Institutional changes prerequisite to the industrial revolution

Tuesday, September 11th, 2007

In discussing Gregory Clark’s A Farewell to Alms, Nick Szabo counters Clark’s claim that England experienced no significant institutional improvements from 1300 to 1800. Here is his list of institutional changes prerequisite to the industrial revolution:

  • The mechanical clock, 14th century. The resulting rise of clock culture and the time wage may have slowly but radically improved the coordination and work habits of Europeans. Earlier adaptation to clock culture, a process that may take centuries to evolve, may explain the large discrepencies between European and many non-European laborer work habits that Clark cites.
  • The printing press and the rise of book consciousness, which radically decreased the costs of teaching economically important knowledge to both children and adults. The rise of book consciousness, reflected in the literacy and book cost data Clark graphs, explains the most prominent puzzle revealed by Clark’s data: the fact that skills and innovation rose dramatically even as the rewards to skills were stagnant or declined.
  • Nationalization the Church in England and secularization of family law, 16th century.
  • The incorporation of the Lex Mercatoria into the common law, and the resulting rise of modern contract law, 18th century. Indeed, much of this occured in the same decades as the start of the industrial revolution.
  • The “Romanization” of property law, rendering land more freely saleable, divisible, and mortgageable, which Adam Smith noted was an important improvement still in process at his time.
  • The rise of marine insurance (e.g. Lloyd’s of London) and the associated rise of colonialism and world trade, 17th-18th century.
  • The decline of guilds and monopolies, 16th-18th centuries. Medieval England was certainly not a highly competitive market economy. Commerce in goods was dominated rather by monopolies and a variety of price and quality controls instituted by guilds and towns.

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