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The Origins of Globalization: World Trade in the Making Of the Global Economy, 1500-1800

Author(s):de Zwart, Pim
van Zanden, Jan Luiten
Reviewer(s):O'Rourke, Kevin Hjortshøj

Published by EH.Net (July 2019)

Pim de Zwart and Jan Luiten van Zanden, The Origins of Globalization: World Trade in the Making Of the Global Economy, 1500-1800. Cambridge: Cambridge University Press, 2018. xvi + 338 pp. $30 (paperback), ISBN: 978-1-108-44713-3.

Reviewed for EH.Net by Kevin Hjortshøj O’Rourke, All Souls College, Oxford.

This is an engaging and generally very well written account of the world economy during the early modern period. It surveys a great range of literature not only on international trade — and, to a lesser extent, migration — in the three centuries following Columbus, but on the economic development during this period of each of the major regions of the world. Its focus is largely on intercontinental trade, but it also provides much useful information on international trade more generally. And its major purpose is to argue that these international trade links had profound effects on many, if by no means all, of the major economies of the early modern world. In arguing that the “soft globalization” (de Vries 2010) of the three centuries before the Industrial Revolution could have important economic effects, and in using international trade as a lens through which to tell the story of early modern economic development more generally, it is thus closely related to Findlay and O’Rourke (2007), and it has the advantage of being able to draw upon an additional decade’s worth of research. The main message to emerge, which admittedly will not come as a surprise to readers familiar with the work of Engerman and Sokoloff (2012) and others, is that trade had very different effects depending upon regions’ geographical endowments, institutional arrangements, and other factors.

The structure of the book is straightforward. The first substantial chapter surveys what we know about transportation costs, silver flows, trade and migration flows, and price gaps during the early modern period. The issue of how many people during this period might have been unaffected by any of this is not addressed head-on, and some readers may think that it should have been. Successive chapters then tell the story of how Latin America, Africa, North America, South Asia, Southeast Asia, East Asia, and Europe interacted with this emerging global economy, and what impact (if any) these interactions had on domestic economies. The concluding chapter argues strongly, based on the preceding material, for the importance of global interactions in influencing worldwide economic development between 1500 and 1800.

Some of the regional economic histories developed here are familiar, others less so. The description of early modern Latin America as a “transition economy” which experienced economic growth based on the introduction of markets is an arresting metaphor, although the sources cited by de Zwart and van Zanden suggest that statements such as “Commodity markets had hardly existed at all before 1500” (p. 71) are greatly exaggerated. But the chapter makes a spirited case for the growing importance of wage labor during the early modern period, a useful corrective to accounts stressing coerced labor.

A second region where the authors take a strong stand on a disputed literature is Southeast Asia. The book argues against Anthony Reid’s well-known claim that the region’s “Age of Commerce” came to an end in the middle of the seventeenth century, when Europeans (and in particular the Dutch) consolidated their control over much of the region. On the other hand, the authors also cite evidence of declining Javanese real wages between 1600 and 1780 (or at least, depending on the source used, in the later seventeenth and early eighteenth centuries); sharply declining urbanization during the seventeenth and eighteenth centuries; and an increase in the gap between Southeast Asian and European heights. This may suggest that there is life in the Reid hypothesis yet, growth in the late eighteenth century notwithstanding.

A major theme of the book is the importance of silver flows during the period, and it is of course important to stress this. This reviewer did not find all of the monetary analysis persuasive: it seems inappropriate to cite Keynes in favor of the argument that silver may have been beneficial for long run growth in various regions during this period (p. 245), and the analysis of bullion inflows on Indian inflation (p. 157) is, frankly, confusing.

Overall, however, this is a book that will be of considerable use to teachers and students looking for an accessible introduction to a fascinating period in world economic history.


Chase, Diane Z., and Arlen F. Chase. “Ancient Maya Markets and the Economic Integration of Caracol, Belize.” Ancient Mesoamerica 25, no. 1 (2014): 239-50.

De Vries, Jan. “The Limits of Globalization in the Early Modern World.” Economic History Review 63, no. 3 (2010): 710-33.

Engerman, Stanley L., and Kenneth Lee Sokoloff. Economic Development in the Americas since 1500: Endowments and Institutions. Cambridge: Cambridge University Press, 2012.

Findlay, Ronald, and Kevin H. O’Rourke. Power and Plenty: Trade, War, and the World Economy in the Second Millennium. Princeton, NJ: Princeton University Press, 2007.



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Subject(s):International and Domestic Trade and Relations
Geographic Area(s):General, International, or Comparative
Time Period(s):16th Century
17th Century
18th Century

Financial Elites and European Banking: Historical Perspectives

Editor(s):Cassis, Youssef
Telesca, Giuseppe
Reviewer(s):Ugolini, Stefano

Published by EH.Net (June 2019)

Youssef Cassis and Giuseppe Telesca, editors, Financial Elites and European Banking: Historical Perspectives. New York: Oxford University Press, 2018. xiv + 259 pp. $80 (hardcover), ISBN: 978-0-19-878279-7.

Reviewed for EH.Net by Stefano Ugolini, Institute of Political Studies, University of Toulouse.

There was a time when elites used to be a very popular topic among economic historians. Under the indirect impulse of (and often, in opposition to) Marxist ideology, an impressive historiographic effort was consecrated, during the 1970s and 1980s, to the study of elites and their role in the working of capitalism. The topic fell out of favor with the crumbling of the Berlin Wall, as economic historians’ focus rapidly shifted to parallel questions such as culture, public choice, or the quality of institutions. This detachment was also partially motivated by growing methodological doubts about the relevance and usefulness of the very concept of “elite” as a historiographical tool.

Naturally, the crisis of 2008 aroused the general public’s interest around the power of the “Masters of the Universe” who had made such a big mess possible. Might this have opened a window of opportunity for revitalizing the historical literature on financial elites? Such is the bet made by the editors of this volume, Youssef Cassis and Giuseppe Telesca — the former of whom contributed substantially to the “old” literature on elites with his celebrated 1984 study of City bankers in Edwardian Britain. The result of the endeavor is a collection of nine diverse studies by economic, business and legal historians, many of whom are directly or indirectly linked to the European University Institute of Florence.

The first chapter, written by the editors, promises to develop the original intuition of the volume by performing a comparative analysis of realities and discourses about financial elites’ responsibilities during the Great Depression and during the Great Recession. The promise is not really fulfilled, as the chapter does not actually address the issue in a truly systematic way. Cassis and Telesca want to suggest that, paradoxically, bankers were less responsible for the economic slump in the 1930s than in the 2010s, yet they paid a much higher price then than now. Of course, the question at stake is so complex (and so difficult to substantiate) that it would deserve several books in itself: indeed, it would be unfair to expect a single chapter to answer it in a fully satisfactory way.

Chapter 2, by Niccolò Valmori, is rather remote from the rest of the volume from a chronological viewpoint, as it deals with the French Revolution. The idea is to try to understand how financial elites manage to deal with major political instability. Building on some business correspondences, Valmori reconstructs the trajectories of three foreign Paris-based bankers throughout the revolutionary period, showing that volatility put financial elites into a situation of net dependence on political elites. While this chapter is concerned with the short-term impact of political shocks on individual financiers, the following one, by Giandomenico Piluso, focuses on the long term — on how the systemic fracture set in motion by World War One triggered the gradual substitution of one elite with another one in Italy. Piluso shows how the challenges of the Interwar led to the birth of Italy’s “technocracy,” a hybrid elite within which the boundaries between finance and politics became impossible to disentangle. The qualitative narrative of Chapter 3 is nicely complemented by the quantitative investigation of Chapter 4, by Alberto Rinaldi and Michelangelo Vasta, which illustrates with network analysis the evolution of Italy’s economic elite throughout the twentieth century. Looking at interlocking directorates in top Italian joint-stock companies, Rinaldi and Vasta are able to document the rise of “technocrats” since the 1920s but also their fall since the 1980s, when direct state intervention in the economy started to falter. These conclusions are contrasted by those of Chapter 5 by Laure Quennouëlle-Corre, which deals with “technocracy” in postwar France. As the chapter suggests, the French experience clearly decoupled from the Italian one in the 1980s, as in Paris “technocrats” managed to maintain their grip on the financial system and acted as the true engines of its liberalization.

In a sort of chronological rollercoaster, Chapter 6, by Leslie Hannah, takes us back to Victorian Britain. The focus here is on the regulation of corporate issuance: building on his extensive historical expertise, Hannah argues that agency theory cannot explain how the London Stock Exchange managed to limit misbehavior. Also Chapter 7, by T.T. Arvind, Joanna Gray, and Sarah Wilson, deals with rules and practices in Victorian Britain, arguing that the thick strata of social norms that characterized the nineteenth-century “gentlemanly capitalism” made it very different from today. Albeit interesting, these two chapters appear to be only loosely connected to the rest of the volume.

The last two chapters bring us forward to the late twentieth century. Chapter 8, by Mikael Wendschlag, analyses the professional backgrounds of a sample of Western central bankers, to show that these changed almost every decade according to the general political context: civil servants dominated in the 1960s, politicians in the 1970s, financiers in the 1980s, and academics in the 1990s. A similar exercise is performed in Chapter 9, by Alexis-Frédéric Drach, for the members of the Basel Committee on Banking Supervision: also in this case, a discontinuity is actually found in the 1980s.

To sum up, Financial Elites and European Banking bundles together nine studies of diverse nature, approach, breadth, and quality. One might regret that the many interesting perspectives opened by the contributors (especially in terms of political economy) were not actually funneled into a broadly consistent analytical framework. Elites could indeed return to be a fashionable topic for economic historians, but the new methodologies through which their study might be revitalized still remain to be clarified.

Stefano Ugolini is an associate professor of economics at Sciences Po Toulouse and a researcher at LEREPS (University of Toulouse). He has published extensively on the history of money and finance, including in journals such as the Economic History Review, the European Review of Economic History, Business History, the Financial History Review, and the Journal of Monetary Economics. He is also the author of The Evolution of Central Banking: Theory and History (Palgrave Macmillan, 2017).

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Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):Europe
Time Period(s):19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

A History of the Global Economy: The Inevitable Accident

Author(s):White, Colin
Reviewer(s):Coelho, Philip R. P.

Published by EH.Net (May 2019)

Colin White, A History of the Global Economy: The Inevitable Accident. Cheltenham, UK: Edward Elgar, 2018. x + 495 pp. $195 (cloth), ISBN: 978-1-78897-197-3.

Reviewed for EH.Net by Philip R. P. Coelho, Department of Economics, Ball State University.
This book is intended as a comprehensive overview of the growth of the human economy from the ancestral past to the present. It has some insights that specialists may benefit from, but its manifest shortcomings limit its utility. It is much like an encyclopedia — wide-ranging, containing considerable scholarship and information — but, like an encyclopedia, the underlying intellectual framework is debatable and there are bits that are just wrong. Its subtitle — The Inevitable Accident — is suggestive of an underlying teleology that an examination of the evidence does not justify. The emergence of a species whose individual members use and manipulate technology to achieve goals has occurred only once on this planet, while eyes, flight, echo-location, social-living, and many other traits have evolved separately in different animals numerous times. This suggests that in the ancestral environment where evolutionary selection occurred intelligence was not as valuable as other traits for evolutionary success (survival and reproduction). The evolution of Homo sapiens was not inevitable, but accidental. There is a substantial literature on the evolution H. sapiens that makes precisely this point.

A History of the Global Economy has twenty-four chapters grouped into seven sections (“Parts”) with each Part having a brief introductory segment. The book is wide-ranging, starting with the evolution of humanity and ending in the present (2017). Almost every page has an insight worth pondering, but, simultaneously, the same page will likely have erroneous conventional wisdom, basic facts that are incorrect or missing, and faulty economic analysis. The author professes to adhere to a Malthusian view of history, but simultaneously believes in progress (increasing output per capita) with periods of “reversal” of relatively short duration (p. 6). Elsewhere he provides/cites estimates of the long-term growth annual rate of output per capita of 0.15 percent and 0.1 percent (p. 213), and 0.05 percent (p. 351). That may not seem very much, but since civilizations came into being some 8,000 years ago, at a growth rate 0.069 percent per year there would be approximately eight doublings. If incomes 8000 years ago were equivalent to $400, then mean incomes throughout the world today would be approximately $98,000. According to the CIA Factbook, at purchasing power parity world income per head in 2017 was $17,500. This tells us that the since the beginnings of civilization the world economy has not averaged an annual growth rate of 0.069 percent, and that, if the rates of growth during the heydays of ancient Greece and Rome were correct, then periods of “reversal” were not short. Regardless of the actual numbers, if you rely upon Malthusian Theory, long-run economic growth cannot occur unless you stipulate various ad hoc “fixes” to explain anomalies. In that case, the theory becomes incoherent.

Throughout the book there are problems with basic economic theory. The author believes that people trade because there is a surplus. This has it backwards. Trade occurs because there are differences in relative prices (opportunity costs). Production increases in those goods and services where there is a comparative advantage; as a result, summing over all parties, total output increases. Implying that a region has a persistent surplus (goods that are neither consumed nor sold) suggests producers are intellectually challenged. Why would anyone spend economic resources to produce things they do not want and cannot be sold? This elementary insight into the basis for trade and specialization is unrecognized too many times by the author; still on other pages he correctly analyzes the economic basis of comparative advantage. I do not know what to make of this except that the book should have had a competent and hard-nosed editor.

Keeping on trade, the author repeats and accepts that European development was able to by-pass Malthusian constraints because of “ghost” acres. Ghost acres are those lands that were outside of Western Europe that provided Western Europe with food, which, in turn, allowed the European population to increase and industrialize. The purveyors of “ghost” acres appear to believe that the raw materials were somehow provided gratis to Europe. If it were otherwise and the Europeans paid New World producers for their produce, it would be considered trade and the economics of comparative advantage. If you believe in “ghost” acres, then we can say the Chinese development over the past forty years is overstated, because it depended upon the ghost acres in Brazil, Canada, and the United States among others. This is nonsense; the Chinese (and the Europeans before them) paid for imports. Again, this is trade and comparative advantage at work. The nonsense of ghost acres pollutes some otherwise respectable scholarship. Still, it remains nonsense.

Major and minor errors abound: The international slave trade did not end in 1807, only the (legal) American and British involvement; colonialism was not a source of net economic benefit to the Mother countries; enclosures did not mean that small landholders lost their rights to the commons; capitalism does not mean that countries lose creative innovativeness; and it goes on and on. The reification of countries is particularly harmful to economic analysis; countries do not industrialize, create or innovate, people do. Certainly, the reification of a country can be a valuable shorthand in writing, but it should not delude one into eliminating the primacy of individual incentives. Otherwise, history becomes inchoate. Try to explain the changes in the Chinese economy from 1950 to the present without reference to individual incentives; it is impossible.

Finally, there is a substantial amount of hubris embedded here. It is best illustrated in the discussion of the “great divergence.” The great divergence is the argument that prior to the nineteenth century, output per capita and living standards were very similar between Western Europe and East Asia. The argument has persuaded me that Chinese output per capita was at least 75% of that of Western Europe circa 1780, but by 1900 European output per capita was five (maybe ten times) greater than Chinese. The author attributes this to increased European output, and has almost nothing to say about Chinese nineteenth century history. During the nineteenth century China experienced the Taiping Rebellion (estimated deaths from 10 million to 100 million), the Dungan Revolt (deaths about 10 million), the Panthay Rebellion (about 1 million deaths) and a host of assorted smaller wars and conflicts. The Chinese population in 1850 was approximately 430 million, about 36% of the world’s population; by 1930 the Chinese population grew to about 475 million and about 24% of the world’s. From 1850 to 1930 world population grew by about 64% (from 1.26 billion to 2.07 billion), while during the same period Chinese population grew by a little less than 10%. Nineteenth century conflicts were demographic and economic catastrophes for China. (As an aside, the major wars of nineteenth century China were religious (the Taiping Rebellion “Christian” based, the other two Islamic); given history one can understand the contemporaneous Chinese reluctance on giving free reign to religion.) The author does not mention Chinese nineteenth century history in his discourse on the “Great Divergence.” Authors cannot be expected to know everything, still they should have some knowledge of what they are writing about. The attribution of the Great Divergence entirely to European exceptionalism rather than to a more nuanced and historically accurate account suggests unconstrained intellectual hubris.

In sum the flaws in this book overwhelm the substantial scholarship embedded in it. A critical reading of almost every contention that the author makes is required because too often he is mistaken.

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Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

The European Guilds: An Economic Analysis

Author(s):Ogilvie, Sheilagh
Reviewer(s):de Vries, Jan

Published by EH.Net (March 2019)

Sheilagh Ogilvie, The European Guilds: An Economic Analysis. Princeton, NJ: Princeton University Press, 2019. xvi + 645 pp. $40 (hardcover), ISBN: 978-0-691-13754-4.

Reviewed for EH.Net by Jan de Vries, Department of History, University of California at Berkeley.

Europe’s craft guilds have been a topic of interest to scholars for a very long time. When the Classical economists condemned them and the French revolutionaries set about abolishing them everywhere they seized power, Europe’s craft guilds, which had then functioned in nearly all of urban Europe for some eight hundred years, came into bad odor: they became the poster child for ancien régime economic privilege and oppression. Later, institutional economists of the “German Historical School” and many historians came to the defense of the old guild regime. Something that had helped organize economic life for so long, that gave manual workers — some of them — a political voice, and that embodied the “spirit” of an economic epoch deserves to be understood on its own terms.

Over the past century or so economists have become less interested in the “spirit” of economic epochs and most social historians became disabused of any romantic notions they may have nurtured about guild members, who were, after all, petty commodity producers, if not actual capitalists. But the beginning of a new millennium brought with it a renewed appreciative interest in guilds. The new institutionalism cast the guilds’ seemingly self-serving actions in a new light, a light that revealed clever solutions to various forms of market failure, particularly in the realm of technical innovation and human capital formation. The guilds were back: instead of being a disreputable relic of the old regime, they now looked like pathfinders for the great divergence.

Sheilagh Ogilvie, Professor of Economic History at the University of Cambridge, has now written a book that intends to bring this most recent flirtation to an end. The European Guilds is a comprehensive study of craft guilds in Europe as a whole. Its foundation is a database of guild actions drawn primarily from the vast secondary literature on guilds, which mostly focus on individual trades or single towns. Ogilvie’s database is primarily qualitative in character: describing guild policy on a particular issue, such as ordinances defining formal guild power in a town, the observations of an outsider concerning guild behavior, etc. But the database also includes quantitative elements: the number of guilds and their members, the price of guild membership, litigation expenses, license payments, etc. Altogether, her database includes 12,051 quantitative and 5,333 qualitative observations drawn from twenty-three modern European countries beginning with the eleventh century and continuing until the last European guilds were abolished in the late nineteenth century.

The database is the foundation of this study. Every aspect of guild behavior Ogilvie addressed is analyzed on the basis of the relevant database elements. Thus, she has 706 discrete observations concerning guilds and innovation, 4919 observations that address barriers to entry to guild membership, etc. The observations as a whole are fairly well distributed across space and time, although nearly half come from the Low Countries and German-speaking Europe. Ogilvie is attentive to possible over- and under-representation problems, but there remains the problem of the nature of the observations themselves. Some record historical events, others are prescriptive statements (rules, pronouncements), yet others are claims of interested parties. Is there a secure way of converting such a mixture of observations into a conclusive statement of guild behavior? Ogilvie’s approach is to rely on the sheer number of observations available to her and, in most cases, on what she sees as the unambiguous answers her database gives to the questions she puts to it.

For, make no mistake, guilds were, first and last, institutions designed to redistribute resources to their members at the expense of society at large (p. 80). They were employer associations, “steely and implacable” in their seeking after rents (p. 210) that endured for so long because guilds succeeded in sharing enough of their rents with those who held political power to buy their protection (p. 581). That is, guilds were not primarily “private order” institutions that generalized trust, built social capital and enriched civil society. They were what Adam Smith said they were: conspiracies against the public, abetted in their pursuit of private gain by public power.

Ogilvie makes this case systematically. Chapter by chapter, she reviews the collusive ties of guilds to governmental authorities, the barriers to entry erected by guilds, their manipulation of markets, their discriminatory policies regarding women and an array of religious and ethnic groups. With few exceptions, guilds acted to restrict membership, monopolize production, exploit suppliers and hired labor, and exclude women.

Scholars who speak well of guilds usually concede their monopolistic, corporatist character, but point to redeeming virtues: they uphold quality standards, enable investments in human capital via apprenticeship, and even stimulate innovation by providing a non-patent based incentive structure. Certainly the most interesting chapters of the book tackle these themes. Ogilvie’s database arms her with example after example to show that guilds were, after all, irredeemable. Their quality controls served themselves, not consumers; apprenticeship had little to do with guilds (and was hardly necessary to the acquisition of skill in most trades); and innovation was only tolerated by guilds when it served the members’ interests. This last claim may seem like a significant concession, but Ogilvie sees it as one more confirmation of the myopic focus of guild activity.

The many thousands of guilds that existed from about 1100 to at least the 1790s imposed a deadweight loss on the European economies, a loss that continued unabated throughout this long period. But, was this loss large or small? After all, no economic era is without its rent-seeking institutions, corrupt governments and feckless regulators. Is there a profession or industry in the United States that does not seek to maintain entry barriers, define self-serving quality standards, and buy the favor of politicians? Did the rent seeking of the craft guilds exceed the endemic background rent seeking that is, arguably, part of the human condition?

The organization of Ogilvie’s study does not lend itself to providing an answer to this question since she pools her data to generate a group portrait of “The European Guild.” Only in the final chapter of this exhaustive study does she turn to a comparative approach. Were guilds less noxious in some places, or in some branches of industry, than in others? Did the severity of rent seeking correlate with overall economic performance? While Ogilvie does not consider industry differences, she does seek to distinguish broad European zones of strong, average, and weak guilds. Her database reveals the German, Nordic, and Iberian lands to have had the strongest, most objectionable, guilds, while the Low Countries and Britain had the weakest. There, either the state or the town magistrates limited guild power more consistently than elsewhere in Europe.

Ogilvie then compares the GDP estimates available for these European countries and finds that Britain and the Low Countries performed better, overall, than the other regions of Europe. This, she suggests, is the measure of the difference that guild power could make.

This analysis is brief, highly aggregated, dependent on weak data, and, unfortunately, not terribly convincing. Northwestern Europe in the early modern era differed from the rest of Europe in so many dimensions that an assertion that the line of causation should run from weak guilds to faster GDP growth is, at the very least, premature.

The European Guilds is a learned and comprehensive study of an institution that stood at the heart of the European non-agricultural economy for over seven centuries. Its strength is, however, also a weakness. The guild is analyzed at a high level of abstraction, the wealth of detailed examples notwithstanding. This aids in drawing generalizations about guild intentions and behavior; but it limits the examination of the guilds within the larger economies in which they functioned. The final chapter hints at these issues, but it is far less fully developed than the rest of this volume. Instead of closing a debate, Ogilvie has, I believe, reinvigorated one. Her new book will be the necessary starting point for anyone wishing to pursue the matter further.

Jan de Vries is the Sidney Hellman Ehrman Professor of History and Economics, Emeritus, at the University of California at Berkeley. He is the author, among other works, of The Industrious Revolution (Cambridge, 2008) and The Price of Bread: Regulating the Market in the Dutch Republic (Cambridge, 2019).

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Subject(s):Business History
Industry: Manufacturing and Construction
Markets and Institutions
Geographic Area(s):Europe
Time Period(s):Medieval
16th Century
17th Century
18th Century

The Poverty of Slavery: How Unfree Labor Pollutes the Economy

Author(s):Wright, Robert E.
Reviewer(s):Geloso, Vincent

Published by EH.Net (May 2018)

Robert E. Wright, The Poverty of Slavery: How Unfree Labor Pollutes the Economy. New York: Palgrave Macmillan, 2017. vii + 302 pp. $45 (paperback), ISBN: 978-3-319-48967-4.

Reviewed for EH.Net by Vincent Geloso, Department of Economics, Bates College.
There are three analytical traditions regarding the consequences of slavery on the broader economy. These traditions are best illustrated in the context of the debates regarding slavery in the United States. The first is best labelled as the “cliometric” tradition initiated by Robert Fogel and Stanley Engerman. It is not the results of this group which define it but its resolute adhesion to methodological individualism as a scientific philosophy. This is what sets it apart from the second tradition whose modern representatives, Sven Beckert and Edward Baptist, play the role of antiheroes to Fogel and Engerman (the term “antiheroes” is selected to divulge the present writer’s biases and priors). They adhere to a more holistic approach where the analysis begins at the level of collectivities and then moves down to the individual. Unlike the “cliometric” group, this latter tradition is more unified in its core conclusions — that slavery established political and economic structures which still last to this day. While there are overlaps between both traditions, the third tradition overlaps both. This tradition, relying nearly universally on methodological individualism, emphasizes a broad political economy approach to the topic arguing that slavery is a form of rent-seeking which can spill over into spheres of societies in ways that impose long-term costs in excess of the private returns. This tradition is less unified than the other two.[1] In The Poverty of Slavery, Robert Wright synthesizes and expands on many key points of this tradition.

In fact, Wright’s greatest service to this underappreciated tradition is to simplify a complex body of ideas into a simple sentence: slavery is pollution. If pollution is the form that externalities take when they divorce social cost from private, then slavery was pollution. It polluted other social, economic and political institutions.

Consider the case of the infamous slave patrols in antebellum America. Slaveowners need to police their slaves who might run away if the option presents itself. Policing slaves is not inexpensive and the costs reduce the returns from owning said slaves. As such, the cost of policing is a deterrent to slavery, which is why thinkers as far back as Adam Smith considered that slaves would unavoidably be less efficient than free workers. However, slaveowners have large concentrated interests, which is in itself a strong incentive for them to organize. If they organize successfully, they can convince the state to spread the cost of policing onto the broader population. If the population that bears the cost is sufficiently large, the costly policy may be small enough on a per capita basis for those burdened to not care or not even know. Yet, slave patrols entailed a large social cost. Economic historian Jeffrey R. Hummel (2012: 123) places the annual subsidy (because that is what it was) at $4.5 million in 1850 which was a little more than fifty cents per capita (including slaves – closer to $1 per person when slaves excluded) in the U.S. South – about 0.3% of annual per capita income. And this does not include the deadweight loss of reallocating workers to tracking down slaves. For such a “small” (for lack of a better term) policy, these are heavy costs. They are also an illustration of slavery as pollution – the slaveowners polluted other institutions by co-opting them to their bidding.

Wright provides a very long list (especially in chapters 6 and 7) of channels through which this pollution materializes (beyond scarring the lives of slaves and coerced workers in many direct and indirect ways). All of these amount to the same core point, those who reap the private benefits of slavery are content with their gains even though they come at a larger social cost and they will work to find ways to drive a wider wedge between the two by shifting costs onto other parties. Hence, slavery as pollution.

Wright argues (in chapter 2) that we ought not to use his synthesis only for the purposes of analyzing slavery. Rather, it should extend to analyzing “unfree labor” on a spectrum going from “free labor” on one end to “chattel slavery” on the other end. Indeed, Wright correctly points out that there were many instances of unfree labor markets that were not as extreme as slavery but which polluted institutions in ways that hindered economic development. As relevant illustrations, one can think of the work of Melissa Dell (2010) on the mita system in colonial Peru, Sheilagh Ogilvie (2011) on feudal systems in Central Europe and Marlous van Waijenburg (2018) on the corvée system of forced labor in French colonial Africa. Wright’s synthesis provides tools to analyze the wider economic costs imposed by less extreme forms of labor coercion.

However, Wright needs to pay more attention to the role of ideas. He only spends two pages on “public perceptions.” Yet, slaveowners not only rent-seek through convincing legislators to support their interest, they also rent-seek by shaping narratives as Grynaviski and Munger (2017) point out. One ought to remember that, in the early days of the American Republic, slavery was seen as a necessary evil which would have, eventually, to be eradicated. However, this view gradually changed to one where slaves were considered lesser human beings which were not responsible enough to be free. This became the leitmotiv not only of slaveowners but also of non-slaveholding southerners. As slaveowners had the ability to shape laws, they had the ability to set the parameters of any discussion and, as such, possessed a strong advantage in imposing their preferred explanation and propositions. In a way, they increased the costs of holding an egalitarian ideology in ways which still persisted into the Reconstruction, Jim Crow and contemporary eras. This form of “intellectual” pollution was caused by unfree institutions.

Given the enormity of the stack of articles and books to be read on the topic of slavery in antebellum America alone, adding an additional volume on the pile appears futile, since it will most likely be ignored. It is likely that Robert Wright’s The Poverty of Slavery will not be an exception to this rule. This is unfortunate. Wright’s book ought to be considered as the synthesis of an underappreciated analytical tradition regarding the broader economic consequences of slavery.


1. I would place Thomas Sowell (1981) in this tradition alongside Gordon Tullock (1967) and Grynaviski and Munger (2014; 2017). Jeffrey R. Hummel also places the eighteenth-century French physiocrat Anne-Robert Jacques Turgot, the early nineteenth century French economist Jean-Baptiste Say and British political philosopher John Stuart Mill into this tradition (2012: 4-6).


Dell, Melissa. “The Persistent Effects of Peru’s Mining Mita.” Econometrica 78, 6, 2010, pp. 1863-1903.

Grynaviski, Jeffrey D., and Michael Munger. “Did Southerners Favor Slavery? Inferences from an Analysis of Prices in New Orleans, 1805–1860.” Public Choice 159, 3-4, 2014, pp. 341-361.

Grynaviski, Jeffrey D., and Michael C. Munger. “Reconstructing Racism: Transforming Racial Hierarchy from ‘Necessary Evil’ into ‘Positive Good’.” Social Philosophy and Policy 34, 1, 2017, pp. 144-163.

Hummel, Jeffrey Rogers. Deadweight Loss and the American Civil War: The Political Economy of Slavery. Ph.D. dissertation, University of Texas at Austin, 2001 [2012].

Ogilvie, Sheilagh. Institutions and European Trade: Merchant Guilds, 1000–1800. Cambridge University Press, 2011.

Sowell, Thomas. Markets and Minorities. New York: Basic Books, 1981.

Tullock, Gordon. “The Economics of Slavery,” Left and Right, 3, 2, Spring-Summer 1967, pp. 5-16.

van Waijenburg, Marlous. “Financing the African Colonial State: The Revenue Imperative and Forced Labor,” Journal of Economic History 78, 1, 2018, pp. 40-80.


Vincent Geloso is the author of Rethinking Canadian Economic Growth and Development since 1900: The Quebec Case (Palgrave Macmillan, 2017).

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Subject(s):Servitude and Slavery
Geographic Area(s):North America
Time Period(s):18th Century
19th Century

From Warfare to Wealth: The Military Origins of Urban Prosperity in Europe

Author(s):Dincecco, Mark
Onorato, Massimiliano
Reviewer(s):Koyama, Mark

Published by EH.Net (February 2018)

Mark Dincecco and Massimiliano Onorato, From Warfare to Wealth: The Military Origins of Urban Prosperity in Europe. New York: Cambridge University Press, 2017. xi + 196 pp. $30 (paperback), ISBN: 978-1-316-61259-0.

Reviewed for EH.Net by Mark Koyama, Department of Economics, George Mason University.

Mark Dincecco and Massimiliano Onorato have authored numerous papers on the relationship between warfare, urbanization, state capacity, and economic development. This book presents the results of their research program in a single slim volume.

Their research sheds new light on the role warfare played in Europe’s urban and economic development before the industrial revolution. In particular, it helps to illuminate the historical origins of the “blue banana” — the corridor of urban development that spreads out from south-eastern England to northern Italy. Rather than relying on geography or national-level institutions to account for different patterns of economic development, Dincecco and Onorato focus on the role played by warfare

There are two main elements to their argument: (1) the safe-harbor effect; and (2) the warfare-to-welfare effect. The safe-harbor effect links frequent interstate warfare to rural to urban migration, which in turn spurred city growth. The warfare-to-welfare effect links conflict to modern economic development via several channels including human capital accumulation, state capacity, and more inclusive political institutions.

The Low Countries, for example, is often referred to by historians as a “cockpit of war.” Indeed, from the Hundred Years’ War to World War I many contests for European supremacy have involved battles in what is now modern Belgium. And, the Low Countries was both high urbanized in the past and highly developed today. A similar argument could be given for northern Italy.

Rather than just relying on historical examples, however, Dincecco and Onorato bring together several different types of data on historical conflict, city size, and regional development today to establish their argument. Chapter 2 confirms that Europe was indeed very bellicose and that the late Middle Ages and Early Modern period were especially warlike. Chapters 3 and 4 show that conflict helped give rise to urban development in a panel setting. Chapter 5 links the data on conflicts with regional income levels today. The authors find that the legacy of this bloodshed is a positive one. A one standard deviation increase in historical conflict exposure is associated with a 5 to 9 percent increase in regional per capita GDP today. The majority of the analysis is conducted for all Europe. But the authors also draw on specific evidence from regions like Italy and from historical case studies.

The main focus of this volume is on Europe but in Chapter 6 the authors consider why similar developments did not occur in East Asia or Sub-Saharan Africa. China tended to be historically unified and hence did not experienced frequent interstate warfare (Ko et al., 2018). In sub-Saharan Africa, in contrast, the high land-to-labor ratio meant that warfare was over slaves rather than territory. War in Africa did not lead to urban growth.

This is a very focused book. The writing is clear and concise and Dincecco and Onorato excel at presenting their empirical results in an intuitive and transparent fashion. As a result, this volume will be a very valuable resource for scholars working on related themes and an excellent model for students learning how to write research papers.

One consequence of this brevity is that Dincecco and Onorato do not make use of the opportunity afforded to them to develop a more expansive argument. Many of the 112 pages of main text are devoted to tables and discussions of empirical results. Perhaps the argument would have been strengthened by considering counterarguments and possible exceptions in more detail?

In summary, this book will be very useful for scholars in economic history, political science, political economy and development economics. But, despite the discussion of historical case studies, it is not probably not a suitable book for the lay reader.


Chiu Yu Ko, Mark Koyama and Tuan-Hwee Sng (2018), “Unified China; Divided Europe,” International Economic Review 59(1), 285–327.

Mark Koyama is an Associate Professor of Economics at George Mason University and a National Fellow at the Hoover Institution. He is the author of Persecution and Toleration: The Long Road to Religious Freedom (with Noel Johnson) which is forthcoming from Cambridge University Press.

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Subject(s):Economic Development, Growth, and Aggregate Productivity
Military and War
Markets and Institutions
Urban and Regional History
Geographic Area(s):Europe
Time Period(s):Medieval
16th Century
17th Century
18th Century

A Culture of Growth: The Origins of the Modern Economy

Author(s):Mokyr, Joel
Reviewer(s):Diebolt, Claude

Published by EH.Net (November 2017)

Joel Mokyr, A Culture of Growth: The Origins of the Modern Economy. Princeton, NJ: Princeton University Press, 2017. xiv + 403 pp. $35 (cloth), ISBN: 978-0-691-16888-3.

Reviewed for EH.Net by Claude Diebolt, Department of Economics, University of Strasbourg.

I enjoyed this new book by Joel Mokyr, which is praiseworthy for its elegance and erudition. It tells the story of economic growth with “culture” — a mushy word for most of us — as the invisible hand. However, I regret the lack of in-depth consideration of the German language literature. Significantly more attention could also have been given to economic cycles. Werner Sombart, for example (Der moderne Kapitalismus and Der Bourgeois. Zur Geistesgeschichte des modernen Wirtschaftsmenschen), was the first to come to mind while reading this fantastic book. It also reminds me of George Akerlof and Robert Schiller’s Animal Spirits, where confidence, fear, a propensity to gamble, and follow-the-leader effect stories are presented as central to explain the decision making process. The Bourgeois Trilogy by Deirdre McCloskey is another seminal work in that spirit: ideas, not capital or institutions enriched the world. A growth theorist would probably also see strong connections between Mokyr’s latest effort and the unified growth theory initiated by Oded Galor.

The book is about the roots of the Industrial Revolution, the Great Enrichment, and radical changes in values, beliefs, and preferences. It is not about a mass movement. It is a phenomenon related to an elite: philosophers and scientists of course, but also engineers, instrument makers, and even industrialists who spawned the process. In any case, it is a minority of the population. Mokyr’s ambition is to understand and to explain how these beliefs and values emerged — why some people developed new ideas and why these ideas replaced the ones in place.

According to Mokyr, we know pretty much what happened, how it happened and where it happened, but we still do not know why it happened. Why, after thousands of years of stagnation, have a number of countries and regions of the world experienced an unprecedented increase in both the scale and speed of their economic growth? Why Europe and not China? Why England? Is it the result of happenstance? The Black Death perhaps? What about the influence of religion (Max Weber and the Protestant ethic?), of major intellectual and scientific personalities who changed the game (Martin Luther, Francis Bacon, Isaac Newton, Adam Smith, Charles Darwin)? What role should be given to natural resource saturation, innovation (the compass, gunpowder, printing) and capital accumulation, trade networks, market institutions and organizations, ideas, violence (battles, dynastic arrangements, power struggles…), women, etc.? For Mokyr, the Gordian knot is a Culture of Growth — a “Useful knowledge,” scientific and technological knowledge, the meeting of motivations and incentives, of attitudes and aptitudes toward Nature and the ability to persuade others. These are the key elements of the puzzle.

“No theory-no history! Theory is the pre-requisite to any scientific writing of history,” wrote Werner Sombart (1929) in the Economic History Review. I urge you to carefully read Joel Mokyr’s evolutionary approach to culture in the spirit of Schumpeter’s theory on Unternehmergeist. It will give you a fresh insight into one of the most fascinating questions in our field: the origins of the Great Enrichment. It will invite everyone to visit economic history with an optimistic vision for the future of the World!

Claude Diebolt is CNRS Research Professor of Economics at the University of Strasbourg and editor of the journal Cliometrica.

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Subject(s):Economic Development, Growth, and Aggregate Productivity
Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):General, International, or Comparative
Time Period(s):Medieval
16th Century
17th Century
18th Century
19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII

Law and the Economy in Colonial India

Author(s):Roy, Tirthankar
Swamy, Anand V.
Reviewer(s):Hejeebu, Santhi

Published by EH.Net (August 2017)

Tirthankar Roy and Anand V. Swamy, Law and the Economy in Colonial India. Chicago: University of Chicago Press, 2016. x + 240 pp. $45 (cloth), ISBN: 978-0-226-38764-2.

Reviewed for EH.Net by Santhi Hejeebu, Department of Economics and Business, Cornell College.
Historical and developmental economists have been captivated by the interplay between institutions — from cultural values, beliefs, and norms to formal property rights and the rule of law — and economic growth. For the last three decades, researchers have blurred the traditional boundaries of economics to rigorously explore why the blessings of economic growth fall so unevenly across the world. What role did European imperialism play in this disparity? How might a nation’s history with European colonial rule shape its growth trajectory in its post-colonial era? Onto this vast intellectual canvas, Tirthankar Roy and Anand V. Swamy masterfully illustrate the evolution of legal institutions in British India from 1772 to 1947. With an eye toward evaluating the impact of this inheritance on today’s Indian economy, Roy and Swamy showcase the limits of imported institutions.

The first chapter frames “the problem”: Contemporary India’s legal infrastructure is in urgent need of reform. Today, many regard it as restrictive, cumbersome, backlogged and, according to the McKinsey Global Institute, a significant drag on economic growth. Roy and Swamy believe the system’s weaknesses originate, partly, in colonial law and legislation. They identify two hypotheses that link the economic quality of legal institutions with European colonial rule. The first conjecture, “extractive states,” correlates strong, growth-inducing institutions with mass European migration and settlement into the colony. The second hypothesis, dubbed “legal origins,” posits that economies importing British (common law) institutions would have stronger economic performance than those importing French (civil law) institutions. Both hypotheses, the authors demonstrate, fit the Indian case poorly.

The second chapter broadly narrates the evolution of British law on the subcontinent. Beginning with the period from the East India Company’s mayoral courts of the early eighteenth century to the creation of the cosmopolitan, Anglo-Indian legal codes of the late eighteenth century, the colonial codifiers’ perspective dominates the discussion of how values and norms were understood and characterized. The authors portray precolonial systems of law and justice as a “vacuum” (p. 16) in which the imperial authorities attempted to build an innovative, new system providing both access and due process to all litigants, while leaving alternative, local juridical practices in place. During the first half of the nineteenth century, this syncretic infrastructure grew in complexity. Presidency councils promulgated laws that varied with litigants’ local custom and religious practices, Parliamentary Acts (when specifying application to the colonies) remained in effect, Mughal civil and criminal courts operated in some regions, and everywhere English common law filled in the blanks. The second half of the nineteenth century witnessed a spirit of reform, a more integrated and hierarchical system of courts and legislatures, and the ascension of the idea “that lex loci could not be constructed on the foundation of Hindu or Islamic law” (p. 25).

The next six chapters focus on specific domains of law — both statutory and case law — that bear particular importance to private economic development and the fiscal health of the colonial state. These domains include land rights, property rights, labor law, contract law, and corporate law. Upon starting these sections, I marveled at the scope of the inquiry. Having dispensed with the broad hypotheses on imperial institutions and growth, could the authors make the whole cohere? How would Roy and Swamy synthesize and qualitatively evaluate colonial India’s changing legal infrastructure, given the breadth of legal domains under review, given their very long temporal horizon as well the significant variations in customary practices within the country and across industries? Each chapter corrals mature literatures and draws evidence from Victorian gazetteers, law commission reports, and case compendia. Each chapter describes how colonial legislative acts affected an area of economic relations. Throughout these chapters, contract theory often disciplines the discussion by identifying how law altered incentives between transacting parties and reconfigured the sharing of risk between them. The project is wonderfully ambitious.

In the two chapters on land, the authors, following the seminal work of the late Ratnalekha Ray, unpack the traditional land “ownership” terms of zamindari or raiyatwari. The authors deconstruct ownership as a set of use rights, or dimensions of control, over the asset. From an economic development perspective, these dimensions of control include 1) proprietorship, in other words liability for paying tax; 2) tenancy, the right to occupy land; and 3) transferability, the ability to alienate the land or use it as collateral in credit transactions. This characterization gives rise to a wider set of possible tenurial relationships than the traditional dichotomy. The discussion carefully integrates landmark legislation — the Permanent Settlement Act (1793), Bengal Tenancy Act (1885), Madras Estates Land Act (1908), Central Provinces Tenancy Act (1898), Deccan Agriculturists’ Relief Act (1879), Usurious Loans Act (1918) — and key court cases, many introduced to the literature for the first time. In each case, law recalibrated bargaining power between owners and tenants and between lenders and borrowers. In aggregate, did the Raj’s land regulations aid economic growth? The authors cautiously answer: it depends on when and where.

Chapter 5 examines the succession of property with particular emphasis on joint versus individual rights. Early British codifiers recognized that secure property rights, based on Hindu or Muslim religious codes, were already in effect. This chapter tells the story of colonial rulers unevenly incorporating Hindu and Muslim personal law into the new Anglo-Indian jurisprudence.

Chapter 6 explores labor law, beginning with the grim reality of slavery and bonded labor and delving more deeply to the case of penal contracting in the Brahmaputra and Surma Valleys. The authors maintain a clinical attitude toward penal contracting, explaining the persistence of legislation allowing such harsh labor contracts as a solution to a contractual problem. The chapter also addresses legislation aimed to regulating modern factory labor in Bombay and Bengal. The factory acts might well have created an industrial labor force, protected from internal competition, had the acts been enforced.

Chapter 7 examines contract law, the legal recognition and enforcement of privately-arranged agreements. As in earlier chapters, this one begins with the late eighteenth century exploration of a “Hindu law of contract” (p. 124) followed by the revealed inadequacy of this “artificial” legal inheritance. Prior to specific contract legislation, silk, hides, cloth and other indigenous trades flourished without resort to formal contracts through intermediaries who could exert social control along the supply chain. In the case of indigo, from roughly 1830 to 1860, the contract problems between peasant cultivators and indigo planters often devolved into coercion and oppression. According to the authors, a key legacy of the Blue Mutiny of 1860 was the Indian Contract Act of 1872. The authors doubt the Act’s contribution to economic growth, given the availability of informal and extralegal mediation and given the limited number of disputes that reference the Act.

Chapter 8 addresses laws affecting organizational forms including partnerships, the managing-agency contract, and joint stock corporate forms. Roy and Swamy describe Hindu partnerships as extensions of the Hindu joint family and governed by property and succession laws. Industrial firms in Bombay and Calcutta preferred the limited liability, joint stock organization form. Synthesizing both family partnership and the joint stock corporation was the popular, opaque, and uniquely Asian business form called the managing agency. The authors carefully analyze the shareholders’ opportunities and risks in managing agencies and the role of law in allocating rights between owners and agents. In both chapters 7 and 8, numerous legal cases effectively demonstrate the law in practice.

The final substantive section, chapter 9 provides a macro view of the evolution of law and litigation over the colonial period. The steady growth in judicial capacity, legislation, and litigation is illustrated in a series of time series graphs. The authors discover that in the early twentieth century, the majority of appellate civil suits were tried under procedural laws rather than laws pertaining to property, contract, or agency. Disputes over process gummed up the courts, a trend that has persisted to the present day. The brief conclusion notes five additional points of continuity or discontinuity between past and present.

This extraordinary synthesis of legal and historical scholarship should be read by anyone serious about the capacity and limits of law in shaping economic development. The Raj is portrayed here as improvisational, often slow and reactive, accommodating conservative impulses within India, while also embracing modernist trends from without. The recurring use of agency theory analysis and case law deliver analytical clarity and thick description. The work will be essential reading for future students of Anglo-Indian law.

While the project does a stellar job of characterizing formal institutions, the approach has its limitations. The framework largely ignores the informal economy and the multifarious, decentralized, informal systems of conflict remediation and heritable rights. To the degree that Anglo-Indian law failed to act as a centripetal force on the colonial economy, the study leaves critical institutions unnamed and unexamined. The variety of indigenous remediation systems — especially those that did not require literacy, travel to district courts, and payments to vakils — remains outside the scope of the study. It is a critical omission given that, in the study period and even seven decades after independence, the vast bulk of Indian employment remains in unorganized sectors, beyond governmental writ. As Rajalaxmi Kamath, of IIM Bangalore recently noted, the informal sector is “far from being ‘un-legislated’… [and] is very heavily regulated by social structures”[1]. A survey of such structures and their complex interactions with the legal infrastructure remains to be done. Future scholars will thank Roy and Swamy for an important point of departure.

1. Rajalaxmi Kamath (June 15, 2017), “India’s Informal Sector: The Vilified-glorified ‘Other’ Side of the Formal,” Retrieved July 30, 2017.
Santhi Hejeebu is Ringer Distinguished Professor of Economics and Business at Cornell College. Her recent publications include, Humanism Challenges Materialism in Economics and Economic History, Chicago: University of Chicago Press, 2017, co-edited with Roderick Floud and David Mitch.

Copyright (c) 2017 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 (August 2017). All EH.Net reviews are archived at

Subject(s):Government, Law and Regulation, Public Finance
Geographic Area(s):Asia
Time Period(s):18th Century
19th Century
20th Century: Pre WWII

The Chinese Market Economy, 1000-1500

Author(s):Liu, William Guanglin
Reviewer(s):Pomeranz, Kenneth

Published by EH.Net (June 2017)

William Guanglin Liu, The Chinese Market Economy, 1000-1500. Albany, NY: State University of New York Press, 2015.  xviii + 374 pp., $30 (paperback), ISBN: 978-1-4384-5568-6.

Reviewed for EH.Net by Kenneth Pomeranz, Department of Economics, University of Chicago.

William Guanglin Liu has written a valuable book on a big, important, topic: the general trajectory of the Chinese economy from roughly 1000-1650.  (The title says 1500, but the argument goes beyond that date.) The research is excellent, and the author comes up with some original and inventive ways to use his data.  At times, however, it frames its arguments in overly stark forms, and makes claims that go beyond what it can prove.  But despite these concerns, this is a book well worth reading, which will stimulate very useful debate on fundamental questions of Chinese economic history.

As a first approximation, Liu’s theses are hard to argue with.  The author shows that China experienced very impressive growth during the Song dynasty (ca. 960-1279), a period in which there was also a striking expansion of the role of markets in Chinese society.  He also show that the policies of Zhu Yuanzhang (r. 1368-1398), founder of the Ming Dynasty (1368-1644) dealt a major blow to China’s economy by trying to resurrect an idealized world of largely autarkic and demonetized villages.  It took a long time for China to recover from this: in contrast to many scholars who think that by 1500 China had returned to a market economy generating at least a Song level of prosperity, Liu argues that this did not happen until at least 1600, and quite likely not even then.  Moving beyond China, Liu then suggests that this historical case shows the centrality of market institutions for stimulating economic growth, beginning at a very low level of development.

The first three of these points — the marketization and relative prosperity of Song times, and the damaging effects of early Ming policies — are broadly accepted.  The first controversy concerns matters of degree: how prosperous? How marketized?  How big and lasting a blow did the early Ming inflict?  A second set of controversies centers on causation, and thus on the role of other factors.  For instance, Liu says very little about the many technological innovations during the Song — including the invention of gunpowder, the magnetic compass, paper money, and the importation (from Southeast Asia) of early-ripening rice — except to note that some of the most important innovations did not diffuse rapidly.  Some others would assign those innovations (and some that began in the Tang, such as printing) a good deal of credit for the growth that occurred in the Song, and continued into the Yuan (1279-1368) in some parts of the empire. While we will never have the data necessary to arrive at a precise allocation of growth to different factors, there is still room for further productive discussion about relative weights. Likewise, it is possible to show that the Mongol conquests of the mid-thirteenth century had a devastating impact in some places (especially North China and Sichuan), and very little elsewhere (the Middle and Lower Yangzi Valley, and in the far south); the relative weight of those different regional stories is still unsettled, and matters greatly in whether Liu is justified in placing an overwhelming emphasis on early Ming anti-market policies in explaining an apparent stagnation or decline in living standards between the eleventh and sixteenth centuries.

One of the book’s contributions is to concentrate in one place the arguments for transformational change concentrated in the Song period, and followed by a later reversal: a once popular view (e.g. Elvin 1973) that has lately given way to a tale of more gradual progress across several centuries (Smith and Von Glahn 2003).  Making the best of flawed data, Liu estimates population growth of 0.92% per year between 980 and 1109, a remarkable rate for a pre-modern society.  And drawing on a large body of secondary scholarship, he points to considerable evidence for changes in agriculture — capital deepening, especially in the form of massive investments in irrigation, and increasing use of oxen – which should, logically, have raised agricultural yields significantly, allowing a population that had more than tripled to eat as well or better than its forebears.

Unfortunately, however, we lack much good data on actual yields in the Song.  Liu notes that Dwight Perkins’ well-known estimates are (like most others for this period) inferences from agricultural rents, and that much of the land in question was land used to support schools; he further argues that school land was often rented out at below-market rates, depressing these inferred yields, and that the land which families donated to schools was often their least fertile property, anyway.  Meanwhile several of Perkins’ later data points come from agricultural handbooks, and probably represent optimal results.  Thus Liu argues, the impression of slow but steady growth across centuries that emerges from Perkins’ highly influential work may well be a statistical illusion. He prefers the older idea of a Song boom followed by little progress in subsequent dynasties.   Building on work by Zhou Shengchan, Liu tries to work backwards from data on population and average food consumption to estimate thirteenth century yields in the Lower Yangzi region; the results vary considerably among prefectures, but are generally near the high end of our range of estimates for any period before the arrival of modern farm inputs.  They would therefore leave little room for continued growth in the Yuan, Ming, or even Qing.

If verified, this would be a very important finding, but I have my doubts.  In part, my doubts come from personal experience, as adopting a similar methodology for estimating eighteenth century output of various crops led to extremely high estimates.[1]  There are also technical problems with some of this data (particularly in Table 7.8), though probably not big enough to change the results dramatically.[2]   The most we can say with strong confidence, I think, is that some Song farmers achieved yields near the pre-modern maximum, and more and more of their neighbors caught up over time — though whether this happened over decades or centuries remains very uncertain.

For most non-food items, we simply lack the data to generate serious estimates of per capita consumption in Song times; and while anecdotal evidence of rising consumption exists, Liu prefers not to rely on it.  Instead, he relies on an estimate of real wages for unskilled workers to show that living standards in the Song were as high as they ever got in China prior to the twentieth century.  Because we have not found for China any very long series of wages for privately-hired workers in a relatively standardized occupation in a particular place — like the long runs of wages for construction workers on European cathedrals and colleges, for instance — Liu constructs a long-run series of military wages, for which data are comparatively rich; and because we lack data for enough commodities to construct a long-run price index, he uses grain prices as the denominator for his series.  The resulting series peaks at its very beginning (in 1004) and fluctuates wildly while declining overall for the next roughly 170 years. It is then relatively stable until another steep drop in the early Ming, and recovers slightly in the late Ming before declining again in the early Qing (Figure E-1).

Liu has done us a considerable service by piecing this data series together, but as a proxy for the living standards of ordinary people it must be taken with a very large grain of salt.  Governments did not engage soldiers through a true labor market, nor did the institutional setting of military recruitment or the conditions of being a soldier (aside from the wage) remain constant over time.  Moreover, even if we had a reliable private sector wage series, it would not necessarily follow that this was a reliable basis for estimating popular living standards, much less per capita GDP, as Liu argues (p. 133).  Wage earners were never more than 15 percent of the labor force in late imperial China, and most farmers either owned their own land or had a relatively secure tenancy (especially in Qing times).  Consequently, they earned far more than unskilled laborers did — perhaps three times as much on average, according to preliminary estimates I have made for the eighteenth century (and for the early twentieth, where the data are better). (Among other things, this is confirmed by the fact that tenants and smallholders could support families, while unskilled laborers could rarely afford to marry. And for GDP per capita, we would also have to average in the earnings of well-to-do families.  Last but not least, if the ratio between wages and average farm earnings changed over time — as it might well have, given a gradual strengthening of tenant usufruct rights over the course of the late empire — even a much better wage series might not tell us what we want to know about general living standards.

But if Liu does not prove his most ambitious claims, he does succeed in proving many of his smaller empirical claims.  In particular, the evidence for relative prosperity in the Song and a sharp decline in the early Ming seems too much to explain away, even if one can raise doubts about each individual measurement.  The money supply contracted very sharply in early Ming times, followed by the introduction of government notes (for state payments) that soon became almost worthless; customs receipts (and presumably long-distance trade declined; and the wage decline between ca. 1050 and ca. 1400 is too big to be explained entirely by data problems.  A separate estimate, later in the book, suggests that per capita income in North China might have fallen by as much as half between 1121 (on the eve of the Song loss of the North) and 1420, though output per capita seems to have remained stable in the Yangzi Delta.  Liu also makes a strong case that Song people were freer than their early Ming counterparts, and perhaps even less unequal economically (though Song writing shows so much worry about inequality that one is tempted to believe there was fire behind so much smoke).

This brings us to the problem of explaining these differences.  Liu provides a straightforward answer: Song reliance on the market worked while the early suppression of it backfired.  Moreover, this represents a timeless truth, most recently vindicated by the sharp contrast between the Maoist and post-Maoist periods.  Here. I think, Liu lets his argument outrun his evidence, focusing too exclusively on one broad-brush contrast.

It would be hard to deny that the increased influence of market principles in the Song stimulated growth: above all, probably, the agricultural growth of the south, which required significant investment (especially for water management) that would surely have been more modest had earlier dynasties’ restrictions of private landowning remained in force; and given the surpluses that southern agriculture soon generate, and the relatively easy transportation that its rivers offered, impressive commercial and urban growth soon followed.  Since the coastline south of the Yangzi also has far more good sites for ports than the coastline north of the Yangzi, the southward shift of China’s economic center of gravity was also propitious for foreign trade, which boomed under both the Song and the (Mongol) Yuan.

Even in the south, however, the state provided essential infrastructure (though its role declined over time), and often played a very active role in foreign trade. In the north, meanwhile, both the enormous system of canals built by the Song government and the huge concentration of demand in the capital region were crucial, both for consumer markets and the growth of a precocious iron industry stimulated by unprecedented levels of military spending.   A variety of inventions also must have contributed something to the robust growth of the Song period.

Nor, I think, would many people deny that the early Ming attempt to return to local autarky had serious and lasting negative consequences. But we should bear in mind that the North, where Liu’s decline in estimated output between 1121 and 1420 was concentrated, suffered a number of  major shocks in this period, all of which bypassed or fell much more lightly on the south (except for Sichuan). These included conquests by three sets of northern invaders (including, most devastatingly, the Mongols); the prolonged turmoil that toppled the Mongols and brought the Ming to power; a civil war between supporters of two Ming heirs; and repeated, enormous, Yellow River floods, including two that dramatically shifted the river’s course (out of six such incidents in the last 4,000 years) and made it impossible to rebuild the Song-era canal system.   Ming policies certainly did great damage, too, but the relative size of these setbacks needs more detailed analysis before we can accept Liu’s almost exclusive emphasis on the Ming founder’s anti-market policies.

I would also caution against lumping all the parts of Ming anti-commercialism under the heading “command economy,” and comparing it to an ideal type of “market economy,” as Liu often does (e.g. pp. 1, 4-12, 134-136, 197, 199).  No pre-modern state could maintain the vigorous intervention needed to run a true command economy for long.  The Ming may have been more effective than most, but their massive redistribution of property and forced migration was over by about 1425, with land and labor again being exchanged in private markets;[3] the system of artisan conscription unraveled during the fifteenth century; foreign trade outside the official tribute system gradually returned; and so on.  This did not mark the end of Ming anti-commercialism as an attitude, or of its effects: among other problems, the dynasty never tried to provide the money supply that the private economy needed, saddling its subjects with costs that lingered for centuries.[4]   But even if this failure was originally part of an aggressive state’s attempt at command economy, it soon evolved into something else: the failure of a relatively weak state to undertake even those interventions that could have benefited both itself and the private economy.  The succeeding Qing dynasty (1644-1912) certainly had no dream of a command economy, and often (though not always) sought to encourage markets;  and the state’s share of GDP may have slipped as low as 2 percent, compared to at least 10 percent and perhaps as much as 20 percent at the peak of Song military-fiscalism.[5]  Yet the Qing provided the most stable bronze currency — the money used for most everyday transactions — China had ever known, while uncoined silver provided a reasonably adequate currency for big transactions; and it mobilized impressive resources for various physiocratic projects, from water control to grain price stabilization to promotion of best practices in agriculture and handicrafts. (That it spent much less, proportionately, on its military than the Song or Ming had facilitated this combination of low extraction and significant services.[6])  And for about a century and a half, they presided over impressive demographic and economic growth, Interestingly,  three prominent economic historians — Loren Brandt, Debin Ma, and Thomas Rawski, none of them remotely anti-market — have argued that the principal reason why Qing economic development was not even better was that the government was too minimalist: that a small government spread across a vast area was unable to prevent all sorts of local actors — from bandits to local elites employing private enforcers to rogue government clerks — from interfering with local markets and property rights.[7]  Such interference was clearly a problem in the late Ming as well, though it is not precisely measurable in either period.  It does, however, remind us that a simple contrast between “market economy” and “command economy” does not give us enough tools to understand the different relationships between state and market in imperial China, or anywhere else.

Nonetheless, the book does an impressive job of demonstrating how much dynamism the marketizing economy of the Song generated, and how much of those gains had been lost by the mid-Ming, at least in certain regions.  The author’s efforts to quantify trends that many others have been content to describe qualitatively are impressive; this is a book where the appendices are often as thought-provoking as the text.  The results are not as revolutionary or dispositive as the book sometimes suggests, but they will stimulate productive debates for years to come.


1. Lacking data on the acreage devoted to non-grain crops in certain areas, I decided to estimate how much land must have been devoted to non-grain crops, relying on generally accepted numbers for population, grain consumption, and imports, and then multiply the acreage left over by conservative estimates of yields for the non-grain crops.  The results came out so high that I cut them in every way I could think of — including, in one case, arbitrarily reducing the estimate of non-grain acreage by half. The results I came up with were still at the high end of the existing range of estimates, or in some cases significantly beyond it.  I am not ready to toss out those estimates completely, and would be happy to see this approach vindicated; but I am inclined to be cautious here, especially since Liu has not made the same efforts to depress his results as I did.

2. The conversions from Zhou’s numbers, which mostly use Yuan dynasty measurements, is complicated. Trying to reproduce his results for one prefecture after an email exchange with me, Prof. Liu got a figure about 1 percent lower.

3. A rare set of household-level records, for instance, shows a family with modest landholdings in Huizhou engaged in no less than 18 land purchases or sales between 1391 (not long after the Ming came to power) and 1432.  See Von Glahn 2016: 291-293.

4. Von Glahn 1996 and Kuroda 2000 suggest that this was finally addressed with moderate success in the Qing.

5. Perkins 1967: 492; Wang 1973: 133 for the Qing; Golas 1988: 93-94 comes up with 24 percent for the Song, but admits that this seems unlikely.  Hartwell 1988: 79-80 suggests a bit over 10 percent.

6. On military spending compare Hartmann 2013: 29 with Zhou 2000: 36-38.

7. Brandt Ma and Rawski 2014: 60, 76, and 79.


Brandt, Loren, Debin Ma and Thomas Rawski. 2014.  “From Divergence to Convergence: Reevaluating the History behind China’s Long Economic Boom,” Journal of Economic Literature 52(1):45-123.

Elvin, Mark. 1973.  The Pattern of the Chinese Past.  Stanford: Stanford University Press.

Goals, Peter, 1988. “The Sung Economy: How Big?”  Bulletin of Sung-Yuan Studies 20: 89-94.

Hartmann, Charles. 2013.  “Sung Government and Politics,” in John Chafee and Dennis Twitchett, eds., The Cambridge History of China, Volume V Part 2: Sung China, 960-1279 (Cambridge: Cambridge University Press):19-133.

Hartwell, Robert. 1988. The Imperial Treasuries: Finance and Power in Song China,” Bulletin of Sung-Yuan Studies 20: 18-89

Kuroda Akinobu. 2000. “Another Monetary Economy: The Case of Traditional China,” in A.J. H. Latham and Heita Kawakatsu, eds, Asia-Pacific Dynamism, 1500-2000 (London: Routledge): 187-198.

Perkins, Dwight. 1967. “Government as an Obstacle to Industrialization: The Case of Nineteenth-Century China,” Journal of Economic History 27 (4): 478–92

Perkins, Dwight. 1969. Agricultural Development in China, 1368-1968.  Chicago: Aldine Publishing.

Smith, Paul, and Richard Von Glahn, eds., 2003. The Song-Yuan-Ming Transition in Chinese History.  Cambridge:  Harvard Asia Center.

Von Glahn, Richard. 1996.  Fountain of Fortune: Money and Monetary Policy in China, 1000-1700.  Berkeley: University of California Press.

Von Glahn, Richard. 2016.  The Economic History of China: From Antiquity to the Nineteenth Century.  Cambridge: Cambridge University Press.

Wang Yeh-chien. 1973. Land Taxation in Imperial China, 1750-1911.  Cambridge, MA: Harvard University Press.

Zhou Yumin. 2000.  Wan Qing caizheng yu shehui bianqian (Late Qing Fiscal Administration and Social Change).   Shanghai: Shanghai renmin chubanshe.

Kenneth Pomeranz is University Professor of History at the University of Chicago.  His best known book is The Great Divergence: China, Europe, and the Making of the Modern World Economy (Princeton, 2000).  His most recent publication is “The Data We Have vs. the Data We Want: A Comment on the State of the Divergence Debate,” Pt. I and Pt II New Economics Papers (June 8, 2017) Forthcoming publications include “Water, Energy, and Politics: Chinese Industrial Revolutions in Global Environmental Perspective,” in Gareth Austin, ed., Economic Development and Environmental History in the Anthropocene (forthcoming, 2017: Bloomsbury Academic).

Copyright (c) 2017 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 (June 2017). All EH.Net reviews are archived at

Subject(s):Economic Development, Growth, and Aggregate Productivity
Economywide Country Studies and Comparative History
Geographic Area(s):Asia
Time Period(s):Medieval
16th Century
17th Century

A History of the Global Economy: 1500 to the Present

Editor(s):Baten, Joerg
Reviewer(s):La Croix, Sumner

Published by EH.Net (January 2017)

Joerg Baten, editor, A History of the Global Economy: 1500 to the Present.  Cambridge:  Cambridge University Press, 2016.  xiv + 369 pp. $40 (paperback), ISBN: 978-1-107-50718-0.

Reviewed for EH.Net by Sumner La Croix, Department of Economics, University of Hawaii-Manoa.

In the past two years, there has been a boomlet in global economic histories targeted to a variety of audiences.  They include a handbook oriented towards academics and graduate students (Francesco Boldizzoni and Pat Hudson, editors, Routledge Handbook of Global Economic History (2016)) and two books more oriented to undergraduates and a general audience (Robert Allen, Global Economic History: A Very Short Introduction (2015) and Larry Neal and Rondo Cameron, A Concise Economic History of the World: From Paleolithic Times to the Present, fifth edition (2015)). A new addition to this field is A History of the Global Economy, a collection of 32 essays edited by Joerg Baten (University of Tübingen), which provides a sweeping introduction to the history of the global economy from 1500.  The volume was commissioned by the International Economic History Association and the editor states that his aim is to organize a “non-Eurocentric history” that presents “economic history in a balanced way.”  The volume is anchored by essays on ten regions that each have “circa 500 million inhabitants today,” although it might have been useful to split the Southeast-Asia-Australia-New Zealand region into two parts given the disparate development paths of economies in Southeast Asia and Australasia.  The regional essays are supplemented by “interlinking notes” that summarize critical debates among economic historians and “take a global perspective” on “core indicators” of development and growth and “highlight notes” that consider particularly interesting puzzles and topics. Senior scholars specializing in each region have written the ten anchor essays, while some of the most distinguished economic historians (e.g., Jeffrey Williamson and Steven Broadberry) were recruited to write some of the interlinking and highlight notes.

Anchor chapters are by Jan Luiten van Zanden (North-western Europe), Joerg Baten (Southern, eastern, and central Europe), Price Fishback (United States and Canada), Luis Bértola and José Antonio Ocampo (Latin America), Osamu Saito (Japan), Debin Ma (China), Rima Ghanem and Joerg Baten (Middle East, North Africa, and Central Asia), Tirthankar Roy (South Asia), Martin Shanahan (Southeast Asia and Australia/New Zealand), and Gareth Austin (Sub-Saharan Africa).  Each author makes a sustained effort to incorporate four measures of the “core dimensions of development” into their analysis: Gross domestic product per capita, height as an indicator of health and the quality of nutrition, basic numeracy as an indicator of education, and the Polity IV index as an indicator of democracy.  Baten argues that while these measures are not available for all regions and times, they are sufficiently available to allow the reader to compare the welfare of populations across regions over at least some of the four dimensions.  The core dimensions of development are presented in each chapter via a unified set of figures and maps.  Another common set of nicely-conceived maps is used to identify directions and compositions of trade flows within and across regions, centers of economic activity in each region, and specialization in production within regions.

One of the strengths of this book is that the text is kept to a manageable length of 355 pages, but this also means that some important topics receive sparse coverage.  For example, the chapter on North-western Europe devotes no space to cataloging major inventions of the industrial revolution while devoting considerable space to more general interpretations of its origins.  Not much space is devoted in any of the chapters to national or international macroeconomic policy.  Instead the emphasis is placed on broader demographic trends, market integration and international trade, and institutional change.  The chapter on Japan is lucid and informative on the 1500-1868 period, but then provides just two pages of analysis for the 1868-2010 period.  This is unfortunate, as a more complete discussion of Japan’s rapid pre-World War II development, its post-war economic miracle, and subsequent stagnation over the 1990-2010 period would surely have been of great interest to many readers.  The effects of war receive little attention except in the U.S./Canada essay.  All that aside, some of the missing topics are filled in by the ten highlight notes and the twelve interlinking notes.  Examples of topics covered by the notes include brain drain from India, the Sputnik shock, the natural resource curse in Latin America, trade and poverty in the third world, women in global economic history, Alfred Chandler’s insights into business history, state finances in civil wars, and Japanese industry during the Second World War.

In sum, Joerg Baten has brought together some of the best people in the field of economic history, and they have written a great set of essays that is surprising unified by the questions they consider as well as by the use of core indications of development and a unified set of maps and figures.  The book is particularly noteworthy for its avoidance of economic jargon and its clear writing.  Authors avoid extensive citation of sources in the text, keep footnotes to a minimum, and provide a brief list of references for each chapter. Students in an introductory or upper-division course in global economic history could easily digest its contents while specialists in economic history could also benefit from reading this volume, as its regional syntheses incorporate the larger literature on regional and economic growth that has emerged in the last 25 years.

Sumner La Croix is the author (with Alan Dye) of “The Political Economy of Land Privatization in Argentina and Australia, 1810-1850,” Journal of Economic History 73(4), 2013.

Copyright (c) 2017 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 (January 2017). All EH.Net reviews are archived at

Subject(s):Economic Development, Growth, and Aggregate Productivity
Economywide Country Studies and Comparative History
Living Standards, Anthropometric History, Economic Anthropology
Geographic Area(s):General, International, or Comparative
Time Period(s):16th Century
17th Century
18th Century
19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII