Nor Did The Glorious Revolution Initiate Private Property
I want to initiate a discussion, to put the point another way, with my numerous friends in economics who have come to believe that all effects of ideas on the economy work mainly or exclusively or necessarily through incentive-summarizing “institutions.” They want this to be true because institutions-as-constraints fits easily with their training in Samuelsonian economics. Incentives are in the Samuelsonian view merely the prices — literally the slopes — built into budget lines. Identity, integrity, justice, temperance, professionalism, ideology, ideas, rhetoric have nothing to do with it, my friends in economics declare. I believe on the contrary, with Alexis de Tocqueville, that “institutions” as laws are not fundamental: “I accord institutions,” wrote Tocqueville in 1853, “only a secondary influence on the destiny of men. . . . Political societies are not what the laws make them, but what sentiments, beliefs, ideas, habits of the heart [in his famous phrase from Democracy in America], and the spirit of the men who form them prepare them in advance to be. . . . The sentiments, the ideas, the mores [moeurs] . . . alone can lead to public prosperity and liberty.”21 Tocqueville’s and my belief finds support in the magnificent tables of the World Value Survey, in which researchers such as Matteo Migheli have found evidence for example of great differences in attitudes towards state intervention in Western vs. formerly Communist Europe.22
In 1973 North and Robert Paul Thomas boldly stated the hypothesis that has so charmed other economists: “Efficient economic organization is the key to growth; the development of an efficient economic organization in Western Europe accounts for the rise of the West. Efficient organization entails 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 . . . . If a society does not grow it is because no incentives are provided for economic initiative.”23 About that same time, inspired I think by such words, and certainly by Steve Cheung, my office mate at the University of Chicago, and Ronald Coase across the way at the Law School, I studied the English legal history of the eighteenth century with exactly the Samuelsonian prejudice about “constraints” North began then to exhibit. But I soon realized that the timing of institutional change in England fits poorly with its economic change. As many economic historians before and after me have noted, the institutions relevant to the economy of Britain in fact did not change much in the very late seventeenth century, or even over the long eighteenth century 1688-1815. The eminent economic historian Nicholas Crafts notes that the various models of endogenous growth proposed by the economic theorists do a poor job of accounting for what happened in the eighteenth and nineteenth centuries. And as to the Northian version, he continues, “there was no obvious improvement in institutions at the time of the Industrial Revolution.”24 There was by contrast an obvious improvement in the dignity and liberty of the bourgeoisie, apparent for example in the invention of the science of political economy itself. But the surrounding institutions of the economy were old. The long eighteenth century begins with the Glorious Revolution, and the Revolution was surely glorious. It created the “transcendent power of Parliament,” as Maitland once called it, that could allow projects for canals, turnpikes, and enclosures to take from some to give to others, in the name of general efficiency. Economists call such trade or compulsion in aid of general efficiency the Hicks-Kaldor Criterion.
Dan Bogart has done some excellent research claiming that 1689 made for more cumbersome but more fair Parliamentary procedures for instituting projects of transportation improvement. Parliament “reduced uncertainty about the security of improvement rights.” By contrast, “for most of the seventeenth century, promoters turned to the Crown for patents or to Parliament for acts. Some undertakers lost their rights following major shifts in power like the Civil War and the Restoration.”25 Well, yes: revolutions do turn things upside down. But the economics would require that people anticipated the Revolutions, for otherwise the prospective uncertainty is not increased by them. If 1642, and especially its outcome, was a surprise, it cannot be counted as a source of ex ante uncertainty. That 1689 was a settlement, true, would make for a more tranquil environment for investment. Well into the eighteenth century, though, the regime was uncertain — if not as uncertain as, say, the Commonwealth in September, 1558. But in any case, as Bogart acknowledges and as I have argued above, canals, turnpikes, and enclosures were routine investments in capital with modest social savings, not epoch-making innovations like steam engines or electricity or organic chemistry. They changed locations, not amounts. The legal changes attendant on the Glorious Revolution and its aftermath had essentially nothing to do with the wave of gadgets.
Before and after North’s favored long eighteenth century the sheer economic institutions-as-constraints and the budget-line incentives changed more sharply than during it. Before it the Tudor administrative revolutions of the sixteenth century were as important for the actual economy as any institutional change in the eighteenth century. The defeat of the Armada in 1588 was as important for English economic liberties as the events of 1688. The English pattern of overseas settlement — England’s decentralized and heavily populated empire — was set not in the decades after 1688 but in the few decades after the 1620s, a third of a million people leaving for Massachusetts, Virginia, and above all the West Indies, with consequences to follow. The big Revolution of 1642 as against the Glorious one of 1688 made ordinary people bold. They never forgot thereafter that they were free-born English people, free increasingly even to change jobs, even to invent machines — or free to behead an anointed king. (The English kings didn’t forget, either.) And anyway in England the claim of free-bornness was by 1688 hundreds of years old, whatever the actual incomes and privileges of a yeoman as against a duke.
And on the other side of the long eighteenth century the great Victorian codifications of commercial and property law did more to alter strictly economic incentives than anything that happened 1688-1815, as did the Victorian perfection of the common law of contract. Regulation of laissez faire began with the Victorian Factory Acts. The democratization of the British electorate after 1867, slowly, had heavier consequences for economic performance, such as the welfare state and the later nationalizations than any previous legal change, including even the triumph of Parliament in 1688. Most of the legal changes after 1815 occurred by way of statute, overcoming a common law romanticized in the Northian story, with more economic effect than all the Georgian enclosure bills and other strictly economic results of 1688 taken together.
And on a still wider view of what the professor of law Simon Deakin calls “the legal origin hypothesis” of North and his followers, one can see little evidence that the long history of English common law was causal for the Industrial Revolution. In the matters of employment contracts and joint stock companies, Deakin writes, “industrialization preceded legal change in Britain, whereas this relationship was reversed in France and Germany,” merely because British law was imitated (he speaks of “sharing of legal ideas,” another example of lateral transfer of cultural genes). And then after a lag the result of Continental civil law were imitated in common-law regimes in the British Empire. Laws converged. Legal cultures did not matter for economic performance, at any rate in the England-admiring way that North’s school wishes. Deakin concludes that “the picture is not one of a more market friendly common law contrasting with regulation in the civil law.”26 In a longer perspective, indeed, the point is obvious from the results — all rich countries have achieved essentially the same level of real national income per head, regardless of their supposedly inherited cultures of law. North has the same problem that Clark has: memes spread by imitation as much as or more than by inheritance. Countries such as France or Germany without the meme that he regards as an English uniqueness caught on, and commenced growing at modern rates.
The economists want the big change to be a matter of Northian “institutions” because they want incentive to be the main story of the Industrial Revolution and the modern world. But suppose incentive (Prudence Only) is not the main story, and cannot be the main story without contradiction: if it was Prudence Only the Industrial Revolution would have happened earlier, or elsewhere. Suppose that other virtues and vices matter a lot — not only prudence, beloved of the Samuelsonians; but temperance, courage, justice, faith, hope, and love, which changed radically in their disposition in the seventeenth and eighteenth centuries. Suppose that the ideology, the rhetoric, the public sphere mattered a great deal, and suppose that these like legal ideas were often and quickly shared across countries. Voltaire and Montesquieu looked across the Channel, with the result that Anglophilia governed one strain in French opinion, and in French public policy. Tom Paine wandered the world looking for places where men were not free, and shared revolution. Suppose that the spread of institutions, such as the dignity and liberty for the bourgeoisie, once revealed as efficacious, like reading, is as much horizontal across countries as vertical across time. Suppose that institutions viewed as incentives and constraints are not chiefly what mattered, but rather community and conversation.
That is what economist should consider. Insisting that every change in “institutions” is the same thing as a change in constraints, and insisting contrary to the evidence that the time of the Industrial Revolution depended on a revolution in property rights, has a sweetly Samuelsonian air. But it is not good history and it is not a good explanation of the unprecedented economic event we are seeking to explain.
North’s story resembles that of his friend the late Fernand Braudel (North is a francophone and a wine connoisseur among his many other accomplishments). As we have seen, Braudel argued that out of local markets came, with the expansion of trade, the age of high commerce, and that out of the age of high commerce came, with the expansion of trade, the Industrial Revolution. Likewise North writes, “long distance trade in early modern Europe from the eleventh to the sixteenth centuries was a story of the sequentially more complex organization that eventually led to the rise of the western world.”27 Braudel was less celebratory than North has been about the progress from local to world-wide trade, and thence to industrial innovation, retaining the French intellectual’s suspicion of les bourgeois.
But North and Braudel agree on the machinery involved. Expansion fueled it, they say, and so it awaited the late eighteenth century to come to fruition. Foreign trade is their engine of growth. “Increasing volume,” writes North, “obviously made such institutional developments [as modern capital markets] possible.”28 “The size and scope of merchant empires” made arm’s length transactions possible. “The volume of international trade and therefore . . . economies of scale” made for standardization and information.”29 The result was a virtuous spiral of economic forces: “the increasing volume of long distance trade raised the rate of return to merchants of devising effective mechanisms for enforcing contracts. In turn, the development of such mechanisms lowered the costs of contracting and made trade more profitable, thereby increasing its volume.”30 To use the jargon of the recent mathematical “theories of economic growth,” the growth is “endogenous,” generated inside the economic sphere itself. Growth leads to growth, which leads to. . . growth.
Note, however, that most of North’s story tells of routine search for better institutions. The search is “routine” because it is a pretty much predictable result of investment. If you reorganize at great expense the docklands of London, and arrange to collect some of the gain for yourself, you or your heirs will reap some profit. The society-wide economic gains, from which you extract some profit, are that traffic gets in and out of port with less delay. Ship stores are more readily available. Information about cargoes coming and going are cheaper. Loss in storage is lower. North’s best and Nobel-winning scientific work, on ocean freight rates before the nineteenth century, gives evidence for such effects. Doubtless you as a dockland investor might make a mistake, and over- or under-invest, or fail to secure your claim to some of the profits of the new docks. But the prospect of net profit, while not perfectly predictable, is what motivates you in such a routine investment. The improvement is like the draining 1848-1852 of the Haarlemmermeer (where Schiphol Airport now sits), one of the numerous great projects of Dutch water management. Cost: steam pumps. Benefit: farmland. Goed idee.
For such routine investment as an explanation of the modern world, however, there are two big problems. For one thing, there’s an economic problem. Routine, incremental investments, naturally, yield routine, incremental returns. North writes that his Max-U merchant “would gain. . . from devising ways to bond fellow merchants, to establish merchant courts, to induce princes to protect goods from brigandage in return for revenue [note the quid pro quo: it is like hiring a policeman], to devise ways to discount bills of exchange.”31 The implied claim that we grew as rich as we are by simply piling brick on brick, or in this case contract on contract, was as I have noted the usual way of thinking in economics from Smith in 1776 through W. W. Rostow in 1960. After all, that’s how we as individuals save for old age, and it is what we urge on our children. But no one, to repeat, grows very rich by routine investment, and neither did Western society 1800 to the present. The new American economic history of the 1960s, which North helped invent, and the old British economic history of the 1950s, which explored the same issue with less rigorous economics, showed it. Routine investment was a good idea, just as the draining of the Haarlemmermeer was een goed idee, and just as saving for your old age is a good idea — provide, provide. But the astounding growth after 1800 needs an astounding explanation.
And that’s the other, historical problem. If routine investment explains the modern world, why didn’t the modern world happen in ancient times? Routine is easy. That’s why it is called “routine.” Ancient China was peaceful and commercial for decades and often for centuries at a time. Its foreign trade was enormous. The disturbances in the Roman Empire were usually palace uprisings in the city of Rome or battles out on the Germanic or Parthian frontier, minor matters — nothing like the economy-disturbing invasions and especially the plagues that finally overcame the Empire. The ancient Egyptians had command over resources and had famously stable regimes as well. The Muslim empires in the two centuries after Mohammed grew at gigantic rates, in extent and in economies of scale. They became brilliant in economy and culture — yet nothing like to the startling degree of northwestern and then all of Europe 1700-2000 C.E. The Aztecs and before them the Maya had great trading empires, as did earlier civilizations still to be explored in the New World. If growth produces growth, which produces growth, as the economists delight to hypothesize (the model is so beautiful), why did modern economic growth wait to happen in the eighteenth, nineteenth, and twentieth centuries, and then begin in a notably turbulent patch of the globe?
North’s answer is the good institutions, such as the settlement of 1689 in England. That has seemed reasonable on its face to many economists, who “don’t know much about the Middle Ages,/ Look at the pictures and turn the pages.” They think, as I said, in terms of maximization under constraints, and therefore are fascinated by a claim that institutions just are constraints, which got relaxed in 1689. “Cute,” they think. Some of these relaxing of constraints, too, North wants to make endogenous, caused by the very growth. “Cuter,” say the economists in their unscientific innocence. The Max-U merchant’s “investment in knowledge and skills would gradually and incrementally alter the basic institutional framework.”32 But if they are endogenous, as against “exogenous” (the Greek means “outwardly born”), then again why didn’t the same institutional changes happen in Egypt under the pharaohs, or for that matter in Peru under the Incas?
North praises, as would many economists, including me, a “credible commitment to secure property rights.”33 But his seminal essay with Weingast in 1989 has been widely credited with claiming, as North and Weingast sometimes do and sometimes don’t in their last few interesting but self-contradicting paragraphs, that the introduction of a Dutch-style national debt in the 1690s shows “how institutions played a necessary role in making possible economic growth and political freedom.”34 It does not. It shows how a state can become powerful by reliably paying its debts to citizens and to foreigners. Robert Ekelund claims that “the credible commitments . . . were required of new institutions [namely, the English and then British national debt, and led]. . . to modern capitalism.”35 No they didn’t. They allowed Dutch William to begin the 120 year war against France that characterized the long eighteenth century in Britain.
John Wells and Douglas Wills succeed in showing statistically that the Jacobite threat to the Protestant succession haunted early eighteenth-century politics in Britain (which may have been ascertained, perhaps with less trouble, by wallowing a bit in the cultural mud of novels and newspapers and street ballads). But in supporting North and Weingast they too claim offhandedly that “the resulting institutional changes [of 1688] ushered in financial developments that laid the foundation for the Industrial Revolution and ultimately established Britain as a world power.”36 The second half of the claim, about power, is true. A parliamentary monarchy that could borrow reliably was one that could intervene in the balance of power on the Continent, and did. But the first half is at best unproven by any of the analytic narratives offered in its favor. In the title of their paper Wells and Wills summarize how they see the threats from the Old and New Pretender out of France connecting with the claims of North and Weingast: “The Jacobite Threat to England’s Institutions [of financing the national debt] and [therefore] Economic Growth.” But the national — that is, governmental — debt had no demonstrated connection to economic growth. Those founts of historical wisdom, Sellar and Yeatman, well anticipated in 1931 the mishmash here: “It was Williamandmary who first discovered the National Debt and had the memorable idea of building the Bank of England to put it in. The National Debt is a very Good Thing and it would be dangerous to pay it off, for fear of Political Economy.”37
That the British state did not then use the wealth acquired by such a Good Thing to obstruct economic growth and destroy political liberty — as so many states enriched by, say, drilling for oil have done — had nothing to do with the imitation under William III of bourgeois, Dutch methods of drilling for loans, and building the Bank of England to refine them in. An historian of Parliament noted of its transcendent power, “despotic power was only available intermittently before 1688, but it was always available thereafter.”38 And as the economists Carmen Reinhart, and Kenneth Rogoff put the point, “It is not clear how well the institutional innovations noted by North and Weingast would have fared had Britain been a bit less fortunate in the many wars it fought in subsequent years.”39 Britain got a military-financial complex up and running in the 1690s and had the good fortune of Churchills and Clives and Wolfes and Nelsons and Wellesleys in its operation. Good on them. But it is not the modern world. The argument confuses — as we have seen many have — victory with enrichment.
What mattered had to do with the change in political and economic rhetoric about the same time that made the British state prudent in the financing of its wars of imperial adventure 1690 to 1815, as the Netherlands had earlier learned to be prudent in the financing of its wars of survival, 1568-1648 and (complements of the envious English) during the four Anglo-Dutch wars of 1652-54, 1665-67, 1672-74, 1680-84 (no wonder the Dutch and the English finally gave up their quarrels and adopted William as their joint stadhouder/king). In 1787 the professor of civil law at Glasgow, John Millar, had it more right than North does: the “energy and vigor which political liberty [my claim], and the secure possession and enjoyment of property [North and Weingast's claim], are wont to inspire. . . . was obtained by the memorable Revolution of 1688, which completed. . . a government of a more popular nature.”40 Secure possession of property is necessary. But it had little to do with the financial innovations that North and Weingast stress, because it had been established centuries before. A government of a more popular nature, and political liberty, and above all the energy and vigor that a new deal brought forth from England’s bourgeoisie, were what mattered.
The figures of North and Weingast imply that total central government expenditure under James I and Charles I was at most a mere 1.2 to 2.4 percent of national income. At the same time the Romanovs were spending nearly 15 percent of Russia’s entire national income on war, and shortly afterwards the Hohenzollerns learned how to spend comparable shares on the largest standing army in proportion to population in Europe.41 We nowadays face central government expenditures among free countries ranging from the U.S.’s and South Korea’s low of 21 percent to France’s high of 46 percent.42 The four forced “loans” from the rich of London 1604-1625 amounted to a trivial 1 percent of the national income earned over those years.43 Of course, as the American case in the 1770s showed, a tax on stamps taking a tiny portion of income can trip off a revolution, and so here. But even the Stuart kings, grasping though they were, and enamored as were many monarchs at the time with a newly asserted divine right of kings, were nothing like as efficient in predation as modern governments — or indeed as were the Georgian kings of Great Britain and Ireland who succeeded them. Macaulay had in 1830 spoofed the alarm of “the patriots of 1640,” who exclaimed, “A million a year will beggar us.” By 1783, Macaulay noted, the alarm was instead over the £240 millions of debt that the British state could then command.44 By the end of the long century of struggle with the French, in 1815, the United Kingdom owed in its national debt a sum twice its annual national income (over three times the ratio in the United States in 2009 — though the figure does not include the gigantic unfunded debt such as Social Security and especially Medicare). Britain paid off the debt by the 1840s, at the height of Political Economy.
No quantitative case can be made, in short, that it was after 1688 that England moved from predation to security of property. England was a nation of laws from the time of Quia Emptores (1290), or Edward I (ruled 1272-1307), or earlier. As North and Weingast themselves admit, “the fundamental strength of English property rights” could be dated from the Great Charter of 1215, and surely earlier.45 And what then of Italian or for that matter Byzantine or Islamic or Chinese property rights?
In certain smallish matters the law of property was indeed improved by the Glorious Revolution — for example (not so small, actually) in 1689 and 1693 landlords were granted clear rights to tin, copper, iron, or lead under their properties, free of harassment for violating an old prerogative of the Crown (which claimed silver and gold thus extracted, even if incidental to the mining of the base metals). But there’s not much in it. Certainly no economy can prosper, as North and Pipes and Harold Demsetz and I warmly agree, in which a Bad Sir Botany can go around blipping people on the head and seizing whatever he wishes.46 “Trade cannot live without mutual trust among private men,” wrote Temple in 1672.47 Otherwise we face Hobbes’ war of all against all: “In such condition there is no place for industry, because the fruit thereof is uncertain: and consequently no culture of the earth; no navigation, nor use of the commodities that may be imported by sea; no commodious building; no instruments of moving and removing such things as require much force; no knowledge of the face of the earth; no account of time; no arts; no letters; no society.”48 North and Weingast correctly assert, with Millar, the importance of “the ability to engage in secure contracting across time and space.”49 Private property is not optional, and market socialism is a contradiction in terms. Even some Marxists nowadays, especially the economists among them, agree on the point. But the problem is, as I have said, that there was little recently new in British property rights around 1700 that can explain its subsequent economic success.
The Northian story has passed into conventional thinking, as for example in an alarming article on “Growth and Institutions” for The New Palgrave Dictionary of Economics (2008) by the economist Darin Acemoglou:
Consider the development of property rights in Europe during the Middle Ages. Lack of property rights for landowners, merchants and proto-industrialists [An error: property was very fully developed, especially in land and in personal possessions; land markets functioned in large and small parcels; exchange on secure terms took place in all commodities, at the latest from the Normans and their lawyers, or outside the King's court in leet courts registering peasant deals in the thirteenth century, and in most respects hundreds of years earlier] 50 was detrimental to economic growth during this epoch [No: lack of property rights had nothing to do with poor medieval productivity]51 . . . . Consequently, economic institutions during the Middle Ages provided little incentive to invest in land, physical or human capital, or technology [Another error: incentives of a strictly economic sort did not change between 1000 and 1800, not much ],52 and failed to foster economic growth [Economic growth did not occur, but — outside of Russia — not because of lack of property rights]. These economic institutions also ensured that the monarchs controlled a large fraction of the economic resources in society [An error: even in early modern times the percentage 'controlled' by monarchs was small by modern or some ancient standards: think 5 percent of national income, though rents from royal estates, until sold off, would make the figure higher; but the estates are rental income, an affirmation rather than a violation of the rights of private property], solidifying their political power and ensuring the continuation of the political regime. The seventeenth century, however, witnessed major changes in the economic [An error: the economic institutions, if by that one means property rights, or even taxation, did not change much then] and political institutions [Finally a partial truth, at least in England and Scotland: not in "Europe" as he claims] that paved the way for the development of property rights [An error: property rights were already developed, centuries earlier] and limits on monarchs’ power [A truth, but a British and later a Swedish truth, and having nothing to do with an allegedly novel security of property, for all the self-interested talk by the gentry at the time, from John Hampden to Thomas Jefferson; and the share of British government taxes in national income did not fall in the eighteenth century: it strikingly rose].53
Acemoglou in short has gotten the story embarrassingly wrong in every important fact.
It is not his fault, though, since the historians he has consulted, especially North, have told the story to him wrongly. The problem is, to say it yet again, that much of Europe — or for that matter much of China or India, not to speak of the Iroquois or the Khoisan, when it mattered — had credible commitments to secure property rights in the thirteenth century C.E., and in some places in the thirteenth century B.C.E.54 China, for example, has had secure property in land and in commercial goods for millennia. And in the centuries in which the economists claim that Europe surged ahead in legal guarantees for property the evidence is overwhelming that China had secure property. True, early in their rule (Yuan, 1279-1368) the Mongols put in place such anti-economisms of bad property rights as prohibiting autumn planting . . . in order to give ample grazing for Mongol horses. But even the Mongols eventually realized that a prosperous and property-respecting China made a more profitable cash cow. And under the Ming and Qing (1368-1911), property and contract laws were enforced on high and low. Merchants were more, not less, secure on the roads of the Chinese Empire than a western Christendom plagued until the nineteenth century by pirates, or highwaymen riding up to the old inn door. Chaucer’s merchant in 1387 “wished the sea were kept [free of pirates] for anything/ Betwixt Middleburg [in Zeeland] and Orwell [in Lincolnshire],” as the Chinese and the Japanese and the Ottomans had already long kept their seas.55 After all, the necessary condition for the creation of anyeconomy is the ability to engage in secure contracting across time and space. No Mesopotamian merchant could buy copper from Anatolia without property rights, whether enforced by the state or more powerfully by the customs of the merchants themselves. North and Weingast and their student Acemoglou are letting their chronology get radically and misleadingly compressed. Certainly the development of property rights away from the arbitrary rule of a war chief in, say, 588 C.E. in Wessex mattered for economic incentives. But by 1688 such a development in England had long, long occurred. It was not true, as Sellar and Yeatman asserted in their loony way, that “there was an Agricultural Revolution which was caused by the invention of turnips and the discovery that Trespassers could be Prosecuted. This was a Good Thing, too, because previously the Land has all been rather common, and it was called the Enclosure movement and was the origin of Keeping off the Grass, . . . [culminating] in the vast Royal Enclosure at Ascot.”56
What is true, however, is that during the decades up to 1700 the effective rulers of Britain became in theory and practice more and more mercantilist, and then by the end of the eighteenth century even a little bit free trading (thus Ekelund and Tollison) — anyway more and more after the late seventeenth century concerned with national profit and loss, instead of ensuring this man’s monopoly profit and that woman’s church attendance. No wonder that the worldly philosophy called “political economy” grew up pari passu, considering that it is precisely the national, or international, view above the struggle of interests that economics claims to take. The wise professor of English quoted earlier, Michael McKeon, put it this way: the mercantilist pretense of “state control of the economy becomes intelligible as one stage in a long process in which the power to modify the heavenly laws . . . and to reform the environment is vouchsafed to increasingly autonomous and individualized human agency.”57 That is, both mercantilism and laissez faire are distinguished from what came before by their focus on a new idea of the economy as a separate thing. The wise philosopher quoted earlier, Charles Taylor, asserts a similar emergence of The Economy as an explicit object of concern in the seventeenth century, and Joyce Appleby gave the story in detail of how by the time Hume and Smith took up their pens “economic life had been successfully differentiated from the society it served.”58 In Thomas Mun’s England’s Treasure by Foreign Trade (1621), Appleby writes, “”for the first time economic factors were clearly differentiated from their social and political entanglements.”59 ***Give quote.
Sir William Temple noted of the great nations of Europe in 1672 that until the end of the Thirty Years War “their trade was war.” But “since the Peace of Munster, which restored the quiet of Christendom in 1648, not only Sweden and Denmark but France and England have more particularly than ever before busied the thoughts and counsels of their several governments. . . about the matters of trade.”60 He was premature in announcing Christendom’s quiet, since William’s and then Anne’s and then the Georges’ eighteenth-century epic against the French was to begin in earnest after Dutch William III taught the undisciplined English to have a national debt and store it in the Bank of England. Other countries at the time had more of a trade of war. Voltaire said of Prussia that most nations had an army, but in Prussia the army had a state. But Temple was right in emphasizing the spread of the Dutchlike subordination of politics to trade at least in Britain. As Montesquieu put it in 1748, “other nations have made the interests of commerce yield to those of politics; the English, on the contrary, have ever made their political interests give way to those of commerce.”61 Well. . . not “ever,” but by 1748 often.
Such an ordering of ideas was second nature to the Dutch in 1600. It had to be learned by the British. The British following the Dutch came to be known in the world as unusually calculating — instead of as before unusually careless in calculating. No one in Europe in 1500 would have thought of the English as anything but arrogant and warlike: “See approach proud Edward’s power,” sang the Scots, who had occasion to know, about a much earlier intervention of the English, “Chains and slavery.” The actual alteration in individual behavior in the direction of bourgeois values by around 1700 was not great. Well into the twentieth century the rest of the world had occasion to be shocked by the aristocratic/peasant brutality of British soldiers. Consider General Kitchener ordering Boer and black women and children into concentration camps, in which a quarter died of hunger and disease in 1900-1901. Consider the massacre at Amritsar in British India in 1919, or the bold Black and Tans suppressing Irish rebellion in 1920. A little if rich island did not paint a quarter of the world red, or win two world wars (with a little help), by sweetly bourgeois persuasion. But the change in rhetoric towards bourgeois cooperation was permanent and finally softening, and in any case the sociological change in the direction of a new dignity and liberty for the bourgeoisie made innovation commendable and possible.
[back] Letter to Corcelle, Sept. 17, 1853, quoted in Swedberg 2009, p. 280.
[back] Migheli 2009.
[back] North and Thomas 1973, pp. 2-3.
[back] Crafts 2004, p. 10 of manuscript.
[back] Bogart 2009, p. 28.
[back] Deakin 2008, pp. 2, 26.
[back] North 1991, p. 105.
[back] North 1991, p. 106.
[back] North 1991, p. 106.
[back] North 1991, p. 107.
[back] North 1991, p. 109
[back] North 1991, p. 109.
[back] North 1991, p. 101.
[back] North and Weingast 1989, p. 831.
[back] Ekelund 2003, p. 366.
[back] Wells and Wills 2000, p. 418.
[back] Sellar and Yeatman 1931, p. 77.
[back] Hoppit 1996, p. 126.
[back] Reinhart and Rogoff 2008, p. 53.
[back] Millar 1787 (1803), Chp.III.
[back] Hellie 2003, p. 416
[back] World Bank for 2005, at http://siteresources.worldbank.org /DATASTATISTICS/ Resources/table4_10.pdf
[back] North and Weingast 1989, Tables 2 and 3, with their guess at national income of £41 millions in 1642.
[back] Macaulay 1830, pp. 186-187.
[back] North and Weingast 1989, p. 831.
[back] Demsetz 1967 is a fount for the insight.
[back] Temple 1672, Chp. VI.
[back] Hobbes, p. NNN***
[back] North and Weingast 1989, p. 831.
[back] One of the leading students of medieval English agriculture, Bruce Campbell notes that "Tenants of all sorts were active participants in the market, trading in commodities, buying and selling labour and land, and exchanging credit," citing some of the numerous medievalists who agree (Campbell 2005, p. 8) . That does not mean that everything worked smoothly. Campbell argues that the fourteenth century was characterized by "rural congestion engendered by the lax tenurial control exercised by most landlords" (p. 10). But anyway his picture, based on the best scholarship, is the opposite of the exploitation and the absence of markets posited by Acemoglou. The serfs owned the lords, not the other way around.
[back] McCloskey 1975a.
[back] Berman 2003.
[back] Acemoglou 2008; compare Acemoglou, Johnson, and Robinson 2005, citing for example R. H. Tawney, unaware it appears that his Fabian views have largely been overturned.
[back] Clark 2007 is good on this, pp. 10, 212.
[back] Chaucer, Canterbury Tales, "General Prologue," ll. 276-277.
[back] Sellar and Yeatman 1931, p. 94.
[back] McKeon 1987 (2002), p. 201.
[back] Appleby 1978, p. 22.
[back] Appleby 1978, p. 41.
[back] Temple 1672, Chp. VI
[back] Montesquieu 1748, Book XX, sec. 7.