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1
A limited view of government.
A review of Mark Koyama and Jared Rubin,
How the world became rich. The historical origins of
economic growth
(Polity Press, Cambridge and Medford 2022) X and 259 pages
Introduction
A book on the historical origins of economic growth, written by two economists at a time
when most economists know nothing about economic history and many of them do not
seem to regret that, is certainly welcome, in particular when it is not a fat volume. Koyama
and Rubin have written a concise, well-structured and systematic introduction. Their book
is very clearly written and the authors know the relevant literature, even though they seem
to be much better acquainted with general economic literature than with specific economic
historical studies. Their book deserves an extended review.
Let me first in order to convince the reader of its broad scope and to set the stage for my
review briefly present the book’s content. It consists of two parts. In the first part the
authors present what they consider to be the main theories on how the world became rich.
After an introductory chapter in which they indicate what they mean when they claim that
the world is rich and what the goal and structure of their book will be, they in chapter 2
review the role of geography. They do so by discussing Jared Diamond’s Guns, germs and
steel, the importance of mountains, coasts and climate, connections between geography
and transport infrastructure, as well as connections between geography and
industrialization. Chapter 3 reviews the role of institutions. In this chapter the authors
present a very wide range of topics and their importance for economic growth. Let me
simply enumerate them: property rights, legal systems, political institutions, equality of
rights, the role of institutions in the commercial revolution of the Middle Ages in Europe,
guilds, parliaments and limited government, war and state finances. Chapter 4 reviews the
role of culture in explaining what they here call the “European take-off”, the role of
religion, the economic impact of in particular Protestantism (primarily as a cause of
growth) and Islam (primarily as a cause of stagnation), the persistence of culture, illustrated
with reference to the centuries-old cultural differences between northern and southern
Italy, and finally the importance of trust and gender norms. Chapter 5 focuses on the role
of demographic factors. Here the authors discuss Malthusian pressures, the impact of the
Black Death and the European Marriage Pattern and the relationship between
demographic change and the transition to modern economic growth. Chapter 6 discusses
colonization and exploitation, focusing on the question to what extent colonizers
benefitted from them, the slave trades (actually only the Western ones!) and the institutions
that colonizers created to grab the resources of their colonies and their long-term negative
effects. It concludes with a brief discussion whether colonial policies may have had some
silver linings.
Part Two of the book provides a more historical analysis trying to indicate why some parts
of the world became rich first, why others followed and why some are not there yet.
Chapter 7 briefly reviews the following questions: Why did northwestern Europe become
rich first? How did geography shape institutional development? Why was there no
medieval European take-off? The authors also discuss the following topics in it: the
divergence within Europe just before take-off, the importance of parliaments and the rise
of limited representative government. Chapter 8 is dedicated to explaining Britain’s
Industrial Revolution, and does so by referring to a large number of preconditions that
2
one can come across in the literature: a revolution in consumption, the spread of capitalist
agriculture, Britain’s particular political institutions, the institutional impact of
mercantilism and empire, the transatlantic slave trade, the specific development of the
Britain’s cotton industry, the size of Britain’s market and the capacity of its state, the
presence of a large number of skilled mechanical workers, and finally the fact that the
country had an innovative economy, either due to it high wages or to the fact that in Joel
Mokyr’s words its economy was ‘enlightened’.
1
Chapter 9 is about the rise of the modern
economy, i.e. the effects of industrialization and its spread. In it the authors discuss the
Second Industrial Revolution, the demographic transition, uneven diffusion of modern
economic growth, the industrialization of the United States and, as a ‘detour’,
industrialization in the Soviet Union.
2
Chapter 10 on industrialization and the world it
created, focuses on the shadow of colonization and other factors that delayed catching up,
on the successful industrialization of Japan and the East Asian Tigers and on how China
is becoming rich. Chapter 2 to 10 all end with a chapter summary. Providing such
summaries is certainly helpful but it can also be a little bit redundant as there already is a
tendency to repeat things in the text itself. There, e.g. are four references to market
integration in Qing China that would have been comparable to that in many parts of
Europe until the latter half of the eighteenth century when it sharply declined (29, 133,
162, 213).
3
Chapter 11 consists of only a couple of pages with some final comments and
summing up. As far as I could see the text contains surprisingly few, very tiny mistakes.
4
Some comments on the structure of the book and on its approach
I have intentionally simply enumerated all the topics discussed in the book to give an
impression of how broad its scope is but also how close it at times, e.g. in discussing
Britain’s industrialization, comes to giving a kind of laundry lists of things that are
‘somehow’ relevant. I think it in principle is a sensible approach to first present theories
and then concretely analyze histories. It in any case is also the approach that I adopted in
my Escaping poverty. The origins of modern economic growth.
5
But I am afraid that the way in which
Koyama and Rubin categorize and present their lists of variables that then so to say get a
plus or a minus, makes it hard for the reader to derive a coherent, structured explanation
or even just a good synthesis from reading the book. What they call ‘theories’ boils down
1
See Joel Mokyr, The enlightened economy. An economic history of Britain, 1700-1850 (New Haven 2009).
2
I was surprised that Koyama and Rubin advise readers who are interested in how - mostly European -
countries followed Britain’s path to industrialization to read Rondo Cameron, A concise economic history of the
world. From paleolithic times to the present (Oxford 1993). In my view Ivan Berend, An economic history of nineteenth
century Europe. Diversity and industrialization (Cambridge 2013) is not only better - which is a value judgement -
but certainly more up-to-date.
3
This is even more striking considering the fact that this claim is not exactly unchallenged. See e.g. Kent
Deng and Patrick O’Brien, ‘The tyranny of numbers. Are there acceptable data for nominal and real wages
for pre-modern China?’ in: John Hatcher and Judy Stephenson, eds., Seven centuries of unreal wages. The unreliable
data, sources and methods that have been used for measuring standards of living in the past (London 2018) 71-94, page
75: “China-wide market integration under the Qing is merely a modern fantasy which is now seriously
challenged. Even within the Yangtze Delta zone, prices of the common commodity rice were clearly not
well integrated.”
4
I spotted a couple of tiny errors; The crop yield for potatoes strikes me as too high, Table 6.1 page 107;
The States General never had full sovereignty in the Dutch Republic, page 141; The Dutch East India
Company was founded in 1602 not 1603, page 142; The population figures for Britain on page 178 differ
from those on page 183-184; It is zaibatsu not zabatsu, page 205.
5
Peer Vries, Escaping poverty. The origins of modern economic growth (Göttingen /Vienna 2013). I brought the text
somewhat more up-to-date in my Peer Vries, ‘What we do and do not know about the Great Divergence at
the beginning of 2016’, Historische Mitteilungen der Ranke-Gesellschaft, 28 (2016) 249-297. That text is available
on my Researchgate-site.
3
to suggestions which factors might have had some effect. It in that context is striking that
the book claims to be about the origins of modern economic growth i.e. sustained economic
growth as a result of sustained innovation. (9, the italics here are mine) but that many of the
explanatory variables that are presented at least in my view are much better suited to
explain growth as such than modern economic growth as they are much better suited to
explain accumulation than innovation. I personally think they could have improved the
framework of their analysis by borrowing more from theories of economic growth as they
exist in economics, as I tried to do in Part One of my Escaping poverty or by e.g. structuring
their analysis by systematically distinguishing between proximate and ultimate causes, or
long-term structural causes and more accidental short-term causes.
6
This is not meant to
say that there are no attempts to structure the main arguments, see e.g. 129-131, only that
it would have been helpful to do it more explicitly and schematically, for example in the
first chapter.
This first and foremost is a book about ideas about economic growth and its history and
it cannot be otherwise, but the fact that there is so little reference to (basic) data makes it
very hard to impossible for readers to get a good idea what actually is explained on the
basis of what. I have taught global economic history for many years and know that students
do not have the slightest clue when it comes to the most basic data in that field.
7
When it
comes to data with regard to incomes, which of course is fundamental in discussions about
growth, they in my view are fairly optimist when they claim that as compared to some of
the famous (or some would say notorious) estimates by Angus Maddison
8
, there are now
estimates of per capita GDP that are “on a much firmer footing.” (8) That may be true
but many of the figures for the period before 1800 can still not be more than guesses. To
claim that one knows for example that GDP per capita in China in the year 980 was 840
1990 international dollars whereas in Japan in the year 1150 it was 572 such dollars, as
Broadberry, Guan and Li do, is to practice science fiction.
9
It is absolutely impossible to
be so precise. I think we cannot do much better than suggest orders of magnitude and
trends. Considering the introductory character of the text some more information on how
GDP figures are constructed and on what differentiates modern economic growth from
other types of growth would have been welcome.
What I liked very much in the text is that the authors, in particular in their discussion of
institutional and cultural explanations, have a long-term perspective and also come up with
explanations of the emergence of modern economic growth that go far back in time. From
an institutional and cultural perspective - and also economically I would add - Europe in
their view already was on a different trajectory from other parts of the world long before
industrialization. (They claim this very explicitly for Europe’s institutions on page 131) In
that respect they clearly, without explicitly saying so, reject the position of Kenneth
Pomeranz and those who endorse his work and who like Peter Perdue claim that
6
For such an effort to structure a very complex multi-causal explanation see Patrick O’Brien, ‘Was the
British Industrial Revolution a conjuncture in global economic history’, Journal of global History 17, 1 (2022)
128-150. For a review see my ‘Patrick O’Brien on industrialization, little Britain and the wider world’, Journal
of Global History 17, 1 (2022) 151-158. My point is not that O’Brien’s ‘framework’ would be perfect but that
structuring explanations helps in trying to understand complex processes.
7
Peer and Annelieke Vries, Atlas of material life. North-western Europe and East Asia, 15th to 19th century (Leiden
2020).
8
For an overview of his main publications see http://www.ggdc.net/maddison/Maddison.htm
9
For these figures see Stephen Broadberry, Hanhui Guan and David Daokui Li, ‘China, Europe and the
Great Divergence. A study in historical national accounting, 980-1850’, Journal of Economic History 78, 4 (2018)
955-1000, page 989. The entire table presented there suggests a level of precision that we can never achieve.
I fully endorse the critique by Deng and O’Brien in their, ‘Tyranny of numbers’. See there note 14 for further
articles.
4
industrialization in the West was “a late, rapid, unexpected outcome of a fortuitous
combination of circumstances in the late eighteenth century. …”
10
They also do not endorse Pomeranz’s claims when it comes to his ‘coal-and-colonies
explanation’ of Britain’s industrialization and his overall interpretation of China’s imperial
history. (See the Index under Pomeranz). In their view the policies of the ruling Qing elites
were a failure while their country was hit by a Malthusian crisis brought about by rapidly
growing population and limited resources. The deeper cause why the country did not
industrialize under imperial rule for them is the absence of sustained innovation for which
it simply lacked the institutional and cultural environment. (214-216) It also, I would add,
was losing state capacity. I think it is only fair to conclude that Pomeranz’s approach and
explanations, that have inspired so much research, have been definitively refuted.
Favoured and less-favoured explanations. Some comments on geography,
demography, colonial exploitation and culture
The authors are very explicit in claiming that the goal of their book is not to “privilege our
preferred theories at the expense of others.” (10, see also 15) As far as I am competent to
judge, they indeed are without exception fair when it comes to presenting and discussing
the main explanations given by others. They want to keep an open mind and claim that
“there are important insights in all of the theories outlined in this book” and that
“Intelligent people can and will disagree on what weight to put on each of these causes.”
(15) In their last chapter they write: “There is no silver bullet. … Context matters. Culture
and the historical past matter. So do demography and geography.” (224) Again, it would
be hard to disagree. Their conclusion in any case is identical to mine in my Escaping poverty.
11
As good scholars they do not oversell their product. They are aware of “both the potential
and the limits of using lessons of history to understand why poor parts of the world can
become rich” and even admit that where they think the importance of institutions is crucial
they are also “limited in our knowledge which institutions matter.” (219)
But on the other hand, their own preferences are so obvious and so explicitly stated at
many occasions that no one can mistake the book for a merely descriptive survey. There
are two sets of explanations they prefer. Firstly, those that emphasize the link between
economic and political development. (14, italics in the original) In their emphasis on politics
they even go as far as claiming that “the economic institutions of a society are a function
of its political institutions.” (49) The other set of explanations they prefer, are those that
highlight the role of culture. In discussing culture and its impact there are always, also in
this book, problems of definition and measurement but it can only be applauded that the
authors pay explicit and extensive attention to its role in making people rich, or not. With
these two preferences it will not come as a surprise that they often refer to Daron
Acemoglu, and his co-authors, and to Joel Mokyr, nor that these two authors praise the
book on the backflap.
I will not try and cover all the many different explanations discussed in the book.
Considering the emphasis of the authors on institutional and cultural explanations, I will
in this review also concentrate on that type of explanations, in particular the institutional
ones, and confine myself to a couple of rather ad hoc comments on other factors they refer
to. My focus will be on periods and regions I hope I know something about and on its
general claims with regard to economic growth. I do have some more detailed criticisms
10
Peter Perdue, China marches west. The Qing conquest of Central Eurasia (Cambridge Mass. /London 2005) 537.
11
Vries, Escaping poverty, 437-438.
5
when it comes to their interpretation of Japan’s industrialization. According to them,
before World War Two wages there were much lower there than in Europe. In their view
this would have meant that while using Western technology often did not make economic
sense, cheap Japanese labour using modified Western technologies could just do what
expensive technology did in the West. I do not think that is a correct description of what
happened in industrializing Japan but to not make this text even longer and avoid a detour
I refer for my position to my forthcoming book.
12
The authors fairly extensively discuss the importance of geography for the wealth and
poverty of nations but in the end consider its impact rather small. They rightly point out
that geography is largely unchanging and thus cannot explain the reversals we see in
economic history, nor the timing of major developments. (22) Two of the comments they
make did not convince me. The first one is about the link they see, following Eric Jones
and Jared Diamond, between institutions and geography. In their view, Europe’s fractured
geography … led to persistent political fragmentation. (130. See also 132 where they claim
that “Europe’s geography explains its persistent political fragmentation.”) Europe has
never become a political unity so far. But whereas there were several hundred polities in
the Late Middle Ages, their number already some 150 years ago had sunk to some thirty
and is now some fifty, depending on the exact criteria one wants to use. I would not call
that persistent. Secondly, I simply fail to see the geographical reasons for the existence of
many countries. What geographical reasons were there for the total fragmentation (and
later unification) of the Holy Roman Empire or the Italian Peninsula? For what
geographical reasons were the Low Countries one ‘polity’ (just before the Eighty Years’
War that started in 1568), then at least two (from sometime during that war till the end of
the French occupation in the 1810s), then again one from 1815-1830, and from then
onwards two? What geographical reasons are there for Portugal to be a country since the
High Middle Ages and for Poland or Lithuania to at times be huge countries and at times
not exist at all? Why has Ireland not always been an independent state? I could go on and
on. Many countries had and have no natural borders and many natural borders did and do
not enclose one country. Personally, I also fail to see geographical reasons for the fact that
‘Europe’ was never unified. Nor, by the way, do I see any geographical reasons for the fact
that as a rule China was a political unity. (See also 132) If it weren’t for the Grand Canal
its southern and northern part would basically be unconnected. It, moreover, would be
quite optimist to claim that this connection as such meant ‘unification’.
My second comment relates to the authors’ suggestion, in this case following Joel Mokyr,
that the supply of coal would not have been a binding constraint for industrialization to
take place. (35) One can of course debate what exactly it means to claim that
industrialization has taken place, but I personally find it very hard to imagine that the
British economy could have been where it was in terms of wealth in let us say 1850 - when
most scholars would say the country had become an industrial nation - without coal. The
amount of wood required to produce the heat that was produced by coal would have been
so huge that I fail to see how Great Britain could ever have produced or imported it. When
it comes to concentrated power, reliability and flexibility in terms of location, water power
could no longer compete with coal and steam power.
13
When it comes to the role of
demographic factors, I only want to point out that I cannot endorse what the authors,
12
Peer Vries, An East Asian route of industrialization? The case of Japan, 1868-1937 (Forthcoming: Leiden
/Boston 2022).
13
For the amount of wood and land required for wood to function as a substitute for coal see Rolf Peter
Sieferle, The subterranean forest. Energy systems and the industrial revolution (Cambridge 2001) chapter III. For the
limits to the efficient use of water power see Andreas Malm, Fossil capital. The rise of steam power and the roots of
global warming (New York 2016) chapter 8.
6
following up on Oded Galor, say about the nature of the demographic transition in as far
as its economic causes and effects are concerned. (102-103 and 185) To not digress too
much I refer to my comments in my Escaping poverty.
14
When it comes to their comments
about colonization and exploitation, I see no points of fundamental disagreement. I do,
however, always find it hard to see the direct connections between the accumulation that
they generated and the many forms of innovation that were at the core of the Industrial
Revolution.
As indicated, the authors prefer two types of explanations: those referring institutions and
those referring to culture. My comments with regard to the latter will be much briefer than
my comments with regard to the former and do not require a separate ‘chapter’ of my
review. What the authors write about cultural explanations overall is less outspoken and
less controversial. To me it is obvious that culture can make a major economic difference.
The point is how to unambiguously define it and measure its impact. The definition of
culture that they have chosen “the heuristics employed by people to interpret the complex
world around them” is a broad one. (14) I found it somewhat confusing that they on the
same page also describe it in terms of values and on page 66 as ‘a set of learned rules of
behavior.” It is also on page 14 that they point out that cultural values can be extremely
persistent and interact with institutional development. Later in the text the word ‘can’ from
the previous sentence has disappeared and it reads that culture is persistent (79, italics in
original) or persists (87, again with italics in the original). The fact that culture is (or rather
can be?) so persistent would be the primary reason it can have such a large impact on
economic growth. (79)
Examples of cultural persistence are easy to find. But so are examples of discontinuity.
The authors surely would not want to deny that. But that being the case, what exactly do
references to persistence or the assumption of persistence then explain? The authors refer
to the example that people in places in Africa that were more prone to slave raids in the
past are less trusting in the present day. (11 and 111). That may well be true, but in Europe
Catholics have hated and killed Protestants and vice versa for centuries, and now
differences and controversies between them have become all but irrelevant. In a long quite
religious Christian country like the Netherlands now over half of the population claims to
be non-religious and the percentage would even be substantially lower if it were not for
the Muslims that currently live there. The French and the Germans hated and fought each
other enthusiastically from Napoleon to Hitler, now there is no serious animosity at all.
The bellicose Germans are now extremely pacifist. Again, like in the case of institutions
on which more will be said later, is it not the persistence that needs explanation rather than
it being used to explain something else?
What the authors write on cultural explanations in my view makes sense, although again,
apart from their general comments on the role of education and their more specific
comments on the Industrial Enlightenment in Britain (174), they often are better suited to
explain growth than modern economic growth. When it comes to explaining the Industrial
Revolution, they endorse the position of Joel Mokyr with his claim that Britain’s economy
at the time would have been an enlightened economy with a large supply of highly skilled
workers rather than that of Robert Allen who focuses on the relative prices of labour,
capital and energy (163-175). I think that is the right choice if only because Allen’s thesis
that specific relative factor costs (basically relatively high wage cost and relatively low
energy costs) would have induced innovation no longer seems to be tenable.
15
14
See e.g. Vries, Escaping poverty, 196-197.
15
For Robert Allen’s explanation of Britain’s industrialization under reference to the impact of relatively
high wages, see Robert The British industrial revolution in global perspective (Cambridge 2009). For a debate on his
thesis see Jane Humphries, ‘The lure of aggregates and the pitfalls of the patriarchal perspective: a critique
of the high-wage economy interpretation of the British industrial revolution’, Economic History Review 66, 3
7
Institutional explanations
The rest of my review will focus on institutional explanations. Not only because in the
book as a whole they get the most attention and - as I see it - are considered more
important than cultural explanations but also because I consider them the most
debatable.
16
Their definition of institutions refers to “the rules of the game” but also to
the believes and social norms that uphold these rules and so mixes elements from the work
of in particular Douglass North and Avner Greif (38-39). On a more practical level they
identify a society’s institutions with its “political, legal, religious and economic
organizations.” (37)
Like with the cultural explanations, we find many references to the persistence of
institutions or their consequences. The authors e.g. dwell on several instances of what they
consider very long-lasting and pernicious effects of colonialism. (116-119) But so one can
counter, what exactly does reference to institutional persistence in a certain place show
other than that apparently things there stayed as they were? Reading the examples that
Koyama and Rubin give of pernicious institutional legacies of colonialism I could not help
wondering why did their effects persisted, apparently over centuries, in a world where so
much has changed? Why are institutions destiny in some places but not in others? Modern
economic growth is based on sustained innovation that means that in places that
experience such growth institutional innovation too is sustained.
Of all the explanatory institutional variables discussed in the book limited government
seems to be the most important. As the name implies, in a limited government “the powers
of the ruling elite are constrained.” (56) In societies in which government is not limited
“Small groups of ruling elites held most power and the rest of society had relatively little
capacity to push back.” (56) Checks on authority in each part of government “helped
economies grow” and “played a role in forging the modern economy.” (56 and 58)
Koyama and Rubin in particular dwell on the cases of England and the Dutch Republic
where parliaments were able “to place significant constraints on central authorities.” (140)
Undoubtedly the power of the monarch was limited in Britain after the Glorious
Revolution when the lawmaking function became vested in the King-in-Parliament and
even abolished in the Dutch Republic, that from the 1580s onwards no longer had a
monarch. But the power of their parliaments became greater than ever. I therefore wonder
what the authors mean when they claim parliaments placed significant constraints on
“central authorities.” As I see it, they themselves had become the central authorities! Their
power was constrained by the fact that they had decided to abide by the rule of law, which
of course can be quite constraining and in principle is a very important improvement for
the general population of a country.
17
But probably this constraint was not that stringent
(2013) 693-714; Robert Allen, ‘The high-wage economy and the Industrial Revolution: A restatement’,
Economic History Review 68, 1 (2015) 1-22; Jane Humphries and Benjamin Schneider, ‘Spinning the industrial
revolution’, The Economic History Review 72, 1 (2019) 126-155; Robert Allen, ‘Spinning their wheels: a reply to
Jane Humphries and Benjamin Schneider’, The Economic History Review 73, 4 (2020) 1128-1136; Jane
Humphries and Benjamin Schneider, ‘Losing the thread: a response to Robert Allen’, The Economic History
Review 73, 4 (2020) 1137-1152. See further for a more general critique my Escaping poverty, 199-203 and 207-
212.
16
Cultural explanations as a rule require institutional underpinning because cultural beliefs as a rule will not
persist without institutional support.
17
Rule of law according to Koyama and Rubin is impersonal, treats individuals the same regardless of their
social identity, guarantees each individual their own private sphere of non-interference, and as such offers a
platform of institutional stability conducive to long-run economic growth. (45) In that respect the two
8
considering the fact that they themselves made the law. Limiting the power of monarchs is
not the same as limiting the power of the elite. Both countries were ruled by rather small
oligarchies that effectively were more powerful than rulers in countries where government
was less ‘limited’. They in Michael Mann’s categories had more infrastructural power i.e.
more possibilities and resources to effectively implement their policies and “to get things
done. . .”
18
This clearly showed in the power of the countries they ruled as compared to
other countries. The British elite ruled a state that was becoming the most powerful state
in the world. In that sense their power certainly was not ‘limited’.
19
Great Britain: an example of an inclusive society with limited government?
To what extent was the ruling elite constrained domestically in countries with limited
government? Let us focus here on Great Britain, the country that amongst institutionalist
economist and economic historians always functions as the example par excellence of an
‘inclusive’ country with limited and representative government and on the period just
before and during its industrialization.
20
In England and Wales in the beginning of the
eighteenth century there were some 300,000 adult males who could vote for the House of
Commons. That was about a quarter of adult male population. At the end of the century
their number had increased to some 350,000 which, however, was only roughly one
seventh to one sixth of the adult male population. When we look at the share of voters in
the total male population, the situation did not improve, rather the contrary, in the decades
until the Reform Act of 1832. It is estimated that immediately before that Act, some
400,000 men were entitled to vote, and that after passage, the number rose to over 600,000.
Even after that increase the voters’ share still was less than one fifth of all adult males in a
system in which the connection between property and the vote was made closer than it had
been. People in the House of Commons all came from a wealthy elite for the simple reason
that only wealthy people were eligible. The voting system not only led to an outcome that
was far from representative in overall quantitative terms, it also was hugely unfair and
corrupt. A reference to the many rotten, pocket, nomination and proprietorial boroughs
must suffice here.
21
Koyama and Rubin of course know that the British system “limited
favourite examples of states with limited government before the nineteenth century, England and the Dutch
Republic, certainly were much closer to rule of law than other countries in the world but the way in which
they treated certain religious groups e.g. those who were not members of the Church of England in England
or Catholics in the Dutch Republic, showed there certainly was room for improvement. In the Dutch
Republic, Catholics may well have formed about one third of total population in the eighteenth century.
Those living in the so called ‘Generaliteitslanden’ had no political representation at all. In the British case it
is interesting that all sorts of ‘dissenters’, who were not optimally included in British society, played such a
major role in industrialization.
18
For a definition of infrastructural power see Michael Mann, ‘The autonomous power of the state: its
origins, mechanisms and results’ in: John Hall, ed., States in history (Oxford /Cambridge Mass. 1986) 113. He
defines it as “the capacity of the state actually to penetrate civil society, and to implement logistically political
decisions throughout the realm.” The expression “to get things done” is by Ian Morris, Why the West rules -
for now. The patterns of history and what they reveal about the future (London 2010) 24.
19
See for this thesis my State, economy and the Great Divergence. Great Britain and China, 1680s to 1850s (London
2015).
20
I here as everywhere else in the text use the terms ‘inclusive’ and ‘exclusive’ in the meaning given to them
by Acemoglu and Robinson, Why nations fail. The origins of power, prosperity and poverty (New York 2012) See the
Index of that book.
21
I took this information from: Frank O’Gorman, Voters, patrons and parties. The unreformed electoral system of
Hanoverian England, 1734-1832 (Oxford 1989); Clive Jones, ed., A short history of Parliament: England, Great
Britain, the United Kingdom, Ireland and Scotland (Woodbridge 2012); Clive Jones, Philip Salmon and Richard
Davis, eds., Partisan politics, Principles and reform in Parliament and the constituencies, 1689-1880: Essays in memory of
John A. Phillips (Edinburgh 2006); John Phillips and Charles Wetherell, ‘The Great Reform Act of 1832 and
9
political representation to those with property.” But so they add, it did provide “scope for
“voice” through regular elections.” (147) Earlier in their book they had already in passing
commented “Parliaments were important, because, at least in theory (italics PV), they allowed
the interests of the broader population to be represented (italics in the original) in a single
body.” (56) I cannot help finding this rather vague and certainly rather optimist for
industrializing Britain, and also for that matter for Scotland, let alone Ireland. In 1817 an
estimated 750,000 people signed 700 petitions for parliamentary reform, asking for
universal male voting rights. All but a few of the petitions were refused outright by the
House of Commons. The rest had no significant effect. In 1839 the first Chartist petition
asking for parliamentary reform was signed by 1.2 million people. In 1842 a second
petition was presented. Now with over three million signatures. It too was rejected.
Apparently, many Britons were not convinced they had sufficient “scope for voice.”
A limitation on government power that pops up time and again in texts of institutionalist
scholars studying Great Britain’s parliamentary system, is the trade-off between ‘taxation’
and ‘representation’. In the words of Koyama and Rubin: “those with capital were willing
to provide taxes in return for protection of their property rights.” (62) That again is rather
optimist. The decision to collect taxes was indeed made by members of the Parliament
who also determined their height. But most of those taxes were indirect taxes that hit the
ordinary consumer much harder than the elite that saw to it that the taxes they had to pay
themselves were kept low.
22
On top of that, this elite profited from buying government
bonds that in the end including interest had to be paid by the ordinary taxpayer. Britain’s
system of taxation, government expenditure and debt servicing was regressive, as such
systems usually were in early modern Europe.
23
The interpretation of Koyama and Rubin of the constraints to which the elites were subject
or subjected themselves in this case as in several others is rather ‘optimistic’. But they
could defend themselves by arguing that representation in other parts of the world was
even less and that nowhere in the world government was even approximately democratic
and fair.
24
Their analyses and their interpretation of developments in Britain in the long
eighteenth century are very much in line with those of Daron Acemoglu and James
Robinson in their Why nations fail. As I already commented on that book extensively I refer
the reader for a long general analysis to my earlier review.
25
In order to make my point
here, and to avoid too much repetitious, I will focus more on one, but I think fundamental
aspect: the position of labour and discuss that in some detail some detail to actually show
how one-sided their analyses are. According to Koyama and Rubin “one key component
of institutions is the degree to which they permit economic freedom.” (39) They clearly hold
the position that economic development profits from economic freedom. So, one might
ask: to what extent were ordinary working people free in Great Britain?
the political modernization of England’, The American Historical Review 100, 2 (1995) 411-436. For a quick
introduction into the phenomenon of so-called rotten, pocket, nomination, and proprietarial boroughs see
https://en.wikipedia.org/wiki/Rotten_and_pocket_boroughs. See also the book by Blockmans referred to
under note 22.
22
As the authors themselves write for the situation in Britain “the bulk of taxes were raised through indirect
taxes, particularly on goods like beer.” (163)
23
Though less so in the Dutch Republic. See e.g. Guido Alfani and Matteo di Tullio, The lion’s share. Inequality
and the rise of the fiscal state in preindustrial Europe (Cambridge 2019). For my review of this book see Zeitschrift
für Historische Forschung 47, 4 (2020) 724-726.
24
For a fascinating general overview of political participation and representation in Europe before 1800,
see Wim Blockmans, Medezeggenschap. Politieke participatie in Europa voor 1800 (Amsterdam 2020). In 2023 an
English version will appear on the market published by Routledge under the title Political voice. Political
participation before the Revolutions.
25
Peer Vries, ‘Does wealth entirely depend on inclusive institutions and pluralist politics? A review of Daron
Acemoglu and James Robinson, Why nations fail. The origins of power, prosperity and poverty’, Tijdschrift voor Sociale
en Economische Geschiedenis 9, 3 (2012) 74-93. The text is available on my Researchgate-site.
10
A concrete example: the position of labour
The following, not even exhaustive enumeration shows that ordinary workers were not
exactly ‘included’ in Great Britain’s political and economic life, at least before and in the
initial stages of industrialization. They continued to be subjected to all sorts of exclusion,
coercion and manipulation.
26
We already indicated they had no vote and could not be
elected, not in Great Brain and obviously not in its empire. Many thousands of those who
worked for Britain’s economy in my view can certainly not be considered free. Let us begin
with slavery. That did not exist in Great Britain itself, although the last traces of ‘serfdom’
of miners and salters in Scotland were only abolished in 1799 - but it was part and parcel
of its economy. In 1800 there were some 600,000 slaves in the British West Indies and
some 150,000 in colonies occupied by Great Britain. On top of that quite a number of the
857,000 slaves in the USA had begun to produce cotton for the British.
27
For the year
1812-1813, merchant-statistician Patrick Colquhoun (1745-1820) claimed there were
1,147,346, as he called it, un-free ‘negro labourers’ in the British Empire, i.e. the West
Indies plus the colonies and dependencies in Asia.
28
When Great Britain granted full
emancipation to its slaves in 1838, their number was 750,000.
29
After 1800, the number of
slaves in the United States increased steeply to 1.5 million in 1820 and about four million
in 1840, a number that remained more or less stable until Abolition. Until slavery was
finally abolished there in the 1880s, yet another 1.7 million slaves were transported to
Brazil and 700,000 to the Spanish Antilles. Many of these slaves, in particular of course in
the USA, also produced for Great Britain. Then there was indentured labour. According
to one estimate, of the total number of Europeans that between 1700 and 1775 immigrated
to the thirteen British colonies that were to become the United States, 152,000 were free,
52,000 convicts, and 104,000 indentured servants.
30
After slavery had been abolished in
the British Empire, indentured labourers often took over the role of slaves e.g. on tea
plantations in India.
Tens of thousands of people were forced into Britain’s Navy via ‘impressment’. During
the Seven Years War (1756-1763) some 90,000 men were forcibly enlisted on ships of the
Royal Navy and in the period from 1776 to 1783 some 80,000.
31
One can safely conclude
that approximately 250,000 British seamen were impressed during the long eighteenth
century from 1688 to 1815, many of them more than once. Impressment ended, in practice
but not law at the end of the Napoleonic Wars, but as late as 1835 legislation was passed
that stated that the Crown still had the right of impressment if necessary. Coercion played
26
In my comments on the coercing of labour in industrializing Britain I use fragments from the following
texts of mine: ‘Bringing labour back in. Reflections on Catharina Lis and Hugo Soly, Worthy efforts: attitudes
towards work and workers in preindustrial Europe and on the origins of modern economic growth’, Tijdschrift voor
Sociale en Economische Geschiedenis 11, 1 (2014) 127-140. The text is on my Researchgate-site; Escaping poverty
and State, economy and the Great Divergence. The comments on the repressive character of law primarily come
from Michael Ignatieff, A just measure of pain. The penitentiary in the industrial revolution 1750-1850 (London 1978).
27
Robin Blackburn, The making of New World slavery. From the Baroque to the modern 1492-1800 (London /New
York 1997) 581.
28
Patrick Colquhoun, A treatise on the wealth, power and resources of the British Empire in every quarter of the world
(London 1815) 7.
29
James Walvin, ‘Freedom and slavery and the shaping of Victorian Britain’, Slavery and Abolition 15, 2 (1994)
246-259, page 246.
30
Aaron Fogleman, ‘From slaves, convicts, and servants to free passengers. The transformation of
immigration in the era of the American Revolution’, Journal of American History 85 (1998) 66-76, page 71.
31
N.A.M. Rodger, The command of the ocean. A naval history of Britain, 1649-1815 (London 2004) 396; Nicolas
Rogers, ‘Vagrancy, impressment and the regulation of labour in eighteenth-century Britain’, Slavery and
Abolition 15, 2 (1994) 102-113.
11
a substantial role in enrolling men for the army too.
32
Occasionally that army used slaves.
33
It is important to point out that Britain’s armed forces not only produced ‘protection’ but
also functioned as a collective of ‘ordinary’ workers. Overseas, they often were also used
to build roads and fortresses. Discipline in army and navy was extremely, or rather cruelly
harsh.
34
We are not talking about small numbers here. On the contrary, the number of
people involved in the British military was staggering. Military historians estimate that
about one in sixteen adult males in Britain was serving in the armed forces during the War
of the Austrian Succession (1740-1748), one in eight during the War of American
Independence (1775-1783) and one in five during the French and Napoleonic Wars from
1793 to 1815.
35
Then there were the poor houses meant to set the poor to work. Already in the 1770s
there existed over 2,000 of them in England and Wales. The number of people actually
put away in places called ‘poor houses’, or more adequately ‘workhouses’, amounted to
90,000 in 1776 and 123,000 in 1850. By far the majority were not able-bodied, full-time
employed adults. But such places nevertheless housed a substantial ‘coerced’ labour
force.
36
The Poor Law Act of 1834 intended the work in workhouses to be intolerable
and the relief to be ‘less eligible’ than the lowest wage outside. Several thousands of people
- in the 1770s per year some 9,000 to 13,000 - were put to work in so-called bridewells, “a
special type of prison, established to address particular social problems that had emerged
in London and other urban areas; namely vagrancy, begging, disorderly women,
disobedient servants and idle apprentices.”
37
Those guilty of such ‘misbehaviour’ were to
be taught how to work and become productive members of society. In the first decades
of industrialization, moreover, thousands of children, many of them orphans, worked as
pauper apprentices for mill owners. They were bound by contract to work at their mills
until adulthood. By the late 1790s, no less than about a third of the workers in the cotton
industry were pauper apprentices.
38
Although they worked under contract, domestic
servants also were not free in the sense in which we use that word now. They were
numerous. In the first decade of the nineteenth century, an estimated ten per cent of the
population, overwhelmingly women, may have been engaged in waged domestic labour in
England.
39
In the new factories children and young women provided the bulk of labour. Over the
period from 1835 to 1870, adult males never formed more than roughly one third of the
labour force in cotton and woollen factories. The information we have suggests, that
between 1700 and 1850, the average age at which children in England began to work was
32
Lawrence James, Warrior race. A history of the British at war (London 2001) 296-301.
33
James, Warrior race, 300-301.
34
See e.g. Niklas Frykman, ‘Seeleute auf den europäischen Kriegsschiffen des späten 18. Jahrhunderts’ in:
Marcel van der Linden and Karl Heinz Roth, eds., assisted by Max Henninger, Über Marx hinaus.
Arbeitsgeschichte und Arbeitsbegriff in der Konfrontation mit den globalen Arbeitsverhältnissen des 21. Jahrhunderts (Berlin
/Hamburg 2009) 55-84; James, Warrior race, 292-317, and Brigitte Mitchell, ‘The debate in Parliament about
the abolition of flogging during the early nineteenth century, with references to the Windsor Garrison’, Journal of the
Society for Army Historical Research 88, 353 (2010) 19-28.
35
Clive Emsley, British society and the French Wars, 1793-1815 (London 1979) and Stephen Conway, ‘Britain
and the impact of the American War, 1775-1783’, War in History 2 (1995) 127-150.
36
Martin Daunton, Progress and poverty. An economic and social history of Britain, 1700-1850 (Oxford 1995) 454-
455.
37
See for the description https://www.prisonhistory.org/author/rosalindcrone/ and for the figures Patrick
Patriquin, Agrarian capitalism and poor relief in England. Rethinking the origins of the welfare state (Houndmills 2007)
109.
38
See e.g. Jane Humphries, Childhood and child labour in the British Industrial Revolution (Cambridge 2010).
39
See Carolyn Steedman, Labours lost. Domestic service and the making of modern England (Cambridge 2009) chapter
2, in particular 36-39.
12
10.5 years in agricultural regions, 11.5 years in towns and 8.5 years in industrial areas.
40
It
would be fairly optimist to call these children and young women ‘free’. Even the position
of many of the formally ‘free’, adult male labourers in Britain was much less free than that
of modern employees working under a contract.
41
In 1799 and 1800 the so-called
Combination Acts were passed. They prohibited labour to ‘combine’ in order to raise its
wages. They were in force till 1824, and were then only slightly relaxed. It was only in 1871
that the Trade Union Act recognized unions as legal entities entitled to protection under
the law. When Koyama and Rubin refer to a “period before labour unions” (178) they
simply pass by the fact that it de facto was long forbidden to set up what we nowadays
would call trade unions. The Combination Acts also prohibited organized activities by the
masters, but that part of the regulations was never enforced. Wage earners were considered
domestics and were supposed to provide a service. Their work was usually conceived as
their master’s property and they had to be at permanent disposal. Employer and employee
never were truly equal contractual partners. Between 1719 and 1825 emigration of artisans
and artificers was officially forbidden. Discipline in factories, as is well-known, was very
strict.
42
The regime on board of ships of the merchant navy was so harsh that they have
been compared to sweatshops.
43
According to Catharina Lis and Hugo Soly in their magnum
opus on the attitudes to work and workers in pre-industrial Europe, national labour
legislation was nowhere enforced longer and more consistently than in England.
44
Intervention in the labour market had always been rife there and that continued to be the
case. On the whole, work-related criminal sanctions were reinforced between 1720 and 1850
and not loosened.
45
That has brought us to the rule of law. I do not deny that in principle there was rule of
law in Great Britain, but I would welcome more analysis how this worked out in practice.
The law to all intents and purposes, de facto was made by Parliament. It is not farfetched to
assume that had specific consequences. The existing legal system in any case was very
harsh and resolutely on the side of the propertied classes. Let me again just give some
figures. Nearly one thousand convicts were expelled annually from Britain in the half-
century after 1718. In total, the country exported some 50,000 convicts, in particular from
Ireland, to its North American colonies. When that was no longer possible, Australia
became the favourite destination for deported convicts. Between 1788 and 1868, no fewer
than 165,000 people were sent there to perform hard labour. By far the majority of those
deported convicts were ‘ordinary people’ in the sense of not members of any elite.
46
As a
reminder, the population of England, Wales and Scotland was some six million in 1750
and some eighteen million in 1850.
40
See Emma Griffin, Liberty’s dawn. A people’s history of the industrial revolution (New Haven /London 2013)
chapter 3.
41
See e.g. Robert Steinfeld, Coercion, contract and free labour in the nineteenth century (Cambridge 2001) and idem,
The invention of free labour. The employment relation in English and American law (Chapel Hill 1991).
42
See e.g. Michael Andrew Zmolek, Rethinking the Industrial Revolution. Five centuries of transition from agrarian to
industrial capitalism in England (Leiden /Boston 2013) 451-455 and the literature it refers to.
43
See e.g. Leon Fink, Sweatshops at sea. Merchant seamen in the world’s first globalized industry, from 1812 to the present
(Chapel Hill 2011).
44
Catharina Lis and Hugo Soly, Worthy efforts: attitudes towards work and workers in preindustrial Europe (Leiden
/Boston 2012) 444.
45
See Paul Craven and Douglas Hay, ‘The criminalization of ‘free’ labour: master and servant in comparative
perspective’, Slavery and Abolition 15, 2 (1994) 71-101. See for a general overview Perry Gauci, ed., Regulating
the British economy, 1660-1850 (Farnham, UK and Burlington, USA 2011).
46
See for information Anand Yang, ‘Indian convict workers in Southeast Asia in the late-eighteenth and
early-nineteenth centuries’, Journal of World History 14, 2 (2003) 179-208; David Meredith and Deborah Oxley,
‘Condemned to the colonies. Penal transportation as the solution to Britain’s law and order problem’,
Leidschrift 22,1 (2007) 19-40. Leidschrift is a journal of the History Department of Leiden University
13
The number of crimes bearing the punishment of death was high: it increased from about
50 in 1688 to about 160 by 1765 and something like 225 at the end of the Napoleonic
Wars.
47
The following is an illustrative quote from Michael Ignatieff’s, A just measure of pain
a book that is full of examples how in the eighteenth century labour was very harshly
‘disciplined’ by means of the law. It could easily be supplemented with many similar texts
showing how repressive Britain’s ‘limited government’ was.
“By 1755, it appears that the JPs (Justices of the Peace PV) had the authority to imprison for
the following offenses: vagrancy, desertion of family, bastardy, disobedience and
embezzlement in most trades, theft of turnips and other field produce, taking of firewood
and deadfall from privately owned woods and minor game law offences. Many of the
offences - vagrancy for example - had always been punishable by imprisonment; now, in the
eighteenth century, the scope of such punishable offences was extended. The Vagrancy Act
of 1744 assembled together categories of social condemnation that had been accumulating
in various statutes since the days of Elizabeth and added new ones to bring it up to date with
the labour disciplined needs of eighteenth-century masters. Besides giving magistrates the
power to whip or imprison beggars, strolling actors or gamblers, gypsies, peddlers, and “all
those who refused to work for the usual and common wages,” it empowered magistrates to
imprison wandering lunatics and “all persons wand’ring abroad and lodging in alehouses,
barns and houses or in the open air, not giving a good account of themselves.”
In addition to their responsibilities under the Vagrancy Act, magistrates were empowered by
the Statute of Artificers of 1604 to whip or imprison any servant or apprentice who left
employ before his contract expired, who failed to give a quarter’s notice, who struck his
master, or who in any way disobeyed.”
48
In 1766 the penalty for leaving work unfinished was increased to in some cases three
months hard labour. This punishment was reaffirmed in the Master and Servants Act of
1823. The number of people committed for vagrancy went up by thirty-four per cent in
the period 1826-1829, and by sixty-five per cent in the period 1829-1832.
49
Overall laws
during the eighteenth century and in the first decades of the nineteenth century became
harsher and more focused on repression.
In brief, ‘the economy’ of industrializing Britain, directly or indirectly, at home, on sea and
abroad, could profit from an enormous amount of coercion. All the sweet talk about
‘property rights’, ‘inclusive institutions’, or ‘limited government’, so dear to
institutionalists, including Koyama and Rubin, who only focus on consensus and never on
coercion, tends to completely obscure these and several other harsh realities till at least the
1820s. From then onwards there are also signs of relaxation and increasing freedom and
inclusion. But their image of the society of industrializing Britain is far too rosy and too
one sided. Freedom, the rule of law, consensus, representation, the market, they all without
any doubt played a role in its economic development, but so did all sorts of constraints,
force, exclusion, manipulation, predation and internal (and of course external)
colonization.
50
In the end what, what seems to be the most important issue for them, more important
than representation or ‘democracy’ is protection of property rights: “Even though British
political institutions were far from perfect and certainly corrupt to modern eyes, there was
enough constraint on executive power that the majority of the population was reasonably
well protected from infringements on property rights. This was not the case in other parts
47
Ignatieff, Just measure of pain, 16. No one was actually quite sure of the number.
48
Ignatieff, Just measure of pain, 25.
49
Ignatieff, Just measure of pain, 25.
50
It struck me that the fact that Britain brutally exploited Ireland and, at the time of the notorious
‘clearances’, also parts of Scotland, is never referred to in How the world became rich. Both ‘countries’ are not
in its Index.
14
of the world, especially those with autocratic governance.” (155)
51
This claim is frequently
made in institutionalist literature but I have never seen any concrete proof of it when it
comes to the majority of the population in other parts of Western Europe and even when
it comes to the majority of the population in more autocratic parts of the world. It in any
case is striking that in Britain, the land of the supposedly exceptionally well-protected
property rights, there were more landless people in the countryside in the seventeenth,
eighteenth and nineteenth centuries than in any major other country in the world that I
have information on. Many people in Scotland and almost all people in Ireland at the time
would certainly have been quite surprised to hear that their property rights were well
protected. In ‘autocratic’ imperial China under the Qing landlessness was very exceptional.
I already pointed out in my review of Why nations fail that the distribution of incomes and
wealth was extremely unequal in Britain, more unequal than in many countries with the
‘wrong’ institutions.
52
What is completely lacking in current institutionalist analysis by in particular economists
is attention to class and what was once called ‘relations of production’ and thus any link
with social history. It is not by accident, I would assume, that the concept ‘capitalism’ plays
no role whatsoever in the analysis of Koyama and Rubin.
53
In my view the origins of
modern economic growth, just like its consequences, cannot be understood without
reference to social relations and class. At least up until the 1830s, Britain, whatever else it
may have been, was also a class-ridden, authoritarian and elitist society.
54
In several
respects it became even more so during the initial stages of its industrialization.
Industrialization, class and repression
In the previous paragraphs I have only referred to the situation in Great Britain but one
can make similar comments for other countries in the initial stages of their
industrialization. They refer to the rule not to an exception. For the case of Japan, that like
the case of Great Britain I studied more in depth, I am pretty sure. When the country took
off in the 1890s, it did so under a Constitution and a system of rule that were very
authoritarian and ‘exclusive’, to again borrow Acemoglu’s and Robinson’s term. Let me
just quote Andrew Gordon on the circumstances in which the Constitution was conceived.
It clearly marked a deterioration of the freedom and rights of the people as compared to the
1870s and 1880s.
51
Britain’s political institutions, by the way, were also very corrupt in the eyes of many contemporaries. See
e.g. Philip Harling, The waning of ‘old corruption’. The politics of economical reform in Britain, 1779-1846 (Oxford
1996) and the very extensive publications on reform of the electoral system. Here I refer to the literature
under note 19.
52
See e.g. Branko Milanovic, Global inequality. A new approach for the age of globalization (Cambridge Mass. /
London 2016) chapter two and http://gpih.ucdavis.edu/Distribution.htm. I consulted that site on 10-4-
2022. For extreme inequality in terms of wealth, I only refer to landed property. See for example Martin
Daunton, Progress and poverty. An economic and social history of Britain, 1700-1850 (Oxford 1995) 62 and Mark
Overton, Agricultural revolution in England. The transformation of the agrarian economy 1500-1850 (Cambridge 1996)
168. For wealth inequality in Britain during the period 1810-2010, see Thomas Piketty, Capital in the twenty-
first century (Cambridge / London 2015) 344. In many ‘extractive’ countries at the time incomes and wealth
were more equally distributed than in post-Glorious Revolution Britain.
53
The book contains two references to capitalism and agriculture, one to capitalism and primitive
accumulation and colonization, and two to the Protestant work ethic and capitalism. See the Index under
‘capitalism’. It never as such discusses it.
54
In this respect my interpretation of the causes of Britain’s industrialization is much closer to that of
O’Brien, ‘Was the British Industrial Revolution a conjuncture’ than to that of Koyama and Rubin.
15
“As the government polished the final drafts of the constitution, these agitations, which forced
two cabinet ministers to resign, vividly reminded the Meiji rulers of the messiness and dangers
of popular participation in politics. It is no surprise that the document formally promulgated
in a grand ceremony in 1889 was written and presented in a way that sought to maximize the
power of the state and minimize that of the people.”
55
When Meiji Japan industrialized, it certainly with less than two per cent of the population
having the vote, was not an ‘inclusive’ state as Acemoglu and Robinson claim against the
consensus of all experts in the field and as Koyama is willing to believe.
56
Government
was very elitist, exclusive and authoritarian and labour was repressed. When it comes to
the inclusiveness of industrializing countries in general I can only refer to what I wrote in
my Averting a great divergence:
“This means that the thesis, infinitely repeated by Daron Acemoglu and James Robinson in
their Why nations fail, that inclusive institutions would cause growth to emerge and perpetuate
in any case for the phase of its emergence is completely at odds not just with the historical
record of Japan but of all major industrializing countries. The transition to a modern, more
industrial economy has always been a complex, painful and disturbing process that most
people would not want to endure voluntarily. I am pretty certain that most people would
have voted against it if, during the initial stages of industrialization, governments would have
asked them whether they were in favour of further industrialization. I am also quite certain
that therefore governments did not hold such referenda. As much as we may regret it, almost
without exception even in the West - I actually wonder what clear exception in the entire
world I could come up with - countries took off in an extractive, exclusive setting. I am afraid
we have to agree with Robert E. Ward when he writes about Japan’s modernization that
authoritarian forms of political organization “can be extraordinarily effective in the early
stages of the modernization process”, and that such forms may have to precede “the
emergence of a political system which is both modern and durably democratic.”
Modernization in particular in its initial stages entails major shocks and strains. National
governments often try to control the stress created, which tends to lead to their further
extension and intervention. Inclusiveness normally only tends to have a chance of emerging
after a certain level of wealth has been reached. In brief: modern economic growth did not
begin with inclusive institutions. Whether it will end without them, i.e. whether growth can
be sustained in an extractive, exclusive setting, is open to debate. China, the most populous
country of the world and not exactly an inclusive society, has now had very high growth rates
for forty years in a row (that is now fifty years! PV), providing the biggest example of
economic growth ever. That should be food for thought.”
57
If we were able to measure (modern) economic growth during global history as a whole,
my hunch would be that much more of it occurred in relatively unfree than in relatively
free settings.
Is limiting government all that states have ever done for creating growth?
55
Andrew Gordon, A modern history of Japan from Tokugawa times to the present (New York /Oxford 2003) 92.
The 1870s and 1880s were a period when the Movement for Freedom and People’s Rights was, in the end
unsuccessfully, quite active. For this movement see Gordon’s book pages 80-91.
56
For my refutation of the claims of Acemoglu and Robinson and for these claims see my Averting a great
divergence: State and economy in Japan, 1868-1937 (London 2019) 74-84 and 158-161. For Koyama’s attempt to
‘save’ Acemoglu and Robinson: “But surely what Acemoglu and Robinson mean is that the Japanese state
became more inclusive (i.e. the statement is not an absolute one but a relative one, comparing the Meiji
regime to its predecessor)” see his review of Peer Vries, Averting a great divergence: State and economy in Japan,
1868-1937 (London 2019). Published by EH.Net (May 2020).
57
Peer Vries, Averting a great divergence, 83. The quotes by Warde are from R.E. Ward, ed., Political development
in modern Japan. Studies in the modernization of Japan (Princeton 1968) 479 and 483.
16
Even if defining and measuring limited government were unproblematic, the question
remains, at least for me, how exactly it would have had an impact on the process of adding
value, and, most importantly, on sustained innovation that counts as the essence of
modern economic growth. Koyama and Rubin time and again present claims like “the rise
of parliaments in the sixteenth and seventeenth centuries played a key role in the economic
rise and of northwestern Europe.” (75) For the Dutch case they claim: “Dutch economic
success was a direct result of institutional change. The rise of limited, representative
governance was one of the key driving forces behind the Dutch economic expansion.”
(142) That is a firm claim. But what exactly is the role of ‘limited government’ in the
development of agriculture and fishery, both of fundamental importance in the country’s
wealth, in the Baltic trade, the ‘mother’ of all Dutch trades, in the exploitation of the
Indies? If in the last two cases government had an impact, it was via the use of force or by
giving a monopoly to the Dutch East India Company. You do not need limited government
for that. A similar question can be asked for the following claim: “Even prior to the
Industrial Revolution, Great Britain had emerged as one of the world’s leading economies.
Institutional change was critical in this development”. (143) How exactly am I to suppose
this would have worked out in practice?
I must assume Koyama and Rubin would answer that the state in these countries did not
expropriate or obstruct private economic agents and let them to do their job. I think it is
fair to say that they in essence identify good economic government policies with facilitating
the market and with non-interference. They do refer to state capacity which they define as
“the state’s ability to implement policy, render justice, protect its citizens, and so on.” (59-
60) That ability undeniably is of fundamental importance. A state with no or little capacity
can get nothing to little done. But as long as we are not told what this state capacity has
been actually used for, we cannot judge how important it has been for (modern) economic
growth. Here I think the book is deficient. Reference to concrete economic policies by
governments is all but entirely lacking. It never in the entire book is explicitly and
separately discussed whether the state has ever done other things to promote growth than
just facilitate the market. In that context it is striking - but I believe no accident - that the
authors suggest that there basically are only two types of economies: those based on the
market and those based on command. (See for this simple juxtaposition 223) In their view,
growth episodes were “not planned by policy makers” but resulted from “an untold
number of decisions by private individuals to experiment with new production methods
or to build new factories or to mechanize production.” (223) This is a misleading
dichotomy. Even if we for the sake of argument simply ignore the possibility that
command economies could provide sustained growth: There are many examples in
economic history where growth strategies developed or implemented by ‘the state’ in
combination with private initiative were essential in creating growth. Surely there are many
examples where the state was a hindrance to growth instead of an agent or even motor. I
am not an optimist or someone with high expectations of the capabilities of bureaucrats
or politicians. One can easily fill entire libraries with glaring errors and failures. But that is
not the point here. In all the cases of modern economic growth that I know of, the state
also tried to ‘develop’ the economy and steer it in a certain direction. Not paying explicit
attention to this aspect of modern economic growth is a serious omission even for the
most ‘free market’- economies in the world.
Koyama and Rubin do not completely ignore economic policies. They do point, at one
occasion, at what they call “mercantilist” policies:
“Economic policy throughout the century or so leading up to industrialization was
unabashedly mercantilist. Mercantilism is the label used to describe economic policies that
favoured exports rather than imports. Mercantilist policies often favoured domestic market
integration. When it came to international trade, they supported the use of tariffs, subsidies
17
and monopolies for special interests to obtain a favourable balance of trade.” (156)
That comment only applies to policies in Europe and strikingly enough is the only one
referring to the entire pre-industrial era.
58
Apparently, economic thinking and economic
policies before the Industrial Revolution are not relevant enough to deserve further
explanation. I disagree, if only because the most mercantilist county in eighteenth-century
Europe, Britain, became the first industrial nation and because more in general,
mercantilist policies were quite normal in Europe and all but absent in the rest of the
world, with the possible exception of Tokugawa Japan. On top of that economic policies
in the age of mercantilism were much more nuanced and covered a much wider range of
subjects than Koyama and Rubin suggest.
59
I have already elsewhere in my work endorsed
this quote by Japan-scholar E.H. Norman “… the mercantile system … was the crutch
with which capitalism learned to walk.”
60
Even for scholars who do not endorse this claim,
it would still be worthwhile to discuss it.
In countries that had to catch up with industrializing Britain and later with other more
developed nations, state policies always and usually to an even higher extent were and had
to be ‘developmental’, even if again for the sake of argument we do not discuss
communist countries. No historian in my view would want to deny the proactive and
often even steering role of the state in industrialization in e.g. Germany, the USA, Japan,
pre-revolutionary Russia, or the East Asian Tigers, to just refer to a couple of examples.
Koyama and Rubin, however, tell us nothing about the state in its developmental role.
61
The same goes for what is now often called the ‘entrepreneurial state’.
62
Again, one
certainly should not simply accept all the claims by scholars writing about these subjects.
But can and should one really teach economists that the only thing the state has done for
growth in global history is being ‘limited’ and leaving the economy to the market? In their
brief discussion of the characteristics of modern economic growth the authors claim:
“The main difference between rich and poor countries is not that rich countries grow fast
during their periods of growth. Rich countries are those countries that have experienced
fewer periods in which the economy has gotten smaller.” (7)
Can one simply ignore the role of the state in combatting economic crises? In my view
58
In the Index the reference is to ‘mercantilism and empire’, and to ‘Britain: Industrial Revolution’.
59
See e.g. Erik Reinert, How rich nations got rich. Essays in the history of economic policy. Working Paper
2004/01 Sum Centre for Development and Environment, University of Oslo 2004; Erik Reinert, How rich
countries got rich … and why poor countries stay poor (New York 2007); Sophus Reinert, Translating empire. Emulation
and the origins of political economy (Cambridge 2011); Philipp Rösssner, ed., Economic growth and the origins of modern
political economy. Economic reasons of state, 1500-2000 (London /New York 2016) containing good reference to
literature on pre-classical political economy in its first article; Philip Stern and Carl Wennerlind, eds.,
Mercantilism reimagined. Political economy in early modern Britain and its empire (Oxford /New York 2013). Dealing
specifically with the British case I can refer to William Ashworth, The industrial Revolution. The state, knowledge
and global trade (London 2017); Peer Vries, State, economy and the Great Divergence.
60
E. Herbert Norman, Japan’s emergence as a modern state. Political and economic problems of the Meiji period (New
York 1946) 110.
61
Let me only refer to Ha-joon Chang, Kicking away the ladder. Development strategy in historical perspective (London
2002); Stephen Cohen and J. Bradford DeLong, Concrete economics. The Hamilton approach to economic growth and
policy (Boston 2016); Chalmers Johnson, Japan: who governs? The rise of the developmental state (New York /London
1995)); Robert Millward, The state and business in the major powers. An economic history 1815-1939 (London /New
York 2014); Espen Moe, Governance, growth and global leadership. The role of the state in technological progress, 1750-
2000 (Ashgate 2007); Alice Teichova and Herbert Matis, eds., Nation, state, and the economy in history (Cambridge
2003); Robert Wade, Governing the market. Economic theory and the role of government in East Asian industrialization
(second paperback edition with a new introduction by the author; Princeton 2004); Meredith Woo-Cumings,
ed., The developmental state (Ithaca /London 1999. These are just some books that I read on the topic and that
I found helpful. The list could certainly and very easily be extended.
62
Mariana Mazzucato, The entrepreneurial state. Debunking public versus private sector myths (London 2013).
18
the world’s wealthy countries would have been much worse off without the state as
capitalism’s ‘trouble shooter’. I just refer to the role of the state in tackling the great
economic crises of the 1930s or the major financial crisis that began in 2007-2008. But
the history of the industrial world is actually littered with economic crises. Would they
have been overcome without ‘the state’? What would the current economies hit by
Covid19 look like without state intervention?
Just like Acemoglu and Robertson in their Why nations fail, Koyama and Rubin think that
unconstrained political rulers tend to block innovation whereas the chance that this would
be the case with limited government is much smaller.
“(W)here there are few checks on autocratic political power, technology adoption may not
occur. … Unconstrained rulers can prevent the spread of … technologies. Constrained rulers
have a much harder time doing so. (187)
That seems to be a major reason to prefer limited, non-interventionist government. It is
quite easy to give examples that corroborate these claims. But I am afraid it is just as easy
to find examples that corroborate their opposite. There are numerous instances in
economic history of often quite conservative and quite authoritarian rulers who
enthusiastically tried to modernize the economy in order that their country would not lose
out against other countries. It was simply too risky to ignore the link between economic
modernization and effective power in the world arena.
63
Let me only refer to Prussia after
the defeat against Napoleon, to Russia after the Crimean War (1853-1856), after the war
against Japan (1904-1905), and under Stalin after World War One (1914-1917) and the
Russian Civil War (1917-1923), to Meiji Japan (1868-1911), with its focus on “rich nation,
strong army”, to China’s Self-Strengthening Movement (1861-1895) or to the Tanzimat
Reforms (1839 to 1876) in the Ottoman Empire.
64
They all were attempts to modernize
against foreign threats. A lot of industrialization in global history has been ‘reactive’. This
can explain a phenomenon described by Michael Mann for the nineteenth century: The
existence of military elites that were “imbued with reactionary old regime values” but ran
armies and navies that were the most technologically and bureaucratically advanced
organizations in the world.
65
On the other hand, to come back to Koyama’s and Rubin’s
second claim, it is not difficult to come up with examples of ‘constrained’ rulers having
trouble introducing innovations, let us say nuclear energy or genetic modification, because
large parts of the population reject them.
Concluding comments
63
Walt Rostow already decades ago called this “reactive nationalism”, and described it as “a sentiment rooted
in a perception of the link between industrialization and effective power in the world arena - (that) came to
be an extremely important factor in leading men to take the steps necessary to unhinge and transform the
traditional society in such ways as to permit growth to become its normal condition.” In his view the rate of
modernization of traditional societies over the past century-and-a-half would have been much slower
without the affront to human and national dignity caused by the intrusion of more advanced powers than,
in fact, it has been. Walt Rostow, ‘The stages of economic growth’, The Economic History Review, New Series,
12, 1 (1959) 1-16, page 6. See also his The stages of economic growth. A non-communist manifesto (London 1960)
chapter three.
64
See for an analysis Linda Weiss and John Hobson, States and economic development. A comparative historical
analysis (Cambridge 1995). For the case of Japan, I tried an analysis in my The wealth and power of nations. Japan
and the idea ‘Rich nation strong army’, 1868-1937, published on my own account in a Kindle version with
Amazon.
65
Michael Mann, The sources of social power. Volume II, The rise of classes and nation-states, 1760-1914 (Cambridge
1993) 438-439.
19
Much of what the authors claim in their book has not been covered in my review. That is
for the simple reason that I more often than not agree with them. To cover so much
theories and history in such a concise, clear and knowledgeable way is a major feat for
which the authors deserve ample credit. In combination with empirical-case studies the
book can certainly serve in teaching as a good introduction into a huge and hugely relevant
subject. There undoubtedly are many claims in their book that one might discuss but in
my view their descriptions and assessments as a rule are correct and fair. With two
interrelated fundamental exceptions: their assessment of the role of the state and its
policies and their ignoring of the importance of social conflict and social class relations.
There we fundamentally disagree. In my view their claims about the essential importance
of limited government and inclusive institutions can quite easily be refuted, which makes
me wonder why they make them. Is it still because economists, with very few exceptions,
prefer to look at the world in terms of individual economic actors?
