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The essay examines the role of Christianity in premodern European capitalism, with regard to the city of Florence. It traces the formation of the historical construct and the influence of Werner Sombart's Der moderne Kapitalismus, a work much neglected nowadays in the Anglophone academy. The article seeks to historicize and contextualize faith and economy, to stress their fundamentally intertwined nature and more specifically how notions of “negotiation” and diriturra (moral Christian rectitude) connect the seemingly antagonistic sides, and connect also Florentine finance and business history, which are too often studied independently. It argues that Christian rectitude and service to the church (a noncynical quid pro quo) were conjoined with a calculated, reasoned profit motive--evident especially among papal bankers, a key sector of the Florentine economy.
This paper aims to analyze the changes in the standard of living of workers in the popular sectors of Mendoza during the “great expansion” of the Argentine economy. A series of real wages of the construction pawn in public works is calculated for 1895–1914, in order to compare it with series of real wages of low and medium public employee grades (low-level policeman, porter and clerk) and vineyard employees, which were previously estimated. In this way, we try to know if the dynamism of viticulture and public investment improved their living conditions. In addition, it seeks to compare these results with the cost of a basic basket of goods and services and calculate family income for some construction laborers identified in the National Population Census of 1895, in order to know if they insured family subsistence.
This article explores the development of railway nationalism and «railway imperialism» within Colombian politics during the early 20th century. It uses the experience of the hitherto unstudied Great Northern Central Railway of Colombia British «free-standing company» as a lens to evaluate the way in which these political currents impacted railway development in the Colombian department of Santander. It argues that the rise of railway nationalism intertwined with regionalism and personal interests represents an important and unacknowledged factor in the collapse of the British company, as well as the overall lack of railway expansion and subsequent economic decline in the department.
Interest in the growth of tradeable securities in early modern Britain, especially its relationship to economic development and the funding of government debt, has centered mainly on the borrower – whether it be trading company, industrial enterprise, or the state. This article directs attention to the investor, using Charity Commission Reports for England and Wales that document a dramatic mid-eighteenth-century shift by donors and trustees from investments in real estate and rent charges to perpetual government annuities, mainly 3 percent Consols. The heavy investment in this public debt product is what ultimately prompted the creation of the London Stock Exchange in 1801.
In analyzing this shift, which occurred among the propertied in all regions of the nation, not just the metropolis or among corporate entities and the mercantile community, I consider both what made the annuities increasingly attractive for charitable trusts and the alternatives – real estate and private loans secured by mortgage or other means – more problematic. Legal changes, I argue, played a role in the transformation, especially the Charitable Uses Act of 1736, which made charitable devises of real estate very difficult and probably resulted in reduced investment in human capital and less wealth redistribution. Regions varied, however, in the degree to which they switched from real estate in the latter part of the eighteenth century; they also differed in the extent to which the switch resulted in more gifts of interest-bearing loans as well.
Admittedly, the changes documented in this article concern only one type of depository for assets, charitable trusts. The appeal of these annuities, however, could extend to investments needed for other purposes such as postmortem payments to dependents. Moreover, the fall-off in demand for real estate in trusts correlates with GDP estimates showing a steady decline in income from real assets after 1755 and what some have noted in this period as a puzzle – the lack of an increased rate of return on rents and private loans at a time of robust investment in government debt. Most importantly, though, the transition demonstrates the ability of the government to induce a broad spectrum of the propertied population to invest in securities, if the vehicle they offered had the right characteristics, which were not necessarily highest yield or liquidity without loss in value.
This article traces the origin of too-big-to-fail policy in modern US banking to the bailout of the $1.2b Bank of the Commonwealth in 1972. It describes this bailout and those of subsequent banks through that of Continental Illinois in 1984. During this period, market concentration due to interstate banking restrictions is a factor in most of the bailouts and systemic risk concerns were raised to justify the bailouts of surprisingly small banks. Finally, most of the bailouts in this period relied on the Federal Deposit Insurance Corporation's use of the Essentiality Doctrine and Federal Reserve lending. A discussion of this doctrine is used to illustrate how legal constraints on regulators may become less constraining over time.
In all probability no scholar has been more influential when it comes to thinking about pre-industrial economies than Thomas Robert Malthus (1766- 1834). Although he was living in Britain at the time of the breakthrough of industrial production, that as a rule is considered to be the beginning of modern, i.e. sustained economic growth, he was very pessimistic about the possibility of such growth and in that sense he would turn out to be ‘a prophet of the past’. His ideas centred around a tension he considered inherent to each economy, the tension between population and resources. That tension would be caused by the fact that population has the tendency to multiply faster - he claimed exponentially - than food supply, that in his view tended to grow arithmetically. Whenever the food supply increases, so he claimed, population will rapidly grow, bring relative abundance to an end and create scarcity. Strikingly enough, in the same decade, the 1790s, in which Malthus wrote down his ideas about the relationship between population and wealth, two scholars who did not know his work nor that of each other came up with quite similar ideas: Hong Liangji (1746-1809) in China and Honda Toshiaki (1744-1821) in Japan.
Malthusianism, be it in a mild and nuanced form, is still very much alive amongst economic historians and economists. Many of them have claimed or still claim that the pre-industrial world was a world without sustained and substantial economic growth, i.e. a world without what economists call ‘modern economic growth’. In their perspective, growth over the long run was close to zero. They do not go as far as to claim that periods of growth were absent, but emphasise that they were shortlived, and neither sustained nor sustainable. The people at large need not always have been living at subsistence level. There were bad and better times. But in their view the tension between population and resources in general - not just food on which Malthus and classical Malthusianists as a rule focused - indeed was integral to the pre-industrial economy, although not as a kind of natural fate, but because no breakthroughs occurred in the field of energy use, technology and institutional arrangements.
An atlas does not have a conclusion. But after having browsed through it, one might briefly want to pause and reflect on what one has seen and what that might mean. A couple of things stand out.
- Until industrialisation the economies of the countries depicted in this book - and according to the existing literature also the economies of all countries not depicted here - only had very limited growth potential. The information in the atlas certainly does not add up to a diehard defence of a strictly Malthusian perspective on pre-industrial economies. But it does show that the margins for pre-industrial societies were small and that their potential for growth was severely constrained by organic limits. All four countries depicted can be characterised as advanced organic economies, i.e. economies that still were organic but that, considering the constraints that this implied, had managed to reach quite high levels of development and growth without, however, actually ‘escaping’ from Malthus.
- The changes we associate with ‘the industrial revolution’ meant the lifting or even elimination of the ‘Malthusian’ constraints. Whether that escape will prove to be definitive of course is another matter. That, however, need not concern us in this book as it stops at the beginning of the twentieth century.
- The absence of modern economic growth did not mean the absence of any growth. There apparently were several instances of what one can call ‘pre-modern’ economic growth. It would appear that Great Britain and the Dutch Republic had already become wealthier than China and Japan before industrialisation in Great Britain took off. The figures presented for GDP, real wages and consumption would suggest so. It would be rash to draw very firm conclusions though: Problems of measurement and interpretation are huge and much has to depend on assumptions.
- Pre-modern growth was not the outcome of so-called ‘macro-innovations’. Overall changes in the sources of energy that were used, in technology and in the raw materials that were processed, were marginal as compared to what became normal in industrial societies. Almost without exception they boiled down to (a little bit) more of the same.
In a world where in principle more than enough information is available, one needs a good reason to publish yet another book. Some explanation of why we wrote this one is not superfluous. The conviction that this could become a useful book is an outcome of Peer's experience in teaching global history. He has done so at several universities for more than twenty years with a focus on the early modern period and on economic history. Students as a rule looked interested and often even enthusiastic. But what always struck him, even with the interested and enthusiastic students, was that they were quite fond of discussing big topics like the Great Divergence, the modern-world system, globalisation, the impact of slavery and so on and so forth, but were often almost completely ignorant of the most basic facts concerning the societies that were being discussed. What was their (relative) size? How many people were living there? At what age did those people marry, or die? What were their main sources of energy? What did they eat? How did they provide for their sustenance? How intense were those intercontinental contacts that global historians like to focus upon? How many people actually migrated from one continent to another? How many people were enslaved in Africa and transported to the Americas? How large were the bullion flows from the Americas that speak so much to the imagination and where did they go? How long did it take to travel by ship from Amsterdam to the New World or to Canton or Batavia? How big was intercontinental trade as compared to the GDP of the trading nations involved? By far the majority of the answers he got when asking such basic questions at the beginning of class were wrong, many of them very wrong. Most students had no or only a fairly distorted idea of ordinary life in pre-industrial societies. Actually, so he found out, you cannot really blame them. It is anything but easy to find the relevant information. It is very often simply not there in the numerous introductions to or syntheses of global history. Apparently, it is assumed that students and other people interested in global history no longer need to be informed about such ‘trivialities’.
An atlas of material life in a pre-industrial setting can best begin with providing basic information with regard to the natural environment in which people lived. Let us begin with information on the sizes of the entities we will discuss. The globe in its entirety measures 510 million sq. km. Just under 150 million sq. km consist of land. Europe, including Russia west of the Urals, measures roughly 10.5 million sq. km and Asia roughly 44.5 million sq. km. The following maps show the size of the entities that play a (major) role in our descriptions. (See Maps 1-1/1-5.) Maps of the Mughal and the Ottoman Empires have been added to provide an idea of relative size. (See Maps 1-6/1-7.) All maps are on the same scale.
The immense size of Qing China is striking. Many of its provinces were the size of major European countries. For those provinces we refer to the map on page 277.
For the sizes of the United Kingdom and its components and of the Dutch Republic/The Netherlands see Table 1-1 on page 20. Tokugawa Japan, which comprised only the three big islands Honshu, Kyushu and Shikoku, and a string of tiny islands, measured about 285,000 sq. km. The fourth major island, which became known as Hokkaido, would become part of the country only after the Meiji Restoration of 1868. Map 1-8 shows how tiny the United Kingdom, the Dutch Republic and Tokugawa Japan were as compared to the big empires shown, on the same scale, on Maps 1-2/1-7.
Actually, the United Kingdom, the Dutch Republic and Tokugawa Japan were all so-called ‘composite states’, i.e. states composed of separate territories with often different rights, regulations, institutions and ways of control by the centre. (See Maps 1-9/1-11.) The Qing Empire, as an empire, to a certain extent was also a composite polity, in which territories that were incorporated later on might have specific arrangements. (See for its aggrandising over time Map 8-15.) For the constituent parts of the United Kingdom see Map 1-9. England and Wales together formed Britain since the Acts of Union of 1536 and 1542. England, Wales and Scotland formed Great Britain since the Act of Union of 1707.
During the eighteenth and nineteenth centuries there emerged a huge gap between the economies of those countries that came to experience modern economic growth, as a rule but not necessarily caused by industrialisation and all it stands for, and those countries that did not. The economies of countries with modern economic growth took off as compared to their past and as compared to countries that did not experience such growth. A great divergence, to use the expression coined by Kenneth Pomeranz in a very influential book, emerged between ‘the West’ and ‘the Rest’, minus, at least to some extent, Japan, as is illustrated in Table 9-1 and Graph 9-1.
With industrialisation the position of Europe, and in particular Western Europe, in the world changed. The long nineteenth century (1789- 1914) clearly was ‘the Age of Europe’, as is shown in Tables 9-2/9-5 on pages 282-283. Needless to say, all the figures in those tables are just approximations. With modern industry emerged modern economic growth which was based on innovation. Even if one realises that it is hard to count inventions/innovations, to measure their impact and to compare them, it would be hard to deny that some countries at times were more inventive/innovative than others. (See Table 9-6.) Inventions and innovations are a result of human ingenuity and thus of human capital. Those in turn can be ‘improved’ by large investments. With their wealth, western industrialised countries had enough to spare increasingly to set money aside for education and research and development.
The Great Divergence brought the beginning of a new economy to those countries that began to experience modern economic growth. It cannot be emphasised enough that it usually did so with an initial stagnation or even deterioration in the quality of life for large parts of society. The first decades of industrialisation for many people brought hard and disturbing times. In Great Britain, the first industrial nation and the first modern economy, it was only in the 1850s that most indicators began consistently to point to better times for a large majority of the population. Overall, in countries that experienced the transition to modern economic growth the birth pangs of the new economy brought hard times for many.
Increased production and productivity in agriculture
Considering its major importance for the pre-industrial economies discussed in this atlas, it is only natural to start a description of changes in their economies with changes in agriculture. Let us first briefly discuss the situation in Western Europe. In the early Middle Ages Europe as a whole was still quite empty. It still had its internal frontiers of lands that were not used to their full potential and its external frontiers of waste and wilderness. Over time, more of the land became settled and the settled land came to be used more intensively. Agriculture experienced several big changes. One was the introduction of the wheeled plough, that came in several forms. The lighter ones that were easily transportable and needed only one draught animal became predominant in Southern Europe, the heavier ones in those parts of Europe that had heavier soils. A second major innovation was the three-field system with its alternating of autumn crops (wheat and rye), spring crops (barley and oats) and fallow. This innovation did not occur in all of Europe. In many parts of Southern, Central and Eastern Europe the two-field system was not abolished. Western Europe's agriculture went through a process of ‘cerealisation’. The work of the farmer and the organisation of the farm became increasingly centred on and subordinated to the growing of grain. In practice, this led to a quite land-extensive type of agriculture with large meadows, pastures and waste lands and substantial parts of arable that lay fallow. Those meadows, pastures and waste lands were used to feed farm animals. Organic materials collected on the waste were used to keep the existing arable land fertile. Leaving arable fallow was done with the same goal in mind. As long as strong animals were needed to work in the fields, in particular for ploughing them, and as long as one had to fall back on manure or other traditional means to make or keep land fertile enough, there continued to be a limit to the amount of land one could use as arable and to the intensity with which one could do that. This has already brought us to the third major change: the extending and more systematic use of animals, initially oxen and, to a lesser extent horses, as sources of labour power.
The idea that in the pre-industrial world people hardly moved and that most of them died where they were born, has already been refuted for a long time. As Table 5-1 and Table 5-2 show, Europeans were on the move quite often, although undeniably the nineteenth century marked the beginning of migration of unprecedented dimensions. In these tables migration is defined as cross-community migration in which a distinction is made between moving from Europe to other continents (‘emigration’); migration from other continents to Europe (‘immigration’); settlement in ‘empty’ or ‘sparsely’ populated spaces within Europe (‘colonisation’); movements to cities of more than 10,000 inhabitants, predominantly from the countryside (‘migration to cities’); seasonal migration (‘migratory labour’); and migration of sailors and soldiers (‘labour migration’).
China was for long virtually untouched by intercontinental migration. But that of course need not and indeed did not mean that it was an immobile society. Its internal migration - and here again one has to realise that Qing China came to be substantially larger than the whole of Europe west of the Urals and had more inhabitants than that continent - was massive. Millions of Chinese migrated from the core regions of the country to its outer provinces and to regions outside China Proper like Taiwan and Manchuria, even though officially they were not, as a rule, allowed to stay there. From the 1680s to the 1850s, at least twelve million people moved to frontier regions at the edges of the Chinese empire. For the period from 1650 to 1900, there is an estimate that their number would have been as high as seventeen million. Here too migration was not always voluntary. Prisoners and soldiers, for example, were often ordered to move elsewhere. In Tokugawa Japan it was officially all but prohibited to migrate, but actually migration must have been quite substantial here too, as the high level of urbanisation suggests. Eighteenthcentury Edo, Osaka, and Kyoto together may have had close to two million inhabitants. It has been estimated that some 400,000 to 600,000 of them had been born elsewhere. Graph 5-1 puts the total migration rates of Europe (excluding Russia), China and Japan in perspective.
In the fifteenth century the world was still fairly empty. Even at the end of the century its total population was less than 500 million. It is estimated that about ten per cent of the globe's land surface at the time was directly used by humans. The total amount of land used as cropland at the time is estimated at about one per cent of the globe's land surface. Living space for wildlife was still abundant. At the end of our period the world's population had doubled. More people meant more exploitation of resources and thus more pressure on land and wildlife. To give just one very telling figure: the area of cropland in the world increased from 180 million hectares in 1400 to 540 million hectares in 1850, almost all of it in regions with centralised states. But intensification of exploitation took place not just in the relatively densely populated regions of the world that are central to our atlas. It also occurred in the many new ‘frontier’ regions that were created in those four and a half centuries. A description of material life during this era would certainly be incomplete if it did not pay ample attention to such major changes in existing resource-portfolios.
What matters most in societies where agriculture plays a fundamental role in the economy is how much of the total extent of land is or can be used for agriculture. Figuring that out obviously means measuring arable. In North-western Europe, however, in addition to arable, a very substantial percentage of land was used as pasture and meadow. Such land, to which one may add parts of the extensive waste lands, in the context of Western European agriculture was also productive and should be considered as part of what we will call ‘agricultural land’. To the extent that such land was used for feeding animals, which played a fundamental role in Western agriculture, but also as a very important, separate source of income, it had hardly any equivalent in East Asia. In that sense at least, in China and Japan arable and agricultural land were almost identical. In those countries pastures and meadows occupied only a fraction of the land.
The productive capacity of an economy is closely connected to the quantity and nature of its energy sources. In the pre-industrial world the available sources of energy set quite clear and quite low limits to that capacity as the following overview will show. A substantial amount of total energy consumption was still provided by the muscle power of humans and animals. Their calorie requirements as ‘input’ depended primarily on their height and weight and their labour power as ‘output’ in turn depended primarily on that calorie intake. Let us begin our analysis with information on human calorie- intake. Currently health organisations advise a daily calorie intake of 2,000 to 2,600 calories for men who are not very physically active; 2,200 to 2,800 calories for men who exert a certain amount of physical activity and 2,400 to 3,000 calories for those who lead a very active lifestyle. For women the figures are 1,600 to 2,000 calories for a sedentary lifestyle, 1,800 to 2,200 calories for a fairly active lifestyle and 2,000 to 2,400 calories for a very active lifestyle. Most of the energy humans normally take in, some eighty per cent, is needed to simply support the basic functioning of the body's vital organs and to maintain a steady body temperature. This is the so-called basal metabolic energy. The net energy efficiency of humans thus is some twenty per cent. An adult human being needs to consume at least 1,500 calories per day to maintain her or his basic metabolic functions and to resist infection. This means that with calorie intakes as low as they often were in the pre-industrial world, even a small reduction in intake could have dramatic consequences in the long term. In a weakened condition because of a reduced calorie intake stress on the body and disease can easily be fatal. Next to that basal metabolic energy we can in this context distinguish two other types of energy: thermal energy (energy in terms of heat and heat transfer) and kinetic energy (energy in terms of motion and power).
How many calories did people consume in the early modern period? Most of the estimates that we have - which indeed are estimates even if the data for some periods and places are better than for others - are rather low, especially considering the hard, physical labour that many people had to perform.
The agricultural labour force, the share of agriculture in GDP and urbanisation
The importance of agriculture in pre-industrial societies is clearly shown by the large share of the total labour force that was employed in it and by its large contribution to GDP. For the world as a whole that share was easily eighty per cent. Again, early modern Great Britain, with its very low percentage of labour input in the primary sector and its even lower contribution of this sector to GDP already before industrialisation, was rather exceptional. See Table 4-1.
In what is now the Netherlands, the economic importance of agriculture was for a long time even less prominent, as is shown in Table 4-2. But one has to realise that we are dealing here with a tiny country and that, after its ‘golden age’, there seems to have been a backlash in the sense that the share of agriculture in its total labour force slightly increased rather than decreased.
Even in Holland, the wealthiest and most dynamic part of the country, the role of agriculture was not further reduced during the eighteenth century, as can be deduced from Graph 4-1.
In both Great Britain and the Dutch Republic, the share of the primary sector, or just agriculture, in the labour force was higher than its share in GDP. That is normal. It was certainly the case also in China and Japan, even though we can give only very rough estimates for these countries. The share of agriculture in their labour force, to which we will confine ourselves here, is much more ‘normal’ for pre-industrial societies. The exact percentage for China is hard to estimate as the overwhelming majority of the people undoubtedly lived in the countryside but many of them were also engaged in non-agricultural activities. But to describe some eighty per cent of total population as ‘peasants’ will not be far off the mark. In Tokugawa Japan urbanisation was substantially higher and here too many people in the countryside, maybe even more than in China, combined agricultural activities and domestic industry. Its share of actual agricultural labour input in total labour input will have been closer to seventy or even sixty per cent.
This book is about material life. In explaining how that functioned and changed, references to institutions cannot be omitted. For individual agents their existence can be just as ‘constraining’ or ‘enabling’ as material circumstances. The focus here will be on two major institutions, the market and the state and on how they may have promoted or hampered growth. In all probability there is no subject that has been more widely discussed in economics than the role of markets. Their potentially positive effects - and that is what we will focus on in our analysis here - in principle are fairly obvious.
They facilitate division of labour and specialisation, which in turn can lead to higher productivity. The competition that characterises market economies promotes efficiency and sanctions inefficiency. The role of the state, too, is a widely discussed subject in economics. When it comes to its role in promoting or hampering economic development and growth opinions are much more divided. Even fierce defenders of laissez-faire - a policy of maximum non-intervention - are willing to admit that the state can play a positive role by taking care of defence, law and order, and of so-called public goods. So-called institutionalist economists emphasise the positive role the state can play in economic life by describing and protecting property rights and by directly or indirectly smoothening the functioning of markets. Then, finally, there are economists who claim that the state, as a so-called developmental state, can play a very important part in economic life as an actual active promoter of development and growth. All these different aspects of the role of the state will, where relevant, be touched upon.
Specialisation and market extension
Even with rather stable technology economies can grow, as Adam Smith famously emphasised, by setting out on a course of further specialisation and by extending the markets in which economic agents operate. Specialisation and market extension are closely interrelated. Increasing specialisation presupposes an extending market. In the end, the extension of the market determines how far labour can be divided. Specialisation in turn has a major impact on efficiency. The larger and more integrated markets are, the more efficient a division of labour can become.