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In Memoriam

ECONOMICS HISTORY ASSOCIATION REMEMBERS

NICK CRAFTS

MARCH 9, 1949-October 6, 2023

Nicholas Crafts: Historian and Economist

Nicholas F. R. Crafts was the most distinguished British economic historian of his generation. Born in 1949 at Nottingham, England and educated at Trinity College Cambridge, he graduated as the top student in the Economics Tripos in 1970. After just a year of graduate studies he took a lectureship at Exeter before moving to Warwick in 1972 and then on to University College Oxford in 1977, where he was lecturer and domestic bursar. He became professor of economics at Leeds from 1987-8, then moved on to Warwick, where he served as chair of department 1991-4. From 1995 to 2005 he was professor of economic history at the London School of Economics, serving as convenor in 1996-9, before returning to Warwick until his retirement in 2019.

Nick was an early observer of the Cliometrics Revolution that was sweeping across the United States at the time of his visiting assistant professorship at Berkeley (1974-6), and he was one of the pioneers in applying the approach in Europe, establishing an annual Quantitative Economic History Conference in Britain. He established a worldwide reputation on the basis of important contributions in many areas of economic history, but perhaps his most important and far-reaching work was his radical reinterpretation of the First Industrial Revolution, which occurred in Britain between the mid-eighteenth and mid-nineteenth centuries and marks the first transition to sustained economic growth. As such, it lies right at the heart of the discipline of economic history.

Slow growth during the British Industrial Revolution

Building on foundations laid early in his career (Crafts 1976), Crafts’ path-breaking book, British Economic Growth during the Industrial Revolution, first published in 1985 and reprinted 4 times, presented a radically different view of the Industrial Revolution as a more gradual process than previously believed. It changed the way economic historians thought of this major event in history. Crafts demonstrated convincingly that earlier writers had exaggerated the growth rate of industrial production and hence of total national output during the Industrial Revolution. In a series of papers using a growth accounting framework he demonstrated that economic growth had been slow during the  industrial revolution using simulations to compare different views of the process of industrialisation (Crafts and Harley, 1992; 1996). Crafts (1996) argued that the TFP growth and investment in broad capital in Britain during 1780-1830 were both quite low when compared with developing countries today. 

From this he was able to demonstrate that the British economy must have been richer and more developed in 1700 than previously thought. As well as dramatically changing our view of the Industrial Revolution itself, this finding also cast an entirely new light on earlier periods of economic history. If Britain was already quite developed on the eve of the Industrial Revolution, then this opened up the possibility of earlier episodes of growth and development, and encouraged a whole new wave of research on early modern and medieval economic history, the effects of which are still being felt in the discipline to this day.

Crafts led the way in the application of modern economic concepts and techniques to shed light on a variety of debates in British economic history, often combining his expertise with that of a range of colleagues. In early work he applied simulation techniques to assess the contribution of delayed marriage to fertility decline (Crafts and Ireland, 1976). His work on trends and cycles in industrial production applied advanced econometric techniques to establish the chronology of growth over the long run (Crafts Leybourne and Mills, 1989). And in a major contribution to the standard of living controversy he adapted the Human Development Index to Britain from 1760 to 1830 to show that, due to urban mortality, the human development index was only slightly more optimistic than views based on trends in real wages or heights (Crafts 1997). He also demonstrated that, in contrast to assessments based on per capita income alone, developing countries at the turn of the twenty-first century ranked significantly higher than the European leaders in 1870 (Crafts 2002). This research stimulated much subsequent work on applications of the human development index in economic history

European economic growth and development

Crafts set the British experience firmly in a European context, an important methodological contribution, which continues to influence the way that European economic history is written today. In an important paper he addressed the question of why the Industrial Revolution had occurred first in Britain rather than in France (Crafts 1977), and this was followed up with comparative studies of levels of economic development in nineteenth century Europe (Crafts 1984; 1985). In much of this work Britain was compared with the ‘European norm’. As one example, he explained to an audience outside economics how, despite Britain’s high productivity in agriculture, British success nevertheless reflected its comparative advantage in industry (Crafts, 1989).

He later extended this comparative approach to the post-Second World War era, which had not previously been the province of economic historians. He used his influence to lead a joint project on postwar economic growth raising a large grant from the European Commission, which was run through the Centre for Economic Policy Research (London). He brought together Europe’s leading economic historians to contribute to two books that combined both historical and comparative perspectives (Crafts and Toniolo (eds.), 1996; Crafts and Van Ark (eds.) 1996). By shedding light on policy issues in the recent past, this represented an important step in demonstrating the relevance of economic history to a wider audience. And by using European comparators as benchmarks he was also able to provide a unique perspective not only on Britain’s ascendency but also in its subsequent relative decline.

British economic policy and performance since the late nineteenth century

Crafts made important contributions to our understanding of the development of the British economy from the late nineteenth century to the end of the twentieth century. Much of this work is summarised in his book Forging Ahead, Falling Behind, Fighting Back: British Economic Growth from the Industrial Revolution to the Financial Crisis (CUP, 2018). With an endogenous growth framework in the background, he stressed that the potential for growth varies widely, both across countries and over time, so that slow growth in one era may represent better performance, relative to potential, than another. Key elements in achieving or falling short of potential are the effects of the institutional environment on incentive structures for innovation and investment.

The First World War was a major setback to the British economy, and while some scholars see the interwar period as one of revival, recovery and renewal, such arguments had not been rigorously tested. In an important paper Crafts and Thomas (1986) conducted a formal analysis to show that Britain’s revealed comparative advantage was in industries that were high in unskilled labour and low in human capital. This was the legacy of low investment in education (especially technical education) and deteriorating industrial relations. Focusing on the supply side of the economy Crafts and Broadberry (1992) analysed productivity growth by industry to show that the cathartic effects on growth of the recession of the 1980s had no parallel in the 1930s. This was partly because the government sought to protect failing enterprises, undermining competition and preserving trade union power.

From 1950 to 1973 the British economy grew faster than ever before or since, but despite this Crafts argued that it fell short of potential. In a series of papers (e.g. Broadberry and Crafts, 1996; Crafts and Bean, 1996) he emphasised that this was partly the result of polices, which from the 1930s onwards, included tariff protection, a complicated tax system with high marginal tax rates, the nationalisation of large swathes of industry and misdirected R&D effort. Underlying these policies was the so-called postwar settlement in which governments accepted the preservation of fragmented industrial relations, weak product market competition and inadequate human capital formation in return for full employment and welfarism. Crafts’ influential judgement was that while this may have been a good deal for short run stability, it was a bad deal for long run growth.

Crafts saw the crisis of the 1970s as breaking the mould that had constrained the UK economy. Although growth subsequently slowed, it did so less than comparator countries, and for the first time in a century, UK economic performance improved relative to potential. This he ascribed to three key elements. The first was the reforms undertaken by the Thatcher governments (1979-90), and not subsequently reversed, which included tax reform, industrial deregulation and privatisation of state enterprises, and the dramatic reduction of the power of trade unions. Another was the rapid adoption of information and communications technologies (ICT), assisted by tax reform and financial deregulation. The third was the competition-enhancing effect of Britain’s membership from 1973 of what is now the European Union.

Not surprisingly Crafts’ insights from history were much in demand and he gave numerous lectures and interviews on what this meant for current policy, not least in the debate over Brexit. His judgement that, from UK accession to the then EEC in 1973, increased trade and greater competition, notably from the Single Market Act of 1992, had increased UK GDP over the long run by 8-10 percent (Crafts 2016) was widely quoted. While this was sometimes taken as an estimate of the likely cost of Brexit, Crafts warned that it was not that simple. Historical evidence suggested that it was the combination of the series of domestic liberalisation in goods, financial and labour markets with exposure to the European market that had given rise to improved (relative) UK performance. Unless Brexit led to a wholesale reversal of these policies the likely damage to the UK economy would be considerably less (Crafts 2019).

Economic theory and economic history—a two-way street

Crafts kept abreast with the latest developments in theoretical and applied economics. He believed not only that economic theory and new techniques could help to illuminate economic history, but equally important, that economists could learn from history, especially if it was presented in a modern economic framework. One illustration is the development from the late 1980s of endogenous growth theory, which opened a wider range of possible influences on economic growth.  This he saw as an important development which provided a welcome escape from the straightjacket of the traditional paradigm that he and others had found wanting. Using the British industrial revolution as a testing ground, Crafts (1995) argued that some versions of the new growth theory that emphasised broad capital accumulation were not useful to historians and instead reasserted the primacy of technological change. He found that Mokyr’s distinction between macro and micro inventions was useful and suggested ways in which the latter could be interpreted in the spirit of endogenous growth models where incremental technical advances depended on the structure of incentives.

Addressing economists, Crafts (1998) argued that while existing endogenous growth models could help to explain slow growth during the industrial revolution, as compared with the 20th century, they failed to take account of how relative resource endowments and non-transferrable technologies could account, not just for catch-up growth potential, but for one economy overtaking another. In later work he turned to the macro inventions and demonstrated that, as a general purpose technology, the steam engine made a more modest but more prolonged contribution to UK productivity growth in the nineteenth century than ICT in the twentieth (Crafts 2004). 

A second area where Crafts cultivated synergies between theory and history is in economic geography, another area that underwent radical advances in the 1990s.  In several studies he combined the traditional resource-based explanation of industrial location that stressed the proximity of key factors and resource endowments with insights from the new economic geography that stressed economies of scale and access to markets. His pioneering quantitative study of the location of cotton factories during the industrial revolution showed that, while access to markets and human capital mattered, the most important factor was access to water power—a feature that persisted even after the transition to steam power (Crafts and Wolf, 2014). For UK industry as a whole, in the decades up to the First World War, he found that the revolution in transport costs had limited effects on regional economic structures, which still reflected initial resource endowments (Crafts and Mulatu, 2006). This dovetails neatly with his stress on the legacy of early industrialisation for subsequent growth performance.

He found that the new economic geography offered a little more historical traction when looking beyond the UK.  In a study of cities in the United States he found that industrial specialisation conferred modest productivity gains due to agglomeration externalities. On the other hand, the gains from subsequent diversification of industrial structures had only begun to emerge in the twentieth century (Klein and Crafts 2020). Perhaps the most important historical application of the new economic geography is to the patterns of growth among nations in the long run. Crafts and Venables (2003) argue that the dramatic fall in trade costs (mainly ocean shipping) first leads to the concentration of industrialisation and agglomeration externalities in countries with a pre-existing comparative advantage. Further declines in transport costs then lead to wider market access so that industrialisation eventually becomes more diversified across countries. This helps to explain cross-country patterns of trade and industrialisation over the last two centuries.

Nick the Master Craftsman

Nick Crafts was a masterful lecturer. In his lectures he dissected often conflicting and confusing literatures to provide a clear analytical roadmap for students with limited knowledge of economics. He wanted to give big first year lectures that most faculty try to avoid. As well as lecturing his own students, Nick gave many other talks, ranging from visiting American students, to public lectures, to groups in the City. No matter the group, he would always describe attendees as “punters”. They had paid in time, and sometimes in money, to hear him speak, and as such he always took his responsibilities to them seriously. That did not mean he dumbed things down in the search for popularity; on the contrary, he set high standards for those attending, as well as for himself. After a lecture on the Gold Standard he remarked “The punters didn’t like that one. They never do. But you can’t say you have studied economic history if you don’t know how the Gold Standard worked.” Nick was, as many former students can testify, a Gold Standard lecturer.

Crafts was very heavily involved in economic policy throughout his career, and was unrivalled in the way that he used economic history to inform his policy conclusions. He was a Research Fellow at the Centre for Economic Policy Research from 1985, serving as Director of the Human Resources Since 1900 Programme between 1989 and 1991. From 2010 until his retirement in 2019, Nick was the founding Director of CAGE, an ESRC-funded research centre at Warwick. In recognition of his achievements he received many high honours. He was elected to a Fellowship of the British Academy at the young age of 43 and in the Queen’s Birthday Honours of 2014 he was appointed Commander of the British Empire (CBE) for services to economics. He also served as President of the Economic History Society, President of the Royal Economic Society, and was Fellow of the Economic History Association and Fellow of the Cliometric Society.

Nick’s retirement from Warwick in 2019 was marked by a gathering of the great and the good for a two-day soirée that included keynote lectures and research presentations by many of Nick’s former graduate students, now distinguished academics in their own right. After retiring from Warwick Nick moved to a part-time post at Sussex where he continued to teach and research. Sadly, his (semi) retirement was all too brief and he died on 6th October 2023 after a lengthy illness. Over 50 years of energetic teaching and research, he reshaped British economic history and hugely influenced generations of economic historians. He will be sadly missed.

References

Broadberry, S. N. and Crafts, N. F. R. (1992), “Britain’s Productivity Gap in the 1930s: Some Neglected Factors,” Journal of Economic History, 52 (3), pp. 531-558.

Broadberry, S. N. and Crafts, N. F. R. (1996), “British Economic Policy and Industrial Performance in the Early Postwar Period”, Business History, 38, –. 65-91.

Crafts, N. F. R (1976), “English Economic Growth in the Eighteenth Century: A Re-examination of Deane and Cole’s Estimates”, Economic History Review, 29, 226-235.

Crafts, N. F. R (1977), “Industrial Revolution in England and France: Some Thoughts on the Question ‘Why Was England First?'”, Economic History Review, 30, 429-41.

Crafts, N. F. R (1984), “Patterns of Economic Development in Nineteenth Century Europe”, Oxford Economic Papers, 36, 438-458.

Crafts, N. F. R. (1985), British Economic Growth during the Industrial Revolution, Oxford: Clarendon Press; reprinted in paperback 1986, 1987, 1990, 1991.

Crafts, N. F. (1989), “British Industrialization in an International Context,” Journal of Interdisciplinary History, 19, 415-428.

Crafts, N. F. R. (1995), “Exogenous or Endogenous Growth? The Industrial Revolution Reconsidered”, Journal of Economic History, 55, 745-772.

Crafts, N. F. R (1997), “Some Dimensions of the ‘Quality of Life’ during the British Industrial Revolution”, Economic History Review, 50, 690-712.

Crafts, N. (1998), Forging Ahead and Falling behind: The Rise and Relative Decline of the First Industrial Nation,” Journal of Economic Perspectives, 12 (2), pp. 193-210.

Crafts, N. F. R, (2002), “The Human Development Index, 1870-1999: Some Revised Estimates”, European Review of Economic History, 6, 395-405.

Crafts, N. F. R (2004), “Steam as a General Purpose Technology: A Growth Accounting Perspective”, Economic Journal, 114, 338-351.

Crafts, N. (2016), “The Growth Effects of EU Membership for the UK: Review of the evidence,” University of Warwick: CAGE Global Perspectives Series, Paper 7.

Crafts, N. F. R (2018), Forging Ahead, Falling Behind, Fighting Back: British Economic Growth from the Industrial Revolution to the Financial Crisis, Cambridge: CUP.

Crafts, N. (2019), Persistent Productivity Failure in the UK: Is the EU Really to Blame?” National Institute Economic Review, 247, pp. R10-R18. 

Crafts, N. and Bean, C. (1996), “British Economic Growth Since 1945: Relative Economic Decline…and Renaissance?”, pp. 131-172 in N. F. R. Crafts and G. Toniolo (eds.), Economic Growth in Europe since 1945, Cambridge: Cambridge University Press.

Crafts, N. F. R and Harley, C. K. (1992), “Output Growth and the British Industrial Revolution: A Restatement of the Crafts-Harley View”, Economic History Review, 45, 703-730.

Crafts, N. F. R and Harley, C. K. (2000), “Simulating the Two Views of the First Industrial Revolution”, Journal of Economic History, 60, 819-841.

Crafts, N. F. R. and Ireland, N. J. (1976), “Family Limitation and the English Demographic Revolution: A Simulation Approach”, Journal of Economic History, 36, 598-623.

Crafts, N. F. R., Leybourne, S. J. and Mills, T. C. (1989) “Measurement of Trend Growth in European Industrial Output before 1914: Methodological Issues and New Estimates”, Explorations in Economic History, 27, 442-467.

Crafts, N. and Mulatu, A. (2006), “How Did the Location of Industry Respond to Falling Transport Costs in Britain before World War I?” Journal of Economic History, 66 (3), pp. 575-607.

Crafts, N. F. R. and Thomas, M. (1986), “Comparative Advantage in UK Manufacturing Trade, 1910-1935,” Economic Journal, 96 (383), pp. 629-645.

Crafts, N. F. R. and Toniolo, G. (eds.) (1996), Economic Growth in Europe since 1945, Cambridge: Cambridge University Press.

Crafts, N. and Van Ark, B. (eds) (1996), Quantitative Aspects of Postwar European Economic Growth, Cambridge: Cambridge University Press.

Crafts, N. and Venables, A. (2003), “Globalization in History: A Geographical Perspective,” in Globalization in Historical Perspective (pp. 323-370), Chicago: University of Chicago Press.

Crafts, N. and Wolf, N. (2014), “The Location of the UK Cotton Textiles Industry in 1838: A Quantitative Analysis, Journal of Economic History, 74(4), 1103-1139.

Klein, A. and Crafts, N. (2020), “Agglomeration Externalities and Productivity Growth: US cities, 1880–1930,” Economic History Review, 73 (1), pp. 209–232. 

 

 

Stephen Broadberry (Oxford), Bishnupriya Gupta (Warwick), Timothy Hatton (ANU and Essex) and Timothy Leunig (PublicFirst and LSE)