How Europe became wealthy

Joel Mokyr, a professor of economics and history, tries to answer the question of why, starting around 1500 CE, “In a time of great powers and empires, just one region of the world experienced extraordinary economic growth”. He looks at various factors that might have contributed and points to two major features. One is that the area we now call Europe was fragmented into many different political entities that competed with each other.

Europe’s political fragmentation spurred productive competition. It meant that European rulers found themselves competing for the best and most productive intellectuals and artisans. The economic historian Eric L Jones called this ‘the States system’. The costs of European political division into multiple competing states were substantial: they included almost incessant warfare, protectionism, and other coordination failures. Many scholars now believe, however, that in the long run the benefits of competing states might have been larger than the costs. In particular, the existence of multiple competing states encouraged scientific and technological innovation.

But Mokyr says that while there was political fragmentation, there was also mobility across borders that created a larger market for goods and thus helped the growth of technology and also enabled the rapid spread of ideas.

Political fragmentation existed alongside a remarkable intellectual and cultural unity. Europe offered a more or less integrated market for ideas, a continent-wide network of learned men and women, in which new ideas were distributed and circulated.

In early modern Europe, national boundaries mattered little in the thin but lively and mobile community of intellectuals in Europe. Despite slow and uncomfortable travel, many of Europe’s leading intellectuals moved back and forth between states.

If Europe’s intellectuals moved with unprecedented frequency and ease, their ideas travelled even faster. Through the printing press and the much-improved postal system, written knowledge circulated rapidly.

In this regard, then, Europe’s intellectual community enjoyed the best of two worlds, both the advantages of an integrated transnational academic community and a com¬petitive states system. This system produced many of the cultural components that led to the Great Enrichment: a belief in social and economic progress, a growing regard for scientific and intellectual innovation, and a commitment to a Baconian, ie a methodical and empirically grounded, research programme of knowledge in the service of economic growth.

I found this article interesting but was also astonished that there is not a single mention of colonialism as contributing to the growth of wealth of Europe. Surely the conquest and plundering of much of the world by the European powers was a major factor in Europe becoming wealthy? The beginning of the period of colonialism dates back as far as the 15th century and the British, French, and Belgians looted the natural resources and labor of their colonies for centuries until they started getting expelled in the mid-20th century.

So to ignore the influence of colonialism in an article that explicitly seeks to explain how Europe became wealthy seems a little strange. It would be like trying to explain the growth of the economy in the US without mentioning slavery.


  1. ardipithecus says

    In the 14th century, China was well ahead of Europe in terms of technology, living standards, freedom of travel, openness to ideas from elsewhere (especially India). Huge trade missions (not plunderers) travelled to Indonesia and other parts of southern Asia. When the Mandarins got in control, they eschewed commerce and turned China inwards. China did not become wealthy until recently, when they turned outwards again. Much of the country still isn’t wealthy.

    Ignoring the plundering (most of the silver circulating in Europe came from Peru) makes the treatise irrelevant, not just strange.

  2. jrkrideau says

    While I do slightly disagree with ardipithecus’ analysis--I think he is wrong about ” the Mandarins got in control” since there had been Mandarins for 600--1000 years before that most of Mokyr’s argument seems devoid of much knowledge of history.

    To slightly adapt ardipithecus’ point, why did not Europe invent the chariot, writing, beer brewing , astronomy or elaborate governments—see Mesopotamia and Egypt as well as China. Or, what I personally--others may differ--consider a major technological innovation, the wheel barrow.

    Why did China and India seem to boast a higher standard of living than Britain into the 17th C?

    Mokyr seems to be recycling a lot of ideas common in historical analysis for the last hundred years or so, some of which may have validity but they are nothing original and seem more attuned to rationalizing conventional economics than answering a serious historical question.

    He also completely ignores the intellectual and technical growth in the Middle Ages, say from 1000 AD to his 16th or 17th C, or Islamic scholarship during the roughly same period.

    BTW China and its failure to expand technologically is the famous Needham Question. To some considerable extent I am betting on ardipithecus’ analysis.

  3. cartomancer says

    I might point out that those two conditions -- small, competitive political units and a continent-wide academic culture and exchange of ideas -- prevailed in Europe long before the sixteenth century. They also prevailed in Medieval and Early Modern North Africa, which was just as divided and, in Arabic and the Islamic world’s academic culture, had an equivalent to Latin and the European world’s academic culture.

    It is also somewhat puzzling to iron out the inconsistencies and present the entire half century from 1500 to the present day as one uncomplicated picture of European growth and stagnation or decline elsewhere. Mughal India was an industrial and economic powerhouse well into the 18th Century, and British prosperity from India came substantially from taking over institutions that the Mughals pioneered, then turning them to ever greater exploitation of the region for the benefit of the colonial power. The USA, on the other hand, was a minor player until the 19th Century, when it used a combination of trade protectionism and access to cheap slave labour to speed its industrialisation and growth. One also omits at one’s peril the miraculous economic growth of Russia in the 20th Century thanks to its communist command economy (with all the good and all the bad that entails). There are also parts of Europe that did not see substantial economic growth, or later saw substantial economic decline. Spain and Portugal came into colonial ascendency in the 16th-18th centuries, but declined sharply in economic wealth and power the 19th and 20th. Greece and much of Eastern Europe didn’t get in on the colonial act at all, and remained economic backwaters. Ireland suffered at the other end of the colonial equation. Scandinavia had its own unusual history slightly aside from the main drag of European social and economic change.

  4. sonofrojblake says

    Suggestion: the reason it ignored colonialism is that the point it is trying to make is that Brexit was an obviously fucking stupid idea.

  5. cartomancer says

    It also seems to me that the assumed link between intellectual culture and economic growth needs to be questioned more. The model put about -- which seems entirely tailored to flatter the industrialists and technocrats of the 20th Century and after -- would have it that new ideas in engineering and technology are the key factor in economic prosperity, particularly when there is a close relationship between the development of ideas and their being put to practical use. This model would suggest that to spur the kind of economic growth one sees in modern Europe, there has to be some kind of joined-up system that takes engineering research into product development and use.

    I’m not at all sure this is true. While mechanical technologies have provided some small, often temporary, advantages to developing societies, it seems that the true engines of substantial change have mostly been social arrangements allowing societies to take advantage of their own strengths and the weaknesses of others. Colonial exploitation is generally achieved not so much with better weapons than through massive state funding of colonising efforts and taking advantage of local division and weakness. Industrial production is increased not so much through better machines than through organising people into factory conditions where their labour can be exploited more easily. There are one or two exceptions. Chemical fertilizers and the “green revolution” spring to mind. But for the most part it is not having better toys than the other boys that has cemented a nation’s economic ascendency. One might point to the rather worrying statistics on US farm productivity in the 18th and 19th centuries, which saw pretty much year on year increases and an eventual almost doubling of productivity with no new technology at all, just more intensive exploitation of slave plantation workers.

    Rome, likewise, became rich and dominant not because it had better technology -- the Carthaginians had much better ships for instance, which the Romans nicked and copied for themselves in short order -- but because they had a practice of incorporating conquered peoples into their military system and making them the front-line troops to conquer the next bit of territory that came under their purview. Their military strength and unified currency system also allowed for more regular trade and exchange across wider areas -- though the actual technology of Roman trade was little different to that used in the Bronze Age a millennium before.

    It seems to me that there is a very self-serving modern mythos surrounding the power and importance of technology, using it as a thinly disguised proxy for sheer intellectual power and by extension the racial supremacy of those able to develop it.

  6. Jazzlet says

    There is also the question of who in Europe got the wealth, related to Cartomancers comment about new technology -- often what it resulted in was the concentration of wealth in the hands of the upper and to a lesser extent the emerging middle classes, while the working class expanded but remained poor and exploited.

  7. springa73 says

    Yeah, one can’t reasonably ignore colonialism. Precious metals and slave-grown cash crops from the Americas changed the economy not only of Europe but also parts of Asia. New crops transferred from the Americas to the “old world” also increased food supply and led to centuries of population growth in Africa and Asia as well as Europe. This is just in the pre-industrial period. After industrialization, further colonial expansion also made it much more difficult for non-European peoples to cope with a changing world -- Japan was a rare example of a non-European country that was able to adapt European technology and methods without being targeted for colonialism. Not that colonialism-driven economic growth was beneficial to everyone in Europe -- the influx of precious metals from the Spanish colonies helped trigger massive price inflation which actually increased poverty in some areas. I think that factors other than colonialism had their place -- industrial technology certainly changed economies greatly -- but colonialism certainly was an important part.

  8. John Morales says

    I thought for sure one of the first references would be Guns, Germs, and Steel by Jared Diamond, but clearly not. It’s a good read.

  9. brucegee1962 says

    It’s pretty obvious that Europe’s wealth came through colonizing, but I thought that the underlying question being addressed here was “During the 16th-19th centuries when European power was expanding, why were they able to dominate so many other cultures around the world?” It sounds as if the answer Mano is proposing is “because they were so successful at colonizing,” which sounds like circular reasoning to me.
    The answer I’ve heard from some is that Europeans were just more willing to be ruthless in their exploitation, but that doesn’t seem right. Every culture exploits its neighbors when it has the opportunity to do so.

  10. Sam N says

    @9, wasn’t this largely explained in Guns, Germs, and Steel to a satisfactory degree?

  11. flex says

    Max Weber attempted to answer that question with his short book (more a pamphlet really, once the commentary is removed) called, Die protestantische Ethik und der Geist des Kapitalismus. Better known in English as, The Protestant Ethic and the Spirit of Capitalism. Weber’s contention is that Protestant countries work harder and have greater economic growth than Catholic countries because in Protestant religions entry into heaven requires a person to work hard and self-sacrifice. This is in contrast to Catholicism where entry into heaven only requires faith. Frankly, I found Weber’s hypothesis to be only weakly supported by the evidence. He also ignores the history of Europe and the immense economic growth in Catholic countries in the late middle ages. Like a lot of other fallacious beliefs a nacre of commentary has formed around this book over the last century, obscuring the bigotry and racism embedded in Weber’s work, and normalizing it. I mention Weber’s work here because it’s still regularly taught as true in business schools throughout the US.

    My opinion, and it’s only an opinion, is that a combination of greed and weak rulers was the primary reason for the growth of wealth in Europe. In Europe, unlike a lot of other societies, social standing could be changed by accumulation of wealth. In a lot of other societies if an individual started to accumulate wealth it would be confiscated by the ruling class. Taken by force. In Europe, if an individual started to accumulate wealth, they could hire people to defend it from the ruling class. It didn’t work for everyone, but it established a principle that what you got you kept. Once trade along the coast of Africa started, merchants became wealthy enough to hire thugs to take what they wanted if the local population wouldn’t trade with them. But the reality is that as long as the traders were offering goods other people wanted, trade would occur.

    When we talk about colonialism, we should remember that much of the colonial conquest was made with local troops. Certainly European troops were being used in various colonial countries, but when you look at the numbers of foreign vs. local troops used you find that usually the local troops outnumbered the foreign troops; often by a factor of ten-to-one, or more. Which leads to the question of why local troops were willing to help grow a colonial empire? There may be different reasons for each region, but I am very skeptical of some of the reasons I’ve heard. I’m very skeptical of claims like, “European troops are better trained”, or “European’s are better fighters”, or “Protestantism demands self-sacrifice”. All these are very Eurocentric notions, established in late-Victorian literature and forms the accepted wisdom of people or European descent to this day. It frames all our interactions with non-European people, and it certainly incomplete and often absolutely wrong. It is far more likely that loyalty to a paycheck (or even just regular food, clothing, and shelter) was a more important factor than worshiping a foreigner because the foreigner had matches.

    Back to the OP, professor Mokyr may have part of a point. Small, fragmented and weak governments, porous boundaries, the need in the late middle ages to hire guards in order to move goods may well have contributed to economic growth because people who made money could defend it against confiscation. Which allowed for the rise of a merchant class distinct from the aristocratic class, even if wealthy merchants could buy themselves into the aristocracy, the principle that confiscation of a person’s wealth is unethical had been established to apply fairly broadly across society. Excluding, of course; women, poor people, slaves, old people, Jews, foreigners, convicts, serfs, children, and anyone else your thugs could beat up who couldn’t complain.

    Am I getting too cynical as I get older?

  12. Mano Singham says

    flex @#11,

    Weber’s contention is that Protestant countries work harder and have greater economic growth than Catholic countries because in Protestant religions entry into heaven requires a person to work hard and self-sacrifice. This is in contrast to Catholicism where entry into heaven only requires faith.

    I always thought that it was the other way around, that it was Protestants who believed that one was saved by faith alone while Catholics threw good deeds into the mix. Isn’t that why evangelical Christians emphasize the ‘born again’ idea to being saved?

  13. mnb0 says

    “Surely the conquest and plundering of much of the world by the European powers was a major factor in Europe becoming wealthy?”
    Until 1800 CE the European powers did not plunder and conquer much of the world. They plundered, sure enough, but focused on trading posts. Armed forces in fortfied buildings made sure trading conditions were very favourable, but the largest parts of North-America, Africa and Asia stayed out of direct European control.
    The exception is Spanish South-America. However in the 16th Century the Spaniards were mainly interested in silver and gold. The resulting inflation (economy was not understood yet) actually contributed to the decline of the Spanish Empire.
    European colonialism in the form of conquest and plundering only took off after and was made possible by the European Revolution. Still, if anything, colonialism stifled economic growth (Paul Bairoch, Economics and World History, Myths and Paradoxes, New York 1993, which observe a strong negative correlation between amount of colonies and economic strenght). It certainly was not a factor in the restoration of the European economies. Since many decades mutual trade of European countries is way more important than trade with former colonies.

  14. mnb0 says

    @3 Cartomancer: “Spain and Portugal came into colonial ascendency in the 16th-18th centuries, but declined sharply in economic wealth and power the 19th and 20th.”
    Nope. Actually their decline started in 1588. In 1648 the Peace of Münster, which coincided with the end of the Thirty Years War, definitely degraded Spain and Portugal to second rate powers. First the Dutch Republic became the global superpower, while from 1672 on (Rampjar, ie “Disaster Year”) France and England took over. The Dutch Republic had definitely become a second rate power in 1713 with the Peace of Utrecht.
    Also neither Spain and Portugal overall did not suffer a decline in economic wealth. Their economies just grew much slower than in other Euorpean countries; ao they were late with their Industrial Revolutions (but so were The Netherlands).

  15. mnb0 says

    @11 Flex: “Weber’s contention is that Protestant countries work harder and have greater economic growth”
    Badly outdated. Catholic Belgium perhaps had the biggest economic growth in the first half of the 19th Century, much bigger than protestant Netherlands. Belgian growth fell back the moment it conquered Congo.
    Also Germany, Weber’s own country, outdid England from 1890 on, “despite” half of the Germans being catholic. Finally France, another catholic country, quickly became an economic powerhouse from 1872 on, the end of the French-Prussian war.

  16. springa73 says

    Mano @12

    I always thought that it was the other way around, that it was Protestants who believed that one was saved by faith alone while Catholics threw good deeds into the mix. Isn’t that why evangelical Christians emphasize the ‘born again’ idea to being

    That is correct, although it’s a little more complicated. While Protestants didn’t think that good deeds could help one get to heaven, certain strains of Protestantism (especially Calvinism) believed that good behavior and self-discipline was a clue that one might have been chosen by God to be saved (be one of the elect). In addition, Protestants in general emphasized self-discipline and moral behavior as a sign of devotion to God even if it was not a factor in gaining salvation.

    Having said that, there really doesn’t seem to be much connection between specifically Protestant ideals of self-discipline and the development of modern capitalism. Like mnb0 said, in many parts of Europe the Catholic nations or regions of nations were faster to industrialize and expand their economies in the 19th and 20th centuries. Weber’s thesis isn’t much believed anymore by historians.

  17. flex says

    @Mano, #12,

    To add to what springa73 wrote, because they are correct, I’d add that Weber was echoing common Protestant prejudices about the nations of Southern Europe. You will find in nineteenth century northern European literature plenty of caricatures of lazy Spaniards, dirty Italians, and crooked Greeks. Not to mention the appalling amount of anti-antisemitism.

    Weber was referring to the emphasis in Protestantism that you can know a person will get to heaven through discipline, hard work, unbending morality, education and thriftiness. And these were the fundamental attributes of European Protestantism. Weber was also referring to the common belief that a Catholic can lie, cheat, steal, and murder, but still thinks they can get into heaven by paying off the Catholic church.

    The more modern American version of Protestantism, where everything can be forgiven by baptism, is a relatively recent development only in the last 150 years or so in the USA. Although we’ve been exporting it for some time.

    That being said, my main reason for bringing Weber up was because his ideas are still taught in US business schools. When I read the original pamphlet some years ago, I wasn’t certain that even Weber was completely convinced of his argument. But
    when I went to B-School I found it taught in both Organizational Behavior courses as well in Economic courses. I went to B-School in my late-thirties (around 2005), and was appalled that this was taught as an example of early sociological studies without going into detail as to why Weber was wrong; very, very, wrong. And the students who were in their early 20’s just absorbed the lesson without thinking about it. Do you ever wonder why many American businessmen think they better at capitalism? And why they oppose anything which may help the general public? This is one of the reasons.

  18. Dunc says

    To add to what springa73 wrote, because they are correct, I’d add that Weber was echoing common Protestant prejudices about the nations of Southern Europe. You will find in nineteenth century northern European literature plenty of caricatures of lazy Spaniards, dirty Italians, and crooked Greeks.

    Such attitudes are still surprisingly common -- you’ll even find them expressed in the discussions of the European Central Bank, which have of late been full of complaints from thrifty, protestant northerners about how they’re having to subsidise the lazy, spendthrift southerners.

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