is telling.

Blaut's ‘rebuttal’ does bring us to an important question: is Diamond obsessed with proving the "superiority" of Europeans and their geography, as his detractors so baldly assert? Obviously not. Even in 2000 (and especially today) the suggestion that Diamond is a defender of capitalism and Westernization must have seemed incredible. His 1987 article "The Worst Mistake in the History of the Human Race" took an impassioned swing at the "progressivist" (Whig) school of history that attributed the flowering of global civilization to the advent of agriculture. He controversially argued that our hunter-gatherer ancestors were healthier, more equal, and freer from work than the first agriculturalists—and many generations to follow. The point of the essay is to convince Western readers to stop treating non-agrarian peoples as "primitive"; instead, they were blessed with advantages that many settled societies around the world lack today. In GGS, Diamond explicitly states that "[f]rom the very beginning of my work with New Guineans, they impressed me as being on the average more intelligent, more alert, more expressive, and more interested in things and people around them than the average European or American is" (20). This is hardly the "myth of the noble savage" reborn—Diamond is deliberately emphasizing New Guineans' advantages in skills that we deem to be characteristic of the WEIRD mindset.

For a purported lover of capitalism, Diamond is careful to dismiss it as a contributor to the long-term pattern of development—for which he was roundly criticized by economists—and has spent a strangely protracted period of time living with and befriending hunter-gatherers. The World Until Yesterday (2012) is a paean to the virtues of "traditional societies"—their cultural practices in particular. From peaceful conflict resolution to care for the elderly (shut up and abandoned in Western nursing homes), Diamond proposes (quite sincerely) that Americans have as much to learn from New Guineans as vice versa. Collapse (2011), meanwhile, urges us to take action in defense of an environment imperiled by two centuries of capitalist development. In GGS, Diamond explicitly states that he "do[es] not assume that industrialized states are 'better' than hunter-gatherer tribes, or that the abandonment of the hunter-gatherer lifestyle for iron-based statehood represents 'progress,' or that it has led to an increase in human happiness. My own impression, from having divided my life between United States cities and New Guinea villages, is that the so-called blessings of civilization are mixed" (18). What more do the critics want?

This brings us to our final question. Does Diamond actually excuse European colonialism or "naturalize global inequality"? Is environmental determinism substituted for racial determinism "by a clumsy sleight of hand"? This, you will recall, is the same claim made by Richardson-Little and Antrosio above.

Indeed, Diamond himself foresaw that his attempts to explain Eurasia's rise to global hegemony would be conflated with the justification of European imperialism. On page 17—to which I presume few of the critics actually made it—Diamond writes:

One objection goes as follows. If we succeed in explaining how some people came to dominate other people, may this not seem to justify the domination? Doesn't it seem to say that the outcome was inevitable, and that it would therefore be futile to try to change the outcome today? This objection rests on a common tendency to confuse an explanation of causes with a justification or acceptance of results. What use one makes of a historical explanation is a question separate from the explanation itself. Understanding is more often used to try to alter an outcome than to repeator perpetuate it. That's why psychologists try to understand the minds of murderers and rapists, why social historians try to understand genocide, and why physicians try to understand the causes of human disease. Those investigators do not seek to justify murder, rape, genocide, and illness. Instead, they seek to use their understanding of a chain of causes to interupt the chain (17).

He also predicted that he'd be accused of Eurocentrism, an accusation to which he pre-emptively responded (rightly) that most of his book deals with non-Europeans (and not even interactions between Europeans and non-Europeans) and that the "basic elements of civilization" were imported by Europe from non-Europeans.

I’ve spent years reading and rereading Diamond’s work, and I’ve found next to no evidence that he even implicitly attempted to give cover to apologists for European empire. I don’t understand why he would have tried to do this: it is the racists and Eurocentrists that he set out to quash in the first place. As you’ve seen above, the claim that Diamond’s work is based on “junk” data appears to be exaggerated, if not altogether specious. If his data (say, on population sizes and losses) is off, it’s off by moderate percentages, not orders of magnitude, and is more likely just uncertain—the critics don’t know either. The only way to avoid speculation about the history of the pre-contact Americas is to say nothing at all.

I am not trying to support the strict conclusions of Diamond’s work. While geographic factors are exceedingly important in the history of economic development, I’m at least ambivalent about the mechanisms that he proposes for their long-term influence. If anything, I probably think more along the lines of the “coal and colonies” approach. But I feel obligated to defend Diamond against the absurd characterizations of his critics—that his books are somehow racist, Eurocentric, pro-imperialist, and so factually incorrect that you should burn them for kindling to avoid intellectual contamination. As I hope that I’ve demonstrated, all of the above criticisms (if they may be called that) are just absurd. While you should take no part of Guns, Germs, and Steel (and much less his later works) as gospel, the book as a whole remains a lucid, thoughtful, and provocative history of long-run global development. It’s justly lauded and you shouldn’t feel bad about loving it as much as you do.

This post is long. If you’re inclined to read just a quick summary, here’s the TL;DR.

1. Slavery was not essential for industrialization.

2. Slavery may help to explain why Britain industrialized first. Economic historians have tried to argue this in three main ways.

3. (1) Vent-for-surplus view: Britain’s colonial Atlantic economy furnished export markets for textiles and metalwares, which were predominantly sold abroad.

   1. Without these exports, Britain would have suffered from underemployed resources and low productivity as labor sat idle.

   2. Larger markets meant economies of scale and endogenous innovation in the export-facing sectors.

   3. Without slavery, the American colonies would have demanded fewer exports.

4. (2) Ghost acreages (a la Pomeranz): imports of American cotton solved the supply bottleneck for the UK textile industry, in the absence of which high prices and the low quality if Indian cotton would’ve choked off industrialization.

   1. But Indian cotton was substituted for U.S. cotton during the Civil War.

   2. If slavery had been abolished during the eighteenth century, the counterfactual isn’t “no cotton” but “less cotton”—unlike sugar, you can grow cotton with free labor.

5. (3) The slave trade and Atlantic exports fostered financial services and created human capital externalities that enlarged Britain’s skilled labor force.

   1. This almost certainly happened, but it’s unclear how big the effect was, and how much of it couldn’t be accomplished by trading with Europe.

6. Most empirical tests of the Williams thesis do not address (1)-(3).

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Slavery is capitalism's original sin. There's no doubt that the plantation system of the Atlantic world was profitable, rationalized, and market-oriented—and that it yielded significant gains to the planter class. Planters, in turn, invested their profits back in the metropole and bought foodstuffs and manufactured goods from Britain and the northern colonies; by the late eighteenth century, most of Britain's trade in manufactures was with the Americas, and much of that relied (directly and circuitously) on coerced labor and bondage.

So slavery was important to really-existing capitalism in its infancy. But there's another question here. Could British industrialization, and thus capitalism itself, have emerged only because of slavery? And if not, did slavery accelerate early modern economic growth, or was it just incidental—a stain on the human record, but needless one at that?

Questions like these matter. If you think that industrial capitalism and modern economic growth could only have arisen in a slave-based economy, then you're making a pretty strong claim about the moral foundations of Western society—there's a causal connection between centuries of exploitation and the sandwich you're eating for lunch. As Stanley Engerman wrote in 1972, "history becomes a morality play in which one evil (the Industrial Revolution) arises from another, perhaps even greater evil, slavery and imperialism." Whereas if you think that abolition could have been accomplished in, say, 1750 with little impact on economic growth, then you've got a better case for just indicting the monsters and benighted fools of yesteryear.

To my mind, this is what the entire "contribution of the periphery" debate (of which the Williams debate is a big part) is really about. Is capitalism built on a heap of bones, or isn't it? It's not just scientific history, but also the empirical foundation for a moral debate. To talk about the role of the slave trade is to try to answer the age-old question: is Western capitalism evil? The accusatory undertone is implicit in a lot (but not all) of pro-Williams research, and a defensive one in (again, not all of) his detractors. Those are the stakes.

The Age of Solow

The publication in 1991 of Barbara Solow's edited volume Slavery and the Rise of the Atlantic System symbolized the resurrection of the "Atlantic economy" version of the Williams thesis. There's a triumphalist tone to the book—all of the essays stress, at least to some extent, the importance of European trade with Africa and the Americas, and the rare debates are mostly nitpicking about emphasis. The one "contrarian" essay, O'Brien and Engerman's "Exports and the growth of the British economy from the Glorious Revolution to the Peace of Amiens," conceded most of the field to the Williams-ites.

Nevertheless, some historians were still frustrated that their more economics-focused colleagues still ignored the Atlantic economy, and the slave trade in particular. Darity (1990) groused that neither "Nicholas Crafts (1987) nor Jeffrey Williamson (1987) nor Joel Mokyr (1987) gives even passing notice, in the special issue of Explorations in Economic History devoted to Britain's industrial revolution, to the potential relevance of Eric Williams's (1966 [1944]) hypothesis that the development of British industrial capitalism bore intimate links to the Atlantic slave system."

Darity's formula is reminiscent of Inikori's. He conveniently endogenizes technical change to market expansion, a la Smith, and even gives an ironic citation to the irascible McCloskey. Slavery was necessary for the "proletarianization" of the Americas because getting white labor there would've been too expensive, lowering profitability and presumably slowing down industrialization. Britain exploited its position as the imperial metropole to create an intra-imperial core-periphery system in which she imported foodstuffs, lowering real wages and raising the rate of return. Colonial investment opportunities also prevented profits from declining by the good old "recycling of plantation wealth" mechanism.

As with Inikori, the mechanism by which extending the market isn't really explicit; and thus reliant on Smithian technical change, Darity struggles to encompass inventive behavior that doesn't conform to, well, textile factories. I'm sympathetic to the broad concept that "doing stuff more" will lead to "you getting better at doing said stuff." But suggesting that the "wave of gadgets" can be fully explained by market extension, ignoring the agrarian, geographical, and institutional context of Britain's economy, is weak.

Solow's essay in her Atlantic System volume expands on the role of slavery in colonial development. She argues that pre-modern land-abundant economies are "more likely to stagnate than grow"; high incomes only go to farm labor, and average people may not have the means to emigrate (which assumes a capital constraint). Investment opportunities are curtailed by the inelastic supply of labor caused by the availability of free land—who'd pay rents to a landlord if they could be an owner-occupier on a big farm on the frontier? Slavery "solves the problem"—a cheap supply of coerced labor that allows Europeans to cultivate plantation crops. It's a variant of the Domar model—serfdom arises in economies with a high land-labor ratio—but used to explain extensive growth in a land-abundant settler colony.

The most important essay in the volume, though, is O'Brien and Engerman's "Exports and the growth of the British economy from the Glorious Revolution to the Peace of Amiens." I could be mistaken, but this paper, to my mind, is the beginning of what Pseudoerasmus called O'Brien's Damascene conversion to peripheralism. The authors trace the role that England's textile exports played in economic developments since the Tudors, when the country transitioned from raw wool to woolen cloth and exports made up about 4 percent of national income. By 1700, export values had quadrupled, making up 8-9 percent of national and supporting somewhere between 20 and 30 percent of the population.

Over 1697-1802, however, exports grew at a rate of 1.5 percent per annum (50 percent faster than in the long seventeenth century), and by 1802 88 percent of those were manufactured—metals, metalware, and cotton. Critically, 95 percent of additional commodity exports during this period went to North America and the British West Indies. Up to 1790, this increment occurred thanks to "autonomous foreign demand," rather than internal factors that drove innovation. In

Aside: the debate about whether foreign demand was an exogenous factor is weird, but the idea is that rising incomes abroad/access to new export markets drops new consumers of your goods upon you like manna from heaven. It's not true. As Findlay and O'Rourke (2007) point out, increasing income/number of consumers shifts the demand curve to the right, which should raise prices. But England's terms of trade fell, suggesting that biased technical change in cotton textiles increased supply much faster than demand rose to meet it.

Nevertheless, O&E raise an important point. Economists modeling the gains from trade in Ricardian terms, in which all resources are fully employed, generally find small numbers—trade just reallocates labor, land, and capital to marginally more productive uses. Autarky means that factors used for exports just go into making domestically consumed goods; for Thomas and McCloskey (1981), their famous suggestion was beer. O&E, however, adopt a vent-for-surplus model, in which land and labor are idle. If foreign consumers don't buy some additional copper plate, for example, no one will, and either prices drop through the floor or workers are unemployed. So the counterfactual output under autarky may not be, say, 20% lower in traded sectors, but 100% lower.

The only real point of "contention" in the volume as pertains to the Williams thesis is Solow's bizarre assertion that O&E don't consider slavery. She reminds the reader that the colonies wouldn't have developed nearly as rapidly without coerced labor—most of the whites were indentured servants and 2/3 of them went to plantation colonies. Sugar constituted 60 percent of British American exports to the metropole up to 1775, most Southern exports were slave-made, and many of the Northern/Middle colonies (78/42 percent) were bought by the West Indies. "The foreign exchange to purchase British goods was earned from the labor of slaves, and it was the American slave who ultimately provided the increased market for the manufactured exports of Great Britain in the eighteenth century." But this is a non-issue and I wonder if Solow was just pretending to take umbrage at something for the sake of alleviating the collection's rather uniform tone.

General Equilibrium

Nevertheless, what neither O&E nor Solow actually presents is a counterfactual analysis for a British economy unable to dump its surplus produce on plantation slaves in the Americas. There are two ways to argue about the counterfactual. First, you can make comparisons spatially, using a discontinuity in the treatment to show its effects relative to a comparison group where it was weaker/absent. That was hard to do in the '90s and it's still not clear how valid this would be. You can't easily compare countries because of the minuscule sample size and bad data; and even if you did, there were other slave-trading countries (like Portugal) that did pretty badly. The tech wasn't really there for within-country comparisons.

The other way you can do this is via general equilibrium modeling. The idea is to examine the effects of a change in prices or output in one sector on the rest of the economy—analyzing all markets in unison. Two papers attempted to do this for the triangular trade: Darity (1982) and Findlay (1990). I'll take a deeper dive into these two in the next post, which will be the wonkish econ version. For now, I give a quick summary of what Findlay does.

There are three regions: Britain, America, and Africa. Britain makes manufactures with capital and labor, the latter of which is in fixed supply, as well as a colonial raw material input, such as cotton or sugar. America exports the raw materials using slave labor and a finite supply of land, while Africa exchanges slaves for manufactured goods. In this model, the Industrial Revolution isn't endogenous, so there's no question of the Williams thesis as such being right. Instead, it's a shock to the productivity of labor and capital in Britain, which increases the supply of manufactures and the demand for raw materials and slaves. British terms of trade (export over import prices) fall, while those for America and Africa rise.

What happens if you ban the slave trade? Depends when. If you're following the Solow story, where you need slavery to develop the Americas altogether, then banning the trade in 1607—following O'Brien's counterfactual—rather than 1807 removes the elastic supply of labor needed to complement abundant land. Findlay and Solow agree that early abolition is basically akin to cutting off Britain from the New World—zero trade. No cotton supplies, no sugar.

That means high raw materials prices, which reduces profits for manufacturers. Smaller export markets also mean lower manufactured output prices, so British producers get cut with both blades of the scissors. In 1807, though, the ban on the trade didn't matter. Presumably, sometime during the intervening two centuries, the American slave population could provide a sufficiently elastic supply. There's also the implicit assumption that no output could've been derived from the Americas and that no substitutes could have been found elsewhere—that's baked into the model, which only has three regions. Anyway, the point here is that Findlay can actually show that, in the model, cutting off the slave trade can hamper industrialization. But what he can't show is that endogenous take-off is a function of the Atlantic trade. And while he echoes Solow in criticizing the Engerman-O'Brien position on "small ratios," he doesn't add much.

Darity (1992) has a famous short summary piece in the AER—"A Model of Original Sin"—where he (which surprised me) doesn't actually present a model at all, but just adds some detail to his and Findlay's. He recommends a Keynesian approach to modeling the "Williams-Rodney hypothesis", predicated on the existence of vast intersectoral linkages and multiplier effects between slave trading/planting and the British home economy. Darity thinks you should take the mercantilists seriously when they say, like Josiah Child, that colonies created jobs where they didn't exist before by hoovering up unused labor.

Backward and forward linkages abound. Wool and cotton textiles needed to buy slaves in Guinea fueled the rise of Manchester; iron tools for the planters and chains for the slavers; Bristol shipbuilding; Birmingham's arms industry (the gun-slave cycle); and even furniture and pottery, somehow. Sugar processing and tobacco, too. But only the gun case is given any magnitude, though–over 1.6 million firearms were shipped to Africa during the Napoleonic Wars. That's the trouble with this line of reasoning. Without any real data on the connections between sectors, your backward and forward linkages could be responsible for 1 or 100 percent of value added in down/upstream industries.

Two Big Books

Two major historical works tackled the slavery-development nexus at the end of the millennium. Robin Blackburn's The Making of New World Slavery (1997) concludes with a lengthy survey chapter on the contribution of slavery to the Industrial Revolution in Britain. The rest of the book is turgid, but those last 70 pages are great. Blackburn situates the Williams debate as just one part of the broader question of the 'contribution of the periphery'—starting with Marx, whose claims that "[t]he colonial system ripened trade and navigation as in a hothouse... [and the] colonies provided a market for the budding manufactures" are quoted by everyone like supplicants appeasing an angry god. He then outlines the various direct and indirect ways that slavery promoted British growth.

First, he restates the export-led growth view, noting that even the skeptics (O'Brien and Engerman) hold it. Second, he refuses to let the profits-investment channel die. He elevates the profit levels for the slave trade and West Indies plantations to show that they could have accounted for between 21 and 55 percent of British gross capital formation circa 1770, assuming either a 30 or a 50 percent rate of reinvestment and whether you choose his lower or upper bound for total profits. Critical here is Blackburn's decision to incorporate a "realization effect"—profits generated by British industry as a result of exporting to the plantations. Notably, he discards Thomas's deductions for imperial defense costs and price distortions. Blackburn claims that his findings are consistent with the original Williams thesis—that slave-trading profits "fertilized the entire productive system of the country." He notes that both the "resource increment" derived from trading profits and exports to the coercive American colonies tripled at the end of the eighteenth century.

Nevertheless, Blackburn admits that the imperial system was a wasteful, inefficient way to generate investment funds—sometimes, it even siphoned them off. He also acknowledges that the only reason mercantile profits could be transmuted into industrial development was because of Britain's prior commercialization, centered on the totally domestic emergence of capitalist agriculture. Small provincial banks, not the City of London—the proverbial octopus manipulating the imperial world-economy—were the main source of industrial finance.

So Blackburn instead focuses on alternative channels—profits were invested in agricultural improvement (but who knows how much land, and how much investment) and canals. Moreover, he tries to argue that investing in the slave trade and in textiles was kind of the same thing, because the two sectors' production cycles were complementary, and stresses the role that mercantile investment played in diverse areas—brewing, baking, candlestick-making. I'll grant that the breadth of channels that he draws up is impressive (and creative). He neglects, however, to give any idea of the magnitudes involved or to mention that only some of merchants' investible funds actually came from the slave trade itself. And if his profit figures are overstated, then those magnitudes are going to be small.

Blackburn's biggest problem kind of seems to be conceptual—a Marxisant fascination with primitive accumulation. While he says that fixed capital is less important than working capital in an effort to overcome Engerman's deflationary analysis, he then asserts that the macroinventions of the Industrial Revolution required a "capital shock" to start. No, they didn't. The technology came first, generating high rates of return from which industrialists largely financed themselves.

This brings us to Blackburn's final channel, that slavery contributed cheap raw materials for British industry. Pretty straightforward stuff—only the American plantations could provide the elastic supply of cotton guzzled by Lancashire's textile mills. Economic pressures created by the plantation system led to major innovations in productivity, including Whitney's gin. Broadly speaking, slave cultivation of cotton led to primitive accumulation across two dimensions: cheap labor for the planter and cheap materials (and thus means of production) for the capitalist.

Of course, the centrality of slave-produced cotton imports is more commonly linked to Kenneth Pomeranz. His 2000 masterpiece The Great Divergence argues that the Americas, won and worked by force, provided the critical ghost acreages that propelled Britain past the Old World's common ecological constraints. Without cotton from the American South and British West Indies, Britain would've been forced to import inelastic supplies from India or (implausibly) get the equivalent from wool by infesting the UK with sheep. Pomeranz cites Williams but doesn't mention him in the text, and ignores Blackburn.

Blackburn, understandably unaware of this coming slight, concludes:

[T]he pace of capitalist industrialization in Britain was decisively advanced by its success in creating a regime of extended primitive accumulation and battening upon the super-exploitation of slaves in the Americas. Such a conclusion certainly does not imply that Britain followed some optimum path of accumulation in this period, or that this aspect of economic advance gave unambiguous benefits outside a privileged minority in the metropolis. Nor does our survey lead to the conclusion that New World slavery produced capitalism. What it does show is that exchanges with the slave plantations helped British capitalism to make a breakthrough to industrialism and global hegemony ahead of its rivals.

The Making of New World Slavery inspired the most famous paper in the anti-Williams literature. Eltis and Engerman (2000) basically snap every arrow in Blackburn's quiver, and a few others besides. They backhandedly accuse most Williamsites of extrapolating too much from the primary source views of interested merchants and mercantilists, who were both predisposed to favor the rent-sharing colonial system and incompetent at statistically evaluating it.

Eltis and Engerman then hit the numbers. The slave trade itself was only a tiny portion of British overseas commerce; in the biggest year, 1792, 204 vessels of a cumulative 38,099 tons left British ports. That's about four a week. But in that year, according to Mitchell's historical stats, there were 14,334 ships registered in Britain grossing 1.44 million tons. So 1.5 percent of British ships and 3 percent of tonnage were involved in the slave trade—not a lot! And in any event, they argue, Portugal's slave trade was larger relative to the size of its small domestic economy, but this didn't lead to convergence with Britain. I'm skeptical about Portugal's (or Spain's, for that matter) relevance as a counterfactual, given my own research on the deindustrializing effects of Dutch Disease.

E&E also critique the "Atlantic economy" reasoning of the Solovian consensus. Compared with France, Britain's Atlantic system was not all that impressive—by 1770, the French were making 17 percent more sugar, nine times more coffee, and 30 times more indigo than the British. France's advantage widened from 1770 to 1791 with the expansion of St. Domingue, now Haiti. Sugar, they contend, was not particularly large compared with other sectors of the British economy, even including the returns to capital and labor on the West Indian plantations. You can get a sense of the magnitudes from Table 1, which compares relative industry sizes in 1805.

Sugar, moreover, wasn't a strategic industry. It was only useful as an intermediate for the refining sector, which was smaller than paper, and while it purchased consumer goods, so did everyone else of comparable size. Moreover, under the extreme assumptions used by Solow to get "large ratios"—all the profits of the slave trade and sugar dedicated to industrial capital formation, slave- and slave-shipowners refused to expand their own activities or to spend profits on consumption—banking, insurance, horse-breeding, canals, hospitality, construction, wheat farming, fishing, and the manufacture of wooden implements could all have been the critical sector!

Finally, E&E swat away Solow's argument that the Americas could only have been developed with an export-oriented plantation using slave labor—though in a slightly weird way. They argue that there was lots of unfree but non-slave labor that could have substituted for African chattels, including the Latin American hacienda system or already-existing white indentured servitude. African slavery would've been more efficient, true, but the result would've been higher prices for sugar, cotton, and tobacco, not autarky for Britain.

I think they dismiss the counterfactual for cotton a bit too quickly, saying that it only became important at the end of the eighteenth century. That's true. It's also true that slave-produced cotton just wasn't essential to the Industrial Revolution. During the Civil War, for example, Indian cotton was substituted for American despite its lower quality; Walker Hanlon (2014) shows that British manufacturers innovated and modified their machinery to adapt to the new source of supply.

The following chart from Pseudo shows that India expanded its output rapidly to fill the gap, such that by 1865 imports were over 80% of prewar levels. Once America came back online, British imports were well above prewar levels by 1866, and by 1880, free-labor America had finally surpassed the bumper year of 1860 in exports to Britain.

But that was in the late twentieth century, long after Britain had achieved supremacy in cotton textile production. Maybe during the nascent phases of the IR, American cotton provided a critical margin that allowed British producers to outsell Indians, and then scale up industry sufficiently to get the Great Inventions?

Still, E&E is a pretty comprehensive critique of a lot of the preceding literature, and where it offers detail, it hasn't been answered. But the paper is wanting in one big area: the vent-for-surplus and export-led-growth channels, which they basically don't address.

Joseph Inikori's Africans and the Industrial Revolution fills the gap. Subtitled "A Study in International Trade and Development", it's basically a '70s dev-econ take on Britain's industrialization as a case of export-led growth—linking the Commercial and Industrial Revolutions. For Inikori, foreign trade is a universal solvent. It changes institutions, rebalances power between interest groups, creates export markets, provides raw materials, induces the division of labor, promotes shipping and services, and spurs technological progress. Most of the "domestic" factors often cited (by people like North) are endogenous to trade. Take infrastructure provision: canals were only really useful in local circulation and getting goods from workshop to coast. Or population growth, which responded to new employment opportunities outside agriculture.

Inikori's conceptual model is a riff on classic development and trade theory: import-substitution industrialization (ISI), in which a nation tries to replace increasingly complex foreign goods with domestic versions. This process occurs in three stages. First, you must complete the "easy" step of producing consumer goods, often underneath tough tariffs, import duties, and quotas. Once the home market is saturated, you have to either produce for export or move on to stage two: producing intermediate goods, like steel. Finally, if that works out, you can finish up by making machinery, at which point you're an Industrialized Country. Inikori's thinking of South Korea and Taiwan after 1945.

Once you've got enough industry in your country, then innovation just happens—people invent by trying to solve the problems they face. It's accelerated by the formation of industrial clusters, like the West Riding woolen zone and the Lancashire textile enclave, in the hinterlands of major port regions. As Inikori writes, "overseas sales expansion and general growth of output and concentration of the industry in the region preceded the growth of technological innovation in woolen textile production in the West Riding."

Africans come in from several angles. The slave trade created massive backward linkages, from the development of maritime finance and insurance to the production of rope and copper sheathing for the ships. Participation in the triangular trade boosted British prowess as a maritime power, expanding its re-export business and entrepot trade, thus opening up new markets for British goods. However, slavery's most essential role was in permitting the "large-scale production of commodities for Atlantic commerce in the Americas" when economic pressures tended toward small-scale subsistence farming. That's all well and good, but only the former could induce the kind of regional specialization in the Atlantic basin that fueled Britain's export surge.

Inikori lovingly amasses statistics on the share of British overseas sales directed to America and Africa (the latter to pay for slaves, he says). Between 1699/1701 and 1772/74, increased sales of English manufactures in Western Africa and the Americas contributed 71.5 percent of the total increase in exports; from 1784/86 to 1804/06, they had a 60 percent share. Thus the purchasing power of the slave economy, Inikori claims, was central to British industrialization.

I confess to adoring Inikori's book. It's the only grand theory of the Industrial Revolution to take both British historiography and economic modeling seriously—and it's by a historian, no less! Inikori's emphasis on the commercial revolution is laudable, given that it's basically missing from/discounted in other accounts, like Mokyr's, and only briefly mentioned in Allen's. For the purposes of the Williams debate, Inikori makes foreign trade synonymous with coerced plantation labor and imperialism. To paraphrase Hobsbawm: whoever says Industrial Revolution says trade, and whoever says trade says slavery. Or a Socratic syllogism:

The Industrial Revolution was caused by trade.
Most trade was with the American plantation colonies.
Therefore, slavery caused the Industrial Revolution.

Trade Theory

The Cambridge Economic History of Modern Britain is a textbook—it shows the kids what the adults have been up to. Surprisingly, however, the 2004 edition contained two quite contradictory essays on the role of foreign trade in the Industrial Revolution.

On the one hand, C. Knick Harley's "Trade: discovery, mercantilism and technology" is a grouchy, old-school rejection of the "engine of growth" theory. Harley made a point ignored by vent-for-surplus theories: imports and export industries have substitutes. Engerman and O'Brien say that workers in export sectors would be tough to re-employ; Harley thinks they would have done something else, at a non-zero but not 100 percent cost. As an example, he suggests that autarky might've lowered Britain's terms of trade by 50 percent. If the share of imports in income was .125, then prohibiting trade would have lowered GDP by 50% x .125 = 6 percent.

Against Inikori's theory of trade-driven technical change, Harley writes that the "dynamic British industries would have been large even if they had not captured export markets, and there is no evidence that the expansion from trade contributed learning that would not have occurred in somewhat smaller industries." He adds, again without citation, that there's little evidence that the export sector had bigger learning dividends or that merchants saved a lot more of their income than the landed gentry.

Harley adds that the eighteenth-century British empire wasn't particularly large or prosperous compared with the French, whose Saint-Domingue plantations would have outcompeted Jamaica's without protection, or the Spanish and Portuguese. French trade to the Caribbean grew faster than English, while French merchants controlled the re-export trade for sugar in Europe. At 10.5 million inhabitants, Spanish America was a much larger export market than British America, which with just 1.5 million was about the size of Portuguese Brazil.

Harley disregards much of the existing literature on the Williams thesis, writing that "Williams’s view is now seen as overblown and the slave trade as not exceptionally profitable." In response to Solow (1985), he notes that income from wealth was equal to half of Britain's GDP, against a miserly 1.5 percent from the slave trade. And he happily cites O'Brien (1982) on the peripherality of the periphery against Wallersteinian claims about the role of an Atlantic "world-economy." That last bit is disappointing, given that O'Brien himself had long since moved on.

The essay's main attack on Inikori, though, is simply to deny that trade was essential to the Industrial Revolution at all. Yes, trade "enhanced" and "stimulated" specialization and the division of labor, but there's no causal link to modern economic growth. Instead, technological change made exports cheaper, and British industry won export markets as a result. However, that's not a death blow to Inikori or Engerman and O'Brien.

In many ways, Findlay and O'Rourke's Power and Plenty feels like a reaction to Harley. In their forceful chapter on "Trade and the Industrial Revolution," they decry the use of "Harberger triangles"—multiplying a fraction by a fraction to get a smaller fraction—to make small ratios arguments, as we saw Engerman (1972) do in the last essay and Harley do just now. But the authors also agree with Eltis and Engerman that the original Williams thesis, based on Marxist capital accumulation, is equally wrong.

Findlay and O'Rourke are economists, schooled in the new trade and growth theory of the 1980s and 1990s. They argue that most of the disagreement about the role of the foreign sector reflects "inappropriate theoretical frameworks." That feels charitable, and the ultimate cause of modeling choices has, as we've seen, been ideological. Instead, they propose a revamped version of Findlay's 1990 general equilibrium model to study a neglected counterfactual: "what would have happened to the Lancashire cotton textile industry if there had not been any British colonies or slavery in the New World[?]"

We've already discussed the basic structure. The model "predicts" an expansion of British manufactured exports as a result of technological shocks, some of which are needed simply to pay for raw materials. This obviously happened, and cotton imports exploded: in 1791, Britain imported 189,000 pounds of raw cotton; in 1801, 21 million pounds; in 1810, 91 million. American trade not only supplied crucial raw materials—over 80 percent of which were produced by Africans during the 18th century—but also stopped the prices of British textiles (churned out in increasing quantities) from falling faster than they would have done in a closed market. Thus any given increase in supply led to a greater rise in output and a smaller decline in price than would have taken place in a closed economy. As it stood, 60 percent of the cotton sector's output was exported in 1815. Maybe that could've been absorbed by the home market... but it would've been at a much-reduced price.

Findlay and O'Rourke also endogenize technical change to international trade. The high fixed costs of technology discovery and adoption can be amortized across more units in a larger market, lowering average costs. If, as Desmet and Parente (2006) show, larger markets make firms' demand curves more elastic, then any given innovation that reduces prices—like an improved textile machine—leads to greater increases in output than in smaller ones. Elastic supplies of inputs are also critical: if you can't actually buy cotton, you're sure as hell not making a machine that uses it.

The main message in Findlay and O'Rourke is not that slavery caused the Industrial Revolution. They're actually trying to show that trade and British imperialism mattered. But as Inikori showed, basically all of the cotton sector's output was going to the Americas (including indirectly via Portugal to Brazil) and Africa during the eighteenth century, at least until Europe picked up some of the slack after the American Revolution. Fustians, an early cotton-linen mix, grew up on exports to Africa and the American slave plantations. And they still appeal to the Atlantic System as an integral part of the British economy—remove one piece (slavery) and the entire scheme might wind down.

Deirdre McCloskey took issue with everyone in her 2010 book Bourgeois Dignity. It's basically an all-out attack on every major theory of the Industrial Revolution except her own—and that includes vent-for-surplus, trade-as-engine-of-growth, and the Williams thesis.

BD is, in part, a reaction to Power and Plenty, which had both come out three years before. McCloskey rightly argues that cotton could be grown without slavery. By the 1870s, prior to the imposition of Jim Crow and after abolition, the United States was producing 42 percent more cotton than in 1860. The question, of course, is whether this was possible when the Americas were being settled in the first place—when the costs and risks of setting up as a worker across the pond were high.

She makes some simple cross-country comparisons of countries with empires that did badly (Iberia) and with no empires that thrived (Scandinavia, Germany, Austria). But I simply do not understand her argument that "if Manchester had been the right place to spin cotton before the invention of air conditioning, then European events would have put it there, regardless of whether Britain won at Plassey or Quebec or Trafalgar or Waterloo." Britain's early preferential access to and development of the Americas helped to create her comparative advantage in cotton textile production. As Berg and Hudson (2021) point out, the skills of British artisans and engineers were at least partly endogenous to the raw material supplies and export markets that allowed them to work on, well, textile machinery!

The end of the 2010s was a bumper period for "big books" in economic history. Joel Mokyr's The Enlightened Economy devotes several pages to attacking the various iterations of the Williams thesis. He acknowledges that trying to cultivate cotton with free white immigrant labor would've been a lot more expensive than with slaves, but responds that this was only true of cotton. Few other critical sectors, least of all ironworking, were so heavily reliant on New World, slave-made raw materials.

Harley (2015) is also a reaction to Findlay and O'Rourke. He turns their trade-theoretic reasoning against them. The North American settler colonies, not the Caribbean, were the crucial buyers of British manufactures. The fact that American shippers entered new markets—e.g. East Asia—after independence (when they were prohibited from trading with the BWI by the Navigation Acts) shows that the Thirteen Colonies were not reliant on exports to the West Indies to earn foreign exchange. Population growth in New England, Harley adds, was probably independent of trading opportunities—who wouldn't be enthralled by the prospect of free land?

Harley also defends his Harberger triangulation—it's just math!—and calculates that if British exports were 45% of manufactured output, 55% of that went to Africa and the Americas, of which 60% went to the US and British North America, then the Numenorian destruction of the colonies would only have reduced national income by 8 percent and industry by 1/4. He adds that Findlay's 1990 general equilibrium model is very simplistic given the small number of goods and sectors and that it doesn't actually say anything about dynamic effects, because it's also static.

Human Capital

Harley, however, did not write the "international economy" essay in the 2014 edition of the CEHMB. Instead, the honor fell to Nuala Zahedieh, a historian with Williamsite leanings. Zahedieh invokes Wallerstein in discussing the core-periphery relationship between Europe and its colonial possessions, particularly the fact that "core" industries imply large human capital spillovers and up/downstream linkages for the economies that develop them. As a consequence, simply removing a line of trade, a la Harley/O'Brien, might result not only in the loss of that sector's aggregate exported output, but also detract from other nearby firms sharing its skilled labor or purchasing its cheap intermediate goods. Zahedieh also emphasizes the role that violence and mercantilism played in setting up and defending the Atlantic slave system, which led to this human capital deepening.

Zahedieh's views are probably best illustrated via her 2021 debate with Joel Mokyr over his "millwrights & mechanics" theory of the Industrial Revolution. Mokyr had published a synopsis of his views through the transcript of his Keynes Lecture—"The Holy Land of Industrialism"—in the Journal of the British Academy. The piece stresses the role of upper-tail human capital, particularly the skills of artisans and millwrights, in catalyzing British industrialization. Machines need adept makers. Zahedieh's response tries to link the "skills" argument, along with the role of applied science, to slave-based American trade. For Zahedieh, the supply of skills and the demand for useful knowledge are endogenous to the foreign sector. Trade, for example, increases the demand for accurate precision instruments, particularly clocks, used to measure positioning at sea.

Trade also sparks innovation in sectors exposed to the Atlantic economy, especially in metalworking. Zahedieh (2021) argued, by studying the accounts of the London smith William Forbes, that the copper industry was inextricably linked with slave-made sugar, which had to be boiled and refined in works requiring copper equipment. This sector's expansion had spillover effects for sectors nearby in geography and the supply chain, including reverberatory furnaces and (much, much more speculatively) the steam engine. She also links much of Britain's inventive activity during the late seventeenth (curiously, not the eighteenth) to colonial commerce. Ultimately, navigation, sugar, and slave cotton expanded the market for useful knowledge and UTHC skills that could be applied to other sectors of the economy.

Berg and Hudson (2021) make similar points in their reply to Mokyr. Arguing that "the whole question of short-lived British industrial primacy can only be addressed by invoking an external, though far from independent, economic stimulus," they attribute it to learning-by-doing externalities in the "catchment areas" of ports participating in the Atlantic trade (shades of Inikori). They emphasize a flexible, skilled, low-wage labor force that could be swiftly adapted to new export industries and product/process innovations resulting from uniquely American raw material imports. The point, though, is that looking at the straight-up contribution of the Caribbean to British output is misguided. If you cut Britain off from American trade, you'd lose not only the raw production, but also the presumably vast innovation and human capital spillovers in upstream and downstream sectors.

These spillovers are difficult to quantify, and no one (to my knowledge) has actually tried. So if you're a young, enterprising economic historian with time on your hands (wait, like me!), this would be something I'd be very interested to see. As it stands, however, we've got no idea how American trade externalities compared with those fostered by other industries, and how replaceable they were by commerce with free-labor colonies/states.

Interlude: The New History of Capitalism

At this point, you're probably wondering: what happened to Beckert? Beckert, after all, wrote a long book called Empire of Cotton in which he argued that the rise of the West was predicated on the exploitation of the Rest, specifically through the channel of enslavement and the production of raw materials. "War capitalism" meant the conquest of the Americas for cotton cultivation by slave labor and the forcible opening of foreign markets for textile exports; this terrible and evil regime, he says, transitioned to industrial capitalism at home while retaining its imperialistic elements abroad during the nineteenth century. It all sounds very Williams/Wallerstein/Inikori-ish.

Sadly, Empire of Cotton is a fairly incoherent book—and it's the most coherent and UK-focused of the "New History of Capitalism" literature, which tends to be even more jumbled and US-centric. As Burnard and Riello (2020) point out, distilling the superiority of the British Empire to "excessive brutality" makes industrialization analytically intractable, obviating the political economy and efficiency of Britain's administration and traders, and making no distinction between international and intra-imperial trade.

Burnard and Riello add that cotton wasn't actually central to industrialization until the early nineteenth century and that until that point, it was the West Indies, not the American plantations, that supplied it. Without it, they believe that it's entirely plausible for Australia (wool) or Russia (flax) to have offered up the raw materials for industrialization. They aren't extremely lucid on this point, but they make one important note—both NHCs and economic historians often conflate several questions:

1. What caused the Industrial Revolution

2. Why was the Industrial Revolution British

3. Why did it happen during the long eighteenth century?

Slavery, then, did not cause the IR, in the sense of ensuring that it happened somewhere. But it probably explains where and why it happened (i.e. 18th c. Britain)—which is sort of tantamount to saying that it caused the IR.

Other recent surveys, like Wright (2020), appear to agree on this point. There would probably have been an Industrial Revolution without slavery, but it would've happened later, and maybe not in Britain. Wright argues that sugar plantations in the New World could not have been cultivated without slavery, thanks to the physical dangers of the work, which free men all but refused to do. He cites many of the old arguments about the importance of market extension, adding that Lewis Paul's roller spinnning machine of 1738 was a direct consequence of international competition. He also contends that "economic infrastructure" benefited from trade—port cities developed services industries, the productivity of shipping (a "revolution of scale") improved, "long credits" were extended by longshoremen and warehousemen, and the cotton sector had gotten large enough to support a specialized machine tool industry. Wright also cites Hudson's argument that trade promoted the integration of national money markets, which in turn supplied the credit for both foreign and internal trade.

"By 2014," writes Wright, "the transformation of expert opinion seemed all but complete." He disavows the claim that slavery "caused" the Industrial Revolution, but still says that "the slave trade was part of an interdependent imperial system, whose expansion underlay the sustainability of the industrial revolution." Which is basically dodging the question. If you don't think that there is an alternate universe in which there is an Industrial Revolution without slavery, then it is a cause! It's more than a little surprising to me that historians like Wright and Hudson won't own it.

What do we know about slavery and capitalism?

Should we agree with Wright and Hudson? Is it reasonable to think that slavery was "essential" to the British Industrial Revolution?

Far from it. First, no one has successfully answered Eltis and Engerman's arguments about the non-strategic nature of the sugar industry, much less the older Thomas and Bean/Coelho critique about wealth transfers from Britain to the plantations.

Here's a plausible story about slavery's role in British industrialization. Following Solow, I think it's plausible that, without slavery, New World agriculture would have been oriented more toward yeoman farming than cash crop plantations. This would have meant less trade between the colonies and the metropole; even though imports by free and non-free colonies were in reality similar, the free colonies paid for their imports by exporting food and timber to the slave colonies. Sugar, for which the British had high levels of demand, thus became important for backstopping purchasing power in the Americas with which to buy British exports of textiles and metalware. How important sugar actually was, though, is not precisely clear—no one has successfully estimated the counterfactual.

During the eighteenth century, cotton was becoming increasingly important to Britain, and a large fraction of its output was exported. Market size created economies of scale and also directly promoted technical change, as firms could amortize the fixed costs of invention across a greater range of units sold. It's plausible to think that some of the "great inventions" in the textile industry were in some way responses to opportunities for foreign sales. Just how many has not been demonstrated. And the Findlay (1990) model is not sophisticated enough to tell us about counterfactual output and productivity in the cotton sector without slavery.

However, Clark et al. (2008, 2014), using a computable general equilibrium model, do analyze the response of sectoral output and TFP to partial and full autarky. To their surprise, they find that cutting off trade with the Americas in 1760 would have decreased total welfare by only 2 percent—and by only 1.6-3.6 percent in 1850. Cotton textile output would have declined only slightly, by 1.1 percent, and by only 8 percent in 1850. It doesn't seem plausible to say that a textiles market 90 percent of the size of the actual one would have had drastically lower rates of innovation.

The rest of the world was much more important; cutting off ROW trade would have decreased real incomes for capitalists and workers by 7.9 and 10.6 percent, respectively. These figures should be treated with some caution—they are static welfare losses, for one, and the model is still pretty simplified, including only five sectors and "the rest of the economy." Nevertheless, they're the best estimates available about the counterfactual importance of the Americas—and they do really hurt an Inikori-Williams-type story. Indeed, we can assume that the effect would have been much more moderate, given that there would have been some trade with the Americas, especially cotton exports, which could have been produced (as both Wright and Blackburn agree) with free labor.

What about other kinds of production externalities? The development of financial services, a machine-tool industry, and the cultivation of pools of skilled labor were all probably boosted by the slave trade and the plantation economy. No doubt they were important, but neither Zahedieh nor Berg and Hudson actually give any evidence as to their magnitudes. We don't need any more studies showing how these links could have worked—we need precise quantitative counterfactuals with which to assess the impact of an early abolition. Banning the slave trade in 1807, for example, clearly didn't severely damage Britain's status as a global mercantile power par excellence—indeed, Britain subsequently specialized in the provision of financial services.

The best argument you can make, I think, is that the British Atlantic empire of the early eighteenth century helped the metropole to realize latent comparative advantages. Cheap cotton and large sugar-funded markets in the New World helped Britain to expand export industries, building up scale economies, a financial services sector, and pools of skilled labor. Slavery massively boosted the import demands of the American colonies at an early stage, increasing their dependence on exports from the metropole. British industries, which were becoming increasingly export-oriented, could be protected and groomed on captured colonial markets before taking on the rest of the world—a terrific first-mover advantage. Countries lacking this internal imperial specialization could not catch up.

Even if all that were true, slavery can't explain everything. Why was Britain such a successful colonial and commercial power during the seventeenth century—a status that enabled the consolidation of the slave-based Atlantic economy? Why did Britain succeed initially in exporting to Europe even before the rise of the imperial system? How important was cotton anyway?

And the Williamsites still have questions to answer. Why didn't the abolition of the slave trade in 1807 do the damage that a Findlay or a Hudson-Zahedieh explanation would predict, given that industrial capitalism was still in its infancy? Why was the U.S. plantation economy easily able to adapt to free labor after 1865, when it supposedly would not have been in 1765? Was cotton really that important, if it only boomed after 1780 and could be produced using free labor with comparative ease? Did Britain have to produce it at all?

These are empirical problems that the literature can and must try to solve. It probably won't—we'll probably see more papers by the same old scholars saying the same old things—but there's reason to hope. Economists have taken an interest in the Williams thesis of late; Ellora Derenoncourt (2018), for example, analyzed the connection between slaving voyages and British city growth. And Heblich et al. (2022) argue that slaves, which were highly collateralizable, encouraged capital accumulation and spatial agglomeration. They show in a dynamic spatial model that slavery increased national income by 3.5 percent. We’ll dig into the mechanics of these two papers next time.

Economic historians can do a lot more to make convincing arguments in either direction. Right now, the balance is probably weakly in favor of Williams, but the effect size, if it exists, looks modest. It’s not clear that slavery was "indispensable" to industrialization, or even that it provided the essential margin that advanced Britain ahead of its European rivals.

This series is not about the economics of plantation slavery, which was brutal, profitable, and fully compatible with capitalism. It’s about the role that slavery played in endogenously generating modern growth in Britain. With that in mind, the TL;DR:

1. Profits from the slave trade were not demonstrably large compared with British national income.

2. While they were pretty big compared with industrial investment, supposing them to be significant requires implausibly assuming that all profits were saved and that all profits went into industry, rather than land or trade/services.

3. The Jamaican plantation economy did generate substantial wealth, but for the same reasons in (2) it’s not clear that they actually financed much investment. Many Jamaican planters repatriating money to Britain did what you’d expect them to do—buy estates.

4. Moreover, it’s possible that the wealth generated by the Jamaican plantations was completely offset by A) elevated sugar prices due to mercantilist tariffs and B) the costs of Jamaica’s garrisons and naval defense.

5. Debating Williams’ financing channel was unlikely to prove fruitful anyway; capital accumulation probably did not cause British industrialization, given the modest set-up costs of even large factories.

6. By the 1980s, most pro-Williams historians had given up on fighting about “small ratios” in favor of an “Atlanticist” view emphasizing British exports to New World plantation economies rather than investment capital; this view was more or less accepted by several anti-Williams historians.

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In August 1962, an Oxford historian became the first Prime Minister of a newly independent Trinidad and Tobago. He was the country's only Prime Minister until 1981, winning an unbroken string of elections up to his death at the age of 69, by which time he’d been dubbed the “Father of the Nation.”

Among economic historians, Eric Williams is better known for his 1938 Ph.D. thesis, published in 1944 as Capitalism and Slavery. Williams, a Marxist, argued that slavery catalyzed British industrialization during the 18th century and that "the monster [capitalism] then turned around and destroyed its progenitors [slavery]"—manufacturers no longer needed the West Indian plantations and abolished an obsolete slavery. Williams wanted to show that abolitionism played a minor role in emancipation (the Marxist elevation of the material over the ideological). But economic historians have mostly focused on his preliminary claim, which we now call the "Williams thesis": that Britain's involvement in the slave-based Atlantic economy caused the Industrial Revolution.

For a short book, Capitalism and Slavery ranges over an enormous variety of topics, so it's hard to pick out the core tenets of the “Williams thesis,” other than the basic association between slavery and British industrial development. Williams focused on surplus capital, drawing a channel from profits derived in the Atlantic trade and the plantation economy to investment: "the profits obtained provided one of the main streams of that accumulation of capital in England which financed the Industrial Revolution" and "supplied part of the huge outlay for the construction of the vast plants to meet the needs of the new productive process and the new markets."

Capitalism and Slavery was, as Kenneth Morgan (2000) charitably suggests, written "at a time when statistical presentation in economic history was much less rigorous than today." He means that Williams' approach was scattershot. I've isolated three parts of the original Williams thesis: 1) that profits from the slave trade were an irreplaceable source of industrial finance 2) that the wealth of Caribbean planters played a similar role 3) that the Atlantic economy was, in general, important for British development. To support 1), Williams pushed a 30 percent figure for profits on the slave trade, which would have been more than twice the "normal" rate for the day. His data was totally inadequate for the purpose, consisting largely of lists of rich Britons who'd somehow made at least a pound or two off slavery. So there was a lot of room for early cliometricians—who cut their teeth with controversial debunkings of historical theories—to challenge his expansive claims.

The Williams thesis is economic history's longest-running debate. And because slavery is often perceived as capitalism's original sin, it just won't go away. Williams has been revived in the twenty-first century by the popular book Power and Plenty by Ronald Findlay and Kevin O'Rourke, as well as recent interventions by economists Stephen Redding, Stephen Heblich, and Hans-Joachim Voth. We're starting in 1944, and with almost eighty years of terrain to cover, we're going to have to split this up into three posts. The first will tackle the initial (and heated) debates over points 1) and 2), ending with the work of Barbara Solow in the late 1980s. The second will explore the economic history literature since Solow, focusing on the evolution of the Williams thesis to cover broader assertions of the importance of the Atlantic economy (3). The third and final version will survey the recent work of economists in raising the ghost of Williams in a new conceptual garb, based on models of agglomeration economies and financial frictions.

The trade profits and plantation wealth debates happened sort of simultaneously, so we'll weave between them as we go. What we'll see is that the original formulation of the Williams thesis was basically completely wrong, and by the early 1980s that had become pretty obvious. But a revived version, emphasizing the importance of the broader “Atlantic system” to British industrialization, had replaced the old profits contretemps and become orthodox by 1987.

Slave Trade Profits

At the core of the Williams thesis is an argument that profits from the slave trade launched British industrialization by contributing to capital formation. This claim rests on answers to three empirical sub-questions: 1) how big were the profits relative to other industries and the overall size of the economy? 2) did profits rise prior to industrialization? 3) did slave trade profits specifically make a difference? The first phase of the debate centered on 1). Williams himself attempted no real analysis of systematic profits, instead adducing specific instances in which slave traders had reaped enormous gains—like John Tarleton, who’d turned £6,000 in 1748 into almost £80,000 by 1783. As I noted above, Williams guessed that average profits were 30 percent. As his detractors showed, he was totally wrong.

The first critiques of Williams' profit-based arguments came from Bradbury Parkinson (1951), an accountant, who demonstrated how to actually read slavers' account books. In Hyde et al. (1952), he and two co-authors showed that outcomes for Liverpool slave traders were highly varied, ventures were risky, and partnerships broke up frequently, all of which lowered returns. The main series used for this project, the 1757-84 accounts of William Davenport, was later studied by David Richardson (1975). Richardson disaggregated the 67 extant voyage accounts in the Davenport records and found that 49 were profitable and 18 were losses. Moreover, he found that the average profit was 8.1 percent per annum, substantially lower than Williams' back-of-the-napkin estimate.

Roger Anstey's The Atlantic Slave Trade and British Abolition, 1760-1810 sought to extend the profit analysis beyond single voyages in a constricted time period. He matched data from the voyage accounts to the numbers and prices of slaves sold in the Americas, concluding that profits rose from 8.1 percent in 1761-70 to 13.4 percent in 1781-90 before falling back to 3.3 percent in 1801-7. The average annual profit during those fifty years was 10.2 percent, slightly higher than Richardson's figure, but still much lower than Williams'.

Thomas and Bean (1974) devised a third and final approach to minimizing the profits of the slave trade, which was to theoretically examine the market structure of each stage in the transport of slaves from Africa to America. Since all stages of the commerce open to Europeans could be freely entered, they argue that levels of competition were extremely high and that all inputs but the slaves themselves were supplied perfectly elastically. So marginal firms should only have experienced temporary periods of non-zero profits. In a phrase that must have annoyed the heck of their adversaries, Thomas and Bean write that "[t]he 'invisible hand' eliminated any long-run economic profits." Indeed, the potential profits were actually passed on to the African slavers—the "fishers of men"—themselves.

Stanley Engerman (1972) asked the macro-question (3): "to what extent was the over-all level of investment in society raised by the profits of the slave trade?" Engerman noted that Williams' model, unlike his own neoclassical "new economic history" reasoning, assumed that resources weren't fully employed; so Williams was led to count any resources (e.g. capital and labor used in shipping and on plantations) used in the slave trade as gains. His procedure is simple: count the number of slaves exported, estimate the profits per slave, multiply the two figures, and compare the result to the investment share of British national income.

Engerman's profit-per-slave figures were probably (intentionally, to bias the analysis against himself) gross overestimates, as he just subtracted 1/4 the Jamaica price to account for costs. Even using the overstated profit numbers, slave profits were usually less than .5% of British GDP, and less than .1% using Anstey's more accurate estimates. Assuming a 5 percent investment rate and that slave traders saved every penny of their returns, the slave trade contributed at most 10.8 percent of British capital formation at its peak and as little as 2.4 percent at its trough. Only if one assumes that A) Engerman's upper-bound estimates are correct B) all profits were saved and C) all saved profits went into industry do you get a significant outcome—that slave profits peaked at 54 percent of industrial and commercial capital formation. Using Anstey's empirically derived figures, however, Engerman comes out with a much smaller (but still inflated!) 7 percent. Anstey himself conducted a similar exercise three years later and found that profits from the slave trade accounted for .11 percent of national investment.

In short, the first wave of new economic history studies to tackle the slave trade portion of the Williams thesis effectively shattered it.

A Plantation Revolution?

Williams also alleged that the wealth of the Caribbean plantations, obviously derived from slavery, was a second source of funds for British industrialization. The West Indies were the richest part of the first British Empire, valued at £50-60 million in 1775 and £70 million in 1789. The region's population rose by 40 percent from 1750 to 1790, sugar production by 11 percent, and exports to Britain by 9 percent. Once again, Williams amassed examples, this time of conspicuously wealthy Jamaican planters who invested their savings in British industry. They included Richard Pennant, a Liverpool MP who put the proceeds from his 600-slave, 8000-acre plantation into slate quarries in North Wales, and the Fuller family, whose interests included Jamaican estates, charcoal ironworks, and gun foundries.

But Williams made too much of his already small sample. Richard Pares (1950) showed that William Beckford, a millionaire who owned 14 sugar plantations and over 1000 slaves, invested little of his vast wealth in British industry. Many others, like John Pinney, were content with channeling funds into government securities and land. It's also unclear how much Jamaican money came back to Britain; some historians have alleged that it only came back with emancipation, which would be far too late to play the role Williams allows it.

Richard B. Sheridan's "The Wealth of Jamaica in the Eighteenth Century" (1965) examined records of Jamaican inventories. They found that their average value rose from £3819 in 1741-5 to £9,361 in 1771-5, a movement almost entirely driven by increases in the number (2x) and price (+76%) of slaves. He valued Jamaica's sugar estates at £18 million sterling, which sent an annual income flow to absentee planters and merchants of £1.5 million—amounting to 8-10 percent of British national income. That would be quite a lot! But his analysis was, well, imperfect. Since Sheridan had no aggregate data on financial flows between the colonies and the capital, his line of argument is essentially that 1) planters were rich 2) riches were produced by slaves 3) that money must have gone back to Britain 4) especially into British industry and 5) that this funding proved the critical margin in establishing new enterprises. As you can tell, there are lots of assumptions here!

Surprisingly, Robert Thomas (1968) critiqued Sheridan's analysis without touching assumptions 1-5. Instead, he proposed a cost-benefit analysis of Britain's possession of the West Indies for the British consumer. Warships and garrisons were expensive (an average first-rate ship, in John Brewer's oft-quoted example, could cost 10 times a large factory), as were the preferential tariffs granted to Jamaican planters to protect the imperial sugar market. Thomas actually felt that Sheridan had underestimated the value of the West Indies, but that this was both totally irrelevant by comparison with Britain's overall wealth and a poor return on defense costs.

Thomas asks what the counterfactual return to investing this wealth (£37 million) gradually in the British economy might have been; picking out the lower-bound 3.5 percent rate on risk-free consols to bias his own estimate downward, the number to beat was £1.295 million. But Sheridan didn't account for the elevated prices that consumers paid for the discriminatory sugar tariff, which set consumers back £383,250 per annum, or the massive costs of defense (£115,000 on troops and £315,895 for ships). Deducting these sums from the annual total left only £660,750 in social return, or 2 percent per annum. By Thomas's logic, Britain would’ve had higher income by just buying riskless assets.

Sheridan (1968) replied that Thomas had overstated the size of the non-sugar staples sector and thus the wealth of Jamaica/the West Indies, artificially reducing the return on capital. He also adduced a list of "invisible" sources of profits like insurance, remittances via North America, bullion from the entrepot trade, and sales of Jamaican industry that altogether raised his rate of return to 8.4 percent, even including Thomas's cost deduction.

Coelho (1973), meanwhile, backed Thomas, arguing that the high import prices on Caribbean sugar diverted resources and defense costs drained £1.1 million per annum out of Britain. Capital was being transferred from Britain to Jamaica—inverting the Williams thesis entirely! It was the increasing efficiency of the British economy during the Industrial Revolution that made the West Indies a profitable place to invest, and not the other way around.

So why did Britons submit to the planter monopoly? Coelho (like Ogilvie's explanation for guild persistence) blamed regulatory capture. Since the primary beneficiaries of the colonial system were the powerful plantation and mercantile interests, they had the lobbying power to keep Parliament on their side. Indeed, many planters ended up as MPs themselves, including the aforementioned Beckford and Pennant. It was thanks to the West India interest that Britain kept Canada, and not Guadaloupe, at the end of the Seven Years' War; the planters feared the consequences of increased (and highly efficient) competition in the imperial trading system.

Enter Solow

The plantation debate then went quiet, but in 1981, Joseph Inikori (get used to seeing his name) attacked the low-profit position hacked out by the new economic historians of the '70s. Inikori was annoyed with Thomas and Bean. Rather than an efficient market with free entry, he asserted, the slave trade was noncompetitive, dominated by fewer than a dozen top firms with much higher productivity than their peers. This small, closed group was able to exploit the inequities of market structure—inelastic supplies of trade goods and credit—to earn monopolistic profits of up to 50 percent, well in excess of Williams' exaggerated guess and several multiples of the 10 percent figure agreed on by Anstey and Richardson. Inikori discards the Davenport accounts, for which he only finds a maximum of 14 percent profits, on the grounds that Davenport had ignored non-British markets and used smaller ships than the bigger traders who appeared after 1780. Inikori also attacked Anstey for using an excessively low slave price and volume.

Anderson and Richardson (1983) returned serve with a comprehensive critique of Inikori's analysis. Inikori based his average profit calculations on a sample of just 24 voyages; thus a few key observations—five voyages fitted out by just one firm, Thomas Leyland & Co. between 1797 and 1805, that earned 71 percent returns—could skew the results. Moreover, successful firms were more likely to have preserved records, creating an upward bias. The remaining nineteen earned just 12 percent per venture, lower than in the Davenport sample. In focusing on venture rather than annual profits, moreover, Inikori ignored the substantial delays that investors faced in getting their money back. The most successful voyage in Inikori's sample, that of the Lottery in 1802, made a huge venture profit of 138 percent. But few of the proceeds were collected until 1811, nine years after the ship sailed! Anderson and Richardson argue that traders thought on the basis of annual return on capital, and that considering time factors profits were substantially lower. Moreover, Inikori's claims about concentration were pretty ephemeral—the largest eight firms in Liverpool controlled just 58 percent of investment, which is by no means exceptional. And as the table attached shows, there were a ton of little firms surviving alongside the large ones with high rates of turnover, indicating the possibility of entry.

Inikori (1983) responded that Anderson and Richardson failed to address his contention that the big firms did better in normal times and then made their fortunes in boom periods, but he himself avoided the essential point that traders rose and fell with the times, and that marginal firms were able to offer effective competition.

William Darity (1985) then entered and lambasted everyone. He argued that the "market structure" debate was pointless; bickering over the amount that excess actually exceeded "normal" profits gave no indication of how big those profits really were, and using primary sources to deduce profit levels was fraught by the "Darwinian" selection of successful traders' accounts. But Darity still thought profits were large. Reviewing the debate between Inikori and Anstey, he showed that the estimated rate of return was a function of slave prices, shipping tonnage (a proxy for outlay costs), the volume of slave imports, and the fraction of the voyage's value that returned to England as trading goods. Increasing the number of slaves imported to 1.9 million and the price to £45, estimated profits could be as high as 30.8 percent, very much in Williams territory.

Barbara Solow (1985) continued the revisionist turn with an attack on Engerman (1972). She does not contest his figures but rather argues that his maximally exaggerated estimate (all slave trade profits invested in industry) in which profits represent 39 percent of industrial and commercial investment is actually very large. For context, no single industry in the modern United States has made a contribution of equivalent scale. That's right, but it's totally irrelevant because of the implausible assumptions involved in creating this upper bound. Sure, if trading profits were large, if all wealth was invested, and if all that investment went into industry, then there might be a case for Williams. But we know that the first is uncertain and the latter two are just flat-out wrong. So I don’t really see the point of this critique.

More convincingly, she adds that if Sheridan's West Indies profits are added to Engerman's total, then slave-related commerce could have contributed 5 percent of national income, or nearly 100% of gross investment. From this perspective, she suggests that the Williams thesis is irrefutable, if not provable. I guess. But that still doesn’t deal with the Engerman assumptions. There’s zero reason to suppose that planters were especially likely to invest all, or even most, of their savings in industry. Finally, she uses a simple model to show that reinvesting the capital sunk in slave enterprises into the British economy would have reduced domestic profits, investment, and thus national income. This exercise is entirely speculative and I’m not sure why you should believe that the effect was of a substantial magnitude.

David Richardson (1987a) ripped the scab off the wound of the profits debate with a further analysis of the market structure and internal workings of the slave trade. He argued that slaves were expensive to transport and subject to high and highly variably levels of mortality during the Middle Passage, which, combined with the competitive market structure (sure to incite controversy) should have limited profits below 10 percent. Darity (1989) responded by basically repeating his 1985 points in a slightly more muted fashion (abandoning, for example, the inflated number of slaves transported from 1760-1800) and criticizing the low slave price assumed by Richardson. Richardson (1989) in turn replied that Darity had basically just copied Inikori and argued that the latter's high price estimates were derived from an overestimate of the share of slaves sold in foreign markets, where they fetched higher prices. He also noted the irony of Darity's claim that the profits debate was a "diversion" while still leaping into it once again.

Inikori, Darity, and Solow have one thing in common: though they can't resist bickering about profits, they all rightly disdain the debate as a red herring. In a remark that presages the later development of his broader theories, Inikori (1981), for example, writes:

[T]he emphasis on profits in the explanation of the role of the slave trade and slavery in the British industrial revolution is misplaced. The contribution of the slave trade and slavery to the expansion of world trade between the fifteenth and nineteenth centuries constituted a more important role than that of profits. The interaction between the expansion of world trade and internal factors explains the British industrial revolution better than the availability of investible funds. This is the more so because it is now known that industries provided much of their investment funds themselves, by plowing back profits. In other words, capital investment during the years leading to the industrial revolution was related not so much to the rate of interest on loans (depending on the availability of investible funds) as to the growth of demand for manufactured goods, which provided both the opportunity for more industrial investment and the industrial profits to finance it.

Darity also focused on colonial commerce, arguing that "[i]t was not profitability or profits from the slave trade that were essential in Williams's theory, but that the American colonies could not have been developed without slavery" and labeling the profits debate a "numbers game" and a "diversion." Finally, Solow proposed that slavery "made more profits for investment, a larger national income for the Empire, and a pattern of trade which strengthened the comparative advantage of the home country in industrial commodities." Indeed, Engerman himself had pointed out the failings of his own neoclassical approach to determining the role of the slave trade, admitting that

It is rather clear that a basically static neo-classical model cannot provide a favorable outcome for arguments such as those of Eric Williams. That form of argument depends upon sectoral impacts resting on various imperfections in capital and other markets, and upon the characteristics of specific income recipients.

For whatever reason, then, the participants in the Williams debate accepted that the old arena of debate either was no longer or had never been productive. By 1985, Williams' own supporters had essentially abandoned the original thesis in favor of a new line of argument emphasizing trade and the Atlantic economy.

Toward the Atlantic Economy

The "Atlantic economy" focus of the 1980s generation wasn't a coincidence. The first volume of Immanuel Wallerstein's influential four-book The Modern World-System came out in 1974, and the second in 1980. Wallerstein argued that the emergence of a world economy in which a specialization between manufacturing countries in a "core" region and primary product exporters in a global "periphery" helped to spur industrialization in the former and an unequal pattern of development. He also linked the accretion of wealth in the periphery to capital accumulation in the core, in line with the Williams debates of the preceding decade. Indeed, Wallerstein cites Williams in volumes I and III. In one sense, what Wallerstein and other writers with dependista leanings, like Amin and Gunder Frank, did was to extend the Williams thesis to apply to the broader process of unequal exchange with regions outside the Western European core.

Wallerstein's books drew a heated response from Patrick O'Brien (1982) in the EHR. O'Brien, in one of economic history's most memorable lines, declared that "for the economic growth of the core, the periphery was peripheral." Most of Europe's trade was internal and most of its industries did not require large shipments of raw material. The periphery generated only sufficient funds to finance 15 percent of investment spending during the Industrial Revolution. O'Brien scoffed at the notion that "without imported sugar, coffee, tea, tobacco, and cotton, [Western Europe's] industrial output could have fallen by a large percentage." Leaving aside the empirically dubious claim that the IR could really have functioned without cotton supplies, O'Brien's figures don't really show that the periphery was very peripheral. On the contrary, O'Brien estimates that for 1784–86, profits from trade with the periphery amounted to £5.66 million, versus £10.30 million for Britain's total gross investment in the British economy—over 50%. Whether 7 percent is big or small may be debatable; 50 percent isn't. Nevertheless, Wallerstein appears to have backed down in his rather feeble 1983 comment on O'Brien's paper, in which he calls the claim that peripheral profits were essential to the IR a straw man.

A number of studies tried to explicate the role of mercantile capital in British, especially Scottish, industrialization. Devine (1976, 1977) showed that profits from the Atlantic trade were invested in shipbuilding, snuff mills, sugar refineries, glassworks, ironworks, textiles, coal mines, and other industries in London, the western ports, and their hinterlands. Bristol, for example, had twenty sugar refineries in its city center during the mid-eighteenth century and also housed copper and brass works. Liverpool developed similar facilities. Glasgow, home to the "tobacco lords," saw the rise of textiles, iron, sugar refining, glassworks, and leather manufactories. Yet it's not possible to show that the capital invested in these enterprises specifically came from the peripheral trade, as opposed to the other domestic ventures in which merchants engaged. Indeed, Devine (1975) actually calculated that only 17 percent of the investment in Scotland's cotton industry c. 1795 was financed by colonial traders; the proportion financed by colonial funds must have been even smaller. Further, Kindleberger (1975) argued that merchants engaged in reselling products made small profits.

Wallerstein's emphasis on the broader international pattern of trade, however, offered a way past the old "small ratios" debates. Research during the 1980s began increasingly to focus on trade and manufacturing development rather than investment funds, especially in light of the low levels of fixed capital actually needed in most British enterprises. Inikori (1987), for example, wrote that "To understand the broader relationships [between slavery and industrialization] the emphasis must be shifted from profits and the availability of investible funds to long-term fundamental changes in England: the development of the division of labor and the growth of the home market; institutional transformation affecting economic and social structures, national values, and the direction of state policy; and the emergence of development centers."

A special 1987 issue of the Journal of Interdisciplinary History, later published as a Solow-edited book (on the “legacy of Eric Williams”), heralded the change in direction. Solow, Inikori, and even Richardson, the main authors tackling the "industrialization" side, all accorded the Atlantic economy an important role in British economic development. Solow's article placed British slavery in the West Indies in the broader context of European conquest-driven plantation agriculture and discussed the formation, by 1700, of an "Atlantic system" (echoes of Wallerstein) based on slavery. Britain shipped manufactures to North and Latin America, Africa, and the West Indies. Africa exported slaves. The West Indies bought slaves and manufactures while exporting sugar. Even the free North American colonies were dependent indirectly on slave labor, since they sold their timber and fish to the West Indies planters, using the proceeds to buy British cottons and metal wares.

Solow argued that "slave-sugar complex" increased economic activity in the Atlantic basin, raising Britain's overall output thanks to the country's (assumed) endemic underemployment, and boosting the productivity of capital (investment) by introducing an elastic supply of labor. She also drew a straight line between industrial exports (60 percent of additional output over 1780-1800) and structural transformation. She appears to back off the claim that slavery "caused" the Industrial Revolution, but doesn't really, echoing Deane and Cole's argument that exports drove the eighteenth-century surge in manufacturing and that the American market took most of it. Solow's argument lacks, well, really any kind of provable claim or supporting statistical foundation—of course slavery was important, but by how much and against what counterfactual?—so it's hard to evaluate. But its general drift exemplifies the new, expanded interpretation of the Williams thesis as referring to the role of the entire Atlantic trading zone existing solely because of coerced African labor.

Richardson took a slightly different tack. Though his contemporary work on the "numbers game" attacked the Inikori-Darity-Solow position on high profits, he remained convinced that the slave-sugar complex contributed to British industrialization (which makes his vitriol toward the trio somewhat perplexing). His article points to the growth of British sugar imports, tied to rising incomes partly, changing tastes, and the availability of complementary goods (tea), in raising demand for British exports in the Caribbean. African and American markets took 10 percent of British exports in 1700 and 40 percent in 1800.

The most important single factor [in driving the British export boom], however, was rising Caribbean purchasing power stemming from mounting sugar sales to Britain. As receipts from these sales rose, West Indian purchases of labor, provisions, packing and building materials, and consumer goods generally increased substantially after 1748, reinforcing and stimulating in the process trading connections be-tween various sectors of the nascent Atlantic economy. Data on changes in West Indian incomes and expenditure at this time are unfortunately lacking, but … gross receipts from British West Indian sugar exports to Britain rose from just under £1.5 million annually between 1746 and 1750 to nearly £3.25 annually between 1771 and 1775 or by about 117 percent.

Rising West Indian proceeds from sugar sales had a direct impact on exports from Britain to the Caribbean and, as planters expanded their purchases of slaves from British slave traders, on exports from Britain to Africa also. Customs records reveal that the official value of average annual exports from Britain to the West Indies rose from £732,000 between 1746 and 1750 to £1,353,000 between 1771 and 1775, and that exports to Africa rose over the same period from £180,000 to £775,000 per annum.

Like Solow, Richardson also argues that North America's balance-of-payments surplus with the Caribbean was necessary to offset its trade deficit with Britain. Summing up, he finds that the West Indies added nearly £1.75 million to British exports from the late 1740s to the early 1770s, accounting for nearly 35 percent of the growth in British overseas sales. But there's a twist. After accounting for re-exports, Richardson finds that the Caribbean exports (of which 95 percent were manufactured) accounted for just 12 percent of the growth (Deane & Cole numbers) in British industrial output from 1748 to 1776. That's not nothing, but it's hardly the stuff of revolutions, either. And it assumes that resources used in producing Caribbean exports could not have been reemployed, exaggerating the colonial contribution.

But Joseph Inikori's article—"Slavery and the Development of Industrial Capitalism in England"—is by far the most sweeping. Borrowing from development/trade economics and Marxist theory, Inikori adumbrates his own theory of Britain's rise. Medieval England was a classic undeveloped economy, lacking adequate markets for land, labor, and capital, with little division of labor and bad institutions. Two autonomous forces operate to produce economic and institutional change: population and external commodity trade. Without the latter, the former tends to produce Malthusian crises. Trade, however, led to the development of private property, the format of a landless proletariat, institutional change, and the creation of a "sociological milieu" for scientific and technological discovery. In short, basically all factors in British development are endogenized to the growth of the export sector.

In medieval England, the raw wool trade led to the cultivation of marginal soils and the development of a land market, giving the country a more "capitalist" internal structure than France. This allowed the English to better exploit the opening of the Atlantic trade. As population growth threw Continental economies into crisis, Britain tapped woolen markets in southern Europe and for "other manufactures" in the Americas to create employment opportunities outside agriculture. Inikori argues that this foreign demand far exceeded that generated by income and population growth at home. Indeed, both of the latter two were consequences of trade (following Wrigley's early links between demography and income)!

And trade was a consequence of slavery. The New World's low population and large natural resource base combined with a high price of white labor raised slave prices in West Africa, leading to the extension of coerced labor. Slaves were the workforce of the American plantation economies, which in turn grew rapidly after the late seventeenth century and furnished the exogenous demand for British manufactures that drove institutional and structural change. Without slaves, the "Atlantic system" would have been smaller. Without the Atlantic system, the scaling up of textiles would have been impossible, especially given the weakness of European demand for manufactures amid Continental protectionism and proto-industrial development.

Inikori's theory was the most complete and sophisticated to date in 1987—indeed, it's more plausible than the one that Williams offered. The profits of the slave trade are incidental to Inikori's narrative, being the mechanism by which coerced labor was elastically supplied to New World plantations. Nevertheless, the "Britain-as-East Asian-developing country" story is incomplete. Why, for example, did Britain export sheep in the Middle Ages, and why was the English state so enthusiastic about and successful in doing so? Why didn't these agricultural commodity exports prove a resource curse?

Inikori also doesn't really explain the links between textile production and technological change, and his assumption that discovery depends on "social context" is totally half-baked. The same goes for institutions. It's actually sort of a Smithian doux commerce take on North: institutions and markets solve all problems, so we just need to explain why they arise—and we can do it with the Atlantic trade! His explanation of why Britain's colonies mattered, but those of her mercantile rivals didn't, isn't an explanation at all—idiosyncrasies of colonies lead to idiosyncratic national outcomes? Really? And treating export demand as an exogenous factor discounts the role of internal factors (plantations only exist because Englishmen want sugar), culture, and political economy in creating export markets. Inikori also doesn't rigorously explore backward linkages from wool to cotton (I guess textiles are textiles!), obscures specifics of production technology, and ignores coal, iron, and steam.

Nevertheless, the fact that Solow and Engerman (who’d smote the Williams thesis fifteen years before) had come together to edit the volume indicates a rough consensus about the big thematic shift in how historians thought about the economics of the slave trade. For the most part, they abandoned a very wrong position and moved on to one that, despite less direct empirical evidence, is more in line with our intuitions about how economic growth happens. We’ll tackle that in Part II.

Being only five books long, the list is non-exhaustive, and really comprises just a few of my favorite works in the area. I’ve been compiling a list of the volumes that I really should have included in a Twitter thread. If you still really think I missed stuff, then yell at me in the comments.

I’m pleased with how the interview came out; if you’re interested, I’ve reposted (with Sophie’s permission) a few extracts from the actual transcript below. It’s about as accessible as anything I’ve written or said, for what it’s worth, and it’s the least discursive answer I am physically capable of giving to the “what do you do at work” question.

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You’re recommending books on ‘the Great Divergence’ which is something you’re very interested in. Perhaps you could start by saying what it is, and why you think it’s important that we know about it?

The Great Divergence is the large and increasing gap between the incomes of Europe and some of its colonial offshoots (plus Japan and a few countries in East Asia) and the rest of the world. When it began is debated—we’ll talk about that when we get to the books—but the ‘West’ was moving ahead of the ‘rest’ at least by the beginning of the 18th century, and the gulf between them has continued to widen ever since.

Ideas flow across borders, technologies can be transmitted to different places, and countries in the rest of the world can trade freely with Europe and its offshoots. Low-wage countries should theoretically be expected to catch up with the leaders on the back of technology adoption and capital investment. Still, perplexingly, there’ve been only halting signs of economic convergence. People who study the Great Divergence are trying to figure out exactly why it happened and why it continues to widen rather than shrinking—as economic theory would predict.

Quite a few of the books you’ve chosen are looking at things that happened hundreds of years ago. Are you saying the reason the Great Divergence is relevant today is that some of these factors are still at play?

Yes. The reason why it’s significant is that the distribution of economic success has many correlates, including military power and modernized political systems. It has ramifications for culture. The nations that were first to industrialize and, subsequently, parlayed that into modern economic success, have been able to exercise a disproportionate influence upon the operation of the global economy. They have transmitted their cultures and political and economic systems to the nations of the rest of the world. So, if you want to understand why the balance of economic and geopolitical power is as it is in the world today, you need to understand why the Great Divergence happened.

A few other highlights, including my discussion of the counter-evidence on Pomeranz:

So is Pomeranz’s book, his theory about the Great Divergence, now the received wisdom?

It’s the received wisdom among some historians. However, I would say that the empirical evidence has moved against it in the last 20 years. Pomeranz’s main contention is that the advanced regions of Europe and Asia are at the same level of economic complexity, free market activity and living standards prior to 1800. This isn’t really the case. Empirical work has been done getting real wages in Britain and several European cities and then also cities in the Yangtze delta, which is Pomeranz’s leading region in China. It turns out that in England silver wages were three times those in the Yangtze delta and five times those in India already by 1600. So the latest you can probably put the Great Divergence is 1700, which means that Pomeranz’s story about it being all about colonial windfalls and British coal use is probably misguided. These were definitely important factors and it’s possible that European industrialization would not have continued without them. But there was definitely something different about Europe from an earlier stage.

There are also other questions. One historian, Deirdre McCloskey, has pointed out that if coal was so important, Chinese industries could just have moved closer to coal because they have tons of it. Also, if Britain didn’t have coal, it simply could have imported it from other countries, which is what ended up happening during the Industrial Revolution itself. Britain exported a bunch of coal and continental countries imported it.

Also, the fascinating chapter in Mokyr’s The Lever of Riches on the so-called “Needham Puzzle” of Chinese technological stagnation/regression after the Song dynasty.

It’s a nice book. I like the pictures he has of the inventions he’s discussing. I noticed there was a chapter on China. What’s that about?

What I’ve discussed so far is the opening chapter of the book where he lays out his theory. At least half of the book is a narrative: first of technological progress through the last several centuries of history, and then a series of comparisons between first medieval Europe and the classical world and then between Europe and China. He is endeavoring to explain why China, which during the Song dynasty from 900 to the late 13th century seems to have been the most scientifically and technologically advanced civilization in the world, responsible for a whole slew of independent inventions that are incredibly important, then falls behind. The Chinese had wet field rice cultivation, dams for drainage, iron ploughs, fertilizer, and pest control. They invented blast furnaces for smelting iron a millennium-and-a-half ahead of Europe. They invented spinning wheels, cotton gins, used waterpower and water wheels. They independently invented the water clock, the compass, paper, porcelain, wheelbarrows, crossbows, and trebuchets.

Yet all of this basically disappears during the early modern period and China becomes strangely unreceptive to science and technology. Their early use of gunpowder and rocketry does not translate into later use of cannons. All of these technologies have to be imported from Europe during the 17th and 18th centuries.

Mokyr is trying to discover what made China less inventive after the 13th and 14th centuries. He doesn’t settle on anything in particular but suggests that the overly large role of the Chinese state in promoting technological change made Chinese invention very vulnerable to withdrawal of that state support. So, whenever the state decided that technological change was too destabilizing for society, invention was more likely to cease than it was in, say, polycentric Europe, where a competitive state system ensured that inventors who were in a repressive society could flee to a more liberal one, and set up their trade there. It’s probably not a coincidence that two of the most liberal societies in Europe, the Netherlands and the United Kingdom, were also particularly inventive. They both took on many, many refugees from other countries in Europe. Huguenots from France, for example, helped to set up textile industries and also the watchmaking industry in Britain.

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Over at Explorations in Economic History, Jonathan Hersh and H. J. Voth have a really interesting paper arguing that we mismeasure the introduction of colonial goods after 1492 in our welfare calculations. Using Hausman's measure of compensating variation and the Greenwood-Kopecky method(see below), they show that colonial goods like tea, sugar, and coffee may have together added 7 to 14 percent to consumer welfare, with 10 percent being the most likely number. This is pretty impressive in a period of stagnant real wages.

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Main points to be addressed:

1. The Dissolution of the monasteries and resultant land sales allowed a new class of middling landowners, the gentry, to accumulate holdings.

2. Hereditary copyhold was flexible enough to allow productivity growth, but did retard commercialization and agricultural productivity on the margin by inhibiting the efficient allocation of holdings.

3. However, the commercialization that followed the Dissolution (small, diffuse effects) was of a different nature than that which characterized British industrialization (enormous but regionally concentrated boom).

4. Monastic lands were mostly in the “agrarian periphery” of the south and east; few of the northwest's high-skill, low-wage textile regions were monastic.

5. Thus there probably is little connection between the mechanization of the cotton sector and the Dissolution VIA the specified channels of A) commercialization B) Catholicism (except on a national level) and C) gentry entrepreneurship.

6. Since industrialization was heavily regional, studying the IR in Britain at the scale of the parish might be looking at the wrong aggregation level.

7. It's possible that early land reform did differentiate Britain from France and Germany, but the effects by the mid-nineteenth century are pretty small.

8. Two reasons for (7): first, this is basically a persistence paper, so effects tend to attenuate over time; and second, commercialization itself helped to erode feudal tenures.

There's another exciting new paper out on British development: "The Long-Run Impact of the Dissolution of the English Monasteries," by Leander Heldring, James Robinson, and Sebastian Vollmer and published in the QJE. The authors use a 1535 survey of ecclesiastical properties to show that the expropriation and sale of clerical land by Henry VIII wiped out the inefficient feudal land tenure institutions that had prevailed across much of England after the Black Death, thereby increasing innovation, raising crop yields, and promoting structural change and industrialization.

They link this shift to the Industrial Revolution and Great Divergence through the so-called "commercialization hypothesis"—that Britain's precocity was due to the pervasiveness of its markets in land and labor. Markets could only form, however, once property relations had been clarified, and this happened (thanks to the Dissolution) 250 years earlier in Britain. Indeed:

The lagged abolition of feudal land tenure in France and Germany may be behind why England pulled ahead on the world stage in the eighteenth century. Continental Europe only transformed after their political revolutions in the nineteenth century finally did away with servile labor and customary land tenure relationships.

It's clearly a great paper, using a ton of novel data at a high level of spatial disaggregation—thousands of parishes!—and a plausibly important (if not exogenous) shock to answer a big historical question. But is it the right answer, and if so, how much does it explain?

"Mostly" and "a little," I'd say. But first, some background is in order.

In 1300, nearly one-half of the English population were serfs—unfree peasants who were bonded to a lord or a specific piece of land. This status was hereditary, not contractual, and was subject to the arbitrary authority of lord-controlled manorial courts. Serfs, also known as "villeins," also had their freedom of movement restricted and were forced to pay fines and labor dues to their masters. But the Black Death, which arrived in England in June 1348, brought serfdom to an end. The decline in population—and resulting labor scarcity—gave villeins increased bargaining power, which they used to renegotiate their tenurial status.

One of the best deals a villein could strike was a copyhold, so called because a copy of the contract was kept at the local manor court. There were two kinds: of inheritance, which was perpetual, and for lives, which generally lasted for three generations; both allowed the ex-villein to pay a low fixed nominal rent, useful in inflationary times. Since copyhold rents were lower during the Tudor period than for leaseholders, freeholders, and tenants-at-will, villeins had the incentive to take the arrangement when they had the power.

Heldring et al. argue that the Church was able to resist peasant bargaining power better than the lay lords—though, oddly enough, they attribute this to "more aggressive" behavior and being "less willing to give way." Why weren't the lords? I would have suggested that the Church as an organization was stronger than most individual lords. Consequently, copyhold was less frequent on monastic lands. They confirm this by looking at 2,136 manorial contracts owned by monasteries, finding that 13% were copyholds of inheritance, versus an estimated 33% for England at large. Elsewhere, copyhold predominated—2/3 of land in 1688—and endured until the nineteenth century.

What's so bad about copyhold? Using a formal model, Heldring et al. predict that copyhold of inheritance would lead to lower investment, reduced labor mobility, and inefficient matching between farmers and land. The reductionist summary: tenants pay a fixed nominal rent and thus get all of the net cash flows from investments. But the investment is specific: if they leave, they forfeit it, because they can't sell. With rising mobility and increasingly attractive outside options, a tenant invests less than if the landlord A) farmed the land or B) let it at market rent. Mobility is reduced because tenants want to keep their investments. And there will be little incentive for the most productive landlords to buy the best lands because the productivity gains would all go to the tenant. The problem was less bad with copyhold for lives, whch could be renegotiated upon expiry (100 years), and freehold.

In The Great Divergence, Kenneth Pomeranz cites the early collapse of hereditary land tenure regimes in northwest Europe as a key factor in that region's rise. "Much of western Europe’s farmland was far harder to buy or sell than that of China," he writes, and even in 19th-century England, "50 percent of all land in England was covered by family settlements, which made it all but impossible to sell." Hereditary tenure made it expensive, if not impossible, to consolidate and enclose land, which in turn prevented investment and the planting of fodder crops for livestock feed. The Anglo-Dutch adoption of the "new husbandry" began the Agrarian Little Divergence within Europe, helping to promote urbanization and raise incomes.

In the 1530s, there were 825 English monasteries owning 1/3 of the land in England and Wales. These holdings were spread out across the country, but as can be seen on the map, were concentrated in the South and East. In 1534, Henry VIII declared himself head of the Church of England. His goal, as a centralizing monarch, was to appropriate the tax revenues that the churches and monasteries had previously remitted to the pope, and so he conducted a survey of all ecclesiastical properties—the Valor Ecclesiasticus—in 1535 to figure out how much he could get, and where he might get it. Then between 1536 and 1540, the Dissolution got underway. Parliament passed a series of acts transferring the ownership of all English monasteries to the Crown, sometimes including the monastic buildings themselves. Monks and nuns, in this case, got state pensions and were told to pack their bags. When the expropriation was less peaceful, the Dissolution ended in the destruction of hated Catholic relics.

Henry's original plan was to manage his new holdings as a long-term tax base. Land revenue was an important way that late medieval and early modern kinds, who were expected to "live off their own", could end-run the power of their elites over the purse strings. But with war with France and the Holy Roman Empire looming at the end of the 1530s, Henry decided to dump the properties for immediate cash. He sold the buildings to his friends and commissioners of the Court of Augmentations, appointed to oversee the sales, generally offloaded individual manors at the fixed price of 20 years income, many of which went to the former managers—bailiffs and stewards.

So you can basically think of this as a great big land reform. Factors of production—land and people—get reallocated via the market for the first time. Holdings get owners with the commercial incentive to cultivate.

Why does this matter? There are basically two stages—the agrarian and the social. I'll take these in turn.

Land Reform

We've already talked about the modeled deleterious effects of copyhold of inheritance—it reduced investment, mobility, and productive land allocation. This, if correct, would have kept yields low and inhibited structural change. Does this play out in practice? Heldring et al. pitch their paper as a test of the "commercialization hypothesis"—that "the ability of factors of production to be allocated commercially through the market, rather than via feudal regulation or custom" explains Britain's precocious growth. They attribute this to Henri Pirenne, Karl Polanyi, and John Hicks (poor Robert Lopez! Paul Sweezy! though it should be noted that the Pirenne thesis concerned medieval Europe and the decline of feudalism!).

But I think their model has a tiny bit more Brenner (sans class struggle) than Pirenne. The old commercialization thesis is about market commerce eroding the inefficient feudal system; here, however, the authors turn the causality around. You need to get a fluid market for land going so that landlords can consolidate holdings and lease them to "capitalist tenant farmers" who could invest in improvements, exploit scale economies, and hire wage labor. Even though Brenner emphasizes the autonomous role of pre-existing class formations, he does argue that the sixteenth century was the critical stage of English development, when the landlords forestalled the move toward freehold tenure, suppressed peasant revolts, and began "to engross, consolidate and enclose." In France, meanwhile, the state—which sought to derive revenues from a peasant base—protected hereditary tenure and fixed fines, forcing landlords to buy up many small holdings to put together a contiguous unit.

This is an intuitive theory. But it goes against some relatively recent British historical literature. Bob Allen, for example, has argued that the copyholder was effectively the owner of his plot and thus could sell, sublet, or innovate as he pleased. French and Hoyle (2007, p. 11), whom the authors cite, state that “it is not clear why the survival of copyhold should have inhibited capitalist development, because copyholds could be bought, sold and let just like any form of freehold property.” And Allen's fabulous book Enclosure and the Yeoman (1992) strove to demonstrate that open field farmers—yeomen—on copyhold land were equal to, if not leading, the agrarian capitalists in advancing productivity during the Agricultural Revolution.

The first-order results look mostly good. The authors don't have data on the thickness of land markets. But they do show that parishes with monastic property were 9 percentage points more likely to have a market survive from 1516 to 1600 (vs a sample mean of 33%) and had fewer copyholds in 1842. For the second result, the OLS coefficient across all parishes is essentially zero, meaning that non-monastic and monastic parishes had the same number of copyholds. Using a long-difference strategy on a much-reduced sample (310 vs 2394 obs) consisting only of parishes with known copyholds pre-Dissolution, they do get a significant negative effect. So places that had copyholds lost them faster if they were monastic.

The Rise of the Gentry

Instead of citing Brenner and looking for agrarian capitalists, however, Heldring et al. situate their analysis in the context of the longest-running debate about the effects of the Dissolution: the "storm over the gentry," as it was humorously termed by the historian J. H. Hexter. The furor was kicked off by R. H. Tawney—he of the EHS's Tawney Lecture—back in 1941. In a famous (to my mind) paper, "The Rise of the Gentry," Tawney argued that the century-and-a-half leading up to the Glorious Revolution saw the emergence of a new class of middling landowners-cum-commercial-farmers. The "gentry" were

the landed proprietors, above the yeomanry, and below the peerage, together with a growing body of well-to-do farmers, sometimes tenants of their relatives, who had succeeded the humble peasants of the past as lessees of demesne farms; professional men, also rapidly increasing in number, such as the more eminent lawyers, divines, and an occasional medical practitioner; and the wealthier merchants, who, if not, as many were, themselves sons of landed families, had received a similar education, moved in the same circles, and in England, unlike France, were commonly recognised to be socially indistinguishable from them.

Mocked as crude and gauche, this "upper layer of commoners" absorbed an increasing area of land from the yeomanry and aristocracy. Heldring et al. contend that the proportion of land owned by the gentry increased from 25% in 1436 to 45-50% in 1688 while the shares of the yeomanry and great landowners remained stable. The Church and Crown share, however, crumbled from 25-35% to just 5-10% over this period—indicating that the soon-to-be-gentry picked up and profited from post-Dissolution sales. There were 200 knightly and 4,000-5,000 esquire/gentlemen families in 1524, according to the lay subsidy of that year; 500 and 16,000 respectively in 1600; and 620 knights, 3,000-3,500 esquires, and 12,000-20,000 gentlemen (per Gregory King) in 1688.

For Brenner, the gentry were, like the "great landlords," powerful enough to undermine peasant property rights and promote enclosure and consolidation. But Heldring et al. are interested in a slightly different angle: as proto-industrialists. One weakness here is that the gentry aren't rigorously defined—not in Tawney's work, and even less so by Heldring et al. We are simply to take them as being "more entrepreneurial" than either the major landlords, the Church, or the yeomen. That said, while Eric Jones (2021) has questioned whether the gentry were wholly economically motivated, he confuses absolute levels for relative status. The gentry only have to be marginally better than other proprietors at land management and business practice to have some effect.

The authors muster some anecdotal evidence that this is true, though I'd have to say it's a little disappoiniting. They cite John U. Nef, the great English economic historian, to the effect that the gentry of Lancashire and the West Riding mined and rented out the coal pits on their lands; and if Langton (1979) is to be believed, nearly 50% of the region's collieries were gentry-owned. Some members of the gentry also formed partnerships with entrepreneurs, including Thomas Bentley's financing of Josiah Wedgewood. But one can equally well find examples, as Jones does, of gentry frivolously dissipating their wealth, and of peers exploiting the coal mines on their property. Some better research on the social origins of the gentry and a more concrete definition of that class would make the "improving gentry" thesis a little more plausible.

So the "rise of the gentry" channel works as follows: Dissolution => liquid land market => gentry land purchases => resource exploitation + industrial financing => industrialization.

Religion and Reformation

The second channel the authors explore is the Reformation, which, in England, involved the systematic ideological and economic persecution of Catholics. By the 1559 Act of Uniformity, all English men and women were forced either to attend Protestant churches on Sunday or pay a monthly fine of 12 shillings, raised to 20 pounds in 1581. So-called "recusants" were also subject to imprisonment and the forfeiture of land and goods. Between 1600 and 1642, 102 recusant Yorkshire families had their estates seized, and religious fines could erode as much as 20% of a landowner's income.

It got worse, too. James I tacked on a ban of Catholics from the professions and public offices, supplemented by an oath of allegiance whose abnegation could result in life imprisonment and the confiscation of all property. William and Mary forced Catholics to pay double the rate of land taxes, forbid them to buy land, and allowed Protestant next-of-kin to claim their inheritances. Unsurprisingly, English people preferred Protestantism to persecution; the number of Catholics declined from, well, the whole population in 1530 to just 40,000-60,000 in 1600.

The authors argue that conversion depended on the opportunity cost. Since the Dissolution increased the value of land in monastic regions, the incentive to convert and not get expropriated must have been larger. So altogether:

In sum, we hypothesize that the Dissolution’s immediate effect was on markets and the allocation of factors of production. Following Tawney, we hypothesize that there was an intermediate impact of the Dissolution on social change. Finally, we hypothesize that ultimately there was a reduced-form effect of the Dissolution on industrialization, in line with the commercialization explanation of the English Industrial Revolution.

The intermediate results for gentry and Catholic presence are very strong. Controlling for parish area (though not population), they find that the number of gentry was higher by .23, relative to a mean of .67, in monastic parishes; this is basically confirmed in the long-diff specification. They also see a one-percent decline in the Catholic share against a mean of three percent. These are highly significant effects (1 percent), but at first glance... they're not very big? Unfortunately, they are not able to discern how much parish land the gentry owned—so maybe an additional gentleman would have bought up the entire parish, or maybe just a little fraction.

Commercial Capitalism?

The authors test a battery of outcomes for the commercialization hypothesis, including shares in agriculture and trade/handicrafts and the presence/number of textile mills (in 1838). The agricultural share fell by three percentage points (against a mean of 62 percent) in monastic parishes, while the trade/handicraft share rose by just two pp (vs a larger mean of 18 percent). Heldring et al. argue that the 3 pp fall in the ag share all went into industry, which thus increased by 11 percent... but that's not really even a large fraction of an already-small fraction. It's hard to see that making a critical difference. They also can't distinguish between the addition and the movement of gentry to monastic parishes. By their own data, the average parish had fewer gentry in 1700 than pre-Dissolution, and while the monastic mean rose from .77 to .87, the non-monastic mean fell by an even greater proportion, from .73 to .58. How great was the Dissolution really if it just polarized parishes?

The authors also find that monastic parishes were more likely to house (.01) and had more (.11) textile mills in 1838. Which again, isn't a lot (especially for 1838, when industrialization is well underway), but since it's a solid percentage of the sample mean (.04 and .16) the authors interpret this as a substantial effect.

However, this presumes that the spatial distribution of economic activity was relatively even—in other words, that monastic parishes had a few more textile mills than non-monastic parishes. But 15,588 of the 16,290 parishes in the sample had no mills at all and 453 more had just one, meaning that fewer than three hundred parishes (1.5%) had more than one mill. Textile production wasn't evenly distributed throughout the country, but concentrated in a couple of highly localized regions like Lancashire and Yorkshire. The first 42 parishes ranked by number of mills were in these two counties alone! And the biggest, Whalley, was way out in front of the others with 141 mills. The next largest was Ashton Town with 86. Only the top 7 had more than 50 mills. This polarization calls into question the use of the probability of having a mill as the main measure—having one mill does not tell you about industrialization at all

And as you can see on the map, monastic properties (marked in blue) were mostly concentrated in the south and east, NOT in the industrial northwest. Lancashire ranks 34th out of 42 counties in the fraction of parishes monastic. #1 on that list, Bedfordshire, actually has no mills at all. None. Indeed, a simple regression of the fraction of monastic parishes on the mean number of mills at the county levels is negative and statistically significant. It's definitely driven by outliers! Drop Lancashire and there's no correlation. But that's my point.

Also, the Kelly et al. mechanics paper shows quite compellingly that textile employment was concentrated in high-skill areas of the northwest—but not because they were great farming regions. Rather, it's because their poor soils and agricultural productivity led, with declining internal transport costs, to regional specialization in "industry" according to comparative advantage. The rich agricultural south, by contrast, became Britain's domestic agricultural periphery. If you take a look at the map in the top right pane, you can see that the real agricultural wage maps onto the Dissolution zone almost perfectly. And the high-skill/textile region fits into the no-monastery area almost as well.

The regression specification used in the paper has county fixed effects, which means that parishes are compared only to parishes within the same county. So the differences that you're seeing are real—a monastic parish probably was more likely to have a textile mill than a non-monastic mill in 1838. But I'd argue that this misses conceptually the defining characteristic of the IR, which was extreme regional concentration.

So we have a conceptual problem here. We're looking at the wrong kind of differences here, and possibly at the wrong level of aggregation. Controlling for counties actually negates the variation (region/county-level) which is actually how industrialization operated. In a way, it's very similar to an issue that we talked about in the context of Kelly et al.'s "Mechanics" paper. They can explain variation in economic development in Britain, but not Britain's advantages over Europe and Asia, which limits the project as an explanation of industrialization and the Great Divergence. Here, Heldring et al. can explain economic development within a parish, but the same doesn't hold true at the regional level—the scale that is most relevant for describing Britain's economic geography.

So insofar as this paper purports to be an explanation of the Industrial Revolution, I don't think it quite succeeds. But that's not all that it has to offer. Fundamentally, as I said before, this is a paper about how land reform leads to agricultural dynamism and commercialization. And I think it generally does do that. The authors show, for example, that of 234 agricultural patentees with occupation data, the single largest class (52 individuals) was the gentry, dwarfing engineers (16), though artisans defined more broadly together (as expected) made a larger contribution. Monastic parishes did have significantly more patents, as well as more threshing machines. My caveat (again) is that the small number of positive outcomes (234 and 409 respectively) relative to the sample size (16,000+) makes this hard to interpret, but the results are really precisely measured!

Heldring and co. also suggest that the gentry may have successfully pushed for enclosure, a la Brenner, a process that had to be initiated by the landlord. True to form, enclosure was 8% more likely in monastic parishes (sample mean 37%). Given their other paper showing that the parliamentary enclosure increased wheat yields by 44%, they suggest that this may have been a major channel for raising productivity. Wheat yields were also slightly higher (.24 bushels per acre against a mean of 21.71) in a reduced sample of 4,000 parishes, albeit at a lower significance level.

It's also worth revisiting the original Tawney thesis here. Tawney focused on the political economy consequences of the "rise of the gentry," especially the creation of a faction in Parliament with vested interests in commercial development.

With the growth of speculative dealings in land, the depreciation of the capital value of certain categories of real property by the antiquated form of land-taxation known as the feudal incidents became doubly intolerable. The more intimately an industry-agriculture or any other-depends on the market, the more closely is it affected by the policy of Governments, and the more determined do those engaged in it become to control policy. The fact that entrepreneur predominated over rentier interests in the House of Commons, was, therefore, a point of some importance. The revolt against the regulation by authority of the internal trade in agricultural produce, like the demand for the prohibition of Irish cattle imports and a stiffer tariff on grain, was natural when farming was so thoroughly commercialised that it could be said that the fall in wool prices alone in the depression of 1621 had reduced rents by over L800,000 a year (Tawney 1941).

It's curious that they focused on the gentry-industrialist connection, because to my mind the original Tawney formulation is more interesting. How you get elites on the side of (or at least indifferent to) your development project is super important, and a lot of pre-industrial countries just couldn't do it. On the continent, we know, it took the French Revolution to wipe out feudalism and its attendant aristocracy. But what if Britain basically sold tickets to a new elite? That would've diluted the power of the old, consumption-based aristocracy and made compromises between manor, merchant, and manufacturer more likely (a la Mokyr-Nye).

Speaking of the French Revolution, the authors suggest that the Dissolution helps to explain why Britain set out early on the special path to capitalism. In one of the many papers that we all wish we'd written, Acemoglu et al. (2011) argue that feudal land tenure (as well as guilds and mobility restrictions) lapsed in Europe only after Napoleon's conquests. Using the French invasion of Germany as a natural experiment, they show that places invaded by the French experienced more rapid urbanization and structural transformation during the nineteenth century (with the caveat that much of it came after 1850).

Another paper, Finley et al. (2021), basically replicates the Dissolution analysis for France, studying the effects of the confiscation and sale of Church properties during the Revolution. The area sold comprised 6.5% of France's territory and had been plagued by a maze of restrictions that inhibited investment and proper land allocation, including uncertain common rights and feudal exactions due to the Church. Even the great spurt of enclosures that took place after 1750 (belatedly) was rendered nugatory by hereditary tenures, as in pre-Dissolution Britain. The situation was probably worse in France thanks to the monarch’s support for peasant rights as a bulwark against the nobility.

They find that more confiscated land led to higher wheat yields and larger farms, which they attribute to reduced transaction costs in the land market. So it's plausible that the greater persistence of hereditary tenure in the Continental agrarian system might have delayed Franco-German development for 250 years.

What do I take away from this paper? I think we learn the following:

1. Market-based land reform can lead to major social change by allowing new, commercially-minded classes to collect and manage property.

2. Changing the property structure of landholding has a positive impact on agricultural innovation, organization, and productivity, with some consequent effects on structural change.

3. The shift toward pro-landlord agrarian property relations came later than Brenner thought and relied not just on pre-existing, immutable class formations but also on historical policy shocks, institutions, and cultural change.

4. Single shifts, even large ones, produce effects that pale in comparison to the dynamic changes that swept the early modern British economy; much more of the wheat yield improvement, for example, still appears to have come from manuring/rotations/legumes/seed varieties that evolved slowly over time.

NB: It’s important to remember that this is an economics paper published in an economics journal. Proving that the mechanism outlined in the model could have some effect probably outweighs the historical argument either way. If you have an important economics-related contribution, you can—for better or worse—be flexible with the history.

Welcome to Paper Round, the weekly bulletin for paid subscribers. Each week, I’ll offer up interesting papers, articles, graphs, and videos as well as notices about upcoming events in the economic history-adjacent community.

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Ian Morris, in a manuscript submitted to the Journal of Social Computing, evaluates the data collection/generation efforts at the Seshat project, arguing that we need a more flexible category of social organization than the “polity” to evaluate how the Greeks developed “collecting computing” technologies: government, money, infrastructure, information system, and texts. He also argues that the “big question” in studying the so-called “Axial age” is why large, coercion-intensive empires Old-World Axial Age is why some of its large, coercion-intensive empires absorbed the small, capital-intensive city-states that developed these technologies.

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1. Canadian protectionism worked -- it created internationally competitive industries at little cost to the domestic economy and forced US manufacturing firms to relocate inside the tariff wall.

2. It's possible that the result is idiosyncratic to the Belle Epoque world, in that Britain served as a "free trade sink" for Canada's export-facing economy.

3. IIP did not promote overall structural transformation, but mostly because it had to keep up with resource booms in the mineral and agricultural sectors.

4. Protection did not make Canada a less resource-dependent economy, but rather succeeded in onshoring more raw material processing

Two special announcements before we dive in. First, I’ve renamed (well, actually just removed the old placeholder title) the newsletter Great Transformations, which contains at least two book references and sort of reflects the general topics that I like to write about.

Second, I’ve added a paid subscription feature so that you can contribute to this project. The essays are staying in front of the paywall, but you’ll get a bit of additional content, including some enormous reading lists that I’m curating and weekly research posts. Maybe some other fun things in the future. The main idea, though, is that I’d like to derive some income from this project to make the time commitment worthwhile. If you can find the funds to support me, I’d really appreciate it.

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A quick note: if you are receiving this post for the second time, I apologize. Substack failed to send out this issue originally and is not responding to my support requests, so I’ve decided to cut my losses and re-send it.

The basic idea behind infant industry protection is that you, as a nascent manufacturer, need the state to tax international competitors until you reach an efficient scale and productivity level. It’s a seductive argument. Who doesn’t like protecting infants? But there aren’t many great empirical studies that show it working, and there is a lot of anecdotal evidence for it failing catastrophically.

In my last post, I used that argument in making the case that Russian economic growth prior to World War I was sustainable. I contested Bob Allen's view that Russia's natural resource exports and protectionism doomed her to a "Latin American" development path. One thing I suggested was that Canada, which both had a "wheat boom" and hiked tariffs at about the same time as Russia, might present a better counterfactual model.

What I didn't know for certain, however, was whether Canadian protection really worked. So I decided to figure that out.

Canada was a relative latecomer to protection. In the US, a fractious Republican Congress raised average tariff rates from 15 percent in 1859 to 45 percent in 1870, and per Irwin (2010) they remained above 30 percent through 1890. Strenuous opposition by the Maritime provinces (New Brunswick, Nova Scotia, and Prince Edward Island), good economic performance, and politically marginal manufacturers coupled with a revenue-based interpretation of tariffs' role meant that little change in the tariff structure occurred up to 1879. Raw materials and semi-finished intermediate inputs entered the country duty-free, while a 15 percent ad valorem tax was placed on manufactured imports, raised slightly to 17.5 percent in 1874 (the Mackenzie Tariff) for revenue purposes.

In 1873, however, global markets slumped and by 1876 an outright "depression" had set in. By 1879, prices had dropped by 20 percent and timber exports by half. Bank failures spiked and government revenues tumbled. After winning the election of 1878, the Conservative Party, led by Prime Minister John A. Macdonald, launched the "National Policy," a development program designed to expand and integrate the Canadian economy. The National Policy had three main planks: the construction of the Canadian Pacific Railroad (completed in 1885); the encouragement of immigration to offset emigration to the US and settle the West; and the adoption of a strongly protectionist tariff regime to bolster domestic industry. I'm writing about the third component, and treat "National Policy" and "protectionism" synonymously. I include both the initial 1879 hike, when average tariff rates weighted by import value rose immediately from under 14 percent to 21 percent, and the Tupper Tariff of 1887.

There were three compelling motivations for the National Policy. First, higher tariffs offered a way to augment the country's revenues, of which duties constituted 70 percent until 1887. Second, the depression of the '70s had hammered domestic industry, with manufactured prices falling further than raw materials. Industrialists' fears were exacerbated by falling transport costs, which rendered producers more vulnerable to foreign competition, and the failure to win reciprocal openness from the US. The Conservatives' main supporters were the industrialists and city businessmen who'd suffered most from the trade depression and would benefit most from protection. Finally, the National Policy appears to have been designed to "balance" Canadian development by making the country more self-sufficient in manufacturing, which would serve an East-West domestic market populated by immigrants, integrated by railroads, and protected by high tariffs.

There was high variation in the tariff structure, though. For non-manufactured raw materials, tariffs only increased from 5.6 to 9.5 percent, and those on exotics remained virtually stable at 38-9 percent. Duties on cotton textiles inicreased from 17.5 to 30 percent and primary iron and steel from 0-5 to 12.5-17.5 percent. Beaulieu and Cherniwchan (2014) derive trade restrictiveness indexes, or the general tariff level that produces the same welfare loss as the actual tariff schedule. As the narrative evidence suggests, goods with close domestic substitutes—i.e. which Canadians were already making—were primary targets. So the Tupper tariff, which strategically increased rates on specific products, actually boosted restrictions by about the same amount as the original National Policy.

Did Canadian protectionism work? There are basically three questions here:

1. How much of a welfare loss did protectionism cause?

2. Did protectionism promote long-term industrial growth?

3. Did (2) outweigh (1)?

I'll take the answers in turn.

Welfare Costs

Early evaluations of the National Policy, especially by Canadians, tended to be positive. A select committee ordered by the government to "inquire into the operation of the tariff" sent two agents, Alfred H. Blackeby and Edward Willis, to survey hundreds of manufacturing firms in Ontario, Quebec, and the Maritime provinces. Blackeby reported:

The value of the product in money does not represent the whole of the increase which has taken place ... Prices are so much lower now in most cases that a like production in value would mean a 10 to 15 percent difference in bulk ... Production has increased in a greater ratio than the number of hands, showing by means of better appliances and facilities brought into use, by reason of the larger trade to be done, each man produces more now than six years ago ... That the general result of that change [the 1879 tariff] has proved decidedly beneficial to manufacturing industries there is now no dispute, and is fully borne out by the figures herewith submitted (Canada, House of Commons, 1883: 4, 6, quoted in Harris et al. 2015).

In their classic textbook, Canadian Economic History, Easterbrook and Aitken argue that the National Policy was a "necessary evil." Protectionism augmented the market power and profits of manufacturers at the expense of consumers, but successfully sheltered infant industry, drove import substitution, and increased the scale of production. Aitken also saw the tariff, which raised aggregate labor demand and promoted immigration, as part of a "defensive expansionism" program designed to make Canada too big to swallow for the US.

Soon afterward, however, a series of revisionist studies of the Cliometric Revolution era set out to debunk the traditional view. On the basis of a neoclassical trade model, the Canadian economist John Dales (1966: 109–10) called the tariff “the price we pay for our protected manufacturing industry," arguing that "protection fosters inefficient, oligopolistic forms of market organization in Canada" and that "Canadian growth has been distorted by the National Policy.” Worse, he thought that the tariff encouraged the emigration of skilled workers and the immigration of unskilled labor, increasing GNP and lowering wages.

Easton et al. (1988) tested the Dales model and found that the extent to which the tariff promoted immigration was contingent on its welfare consequences (unemployment, real wages, and per capita income), calling for further research. Richard Pomfret, in The Economic Development of Canada (1993), argued that the tariffs lowered competition, allowing manufacturers to charge well above their marginal costs. This would have lowered consumer surplus and thus aggregate welfare. He found that the National Policy knocked a fairly enormous 4-8 percent off Canada's GDP.

But the pendulum is swinging the other way again. Beaulieu and Cherniwchan (2014) point out two pretty gaping holes in Pomfret's analysis. First, he relies on the import-weighted average tariff (AWT), which is (per Irwin (2010)) downward-biased, ignores dispersion in rates among goods, and has zero economic interpretation (no good is actually charged the AWT). Second (and this mildly shocked me), his welfare analysis is inferred from later welfare estimates (from after 1950), assuming that since the AWT was higher over 1870-1910, the deadweight loss must have been greater.

The authors instead use a Trade Restrictiveness Index (TRI), which as mentioned above spits out the tariff rate which, if applied to all goods, would produce the same welfare loss as actually-existing rate structure. It's basically the sum of the (squared) ratio between expenditures with and without the tariff for each good. They also can compute the static deadweight loss directly using a similar formula. Using Canadian trade data from 1870-1910, they get a much lower, but still negative, estimate of the GDP loss, at about 0.7-1.5%. Targeting goods with close domestic substitutes, such that inefficient Canadian producers replaced foreign, increased the welfare cost of protection.

The problem with the partial equilibrium results is that the deadweight loss measure requires completely unrealistic assumptions: perfect competition, market clearing, no externalities, and constant returns to scale. All of these are manifestly untrue of 19th century Canadian industry. Partial equilibrium frameworks also don't account for changes in prices and productivity. Costinot and Rodriguez-Clare (2014) show that for small open economies like Canada (was) that rely heavily on international markets, even a modest influence over the terms of trade (the price of exports relative to imports) can have a big welfare effect. Partial equilibrium models, which are functions of industries' consumption shares, trade elasticities, and average weighted tariffs, ignore this channel.

Using product-specific trade data for Canada, the US, and Britain, Alexander and Keay (2018a) take a multi-sector general equilibrium approach. Surprisingly, they find that adopting protectionism actually increased GDP by 0.14-0.16 percent, as tariffs increased the domestic terms of trade in favor of manufacturing and augmented government revenues. Unilaterally adopting free trade, by contrast, would have lowered it by .23-.68 percent. Of course, the best-case scenario would have been for everyone to adopt free trade, but since the US was refusing reciprocality this wasn't a likely outcome.

In sum, early estimates of the short-term distortions imposed by the National Policy tariff were exaggerated. But did it succeed in nurturing competitive domestic manufacturing industries? I turn to this next.

Did Infant Industries Grow Up?

Perhaps the central purpose of the National Policy was to encourage domestic industrialization—basically an infant industry argument. The idea, often attributed to Alexander Hamilton in his 1791 Report on Manufactures, is that foreign producers with established industries will initially have a near-insurmountable advantage over a nascent one; both have to pay the hefty fixed costs of building a factory, buying machinery, and setting up infrastructure, but companies in the older industry can amortize the expense across more units of output (lower average total cost).

Plus, firms in existing industries have access to pools of skilled labor, knowledge spillovers, and technologies that are available only locally—what economists call Marshallian externalities. You need to offset the cost advantage with a tariff until your domestic manufacturers reach are efficient enough to be internationally competitive; otherwise, you can end up in a sub-optimal equilibrium specialized in a dead-end product.

Does this actually work in practice? Not always! Harrison and Rodriguez-Clare (2010) is an excellent survey of infant-industry protection and industrial policy more generally, and they write that "[c]ross-industry studies usually show that the removal of protection generates both intrafirm and intraindustry productivity gains." They make the (much stronger!) claim that "[t]here is no evidence to suggest that intervention for IP reasons in trade even exists," because, as in the Canadian case, revenue and special interest concerns seem to predominate.

More recently, however, Reka Juhasz has demonstrated that the Napoleonic blockade effectively protected French industry from British competition and let to growth in cotton textile factories. Per Pseudoerasmus, it's the first study to rigorously show that temporary protection for a "fledgling industry" can have positive long-run consequences.

The Canadian government was clearly trying to do IIP. Alexander and Keay (2019) find that the National Policy was highly selective, targeting finished goods over intermediate inputs. Transport equipment and petroleum and coal products experienced large increases, while leather and tobacco, say, were all but ignored. They show that the new tariffs disproportionately hit imports with close domestic substitutes (measured as higher trade elasticities, or the extent to which changes in price lead to changes in import quantities) produced by sizeable domestic industries if they had political clout.

That said, Ian Keay and a revolving cast of coauthors have produced a series of papers arguing that the National Policy worked. Inwood and Keay (2013) found that the tariffs of 1879 and 1887 were correlated with higher output of pig iron, increased industry turnover, and led to the transition from small, rural charcoal blast furnances to larger coke-burning plants. Domestic demand sharply boosted output while labor costs fell. They conclude that "tariff protection was required to trigger entry and investment in larger, technologically advanced blast furnaces, and only then could increasing domestic demand be satisfied by Canadian producers."

Harris et al. (2015) are more ambitious. Their analysis is motivated by the "New Trade Theory" models associated with Paul Krugman, Elhanan Helpman, and Marc Melitz. The main idea is that imperfect competition and increasing returns to scale change the calculus of neoclassical trade model, in which differences in productivity or factor endowments determined trade patterns. The Dales (1966) and Easton et al. (1988) papers that predicted slower growth were of the latter type.

The authors suggest two ways (models) that you can think about infant industry protection working. The first presents manufacturing as an oligopoly (relatively small number of sellers with some market power) with free entry in which prices are marked up above marginal cost. Slapping a tariff on manufactured imports increases aggregate demand, causing the entry of new firms and the expansion of employment in industry. Increased profitability and larger market size (from firm entry) leads firms increase scale and thereby exploit internal economies, allowing them to cut prices. In the neoclassical model, domestic and foreign manufactures are perfect subsitutes, so in a small open economy prices increase by the size of the tariff. But in the "industrial organization" model, there aren't always close Canadian substitutes for foreign goods, and the tariff's positive effect on firm size reduces markups, which raises productivity and lowers prices.

The second model proposes that learning-by-doing is a function of "industry experience," proxied by cumulative output. Tariffs increase output, accelerating the growth of accumulated experience and raising productivity, lowering costs and prices. In the figure below, a tariff permanently raises output in protected industry and allows it to move faster along the experience curve. The prediction is basically the same as above, but here productivity increases because of learning-by-doing—adapting machinery, training labor, etc.

To assess the effects of the National Policy, Harris et al. exploit variation in effective protection across fifteen Canadian industries as a natural experiment. Industries are classified as "target," "broad," and "unaffected" based on the size of the tariff increase. They run difference-in-differences and treatment intensity regressions to compare perfomance changes between treatment groups. Targeted industries included tobaco, paper, transportation, petroleum; the broad group was mostly metals; and food, rubber, leather, and textiles were considered "unaffected." In the treatment intensity regression, elasticity of output and TFP growth to treatment intensity were 3.6 and 4.6 percent respectively, with an elasticity of -4.6 percent on the price change. In the DiD, they found that output rose by 6.7 percent and productivity by 10.6 percent in the target group (5.2 and 8.0 in the broad group). Those are big numbers!

You should be worried about endogeneity concerns, of course. That's the whole reason why the Juhasz paper is so groundbreaking. Did the Canadian government pick winners for treatment? DiD specifications also demand parallel pre-trends between targeted and non-targeted industries, which could easily have been violated. Karacaovali (2011) adds that “more productive sectors have ... more to gain from lobbying and can potentially generate more protection.” It doesn't look like the Macdonald government explicitly targeted the most promising sectors, though, but rather to "restore prosperity" to "struggling industries, now so sadly depressed." Treated industries were also performing much worse on prices, productivity, and output beforehand.

To address endogeneity concerns, they instrument for intensity using political, locational, and market structure characteristics, including whether the industry's value-added came from districts with close electoral races in 1878 (or, confusingly, where the Conservatives won handsomely). The estimates are about the same. They also do a placebo test with the treatement year in 1875. I would've liked to see randomized assignment of treatment intensity, but this isn't really a true causal inference paper.

Finally, Keay (2018) shows that the Canadian government followed through on the other side of the infant industry bargain—removing tariffs from mature industries once they had become competitive. He finds a strong negative correlation between net export performance and the level of tariff protection after 1890 which substantially reduced the deadweight losses from the National Policy. So industries were allowed to "graduate" from state protection if they showed promise as exporters, permitting consumers to reap the welfare gains from lower prices.

To summarize: the National Policy tariff program appears to have succeeded in nursing several key export industries to international competitiveness and backing off afterward. But was it worthwhile?

Protection and Development

How do we know if IIP worked? It's not enough to check a box if protected sectors expanded their output—if you wipe out an industry's competitors, then yeah, it's going to produce more. Harrison and Rodriguez-Clare (2010) propose two tests for whether IIP worked: the Mill test, which requires that a protected industry become internationally competitive, and the Bastable test, which requires that the aggregate benefits outweight the costs of protection (deadweight loss + enforcement costs). I haven't found any study that has truly assessed the aggregate dynamic effects of the National Policy. But some stylized facts about post-1879 Canadian growth can help to illustrate the point.

Economic historians often associate Canadian growth with the railway-fuelled wheat boom, which took off after 1896. But GDP per capita grew by 2.2% per annum during 1879-95 and manufacturing value-added per capita by 2.4%, the latter rising at 4.2% in the first decade of the National Policy. By contrast, the 1870s had seen essentially zero growth. I'm not one for chart-squinting, but the difference between 0.1% and 4.2% is pretty big!

Targeted industries, which had been struggling during the '70s, grew rapidly after 1879. Paper output fell by 4.3% per annum over 1870-7, but grew by 13% per year over the next decade; iron and steel jumped from -2.4 to 8.4%. Altogether growth rates in the targeted and broad groups rose by 12 pp and 9 pp respectively, while the unaffected groups only increased by 0.8 pp.

Inwood and Keay (2013) discuss the case study of the iron and steel industry, which received strong tariff protection during the 1880s, with the AWT rising from 13.7% in 1870 to nearly 30% in 1893. By 1900, advanced blast furnaces had been installed at Hamilton, Deseronto, and Midland in Ontario; and at Pictou and Sydney in Nova Scotia. Pig iron production was 120 times greater in 1913 than it had been in 1870 and 50 times greater than in 1890. McInnis (2000) also suggests that the tariff encouraged the utilization of empty plant capacity, leading to spurts immediately after the 1879 and 1887 tariff shocks.

You can take these descriptive statistics, along with the causal results from Harris et al. (2015), as small-sample and imperfect. You could argue that some of the growth of the 1880s was just rebounding from the previous decade. But it seems implausible to say that industrial growth, specifically in targeted sectors, would have been even faster had Canada not attempted IIP. With the United States remaining staunchly protectionist, even renouncing the "Reciprocity Treaty (1854)" in 1866, some tariff response was probably warranted even in the short run.

Did Canada have latent comparative advantages in protected industries? Looks like it. Exports of paper, mineral products, and petroleum boomed. Table 2 below shows that Canada began to substantially diversify its exports during the National Policy years. In 1851, Canada basically was a timber economy with some wheat and cattle thrown in. By 1890 and even more so by 1900, as some industries were starting to mature, Canada was selling machinery, agricultural implements, drugs, clothing, and furniture abroad. The total value of wood product exports grew markedly despite the waning of the timber trade, thanks to the explosion of the protected paper industry. Canada's imports were increasingly dominated by capital equipment and parts for manufacturing plants, as well as coal with which to power them.

Canadian industries protected by the National Policy not only expanded their output, but saw rapid productivity growth, lowered their prices, and exported more. Targeted sectors displayed increasing returns to scale and large learning-by-doing effects, which together contributed to nearly 40 percent of their improvement in productivity. So it seems like the tariff passed the Mill test. And since the costs of the tariff might actually have been zero, it seems pretty likely that protection actually worked as an infant industry policy. The National Policy interacted with Canada's vast resource endowments and newly-integrated home market to produce competitive manufacturing industries, some of which would become the basis of the non-wheat economy of the twentieth century.

International Comparisons

By now, you're probably wondering why protection worked so well in Canada, but failed so frequently in other places and at other times. After all, we're familiar with how ISI in Latin America, especially Argentina (Canada's Spanish-speaking sister), went badly awry after World War II. But did protection work for Canada's contemporary rivals? The simplest justification for my argument would be a universal tendency for IIP to promote growth in the pre-1914 globalization era.

Coincidentally, Pseudoerasmus has a great post from 2016 on the "tariff-growth paradox"—Paul Bairoch's finding that countries with higher tariffs grew faster during the late 19th century. O'Rourke (2000), using a small panel of rich countries (Australia, Canada, Denmark, France, Germany, Italy, Norway, Sweden, Britain, and the USA) over 1875-1913, did find a correlation between average tariff rates and growth.

Clemens and Williamson (2001) confirmed this on a 35-country sample for 1865-1908 and 1919-1934. Both papers hypothesize that protection accelerated the expansion of "emerging" sectors (i.e. industry) at the expense of agriculture. The new sectors, characterized by Marshallian/learning externalities and scale economies, were supposed to head the transformation to developed-country status. This looks quite a bit like Canada, with the proviso that the wheat boom led to accelerated agricultural-sector growth after 1896.

Irwin (2002), however, countered that the correlation was driven by the use of revenue tariffs in fast-growing, land-abundant countries—namely the US, Argentina, and Canada. But as we've seen, revenue- and IIP-based tariffs can't be so easily differentiated. Lehmann and O'Rourke (2011), in any event, address this critique by cutting out revenue tariffs and find the positive relationship again. Industrial tariffs lead to positive growth over 1875-1913, and agricultural tariffs to negative. Canada's pattern of protection generally looks skewed toward IRS sectors, though it should be noted that some were declining outright and might have warranted sunsetting.

There are a couple of more recent studies here, like Schularick and Solomou (2011), who find that the 1875-1879 depression, which caused many countries (including Canada!) to adopt protectionism during the subsequent recovery, drove the tariff-growth correlation. This could be a damning indictment of my argument; as we've seen, the targeted sectors were doing worse during the depression. But I don't think that a "bounce-back" explanation really suffices to cover the structural expansion of protected industries in the Canadian economy or the new lines of production (e.g. machinery and farm tools) adopted.

I think Pseudo's interpretation of C&W—that the UK was a free-trade sink for protectionist countries—checks out for Canada. Exports to the UK rose from $22 million in 1870 to $43 million in 1880 and again to $93 million; exports to the protectionist US, which had been higher ($29 million) in 1870, increased only to $34 million in 1880 and $68 million in 1900. Indeed, many American firms located inside Canada during the National Policy era in order to take advantage of preferential intra-imperial duties. Altogether the UK was taking half of Canada's exports over 1880-1900. C&W's "prisoner's dilemma" model, in which coordination is the best option but protection is superior to unilateral free trade, is validated by the general equilibrium results that we discussed above.1

Protectionism in One Country

If the cross-country studies are "crude" and ambiguous, it's worth making straightforward comparisons with one-country case studies. Canada's mirror here is obviously the US, which as we mentioned ratcheted up protection after 1870. Head (1994) attributes the growth of America's steel rail industry to protection; it was uncompetitive in the 1860s, became a world leader under IIP, and later had its tariff successfully removed.

But Irwin (2000) finds that there's little room for a positive role for the US tariff, since "import tariffs may have raised the price of imported capital goods, thereby discouraging capital accumulation." He argues that "productivity growth in nontraded sectors, rather than in manufacturing, was the driving force behind the United States’s overtaking of the United Kingdom in per capita GDP during this period." That's not true of Canada, however, which largely exempted capital goods and intermediate inputs from its developmentalist program.

A more relevant point is made in Irwin's counterfactual simulation of the US tinplate industry, which was protected in 1890 (when there were no domestic producers) and subsequently became self-sufficient. He found that the tariff accelerated the industry's growth by 10 years, but that it would have emerged anyway thanks to falling ore prices and that the welfare cost outweighed the benefits. However, a smaller tariff (50% rather than 70%) might actually have improved welfare.

Clemens and Williamson (2005) suggest that Latin America's high pre-1914 tariffs–the world's highest–should be linked with the region's superior growth performance, at least relative to Asia (whose levels were four times lower). Uruguay had tariff barriers 2.5x Canada's in 1905. French tariffs were at 10.1% and Germany's at 9.1% in 1890, while the Latin American average was 34%. Labor productivity growth rates in Argentina, Brazil, and Chile all exceeded America's over 1900-1919, and Brazil's industrial GDP grew at a staggering rate of 9.8% per annum.

Why did protection fail so spectacularly in Latin America after World War II? The most likely reason appears to be the insertion of price distortions that prevented regional market integration, forcing producers to operate far below the minimum efficient scale. Argentina had over a dozen auto companies serving a home market that could barely fit one. Indeed, this was what happened in Canada until it signed the Automotive Agreement with the US, which assigned particular production lines to each country to ensure an MES. But why did IIP work in the (much smaller) settler economies of the Belle Epoque? Perhaps, as Pseudo suggests, it's the intial boost that comes from transferring unproductive labor out of agriculture that counted; once all available peasants had been mobilized, the growth gains went away. It also could be that Canada, unlike Argentina, discriminated in favor of intermediate inputs—unfortunately, meaning better institutions and policy choices, an annoying black box!

That doesn't quite explain how Canada ended the National Policy era with about the same manufacturing share with which she began it. Here, though, I think it's important to note that Canada had several resource booms during 1879-1914: minerals, metals, gold, wheat, wood pulp, etc. The discovery of new deposits and improvement in Canada's terms of trade might well have proved deindustrializing forces in the absence of industrial policies—for example, Ontario's ban on pulp wood exports—intended to encourage domestic processing of the bounty. With intervention (and American tech), however, Canada was able to channel cheap resources into a modern economy.

1. Canadian protectionism worked -- it created internationally competitive industries at little cost to the domestic economy and forced US manufacturing firms to relocate inside the tariff wall.

2. It's possible that the result is idiosyncratic to the Belle Epoque world, in that Britain served as a "free trade sink" for Canada's export-facing economy.

3. IIP did not promote overall structural transformation, but mostly because it had to keep up with resource booms in the mineral and agricultural sectors.

4. Protection did not make Canada a less resource-dependent economy, but rather succeeded in onshoring more raw material processing.

   ---

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The basic idea behind infant industry protection is that you, as a nascent manufacturer, need the state to tax international competitors until you reach an efficient scale and productivity level. It’s a seductive argument. Who doesn’t like protecting infants? But there aren’t many great empirical studies that show it working, and there is a lot of anecdotal evidence for it failing catastrophically.

In my last post, I used that argument in making the case that Russian economic growth prior to World War I was sustainable. I contested Bob Allen's view that Russia's natural resource exports and protectionism doomed her to a "Latin American" development path. One thing I suggested was that Canada, which both had a "wheat boom" and hiked tariffs at about the same time as Russia, might present a better counterfactual model.

What I didn't know for certain, however, was whether Canadian protection really worked. So I decided to figure that out.

Canada was a relative latecomer to protection. In the US, a fractious Republican Congress raised average tariff rates from 15 percent in 1859 to 45 percent in 1870, and per Irwin (2010) they remained above 30 percent through 1890. Strenuous opposition by the Maritime provinces (New Brunswick, Nova Scotia, and Prince Edward Island), good economic performance, and politically marginal manufacturers coupled with a revenue-based interpretation of tariffs' role meant that little change in the tariff structure occurred up to 1879. Raw materials and semi-finished intermediate inputs entered the country duty-free, while a 15 percent ad valorem tax was placed on manufactured imports, raised slightly to 17.5 percent in 1874 (the Mackenzie Tariff) for revenue purposes.

In 1873, however, global markets slumped and by 1876 an outright "depression" had set in. By 1879, prices had dropped by 20 percent and timber exports by half. Bank failures spiked and government revenues tumbled. After winning the election of 1878, the Conservative Party, led by Prime Minister John A. Macdonald, launched the "National Policy," a development program designed to expand and integrate the Canadian economy. The National Policy had three main planks: the construction of the Canadian Pacific Railroad (completed in 1885); the encouragement of immigration to offset emigration to the US and settle the West; and the adoption of a strongly protectionist tariff regime to bolster domestic industry. I'm writing about the third component, and treat "National Policy" and "protectionism" synonymously. I include both the initial 1879 hike, when average tariff rates weighted by import value rose immediately from under 14 percent to 21 percent, and the Tupper Tariff of 1887.

There were three compelling motivations for the National Policy. First, higher tariffs offered a way to augment the country's revenues, of which duties constituted 70 percent until 1887. Second, the depression of the '70s had hammered domestic industry, with manufactured prices falling further than raw materials. Industrialists' fears were exacerbated by falling transport costs, which rendered producers more vulnerable to foreign competition, and the failure to win reciprocal openness from the US. The Conservatives' main supporters were the industrialists and city businessmen who'd suffered most from the trade depression and would benefit most from protection. Finally, the National Policy appears to have been designed to "balance" Canadian development by making the country more self-sufficient in manufacturing, which would serve an East-West domestic market populated by immigrants, integrated by railroads, and protected by high tariffs.

There was high variation in the tariff structure, though. For non-manufactured raw materials, tariffs only increased from 5.6 to 9.5 percent, and those on exotics remained virtually stable at 38-9 percent. Duties on cotton textiles inicreased from 17.5 to 30 percent and primary iron and steel from 0-5 to 12.5-17.5 percent. Beaulieu and Cherniwchan (2014) derive trade restrictiveness indexes, or the general tariff level that produces the same welfare loss as the actual tariff schedule. As the narrative evidence suggests, goods with close domestic substitutes—i.e. which Canadians were already making—were primary targets. So the Tupper tariff, which strategically increased rates on specific products, actually boosted restrictions by about the same amount as the original National Policy.

Did Canadian protectionism work? There are basically three questions here:

1. How much of a welfare loss did protectionism cause?

2. Did protectionism promote long-term industrial growth?

3. Did (2) outweigh (1)?

I'll take the answers in turn.

Welfare Costs

Early evaluations of the National Policy, especially by Canadians, tended to be positive. A select committee ordered by the government to "inquire into the operation of the tariff" sent two agents, Alfred H. Blackeby and Edward Willis, to survey hundreds of manufacturing firms in Ontario, Quebec, and the Maritime provinces. Blackeby reported:

The value of the product in money does not represent the whole of the increase which has taken place ... Prices are so much lower now in most cases that a like production in value would mean a 10 to 15 percent difference in bulk ... Production has increased in a greater ratio than the number of hands, showing by means of better appliances and facilities brought into use, by reason of the larger trade to be done, each man produces more now than six years ago ... That the general result of that change [the 1879 tariff] has proved decidedly beneficial to manufacturing industries there is now no dispute, and is fully borne out by the figures herewith submitted (Canada, House of Commons, 1883: 4, 6, quoted in Harris et al. 2015).

In their classic textbook, Canadian Economic History, Easterbrook and Aitken argue that the National Policy was a "necessary evil." Protectionism augmented the market power and profits of manufacturers at the expense of consumers, but successfully sheltered infant industry, drove import substitution, and increased the scale of production. Aitken also saw the tariff, which raised aggregate labor demand and promoted immigration, as part of a "defensive expansionism" program designed to make Canada too big to swallow for the US.

Soon afterward, however, a series of revisionist studies of the Cliometric Revolution era set out to debunk the traditional view. On the basis of a neoclassical trade model, the Canadian economist John Dales (1966: 109–10) called the tariff “the price we pay for our protected manufacturing industry," arguing that "protection fosters inefficient, oligopolistic forms of market organization in Canada" and that "Canadian growth has been distorted by the National Policy.” Worse, he thought that the tariff encouraged the emigration of skilled workers and the immigration of unskilled labor, increasing GNP and lowering wages.

Easton et al. (1988) tested the Dales model and found that the extent to which the tariff promoted immigration was contingent on its welfare consequences (unemployment, real wages, and per capita income), calling for further research. Richard Pomfret, in The Economic Development of Canada (1993), argued that the tariffs lowered competition, allowing manufacturers to charge well above their marginal costs. This would have lowered consumer surplus and thus aggregate welfare. He found that the National Policy knocked a fairly enormous 4-8 percent off Canada's GDP.

But the pendulum is swinging the other way again. Beaulieu and Cherniwchan (2014) point out two pretty gaping holes in Pomfret's analysis. First, he relies on the import-weighted average tariff (AWT), which is (per Irwin (2010)) downward-biased, ignores dispersion in rates among goods, and has zero economic interpretation (no good is actually charged the AWT). Second (and this mildly shocked me), his welfare analysis is inferred from later welfare estimates (from after 1950), assuming that since the AWT was higher over 1870-1910, the deadweight loss must have been greater.

The authors instead use a Trade Restrictiveness Index (TRI), which as mentioned above spits out the tariff rate which, if applied to all goods, would produce the same welfare loss as actually-existing rate structure. It's basically the sum of the (squared) ratio between expenditures with and without the tariff for each good. They also can compute the static deadweight loss directly using a similar formula. Using Canadian trade data from 1870-1910, they get a much lower, but still negative, estimate of the GDP loss, at about 0.7-1.5%. Targeting goods with close domestic substitutes, such that inefficient Canadian producers replaced foreign, increased the welfare cost of protection.

The problem with the partial equilibrium results is that the deadweight loss measure requires completely unrealistic assumptions: perfect competition, market clearing, no externalities, and constant returns to scale. All of these are manifestly untrue of 19th century Canadian industry. Partial equilibrium frameworks also don't account for changes in prices and productivity. Costinot and Rodriguez-Clare (2014) show that for small open economies like Canada (was) that rely heavily on international markets, even a modest influence over the terms of trade (the price of exports relative to imports) can have a big welfare effect. Partial equilibrium models, which are functions of industries' consumption shares, trade elasticities, and average weighted tariffs, ignore this channel.

Using product-specific trade data for Canada, the US, and Britain, Alexander and Keay (2018a) take a multi-sector general equilibrium approach. Surprisingly, they find that adopting protectionism actually increased GDP by 0.14-0.16 percent, as tariffs increased the domestic terms of trade in favor of manufacturing and augmented government revenues. Unilaterally adopting free trade, by contrast, would have lowered it by .23-.68 percent. Of course, the best-case scenario would have been for everyone to adopt free trade, but since the US was refusing reciprocality this wasn't a likely outcome.

In sum, early estimates of the short-term distortions imposed by the National Policy tariff were exaggerated. But did it succeed in nurturing competitive domestic manufacturing industries? I turn to this next.

Did Infant Industries Grow Up?

Perhaps the central purpose of the National Policy was to encourage domestic industrialization—basically an infant industry argument. The idea, often attributed to Alexander Hamilton in his 1791 Report on Manufactures, is that foreign producers with established industries will initially have a near-insurmountable advantage over a nascent one; both have to pay the hefty fixed costs of building a factory, buying machinery, and setting up infrastructure, but companies in the older industry can amortize the expense across more units of output (lower average total cost).

Plus, firms in existing industries have access to pools of skilled labor, knowledge spillovers, and technologies that are available only locally—what economists call Marshallian externalities. You need to offset the cost advantage with a tariff until your domestic manufacturers reach are efficient enough to be internationally competitive; otherwise, you can end up in a sub-optimal equilibrium specialized in a dead-end product.

Does this actually work in practice? Not always! Harrison and Rodriguez-Clare (2010) is an excellent survey of infant-industry protection and industrial policy more generally, and they write that "[c]ross-industry studies usually show that the removal of protection generates both intrafirm and intraindustry productivity gains." They make the (much stronger!) claim that "[t]here is no evidence to suggest that intervention for IP reasons in trade even exists," because, as in the Canadian case, revenue and special interest concerns seem to predominate.

More recently, however, Reka Juhasz has demonstrated that the Napoleonic blockade effectively protected French industry from British competition and let to growth in cotton textile factories. Per Pseudoerasmus, it's the first study to rigorously show that temporary protection for a "fledgling industry" can have positive long-run consequences.

The Canadian government was clearly trying to do IIP. Alexander and Keay (2019) find that the National Policy was highly selective, targeting finished goods over intermediate inputs. Transport equipment and petroleum and coal products experienced large increases, while leather and tobacco, say, were all but ignored. They show that the new tariffs disproportionately hit imports with close domestic substitutes (measured as higher trade elasticities, or the extent to which changes in price lead to changes in import quantities) produced by sizeable domestic industries if they had political clout.

That said, Ian Keay and a revolving cast of coauthors have produced a series of papers arguing that the National Policy worked. Inwood and Keay (2013) found that the tariffs of 1879 and 1887 were correlated with higher output of pig iron, increased industry turnover, and led to the transition from small, rural charcoal blast furnances to larger coke-burning plants. Domestic demand sharply boosted output while labor costs fell. They conclude that "tariff protection was required to trigger entry and investment in larger, technologically advanced blast furnaces, and only then could increasing domestic demand be satisfied by Canadian producers."

Harris et al. (2015) are more ambitious. Their analysis is motivated by the "New Trade Theory" models associated with Paul Krugman, Elhanan Helpman, and Marc Melitz. The main idea is that imperfect competition and increasing returns to scale change the calculus of neoclassical trade model, in which differences in productivity or factor endowments determined trade patterns. The Dales (1966) and Easton et al. (1988) papers that predicted slower growth were of the latter type.

The authors suggest two ways (models) that you can think about infant industry protection working. The first presents manufacturing as an oligopoly (relatively small number of sellers with some market power) with free entry in which prices are marked up above marginal cost. Slapping a tariff on manufactured imports increases aggregate demand, causing the entry of new firms and the expansion of employment in industry. Increased profitability and larger market size (from firm entry) leads firms increase scale and thereby exploit internal economies, allowing them to cut prices. In the neoclassical model, domestic and foreign manufactures are perfect subsitutes, so in a small open economy prices increase by the size of the tariff. But in the "industrial organization" model, there aren't always close Canadian substitutes for foreign goods, and the tariff's positive effect on firm size reduces markups, which raises productivity and lowers prices.

The second model proposes that learning-by-doing is a function of "industry experience," proxied by cumulative output. Tariffs increase output, accelerating the growth of accumulated experience and raising productivity, lowering costs and prices. In the figure below, a tariff permanently raises output in protected industry and allows it to move faster along the experience curve. The prediction is basically the same as above, but here productivity increases because of learning-by-doing—adapting machinery, training labor, etc.

To assess the effects of the National Policy, Harris et al. exploit variation in effective protection across fifteen Canadian industries as a natural experiment. Industries are classified as "target," "broad," and "unaffected" based on the size of the tariff increase. They run difference-in-differences and treatment intensity regressions to compare perfomance changes between treatment groups. Targeted industries included tobaco, paper, transportation, petroleum; the broad group was mostly metals; and food, rubber, leather, and textiles were considered "unaffected." In the treatment intensity regression, elasticity of output and TFP growth to treatment intensity were 3.6 and 4.6 percent respectively, with an elasticity of -4.6 percent on the price change. In the DiD, they found that output rose by 6.7 percent and productivity by 10.6 percent in the target group (5.2 and 8.0 in the broad group). Those are big numbers!

You should be worried about endogeneity concerns, of course. That's the whole reason why the Juhasz paper is so groundbreaking. Did the Canadian government pick winners for treatment? DiD specifications also demand parallel pre-trends between targeted and non-targeted industries, which could easily have been violated. Karacaovali (2011) adds that “more productive sectors have ... more to gain from lobbying and can potentially generate more protection.” It doesn't look like the Macdonald government explicitly targeted the most promising sectors, though, but rather to "restore prosperity" to "struggling industries, now so sadly depressed." Treated industries were also performing much worse on prices, productivity, and output beforehand.

To address endogeneity concerns, they instrument for intensity using political, locational, and market structure characteristics, including whether the industry's value-added came from districts with close electoral races in 1878 (or, confusingly, where the Conservatives won handsomely). The estimates are about the same. They also do a placebo test with the treatement year in 1875. I would've liked to see randomized assignment of treatment intensity, but this isn't really a true causal inference paper.

Finally, Keay (2018) shows that the Canadian government followed through on the other side of the infant industry bargain—removing tariffs from mature industries once they had become competitive. He finds a strong negative correlation between net export performance and the level of tariff protection after 1890 which substantially reduced the deadweight losses from the National Policy. So industries were allowed to "graduate" from state protection if they showed promise as exporters, permitting consumers to reap the welfare gains from lower prices.

To summarize: the National Policy tariff program appears to have succeeded in nursing several key export industries to international competitiveness and backing off afterward. But was it worthwhile?

Protection and Development

How do we know if IIP worked? It's not enough to check a box if protected sectors expanded their output—if you wipe out an industry's competitors, then yeah, it's going to produce more. Harrison and Rodriguez-Clare (2010) propose two tests for whether IIP worked: the Mill test, which requires that a protected industry become internationally competitive, and the Bastable test, which requires that the aggregate benefits outweight the costs of protection (deadweight loss + enforcement costs). I haven't found any study that has truly assessed the aggregate dynamic effects of the National Policy. But some stylized facts about post-1879 Canadian growth can help to illustrate the point.

Economic historians often associate Canadian growth with the railway-fuelled wheat boom, which took off after 1896. But GDP per capita grew by 2.2% per annum during 1879-95 and manufacturing value-added per capita by 2.4%, the latter rising at 4.2% in the first decade of the National Policy. By contrast, the 1870s had seen essentially zero growth. I'm not one for chart-squinting, but the difference between 0.1% and 4.2% is pretty big!

Targeted industries, which had been struggling during the '70s, grew rapidly after 1879. Paper output fell by 4.3% per annum over 1870-7, but grew by 13% per year over the next decade; iron and steel jumped from -2.4 to 8.4%. Altogether growth rates in the targeted and broad groups rose by 12 pp and 9 pp respectively, while the unaffected groups only increased by 0.8 pp.

Inwood and Keay (2013) discuss the case study of the iron and steel industry, which received strong tariff protection during the 1880s, with the AWT rising from 13.7% in 1870 to nearly 30% in 1893. By 1900, advanced blast furnaces had been installed at Hamilton, Deseronto, and Midland in Ontario; and at Pictou and Sydney in Nova Scotia. Pig iron production was 120 times greater in 1913 than it had been in 1870 and 50 times greater than in 1890. McInnis (2000) also suggests that the tariff encouraged the utilization of empty plant capacity, leading to spurts immediately after the 1879 and 1887 tariff shocks.

You can take these descriptive statistics, along with the causal results from Harris et al. (2015), as small-sample and imperfect. You could argue that some of the growth of the 1880s was just rebounding from the previous decade. But it seems implausible to say that industrial growth, specifically in targeted sectors, would have been even faster had Canada not attempted IIP. With the United States remaining staunchly protectionist, even renouncing the "Reciprocity Treaty (1854)" in 1866, some tariff response was probably warranted even in the short run.

Did Canada have latent comparative advantages in protected industries? Looks like it. Exports of paper, mineral products, and petroleum boomed. Table 2 below shows that Canada began to substantially diversify its exports during the National Policy years. In 1851, Canada basically was a timber economy with some wheat and cattle thrown in. By 1890 and even more so by 1900, as some industries were starting to mature, Canada was selling machinery, agricultural implements, drugs, clothing, and furniture abroad. The total value of wood product exports grew markedly despite the waning of the timber trade, thanks to the explosion of the protected paper industry. Canada's imports were increasingly dominated by capital equipment and parts for manufacturing plants, as well as coal with which to power them.

Canadian industries protected by the National Policy not only expanded their output, but saw rapid productivity growth, lowered their prices, and exported more. Targeted sectors displayed increasing returns to scale and large learning-by-doing effects, which together contributed to nearly 40 percent of their improvement in productivity. So it seems like the tariff passed the Mill test. And since the costs of the tariff might actually have been zero, it seems pretty likely that protection actually worked as an infant industry policy. The National Policy interacted with Canada's vast resource endowments and newly-integrated home market to produce competitive manufacturing industries, some of which would become the basis of the non-wheat economy of the twentieth century.

International Comparisons

By now, you're probably wondering why protection worked so well in Canada, but failed so frequently in other places and at other times. After all, we're familiar with how ISI in Latin America, especially Argentina (Canada's Spanish-speaking sister), went badly awry after World War II. But did protection work for Canada's contemporary rivals? The simplest justification for my argument would be a universal tendency for IIP to promote growth in the pre-1914 globalization era.

Coincidentally, Pseudoerasmus has a great post from 2016 on the "tariff-growth paradox"—Paul Bairoch's finding that countries with higher tariffs grew faster during the late 19th century. O'Rourke (2000), using a small panel of rich countries (Australia, Canada, Denmark, France, Germany, Italy, Norway, Sweden, Britain, and the USA) over 1875-1913, did find a correlation between average tariff rates and growth.

Clemens and Williamson (2001) confirmed this on a 35-country sample for 1865-1908 and 1919-1934. Both papers hypothesize that protection accelerated the expansion of "emerging" sectors (i.e. industry) at the expense of agriculture. The new sectors, characterized by Marshallian/learning externalities and scale economies, were supposed to head the transformation to developed-country status. This looks quite a bit like Canada, with the proviso that the wheat boom led to accelerated agricultural-sector growth after 1896.

Irwin (2002), however, countered that the correlation was driven by the use of revenue tariffs in fast-growing, land-abundant countries—namely the US, Argentina, and Canada. But as we've seen, revenue- and IIP-based tariffs can't be so easily differentiated. Lehmann and O'Rourke (2011), in any event, address this critique by cutting out revenue tariffs and find the positive relationship again. Industrial tariffs lead to positive growth over 1875-1913, and agricultural tariffs to negative. Canada's pattern of protection generally looks skewed toward IRS sectors, though it should be noted that some were declining outright and might have warranted sunsetting.

There are a couple of more recent studies here, like Schularick and Solomou (2011), who find that the 1875-1879 depression, which caused many countries (including Canada!) to adopt protectionism during the subsequent recovery, drove the tariff-growth correlation. This could be a damning indictment of my argument; as we've seen, the targeted sectors were doing worse during the depression. But I don't think that a "bounce-back" explanation really suffices to cover the structural expansion of protected industries in the Canadian economy or the new lines of production (e.g. machinery and farm tools) adopted.

I think Pseudo's interpretation of C&W—that the UK was a free-trade sink for protectionist countries—checks out for Canada. Exports to the UK rose from $22 million in 1870 to $43 million in 1880 and again to $93 million; exports to the protectionist US, which had been higher ($29 million) in 1870, increased only to $34 million in 1880 and $68 million in 1900. Indeed, many American firms located inside Canada during the National Policy era in order to take advantage of preferential intra-imperial duties. Altogether the UK was taking half of Canada's exports over 1880-1900. C&W's "prisoner's dilemma" model, in which coordination is the best option but protection is superior to unilateral free trade, is validated by the general equilibrium results that we discussed above.1

Protectionism in One Country

If the cross-country studies are "crude" and ambiguous, it's worth making straightforward comparisons with one-country case studies. Canada's mirror here is obviously the US, which as we mentioned ratcheted up protection after 1870. Head (1994) attributes the growth of America's steel rail industry to protection; it was uncompetitive in the 1860s, became a world leader under IIP, and later had its tariff successfully removed.

But Irwin (2000) finds that there's little room for a positive role for the US tariff, since "import tariffs may have raised the price of imported capital goods, thereby discouraging capital accumulation." He argues that "productivity growth in nontraded sectors, rather than in manufacturing, was the driving force behind the United States’s overtaking of the United Kingdom in per capita GDP during this period." That's not true of Canada, however, which largely exempted capital goods and intermediate inputs from its developmentalist program.

A more relevant point is made in Irwin's counterfactual simulation of the US tinplate industry, which was protected in 1890 (when there were no domestic producers) and subsequently became self-sufficient. He found that the tariff accelerated the industry's growth by 10 years, but that it would have emerged anyway thanks to falling ore prices and that the welfare cost outweighed the benefits. However, a smaller tariff (50% rather than 70%) might actually have improved welfare.

Clemens and Williamson (2005) suggest that Latin America's high pre-1914 tariffs–the world's highest–should be linked with the region's superior growth performance, at least relative to Asia (whose levels were four times lower). Uruguay had tariff barriers 2.5x Canada's in 1905. French tariffs were at 10.1% and Germany's at 9.1% in 1890, while the Latin American average was 34%. Labor productivity growth rates in Argentina, Brazil, and Chile all exceeded America's over 1900-1919, and Brazil's industrial GDP grew at a staggering rate of 9.8% per annum.

Why did protection fail so spectacularly in Latin America after World War II? The most likely reason appears to be the insertion of price distortions that prevented regional market integration, forcing producers to operate far below the minimum efficient scale. Argentina had over a dozen auto companies serving a home market that could barely fit one. Indeed, this was what happened in Canada until it signed the Automotive Agreement with the US, which assigned particular production lines to each country to ensure an MES. But why did IIP work in the (much smaller) settler economies of the Belle Epoque? Perhaps, as Pseudo suggests, it's the intial boost that comes from transferring unproductive labor out of agriculture that counted; once all available peasants had been mobilized, the growth gains went away. It also could be that Canada, unlike Argentina, discriminated in favor of intermediate inputs—unfortunately, meaning better institutions and policy choices, an annoying black box!

That doesn't quite explain how Canada ended the National Policy era with about the same manufacturing share with which she began it. Here, though, I think it's important to note that Canada had several resource booms during 1879-1914: minerals, metals, gold, wheat, wood pulp, etc. The discovery of new deposits and improvement in Canada's terms of trade might well have proved deindustrializing forces in the absence of industrial policies—for example, Ontario's ban on pulp wood exports—intended to encourage domestic processing of the bounty. With intervention (and American tech), however, Canada was able to channel cheap resources into a modern economy.

TL;DR: I defend the “optimist” position on the economic performance of Tsarist Russia. The pre-1914 Russian economy was experiencing sustained economic growth which was interrupted by WWI and curtailed by the Bolshevik Revolution and Civil War. The “pessimist” stance ignores or explains away real signs of capitalist development in Russia in spite of its bad institutions. Main points:

1. Russia had cheap labor, abundant natural resources, and tons of foreign investment capital plus access to technology.

2. Russian political and economic institutions were not developmentalist, but were improving under the pressure of social unrest and military modernization.

3. Russia’s domestic market was large and prosperous enough to make protectionism work AND there was no prewar crisis of rural living standards.

4. Latin America is not the correct counterfactual for non-communist Russia; other primary product exporters (notably the US) successfully transitioned.

5. Russian heavy and light industry grew far more rapidly prior than agriculture prior to the First World War, leading to structural transformation.

6. The trigger for Revolution was more likely the wartime collapse of the Russian economy than its inherent weakness.

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Investors of the Belle Epoque would have been surprised to hear the modern consensus that Russia was a structurally weak, doomed economy. In the decades preceding the July Crisis, the empire of the Tsars was a magnet for foreign capital, attracted by the prospects of heavy industrialization and railway construction. Russian economic growth, accompanied by rising per capita GDP and structural transformation, was rapid for the pre-1945 world and there were signs of convergence, or at least parity, with Western Europe.

Yet the Bolshevik Revolution(s) of 1917, with its crosscurrents of proletarian agitation, created the enduring impression of a stricken Russia just waiting to collapse. If the economy was running well, why did the masses revolt? Robert Allen has been among the strongest advocates for this view. His 2003 book Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution argues that the Tsarist expansion was doomed to fail, as repressive government, moribund class structures, and declining terms of trade would have sapped growth in the absence of war.

I've been a diehard Allen fan for most of my mature existence. But in discussions with various kindly people on Twitter and in real life, I've been progressively recanting from my dogmatic faith in his three big books. We're starting in Russia.

Allen’s Thesis

Allen discounts growth under the Tsars because his aim to is to show that only Soviet resource mobilization and command could have lifted Russia out of a low-equilibrium trap. In short: "ln the absence of the communist revolution and the Five-Year Plans, Russia would have remained as backward as much of Latin America or, indeed, South Asia" (16). The corollary of this point is that, if the Third World is one's reference group, Russian economic growth looks pretty good over 1928-1970. Given that Russia was destined to be a peripheral nation and neither European nor Japanese, one should laud the Soviets for the limited convergence that they achieved with the OECD countries.

What's Allen's argument? It's not completely straightforward, but there are several components. He starts with the incontrovertible fact that Russia had not completed its structural transformation in 1913. Three-quarters of the population were peasant farmers and half of GDP was in agriculture. Urbanization (towns of 5000 or more) was only 14 percent, up from a miserly 7 percent in 1850. In value-added terms, agriculture was 58.7 percent of GDP in 1885 and 50.7 percent in 1913, while industry grew from 6.6 to 14.9 percent. Allen concludes: "Russia was developing a modern economy, but the pace was glacial."

Somewhat confusingly, Allen admits that Russia *was* having an economic boom prior to 1913. National income grew at 1.7 percent per annum over 1885-1913, rising even faster during certain phases. He then tries to explain it by saying that all of it was wheat. Since agriculture production doubled—fuelled by rising prices from integration with Western markets and convergence with North American yields—and agriculture was by far the largest industry, this channel explains 44.9 percent of value added (Allen rounds up whenever it's convenient). Moreover, the wheat boom was non-repeatable, since wheat prices collapsed after World War I. "If capitalism had continued in Russia, the wheat boom would have ended there, just as it did in Canada, Australia, and Argentina. Income growth slowed dramatically in these countries and the same fate awaited Russia" (35). Whew, good thing the Soviets saved Russia from becoming Canada or Australia (or even pre-Peron Argentina)!

But what about that industrial expansion? No, says Allen, that wasn't going anywhere. Heavy industry was basically "building railroads", and the pace of construction was about to dramatically slow down (you can have lines everywhere). While low Russian wages should have meant Japanese-style labor-intensive textile expansion would have been possible, the Tsars hamstrung the industry by slapping tariffs on everything, which meant that Russian cloth was never competitive on world markets. Since domestic demand had to supply the impulse to light industry, and since both rural and urban growth had limits (the railroad and wheat booms were done), there was no chance of a home-market cotton surge.

This all looks pretty bad for the Tsars, and even worse when you tack on a couple of institutionalist and human capital arguments for why Russia wasn't like Canada or Japan. Since "[t]he tsar was not wise enough to lead Russia down a Japanese course of modernization, nor was the society supple enough to follow," late Argentina or India was Russia's non-Soviet destiny. But really?

Political Economy

The political economy question is at the center of the "pessimist" case. Allen (2005) argues that "[w]ithout a comparable institutional revolution [to Japan's], Russia would have languished." Was the Tsarist autocracy fundamentally too conservative to permit capitalism to exist, let alone thrive, in Russia?

Alexander Gerschenkron famously argued that, prior to the Crimean War, the Russian government actively sought to block development to ensure its own stability. But defeat and the 1855 accession of Tsar Alexander II led the regime to face its backwardness relative to the Anglo-French alliance and begin wholesale reforms. The first step was the emancipation of the serfs in 1861. During the 1850s, most Russians lacked "juridical freedom"—serfs could be bought and sold and were prevented from owning property. They continued to perform compulsory labor on the manors of their feudal lords, the church, or the crown itself. But he Emancipation Act failed—land was distributed to village communes, and individual families could not withdraw their holdings and were subjected to arbitrary redistribution. Gerschenkron saw this as a (the?) major obstacle to capitalist development.

Gerschenkron held that the "entrepreneurial" Russian state substituted for private enterprise, following an "enlightened industrial policy" designed to drive catch-up with the West. This meant state railroad construction (and ownership), guaranteed lending to private railways, state assistance in floating foreign-currency loans in European capitals, and the reservation of steel, military, and railway equipment contracts for domestic industry. Gerschenkron also highlighted “protectionist” tariff barriers that increased demand for domestic goods and compelled firms to relocate (FDI) within Russia to escape paying. The state also wooed Western entrepreneurs and craftsmen and granted licenses to top foreign companies. Gregory (1994) disputes Gerschrenkron's thesis, emphasizing market forces over state promotion, but Gatrell (1994) shows that the regime played a significant economic role, especially through armaments.

Tsarist Russia wasn't a great place to do business. Russian corporate law required that a new joint-stock company receive the dispensation of the Tsar prior to formation. Incumbent companies grew faster and became larger. Shepelev (1973) has argued that by 1914 the equity capital of the average Russian corporation was 40 percent larger than the average German firm and 5 times the British average. During the 1890s, cartels seized industries including iron, steel, oil, coal, and railway engineering; they fixed output quotas and prices. 70 percent of national production in the metallurgical industry was controlled by the joint selling agency Prodamet. The tariff structure, meanwhile, was probably intended more for revenue than strategic protection. They did not discriminate in favor of industrial inputs and so raised domestic prices, cutting into real wages.

Granting the debatable premise that growth was threatened under an autocracy with imperfect competition, however, Russia's institutions were gradually reforming. Emancipation was a start. During the 1890s, a pro-industrialization cabal led by Sergei Witte took control of the Finance Ministry. Their program involved protective tariffs for heavy industry, large railroad expenditures, business subsidies, and export promotion. Witte's objective was to join the gold standard, which he did in 1897—a further sign of an internationalist orientation.

In 1901, the government passed a bill for corporate reform that strengthened the rights of minority shareholders and attacked the concentration of board power in the hands of a few large investors. Despite the expense of acquiring a concession to incorporate, over 4,000 firms had done so by 1914, and factories run by incorporated companies had higher labor productivity thanks to greater access to capital. After the 1905 Revolution, halting steps toward constitutional monarchy were made through the establishment of the Duma, which though dissoluble by the Tsar did have to approve his laws, and the passage of the 1906 Constitution. The Stolypin reforms were also begun at this time, of which more below, and a Peasant Land Bank was established to ease access to credit.

Growth

We can start with the structural change data. Allen's assertions about the "glacial pace" of Russian structural change are no more than that—assertions. Glacial compared to... the later-stage industrial economies of the day? Then sure. But by Allen's own admission, Russia was at least a generation behind in the industrialization process after 1861. British urbanization in *1700* was higher than Russia's in 1913! And as a historian of Britain's transformation, Allen is undoubtedly aware that British growth creaked along in its earliest phases. The value-added of British agriculture rose from 26.7 to 31.4 percent over 1700-1801, and fell to 18.7 percent only by 1851. Russia's 8 percentage point decline over a thirty-year span doesn't look so bad in that perspective. British industrial output increased by a factor of 12 from 1700 to 1851. Russia's heavy industry grew by 9 times in less than thirty years and light industry by 3.5 times over the same period, and in a much less developed economy.

Moreover, if essentially any* major country continued to grow at pre-1913 rates it would have failed to reach a hypothetical 1989 income target. I've crudely and quickly drawn "Belle Epoque trend" growth paths onto the US, Germany, Britain, and France GDP trajectories for 1801-1993. Shockingly, everyone ends up a lot poorer. Growth wasn't very fast almost anywhere prior to 1939. And after 1945, a lot of places once deemed too "backward" for modernization got a healthy dose of it, with or without Communist mobilization.

A major plank of Allen's model of Soviet industrialization is the program of forced saving imposed on farmers, under which agricultural products were purchased as prices that guaranteed a substantial profit for the regime. This was necessary to boost the investment rate and spur capital accumulation. Yet Russia's pre-war investment rate was high by contemporary standards and augmented by inflows of foreign capital.

Cheremukin et al. (2013, 2017) analyze the development of the Tsarist and Soviet economies over the long term. They "map" specific policies to "wedges" in a neoclassical growth model—distortions dividing the actual trajectory from an efficient economy. The most important was the concentrated, cartelized manufacturing sector, which was able to impose significant markups on product prices. The authors find that most of the Soviet economy's performance was driven by the reduction of these wedges: "high production targets set by the Soviet government during industrialization helped remove frictions caused by entry barriers and the monopolies."

However, the wedge reduction also slashed the USSR's TFP compared to the Tsarist trend. Low productivity, especially in agriculture, created offsetting welfare losses that resulted in worse short-run performance than the Tsarist counterfactual and possibly "moderate" long-run gains. But even in this case, the non-communist economy might, as Gregory argued, have higher welfare, if slightly less growth.

The baseline exercise, however, assumes no instutitional reforms. As we've discussed above, statis was unlikely. The government was (slowly) making reform efforts during the pre-war years, from the abolition of serfdom to the Witte and Stolypin programs. If this process had continued, as in Japan, the authors (in an earlier working paper) show that Russian growth would have far exceeded actual Soviet performance and led to large welfare gains.

Their conclusion is pretty devastating:

Therefore our answer to the ‘Was Stalin Necessary?’ question is a definite ‘no’. Even though we do not consider the human tragedy of famine, repression and terror, and focus on economic outcomes alone, and even when we make assumptions that are biased in Stalin’s favour, his economic policies underperform the counterfactual.

Furthermore, Nintil (thanks Anton) suggests that Allen exaggerates the superior performance of the Soviet economy by only considering data up to 1970. This is a bit like slapping Bush and Greenspan on the back for their great economic management between 2001 and 2008. If only the housing bubble hadn't blown up! When the 1970-1989 period is factored in, Soviet growth relative to starting GDP looks much worse. Indeed, the graph below shows that the worst-case Tsarist trend—no reforms, including 1914–leads to similar outcomes by 1989.

To summarize: the Tsarist economy was, despite inefficiencies, starting to grow during the last decades before the war. Growth was retarded by barriers to entry in the manufacturing sector and the simple fact that the early years of industrialization can be frustratingly slow, as in eighteenth-century Britain. Increasing industrial competition could have resulted in improved welfare and more structural change in Russia compared to the actual performance of the Soviet economy. Positive institutional developments prior to the war suggest that this was possible.

Industrialization

But was Soviet growth all attributable to the wheat boom, as Allen argues? No. Allen's suggestion that agriculture did all the heavy lifting is a fallacy of growth accounting. Dynamic but inchoate sectors always contribute slightly to aggregate output at first—until they collectively become large enough to contribute a lot. Unlike during the early phases of Britain's development in the eighteenth century, Russian industry was growing *much* faster than agriculture—and agriculture was hardly limping along. To say that agriculture contributed most to value-added is irrelevant because agriculture was the largest sector—if agriculture had grown by 35 percent instead of 104 percent, it still would have made a larger contribution than heavy and light industry *combined*.

The point is that the latter two sectors were growing relatively much faster. Indeed, Russian industry was growing much faster over 1870-1914 than that of any other European country—at 5.1 percent per annum, versus 4.1 percent in Germany and just 2.1 percent in France and England. Industrial capital per worker rose by 55 percent between the 1880s and 1913, and the overall growth rate (8-9 percent) of the capital stock was greater than that in other industrializers of the period.

Why shouldn't industry have located in Russia? The country was well-endowed with cheap unskilled labor and boundless stocks of cheap energy, including charcoal, coal, and oil. Industrial technology was available from abroad, though import tariffs did make it costlier than necessary. Russian interest rates were slightly higher than Western European during the Belle Epoque, on par with those of land-rich Argentina and Brazil; state investment guarantees attracted enormous foreign investment from France, Germany, and Britain. By the time that war broke out, Russia's foreign debt was the world's largest. Investors were pretty sure that the Tsarist regime was a good bet, insured by budgetary orthodoxy and the gold standard. Even so, Russia's foreign investment as a share of NNP was just -1.4 percent, which is similar to the US over 1869-88 (-1.0) and far less than Canada or Australia (-7.9 and -5.1 respectively).

Would declining terms of trade have ruined the Russian farmer and stifled agricultural demand for urban goods? It's hard to say, and Allen's assertion remains fairly speculative. Peasant incomes had been rising steadily over 1885-1913, and Dennison and Nafziger (2012) show that rural households in the Rostov and Iur'ev districts had expanding consumer cultures characterized by newspaper product advertisements and sizeable budget shares devoted to non-food goods. Gregory (1980) found that rural consumers constituted a sizeable market for domestic industry already prior to 1890. Was this all contingent on the wheat boom? Or could the rise of Russian industry have picked up the slack? Other nations survived—and the ones that didn't, like Argentina, had much smaller domestic markets than did Russia.

Allen's argument that Tsarist Russia was doomed by protectionism, primary product exports, and the end of the railroad boom looks worst in comparative perspective. Canada, Australia, and yes, the United States all built thousands of miles of track and used them to ship out crops (including wheat!). Allen's own (later) work on the United States argues that "American industrialization in the nineteenth century required tariff protection since the country's comparative advantage lay in agriculture" (sound familiar?).

This pretty striking graph shows that primary products represented over 80 percent of US exports until the 1890s and were still over 50 percent at the end of World War I. Did the prevalence of cotton in US exports doom it to a Latin American fate? Meanwhile, Canada was Russia's mirror image in the Belle Epoque—a giant wheat exporter linked by railroads to the international market that took up protectionism through the "National Policy" after the late 1870s. Not bad company! As Gregory writes in his review of Farm to Factory, "Allen emphasizes the deleterious impact of the Great Depression on a non-communist Russia's agriculture, but contemporary living standards of affluent economies with competitive agricultures (Australia, New Zealand, Canada, and to some degree the United States) are today unaffected by the remote events of the late 1920s and early 1930s."

Even if you don't buy comparisons with the British offshoots, say for institutional or trade-relationship reasons, it's hard to deny that Finland, Denmark, and Sweden—all agrarian regions (and much smaller!) relatively close to Russia and similarly backward—turned out okay! So I am pretty skeptical that primary product orientation spelled Russia's doom.

The Agrarian Problem

Was there an "agrarian crisis" in the late prewar years? Gerschenkron argued that the retention of the commune (instead of distributing land to individuals) after the emancipation of 1861 made Western European agriculture impossible. The Emancipation Act of 1861 forced peasants to pay off their mortgages before removing land from the commune but failed to create a capital market that would let them do this. Thus no agglomeration of holdings took place, investment was disincentivized, and land could not be reallocated to its most productive uses. The Stolypin reform of 1905-6, which canceled peasant debts and allowed farmers to remove land from the commune, came too late, in Gerschrenkron's account, to alleviate rural poverty.

Under the 1906 Stolypin reform, peasants were able to convert their land from communal to hereditary tenure and consolidate their scattered strips from around the village into enclosed, contiguous plots. Updates in 1910 and 1911 lowered the costs of exit, allowed households that had not experienced repartition in the last 50 years to gain property title, permitted households to consolidate without leaving the commune, and made consolidation itself obligatory if 20 percent of the commune's households wished it. The number of peasants in the communes fell by 2.5 million from 1905 to 1915 and the percent of land held by the institutions from 83 to 71 percent, before the outbreak of war halted changes.

The process of exit was complicated, and perhaps 250,000 were pressured to give up the application by their communes. But the reforms appear to have been successful. Larger farms were more cost-effective by saving on labor, livestock, and farm tools and had access to cheaper credit. Consolidation led, per a 1913 survey, to increased use of agricultural machines, hired labor, and the replacement of the three-field with the many-field system. Castañeda Dower and Markevich (2019) found a large positive effect of the Stolypin reforms, primarily through land consolidation—the net effect was a doubling of land productivity.

And this was in an already-improving agricultural context. Gregory (1994) finds that Russian agriculture was rising growing per capita output and living standards. Peasants were consuming greater portions of their wheat harvests and probably experienced real wage growth (as opposed to marketing them and eating cheaper crops). Though legally the commune "could not have been set up in a worse form for raising productivity," Gregory argues that it could have been a "flexible" institution in which land could be redistributed through informal agreement. This is speculative, but at least the underlying data doesn't support a view of peasant immiseration. I am agnostic on Allen's take, which is that rising productivity was capitalized into increased land values, which only benefited owners and led to an equilibrium of holding parcellization.

Borodkin et al. (2008) offer evidence against the claim that farm labor was "trapped" in the countryside, showing that the rural-urban wage gap was stable at around 35 percent. Indeed, over 1884-1910 there were signs of convergence between urban and rural labor markets, especially in industrializing St. Petersburg. Demand shocks provoked similar responses in the city/country wage series. Thus peasant labor A) wasn't completely immobilized by the commune system and B) was available for employment in urban industry even without Stalinism. This finding is confirmed by Cheremukin et al., whose neoclassical modeling exercise attributes very little of the Tsarist economy's inefficiencies to agricultural labor mobility.

It is also untrue that aggregate economic gains were frittered away by extreme inequality. Lindert and Nafziger (2014) recently calculated inequality across Russia for 1904 and found that it was unexceptional by the standards of the period. Lenin's thesis about the differentiation of the peasantry, which was to have such tragic consequences under Stalin, remains unproven.

In sum, there is little evidence to suggest that Russian agrarian systems were blocking industrialization. Labor could move into urban industry, and rising living standards made peasant families consumers of manufactured goods, providing a market for factories operating within the country's tariff walls. The Stolypin reforms were incomplete at the time of the Revolution, but they probably helped to increase living standards, if at the possible cost of additional social conflict.

Conclusions

I'm not arguing that Russia was Japan. The Tsarist regime and its supporting elite were less pro-developmental than the Japanese, and levels of human capital were low, if slowly improving. Russia's geographical endowments and social structure made rapid Japanese-style industrialization unlikely. But judging Russia against the most successful rapid industrializer in history doesn't seem to be very credible. Instead, Tsarist Russia was in the early stages of a not-too-atypical European development pattern, hamstrung by poor (but not fatal) political economy and rapid population growth. I concur with Peter Gregory (1994) in that "[t]he structural changes that occurred in the thirty years preceding World War I were in line with the first thirty years of modern economic growth elsewhere" and that "Russia definitely had begun the process of modern economic growth by the outbreak of the First World War I."

As Gregory concedes, Russian growth certainly "began under unfavorable circumstances." These included the weakness of property rights (especially in agriculture), anti-competitive tariff barriers, and a corrupt and regressive bureaucracy headed by a cautious autocrat. But growth began nonetheless, and it seems probable that, had the stable international system of the Belle Epoque endured, Russia could have continued its structural transformation amid gradual political thawing. Per capita growth probably would have been accelerated post-1913, if only because population growth would eventually have slowed as the demographic transition took hold, and growth increased with rising literacy and science/technology imports. And that’s assuming no further institutional shifts toward inclusion and developmentalism—which in light of the regime’s international and domestic concerns seems unlikely. How much faster is tough to say, and while I wouldn't bet on Japanese rates, I don’t think convergence with parts of Western Europe was out of the question.

I'm also not arguing that counterfactual Tsarist growth would have been *faster* than under Lenin and Stalin—I just don't know. I find Allen's story of rapid labor mobilization, increased human capital, and an accelerated demographic transition relatively convincing (or at least intimidating) from a conceptual point of view. For this essay, it's sufficient to argue that growth could have occurred under the Romanovs, especially if instutions continued to get better. Protectionism and industrial policy could have succeeded in growing up competitive industries, especially given Russia's large internal market, low wages, and cheap energy.

Instead of viewing the Revolution of 1917 as an inevitable outcome of limited development, we should accept the more obvious answer: that the destruction of the Russian economy during the First World War—GDP per capita fell by 20 percent—combined with an already-fragile political and economic situation to induce mass unrest. Without the war, it's possible that Russian growth and (potentially) institutional change would have delivered the goods and forestalled the violent destruction of the old order.

In researching for my recent post on “The Mechanics of the Industrial Revolution,” I noticed that a key explanation for the purportedly higher levels of artisanal skills in Britain relative to the Continent was the weakness of the former’s guilds. “[T]he relative limited [sic] power of guilds meant that rapidly growing sectors could swiftly attract extra apprentices,” who in turn served as the skilled labor force manning British textile machines and ironworks. Guilds had resurfaced in European cities after the six hundred-year hiatus of the Dark Ages after 1000 as trade and manufacturing began to concentrate in urban areas. They allowed artisans and merchants to organize and bargain for favors from local potentates, usually exclusive rights to sell goods and to regulate entry into the practice; the monopoly rents so derived were in turn shared with the elites who legitimated the system.

None of this sounds particularly good for growth. But for several decades up to the mid-2000s, economic historians developed a litany of arguments stressing the efficiency of guilds—that is, that these institutions created aggregate economic benefits that outweighed the obvious costs. There are four-ish main planks of what Sheilagh Ogilvie terms the “guild enthusiast” argument:

1. Guilds upheld quality standards and resolve information asymmetries.

2. Guilds transmitted skills and training.

3. Guilds facilitated technological innovation.

4. Guilds improved urban politics.

The major debate on the issue came in the pages of the Economic History Review during 2007-8, as S. R. Epstein and Sheilagh Ogilvie disputed all of these main points. Epstein unfortunately died before he could respond to Ogilvies’s rebuttal, but the exchange is worth understanding nonetheless. My description of the altercation is based largely on Epstein’s 2008 paper, Ogilvie’s reply, and her contemporaneous working paper that expands on the critique.

Quality Control

To Epstein, quality control—ensuring high product standards—was one of the central purposes of a guild. The primary evidence that guilds actually provided quality control comes from guild legislation, which frequently did seek to fix quality standards. But as many historians point out, written records can be a poor guide to actual practice. Ogilvie conducted a case study of the strongly-regulated Württemberg worsted industry to provide empirical evidence for these theoretical concerns. The actual punishments levied against offenders tended to be so trivial (apologies, minor fines, promises of reformation) as to be inadequate to keep members’ standards high, and—when enforced–were frequently meted out largely to keep cheaper competitors off the market. Price and wage ceilings actually harmed quality. Furthermore, quality offenses were so frequent that it seems dubious that the restrictions were particularly oppressive for would-be violators. Patrick Wallis, for example, found that in the early 17th century, 30 percent of the London Apothecaries and Stationers’ Companies had broken the rules.

Epstein objected to most of Ogilvie’s case study. On quality, he asserted that the examples given of guild regulatory inefficacy were unrepresentative—a claim that appears to be patently false, given that examples from twelve different worsted industries are given—and that Württemberg was doomed to be poorly enforced anyway because it was a proto-industrial area with dispersed production. This latter point also appears to be incorrect, and in any event, a common argument for the necessity of guild controls is precisely the fact that information asymmetries are rampant in dispersed putting-out systems. The Württemberg study ultimately found guilded products to be objectively poor, and that they also prevented sellers from marketing lower-quality products to consumers who actually wanted them. All of the above imposed deadweight losses, as large volumes of potentially beneficial transactions couldn’t take place.

Training and Skills

Another key argument for the economic utility of the guilds is that—through their apprenticeship system—they provided training for entrants into skilled crafts that could not otherwise have been acquired. In many areas of production, this just wasn’t true. The worsted textile industries studied by Ogilvie appear to have been open (sans guild restriction) to new, “untrained” entrants—indeed, hence the guilds’ incessant war on illegitimate producers. For example, she cites a 1582 petition by an urban guild of woolen-broadcloth-weavers against competitors who were seizing export markets “after learning combing and weaving for only a few weeks or months.” If the untrained were incapable of participating in a trade, then why were the guild masters so worried about them trying? In trades where guild apprenticeship was not mandatory, it was deliberately circumvented by people who realized how little they needed to use it. In the Yorkshire worsted industry, an increasing division of labor and the absence of such regulations meant that apprenticeship became increasingly outmoded and ignored.

If guilds were essential for the transmission of skills to the broader workforce, then the fact that they restricted entry into trades was probably counterproductive. Epstein had originally argued that entry was not rationed in Ogilvie’s German case because masters could take unlimited numbers of apprentices, but the worsted guilds had actually imposed quotas in 1611 and ratcheted them upward in subsequent years. Though the number of masters did rise, this was actually a result of internal increase (masters’ sons entering).

Some of Epstein’s arguments are just weird. He at one point completely misquotes Ogilvie, claiming that she wrote that ‘labour productivity “should have been higher in the countryside, where corporative regulation might be expected to be weaker,”’ when she actually wrote that “[s]tandard assumptions about proto-industrialization would predict higher output quotas in the countryside, where corporative regulation might be expected to be weaker.” He thus attributes to her an argument that she is actually attempting to debunk and uses her evidence on output quotas to show that countryside labor productivity was higher when she wasn’t talking about it at all!

Epstein also asserted that the fact that apprentice fees were paid and training years endured evinces the utility of the program itself, when it’s pretty obvious that trainees would be perfectly willing to waste time given that it was the only way to get certification as a master. Apprenticeship fees were not bonds to ensure future performance, either, because at 14-24, payers were already expected to be at something close to adult productivity, and thus able to reward masters financially.

Also, is this the best paragraph in the history of the EHR?

Epstein’s criticism of my German evidence is again vitiated by errors and distortions. His inclusion of masters’ daughters among women who could do craftwork freely is simply false. His claim that spinners demonstrate that nonguild-related females could work at guilded crafts omits to mention that guilds restricted them to spinning, prosecuted all other female ‘encroachers’, and capped spinners’ wages. His accusation that I assume female labour productivity to equal male is false: I explicitly analyse gendered productivity differences. His implication that guilds’ exclusion of females is justified by women’s domestic responsibilities and low productivity is called into question by demographic realities and guild masters’ opposition to women as skilled competitors. Epstein’s reinterpretation of woollen-weavers’ objections to short worsted training as a defence of their guild’s reputation is unjustified, since worsted wares were new in 1582 and woollen-weavers operated in different markets. Epstein’s assertion that nonguilded labour could not compete with guild-masters’ ‘all-round expertise’ is unsupported by the Yorkshire study he cites and is undermined by masters’ opposition to unapprenticed workers as dangerous competitors. His claim that when apprentices absconded they were manifesting a ‘sophisticated understanding’ of the importance of guild training is far-fetched beside the alternative interpretation that apprentices who quit had decided guild training was useless. Epstein’s statement that Württemberg worsted guilds did not restrict apprentice numbers is simply false. His notion that outside entry declined after 1650 because no one desired to enter is refuted by voluminous evidence of outside applicants rejected by the guild. His claim that the guild cannot have become more exclusive after 1650 since numbers increased ignores internal recruitment of masters’ sons. His assertion that average output fell after 1650 because of weak demand for guild jobs is based on careless misreading of evidence on guild output quotas. His argument that apprentices would not have paid guild fees had they not valued guild training is ridiculous: becoming a journeyman or master required an apprenticeship certificate, issued only if fees were paid. Epstein’s claim that my evidence shows labour productivity was higher in guilded towns than ‘unregulated villages’ is based on misquotation of my study, muddled conflation of guild quotas with labour productivity, and disregard of evidence on guild regulation in villages (Ogilvie 2008, pp. 177-8).

I count 15 refutations.

Technological Innovation

One provocative claim in favor of the guilds suggests that they imperfectly prevented innovation, blocking only labor-saving inventions outright and doing so weakly in any event. Surprising as it may seem, Epstein in one 1998 article even argued that the guilds were themselves creators of new technologies, citing four mechanisms: 1) offering monopoly rents to innovators 2) promoting clustering and spillovers 3) intergenerational idea transfer through apprenticeship 4) spreading ideas geographically by forcing journeymen to travel. The guilds also prevented "harmful" innovations that might have damaged product quality.

Several of these are theoretically intriguing ideas, but they don’t really fit together, let alone work independently. Ogilvie notes that guilds must have been simultaneously weak and strong to a) let labor-saving inventions slip through the cracks and b) enforce monopoly rents to innovators. Monopoly rents aren't inherently pro-innovation and require no/low entry barriers to encourage innovation, which is clearly not the case with the guilds.

The advantages of clustering are obvious in principle: guilds might, like portage sites in the US, serve as coordination devices to choose the location of concentration among multiple viable sites. But the empirical evidence for this point appears to be lacking. Ogilvie compares the technologically moribund German worsted industry with the flourishing and guild-free British and Dutch sectors, whose advance was predicated on the rapid adoption of new foreign techniques on both the product and process sides. And it's no comfort that “only” labor-saving inventions were opposed (even if that were true)—such devices lay at the core of the Anglo-European Industrial Revolution.

Guild regulations, meanwhile, were also unintentionally harmful to innovation. Quality rules prevented changes to the production process, which might have made it harder to monitor. Entry barriers prevented potential innovators from carrying on the trade. Price floors prevented new techniques from undercutting inefficient ones. And long-term apprenticeship in a single trade created vested interests among the masters against dynamism which might render their human capital nugatory. And by preventing non-members from selling, their incentives to innovate were also removed. The list goes on.

In his 2008 article, Epstein abandons the technology-creation thesis, retreating to the informational transmission argument instead. Ogilvie rejoins that apprenticeship was both not universal within guilds and compatible with non-guilded industries, such as English worsted textiles, which were far more innovative than their protected central European counterparts. Outsiders managed to learn how to produce like guild craftsmen and did so successfully enough to attract masters' ire. And the journeymen's mandate to travel was really another entry barrier and was in any case absent in the innovative Netherlands.

One important paper defending apprenticeship as a method of knowledge transfer is De la Croix et al. (2018). The authors construct a model of technological progress in which information sharing occurs person-to-person; thus apprenticeship, which expanded a young worker's circle beyond his family, increased the exposure of individuals to new ideas and techniques. Yet the authors note that apprenticeship is not synonymous with guilds and that the system worked best in Northwest Europe where the state was strong enough to enforce contracts without the anticompetitive influence of informal institutions. Their argument, I believe, can be taken to say that guilded Europe was better positioned than clan-based "everywhere else" to transmit technical ideas, but that the optimal setup was the one prevailing in England and the Netherlands, where apprenticeship coexisted with flexible factor markets.

Many of Europe's premier industrial centers were non-guilded. In 1782, Horn (2012) shows that 85 percent of Normandy's cotton textiles and all of its woolen, stocking, metallurgical, paper, glass, chemical, and ceramics industries were located small no-guild enclaves. Leiden, a leading Dutch textile region, was exceptional both for banning its guilds and for its product and process innovations during the Golden Age. English textile machinery entered Germany via the Rhineland and Saxony, where the guilds lacked power to enforce restrictions.

Political Economy

The major point in the debate on the guilds concerned their role in promoting good governance in urban polities. Robert Putnam (1993) argued that guilds helped to promote civic self-responsibility in Northern Italian city-state (with persistent effects on social norms) while Karl Gunnar Persson deemed them conflict resolution forums between adversarial factions. Epstein, finally, contended that bargaining with guilds helped states to “to overcome multiple coordination failures in the implementation of fiscal, political, military, and economic policy” and reduced “dispersed rent-seeking.”

Epstein's claim is that pre-modern markets were ‘thin’, meaning that coordination of “decentralized agents” would generate positive externalities that would outweigh both the deadweight loss and political costs of rent-seeking. What these externalities are isn't exactly clear. Ogilvie's response is that “particularized” states—which favor specific individuals or factions—failed at delivering the goods (“mobilizing economies of scale, increasing the costs of collusion, and enforcing clearer rules and procedures for contract enforcement”) by comparison with “universalist” ones, where laws applied generally. This seems pretty obvious—why should the characteristics of open-access orders be achievable only by creating a closed-access society?

In sum, the pro-guild case reeks of contrarianism. The arguments in favor flout common sense, empirical evidence, and often mere logical consistency. Worse, Epstein appears to have argued either sloppily or in bad faith, misquoting Ogilvie and misinterpreting her evidence on multiple occasions. He confuses labor productivity with output quotas. His language verges on rhetorical ad hominem attacks on his opponent (e.g. “Ogilvie presents her argument and methodology as novel; in practice they are neither.”) and accusations of “careless reading” and “myopia.” Some of the arguments are interesting and provocative, but Epstein rarely presents sufficient empirical evidence to show that his mechanisms actually, well, worked. I feel pretty sympathetic to Ogilvie’s conclusion:

Epstein’s article… is a tissue of unsubstantiated assertions underpinned by startlingly inaccurate criticisms of my German case study, quotations from cognitive psychology textbooks, and references to a small circle of like-minded believers (Ogilvie 2008, p. 180).

The most compelling part of Epstein’s 2008 critique is to stress that the single German case study may not generalize to other regions and that until a more comprehensive picture emerged one could (if unjustifiably) treat the Anglo-Dutch cases—which he favored—as representative. In response, however, Ogilvie later wrote The European Guilds (2019), a sweeping compilation of more than 17,000 observations of guild behavior in 22 modern countries over 8 centuries. The book's comparative perspective presents a powerful confirmation of the generalizations from the Württemberg case study. Markets were near-ubiquitous in early modern Europe, and the constant efforts by guilds to restrain them for narrow advantage spoke against them—if markets didn’t work, why did guilds pay so much to stop them? And if guilds imposed little practical restraint on economic activity, why did artisans forfeit fees (150-300 days’ wages) and time to join?

Do Guilds (or the lack thereof) Explain Anglo-Dutch Growth?

The case against guilds is compelling. Guilds created market frictions, blocked technological progress, were indifferent toward educating workers, and mired societies in “particularized” regimes in which favoritism and protection assigned to interest groups limited competition and development. They existed not because they were efficient, or because their net benefits outweighed their costs, but because they were vehicles by which small bands of economic elites could effectively lobby rulers for privileges. So how much did this drag on growth? And how much of the Little Divergence do they explain?

Anglo-Dutch guilds began to weaken during the sixteenth century. In England, guilds vanished from some of the older towns (which had never granted local monopolies), had little sway over the countryside (to which proto-industry escaped), and never formed in the new industrial towns of Birmingham, Manchester, Leeds, Halifax, Sheffield, and Wolverhampton. Established centers “gradually lost their ability to conduct quality inspections, regulate production techniques, compel apprenticeship, prevent women’s work, or enforce entry restrictions.” In 1689, only a quarter of England's 200 towns had any guilds at all, and as we've discussed above some crucial industries in guilded towns weren't organized themselves.

Patrick Wallis (2008) shows that London's guilds failed to enforce the completion of apprenticeship contracts by the late seventeenth century, but that apprenticeship itself thrived nonetheless. This was due to the relatively even distribution of training and payments throughout the life of the bond, which ensured that individuals could drop out when they felt they'd received sufficient training without costing much to their masters. Thus in England, the human capital benefits of guilds were both be separated from the institutions themselves and more widely diffused in their absence.

The Dutch Republic presented a similar, if more complex, picture. The number of guilds increased during the seventeenth-century Golden Age, but primarily in local industries (rather than export trades). Ogilvie quotes Soly to the effect that “[t]he overwhelming majority of the textile producers in the United Provinces, employers and employees alike, operated outside the corporative context.” Leiden textile workers were organized in neringen to which all producers inherently belonged, informal institutions supervised by municipal authorities. Similar frameworks were present in the Republic's other famous industrial towns—Amsterdam, Haarlem, Delft, and Gouda.

France and Italy were intermediate cases; in France, Lyon, an avowedly “free” city, housed a dominant silk industry, and other towns like Roubaix lay outside the guilds' scope. In Italy, Vicenza played a similar role. Germany and Scandinavia, however, had “pervasive” guilds.

Why were guilds stronger in some places than others? One answer offered by Ogilvie is the density of and competition in a country's urban network—the less urbanized a country, the more that each town represented a local monopoly over which protection was possible. Many nearby towns meant overlapping hinterlands, which in turn prevented any particular guild from controlling the countryside. In England and the Netherlands, the absence of city-states allowed competing regional interests to neuter each other in the national assemblies. Dutch governments always exercised greater control over the guilds, using them as tools for advancing the general public interest rather than submitting to their lobbying behavior.

From the sixteenth century on, the weak-guild Low Countries and England began to diverge in per capita GDP from intermediate and strong-guild regions. While it's unwise to make too much of these comparisons, it's important to note that no country with practically strong guilds—that is, where guilds actually exercised control over their trades and political influence—experienced rapid economic growth prior to the nineteenth century. Guild abolition immediately preceded industrialization in several European countries, including France and northern Italy, and Napoleon’s conquests extended the movement into the Rhineland, the Netherlands, and southern Italy.

The abundant urban evidence in The Economics of Guilds supports the aggregate view. But without resorting to econometrics, it's hard to get a hold of what “the effect” of guild strength truly was. Guilds are obviously highly endogenous. Cities and trades experiencing economic decline, like those of Holland after 1680, would invite increasing guild power as a form of protectionism—suppressing rural industry and foreign competition to defend profits. Indeed, it feels like there may be some low-hanging fruit for a study of European city growth based on this or similar data, a la “Resetting the Urban Network” or “Coal and the Industrial Revolution”—i.e. a difference-in-differences design comparing strong- and weak-guild regions or an IV.

Kelly et al.’s claim—that in weak-guild England, the availability of apprenticeship outside guild jurisdiction provided an abundant supply of skilled workers to nascent industries and transmitted knowledge to a wider public—does ring true, in this light. But we're no closer to an explanation for England's separation from the Dutch Republic, whose rise appears to have centered around notably free cities/regions like Leiden and Hondschoote. In comparison with central Europe, however, the story does appear to be plausible.

In How the World Became Rich, Mark Koyama and Jared Rubin have written what will almost certainly become a beloved economic history classic, as Power and Plenty or The British Industrial Revolution in Global Perspective became over a decade ago. I fawn over a refreshingly readable book and raise a couple of concerns about the thesis:

1. What do institutions do?

2. Were all of Britain’s purported advantages really advantageous for growth (not just neutral)?

3. Do explanations for the IR hold for the poor periphery?

The best tribute that I can make for How the World Became Rich, Mark Koyama and Jared Rubin’s recent addition to the economic history canon, is that I put another book on pause to read it. As a manic completionist, I never do this, but once I had peeked past the blue-girded front cover I couldn’t put it down. Now I’ve read it twice. So it goes.

The book has two parts. The first is a literature review of the five main strands of research in modern economic history—what I, following Bisin and Federico (2021), usually call the New Historical Economics. The second is also a literature review, but in the guise of a “rise of the west”-type book, and covers the medieval preconditions for European growth, Britain’s takeoff, and the spread of the Industrial Revolution to the global periphery. I will discuss each of these elements separately, focusing more on the second, which is the substance of the argument, and organize some of my thoughts from reading.

The five categories are geography, institutions, culture, demography, and colonialism. Koyama and Rubin (henceforth K&R) aren’t indifferent between them, however. We can start with geography, which encompasses everything from Diamond-esque continental axis orientations and long-run climatological patterns. K&R downplay these as causal forces, for example, stressing that while they influence some outcomes, they can be negated by interactions with other factors. They place great emphasis on the power of infrastructure to lift the “curse” of geography, citing the Donaldson/Hornbeck research agenda on railroads in India and the United States as well as Dan Bogart’s work on turnpikes and canals in Britain. K&R also take umbrage with the Wrigley-Pomeranz-Allen axis on the indispensability of coal to the Industrial Revolution, noting that A) China and Germany had abundant reserves B) the early textile mills depended on water power anyway and C) coal output responded elastically to demand. You could envision a scenario in which sufficient growth in Dutch textile industries, for example, eventually triggered mass shipments of coal from Newcastle, as was possible for London. If you object that the British attempted to stifle such exports, then K&R would probably respond—rightly—that geography only became significant because of British mercantilist institutions. Contesting coal as a limiting factor is probably mistaken on these grounds, as without it you’ll eventually exhaust your water mill sites (and aren’t mill sites geography too?), but the point is well taken that you can’t really grasp the significance of geography without understanding the institutional context.

In a way, K&R are making a meta-argument resembling Robert Brenner (1976)’s explanation for why the impact of the fourteenth-century demographic crises differed to the east and west of the River Elbe, and in England and France. In the west, where peasants were relatively well-organized, population collapse led to the defeat of reactionary forces and the collapse of serfdom; but in the east, where landlord control was greater, a “second serfdom” was instituted permitting greater exactions by seigneurs. Thus the impact of demography cannot be understood until one takes into account the pre-existing structure of institutions and class relations in a region. To me, this is exactly what K&R are saying, albeit for all factors that determine economic development. We know the partial effects of lots of things in the abstract, but unless we control for context-specific characteristics, we cannot know how natural resources or climate crises will alter outcomes. I don’t know about you, but this seems pretty reasonable to me.

This logic does apply differentially to each of the five factors. Demography (e.g. the European Marriage Pattern) is treated similarly to geography; only in combination with institutional or cultural forces can beneficient changes in birth rates stimulate growth. But institutions and culture—our authors’ fortes—show up as universal solvents. On the former count, limited government and the protection of property rights tend to be globally good, and sometimes decisive in the shift to sustained growth. K&R review most of the big institutionalist discussions in economic history, from private property, inclusive institutions, and legal origins to the Maghribi traders, European guilds, and the rise of fiscal-military states. Missing citations are astonishingly rare—in general, when I was about to complain about an omission it either appeared on the next page or somewhere later in the book. For a short work, the coverage is fantastic. One qualm that I do have with the treatment of institutions is the under-emphasis on real debates over the validity of some claims. The authors generally (more on this later) try to stress the cumulative and cooperative nature of recent EH research, but frequently this rosy image just doesn’t fit the reality. Some theories truly are contradictory. In this vein, I would have liked to see more emphasis on the now-standard critiques of the Glorious Revolution literature, as summarized in Ogilvie and Carus (2014).

As befits a Jared Rubin book, the section on culture is also particularly weighty. The discussion veers away from preconditions for growth and tries to cover several aspects of the burgeoning literature, especially religion and trust. The Protestant Reformation—and its converse, the persistence of Islam—are accorded pride of place; though K&R discount a “Protestant ethic,” they argue (following Rubin (2017)) that the Reformation forced newly-illegitimate Protestant leaders to seek popular approbation, especially through parliaments—leading to increasingly limited government. Islam, on the other hand, inhibited the growth of large businesses, centralized power among elites, and conversely disenfranchised factions who thereby gained an interest in creating political instability. Other topics include the role of the Church in uprooting kin-based family structures and the Alesina-Giuliano-Nunn (Boserup!) research on the plough’s role in fixing female gender norms.

Finally, the authors have little patience for theories—i.e. the California school—according colonialism a decisive role in promoting Western economic growth. They argue that the negative effects of European expansion abroad came after the onset of the Great Divergence. By the time British gunboats were marauding on the Yangtze, in other words, Manchester’s factories already had an unassailable cost advantage. Most of the chapter instead focuses on the subsequent impact on the colonized, from the unambiguously ghastly—Nunn on the African slave trades, Dell on the mita, Lowes and Montero on the Congo—to the probably-beneficial—railroads, Dell and Olken on the cultivation system, and missionaries.

The guiding theme of the first half of the book, to my mind, is the laudable effort to present the last two decades of economic history research as part of a cumulative scientific project—normal science progressing within the “historical economics” paradigm. We are treated to a catalog of canonical results wrung from the stones of history, findings that we can use to guide our thinking about broader questions of development. This does leave the book open to the always-troubling problem of generalizability—do results about one time and place offer meaningful insights about others? Perhaps most studies don’t, but that shouldn’t be too upsetting. If we can collect and catalog enough consistent findings, we can still describe the causal forces underlying the historical process, even if we don’t have a truly unified theory of development.

Nevertheless, a theory of development is just what K&R attempt in the book’s second half. The argument proceeds in pyramidal fashion, explaining first Europe’s Great Divergence, then Northwest Europe’s Little Divergence, and lastly Britain’s surge into industrialization. They conclude by discussing how the rest of the world—from France to South Korea—followed suit. K&R lay out a series of “preconditions” for each stage that A) fall into one of the 5 categories and B) build upon the preceding. We can take them more or less in turn. Geography, the eternal constant, comes first. Europe had two advantages over Asia: one, a landmass “fractured” by rivers and high mountains, creating several “core” regions that could be dominated by separate polities; and two, some distance from the steppe, which meant that no large state needed to arise and hold off Mongol raiders. Small, equal polities led to all the expected things—military and intellectual competition, fiscal states, constrained government, etc. One might also add: a peninsula jutting out into the Atlantic Ocean, where favorable wind patterns might blow a lucky mariner into the Americas, and a climate (following Eric Jones) less prone to disasters (facilitating capital accumulation).

Europe always had these advantages; why didn’t it take off after the splintering of the Roman Empire? There was some halting growth in the late-medieval city-states, but ultimately the rent-seeking of municipal oligarchs and the “low technological base” of the period curtailed the efflorescence. The Black Death and the sluggish demographic recovery—aided by the EMP—kept wages higher than in Asia, but that produced divergence, not growth. India fell relatively behind by absolutely going backward. Nor was the opening of the Atlantic, which marginalized the Mediterranean and inundated Iberia with tainted treasure, but was not responsible for the forward surge of the Anglo-Dutch commercial kingdoms. The key force was the emergence of limited government, specifically parliaments—“Dutch economic success was a direct result of institutional change”—which prevented regimes from meddling with entrepreneurs and innovators. Here, though, one feels that there’s something missing. Why did commercial monopolies serve the Iberian economies so poorly, but increase incomes in Britain and the Low Countries? The authors cite Henriques and Palma (2020) to the effect that only after the Civil Wars did English institutions diverge from those of Spain and Portugal; but this result is incompatible with the “Atlantic traders” argument, which cites initially bad Spanish institutions for mishandling American resources.

The situation becomes more complex when the authors have to explain Britain’s divergence from the Dutch. Why did Dutch institutions follow the medieval Italian city-states into rent-seeking and decay, but Britain establish a stable alliance between mercantile, industrial, and landed power under the aegis of a powerful parliamentary state? Indeed, if Britain was no less corrupt and no more democratic than her European rivals, what exactly were the institutional aspects of the British state that facilitated growth? Sure, estate bills and enclosure acts helped to reallocate land for agricultural improvement and transport infrastructure, but the economic returns to enclosure were not significant and European market integration was already well-advanced by the sixteenth century. We’re told that the Dutch also suffered from heavy war taxes, which is true—but Britain also boasted a fearsome and often regressive tax regime that funneled enormous sums into military spending. And if it’s military success that we’re talking about, why didn’t the Dutch invest more in fiscal capacity? In sum, I think the institutions-growth link could have been clarified—quite a bit is taken for granted, leaving us with unresolved puzzles.

Ultimately, K&R take a reasonable tack. Many countries shared one or two advantages with Britain, but in hindsight, she appeared to have all of them—reasonably good government, Atlantic commerce (but no resource curse), weak guilds, a flexible apprenticeship system, and high levels of artisanal skill. What lit the torch was the spark of Mokyr’s “Industrial Enlightenment.” All Europe benefited from the “Republic of Letters” and the Scientific Revolution, but only Britain had the communities of engineering talent to put abstract ideas into practice. This last point follows the Kelly-Mokyr-O’Grada “mechanics & millwrights” research agenda that we discussed recently. As I alluded to then, I think the international comparative evidence for this theory is lacking—the authors assert that the Dutch had a “relative paucity” of skilled workers, but I’m not completely convinced that this should have been the case. After all, the Dutch Golden Age saw the erection of sophisticated windmills across the country, powering wheat processing and lumber-sawing—surely the makers and maintainers of these machines were exactly the kinds of men needed for running textile machinery? The Republic also had plenty of canals to bind markets together, dozens of famous scientists, and proximity to French ideas. Yet it fell behind. I’m willing to entertain the possibility that small size and location next to multiple belligerent military powers was a developmental downside, but that’s a fundamentally, well, geographical problem.

I think my chief issue with these explanations is that I still think that many of them beg the question of “why Britain?” To paraphrase a famous economist, a functional institutional conjuncture and high levels of human capital aren’t just causes of growth—they are growth. Nations get the institutions they pay for. By looking with the benefit of hindsight at the many things that made Britain exceptional, we’re looking both at origins and outcomes, and it’s difficult to distinguish between the two. Worse, I think we risk assuming that because certain factors were present in the cradle of industrialism, they must have helped growth (rather than simply not suppressing it). The Glorious Revolution isn’t just significant in itself—it accrues explanatory prominence because a century later Britain was in the throes of economic development, and because we have compelling stories linking the two. They don’t have to be wrong! But we do have to be careful.1

Briefly on to the spread of development. K&R favor human capital-based explanations for the Second Industrial Revolution, stressing (a la Goldin-Katz / Galor-Moav) the role of educated white-collar workers in putting new science-based technologies into place. They stress the role of institutions, this time operating through railroad investment and mass education, especially in Prussia and the United States. I won’t stop prating on about how skeptical I am about schooling-based stories of 19th-century growth—most people weren’t doing jobs that required more than rudimentary literacy and numeracy. But I've mostly lost hope of convincing anyone.2

Two more notes before I close. First, I am surprised that K&R discuss the Soviet Union in such a negative light without contending with Bob Allen's illuminating Farm to Factory. The book's not perfect (I don’t even agree with that much of it), but the main points—pre-Soviet growth was limited and living standards/urbanization did rise under the Five-Year plans—are not really compatible with the more standard view (planning failed and was unsustainable) that the authors espouse. Stalinism's unsavory aspects, according to Allen, are separable from the extent to which the planned economy—output targets plus soft budget constraints mobilizing unemployed labor—broke the USSR out of a low-equilibrium trap by establishing heavy industry, attracting peasants to the cities, and lowering female fertility. Consumption was not ignored, as the authors assert, but rather arose as a direct consequence. If this narratie is correct, I would have had K&R produce evidence to rebut it.

Second (and relatedly), I think the authors might be... too neoliberal... on twentieth-century development on the periphery.3 We need more Dani Rodrik citations! In slating India's poor performance under the socialist "License Raj," for example, K&R follow the "conventional" line that the liberalization of 1991 was the turning point, when a balance-of-payments crisis led to tariff cuts, foreign investment, and privatization. But Rodrik and Subramonian (2004) find that the crucial change came a decade earlier, with the regime's "pro-business"—rather than "pro-market"—policy shift. The contrast is between favoring incumbents by raising profitability (in this case for political purposes) rather than encouraging new entrants.

Similarly, the authors stress that the four East Asian Tigers were successful above all as small open economies, immunized against inefficiencies by export discipline. Rodrik (1995), however, finds that—in the case of South Korea and Taiwan—export profitability was initially too low and the export sector too small to explain take-off during the 1960s. Instead, he argues that the mismatch between the countries' high levels of human and low levels of physical capital created an opportunity for government to "engineer" elevated returns to investment through coordinated industrial policy. Export orientation was a result of greater demand for capital goods. It's an old paper, I'll grant, but the theory has gained empirical backing thanks to recent work by Nathan Lane (2021) and others, who find large and persistent effects of South Korea's Heavy Chemical and Industry drive on comparative advantage and downstream production.

Joe Studwell's How Asia Works offers an interventionist argument for growth in the region, stressing the role of agrarian redistribution, moving resources into manufacturing, and state mobilization of finances behind long-term development plans in winning (or losing) East Asian countries a place in the global market. K&R suggest that South Korea may have succeeded “in spite” of an activist state. But as my friend Oliver Kim argues, the sheer scale of government intervention makes it unlikely that industrial policy didn't have a massive effect on the economies involved. Could the Tigers really have grown much faster without state meddling? And all this, as K&R acknowledge, occurred under institutions that were not very limited—corrupt semi-democracies and outright autocracies. Maybe, given the flaws of the British polity (and its mercantilism/militarism/land reform agendas), this actually makes a perverse kind of sense.

Yes, these aren't economic history. But understanding why the Industrial Revolution did or did not spread to different countries is a concomitant to understanding the industrialization process at all. If we can't figure out why some places develop and others don't, how can we be confident that our theories capture how development itself began? I think the mystery—as well as the hitherto non-replicability—of East Asia's rise should shift our baselines when discussing the kinds of institutions that favor and hinder growth. K&R acknowledge the incredible diversity of development experiences and outcomes. There just might be even more.

This review is much longer than I intended, so my sincere apologies for making you slog on this far. I hope I’ve not seemed disproportionately critical. There are basically two ways to write a positive book review, and neither consists of writing “this is amazing” over and over again. First, you can ignore the book and write about whatever you want, saying “this is amazing” in a sorry little paragraph at the end. Or you can try to be constructive, make your words useful, and offer suggestions for improvement. I’ve attempted to do the latter. To be clear, I think that the book is one of the best economic history works of the last decade and that it is certainly unmatched in its coverage of the new literature. I couldn’t do such a concise job of summarizing it for the layman if I spent the rest of my career trying. I’m just happy it also gave me a few things to grouse about. Because that’s half the fun of reading and writing.

This theory is deliberately set against Bob Allen’s influential induced innovation story of the Industrial Revolution, which posits that high wages relative to the prices of capital and coal in Britain incentivized the invention and adoption of technologies that were more intensive in the latter. Other nations could not follow suit until the British had devised and exported machines that were compatible with their factor prices. The “high wage explanation” has taken some empirical criticism over the past decade as historians like Judy Stephenson, Jane Humphries, and Jacob Weisdorf produced evidence suggesting that the wage estimates upon which Allen had based his work were mistaken. Now, however, we’ve got a true alternative theory to work with. How good is it?

I like to start at the beginning. Joel Mokyr has never liked high-wage explanations of invention;1 in The Lever of Riches (1990), he inveighs against the Habbakuk thesis, arguing that inventors tried to save on both labor and capital, only inadvertently saving more on the latter, citing a statistic from MacLeod (1988) that only 3.7 percent of British patentors had stated labor-saving as their intention. He repeats these remarks in The Enlightened Economy (2009), with the proviso that factor prices may determine the direction, not the rate, of technological change. I was listening to Mokyr interviewed on the VoxTalks podcast the other day, where he in no uncertain terms called the HWE “bogus” and “basically wrong.” Don’t hold back!

This isn’t an intellectual biography of Mokyr, though, so we’ll fast forward to 2014. Five years after Allen’s provocative The British Industrial Revolution in Global Perspective, which lays out his grand theory, Kelly, Mokyr, and O’Grada published their own in “Precocious Albion: A New Reinterpretation.” Taking a comparative approach, they concede that British wages were higher than French, but argue that this was merely compensation for higher labor force quality. Thus British unit labor costs—how much an employer paid to produce one piece of output—were paradoxically lower than French. There were two dimensions to this: “physical-cognitive” and human capital. British workers were fed better than the French, eating more meat and getting more calories in general; this made them stronger, more energetic, and smarter. Superior nutrition was the result of more productive agriculture, integrated internal transport systems, Irish imports, and the Poor Laws.2 Secondly, the British apprenticeship system worked well at transmitting tacit knowledge from masters to learners, despite the country’s embarrassingly bad education provision. This is undoubtedly a second-order effect, because one has to wonder why the lack of guild oversight and efficient conflict resolution should have obtained. Good institutions are endogenous! It’s also tough to quantify: the authors rely heavily on anecdotes about British workers setting up shop on the continent. But it’s indisputable that British workers A) ate more B) were more productive and C) were paid more than their French counterparts. This is one interpretation.

In the new paper, Kelly et al. double down on skills. The basic idea is this: no matter how good you are at inventing things, prototypes don’t get turned into productivity unless you can make machines that work. Ideally, you’d have a cadre of industry experts to make the factories run—but what if the industry doesn’t exist yet? You have to use the next best thing: people with adjacent, flexible skills that can readily be adapted. Fortunately, Britain had a lot of these people—watchmakers, millwrights, and coal miners—dubbed “engineers” or “mechanics” by the authors. These men put together the elaborate gearing systems of Richard Arkwright’s famous water frame, which were in many ways custom-made devices that required craft skill to erect. Watchmakers had the finesse to work with the soft brass gears of early textile machinery, which the authors note was still known as “clockwork” long after durable iron parts had allowed iron founders and specialized machine firms to batch-produce them. A millwright, in the words of William Fairburn, was a man who could “turn, bore and forge ... was a fair arithmetician who knew something of geometry and [could] do much of the work now done by civil engineers” (quoted in Mokyr 2021), and the inventors of gas lighting and threshing and paper-making machines came from that stock.

So far, so good, but it’s still just anecdote. To prove this, the authors try to show that the pattern of textile and metallurgical concentration across Britain was determined by pre-existing clusters of skilled labor. The problem here is, unsurprisingly, that adequate statistics neither for “skilled people” nor “innovative industry” really exist for the eighteenth century on a sufficiently disaggregated scale. The first census was taken in 1801, and the authors have data for textile employment at the county-level starting in 1831. They also have wages in 1760. To measure “skills,” they have to adapt: they count “blacksmiths, millwrights (both traditional skills), watch- and instrument makers, gunsmiths and locksmiths, toolmakers, sheet-metal workers, and mechanics” above the age of 60 in the 1851 census. These men would presumably have been apprenticed at age 14 in the 1790s, and their sum proxies for the availability of skill in that decade. This is the key explanatory variable: the authors regress 1831/51 textile employment on “1790 skills,” controlling for water flow (proxying for water mill suitability), coal proximity, and market potential.3

Why would skilled employment differ across counties? Kelly et al. set up a pretty straightforward trade model to illustrate. There are two regions, North and South, one (North) with less fertile land. Falling transport costs makes food cheaper in North, reducing the demand for unskilled labor in agriculture and pushing it into manufacturing. This raises the wages of skilled labor (artisans, engineers)—for which unskilled labor is a complement—and attracts more such people to the region. Skilled workers and manufacturing output thus concentrate in regions with poor soil and low wages; but the resulting agglomeration economies (learning-by-doing, sharing of workers) in the low-wage regions leads ultimately to a “reversal of fortune” after the industrial revolution. The empirical prediction, then, is that the counties with low wages and high skills should be more industrialized in 1831, and high-wage, low-skill regions comparatively backward and underdeveloped. It’s a core-periphery model within Britain!

And that’s exactly what the authors observe. Take a look at Table 1. The skills variable is highly significant, and though wages are less so, the coefficient is pretty large. Together with market potential, the two variables explain ~70% of regional variation in textile emploment in 1831 and over 80 percent in 1851. That’s a lot! You’ve probably already seen Figure 4, too. It’s very convincing. There’s clearly a pretty strong correlation between wages, textile employment, and skills. Regions with lots of textile workers in the mid-nineteenth centuries certainly did have low wages in the 1760s and lots of artisans/engineers in the 1790s. And for what it’s worth, I totally believe this story, or at least part of it. Pools of engineers greased the wheels of growth, and internal market integration helped to get those wheels rolling.

“But hold on,” you should be thinking (or at least I was). “Those ‘skills’ variables—even if we believe them—are from the 1790s.” British growth may have been halting prior to that year, but it was well underway. So was market integration. And you’d expect skilled labor to migrate to areas of industrial growth, where demand for machine-fixers is high. And things that cause economic growth also tend to be pretty favorable to skill development. Last year, for instance,Maxine Berg and Pat Hudson strongly rebutted Mokyr’s qualitative presentation of the “mechanics” theory. Mokyr had previously asserted that “British mechanical ingenuity was behind the supply response to rising demand, but the primary causality was from human capital and low prices to exports”; human capital, in turn, was—as we discussed above—generated by the apprenticeship system, reasonably low inequality, and good institutions. Against this internalist view, Berg and Hudson rejoin that skills are important, but the real prime mover was foreign commerce, by which they mostly mean slaving and cotton. Britain’s preeminence in the Atlantic trade drove structural transformation near seaports like Liverpool and Bristol and supplied raw materials and investment capital to nascent industry, all of which created demand for artisans. Trade drove economic growth, and trade also drove the accumulation of skills; thus the latter could easily be endogenous to the former or confounded by some second variable (trade, institutions, etc).

Whether or not you believe the Berg-Hudson story, it’s difficult to interpret the 1790s skill measure as representing the pre-existing clustering of mechanics, and thus to treat Table 1 as a causal estimate. Kelly and co. know this:4 they instrument for skills using the cost of becoming a watchmaker from 1750 to 1779. The instrument is definitely relevant—since (as they argue) this figure is similar across trades, places with lower entry fees should have more skills. But is it really exogenous? I have concerns. Good instruments are things that are determined independently of the process of interest and that influence it only through the main right-hand-side variable. Reka Juhasz, for example, has a recent paper where she instruments for the probability of getting a telegraph connection to London with undersea ruggedness on the route. Non-economic variables—geography, policy rules, etc.—with an element of arbitrariness work best. But as the authors themselves admit, “counties that had a larger supply of masters making things like locks, guns, and instruments would charge lower fees in the market for apprenticeship.” So that doesn’t really solve the problem, to my mind. Surely the number of masters is also potentially endogenous to textile development or confounded by trade/institutions in the same way as the skill measure? We’re just using a different measure of the same thing. Another curious point: the IV estimates are about 50% larger than the OLS estimates, which is odd, if we’re supposed to be reducing endogeneity bias, which should overstate the effects of skills. I’m assuming that this is a local average treatment effect thing—regions that got more skilled labor benefitted more from it—but I’m not sure. I’m perfectly happy to be told that I have either of these issues wrong, though.

Another worry I have, as Pseudoerasmus pointed out, is that this paper has kind of lost the comparative perspective that’s at the heart of “Precocious Albion.” The 2014 paper was all about comparing England and France on nutrition, wages, productivity, and human capital formation. If your question is “Why Britain?”—and the paper opens with the sentence “The question of British leadership in the Industrial Revolution remains one of the central topics in economic history”—then it’s reasonable to expect that you make comparisons with Britain’s rivals. But this paper compares regions within Britain. So even if skilled artisans did help to determine the locus of production, we still don’t know if this factor differentiated Britain. Likewise, I think dismissing the role of coal on this basis of probably unfair, although the differential importance for textiles (zero) and metallurgy (substantial) is relatively convincing evidence that it shouldn’t have mattered much given the greater importance of water power until well into the nineteenth century. If coal prices were contained within a relatively narrow band within Britain, then low labor costs and high skill concentration could determine the location of production within the country while the relative prices of coal and labor determined the international distribution. I don’t think that you should argue this, though.

Other Thoughts

One thing that I’m conflicted about is the message of this paper. Joel Mokyr is one of my academic idols, and what I admired so much about his early work was his willingness to engage with intellectual factors—i.e. science—as explanations for Anglo-European take-off. “The Mechanics of the Industrial Revolution” takes a grittier view, looking at the unglamorous workmen who kept the machines running rather than the scholars who (allegedly) devised them, and roots the British development process in an economic model that’s actually kind of redolent of Allen’s. You don’t need science to explain anything that’s going on here—indeed, the word “science” shows up only three times in the paper, and always in footnotes! It’s immaterial whether It’s still internally consistent with the rest of Mokyr’s work: he has always asserted that Britain was little better than the Continent at invention, whose Enlightenment was a pan-European phenomenon. But this is still a shift in emphasis, to my mind, and though I find this a stronger argument than the “Industrial Enlightenment” view presented in The Enlightened Economy and The Culture of Growth, I still feel slightly betrayed. Que sera sera.

It’s interesting that debunking the high-wage explanation should remain, even in 2022, a major motivation for this paper. Clearly it remains popular among amateurs like me, but I was under the impression that the Stephenson-Humphries-Weisdorf axis had mostly laid it to rest. Even in “Precocious Albion,” Kelly et al. raise some fairly damning objections: high wages don’t imply high unit labor costs, steam power largely substituted for water power, few patentors actively sought to save labor, the jenny was immediately profitable in France, etc. I’ll try to do a post on this in the future. While I don’t think you can refute the HWE with this research design—it requires international wage, energy price, and productivity comparisons—some version of the “millwrights and mechanics”5 view has replaced it as my go-to economic explanation for why the Industrial Revolution was British. The process of domestic market integration that the authors deem central to producing regional specialization was key (I’ve written about this before, as has Anton Howes) and unique to Britain. This would have differentiated agglomerations of manufacturing expertise both within Britain and by comparison with the continent, where higher internal transport costs spread out textile production across regions (the central prediction of the Krugman core-periphery model). And while I’m hesitant about a model where one form of labor is completely mobile and another isn’t, regions with existing concentrations of skill should have been better-placed to exploit this process. As historians, we should bow to the endogeneity anyway—important causal interactions like this are usually two-way streets, and it’s hard to parcel out a “true” effect.

To conclude, I think that this paper, while not quite getting at the biggest “why” question about the Industrial Revolution’s origins, offers a pretty compelling explanation of how the process actuall happened. It’ll take further work to piece together the causal story, especially making international skill comparisons akin to the wage work that the Allen agenda inspired; but that’s one of the exciting consequences of an interesting and groundbreaking bit of research.

Anyway, it’s become clear to me in the past year or two that economic history has a lot less to do with these kinds of books than I’d once thought. Of course, the questions raised by those three volumes are still some of the biggest out there, and the latter obviously remains a touchstone for much research in the British/technological history area. But the more that I read and immerse myself in the best-respected academic research of the past two decades—especially from top-5 journals—it’s become clear to me that economic history isn’t really about this anymore. And, with some reservations, that’s fine.

A few points have clarified my thinking on this head. First, I’ve been reading the Bisin and Federico-edited Handbook of Historical Economics over the past few weeks. The writing is a little rough around the edges (like my own) at times,3 but the first dozen chapters give a clear impression of what economic historians are doing today. You could answer “a lot!” and get away with it. But I’ll try to boil things down into a couple (heavily overlapping) categories.

1. Causal identification. Historians (used to) love to study causation, and economic historians more than most. Why did Europe conquer the world? Why did Britain industrialize first? etc. In chapter 12, Monnet and Velde (2021) lay out three ways that economic historians identify causality: process tracing, microeconometrics, and structural models. Process tracing lines up loosely with the old-school cliometrics that I grew up reading—it involves close reading of historical processes to establish chains of causality. An example from this morning: Napoleon III’s coup de etat demanded popular legitimacy to stay in power; the Catholic Church offered itself as a legitimating force; Napoleon sought to bolster the Church, gain a popular foreign policy success, and bolster the Ottomans by interevening against Russian Orthodoxy in the Near East; the Crimean War broke out.

2. Econometrics and Persistence. Economic history has been transformed by the Credibility Revolution in economics, which seeks to use experimental or quasi-experimental settings along with a canonical suite of econometric methods (instrumental variables, difference-in-differences, regression discontinuity) to make causal claims about economic processes. Everybody knows about AJR (2001) and their famous settler mortality instrument, but the intervening two decades has seen increasing A) creativity of instrument choices and B) use of RDDs, especially geographical. Melissa Dell’s 2010 paper on the mita region of Peru founded a cottage industry of analyses using arbitrary boundaries as policy or institutional discontinuities.4 Many papers in this vein are “persistence” studies aimed at studying how past variables affect contemporary outcomes (like both of the aforementioned). Chapter 9, by Hans-Joachim Voth, catalogs some of the canonical papers—on the Protestant Reformation, historical anti-Semitism, and colonialism in Africa—and provides useful discussion of when and why they fail (and no, it’s not “uniformly”). Instead, good studies convincingly explain the mechanisms of persistence and examine variables corresponding to some logical theory. He also vehemently defends himself against the “Kelly critique” on spatial autocorrelation, which I strongly recommend reading.5

3. Natural experiments. One of my favorite chapters in the book is Cantoni and Yuchtman’s on historical natural experiments. They outline the explosion of papers from the last decade which seek causal identification in quasi-natural experiments, when an exogenous shock is applied to one group but not a comparable other, which can be used as a control, and sort them into three categories: 1) for understanding historical processes and events (e.g. Nunn and Qian (2011) on the potato) 2) for testing economic theory (Juhasz (2018) on the Napoleonic blockade) and 3) for explaining contemporary development (persistence). Chapter 10 is devoted to unraveling the econometric logic underlying these papers, stressing that the interpretation of the coefficient of interest is contingent on the kind of heterogeneity of treatment effects. If you consider the instrument as a treatment, then your regression often recovers the effect only for those units (the “compliers”) who’ve changed their behavior as a result. The LATE-ATE distinction is inspired by the brand of labor economics pioneered by Card, Krueger, Angrist, and Imbens.

4. Models. The new historical economics may have a deeply empirical bent, but there’s still a lot of room for the use of models, which establish causality by creating a counterfactual universe from which the real world deviates by means of exogenously-injected shocks. Most of these frameworks come from macroeconomics or (more frequently) trade/urban. The canonical example is Donaldson and Hornbeck (2016) on the value of the American railway network in the 19th century. However, many primarily empirical papers are adding models—sometimes for hoop-jumping purposes, but also to either clarify the conceptual point or to make ballpark estimates of welfare consequences of the phenomena under study.

5. Culture. There are four chapters entirely about culture and/or cultural evolution; and more if you count the Becker-Rubin-Woessman entry on religion or Sara Lowes’s on field experiments. This is to be expected given that Alberto Bisin is one of the two editors, but it’s still a lot, since they’re all in the methodology section. The unifying thread appears to be an emphasis on long duree evolutionary processes, explicated through models, which lean heavily on biological analogies. Since these kinds of works are theory-guided, making only brief references to historical episodes by way of illustration, they stand in stark contrast to the empirical revolution described above. In practical terms, I think this is probably an overrepresentation based on the numbers of economic historians doing one versus the other; but maybe the theory is more influential as an inspiration for the empirical work than I know. One point (same with 6 below) is that mainstream economists seem to pay a lot of attention to this literature, even by comparison with the applied-micro papers that have made it into top 5 journals.

6. Institutions. There are also several chapters on institutions, again from a modeling perspective. Acemoglu et al. present a simplified game theoretic perspective on why institutional arrangements persist or change over time; his formula presents these decisions as a contest between interest groups with different weights jostling for position at the center of political discourse. Each faction wants to direct the trajectory of the ruling coalition toward its own policy “bliss point” and maximize the institutional gains over time, but must deal with threats of revolt, economic and technological drift, and cultural evolution which disrupt equilibria. Again, this kind of work—to my mind—isn’t something that economic historians do, but many of the ideas are testable and provocative for future research.6 Did the opening up of Japan to international trade force elites to grant the rule of law in exchange for defensive modernization? Did Britain extend the franchise to quell threatened revolts? Both are interesting questions that have been explored empirically.

7. Data collection. Finally, the Handbook rightly emphasizes the importance of original data collection and creation of various kinds. From digitizing Habsburg maps to OCRing old newspapers, economic historians are perhaps unique in the extent to which the sources that they bring to the table are completely original. Someone once told me that there were three ways to get your paper through: be influential, make a theoretical contribution, or find some new data. The practice of collection and creation is now taken very seriously, and it’s a notable step that several chapters offer practical advice on how to engage with oft-used sources (the Murdock map) or build your own.

As a crotchety old man-in-waiting, I’ve grumbled before about the unwillingness of economic historians to engage with the big questions, favoring empirically tractable situations with microdata and sufficiently exogenous shocks to use econometric methods. But that’s not strictly true—I mean, there are empirical papers on the origins of agriculture, the Great Divergence, and the Weber thesis—and even if it were on average, people who think seriously about this sort of thing get that and want to do better. Cantoni and Yuchtman, for example, note that historical natural experiments are especially prone to the above critique, and add that the quest for quasi-experimental exogeneity often amounts to producing an explanatory variable that is itself inexplicable—i.e. suggesting that the historical process is driven by something random, because it gives you a lottery-ish design. They and Voth completely agree with the critique that bad persistence papers have no mechanisms, pick variables willy-nilly, and ignore history.

To conclude, I think it’s well that this handbook is not called the Handbook of Economic History, or of Cliometrics, but of Historical Economics. By and large, the economic history that the book describes—heavily quantitative, practiced predominantly but not exclusively in US economics departments—is by and for economists, using historical settings and data. You have development economists, political economists, and trade economists—and then you have historical economists. They’re not the same thing as economic historians.7 Maybe that’s pedantic or obvious to you, but I found this very confusing. Many papers may be narrow-minded in terms of historical contribution, but economists… don’t care that much. What they are looking for is a theoretical innovation or an empirical test of said theory. Bisin and Federico don’t claim that their selection of articles is representative of all economic history, but rather of an increasingly influential brand that finally has some sway in mainstream publications. This is borne out by the self-conscious survey in Chapter 2. Field journals are not dominated by “advanced methods”—IV, RDD, and DiD make up a growing fraction, but still a minority. Conferences still have long sessions about the minute details of real wages, textile quality, and coin metallurgy. And so long as folks remember that solving economic problems is only part of the game, I think it’ll stay that way.

North’s graduate education was equally unconventional. His teachers—one a Marxist, another Frank Knight’s brother—were more interested in history than theory, and so North learned the basic principles of economics “by rote.” He’d picked up no “real understanding” of economic theory by the time he graduated in 1952. Fortunately, he found work as an assistant professor at the University of Washington in Seattle, where he played chess for two hours a day against Don Gordon, a young colleague, who knew his theory well. While North won game after game, Gordon gave lessons that the historians had neglected. North’s dissertation was uninspiring—a history of life insurance in the United States—but it afforded him the opportunity to visit the East Coast on a fellowship. There, he encountered the intellectual luminaries who’d been absent in his Western upbringing: the sociologist Robert Merton at Columbia and (more importantly) Joseph Schumpeter at Harvard. On another trip out east, he met Simon Kuznets and performed the first empirical work that would lay out his path into economic history. He also attended the famous NBER-EHA conference—of which we spoke last week—that produced Conrad and Meyer’s revolutionary tract on American slavery and inspired a young Robert Fogel. When he came back, he set to work on The Economic Growth of the United States from 1790 to 1860 (1961), where he applied the sort of orthodox neoclassical reasoning—with great effect—that was sweeping the field. As one of the shapers of Washington’s graduate program in the early 1960s, North helped to train and place many of Goldin’s “Young Turks” in top US economics departments.

As we noted last week, North was an apostle of the Cliometric Revolution in economic history. The Economic Growth of the United States, for example, was based on “the proposition that U.S. growth was the evolution of a market economy where the behavior or prices of goods, services, and productive factors was the major element in any explanation of economic change.” Ironically, he explicitly relegated institutions to a subordinate status, writing that “they have modified rather than replaced the underlying forces of a market economy.” As we discussed last week, the book develops a rather conventional (for the time) theory of economic development as a function of geographical specialization—the '“triangular trade” between a food-producing Midwest, manufacturing North, and slave-plantation South. And so long as he continued to work on American economic history, his approach remained stereotypically neoclassical, lining up with Fogel, Lance Davis, and Stanley Engerman in foregrounding technology and production functions.

In 1966-7, however, North decided to “re-tool.” Having moved to Geneva on a one-year grant, he started to read into European economic history. Faced with this broader canvas of economic development—which spanned not just the short, dynamic life of the American republic but long millennia of stagnation—North had something of a revelation. “[T]he tools of neo-classical economic theory,” he later wrote, “were not up to the task of explaining the kind of fundamental societal change that had characterized European economies from medieval times onward.” He began to cast about for something new, the first inklings of which appeared in his 1968 paper “Sources of Productivity Change in Ocean Shipping” in the JPE. In it, he found that organizational rather than technical changes were the greatest contributors to efficiency in oceanic transport prior to 1800. This was exactly the opposite conclusion from the one he’d drawn in an analogous paper a decade before, and a tentative step away from the central model of Economic Growth. By 1971, he was calling for something that seems very familiar to us now: “a body of theory which encompasses the traditional models of the economist and both widens its scope and allows us to include an explanation of the formation, mutation and decay of organizational forms within which man cooperates or competes.” In other words, he’d realized that economics was in need of institutionalism.

Elements of what became the New Institutional Economics (NIE) existed long before North’s volte-face. In 1937, Ronald Coase’s transformative paper “The Nature of the Firm” introduced and developed the concept of transaction costs, which contravened the fundamental assumption of frictionless exchange embodied in early neoclassical models. Asking himself why firms existed when production could be contracted out to individuals, he (later) argued that “the fact that it costs something to enter into these transactions means that firms will emerge to organize what would otherwise be market transactions whenever their costs were less than the costs of carrying out the transactions through the market.” These costs were not only technical (e.g. shipping), but also related to imperfect information and the frequency of exchange between market participants. Coase would later contend that transaction costs could undermine the economy-wide specialization of which North had written in 1961. The centrality of property rights was another innovation of Coase’s; in his 1959 “The Federal Communications Commission,” he contended that people traded rights—rather than physical goods and services—which had to be protected by a legal system. The argument was refined into its most recognizable form by Almen Archian, who defined property rights as “a set of rights to take permissible actions to use, transfer, or otherwise exploit or enjoy property.” Oliver Williamson added the final point of NIE’s “golden triangle” in 1971, when he showed that—by contrast with neoclassical assumptions—individuals defect and violate contracts under certain conditions. North’s contributions in each area would be as if not more significant, but he was fortunate in his intellectual predecessors.

North set out on the road to Damascus in the early 1970s, when he published two books that straddled the divide between the neoclassical and institutionalist paradigms. Institutional Change and American Economic Growth (1971) and The Rise of the Western World (1973), co-authored with Lance Davis and Robert Paul Thomas respectively, both sought to rationalize the evolution of long-run institutions as a process of maximizing net benefits. In the latter book, he wrote that “the key to growth” was “the establishment of institutional arrangements and property rights that create an incentive to channel individual economic effort into activities that bring the private rate of return close to the social rate of return.” The classic example of the new reasoning was North and Thomas’s explanation of how increased labor costs after the Black Death led to two different institutions: wage work in Western Europe and retrenched serfdom in the East. In the former case, landlords signed away life leases to retain tenants, and the inflations of subsequent years wiped out the value of fixed money rents until they became all but nominal. In the East, by contrast, lords were able to collude and avoid competition for labor, which permitted a consolidation rather than a collapse of rentier hegemony. Institutions, contracting, and transaction costs played a key role in the analysis, but the logic remained fundamentally neoclassical: organizations are altered when the net benefits outweigh the costs.

The theory of “neoclassical institutions” resulted in two key insights. First, changes in relative prices create incentives for alterations in human organization. But these shifts are sticky, transcending the short-term economic conditions that brought them about. North thought that path dependence and transaction costs were part of the explanation. Once institutions were in place, transaction costs created frictions that led them to persist beyond the context for which they initially evolved. More importantly, North was slowly realizing that neoclassical theory was inadequate for explaining the kind of long-term dynamics that he believed at the center of the wealth and poverty of nations.

From my quite subjective perspective, the new economic history has made a significant contribution to revitalizing the field and advancing the frontiers of knowledge. Yet I think it stops short – far short of what we should be accomplishing in the field. Our objective surely remains that of shedding light on man’s economic past, conceived in the broadest sense of those words; and I submit to you that the new economic history as it has developed has imposed strictures on enquiry that narrowly limit its horizons-and that some of my former revolutionary compatriots show distressing signs of complacency with the new orthodoxy (North 1974, p. 1).

North’s “breakthrough” work began to resolve these dilemmas. Structure and Change in Economic History (1981) offered a radical new explanation of persistence that superseded the transaction cost compromise: culture. The “cumulative experience” handed down across generations coalesces over time into beliefs and ideologies, and the accretive nature of this process makes the outputs persist even if economic efficiency arguments dictate change. Bad institutions that clearly retard development can be locked into place by the cultural framework of a society merely because of the path-dependent construction of the underlying norms and assumptions—hardened by thousands of discrete interactions between anonymous actors. Change, therefore, occurred on two levels: the discontinuous and abrupt, as in the Black Death case, and continuous evolutions in the longue duree. Neither type need necessarily persist; Structure and Change offers framework for thinking about why they do and don’t. The assumption that existing arrangements were efficient had been abandoned for good.

In 1989, North (along with Barry Weingast) published the work for which he’s perhaps best known: “Constitutions and Commitment,” which explored the role of the Glorious Revolution in creating institutions favorable for the emergence of economic growth in Britain. The overthrow of the arbitrary and domineering Stuart monarchy, in the now-familiar parable, led to the rise of “Parliamentary supremacy” and constraints on the executive, both of which secured private property—in turn increasing investment incentives and greasing the wheels of exchange. This argument would be enormously influential, both in its own right, and in setting out a precursor to the Acemoglu-and-Robinson paradigm of Why Nations Fail and “Atlantic Traders.” Indeed, North and Weingast offered a straightforward explanation of how most nations failed, and why Britain—despite a “nearly” moment—didn’t.

Rules the sovereign can readily revise differ significantly in their implications for performance from exactly the same rules when not subject to revision. The more likely it is that the sovereign will alter property rights for his or her own benefit, the lower the expected returns from investment and the lower in turn the incentive to invest. For economic growth to occur the sovereign or government must not merely establish the relevant set of rights, but must make a credible commitment to them (North and Weingast 1989, p. 803).

At the same time, North was writing Institutions, Institutional Change, and Economic Performance, where he further refined these ideas into a solid definition. According to his “sports analogy,” institutions were the “rules of the game” and the referees, and organizations were the players. Players had three moves: to maximize within the rules, expend resources in changing them, or cheat. The payoffs from these non-exclusive strategies determined how what happened to the institutions—whether they remained static, evolved gradually, or made revolutionary leaps. This distinction between institutions and organizations was novel; in earlier treatments, organizations were treated as appendages to institutions, which interacted directly with the representative individuals of neoclassical theory. Institutions was ultimately a claim, according to John Wallis, that “the function of institutions [w]as providing stability and predictability... and that the persistence of institutions was not a matter of real-time economic and political forces, but an outcome of the natural limits of human capacities for cognition and culture.”

One of my favorite of North’s papers, simply titled “Institutions” (1991), tries to extend this concept to a theory of state formation. Initially, exchange takes place within the context of a single village, where “dense social networks” permit transactions to occur at low cost, but limit the amount of productive specialization that can feasibly take place. Population and economic growth eventually extend the market beyond immediate personal relations, necessitating the development of institutions to prevent defection. Long-distance trade generates further problems: agency problems for merchants hiring operatives at a distance and contract enforcement in faraway markets. Successfully resolution of these issues required the development of “standardized weights and measures, units of account, a medium of exchange, notaries, consuls, merchant law courts, and enclaves of foreign merchants protected by foreign princes in return for revenue.” Such innovations lowered information costs and ensured contract fulfillment, encouraging greater participation in long-distance trade. “A mixture of voluntary and semi-coercive bodies” ostracized merchants who failed to live up to expectations. Long-distance trade, in turn, fostered a broader division of labor and specialization, which lowers production costs through economies of scale, offsetting the transaction costs imposed by distance and anonymity. Towns and cities spring up, labor shifts out of agriculture into manufacturing and services, and eventually specific institutions—an effective judiciary, constrained executive, and private property rights—are required to keep the development process moving: into fixed plants and continuous-process technology run by specialized wage labor. In the “final stage,” the financial sector itself becomes a large fraction of national product and international institutions emerge to regulate a cross-country division of labor.

By the late 1980s, the New Institutional Economics was gaining significant ground. The proliferation of cross-country data on national income and institutional quality spurred a massive literature on the institutions-growth relationship during the following decade. Problems generated by the first generation of studies—namely, that institutional quality might well be endogenous to rather than formative for economic performance—inspired a famous set of studies: the AJR research agenda of “Colonial Origins,” “Reversal of Fortune,” and “Atlantic Traders”; Rodrik, Subramanian, and Trebbi’s “Institutions Rule”; and the “Legal Origins” work of La Porta, Lopez-de-Silanes, and Shleifer. Stanley Engerman and Kenneth Sokoloff’s classic “Factor Endowments, Inequality, and Paths of Development Among New World Economies” foregrounded the interaction between initial levels of social stratification—determined by geography—and the evolution of institutions in explaining economic performance in the Americas. Avner Greif’s studies of the European guilds and the Maghribi traders picked up where North left off in studying beliefs and norms (not just rules) in demonstrating how informal coalitions used reputational mechanisms to create secure conditions for exchange. And Joel Mokyr, one of the doyens of recent economic history, has been developing a theory, spanning multiple books, of how cultural evolution influences the formation of innovation-friendly values and institutions. With the “Culture of Growth,” combining gentlemanly capitalism with a Baconian obsession with useful knowledge, he seeks to explain the immediate origins of the Industrial Revolution in Western Europe.

North’s final act was, along with Wallis and Weingast, to apply his institutional theory to the entirety of human history, via “Violence and the Rise of Open-Access Orders” (2009). Ten thousand years ago, warring tribes were the were the prevailing mode of “organization.” In some of these bands, elite coalitions arose between specialized warrior, economic, and priestly castes who exchanged protection, resources, and legitimation and excluded outsiders. This upper tier controlled the productive base of society and extracted rents, which encouraged their cooperation; this alliance—the “natural state” was extraordinarily stable, forming the basis for thousands of years of “limited-access” political regimes. Property rights and law are written by elites, for elites, and admission to trade and business was limited by a range of exclusive corporations, clubs, and associations. Elites can outcompete commoners through easier access to credit and the manipulation of state patronage, removing the incentives for many potentially profitable business enterprises. “Open-access” orders, by contrast, put violence under the control of civilian politicians, passed impartial laws, and ensured that ordinary citizens could compete at relatively low cost in markets and political activity. Free entry loosed a process of Schumpeterian creative descruction. Economic development was synonymous with credibly enforced property rights and contracts, the rule of law, and the egalitarian recognition of political and human rights. This, needless to say, was the apotheosis of the new institutionalism as applied to history.

What was North’s great intellectual contribution, in the end? To the Nobel Committee, which awarded him the Prize in 1993, North “[s]hed new light on the economic development in Europe and the United States before and in connection with the industrial revolution” and “emphasized the role of property rights and institutions.” As we’ve seen, though, his research program was far more ambitious. To Claudia Goldin, North sought nothing less than to return economic history—led astray by the Cliometric Revolution—to the study of the “humanly devised constraints that shape human interactions,” as he put it in a 1991 paper in the JEP. Neoclassical theory explained capital accumulation and technical change assuming a given set of institutions, but not why or how a particular institutional configuration came to exist in the first place. Accumulation of the conventional factors of production set out the capacity, but not the impetus, for sustained economic growth. To me, North did something even more profound. His efforts to develop a theory of institutions led him, with economic history itself in tow, to study the truly fascinating questions in history: why and how complex societies emerge, change over time, and differ in wealth and power today.

Economic history was born alongside academic economics in the late nineteenth century, a small part of a broader process: the formation of the modern university. Harvard’s first chair in economic history was William J. Ashley, a British scholar who received the post in 1892, a few years before his colleagues formed the school’s economics department. In England, the LSE became the first British university to offer an economics degree, and economic history was one of the offered specializations. Early tensions emerged between classical theorists and German-trained historical economists, who eschewed deduction for induction. Following Gustav Schmoller in Germany, John H. Clapham in England, and Richard T. Ely in the US, the early economic historians felt that cultural and temporal circumstances prevented the generalizations required to construct theory. The first articles were cross-disciplinary: those appearing in the Journal of Political Economy (JPE) or the Quarterly Journal of Economics (QJE) were methodologically indistinguishable from those appearing in the American Historical Review (AHR). But the avoidance of general theory began to alienate economic historians from their economist allies, symbolized by the absence of historical work from the early issues of the American Economic Review (AER) after 1911.

Convergence forces emerged during the 1920s, with the formation of institutions like the National Bureau of Economic Research (NBER), which—under the guidance of Wesley C. Mitchell—sought to build long-run historical datasets for policy advising. At the prodding of Clapham, who decried past scholars’ tendency to extrapolate from faulty data, economic historians were increasingly pressed to construct and incorporate longer, more rigorous time-series during the interwar period. For the first time, research began to focus primarily on “such questions as How much? How many? How quickly? Or How representative?” Economic history began to re-embrace formal theory, and while historians were prevalent in the formation of the Economic History Association (EHA) in 1941, the charge was led by economists like Earl Hamilton. In the first issue of the Journal of Economic History, the EHA’s publication, Simon Kuznets, an NBER pioneer and former Mitchell student, called for collaboration between economic historians and “statistical economists” to achieve “the final goal of economic study.” Kuznets’ students, including Robert Gallman and Richard Easterlin, would help to transform the discipline by their meticulous collection of national income and capital stock data. Quantitative studies began to take on old historical dogmas; C. M. Thompson, for example, argued that the South was not over-specialized in cotton because the region produced sufficient foodstuffs, while Carter Goodrich and Sol Davison attacked the Turner thesis by demonstrating the high costs of westward migration and the small numbers of actual migrants from the industrial sector.

The new stock of quantitative knowledge and the drive for theory proved transformative for economic history. In 1957, a Conference on Research in Income and Wealth held jointly by NBER and the EHA produced a famous volume containing a range of fundamental statistical series for the nineteenth-century United States. These included Gallman's estimates of commodity output, Towne and Rasmussen's farm gross product and investment series, Richard Easterlin's regional income estimates, Stanley Lebergott's wage series, Ethel Hoover's price index, Edward Budd's factor shares, and estimates of the balance of payments by a young Douglass C. North. Formalization, however, was immediately controversial. Claudia Goldin (1995) suggests that the main point of contention was the “huge fossilized stock of accepted wisdom concerning major projects, figures, and events of the past” which was absent in the other fields of empirical economics. “If one generation claimed labor supply functions were backward bending, but the next estimated a positive supply elasticity using new data and methods,” she writes, “their results could be reconciled by merely supposing that in the meanwhile the underlying parameters had changed.” But economic history’s knowledge base was both old and cumulative, and the findings derived from exploration of the new data frequently threatened the entire structure.

In 1958, John Meyer and Alfred Conrad published a paper that symbolized the consensus-breaking potential of leveraging theory and data in historical study. “The Economics of Slavery in the Antebellum South” had initially been presented at the joint NBER-EHA meeting of the previous year; in it, Conrad and Meyer challenged the prevailing view that American slavery was an economically moribund institution that was fading out prior to the Civil War. They estimated production functions for male and female field hands and, using historical price series, found that the rate of return on the former ranged from 4.5 to 6.5 percent in typical cases to over 10 percent on the best Mississippi alluvial lands. Women, meanwhile, earned 7 to 8 percent. Since comparable investments in other sectors of the economy might return 6 to 8 percent or less, they concluded that slavery was at least as profitable, and certainly not on the verge of dying out. Conrad and Meyer’s scientific project precipitated a series of studies testing the reproducibility of their findings, using different assumptions, data, and production specifications. The fact of their vindication is less relevant than the sheer novelty of their enterprise and the reaction inspired.

An air of excitement was sweeping the discipline. In 1963, Douglass North, recently appointed co-editor of the JEH, declared that “a revolution is taking place in economic history in the United States.” “Even a cursory examination of accepted ‘truths’ of U.S. economic history,” he proclaimed, “suggests that many of them are inconsistent with elementary economic analysis and have never been subjected to—and would not survive—testing with statistical data.” There was a sense that historical study had suddenly become amenable to great change—a desiccated set of long-cherished theories and assertions promised to collapse in spectacular fashion under the weight of formal analysis. “In those early years,” recalled Jonathan Hughes, “it seemed like you could hardly miss. Pick any topic in Economic History. Did it make sense as theory? If not, why not? Were there data available? If so, BINGO.”

The next of the series of studies challenging attacking the consensus on American economic history was produced by Robert W. Fogel, a former student of Kuznets. Born in 1926 to Ukrainian Jewish immigrants, Fogel had attended Cornell University as a history major (though minoring in economics), and on his graduation in 1948 worked for nearly a decade as an organizer for the Communist Party before rejecting the ideology as “unscientific.” Turning to economics, he received his MA from Columbia in 1960 (having studied under George Stigler) and his PhD from Johns Hopkins in 1963, where he worked with Kuznets. In the following year, he published his first major work: Railroads and American Economic Growth (1964), derived from his doctoral dissertation. Provoked both by the long-held view of the railroad as the “engine” of U.S. economic growth and by a burgeoning literature on the centrality of efficient transportation to development, Fogel sought to calculate the “social savings”—the addition to the social surplus from falling transport costs—of American infrastructure. His innovation here was the use of the counterfactual method of reasoning. By stressing the importance of the railroads to growth, old-school historians were hypothesizing that America would have grown sluggishly in their absence; thus Fogel’s book was “an extended thought experiment of what the U.S. economy would have looked like if the railroads had never been built.”

His most dramatic finding, the much-cited “interregional” social savings calculation, was that the abrupt disappearance of the large trunk lines linking the food-exporting Midwest with the importing Northeast would have decreased national product by less than 0.6 percent. Existing water routes would have carried the four main crops—wheat, corn, pork, and beef—with similar efficiency. The real controversy, however, was over “intraregional” social savings—what would have happened if the railroads connecting farmers with Midwest markets had vanished. Fogel made four sets of calculations, each based on different assumptions about the alternative mode of transport used—existing land and water routes or a hypothetical array of replacement canals—and the area cultivated (use all existing land, or only that within the feasible margin). The number was still small, around 1 percent of 1890 GNP, meaning that the contribution of railroads to the shipment of agricultural products—a quarter of all goods moved by rail—was less than 2 percent of national income. While this was a substantial figure to allocate to any single mechanical device, it was gallingly small by comparison with the expectations of the “big push” and “engine of growth” theorists.

Together with North, whose work on ocean shipping helped to demolish the view that technical change contributed most of the productivity gains of 1600-1860, Fogel inaugurated the “Cliometric Revolution” in economic history. This rapidly became a clash between the economic theorists and the “traditional” historians, who objected that historical models were too complex to be captured by mathematical relationships. The “young turks” held meetings at Purdue University and called their field the “new economic history,” a coinage of North’s. Quantification came slowly—labor economics was undergoing a similar transition at the time, which by comparison occurred practically “overnight”—but it came nevertheless. Fogel and North came to stand for two different perspectives on the possibilities of the new science; Fogel was the consummate empiricist, dogmatically proving facts over and over, while North was the “grand theorist,” developing narratives about the role of institutions in the broad sweep of growth. North’s ocean shipping study, which highlighted the reduction in piracy as a motive force behind efficient changes in ship design, presaged this methodological divergence.

The great arena of the Revolution was the slavery debate, which had been simmering unquietly since Conrad and Meyer had gone to press. North's The Economic Growth of the United States, 1790–1860 (1961), Fogel and Stanley Engerman's Time on the Cross (1974), and Fogel's later recapitulation Without Consent or Contract (1989) were the defining works. Both North and Fogel sought to explain the regional differences in American income that persisted after the Civil War, with the South lagging the US average by more than 40 percent as late as 1920—a collapse that neither could attribute to the consequences of the conflict itself. North saw the involvement of the slaveholding South in a complex network of export trade as the villain; the substantial receipts from sales of cotton to Britain and the Northeast paid for purchases of Midwestern foodstuffs, Northern industrial goods, and European luxuries. The inequality of Southern society prevented these profits from being invested in capital accumulation and internal improvements, as in the North, and channeled them into elite consumption instead. The existence of the slave-master institution (presaging North’s later work) prevented efficiency-improving trades between the two parties, even if those transactions would have raised elite incomes in the long run.

Fogel famously took an entirely different tack. Time on the Cross was designed as a systematic refutation of the “traditional view” that Conrad and Meyer had once assailed: that slaves were inept and incompetent, plantation agriculture was inefficient, and that planters themselves were irrational for perpetuating the system. On the contrary: slavery was profitable, the antebellum South was prosperous, and Southern slaves and farms were more productive than their white and Northern counterparts. He observed that in 1860, hypothetically reducing enslaved persons to a minimum subsistence income raised white consumption above Midwest and on par with Northern levels. Together with Engerman, Fogel sought to demonstrate how control of this captive labor force undergirded the South’s economic power during the antebellum period. They asserted that planters were rational profit-maximizers who treated their human property relatively well—positive rather than negative incentives, keeping families together, providing adequate nourishment—and organized their workforces to exploit economies of scale. Plantations with 15 slaves were shown to have produced 40 percent more per unit input than those with fewer. Gang labor, Fogel surmised, was combined with efficient management practice, including the seasonal employment of slaves (especially the corn and cotton growing periods) and the strategic deployment of the elderly, infirm, and women on associated tasks such as tending livestock and buildings and producing manufactured goods. North’s “triangular trade” was a mirage—the South was actually self-sufficient in foodstuffs. Urban and industrial growth had been suppressed not by the moribund extractive institution of the planter elite, but by the South’s exploitation of a slave-based comparative advantage in cotton agriculture.

All of the book’s claims received intense scrutiny and criticism, both from Fogel’s fellow economic historians and from the standard historical profession. The gang labor hypothesis was assailed on multiple fronts, first for ignoring the fact that large plantations only appeared to be more productive because they grew proportionately more cotton than small farmers, and more recently for failing to recognize that picking rates were invariant to farm employment over time. Others attacked the “benign working conditions” claim, suggesting that Fogel and Engerman had misread source material on physical punishment and ignored nutritional and anthropometric evidence on well-being. But this is beside the point. Time on the Cross had, for the first time, placed neoclassical economic analysis at the forefront of the historical debate on a controversial question. Price signals, market processes, and above all rational profit- and utility-maximization were at the core of the Fogel-Engerman mechanism, and these assumptions and emphases proved nearly as contentious as the econometrics with which they handled data. Arguments about the book were really concerned with whether neoclassical models relying heavily upon these features were an appropriate tool for historical analysis; ultimately, they marked a fork in the road along which economists and their historian counterparts had hitherto traveled together. While the cliometricians challenged Fogel and Engerman on their own terms—Gavin Wright, for example, developing the “safety first” model to explain why smallholders grew less cotton and more corn—the historians increasingly ignored the Time on the Cross debate, and economic history, altogether. As mainstream economics offered up models with information costs and bounded rationality with which to expand upon (and supersede) the neoclassical method, economic historians became ever more deeply wedded to the program that Fogel had pioneered. Historians, feeling alienated, began to turn away.

Having fully re-embraced economics, economic history began to branch outward beyond the critique-based bounds of the Cliometric Revolution. Paul David, inspired by the retention of the ineffective QWERTY keyboard, developed the concept of technological path dependence, and, in partnership with Gavin Wright, sought to demonstrate that American resource abundance was a product of institutional and cultural factors, not merely endowments and incentives. Wright foregrounded the role of racism in preserving an economically sub-optimal apartheid in the South, while Joel Mokyr began to explore the role of the Enlightenment in kickstarting the Industrial Revolution. By the 1990s, however, there was a sense that the Cliometric Revolution had “eaten its own.” Christina Romer, in a 1993 talk titled “The End of Economic History?,” blamed the cliometricians for making economic history too familiar to the mainstream economist. “[A]s economic history began to use the same tools as other specialties,” Goldin observed, “many believed the economic history requirement for the doctorate could be abolished without consequence.” That the end of economic history did not arrive was in large part thanks to the efforts of North, who had been working on a grand theory of historical change whose assimilation would mark a turning point in the discipline’s history. Explaining this theory is deserving of a subsequent post, however—so for the moment, we stop here.

Thirty years on from Gavin Wright’s seminal paper on “The Origins of American Industrial Success” (1990), the inextricable link between resource abundance and industrialization in the United States is fairly obvious. Coal, petroleum, and iron ore were all increasingly available in vast quantities and at low prices by the early twentieth century, a cornucopia that left its stamp on the character and trajectory of American growth. Alfred Chandler, for example, has documented how the high-throughput mass production system that laid the basis for big business and “managerial capitalism” was built on the availability of natural resources: fuel for the machines, trains, and production lines and minerals for the furnaces and forges. Even high agricultural productivity proved useful as an input for some of the refining and distilling industries, and the resulting Dutch Disease effect on high wages combined with cheap coal to incentivize the adoption of labor-saving technologies. George Otis Smith, director of the US Geological Survey, wrote in 1919 that “the United States is more richly endowed with mineral wealth than any other country” and W. N. Parker (1972) reveled in the “sheer luckiness of the American economy.”

While the United States was a great producer of mineral wealth at the turn of the twentieth century, she did not hold a monopoly in mortmain. Her staggering shares world of petroleum, copper, and iron ore had fallen from 65, 56, and 36 percent respectively to 3, 16.4, and 10 percent from 1913 to 1989. Most of the decline was purely relative—the result not of depletion but of foreign sources coming online, especially the emergence of the Middle Eastern oil bloc. “Between 1850 and 1950,” as David and Wright (1997) argue, “the USA exploited its resource potential to a far greater extent than other comparable countries.” In all major mineral sectors besides coal, US production shares vastly outstripped those prescribed by endowments alone. She combined a plentiful natural base with a penchant for aggressive, European-style exploration and extraction to assume an unprecedented leadership position in mining and fuel by the turn of the twentieth century.

How did the United States achieve this precocious exploitation? After all, it wasn’t always this way. Writers on the colonial period observed that the British North American possessions were singularly lacking in mineral resources, especially by comparison with the Spanish domains. “It was more than a hundred years after the first settlement of the Brazils, before any silver, gold, or diamond mines were discovered there,” wrote Adam Smith. “In the English, French, Dutch, and Danish colonies, none have ever yet been discovered; at least none that are at present supposed to be worth the working.” Benjamin Franklin similarly added in 1790 that “[g]old and silver are not the produce of North America, which has no mines.” Exploration of other minerals was even less successful (and enthusiastically pursued), leading some historians to suggest that, up to 1800, most would have regarded the United States as land-rich, but resource-poor. All metals except a limited flow of iron were imported.

The first mining booms occurred only in the 1820s, when the search for gold intensified in Appalachia and lead extraction took off in Missouri and the Galena district of the Upper Mississippi. Three decades after its discovery in the Lehigh region of eastern Pennsylvania, anthracite coal began to be shipped in quantity to Philadelphia. The initial impetus came from price spikes for Virginia bituminous during the War of 1812, but serious mining awaited the development of adequate transport links and the recognition that this valuable resource was useful for thermal energy, not just as paving material. Owners of coal lands drove canals into the anthracite regions, and with the advent of the Schuylkill, the Lehigh Valley, and the Delaware and Hudson, output rose from nil prior to 1825 to 91,100 tons in 1828, 290,600 in 1830, and 1,039,000 in 1837. Coasting ships carried coal from Boston and Philadelphia, and the price fell from $10 to less than $5 a ton by the mid-1830s. By the end of the decade, the anthracite-heated reverberatory blast furnace was in commission, their numbers rising to 60 in 1849 and 121 in 1853. The following year, 45 percent of American iron was made with anthracite coal. For Alfred Chandler, this. expansion was crucial in the establishment of factory industry in the United States. “The opening of the anthracite coal fields in eastern Pennsylvania lifted” the “most significant” constraint on the spread of mechanized production.

The full breakthrough into mineral dominance awaited the end of the Civil War. In the astonishing five decades separating the peace of Appomattox from the assassination of Franz Ferdinand, the United States rose to world leadership in the production of iron ore, coal, lead, zinc, silver, copper, antimony, magnesite, mercury, and nickel. Some of this was due to the geographical extension of the country into the West, but much of the growth in output occurred in older, established regions: copper in Michigan, coal in Pennsylvania and Illinois, oil in Pennsylvania and later Indiana. As David and Wright note, the British Empire and Russia were both extensive domains, yet neither achieved the same intensity of resource extraction. Prior to World War II, the United States spent the equivalent of £1 million annually on their geological survey; the British spent £70,000, and in 1947 employed a staff of just 58 in the very-much-intact empire. The industrialist G. N. Tata, seeking to set up an Indian steel plant in the 1890s, consulted an American survey team, which promptly discovered one of the world’s richest hematite deposits at Gurumaishi Hill, where it had been ignored by the British. Russia heavily under-produced her resource endowments in 1913, putting out 5.7 percent of the world’s iron ore supply when her share of global reserves totaled 39.1 percent in 1989.

What drove American success in mining? There were a plethora of contributory factors. Some authors cited the security of property rights in American mining, including the primacy of free prospecting, but the prevalent system was neither unique nor always especially effective. The petroleum industry, for example, arose under the “manifestly deficient” principle called the “rule of capture” under which the owner of a well had the right to any oil drawn from the ground on his property, regardless of the source. This was a catastrophic way to manage a common-pool resource problem: excessive drilling and extraction costs were widespread, as was destructive industry cyclicality as drillers rushed to pump out every last drop from each fresh pool. The “rule of capture” and analogous systems in hard-rock mining ensured maximum extraction rates for recently-discovered resources, but as David and Wright point out, one could as easily rationalize the end of exploitation. They suggest that the United States in some respects is a “gigantic illustration of excessive resource depletion in a common-property setting, augmented by the urgency of a race to drain a non-renewable common pool.”

Another important factor was the precocious development of geological science. Geologists were the most prominent privately-funded scientists in the antebellum United States, with the popular perception that they effectively held maps to “buried treasure” helping to secure them patronage in the business world. This in turn led to pressure for government aid. Geological surveys were the primary channel of state support for science before the Civil War; by 1860, 29 of 33 states had sponsored at least one mission. An early example was the discovery of copper in Michigan. In 1840, Douglas Houghton—the state’s official geologist—reported rich deposits in the Keweenaw Peninsula region, leading Congress to purchase the land from the Chippewa Indians the following year. Mining companies and prospectors surged into Michigan, as did a federal survey team, whose mission (ending in 1850) produced the first accurate maps of the area for the purposes of “rational” exploitation. Surveyors like Josiah Whitney and J. P. Lesley made large salaries as industry consultants and published popular manuals.

Western expansion after the Civil War proved an accelerant. In 1867, Clarence King approached the US Army Corps of Engineers with a proposal for the Geological Exploration of the Fortieth Parallel, for which funding was quickly secured. King’s reputation soared—he charged $5000 for a mine visit—and the academic-instutional nexus led to the formation in 1879 of the United States Geological Survey, of which he was the first director. The organization was the most productive state scientific branch of the nineteenth century and, under King’s successor, secured the funding to publish a geological survey map of the entire United States. Employees frequently went on to work in the private sector and contributed to the success of groundbreaking mining enterprises. The USGS also helped to forge links between industry practitioners and applied science, forcing oil operators—many of whom were poorly educated ex-drill hands—to recognize the value of geology through the publication of reliable field data. The popularization of the anticlinal theory, which suggested that anticlines (downward sloping rock strata) were good places to find oil, after 1914 led to fifteen years of new discoveries.

With booms underway in Michigan and California, demand for mining education expanded rapidly during the 1840s. Abbott Lawrence endowed Harvard with a $50,000 grant for professorships in geology and engineering, writing that “[t]he three great practical branches to which a scientific education is to be applied are: first, engineering; second, mining in its extended sense, including metallurgy; third, the inventions and manufacturing of machinery.” In 1864, Columbia College set up America’s first school of mines; MIT, founded the following year, had a mining course from its inception; Michigan had a degree in Mining Engineering, Yale a professor of mining, and Harvard a chair in geology—twenty schools in all granted degrees in mining from 1860 to 1890. In 1903, the University of California boasted the world’s largest mining school, with over 300 students registered (11 percent of enrolled). These students often ended up as executives in large firms, which rebounded in a curricular focus on combining managerial and technical functions (a la Chandler). The Scientific Press reported in 1915 “that nearly every successful mining operation of consequence, old or new, is today in the hands of experienced technically trained men.” Like British mechanics during the Industrial Revolution, American mining engineers were imported en masse by developing countries seeking to upgrade indigenous industry.

Finally, David and Wright argue that an “ethos of exploration” sustained the US quest for precious metals in the face of persistent suggestions that supplies were soon to be depleted. In Australia, for example, an embargo on iron ore shipments was instituted in 1938 to conserve the remaining stock; when the policy was changed to favor exploration during he 1960s, fresh discoveries were made, along with a host of copper, nickel, bauxite, uranium, phosphate rock and petroleum finds. Stores of iron ore in 1967 were 10 times the estimate of a decade before. American local, state, and national governments persistently aided in mineral development, exempting mine shafts and buildings from taxes, lightly taxing mine incomes, judging claim disputes, and using eminent domain on behalf of mining companies. Optimism and state backing led to discoveries of natural resource pools far in excess of rational scientific estimates would have suggested.

Of course, technological and organizational progress was critically important, too. The copper deposits of the Great Lakes region required massive capital investments to exploit, leading to the formation of large, integrated industrial enterprises on the scale of the railroads. Drilling and blasting techniques were improved through the 1870s and 1880s, including nitroglycerine dynamite and compressed-air rock-drilling machines. Steam engines were employed to hoist ore from the deepest mines. The next two decades saw a “revolution in metallurgy,” led by the application of the Bessemer process to copper and electrolysis to refining. The Jackling method of “non-selective”mining—removing all ores from a mineralized areas—catalyzed a further production surge. In coal, traditional blasting methods began to be replaced by electric cutting machines, finally loosening the grip of labor-intensive pick-and-shovel extraction. Pumping, hoist, and ventilation systems drove mines deep below the water line. Capital-intensive firms were aided by USGS- and university-trained mining engineers for exploration and technical innovation.

These enterprises were often integrated within industrial giants in railroads and manufacturing. The Pennsylvania Railroad Company, for example, was compelled “to follow the example of the other railroad companies by securing, in the vicinity of its lines, the control of coal lands that would continue to supply transportation for them.” Machine-makers like McCormick integrated backward into mining and timberland and forward into mass distribution. The famous exploitation of the Mesabi range, which lowered the cost of iron ore by 50 percent during the 1890s (the equivalent of a decade’s worth of productivity improvement), is a case in point. The region—where ore was located close to the surface, permitting strip mining—produced half the nation’s output by 1905, and came into the hands of the US Steel Corporation after John D. Rockefeller sold his interests to J. P. Morgan, who merged them with the properties of Andrew Carnegie. Rockefeller and Carnegie both invested millions in developing the transportation infrastructure to link the Minnesota mines with the Great Lake ports, and then with the Pennsylvania and Ohio refineries. Despite the company’s monopoly holdings (and pricing behavior), the combined mining, railroad, and refining facilities constructed around the Mesabi complex helped (as Douglas Irwin has argued) to fuel America’s steel export boom at the turn of the twentieth century. From 1895 to 1899, the price of US iron and steel exports fell by 30 percent relative to Britain’s.

American resource superiority was overdetermined. Natural abundance combined with an aggressive development strategy to create an accelerating, cost-lowering feedback loop between extraction, state, and industry in the last decades of the twentieth century. American capitalism was resource-hungry, and the immense returns on offer from mining and refining in turn created the investment funds, scientific knowledge, and technical resources for exploitation. The variety of mineral deposits contributed to the range and quality of complex industrial products in which the United States had cost advantages by the early twentieth century. And without cheap coal, the Chandlerian capitalism would have been all but impossible—whether big business produced sugar, steel, or shirts, coal was in one way or another a critical input. Imitation is the sincerest form of flattery; no better evidence exists of the centrality of resource abundance to American economic growth than the fact that developing countries immediately tried to replicate it. A diaspora of US-trained mining engineers swept Australia, China, and Siberia from the late nineteenth century on, exporting on-the-job experience and technical knowledge. In so doing, they helped to undermine—no pun intended—the geological basis of American exceptionalism. The US monopoly on key resources collapsed during the later twentieth century, and with it fell the low-cost production structure that propelled domestic growth up to the World Wars.

This four-stage(ish)1 process is exemplified by one of my favorite economic history papers: Peter Temin’s 1997 “Two Views of the British Industrial Revolution.” Temin offers an instructive example about how to take an important, purely historical question—what is the correct description of technical change during the Industrial Revolution?—and write out and test a model with which to answer it. Indeed, “Two Views” is a paean to the powerful insights that simple economic reasoning and clear thinking can bring to the table in researching the past. By 1997, Temin’s style of classical cliometric argumentation was already fading from the forefront of economic history as the discipline began its merger with economics—AJR 2001 was under development—but he explicitly used the framework that I’ve described in a way that applies equally to our sophisticated econometrics two-and-a-half decades on. In this essay, I’m going to run through the paper and let him convince you of that fact.

It’s worth quoting the abstract in full, because it explicitly and parsimoniously lays out the question-design structure described above:

There are two views of the British Industrial Revolution in the literature today. The more traditional description sees the Industrial Revolution as a broad change in the British economy and society. This broad view of the Industrial Revolution has been challenged by Crafts and Harley who see the Industrial Revolution as the result of technical change in only a few industries. This article presents a test of these views using the Ricardian model of international trade with many goods. British trade data are used to implement the test and discriminate between the two views of the Industrial Revolution.

Temin starts with a problem. There are two descriptions of the British Industrial Revolution: the traditional Ashton-Landes tale of a “wave of gadgets” sweeping over England, transforming all aspects of economic life, and the more recent Crafts-Harley growth accounting approach emphasizing the expansion of two modern sectors—cotton and iron—and the stagnation of the rest. He will “test” these views with a many-goods Ricardian model and using British trade goods as the empirical basis for the test. There’s no hint of evasion, equivocation, or (even accidental) obfuscation. If he’d previewed the results, you could stop reading there and be able to describe the paper to anybody.

But let’s keep going. The introduction, which lasts for only five short paragraphs, expands upon these methodological themes. “It may seem as if the choice between these two views is a matter of taste,” writes Temin. “But it is seldom that an empirical question cannot be tested.” The ideal way to discern whether few or many industries experienced productivity growth would, of course, to get direct indexes of inputs and outputs, but those are frequently unavailable. So Temin will use a proxy—trade data—in the context of a Ricardian trade model. Interacting each of the two views with the model generates a distinct hypothesis for what should be observed in the statistics. If Crafts-Harley is correct, then British exports would have been limited to iron bars and cotton textiles; if Ashton-Landes, then Britain would have exported a diverse range of products. One can easily look into the trade figures and observe which result prevails.

Section II describes the debate that Temin wants to settle. The historian T. S. Ashton suggested that the Industrial Revolution was characterized by “innovations of various kinds—in agriculture, transport, manufacture, trade, and finance—that
surged up with a suddenness for which it is difficult to find a parallel at any other time or place.” His perspective was popular in the 1950s and 1960s thanks to the statistical work of Deane and Cole and Landes’s The Unbound Prometheus. But during the 1980s, Nicholas Crafts and C. Knick Harley produced new estimates for British economic growth during the Industrial Revolution that were substantially lower than Deane and Cole’s. Practically all of the downward revision came from a reduction in the contribution of non-modernized sectors, from .55 to .07 and then just .02 percent per year. Temin summarizes: “As Crafts repeated throughout his discussion, the Industrial Revolution in [his] view was a decidedly localized affair. The industries affected were textiles, iron, and transportation. All else-other manufactures and other services-were technologically stagnant for the first half of the nineteenth century.”

But that created a paradox: if British industry was even more backward than its agriculture, why didn’t the country “peripheralize,” exploiting its comparative advantage by exporting food and importing manufactures? Crafts resolved the paradox by arguing that Britain’s true comparative advantage was in cotton and iron specifically, not manufacturing generally. Harley backed this up with a computable general equilibrium model that, when simulated, showed that Britain would indeed export textiles and smelted goods while importing food. Patrick O’Brien summarily consigned the “old-hat” Ashton view to the dustbin, noting dismissively that “[it] is still being read and continues to be written by an unrepentant but elderly generation of Anglo-American economic historians.” In the absence of industry-level data, however, he despaired of convincing the venerable holdouts to give up. The old economic history would have to die with its theorists.

But Temin refuses to let the issue die there. In Section III, he proposes an alternate way to solve the problem. “The implications of the Crafts-Harley view for Britain's international trade can be used to formulate a test of these views,” he says. “A model is needed to derive a test, more formal than Crafts's verbal exposition and more transparent than Harley's computable general equilibrium model.”2 He suggests that the Ricardian model of international trade with many goods—developed in a classic paper by Dornbusch, Fischer, and Samuelson (1977)—will do the trick. Unlike Harley, Temin undertakes to explain exactly how the model works, and since that’s the beauty of this paper, I’ll try to follow along, letting him do some of the exposition and interjecting when the going gets tough. It’s a simple model pulled straight out of an undergraduate textbook, but since some readers will not be familiar with it, I think a gradual explanation will be helpful.

To start: “Imagine two ‘countries’: Britain and everywhere else.” Each ‘country’ uses a single factor of production, labor. Labor is “Hicksian,” in that its price does not change relative to other factors, so land and capital can be ignored for the sake of simplicity. “Each country both produces and consumes a large variety of goods made from this single factor of production. These goods can be numbered from 1 to N. The technology of each country can be described by the labor needed to produce each good.”

To produce good n at home requires a_n hours of British labor, and a*_n hours in the “rest of the world.” The lower is a_n, the higher is the country’s productivity in producing good n, because it takes less time (and thus input) to create a unit of output. The ratio between the two countries’ productivities in making n is a*_n/a_n; the higher the ratio, the wider Britain’s absolute advantage. You can then order all N goods from highest to lowest, with the left side being the goods in which Britain’s advantage is greatest and the right side being where it is least.

Whether Britain or the rest of the world exports a good depends on the relative cost of producing it in each country. In the Ricardian model, the only cost is that of labor—the wage. If w is the British wage and w* the foreign wage, then the cost of producing a unit of good n in Britain is (a_n)(w): the time needed for the worker to produce one n (say, a bolt of cloth) multiplied by the prevailing hourly or weekly wage. It similarly costs (a*_n)(w*) to produce n abroad. It stands to reason that Britain will produce any good for which (a_n)(w) < (a*_n)(w*), and vice versa—it’s cheapest that way. If you divide both sides by a_n and w*, you get the following:

The implication: Britain produces any good for which the above inequality holds true. Stated in plain English, Britain will make any good in which its relative productivity advantage is greater than its relative labor costs. You can go back to the “continuum” of a*/a productivities and place w/w* as a divider: Britain exports all the goods on the left to the rest of the world, and imports the goods on the right.

How are wages set? Temin: “The wage in each country is determined by the demand for labor, which is determined in turn by the range of goods produced in that country. If the range of domestic goods increases at any relative wage, then the demand for domestic labor rises.” Thus there’s a positive relationship between the number of products produced and the relative wage rate. Temin provides a useful graph on page 70:

The X axis represents the list of goods exported (everything to the left of x0) and imported (to the right), and the Y axis both the relative wage rates and productivities. Line A is the just the continuum of a*/a terms that we highlighted above. Line B is the relationship between the relative wage rate and the fraction of goods exported. The equilibrium number of goods produced is where the lines cross—in other words, exactly where the divider w/w* sits in the continuum of goods.

Now you can easily generate the hypotheses for the Ashton-Landes and Crafts-Harley views. Technological progress in Britain means that the time needed to produce a good falls; according to the “traditional” view, this happens for all or most industries. Since a falls while a* remains static, Line A shifts out to A’. Crucially, the number of goods exported increases from x0 to x1. If Ashton is right, Britain would have exported a wider variety of goods during the Industrial Revolution.

But if technological progress is restricted to a few sectors, the result is entirely different. If Britain already exports the good, then wages will rise and Line B will shift up to B’. The number of goods produced by Britain will fall from x0 to x2. If Crafts and Harley are right, Britain would have exported a narrower variety of manufactures during the Industrial Revolution. Temin’s summary is perfect: “The Ricardian model consequently generates a simple test to discriminate between the two views of the British Industrial Revolution. Were other manufactures exported or imported? If exported, then the view change was widespread among British industries in the early nineteenth century is confirmed. But if the other manufactures were imported, then the conclusion that technical change was restricted to a very few modem industries while other industries stayed mired in premodern production techniques is confirmed.”

We’ve asked our question, set up a model, and produced hypotheses. All that remains is to collect data and run the test. Temin’s source is the set of trade figures compiled by Ralph Davis in his 1979 book The Industrial Revolution and British Overseas Trade. He demonstrates that Britain exported an enormous variety of manufactured goods as late as 1850, when the accumulated productivity gains of cotton and iron over the laggard sectors should have been greatest. Linens amounted to £4.7 million, silks to £1.2 million, and miscellaneous metal-worked goods—hardware and cutlery, brass and copper, tin and pewter ware—to more than £5 million. But variety is what counts, and Britain had it in spades: beer and ale, weapons, glass, soap, books, candles, hats, instruments, parasols, hats, drugs, stationery, jewelry, watches, and painters’ colors (to name just a few categories) all found foreign markets. Imports, by contrast, consisted—with the exception of silks, a few cotton and wool articles, and watches and clocks—almost wholly of foodstuffs and raw materials: £23.7 million worth of cotton, £10.7 million of sugar, £9 million of corn, meal, and flour, and similarly vast quantities of coffee and tea. “None of the myriad other British manufacturing exports were imported at all.”

Temin’s conclusion, therefore, is that “the traditional ‘old-hat’ view of the Industrial Revolution is more accurate than the new, restricted image. Other British manufactures were not inefficient and stagnant, or at least, they were not all so backward.” Furthermore, the Crafts-Harley estimates of productivity growth in the non-modernized sectors were clearly too low, and would have to be revised. Seventeen pages of brevity and clarity were all that he needed for this exercise—an efficiency befitting a great economist. Is Temin completely correct? Probably not; Crafts and Harley replied with a new set of simulations three years later that showed that demand for food imports could boost manufactured exports even in the absence of widespread productivity growth. But there are always limits to modes of argumentation—that’s beside the point. What Temin shows, and does better than Crafts and Harley, is the power of formal economic reasoning to generate testable hypotheses about the past. As our own papers flirt with the hundred-page mark, we can clearly learn something from his example.

The steam engine—the flagship technology of the British Industrial Revolution—is the canonical macroinvention. While it’s difficult to pinpoint a single moment in which it came into being, the steam engine was, in aggregate, a radical new solution to a very old problem: that of converting stored energy into power. Prior to 1700, the limits to human productivity were fixed by the potential of water, wind, and old-fashioned muscle. The use of power technology was constrained geographically by the location of rivers and temporally by the seasons (which iced over and dried up streams) and the weather (which governed the utility of the windmill). It could not be moved, had to be operated inconsistently, and was strictly limited in the possible application of horsepower. The steam engine, however, unlocked the tremendous potential of the latent heat energy stored over millennia underground as coal. Power technology could be spread across the land, automating and augmenting human labor to an extent impossible even with the most efficient windmills and waterwheels of the day; it could be used to move ships and trains; and it could operate in all seasons and at untold intensities. Though the finest steam engines have long since been superseded, the basic principle—conversion of fossil fuel into mechanical energy—remains the foundation for the economic life of our civilization. It’s a legacy that’ll be difficult to escape.

While Europeans had dabbled with prototype steam machines for centuries, beginning with the fabulous aeolipile suggested by Hero of Alexandria, the scientific basis for the modern technology awaited the Scientific Revolution of the seventeenth century. Two key developments occurred during the 1640s. The Grand Duke of Tuscany had ordered his workmen to dig a well to supply his palace with water, but the suction pump used could not bring the fluid above seven feet from the top of the pit. Galileo was called in as a consultant. Though influenced by the Aristotelian dictum that “nature abhors a vacuum,” he nevertheless observed that there were limits to this abhorrence, which seemed to end at 33 feet.1 While under house arrest for his espousal of Copernicanism, Galileo suggested to his friend and secretary, Evangelista Torricelli, that he take up the problem. In 1644, Torricelli inverted a glass tube of mercury in a bowl containing the same substance. The mercury stabilized in a column 76 centimeters high with an atmosphere above it—the world’s first barometer. The fluid was suspended, he realized, not by “nature's intolerance of a vacuum” but by the weight of the air itself. “The horror vacui doctrine, lasting for two millennia,” wrote one historian, “was finally thrown into the dustbin of history.” Torricelli’s friends sent word to Blaise Pascal in France, who showed that the deeper one submerged a barometer in water, the higher the mercury was forced upward by water pressure.

During the following decade, Otto von Guericke, the mayor of Magdeburg, performed a series of experiments that proved of equal importance. In 1654, he pumped air out of a cylinder fitted with a piston, which slowly descended under the weight of the atmosphere, despite the efforts of twenty rope-pulling men to restrain it. The following year, he evacuated air from between two hemispheres, and it took sixteen horses to rip them apart. Finally, in 1661, he repeated the piston exercise by using the mechanism to pull up a scale with weights. In 1666, Christiaan Huygens took a dramatic next step: he exploded gunpowder beneath a piston to drive it up a cylinder, and then released the gases to create a vacuum below it. Air pressure forced the piston downward, raising an attached load. And while gunpowder was obviously unsuited for a power technology, Huygens’s assistant, Denis Papin, substituted steam: filling the cylinder to push up the piston, and then condensing it to create the vacuum. This was the first prototype steam engine. He wrote of this result in a 1690 paper published in England, to which he had fled in fear of religious persecution. Eight years later, Captain Thomas Savery, a fellow of the Royal Society—which had been coolly indifferent to Papin’s achievement—had acquired a patent for the first working steam engine.

Savery had been interested in the problem of pumping water out of mines, something that Papin had himself considered. This issue that motivated Thomas Newcomen to conduct the research that led to the original successful steam engine. Indeed, Robert Allen goes so far as to call the steam engine itself “Newcomen’s macro-invention” and suggests that Savery’s design was not for an engine at all, but rather a flawed sort of vacuum pump. Fair or not, the units installed following the establishment of the Dudley Castle Machine of 1712 bore his name and operated on his, not Savery’s, principles. The Newcomen engine worked as follows: a balance beam was set atop a column with one end attached to a cylinder-piston and the other to the rod used to pump out the mine. Water was heated in a boiler and the resultant steam admitted to the cylinder by using a valve. Cold water was injected into the cylinder, condensing the steam and causing the atmospheric weight to drive down the piston, which lowered the near end of the beam and lifted the end with the rod. The result was a machine that was powerful, safe, and operable by contemporary craftsmen.

Though the Newcomen engine was the end product of ten years of development, it still had major flaws. First, it consumed fuel voraciously, thanks to the need to cool and heat the cylinder with each stroke. And second, the irregularity of the drive produced meant that rotational motion—needed to power mills—was not directly possible. Both factors conspired to restrict the spread of the Newcomen engine to the vicinity of the coal fields, where fuel was essentially free. As a result, the initial diffusion of the machines was frustratingly slow. In 1733, when Newcomen was finally freed from his joint patent with Savery, there were only about 100 engines of any kind in all of Britain. Fuel-efficiency increased gradually until 1769, from 45 to 30 pounds per horsepower-hour, at which point the engineer John Smeaton systematically improved the design through experimentation to reach 17.6. This, however, proved to be the hard ceiling of the Newcomen design.

By this stage, however, the Newcomen engine was being made obsolete by the better-known James Watt. While employed at the University of Glasgow to repair a model, he realized that the machine’s fuel issues could be solved by chilling the steam in the famous “separate condenser,” removing the energy loss from repeatedly cooling and reheating the cylinder. The Watt design’s 8.8 pounds per hp/hr were a 50 percent saving over Smeaton’s furthest refinement of the Newcomen paradigm. In 1800, Richard Trevithick designed the high-pressure engine, which used the force of injected steam to drive up the piston and, since it eschewed the separate condenser, air pump, and beam, was cheaper to install and more compact. By saving on fuel and capital, the new method set off a train of microinventions that lowered consumption to 2 pounds by 1830 and was eventually applied to trains and ships. At the prompting of his partner Matthew Boulton, Watt also developed the “sun and planets gears,” which translated the engine’s reciprocating into rotatory motion. Combined with the double-acting technique of inserting steam both above and below the piston—ensuring a smoother drive—the Watt engine could be applied to mills and textile machinery.

As the Watt and Trevithick designs were refined and recombined, steam power began to diffuse throughout the British economy. In 1800, there were 2500 steam engines operating in Britain, of which two-thirds were Newcomen- and the remainder Watt-types. But the critical fact is that this process was staggeringly slow. In 1760, a half-century after Newcomen’s macroinvention, only 5,000 out of the 85,000 horsepower installed in Britain was provided by steam. In 1800, with Watt’s efficiency increases and applicability expansions now best-practice, the corresponding figures were still just 35,000 and 170,000. Even in 1830, steam power had only just reached parity with water power, when both sources comprised 160,000 horsepower each out of 340,000 total. This was thirty years after Trevithick, fifty years after the “sun and planets” gears, a century after the Savery-Newcomen patent expired, and 150 years after Papin had built his prototype. And it was only in the four decades between 1830 and 1870 that the high-pressure compounding steam engine became the dominant power provider in Britain. Steam horsepower per worker was no higher in 1850 than in 1760, as the technology diffused barely at the rate of labor force growth.

Why? First, best-practice technologies were not always cost-effective. Robert Allen discusses at length the extent to which diffusion was mediated by fuel costs, which were lowest in Britain—particularly in the Northeast coal regions—and higher in many continental industrial centers. The areas of effectively free energy were a British luxury, and equally fortunate was the local demand for mine pumping fostered by the metallurgical industry. As late as 1840, Britain commanded double the steam power of France, Prussia, Belgium, and the United States combined. Second, average practice was slow to reach the productivity frontier regardless of cost-effectiveness. The Lancashire cotton industry used low-pressure engines until the late 1840s, decades after the technology had become obsolete. This may have had something to do with initial capital costs, which actually increased until the 1830s and offset many of the fuel savings gains made possible by Smeaton, Watt, and Trevithick. A skilled workforce of engineers able to run and repair the machines also had to be expanded sufficiently to ensure that firms could continue to operate them at less-than-prohibitive expense. This point, along with the primacy of coal costs, is confirmed by Nuvolari et al (2011), who find that a one-shilling increase in price decreased the expected number of Newcomen engines in a county by 0.7. But we should also not underestimate the nightmarish weight of history upon the living. Inertia and path dependence continue to slow adoption and diffusion of novelties long after the economic tide appears to have turned.

We have many macroinventions we might desire today, from carbon capture to nuclear fusion, but the history of such events tells us they come unexpectedly, stochastically, and, above all, rarely. There were rational economic and scientific reasons underlying the invention of the steam engine. But no natural law governed when or whether the Newcomen engine was invented, and still less in the case of Papin’s prototype. Economic incentives, as Mokyr points out, may decide the direction of technological change, but they have no deterministic grasp of the pace. The Scientific Revolution made the steam engine possible, but not immediately inevitable. And invention is only the first step. Legacy economic systems change only slowly—it’s one thing to invent the technology, and quite another to diffuse it through the entire economy. Steam’s conquest of British power production came over a century after Watt’s separate condenser, and lagged two centuries behind Papin. And that was just one tiny island corner of a planet that even today is still in the throes of its first industrial revolution.