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The Economy of Europe in an Age of Crisis, 1600-1750

Author(s):Vries, Jan de
Reviewer(s):Grantham, George

Project 2001: Significant Works in Economic History

Jan de Vries, The Economy of Europe in an Age of Crisis, 1600-1750. New York: Cambridge University Press, 1976. xi + 284 pp. ISBN: 0-521-29050-3.

Review Essay by George Grantham, Department of Economics, McGill University.

An Economy in Crisis

First published in 1976, The Economy of Europe in an Age of Crisis was chronologically the fourth in a series of general syntheses of European economic history commencing with Robert Lopez’s account of the medieval economic boom and carried forward by Harry Miskimin’s two volumes on the economic history of the Renaissance.1 The four works by two Yale professors of economic history and one of their students constituted as it were a ‘Yale’ history of the European economy, which was distinguished from other works by its attention to macroeconomics and the implications of general equilibrium. One recalls hoping for an ultimate volume from the pen of Yale’s other senior economic historian that would bring the story out of Europe to America and through the Industrial Revolution to the mid-twentieth century. Alas. The hungry sheep look up and are not fed. … Weep no more, woeful shepherds.

Jan de Vries’ contribution to this series deals with a particularly enigmatic period in the history of the European economy. The Age of Crisis began as a prolonged recession during which the older centers of economic growth, strung out like beads on a strand extending from the cities of Northern Italy to the trading and manufacturing towns of Flanders, fell into a deep economic sleep from which they were not roused until the coming of the railway. Elsewhere, sectarian violence, civil war and repeated incursions by Turkish troops ravaged vast regions of central and eastern Europe into the first decade of the eighteenth century; from the 1660s to 1713 commercial and real warfare between France, England and the Low Countries perturbed Europe’s most prosperous economies. Sovereign default occasioned by the financial burden of these conflicts ruined financial intermediaries; the supply of money declined and prices fell; population grew hardly at all and in some places actually declined. The paradox is that from this age of social and economic turmoil emerged an Industrial Revolution and the onset of sustained economic growth. The question addressed by The Economy of Europe in an Age of Crisis is how could this have happened. The answer is summed up by an aphorism and a label. The aphorism – ‘The division of labour is limited by the extent of the market’ — was Adam Smith’s; the label — an ‘Industrious Revolution’ — belongs to Jan de Vries.

To appreciate the how difficult it was in the early 1970s to explain how an economy of growth could emerge from an economy in crisis one must know something about the contemporary state of early modern economic historiography. The literature dealing with economic and social development between 1500 and 1800 fell into four broad classes: studies inspired by the stages theory of economic evolution, which were mainly concerned with the evolution of business and commercial organization; a literature on Mercantilism, which focused on economic policies of states and the attitudes and ideas that informed them; a literature centered on population, prices, and wages, which emphasized the Malthusian/Ricardian agricultural constraint on pre-modern economic growth; and a Marxist literature that viewed the period as the crucial transition from feudal to capitalist society. None of these approaches — with the latent exception of the Marxist labor theory of value — embodied an endogenous model of how the economy changed. Change came from outside the ordinary workings of the economy. Monographs on the economic history of particular industries and regions took the general economic context as exogenously given, as did the Malthusian literature, which interpreted falling wages and rising rents as infallible signs of overpopulation in an economy characterized by fixed production possibilities. Broader treatments like Braudel’s Material Civilization (1967) on the other hand, envisaged the period as a struggle between an aggressively expanding capitalist sector and agricultural traditionalism. Apart from some discussion of the relation between price levels and the supply of money, there was little economic analysis of factors affecting the general equilibrium of the economy.

The stages theory was the foundation of most narrative accounts of the period. As is well known, it hypothesizes a chronological taxonomy of economic forms or ‘stages’ that purports to describe in a generalized way how the western national economies progressed from familial and tribal self-sufficiency in the early middle ages to the economy of large-scale industry and international specialization of the nineteenth and early twentieth centuries. In the canonical sequence of stages the economies of early modern Europe occupy an intermediate position situated somewhere between the urban guild economy of the later middle ages and the industrial economy of the nineteenth century. The narrative thus emphasized the organizational response of urban and rural industrial enterprise to growth in trade, which was not explained but simply assumed to have happened for reasons of its own. The analysis of agricultural evolution was largely confined to the description of settlement patterns and modes of tenure. In the degree that the period was defined by the ‘stage’ attained by the most progressive nations, it was characterized by the expansion of municipal and regional market economies to a larger national level of aggregation.

Part of the appeal of this typology to the German historical economists most closely associated with it was its historical justification of protectionist policies accompanying Germany’s political unification in the nineteenth century, which combined reduced barriers to domestic trade with increased tariffs on imports from other countries. The departure from the abstract precepts of the theory of comparative advantage were rationalized as measures fitting the requirements of an economy that had not yet attained its ‘national’ stage of economic development. This argument was closely related to a relativistic proposition holding that economic motivation also varies across stages, an idea supported by philosophical traditions going back to Hellenistic times and by the striking social and economic disparities between rural and urban societies and between Europe and the underdeveloped world. The very magnitude of these disparities, however, caused scholars to conflate the supposed continuum of economic stages and behaviors into a dichotomy that contrasted a traditional rural sphere where social values and institutions worked to reproduce self-sufficient and self-sustaining communities, and a modern urban one where actions were motivated by the individualistic goals of social advancement and wealth maximization. This vision, which is most fully articulated in the sociologies of Emile Durkheim and Max Weber and which survives in the economic anthropology of Karl Polanyi and his followers, was adopted by the influential Annales historians as the central framework of their history of social and economic evolution. In the words of Braudel, the early modern economy was comprised of “two universes distinct from each other” — a rural world ruled by instinct and habit; and an urban world of “energy, innovation, new awarenesses, and even progress.”2 Economic and social development thus unfolded as a war between two mutually antagonistic worlds. This Manichean vision of social and economic process clearly left little space for the analysis of economic complementarities between town and countryside. The countryside and small towns were passive recipients of ‘energy’ emanating from the city. Metaphors like this provided little guidance as to how that energy was channeled, nor exactly how it was generated.

The second strand in early modern economic historiography revolved around the idea of Mercantilism. Coined by Adam Smith as an Aunt Sally, the term experienced rebirth in the late nineteenth and early twentieth century in works by economic historians like Schmoller, Cunningham, Ashley and Lipson, who held that the international division of labor reflected the unequal capacity of competitive nation states to protect their economic interest. To them the early modern period represented an age when princes tried to protect their people from the disquieting effects of rapid economic and social change. This rosy view of the paternalistic and authoritarian policies of seventeenth- and eighteenth-century government, which was advanced as a model for the paternalistic policies of the national welfare state, was devastatingly criticized in a monumental study by the Swedish economist Eli Heckscher, and in a comparative analysis of early modern France and England by the American economic historian John Nef.3 As the policies in question were quite diverse, the ensuing debate mainly emphasized questions of definition. Exactly what was Mercantilism? The quantitative significance of specific policies could not be analyzed given the limited available documentation, so the debate shed little light on the causes of economic change, although there are topics in this general sphere of enquiry that are more immediately fruitful of insight into this topic than the analysis of industrial and commercial regulations, most of which were easily circumvented. The first is the economic and administrative response to the transfer problem created by central taxation of rural districts; the second concerns the impact of military provisioning on the organization of the wholesale trade in cereals and other materials that were cumbersome to transport and costly to store. The Age of Crisis was an age of rising taxation and growing armies and navies. Neither trend could fail to affect industrial and commercial organization.

The third strand of economic historiography was unreservedly quantitative. Since the 1930s an international effort to collect prices and wages for the period prior to 1800 had provided numerical data that seemed to bear out the Ricardian hypothesis of an inverse correlation between movements in population and real income, which was explained as the joint consequence of a fixed supply of land and a static agricultural technology. By the 1970s compilations of crop yields and yield ratios further supported the impression that outside a few exceptional districts agricultural technology and agricultural productivity were indeed mired. At the same time, however, the price data indicated a positive correlation between the price of cereals relative to meat and dairy products, and growth in population. This was explained by the higher income elasticity of demand for animal products than for subsistence cereals; when population increased, real per capita income declined due to diminishing returns in farming, causing demand for meat and dairy produce to fall faster or rise more slowly than the demand for grain. Since scattered observations of the amount of land in different kinds of crops indicated a rise in the output of livestock products in periods when their relative price was increasing, the apparent increase in the output of the pastoral sector and the diffusion of forage legumes after 1650 could plausibly be explained as a consequence of demographic stagnation, which in the context of an unexplained upward drift in overall productivity generated the increase in per capita income needed to support the rising relative price of livestock. The difficulty with this demographic explanation of shifts in demand was that it didn’t explain how demand and agricultural production could increase in an otherwise stagnating economy, in which demand for all kinds of produce should have been contracting. Output had risen in a period when incentives to increase it seemed weak. The Ricardian paradigm was incomplete.

The final strand of the economic historiography suffered from no such logical misgivings. Marxist historians viewed the seventeenth century as crucial to the transition from ‘feudalism’ to capitalism. The defining event was the long English Revolution that began in the late 1620s and culminated in the substitution of a Dutchman for King James II in 1688. To English Marxist historians, the six decades represented the original ‘bourgeois’ revolution, which instituted political preconditions for capitalism. The crucial preconditions were the expropriation of the peasantry by Parliamentary acts of enclosure and the creation of a free labor market by the enactment of laws and judgments limiting the right of rural laborers to seek work outside their home parishes and the removing the right of all workers to combine in defense of wages and working conditions. Relieved of paternalistic regulations promulgated by Tudor and Stuart monarchs intended to protect peasants and maintain social stability, English landlords and businessmen could create a subservient force of free labor exploitation that was the source of the capital on which rested England’s later industrial supremacy. The crisis of the seventeenth century planted the seeds of capitalism and the industrial revolution. In a variant of this argument Wallerstein argued that the capital-creating surplus was extracted not so much from domestic labor, but from serfs and slaves in peripheral regions. Economics followed politics.

None of this added up to a theoretically coherent account of how the economy of the seventeenth and early eighteenth century gave birth to sustained economic growth. The stages literature described the changes in industrial organization, but could not explain them; the debate over mercantilism and the role of the state was virtually devoid of economic analysis of cause and effect. The Malthusian approach was more promising, and by the 1970s had been reinforced by outstanding regional studies in early modern agriculture and better demographic information, but the analysis was typically couched in terms of the tension between population and resources, and ignored the implications for agricultural productivity of farm specialization induced by the growth of cities and rural industrial districts. The Marxist approach focused on the evolution of social classes and politics.

The facts are that by the middle of the eighteenth century, the economies of the Netherlands, England, and in lesser measure France were significantly larger than they had been a century and a half earlier. Although some technical change had occurred, it was not enough to explain the apparent growth in output and productivity, since most production was done with the old techniques, albeit on a larger scale. The source of growth therefore had to be increased inputs. One input, however, could not have increased. Although population had expanded, the land available to supply it with food, fuel and building materials had not, which implies that the positive effect of a larger labor force should have been offset by diminishing returns. But in regions of Europe where population was rising, the standard of living — as evidenced by the kinds of goods people had in their homes when they died — had apparently increased.

De Vries’ proposed solution to the problem of how growth could proceed in the face of diminishing returns involved two correlations. The first was a regional correlation between the rate of urbanization and agricultural productivity. A survey of the agricultural regions of Europe reveals that places where the urban economy thrived were also places where agriculture prospered. In the Dutch Republic and southern England, the growth of Amsterdam (and other Dutch cities) and London created new incentives for nearby farmers to intensify and ameliorate methods of cultivation. It is now known that similar incentives had similar effects in other regions, most notably on the great farms that supplied Paris with grain and straw. By contrast, farming in the hinterlands of the declining Italian, Flemish and Iberian towns stagnated. Both economic logic and the price data indicate that the causal link runs from changes urban demand to changes in rural supply, rather than the other way round. De Vries also argued the traditional hypothesis that pre-existing differences in agrarian structure affected the rural response to changing market opportunity. The evidence for the exogeneity of rural institutions, however, is less convincing than the regional correlation between urbanization and agricultural productivity, as the regions where agrarian structure permitted an elastic response to market opportunity had the strongest market incentives to adjust agrarian institutions to that opportunity. In one part of the world such responses may nevertheless have worked to limit the range of subsequent response to economic opportunity. In Eastern Europe and in the American tropics, landowners used their political authority to solve the problems of growing labor scarcity caused by growing demand for produce by subjugating the labor force.

The second suggestive correlation is between urbanization and interregional trade. Between 1600 and 1750 much of the long-distance trade of Europe came to pass through a handful of entrep?ts situated on the southwest margins of the North Sea. Although geographical factors determined that this region would contain nodes of exchange between the Baltic and the Western Atlantic, it was the spatial economies of scale in distribution and exchange of economically useful information that caused them to capture the lion’s share of Europe’s trade with other continents as well as a significant share of her internal commerce. The entrep?t trade attracted related industries processing exotic materials and servicing the shipping and financial sectors. The growth in population supported by these activities was so large that it created a market large enough to induce economies of scale in production, of which the counterpart was rising real returns to capital, land and labor. De Vries noted that unlike other parts of Europe, where population growth lowered real wages, in urbanizing Holland and England it raised them. The land constraint was not absolutely binding. Spending the higher incomes created an effective market demand for more expensive kinds of farm produce, textiles and housewares, and so diffused the prosperity of the town into the countryside. The dynamic thus reflected the reciprocal relation between the extent of the market and the division of labour summarized by Smith’s famous maxim.

Economies of scale resulting from the concentration long-distance trade and related activities into a smaller number of large cities, however, could not fully explain how an economy in crisis could generate points of economic progress and prosperity. The major exogenous event in this century and a half of slowly growing population and imperceptibly improving technology was the colonization of North and South America and the growth of trade with Asia. The chief products of this expansion in Europe’s commercial space was increased supply and falling prices of exotic commodities, some of which are highly addictive. Unlike traditional commodities manufactured locally or within the household economy of peasant families, exotic goods and the cheaper kinds of manufactures available through trade had to be paid for with cash, which in the steady state could only be earned by exporting more goods to the urban sector. This, plus the demand for cash to pay increased taxes, explained why the extra rural income was not dissipated in leisure. The advent of exotic commodities and cheap manufactures changed tastes in a way that shifted the supply of labor, enterprise, and most likely capital, outward.

How, then, did the economy of crisis become an economy of growth? Part of the answer was the end of civil and religious warfare in Germany and the stabilization of government in France and England after 1720, which provided a period of comparative calm during which population could begin to grow again and the web of financial intermediation could be re-knitted. The continued growth of long-distance trade with Asia and the accelerated expansion of the European colonies in the New World imparted a further positive impetus, though its main effects happened late in the day. In the first century of the age of crisis the most important source of long-term growth was the dynamic scale economies associated with the concentration of trade and related activities on a handful of cities in Northern Europe. At first the growth of Amsterdam and perhaps London was at the expense of older centers like Antwerp, Venice and Genoa, but as overall activity stabilized and began to grow again after 1713, falling transaction and distribution costs fell throughout the continent. Declining costs of manufactured and imported goods improved the rural terms of trade, and induced more agricultural and industrial production in the countryside. The growing trade financed the improvement of transport facilities linking town and countryside, and provided the means of greater financial integration. The crisis, then, was in many ways a tipping event that led Europe’s economy to a new geographical and economic equilibrium. An important and as yet unanswered question is whether in the absence of the negative shocks of the seventeenth century the tipping would have favored southern Europe and the developing spine of development in central and western Germany, which were to be the heartland of Europe’s nineteenth-century industrialization.

Despite criticism from Dutch economic historians wedded to the Malthusian paradigm, De Vries’ economic model of the early modern transformation of the European economy has stood up well. Based to a large extent on the Hymer-Resnick model of gains from trade to be had from the specialization of rural households on agricultural production, and on Adam Smith’s scale economies, De Vries’ account of the dynamic returns to scale in the early modern economy found support in the arguments for increasing returns embedded in the economics of coordination failure and in the new trade theory of the 1980s and the early 1990s. In this respect, the book was ahead of its time. An Economy in Crisis has also influenced the reconstruction of Chinese economic history, where a similar dynamic has been found to operate with similar results.4 According to Kenneth Pomeranz a market-based division of labor in eighteenth-century China supported living standards comparable with the European standard of 1750.

One of the overlooked merits of this account of early modern economic development is its denial of the inevitability of an Industrial Revolution. Smithian trade dynamics could lift productivity for a long time, but not forever; it could alone give rise to the fundamental technological breakthroughs that have sustained economic growth since the late eighteenth century. Perfect property rights and easy trade might actually limit incentives to innovate by providing tradable substitutes for intellectual effort. These notions underlie Pomeranz’s assertion of an eighteenth-century Chinese ceiling that led to what he calls the Great Divergence. According to De Vries, the exceptionally commercialized Dutch economy was bounded by a similar ceiling.

As is to be expected some parts of the book have held up less well than the general model. The agricultural discussions are dated; it is now clear that French agriculture was more productive and less static than the accounts on which De Vries based his discussion indicated, and it appears that traditional husbandry was capable of supporting a more elastic supply response than was then believed to be possible. The role of structural determinants of regional differences in agricultural productivity is also problematic. The discussion of the role of rural industry in creating a proletariat reflects historical debates of an earlier time, and ignores the agricultural implications of a growing non-agricultural population. The analysis of the financial sector, including the evolution of commodity moneys, is less sophisticated and detailed than one would demand today. In particular, a new edition would have to incorporate the insights into public finance derived from the theory of rational expectations and the theory of games. A modern, longer treatment would also probably pay more attention to what one might call business cycles, bringing the short run back into the story of the long one. The study of population dynamics in this period has also progressed from its state in the early 1970s, and much more is now known about the role of women in the economy. A new edition would extend the discussion of technological change to the development of scientific institutions and scientific publishing. Nevertheless, it is surprising how well the book holds up. A recent textbook by Robert Duplessis covering the same ground has little more to say except in having more detail.5

In its modest way, The Economy of Europe in an Age of Crisis has made a signal contribution to the way we think about pre-industrial economic development. One might argue that the dynamics the book expounds are based on the atypical experience of a few rapidly growing regions; but this is the nature of dynamic economies of scale. They gather in business and enterprise from other places. One of the unanswered questions is how fragile was this trade-based growth. Was it rooted in the irreversible expansion of colonial trade, or did its continuance depend on the maintenance of stable trading relations? How integrated was the European economy of the seventeenth and early eighteenth century? How vulnerable was it to monetary instability? How close did it come to coming unraveled in the dark years between 1640 and 1660, and again between 1690 and 1713? How important for the subsequent growth of the European economy were the stabilization of finances and the political tranquility of Europe’s largest nation (France)? Exactly how crucial was the growth of population and production in North America? These are questions to which we still lack answers. That we can ask them is a tribute to the achievement of this remarkable little book.


1. See Robert S. Lopez, The Commercial Revolution of the Middle Ages, 950-1350, Cambridge (1971); Harry Miskimin, The Economy of Early Renaissance Europe, 1300-1460, Cambridge (1969); and Harry Miskimin, The Economy of Later Renaissance Europe, 1460-1600. (Cambridge (1977).

2. Fernand Braudel, Afterthoughts on Material Civilization and Capitalism. Baltimore (1977), p. 17.

3. Eli Heckscher, Mercantilism, London (1935); John U. Nef, Industry and Government in France and England, 1540-1640, Ithaca (1964).

4. Philip Huang, The Peasant Economy and Social Change in North China, Stanford (1985); R. Bin Wong, China Transformed: Historical Change and the Limits of European Experience, Ithaca (1997); Kenneth Pomeranz, The Great Divergence: Europe, China, and the Making of the Modern World Economy, Princeton (2000).

5. Robert S. Duplessis, Transitions to Capitalism in Early Modern Europe. Cambridge (1997).

George Grantham was awarded the Cliometric Society’s annual prize — the Clio Can — in 2000. His recent publications include “La faucille et la faux: un cas de d?pendence temporelle?” Etudes Rurales (2000); “The French Agricultural Productivity Paradox: Measuring the Unmeasurable,” Historical Methods (2000); “Contra Ricardo: On the Macro-economics of Europe’s Agrarian Age,” European Review of Economic History (1999); and “Espaces priviligi?s: productivit? agricole et zones d’approvisionnement urbains dans l’Europe pr?-industrielle,” Annales. histoire, sciences sociales (1997).


Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):Europe
Time Period(s):18th Century

The First Knowledge Economy: Human Capital and the European Economy, 1750-1850

Author(s):Jacob, Margaret C.
Reviewer(s):Hornung, Erik

Published by EH.Net (September 2015)

Margaret C. Jacob, The First Knowledge Economy: Human Capital and the European Economy, 1750-1850. Cambridge: Cambridge University Press, 2014. ix + 257 pp. $30 (paperback), ISBN: 978-1-107-61983-8.

Reviewed for EH.Net by Erik Hornung, Max Planck Institute for Tax Law and Public Finance.

Many factors have been identified as causes of the transition to sustained economic growth during the eighteenth and nineteenth centuries. Human capital may be one of the most controversial additions to the long list of causes, not least because the English are not known to have been well educated at the eve of the Industrial Revolution. In The First Knowledge Economy, Margaret C Jacob argues that English knowledge elites were at the heart of the transition. She especially focusses on the marriage between theoretical sciences and applied mechanical knowledge which helped creating many technological innovations during the Industrial Revolution. She, thus, aims at rectifying the prevalent hypothesis that technological progress resulted from tinkering of skilled but science-ignorant engineers. An impressive set of new archival sources supports her argument that English engineers were, indeed, well aware of and heavily influenced by recent advances in natural sciences.

Each of the first four chapter focuses on outstanding entrepreneurs and engineers whose records and transcripts have survived. Available information on technical and scientific knowledge is extracted from correspondence with fellow engineers and businessmen, calculations, lecture notes, thoughts about scientific readings, and involvement in scientific societies. In this manner, the reader learns how scientific content affected mindsets and decisions of famous entrepreneurs and eventually entered the production process. Understanding that their decisions were based on the latest advances in science helps to sort out the misconception that entrepreneurs were uninformed tinkerers who accidentally became successful. When tinkering, they did so with mechanical precision and regard for the known natural laws.

After a rather unstructured introduction, Chapter 1 depicts James Watt and Matthew Boulton, the inventor/entrepreneur duo famed for developing the steam engine. Analyzing a wealth of notebook entries and correspondence, Jacob depicts the views and attitudes towards religion, politics, education and science of the two businessmen and their family members. Although never formal scholars of science at any institute of higher learning, science infused the life and work of both Watt and Boulton.

The second chapter is mainly concerned with the argument that England was first because labor was expensive and coal was cheap, which made the invention of steam engines necessary. Jacob argues that technical knowledge was crucial for technological progress in mining. This claim is substantiated by transcripts which exemplify the technical knowledge of engineers, colliers, and so-called viewers working with steam engines. Clearly the majority of the technical staff in English mining must have been highly literate and capable of doing sophisticated calculations. They needed to estimate the size of engine cylinders, water-pumping potential, and the size and costs of a steam engine to advise mine owners on which steam engines to buy. Their knowledge eventually translated to a wide knowledge base which diffused through publications and public lectures.

Chapters 3 and 4 expand the established concepts to the Manchester cotton spinning industry and the Leeds textile industry. Using the correspondence of cotton barons John Kennedy and James M’Connel, Jacob describes how science and technical knowledge increased in importance during the mechanization of cotton spinning. Cloth manufacturing was arguably less prone to mechanization than spinning. Yet, the notebooks of textile manufacturers John Marshall and Benjamin Gott confirm the established pattern of adoption of scientific knowledge. The chapters conclude that a common language was needed to allow for the interaction between manufacturers and engineers. Once established entrepreneurs were able to mechanize, their businesses and machines became more sophisticated and complex.

Chapters 5 and 6 constitute a geographical change and a methodological break in the book. The center of attention is shifted to France and the “puzzle” why the French lagged behind in industrial development. Although highly interested in the practical uses of the new science, the Ancien Régime failed to create an optimal environment for industrial purposes. Jacob argues that scientific education was almost completely directed toward the aristocracy who entered into military positions. Consequently, technical knowledge was primarily used in military engineering and not for commercial activity. The French Revolution democratized education and increased the scientific content of the curricula, but, this was only a brief episode before the Restoration re-reformed education to replace scientific with religious content subject to harsh supervision by the clergy and police authorities.

Chapter 7 shifts the focus to the Low Countries, comparing Belgium and the Netherlands regarding how French occupying forces managed to instill scientific knowledge in the curricula of secondary schools and universities. Jacob argues that Belgium with its centralized system of education embraced and retained the French reforms towards industrial educational after 1795, which helped them industrialize quickly. Unlike Belgium, the Netherlands with its localized system of education did not embrace French educational reforms and industrialization evolved more slowly.

Jacob argues that we do not know enough about the curriculum in England, since schooling was organized locally. Thus, to understand whether industry benefited from sciences, we have to rely on the scientific knowledge of entrepreneurs and engineers without knowing where it was acquired. Due to the fact that France was more centralized, it can be convincingly established that the French institutional setting did not leave enough room for scientific content in public education. However, it remains unclear whether this argument suffices in contributing to solve the puzzle of continental backwardness. Instead of applying the established concept of relying on biographical information and the personal scientific knowledge of successful entrepreneurs to France (and the Low Countries), Jacob decides to provide a summary of the political economy of schooling and the curriculum during the pre- and post-Revolution. For a suitable comparison we would need to learn more about the adoption of scientific knowledge by continental entrepreneurs and engineers. We might end up finding similar patterns here.  A recent article by Squicciarini and Voigtlaender (2015) focusses on French knowledge elites (subscribers to Diderot’s Encyclopédie), who seem to have been relevant for industrial development during the period from 1750 to 1850.

This book makes an important contribution by showing that English technological development did not occur detached from scientific advances. Jacob carefully avoids drawing strong conclusions and generalizations. She asserts a central role to human capital without making causal claims. A little more structure and clearer statements might have been helpful. If cheap energy and expensive labor made inventing labor-saving technologies profitable, acquisition of scientific knowledge might be considered a proximate factor rather than the ultimate cause.


Mara P. Squicciarini and Nico Voigtländer (2015). “Human Capital and Industrialization: Evidence from the Age of Enlightenment.” Quarterly Journal of Economics (forthcoming)

Erik Hornung ( is Senior Research Fellow at the Max Planck Institute for Tax Law and Public Finance. He is author of the paper “Immigration and the Diffusion of Technology: The Huguenot Diaspora in Prussia,” American Economic Review 104-1 (2014): 84-122.

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Subject(s):Economic Development, Growth, and Aggregate Productivity
Education and Human Resource Development
History of Technology, including Technological Change
Geographic Area(s):Europe
Time Period(s):18th Century
19th Century

The Birth of Modern Europe: Culture and Economy, 1400-1800: Essays in Honor of Jan de Vries

Author(s):Cruz, Laura
Mokyr, Joel
Reviewer(s):Hohenberg, Paul M.

Published by EH.NET (December 2011)

Laura Cruz and Joel Mokyr, editors, The Birth of Modern Europe: Culture and Economy, 1400-1800: Essays in Honor of Jan de Vries. Leiden: Brill, 2010. xiv + 259 pp.. ?99/$141 (hardcover), ISBN: 978-90-04-18934-8.

Reviewed for EH.Net by Paul M. Hohenberg. Department of Economics, Rensselaer Polytechnic Institute (emeritus).

Festschrifts are an honored tradition, a celebration of the work and influence of a distinguished scholar usually respected as well as admired by many colleagues and former students.? They are also a somewhat antiquated and awkward form of scholarly communication, sometimes with what the French would call a ?bottom of the drawer? feeling.? Busy scholars eagerly agree to the idea of joining in such a project, but then have to face the deadline imposed by the editor(s).? So, contributions of varying quality and relevance to each other are frequent, perhaps typical.

These reflections occur to the reader of the present volume, in honor of Jan de Vries, perhaps the scholar who best embodies the hope that economic history can survive the divergent forces that have driven the constituent disciplines so far apart in recent decades.? If he has a rival in this effort, it is surely one of the editors, Joel Mokyr, who opens the volume with an engaging and glowing survey of de Vries? scholarship.? The other editor, Laura Cruz, follows with a summary chapter that works hard to tie the rest of the contributions to one another and to de Vries? themes.? As a relatively recent and theoretically ambitious work, The Industrious Revolution gets the most attention.

That is particularly true regarding the chapters by Anne McCants and Maxine Berg.? They detail the significance of two categories of manufactured consumer goods that gained wide acceptance in early modern Europe, at least in its progressive northwest: textiles and porcelain.? Drawing (again) on her unique trove of estate inventories — unique because they include decedents generally too poor for such a reckoning to be made — McCants shows that even modest households in Amsterdam possessed a wide variety of both domestically produced and imported fabrics.? Berg, on the other hand, is concerned with the production end in China, and its development for the European export trade.? The porcelain industry was concentrated in a single city, Jingdezhen, and its markets included Japan and the ?South Seas? as well as Europe.? While Berg has something to say about import substitution in Japan, which also became an exporter, she does not here deal with the diffusion of porcelain manufacture to Europe in the eighteenth century.

Two other contributions tackle the relevance of the Industrious Revolution model, but deal mostly with the nineteenth century, thus with a time when the Industrial Revolution was (also?) in progress.? George Grantham and Franque Grimard consider France in mid-nineteenth century, using a census that has been unjustly discounted (in their view) despite the fact that it appears to mesh well with the almost simultaneous agricultural census of 1852 (though not with later population censuses).? The 1851 census went to great lengths to determine occupations for dependents, notably wives of working men, and so promises to be useful in testing the de Vries model, which purports to show greater labor force participation by women induced by the heightened availability of consumer goods in the market.? As is so often the case with French data, clear conclusions are difficult to draw.? In the rural communes investigated, a substantial proportion of women were counted as working, often in the family farm or other enterprise, but that participation seems more a result of need than of opportunity.? On the other hand, this is a relatively late period, notably for rural proto-industrial production which was already declining in many areas in the face of factory competition.

The American case that Gavin Wright examines is also complicated, though for different reasons.? The dominant driving force in eliciting labor input (hours and effort) was apparently the drive to own land and be independent rather than the lure of new consumer goods.? Thus, American workers worked very hard and long for good wages, but operated in a culture of great mobility, geographical as well as job-switching.? Moreover, the place of women in the labor force was also distinctive, in the sense that American (married) women went from producing goods for the household to consumer-household homemaking without very much participation in the market either in a putting-out system or outside the home.? Wright also brings into the story that hardy perennial of discussion, the bias in American technological change and choices, first examined by H. J. Habakkuk over half a century ago.? It is fair to say that the discussion here, informed as it is, will not qualify as definitive in either sense identified by Mokyr (p. 1) as the first or the last word on its subject.

I will pass more quickly over the remaining contributions.? Wim Klooster looks at the role of English tobacco processors and clay pipe makers in the Netherlands, noting that, contrary to what one might think, Dutch ships often brought New World tobacco to Rotterdam for English nationals to process, though the natural order eventually reasserted itself.? Maarten Prak follows the rise and fall of the architect in Holland, tracing out an accelerator model in which public buildings (and great residences) served to employ architects rather than mere builders, but could not sustain the profession after the Golden Age once the stock was fully built.?? Peter Temin and Hans-Joachim Voth trace the fortunes of Hoare?s Bank, as long lived as the Bank of England, and attribute its longevity to financial conservatism and demographic prudence, in this case enough heirs to avoid losing control.? Laura Cruz looks at networks of booksellers in the Seven United Provinces and slightly beyond, recalling Jan de Vries? work on early modern European urbanization.? She notes that Amsterdam figures prominently in these networks, but as one node among several rather than as the highest-order central place for a hierarchical set of connections.? Finally, Drew Keeling adds to his studies of repeat migration westward across the North Atlantic in the late nineteenth century.? He finds it more prevalent than many have thought, which leads to the question of how often an individual may repeat a migration before it becomes merely travel.

In summary then, these are worthy pieces in a worthy cause.? However, unless one?s library can be induced to stock the book, not many scholars are likely to read them, since they cover quite a range of subjects and the book, though slim, costs about $140.

Paul Hohenberg was professor of economics at RPI.? He co-authored The Making of Urban Europe, 1000-1994 (Harvard, 1995) with Lynn Hollen Lees.

Copyright (c) 2011 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (December 2011). All EH.Net reviews are archived at

Subject(s):Development of the Economic History Discipline: Historiography; Sources and Methods
Economywide Country Studies and Comparative History
Financial Markets, Financial Institutions, and Monetary History
Historical Demography, including Migration
Household, Family and Consumer History
Industry: Manufacturing and Construction
International and Domestic Trade and Relations
Labor and Employment History
Markets and Institutions
Geographic Area(s):Asia
North America
Time Period(s):Medieval
16th Century
17th Century
18th Century
19th Century

Guilds, Innovation and the European Economy, 1400-1800

Author(s):Epstein, S. R.
Prak, Maarten
Reviewer(s):MacLeod, Christine

Published by EH.NET (December 2008)

S. R. Epstein and Maarten Prak, editors, Guilds, Innovation and the European Economy, 1400-1800. Cambridge: Cambridge University Press, 2008. viii + 352 pp. $99 (cloth), ISBN: 978-0-521-88717-5.

Reviewed for EH.NET by Christine MacLeod, School of Humanities, University of Bristol.

Until recently, Adam Smith?s condemnation of craft guilds as ?a conspiracy against the public? has implied that the juxtaposition of ?guilds? and ?innovation? is an oxymoron. That this no longer so is thanks to three decades of lively revisionist scholarship, which has seen guilds rehabilitated as significant political and cultural institutions, especially by historians of pre-revolutionary France. Economic historians, however, with one or two exceptions ? one thinks especially of R. W. Unger?s Dutch Shipbuilding before 1800 (Assen, 1978) ? have been slow to relinquish the stereotype of moribund rent-seekers whose habitual reaction to technical innovation was resistance and rejection. Yet, a fruitful debate has now been joined, with the revisionist camp ably represented here, not least by S. R. (Larry) Epstein, whose untimely death occurred during the preparation of this volume. Their claim is a bold one: ?that the impact of [craft] guilds on the early modern economy was more positive than has so far been acknowledged by historians of the traditional, and even of the revisionist, school? (p. 23). As several contributors explicitly recognize, they have an arch-critic in Sheilagh Ogilvie, whose important work on early modern Germany challenges the natural tendency of revisionists to over-compensate, reminding us in particular of the guilds? economically inefficient patriarchal, hierarchical and anti-Semitic exclusivity. With that in mind, let us examine the case for the defense.

First, six comparative syntheses of research (including Epstein and Prak?s lucid introduction) emphasize different aspects of the craft guilds? economic function and role in innovation. Ulrich Pfister?s contribution is divided between two chapters, the first of which has relatively little to say about technical innovation, but offers an enlightening exploration of craft guilds through the modern theory of the firm. His argument, that ?craft guilds and firms were functional substitutes? (p. 50), rests on a demonstration of the guilds? firm-like behavior in delegated monitoring and vertical integration, both of which reduced their members? agency costs. Focusing on the entrepreneurial activities of master artisans engaged in the export trades, Catharina Lys and Hugo Soly explore the development of subcontracting amongst them and compare it (not unfavorably) with proto-industrialization. Reith Reinhold condenses an extensive body of research, most of it previously only available in German, on the circulation of skilled labor through central Europe since the fourteenth century. Not only does he emphasize migrant artisans? role as the principal conduit of technological diffusion, especially of ?tacit? knowledge, but he also shows how ?tramping? acquired an important function in the acquisition of skills and completion of a journeyman?s training, to the point where some guilds began to insist on it.

A further six contributions investigate individual cities and/or crafts: London commands the lion?s share, justified by the conventional belief that its guilds, being incompatible with industrialization, were the first to disappear. This justification is dismantled implicitly throughout but explicitly by Ian Anders Gadd?s and Patrick Wallis? demonstration of how four metropolitan guilds succeeded in establishing nationwide jurisdictions in the period 1500-1700 (without the harmful effects that Ogilvie has identified elsewhere), and by Michael Berlin?s analysis of the varying fortunes of London?s guilds through to their legal termination in 1837: ?far from experiencing a long ?natural? decline, the regulatory mechanisms of many of the companies were abrogated as a result of historical conjunctions and circumstances unique to each trade? (p. 337). Anthony Turner compares the various ways in which the novel trades of horology and instrument making were absorbed into early modern Europe?s corporate structure and highlights their generally positive attitudes towards technical innovation. Guilds? hostility to patents, which they opposed as restraints on trade, stood in sharp contrast to the ferment of ?collective invention? that placed these crafts among the most technically dynamic. Similarly, Francesca Trivellato?s exposition of how Venice?s silk and glass trades adapted to innovation downplays the significance of patents in this, their legislative ?home? (Venice enacted Europe?s first patent law in 1474). Instead, she highlights the importance in glassmaking of private recipe books, which were ?so precious that they were included in women?s dowries? (p. 224n), as both revealing of constant product innovation and intra-guild competitiveness. Perhaps most surprising of all, we find seventeenth-century Dutch artists clamoring to be organized into guilds. Yet, as Maarten Prak suggests, Holland?s booming art market could only be supplied through large increases in productivity, implying extensive specialization and division of labor, such that ?painters had to get used to working for a market that was not fundamentally different from the market for wine or furniture? (p. 150). Painters? guilds offered their members expanded facilities, including corporate salesrooms where the pricing of such hard-to-value products could be publicly determined and events for the discreet education of newly rich customers.

Three contributions stand out for their particular concern to specify the links between guilds and innovation. Epstein?s, reprinted from the Journal of Economic History (1998), contends that the craft guilds? primary function was to police the transmission of skills via the regulation of apprenticeship, thereby sharing out ?the unattributed costs and benefits of training among its members? (p. 56). Adam Smith?s mistaken belief that apprenticeship?s purpose was rather to defend a labor-market monopsony, argues Epstein, stemmed from his undervaluing the difficulty and cost of transmitting skill, especially its ?tacit? component which could only be taught through personal demonstration and repeated practice; simultaneously, the apprentice learned his master?s trade secrets. From the resulting high investment in human capital flowed three unintended but systematic boosts to innovation: ?by establishing a favourable environment for technical change; by promoting technical specialisation through training and technical recombination through artisan mobility; and by providing inventors with monopoly rents? (p. 73). Such incremental innovation via quotidian problem-solving was of infinitely greater significance, Epstein suggests, than the more visible cases of guilds overtly resisting labor-saving machinery.

The ironic implication of Epstein?s argument for Liliane P?rez?s study of pre-revolutionary Lyon is the guilds? own ignorance of this involuntary progress. For, while most contributors offer examples of guilds passively accepting product innovations and even new processes provided they were labor- or skill-intensive, P?rez shows the Grande Fabrique (Lyon?s powerful silk guild) taking great pains to actively promote and disseminate them. French guilds generally were in tune with the ?enlightened? state?s policy of promoting innovation through offering financial incentives. Yet, Lyon was demonstrably ?the most technologically innovative city in France? (p. 242). In its quest to forestall secrecy and private appropriations of knowledge, the Grande Fabrique mobilized various local institutions to validate inventions and assess appropriate levels of reward; it instituted a public repository of models; and it paid bonuses in proportion to the number of new devices sold to Lyon weavers. Ultimately, however, such interventionism proved not merely unnecessary but possibly counter-productive: P?rez points to the bitter contests over priority and ?unfair? reward that erupted.

Pfister?s second chapter takes the bull of innovation by the horns, investigating the checkered career of the engine loom for weaving silk ribbons. Although the labor-saving engine loom was predictably resisted by most guilds, Pfister?s analysis demonstrates that this was neither universal ? it depended on local economic and institutional contexts ? nor without other implications for the organization of labor, such as cutting costs to compete with mechanization through the increased employment of women (as Trivellato shows happening in Italy).

What emerges from this exceptionally coherent volume is not only the complexity of this institution, whose history spans more than half a millennium and a myriad of particular trades and local circumstances, but also the persistent tensions to which it was subjected, both internally from individualistic and capitalist challenges to its collective ethos and externally from the exigencies of nation states. Moreover, it adds another spur to the demanding search for innovation in the workshop and on the construction site, rather than in the too easily accessed and counted records of the patent office.

Christine MacLeod is Professor of History at the University of Bristol and author of Heroes of Invention: Technology, Liberalism and British Identity, 1750-1914 (Cambridge University Press, 2007).

Subject(s):Markets and Institutions
Geographic Area(s):Europe
Time Period(s):Medieval

The European Economy since 1945: Coordinated Capitalism and Beyond

Author(s):Eichengreen, Barry
Reviewer(s):Broadberry, Stephen

Published by EH.NET (May 2007)

Barry Eichengreen, The European Economy since 1945: Coordinated Capitalism and Beyond. Princeton: Princeton University Press, 2006. xx + 495 pp. $35 (cloth), ISBN: 978-0-691-12710-1.

Reviewed for EH.NET by Stephen Broadberry, Department of Economics, University of Warwick.

In 1996, Barry Eichengreen published an influential article in a book edited by Nick Crafts and Gianni Toniolo, Economic Growth in Europe since 1945, (Cambridge University Press). Eichengreen argued that the same institutions which facilitated postwar recovery in western Europe during the 1950s and 1960s, also exerted a drag on growth from the 1970s. The high growth of the 1950s and 1960s was seen as a result of the particular suitability of western Europe’s institutions of co-ordinated capitalism to catching-up on the United States through capital investment and the absorption of technology and organizational forms from abroad. However, as the frontier was approached, the unsuitability of those same institutions for innovation was seen as creating a crisis of adjustment. This excellent volume can be seen as expanding on the ideas first developed there, updating them to take account of the experience of the last decade, and bringing the centrally planned economies of eastern Europe into the picture. The picture is now much more nuanced than the earlier article, and the author has become more ambivalent about Europe’s economic prospects.

The links to the earlier article are still very visible in chapter 2 on the mainsprings of growth, which sets out the basic analytical framework. A great deal of emphasis is still placed on the “neocorporatist bargain” or postwar settlement between employers, trade unions and governments, which is seen as underpinning high levels of investment. Workers agree to wage restraint so long as employers commit to high levels of investment, and employers commit to high levels of investment so long as workers agree to wage restraint, with the whole bargain being overseen by an interventionist state committed to maintaining full employment through Keynesian policies. The establishment and more or less successful functioning of these neocorporatist bargains in individual west European countries is analyzed in chapters 3, 4 and 7 on the 1940s, 1950s and 1960s respectively. Chapters 7 and 9 focus on the difficulties which these institutions faced in the 1970s and 1980s. The problem can be seen as the breakdown of wage restraint as growth slowed down with the exhaustion of the potential for rapid catch-up growth, and as memories of the mass unemployment of the interwar years began to fade.

Superimposed on this general framework are a number of sub-themes which amplify the central argument of the importance of institutions. First, the author is able to draw on his unrivalled expertise in the area of international monetary systems to show in chapter 3 how Europe’s neocorporatist bargains were facilitated by the Marshall Plan, German economic and monetary reform, the 1949 devaluations and the European Payments Union. Then in chapter 8, he argues that the institutions of the international monetary system exacerbated the breakdown of the neocorporatist bargains as payments problems mounted and the Bretton Woods system collapsed.

A second sub-theme concerns the role of economic and political integration in western Europe, with the initial impetus to co-operation to avoid a return to the conflict of the previous half-century seen in chapter 6 as bolstering the institutions of coordinated capitalism in western Europe. In chapter 11, the further integration pursued since the 1980s is seen as identified with liberalization, and thus helping to overcome the crisis of adjustment by undermining the institutions of coordinated capitalism.

A third sub-theme is the application of the basic approach to eastern Europe, the most extreme case of coordinated capitalism, where the market economy was all but eliminated. Here, of course, the specifics need some modification, but even eastern Europe conformed to the pattern of rapid growth during the 1950s and 1960s, followed by slow-down from the 1970s. Large firms and unions were organs of the state, so there can be no equivalent of the neocorporatist bargain. However, in discussing western Europe, Eichengreen counters criticism that his earlier work was too focused on the highly unionized manufacturing sector by noting that the 1970s saw not just a breakdown of the neocorporatist bargain on wages and investment, but a major technological shift associated with the decline in the cost of information processing, with radical implications for the organization of services as well as industry. This shift towards information and communications intensive technologies, allowing much greater customization of output to individual consumer tastes, can be seen as creating difficulties for the institutions of organized capitalism in western Europe, geared towards large-scale production of standardized products and provision of standardized services in regulated markets. But for eastern Europe, where governments relied for their survival on limiting the free flow of information, it proved fatal. The experiences of the centrally planned economies are discussed in chapter 5, covering the rapid growth of the early postwar period, and chapter 10 on the collapse at the end of the 1980s and the subsequent transition.

The book ends with the author hedging his bets about Europe’s economic future, depending on whether the most appropriate indicator of economic performance is GDP per capita or GDP per hour worked. Although GDP per capita in Europe is only around two-thirds of the U.S. level, GDP per hour worked is about equal to, and in some countries higher than in the US. The MIT view of this is that Europeans simply enjoy their leisure more than Americans, who are caught in a rat race. However, the Minnesotan view is that Europe is being held back by the institutions of coordinated capitalism, with high tax rates and regulations stopping people from working as much as they would like. If you accept the Minnesotan view, Europe is in for a tough period of liberalization or relative decline, but if you accept the MIT view, Europe can continue to enjoy its chosen combination of high productivity and leisure.

My main criticism of the earlier article was its bias towards manufacturing, and that has been dealt with to some extent here by the discussion of technology and its application to services. However, this has the effect of giving a much more central role to changes in technology, which are never really explained in any detail. Also, a place has been found for the importance of the shift of labor out of agriculture, but again agriculture is never really covered in sufficient depth. However, any shortcomings in the treatment of the major sectors should certainly not weigh heavily in the balance against the overwhelming list of positive features about this book, which is clearly structured and well-written, concise and clear. Above all, it strikes a masterly balance between a clear theoretical structure and sufficient attention to historical detail.

Stephen Broadberry is Professor of Economic History in the Department of Economics, University of Warwick, and co-organizer of the CEPR Economic History Initiative. His most recent book is Market Services and the Productivity Race, 1850-2000: British Performance in International Perspective (Cambridge University Press, 2006). He is currently co-editing (with Kevin O’Rourke) a 2-volume economic history of modern Europe.

Subject(s):Labor and Employment History
Geographic Area(s):Europe
Time Period(s):20th Century: WWII and post-WWII

Americanization of the European Economy: A Compact Survey of American Economic Influence in Europe since the 1880s

Author(s):Schröter, Harm G. S
Reviewer(s):Brownlow, Graham

Published by EH.NET (January 2006)

Harm G. Schr?ter, Americanization of the European Economy: A Compact Survey of American Economic Influence in Europe since the 1880s. Dordrecht: Springer, 2005. xii + 268 pp. $99 (hardcover), ISBN: 1-4020-2884-9.

Reviewed for EH.NET by Graham Brownlow, Faculty of Business, Auckland University of Technology.

The development of what could be termed the “American way of economic culture” in Europe since the 1880s is the stated focus of Harm Schr?ter’s book. Schr?ter is Professor of History at the University of Bergen. The long-run focus of the economic history and the promise to consider the nexus between European cultural and economic development intrigued and excited this reviewer; unfortunately my expectations and hopes were far from met. Indeed after ploughing through this book, Schr?ter’s claim made in the preface (p. ix) that it was the product of ‘a number of years’ labors came as a great surprise to this reviewer. The standard of general presentation is extremely careless for an academic work, especially for one with such a high hardcover price. The inadequate standard of presentation leaves the distinct impression of a manuscript having been rushed to publication without adequate proofreading. There are far too many typos, spelling and grammatical errors to mention. Entire passages are put in italics for no good reason (p. 118) and at one point instead of the location of an AFL-CIO conference the reader is met in the text with a cryptic ‘[where?]’ (p. 196).

The basic thesis of the book is that three successive historical waves of Americanization have shaped Europe’s economic and cultural life. These waves are identified and each is assigned a part in the book. Part 1, which is only a single chapter, covers the first wave of Americanization that is claimed to have emerged between 1870 and 1945. Part 2, covered by chapters 2 through 4, discusses the ‘Golden Age’ as a process of Americanization and the next three chapters cover Americanization since the 1980s. In part 1, Americanization is viewed as involving a transfer of ‘economic institutions and culture’ across the Atlantic. In the period from 1870 to 1945 the process is equated with a Europe-wide phenomenon; in later chapters the diversity of different national experiences is recognized. In part 2, the implications of the Marshall Plan for Americanization are considered along with the cultural effects of the growth of mass consumption and production. In part 3, the focus is on the transfer of free market policies to Europe since the 1980s. The role of financial and labor markets in determining the pace of Americanization is also considered.

The book covers a wide range of issues, but its coverage is found wanting in a number of respects. Firstly, there are a wide range of topics where Schr?ter makes elementary errors regarding historical fact. To note just a few of the more glaring errors, F.A. Hayek was not a Friedmanite monetarist of the Chicago School variety (pp. 127-28) and his Road to Serfdom was first published in 1944 and not 1946 (p. 128). EQUIS is not an American business school standard (p. 149). EQUIS is in fact European in origin and is run by the European Foundation for Management Development (EFMD). The emergence of professional baseball began with the formation of the National league in 1876 and not at the start of the twentieth century (p. 186). As with the typographical errors, these errors of fact should have been spotted prior to publication.

Secondly, a number of major weaknesses in the historical and economic interpretation exist independently of Schr?ter’s many errors of historical fact. To start with, especially as Schr?ter uses it, the central concept of Americanization is imprecise. In addition to defining it as a transfer of culture and institutions, Schr?ter also defines it as variously a synonym for convergence of growth rates (p. 96), the pursuit of deregulation and privatization (p. 205) and national differences in per capita advertising expenditure (p. 120). While these uses are not necessarily inconsistent with one another, this reviewer would have preferred a single definition that could better lend itself to measurement. Schr?ter’s suggestion that such a more quantitative approach would be ‘misleading’ (p. 7) again does not convince this reviewer.

Thirdly, there are a number of extremely peculiar omissions in the discussion of Americanization. These omissions further reduce the credibility of the book. Strangely, despite in chapter 4 discussing the alleged role of marketing and advertising as academic disciplines in promoting Americanization, Schr?ter makes no reference to the growing literature on the causes and consequences of the post-1945 Americanization of the global economics profession (Coats, 1995). Schr?ter, moreover, despite claiming that small states are more susceptible to Americanization (p. 205), ignores mentioning the role of American investment in creating Ireland’s economic transformation in the last decade. Most economists would agree that the attraction of American inward investment has been central to the Celtic Tiger. For Schr?ter to omit even mentioning the paradigm case of American economic influence in recent European economic history, when he repeatedly discusses the very ‘unAmerican’ practices that exist within German retailing, strikes this reviewer as odd to say the least.

Perhaps this last omission arose because all too often Schr?ter is rather too fond of equating German and/or French with ‘European’ conditions. Different European countries get very different levels of discussion devoted to them; indeed some countries barely get a mention. The contents of the index illustrate this point. There are no references to Spain, Portugal or Poland in the index and few mentions to these countries in the text. This skewed geographical focus is all the more unfortunate as the book’s introduction promised the analysis would not just consider the major countries (p. 8). Moreover, those interested in UK economic history will be similarly disappointed, — while in certain parts of book British cultural and economic ‘exceptionalism’ is recognized (pp. 6, 205), it is never adequately explained. Nor is the relevant literature on the uniqueness of British economic performance even mentioned (Hutton, 1996). The UK’s status as a cultural and economic ‘middle way’ between continental Europe and America is an important topic that Schr?ter makes far too little of in this book.

This ambitious but ultimately unsatisfying book will struggle to find a target readership because of its weaknesses of style and substance. Overall this is not a book that can be satisfactorily recommended to undergraduate students of European economic history as they will inescapably repeat its errors of fact and economic understanding. Overall then, I’m sorry to report that Schr?ter’s book fails by a wide margin to deliver on its promised focus on European cultural and economic development. Economic historians seeking to consider the interplay between economy and culture are still better served by the works of authors such as Eric Jones and Peter Temin.


Coats, A.W. (ed.), 1995. The Development of Economics in Western Europe since 1945. London, Routledge.

Hutton, Will, 1996. The State We’re In. London, Vintage.

Graham Brownlow is Senior Lecturer in Economics at Auckland University of Technology. His published research is mainly in the area of institutional economic history and Irish economic history. His most recent journal article (co-authored with Frank Geary) is entitled: “Puzzles in the Economic Institutions of Capitalism: Production Coordination, Contracting and Work Organisation in the Irish Linen Trade, 1750-1850,” Cambridge Journal of Economics, Vol. 29, No. 4 (2005), pp. 559-77.

Subject(s):Markets and Institutions
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

European Integration, 1950-2003: Superstate or New Market Economy?

Author(s):Gillingham, John
Reviewer(s):Barbezat, Daniel

Published by EH.NET (May 2004)

John Gillingham, European Integration, 1950-2003: Superstate or New Market Economy?. New York: Cambridge University Press, 2003. xx + 588 pp. $70 (hardback), ISBN: 0-521-81317-4; $25 (paperback), ISBN: 0-521-01262-7.

Reviewed for EH.NET by Daniel Barbezat, Department of Economics, Amherst College.

John Gillingham, Professor of History at the University of Missouri, has followed up his work on the early European Coal and Steel Community with an ambitious large-scale project, chronicling the history of European integration from the Marshall Plan era right through to the present. Gillingham sets his arguments on the personalities of the major figures, especially EU Presidents, woven broadly around the theme of Hayek’s liberal integration project. The book is not an economic history of the integration process, nor is it a straight history; rather, it is a detailed outline of how major figures shaped and responded to the increasing power of pan-European institutions. It is not general enough for use in a course on the European Union because it does not provide enough background and assumes a good deal of prior knowledge. However, it is also not a probing analysis of the span of European integration. As such, perhaps the book’s greatest use for economic historians is as a reference guide to key summits or the Single European Act/Maastricht Treaty period.

Gillingham is far more interested in the period after 1980 than the years before it. In fact, the book really should be thought of as an explanation of the reforms to the EU after the Single European Act than a book on the history of integration. Of course, asking one book to accomplish an overall history of European integration is far too great, but given the title of the book, Gillingham invites this expectation. In a book of over 500 pages, only about the first fifty or so pages discuss the period prior to 1965. Gillingham does not actually cover the period as much as set up some of the tensions that would play out over the next thirty years. Without prior knowledge, a reader would not understand the early years of the European Economic Community and its long and arduous transition into the European Union.

The book picks up strongly with country-by-country (Great Britain, Denmark, Sweden, France, Germany, Italy, Spain) descriptions of the crises in European nations over the 1980s. This provides a very good backdrop to the next chapter on the Maastricht Treaty. Here, Gillingham does a very nice job of analyzing the reasons behind both the Single European Act and the Maastricht Treaty of European Union. These treaties, of course, are the basis for most of the integration activity of the EU over the past twenty years and certainly deserve the attention Gillingham places on them. The chapters that follow examine the details over the major core European states over the 1990s with special attention paid to various scandals that destabilized governments. Gillingham spends far too much space, however, detailing the machinations within the major core countries. Ireland and Greece are barely mentioned and no mention is made of the arrangements between the EU and the African-Caribbean-Pacific (ACP) nations. By ignoring the periphery, Gillingham does not allocate nearly enough space to agricultural issues; no real description is given of the reform of the Common Agricultural Policy [CAP] (neither the MacSharry reforms nor those that followed). Given that the CAP (as Gillingham himself notes) has, since its inception, so dominated the EU budget, this is a major weakness.

As mentioned, because Gillingham largely ignores the periphery he pays no attention at all to the Greek-Turkish conflict, nor the total breakdown of European foreign policy during the Balkan crisis. (In the preface, Gillingham apologizes for not discussing Mediterranean policy (p. xvii) in detail, but “Turkey” is not even mentioned anywhere in the text of the book! Given that European integration accords with Turkey go back to the early 1960s, this is a dramatic example of how far Europe has alienated this non-Christian state.) Gillingham also only looks at the “frontrunners” of EU enlargement: Estonia, Hungary and Poland. Nothing is said about the other Eastern European countries or, for example, Malta. Since these issues comprise an important part of why the political process has been so difficult for Europe over the past two decades, their omission from the book leaves a regrettable gap in the chronicle.

Gillingham ends the book with a lengthy but interesting “Envoi.” In it, he quickly and clearly outlines the themes of the various periods. This is a very useful section, providing a quick overview of European integration. Overall, John Gillingham has written a text that could provide a good starting point for an understanding of the forces that produced the Single European Act and the Maastricht Treaty but I would not recommend it as a basic reference text for European integration as a whole.

Daniel Barbezat has written several articles on the European Steel industry in the inter-war period and the economics of the European Union. He is currently working on a book on public policy and a macroeconomics text.

Subject(s):International and Domestic Trade and Relations
Geographic Area(s):Europe
Time Period(s):20th Century: WWII and post-WWII

Origins of the European Economy: Communications and Commerce, AD 300-900

Author(s):McCormick, Michael
Reviewer(s):Griffiths, David

Published by EH.NET (July 2002)

Michael McCormick, Origins of the European Economy: Communications and

Commerce, AD 300-900. New York: Cambridge University Press, 2002. xxviii +

1101 pp. $60 (hardback), ISBN: 0-521-66102-1.

Reviewed for EH.NET by David Griffiths, Oxford University.

Much water has passed down the Rh?ne, Danube and Nile since Henri Pirenne’s

seminal masterpiece Mohammed and Charlemagne was published on the eve of

the Second World War. Much of Pirenne’s premise has been shown by subsequent

work to be faulty: certainly the idea that north-western Europe was cut off

from the newly-Islamic Mediterranean from the seventh century AD (thereby

causing it to develop a dynamic economic focus within the Frankish realm of

Charlemagne) has been comprehensively disproved not only by archaeology but

also by a more inquisitive reading of the contemporary documents. The test of

greatness of historical theses, however, is not that they remain as a permanent

orthodoxy, for few ever do, but that they become a permanent inspiration to

further work.

In this Pirenne has his claim to intellectual immortality. Michael McCormick’s

vast contribution is couched explicitly and implicitly in terms which Pirenne

would have recognised instantly as his own parameters: the search for

explanation of the origins of Medieval European culture, economic behavior and

urbanization in the aftermath of the collapse of the western Roman Empire, the

motor of trade and travel, and the centrality of the reign and personality of

Charlemagne. Where Sture Bolin and Maurice Lombard led the way in revising

Pirenne’s thesis — by making the Christian and Arab Mediterranean a

motivating, not an inhibiting influence on Carolingian Europe — McCormick has

followed with a heavy freight of supportive detail.

The book sets out its stall as covering the period AD 300-900, but the heart of

its message is really the latter two centuries from 700 to 900: the Carolingian

Age. Eleven hundred and one pages (including appendices and bibliography)

provide a narrative of thematic coverage (trade, pilgrimage, diplomacy,

manufacturing) set within an extensive and complex record of contemporary

individual experience.

Origins of the European Economy is a product of arduous, ambitious,

serious historical scholarship. It quite simply could not have been written in

this form ten years ago, let alone when Pirenne was alive, since it depends for

its analytical powers on the use of computerized word recognition on digitized

texts, and on databases for marshalling, quantifying and synthesizing the

disparate documentary and numismatic information available in a diverse range

of sources. McCormick’s signal achievement is to have trawled the relevant

literature, much of which has now been digitized, and brought together 669

references to travelers in the post-Roman Mediterranean world, many of which

had languished in primary obscurity until this illuminating synthesis. These

are supplemented with far-reaching studies of the relic trade, amber and coin

movements and slavery. McCormick’s numismatic antennae have no doubt been

sharpened by his association with Philip Grierson, and his easy familiarity

with the detail of European geography is impressive. The footnotes are rich

with referencing, argument and explanation, tracing the gestation of the book

in miniature and showing the extraordinary extent of the author’s encounter

with the primary and secondary literature in numerous ancient and modern


McCormick’s method of approach to the sources is prosopography — he deals in

life stories (and he is by no means alone in this — a large published

prosopography of Byzantine authors between 641 and 867 has just been completed

in German (F. Winkelmans, 2002)). Most of the historical glimpses assembled

here are principally or ostensibly individual accounts of pilgrimage and

diplomacy, but McCormick encourages us to read between the lines and extract

the hidden information — the incidental becomes the primary: a documented

transit of a pilgrim or Byzantine diplomat through a port such as Marseilles,

Naples or Tartus, or a sea voyage at a certain time of year, activates a search

for historical and archaeological evidence for trading systems, harborage and


The book is rich with practical details of early medieval travel, the storms,

fevers, delays, miracles and pirates. Some of the personalities we follow, such

as St. Willibald, Cyril and Methodius, are well-known to those with an interest

in this period. Others, such as the pilgrims Bernard and Gregory Akritas, or

the envoys Amalarius, Marinus, Michael and Theophylact, are rather less so.

Willibald’s voyage via Naples, Catania and Monemvasia to Ephesus and eventually

to Jerusalem is milked for every scrap of informative incidental detail.

Occasionally the anecdotal style imposes its own momentum and the thematic

content seems to recede, but McCormick is surely right when he states: “This

approach to communications in the Mediterranean Basin suggest that there was

considerably more going on than has hitherto been recognised by research which

focused exclusively on explicitly documented instances of trade” (p. 438).

Unlike some of his European counterparts amongst historians, McCormick is also

archaeologically literate, recognizing the huge advances of the last thirty

years, but accurately hitting upon many of the remaining lacunae, both in

Mediterranean urban archaeology and in northern Europe: his plea for further

investigations of the inland market sites of the Frankish realm such as Cologne

is particularly topical. However, he occasionally displays his credentials as a

resident of the historical end of the interdisciplinary spectrum, for instance

describing the fruits of archaeological labors as “excruciatingly local” (p.

791): how could they be anything else?

The book is divided into five sections, each dealing with a major sub-theme

under the main title: the end of the Roman Empire, the personalities and

objects which traveled; the means and patterns of overland and maritime

communication, and finally the implications for trade. There are clear chapters

dealing with regions, industries and commodities, which are supported by 40

maps and 82 tables (but only 16 pictorial figures) in the main text alone. The

maps are consistent, clear and accurate, and oblique perspectives give some of

them additional impact. Where deployed, this optical trick is almost always

Mediterranean-centered, but Map 20.4 of the ‘northern arc’ shows some

willingness to experiment with standard geographic conventions by turning the

map on its head. Almost completely missing from this book, however, is what

might be termed the ‘western arc.’ Europe’s Atlantic seaboard is far more than

a periphery beyond a periphery, and what is loosely termed the ‘Celtic West’

played as dynamic and well-traveled a role, particularly in European religious

affairs, as the people of many a southern or central European region. An Irish

reviewer, for instance, might well feel justifiably aggrieved about this.

Occupying 171 pages towards the end of the book are appendices listing

Mediterranean travelers and communications, 700-900; mentions of mancosi

to 850; and catalogues of Arab and Byzantine coins in the west. The appendices

alone are a considerable achievement, although McCormick is clearly aware that

they will have a fairly limited shelf-life, as the research continues. In this

context, there is a curious disjuncture between the methodology of the book and

its style of presentation: a mass of detail has been sorted, analyzed and

synthesized digitally, yet it is presented in immutable form, frozen in print

and impervious to manipulation by the reader and fellow-researcher. One is left

wishing that a CD or DVD.ROM, or possibly an invitation to visit a designated

website could have been found tucked into the back cover to unlock the

possibility of self-motivated exploration — at least of the raw data presented

here in the appendices if not the texts themselves — which the author himself

has described in such exciting terms.

Despite grappling with the uncertainties of what are still sometimes referred

to as the ‘dark ages,’ this book is written in the style of straightforward

economic history. Argument based on statistical flow-charts, histograms and

percentages looms large: this book will be a lesson to anyone who still thinks

the documentary sources for the post-Roman Mediterranean defy a quantitative

approach by their sparseness. The number of references to voyages by year and

season, or the value of slaves in different areas of the Mediterranean, for

instance are presented in graphic form. There is a relentless empirical logic

to McCormick’s approach — this is history-writing by frontal assault with

plenty of logistical support rather than by deft footwork or mere good luck. As

any military historian will confirm, luck and quick thinking might win battles,

but strategy, endurance, organization and resources win wars. McCormick has all

of these things, and this is indeed a monumental and inspiring achievement.

Cambridge University Press is to be congratulated on a polished and well-edited


In a new century when Dublin or Helsinki have as good a claim to be the

economic dynamos of Europe as Paris or the Rhineland (the Franco-German ‘axis’

which created the European Union in the 1950s — choosing Charlemagne as its

hero — now looks not a little tired), the historical meaning of ‘Europe’

itself needs re-visiting. McCormick is rightly skeptical about the ‘Roman

Economy’ as a single normative historical construct, but what of the ‘[early]

European Economy’? — surely an even more diffuse and varied concept. We need

to continue disentangling what ‘an economy’ can mean realistically in the

pre-modern period, where new and old religions, pilgrimage, war, despotism,

weather, trade, diplomacy, piracy, slavery and disease all add up a complex

brew of factors in growth and contraction, seen through the cloudy lens of over

a hundred decades. The detail of this book will help greatly to identify and

illuminate the workings of these forces.

McCormick concludes as he set out to show: that the post-Roman Mediterranean,

together with the Arab Middle East and the Viking North, were indeed alive with

traffic and trade, and that Charlemagne and his contemporaries looked south and

east for their inspiration in powerful and fundamental ways. When picking up

the book for the first time, it seemed overly massive — more like a doctoral

thesis of old. Any fears of unnecessary verbosity and turgidity are misplaced,

however: the book has actually quite a spare style — and 1101 pages ultimately

seem hardly adequate to serve this root-and-branch review of a core theme in

European history. This is a noble addition to the school inspired by Pirenne,

and will no doubt still be around in another sixty years’ time.

David Griffiths, PhD, FSA Scot., teaches Archaeology at Oxford University,

where he is a Fellow of Kellogg College. A specialist in the social and

economic archaeology of Early Medieval Britain, Ireland and Scandinavia, he is

currently researching non-urban coastal market sites. His book The Making of

Kingdoms (with T. Dickinson, Oxford, 1999) has reached a worldwide

audience, and his chapter “Exchange, Trade and Urbanisation” will soon appear

in the Short Oxford History of the British Isles (Volume: AD 800-1100,

edited by Wendy Davies).

Subject(s):International and Domestic Trade and Relations
Geographic Area(s):Middle East
Time Period(s):Medieval

A History of the European Economy, 1000-2000

Author(s):Crouzet, François C
Reviewer(s):Liebowitz, Jonathan J.

Published by EH.NET (May 2002)


Fran?ois Crouzet, A History of the European Economy, 1000-2000. Charlottesville and London: University Press of Virginia, 2001. xx + 329 pp. $65 (cloth), ISBN: 0-8139-2024-8; $26.50 (paper), ISBN 0-8139-2025-6,

Reviewed for EH.NET by Jonathan Liebowitz, Department of History, University of Massachusetts — Lowell.>

Fran?ois Crouzet, Professor Emeritus at the Sorbonne, has written a brief (about 260 pages of text) history of the European economy in the last millennium. Instructors could confidently choose it for European economic history courses, with its brevity allowing for additional more detailed readings.

Fran?ois Crouzet, Professor Emeritus at the Sorbonne, has written a brief (about 260 pages of text) history of the European economy in the last millennium. Instructors could confidently choose it for European economic history courses, with its brevity allowing for additional more detailed readings.

Crouzet has stood outside the Annales school of French economic historians and has been rather critical of the state of economic history in France. He has criticized most French economic historians for their insularity, both for sticking to their national history and for avoiding cliometrics. (See Crouzet and Isabele Lescent-Giles, “French Economic History in the Past 20 Years,” in NEHA-bulletin 12:2 [1998], 75-101. Available on-line at No one could reproach him for this fault. Crouzet is not insular in either sense. While he has done important work on the French economy, much of his focus has been on Britain, where he has studied, for example, the origins of entrepreneurs and the Victorian economy. (See the bibliography in the article listed above. His modesty keeps him from listing any of his own works — but he does cite one by his daughter-in-law! — in the ten page bibliography of the book under review.) If not stuffed with the latest in regressions, Crouzet’s book also reveals his familiarity with the new economic history

These qualities stand him in good stead in A History of the European Economy. The book treats Europe as a whole, rather than focusing on individual countries, and Crouzet carries on a dialogue with leading economic historians of all nationalities — some French but most British and American. Within chronological chapters, the approach is topical, based on the central issues of the time. Except perhaps toward the end of the volume, where he gives vent to his anti-statist, pro-free market attitudes, Crouzet adopts a judicious posture. No reader will be startled by his interpretations, which are traditional with a tilt toward the Mokyr-Landes emphasis on technology as a causal factor in economic change. Differing or opposing views are often considered, and Crouzet is prepared to accept what is valid in them. He is no monocausalist. While this approach may be less exciting than one that argues for an idiosyncratic interpretation, it may be what many professors want in a textbook.

One shortcoming felt by this reviewer is the lack of graphics, except for five maps that do little more than locate cities, regions and nations. There are no topical maps, no graphs, no technological drawings or illustrative images. Here Rondo Cameron’s A Concise Economic History of the World (third edition, New York and Oxford, 1997) holds a distinct advantage.

The author claims to examine a thousand years. I would guess this was a device to catch the Y2K spirit; actually the discussion starts with the fall of Rome. Like most surveys, Crouzet’s concentrates on more recent times, with the tenth through thirteenth centuries being covered in thirty-six pages, while the most recent eighty-five or so years take about ninety pages.

The early medieval chapter adopts the by-now-commonplace position that the history of Europe after the fall of Rome and the barbarian invasions was one of progress. Crouzet places the prime cause for this progress in population growth without denying a role to improvements in technology and higher agricultural productivity. The manorial system was “rational … ; not inimical to change” (p. 15) and had the potential of expanding trade. Crouzet’s treatment of the latter topic will be familiar, with emphasis on fairs, towns, and regions like northern Italy and Flanders. He does accept the contention expressed by many scholars recently that various Asian economies held a considerable advantage over Europe, citing Bairoch’s contention that “what was essential in world history was happening in Asia,” (p. 2) but his emphasis never strays from Europe.

Crouzet goes on from the Middle Ages to consider as a bloc what historians have usually called the late Middle Ages and the Early Modern Period. These years were marked by a combination of “Change and Continuity,” as the chapter title calls it. Among the types of technological progress he discusses are the new husbandry, printing, shipbuilding and navigation, and finance and banking. Not surprisingly, Crouzet devotes considerable attention to trade, both inter- and intra-continental. The narrative thrust of this chapter comes in discussions of how the yellow jersey of the leader was passed from one nation to another and of the cycles of expansion and contraction. His conclusion is that Europe suffered from a “low-productivity economic system”(p. 84) but that nevertheless, over the long run “some growth took place”(p. 95). This rhetoric is typical of chapters two and three — lots of “on the one hand, but then on the other.”

With chapter three Crouzet reaches the Industrial Revolution — a term he would rehabilitate. Whatever the proponents of the slow growth school would maintain (and Crouzet accepts their evidence), that does not eliminate the fact of a qualitative revolution, especially in technology. The central importance of the Industrial Revolution was that it made change the norm. After this introduction, Crouzet proceeds to touch all the usual bases: Britain’s place as leader, the followers, various technologies, national disparities and the reasons for them, among which he emphasizes “path dependency … of which human capital is a crucial component”(p. 150). The author concludes this optimistic chapter by stressing the progress and globalization of the long nineteenth century.

In the final chapter — on the “Disasters, Renaissance, Decline” since 1914 — Crouzet, despite everything, maintains his optimism. Even twentieth century Europe would not have been so bad, “were it not for the unatonable sin of the Shoah”(p. 172). Not surprisingly Crouzet stresses disruption during the first thirty years of this period though, in typical fashion, admitting that there were important gains during the twenties and that the depression of the thirties was not general. After World War II, “it was a mistake not to establish a federal Europe … and not destroy nation-states (especially France [!]) at a stroke … — a policy that the U.S. government ought to have imposed upon Europeans” (p. 204). Not based on any careful analysis, such rants, like a later one that “France looks like a last relic in Europe of old-fashioned, Soviet-style socialism,”(p. 246) add a bit of spice to the last chapter. For the second half of the twentieth century, Crouzet follows most observers in delineating two periods: the “Golden Age” of 1950-73 and the era of “Slowing Down and Not Working” that followed. For the first he naturally stresses the rapid growth of both western Europe and the Soviet bloc, for the second the contrast between the poor performance of Europe and successes of the United States and Asia. He ends disabused but hopeful that Europe will retain its liberty and recover the creativity essential for economic growth.

As will be apparent from this conclusion, Crouzet’s book feels personal and historical. The main organizational principle is chronological rather than one based on topics or problems. Yet the author is fully engaged with the cutting edge issues of contemporary economic history, and any economist or historian could assign it to students with assurance that they would obtain a solid grounding in Economic History.

Jonathan J. Liebowitz is Professor of History at the University of Massachusetts — Lowell. He is currently working on a study of the impact of the late nineteenth century agricultural depression on French tenants and sharecroppers.

Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):Europe
Time Period(s):Medieval

The European Macroeconomy: Growth, Integration and Cycles 1500-1913

Author(s):Craig, Lee A.
Fisher, Douglas
Reviewer(s):Broadberry, Stephen N.

Published by EH.NET (October 2000)

Lee A. Craig and Douglas Fisher, The European Macroeconomy: Growth,

Integration and Cycles 1500-1913. Cheltenham, UK and Northampton, MA, USA:

Edward Elgar, 2000. xii + 389 pp. $120.00 (cloth), ISBN: 1-85278-643-4.

Reviewed for EH.NET by Stephen Broadberry, Department of Economics, University

of Warwick.

European economic history currently lacks a good textbook that might appeal

to undergraduate students with a background in economics. Floud and McCloskey

(The Economic History of Britain since 1700, Cambridge University

Press, second edition, 1994) exists, but there is nothing comparable for any

other European country or for the early modern period. This book by Lee Craig

and Douglas Fisher, both from North Carolina State University, is thus to be

welcomed as filling an important gap in the textbook market. It is to be

doubly welcomed, however, for doing an excellent job. In many ways, this book

builds on two earlier volumes, the first by Fisher (1992), The Industrial

Revolution: A Macroeconomic Interpretation, and the second by Craig and

Fisher (1997), The Integration of the European Economy, 1850-1913.

Parts III and IV of this book are essentially compressed and simplified

versions of the earlier two volumes, while parts I and II provide a

theoretical overview and a new section on the early modern period.

Part I sets out the theoretical framework, emphasizing four basic ideas that

recur throughout the book: (1) Institutions have an important role to play in

determining economic performance. In particular, increasing political and

economic integration plays an important role in helping to bring about

convergence of per capita incomes within and between countries. (2) Within a

given institutional setting, the long run rate of economic growth is driven by

population growth and technological progress, with investment affecting the

level of per capita income, but not the long run growth rate, as in the basic

neoclassical growth model. (3) Money and financial services play an important

role in real economic activity, but excessive monetary growth causes inflation

along simple quantity theory lines. (4) Business cycles are driven largely by

shocks to real activity, as in real business cycle models. Armed with this

theoretical toolkit, Craig and Fisher cut a swathe through European economic

history between about 1500 and 1914. The starting date reflects the belief

that integration within nation states had largely occurred by 1500, while

subsequent developments are seen as reflecting integration between those


Part II deals with the growth of the European market economy 1500-1750 in four

chapters, covering population and agriculture (chapter 3), inflation, money

and banking (chapter 4), trade, industry and mercantilism (chapter 5) and

trends and cycles (chapter 6). There are some excellent sections here,

including the analysis of the price revolution in the sixteenth century and

the Kipper- und Wipperzeit inflation in terms of the quantity theory of money,

and the use of real wage data in England, Austria, Alsace, Germany and Spain

to make inferences about living standards. However, apart from population,

there is a serious shortage of macroeconomic data for many countries, so that

at times the authors seem constrained by their framework. Would it not be more

useful, for example, to get at the issue of European integration at this time

by using the abundant microeconomic data on variables such as grain prices,

rather than searching for a common European cycle in the fragments of

macroeconomic data?

Part III then turns to the First Industrial Revolution in Europe, 1750-1850,

with separate chapters on Britain (chapter 7), the “major” continental

economies of France, Germany and Belgium (chapter 8) and the “periphery”

(chapter 9). The discussion of Britain embraces the Crafts/Harley gradualist

view of growth during the Industrial Revolution, although I would have liked

more emphasis on the accompanying and more revolutionary structural change

that the British economy underwent at this time. Traditional microeconomic

themes such as the standard of living and other distributional issues receive

only the briefest mention, and although the “wave of gadgets” that spread

across the continent as well as Britain is discussed in chapter 8, the

treatment is brief by comparison with other texts. By contrast, a great deal

of space is devoted to an innovative attempt to identify a common

international cycle as a sign of the integration of the European economy.

Although the extent to which the peripheral countries can be seen as

integrated into the European economy and hence sharing in this common cycle is

limited, Craig and Fisher are keen to emphasize that right down to the “bottom

of the table,” all these countries were experiencing economic and population

growth rates that were uniquely rapid for any sustained period in their


Part IV contains three chapters on the maturing of the Industrial Revolution

1850-1913 and a final chapter on growth and cycles 1500-1913. The chapters on

the 1850-1913 period cover population and overall economic growth (chapter

10), financial issues (chapter 11) and business cycles (chapter 12). With a

much more complete data set than for earlier periods, it is possible to show

clearly that most West European countries converged towards British levels of

per capita income between 1850 and 1913, but that South and East European

countries did not share in this process of convergence. It is also possible to

show how convergence was linked to a willingness to permit a shift of

resources out of agriculture and out of the industries of the First Industrial

Revolution into the industries of the Second Industrial Revolution. The fuller

data set for this period also permits a much more detailed analysis of the

role of money, drawing on the monetary approach to the balance of payments.

The close correlation of inflation rates across countries during the gold

standard era, combined with the very low correlation of monetary growth rates

across countries is explained by arbitrage in goods markets combined with a

commitment to fixed exchange rates, rather than by a specie-flow mechanism. As

in the previous sections, the chapter on business cycles identifies a common

European cycle.

There is much to commend in this approach. A broad sweep of history can be

covered without getting lost in excessive detail. And by sticking to some

basic ideas, Craig and Fisher have made the book accessible to students with

only a basic knowledge of economics. However, there are also drawbacks. One

concern is that by sticking to a macroeconomic approach, many of the issues

that economic historians have traditionally emphasized are simply not covered

or mentioned only briefly in passing. Maybe traditional texts do sometimes get

a bit bogged down in the details of how the spinning jenny worked, but the

macroeconomic emphasis of this book also has its drawbacks. For one thing, we

can probably be more confident about our knowledge of what happened in the

cotton industry than we can about the growth of national income during the

Industrial Revolution. This makes it instructive to work up to the aggregate

data from the micro evidence, not just to present micro data when macro

estimates are unavailable.

A second area of concern is that economics students studying economic history

should pick up a clear message that history matters. The authors do state at

the beginning that institutions are important, but much of the subsequent

material emphasizes smooth convergence on a global optimum apart from a few

exogenous shocks. One obvious way of emphasizing the importance of the

particular historical path taken would be to cover the twentieth century more

fully, since the period of European integration before 1914 was followed by a

long period of disintegration, some of the consequences of which are still

with us. The excluded twentieth century anyway looks eminently more suitable

for the quantitative macroeconomic treatment favored by the authors than the

included sixteenth and seventeenth centuries.

Overall, I found this a stimulating book. European economic history badly

needs a fresh approach and this is one way of doing it. It is to be hoped that

a paperback version will be issued, otherwise it may prove too expensive for

the mass undergraduate audience that it undoubtedly deserves.

Stephen Broadberry is Professor of Economic History in the Department of

Economics, University of Warwick, United Kingdom. He is currently an editor of

the European Review of Economic History, and his 1997 book, The

Productivity Race: British Manufacturing in International

Perspective,1850-1990, was published by Cambridge University Press.

Subject(s):Macroeconomics and Fluctuations
Geographic Area(s):Europe
Time Period(s):20th Century: Pre WWII