Robert C. Allen tells us in his introduction to the subject that economic history seeks to explain the nature and causes of national prosperity by examining the process of historical change.
Two essential questions hover above the subject.
First, why did the western Eurasian peninsula and its colonial offshoots diverge in such spectacular fashion from the cyclical Mathulsian limits that had hitherto characterised human history?
Second, how did those few countries that caught up with the West do so?
Trailing those two primary questions are the secondary ones of why the Great Divergence was a regional phenomenon, and why the rest ain’t as rich as the West (+ Japan and the East Asian tigers)?
The book shines when it examines those questions. Vim, vigour, dash, brio! are some of the words that came to mind as I read. In contrast, a rather out of place chapter on Africa is dull, disjointed and flaccid, as literature reviews inevitably are.
In lieu of the antiseptic BCE and CE, consider, instead, B1500 and A1500.
B1500, the wealthiest places on earth—those locations with the greatest concentration of sheer lucre—were the typically Asian empires astride great trading regions and vast metropolises fed by plough-powered, irrigated agriculture. Ming-era China and Mughal India are archetypes. Equally prosperous were city-sized emporia that linked demand and supply across the known world. Venice and Antwerp are justly famous, but there were also places like Alexandria, Ragusa and Dubrovnik.
A1500, things changed. First in the mercantilist phase, c.1500-1800, in a vast burst of expansionary energy, mediaeval European empires like England, Portugal and Spain bound over the Pillars of Hercules into the New World and Asia.
The Americas were settled. They soon exported bullion, tobacco and sugar mined and cultivated by vassalized, enserfed and enslaved Amerindians and Africans. Much of those exports went to Europe, the rest went to Asia. In turn, the Asians traded spices, textiles and porcelain. Those products were circulated across a global market whose shipping, through force, guile and sheer competitiveness, had become a near European monopoly. Note that the Asian exports were industrial products. That becomes important later.
The British beat the Dutch and the French to emerge mistress of the seas in the mercantilist age. She held India, valuable Caribbean isles and an increasing number of naval bases across the world.
While the French, her closest rivals, dallied with revolution, the British mastered a general-purpose technology called steam. By the time Napoleon was cashiered, Britain was in a similar position that her star-spangled descendant would find himself after WW2.
By 1815, Britain was the workshop of the world and London, her greatest city, was becoming the place where British Capital did the world’s business. Britain had made it to the Champions League/The Playoffs while other countries were battling for seeding.
Western Europe and the USA were the first of the rest to make the grade. Their secret sauce was free trade, abolishing tariffs and embracing their comparative advantage.
Kidding.
Instead of those policies, they shifted their comparative advantage.
How?
They unified their national markets via infrastructure and demolished regional barriers, protected their infant industries from British competition, created Central Banks and well-capitalised financial institutions and embraced the mass education of their labour force.
While those future champions had their training montages, British industrial competition ate everyone else up and asked for dessert.
During the reign of Mad King George, the British share of global manufacturing was around 2%. In 1887, when his successor, twice removed, the British Queen-Empress Victoria celebrated her silver jubilee, Britain accounted for at least a quarter of global manufacturing. Unsurprisingly, her jubilee was a time for pomp and circumstance. Perhaps, for all but one. He wrote: ‘For frantic boast and foolish word— Thy mercy on Thy People, Lord!’
High wages, adjusted for inflation, Professor Allen writes, was the secret formula that explained the iteration of machine-driven production in Great Britain and, later, the West. To wit: ‘The incentive to increase the amount of machinery used by each worker is greatest where labour is dearest’. In sum, the Industrial Revolution did not cause high wages, it needed them to exist. Now go out, and buy this book.