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Economics 201 European Economic History Fall 2004 MWF 9-9:50 Castleman 212 R. N. Langlois

Economics 201 European Economic History Fall 2004 MWF 9-9:50 Castleman 212 R. N. Langlois Richard.Langlois@UConn.edu http://langlois.uconn.edu Office: Room 322 Monteith Office hours: MWF 10:15-12 or by appointment. Books and readings.

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Economics 201 European Economic History Fall 2004 MWF 9-9:50 Castleman 212 R. N. Langlois

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  1. Economics 201 European Economic History Fall 2004 MWF 9-9:50 Castleman 212 R. N. Langlois Richard.Langlois@UConn.edu http://langlois.uconn.edu Office: Room 322 Monteith Office hours: MWF 10:15-12 or by appointment

  2. Books and readings. • Rondo Cameron and Larry Neal, A Concise Economic History of the World. New York: Oxford, 2003. • Jared Diamond, Guns, Germs, and Steel. New York: Norton, 1997. • Douglass C. North, Structure and Change in Economic History. New York: Norton, 1981. • Nathan Rosenberg and L. E. Birdzell, Jr., How the West Grew Rich. New York: Basic Books, 1986. • Frances and Joseph Gies, Life in a Medieval Village. New York: Harper, 1990. .

  3. Course requirements.

  4. Points to remember. • Come to class. • Check online syllabus regularly for new links and materials.

  5. Central Question: Why Europe?

  6. Economic growth. • Extensive growth. • Total income (Y) increases. • Intensive growth. • Per capita income (Y/N) increases. Example: India versus Australia.

  7. Intensive economic growth. Australia (1998) India GDP US$ 382,335 million* US$ 1,702,712 million* Pop. 18.75 million 975 million Y/N US$ 20,391 US$ 1,746 *1990 international $

  8. Income per capita 1999. GNP per capita, 1999 international dollars, PPP method. Source: The World Bank.

  9. Economic growth. Growth in U. S. GDP per capita, 1789-2001 (1996 dollars). Source: Johnston and Williamson (2002)

  10. What is economic growth? • Mercantilists: wealth is an excess of money or real goods. • Adam Smith: wealth is not stuff; wealth is productivity. • Productivity is total output divided by total input: Y/L. • Smith: the ability to command resources with labor time. Adam Smith (1723-1790). Author of the Wealth of Nations (1776). Picture courtesy of the Warren J. Samuels Portrait Collection at Duke University.

  11. Declining time-price of food. • 3-lb. Fryer: • 1919: 3.5 hours. • 1997: 27 minutes.

  12. Falling death rates. Annual deaths per thousand, United States and Great Britain. Source: Fogel (1986), p. 44, Table 9.1.

  13. Increasing life expectancy. U. S. life expectancy at birth in the twentieth century (years). Source: National Center for Health Statistics.

  14. Decreasing price of computing power. The decreasing cost of computing power (1998 dollars per MFLOPS.) Source: Kurzweil (1999, pp. 320-321).

  15. Decreasing price of illumination. Time price of light (hours of work per kilolumen-hour). Source: Nordhaus (1997).

  16. Who is wealthier? Louis XIV (1638–1715)King of France (1643–1715)

  17. Economic growth. “[I]t is the cheap cloth, the cheap cotton and rayon fabric, boots, motorcars and so on that are the typical achievements of capitalist production, and not as a rule improvements that would mean much to the rich man. Queen Elizabeth owned silk stockings. The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort.” Joseph A. Schumpeter (1883-1950) Schumpeter, Capitalism, Socialism, and Democracy (1942).

  18. Economic growth. Per capita income by region, selected years CE. (1990 International $.) Source: Maddison (2001)

  19. Year Population (millions) 25000 BCE 1 5000 BCE 5 1 CE 170 1000 CE 265 1400 CE 350 1800 CE 900 1900 CE 1625 2000 CE 6272 World population growth. Source: Michael Kremer (1993), “Population Growth and Technical Change, One Million B.C. to 1990,” Quarterly Journal of Economics 108:3 (August), pp. 681-716.

  20. Is intensive growth even possible? “It has been said that the great question is now at issue, whether man shall henceforth start forwards with accelerated velocity towards illimitable, and hitherto unconceived improvement; or be condemned to a perpetual oscillation between happiness and misery, and after every effort remain still at an immeasurable distance from the wished-for goal.” Thomas Robert Malthus (1766-1834) Malthus (1798), I.2.

  21. Is intensive growth even possible? Thomas Robert Malthus (1766-1834) • Malthusian population doctrine. • Population (potentially) grows exponentially but food supply (potentially) grows only linearly. • Any surplus above necessities leads to population growth, which reduces real wages back down to subsistence. • Diminishing returns. • Because land is a fixed factor, food supply actually grows less than linearly. • Rent of land sucks up all returns and brings growth to a halt. David Ricardo (1772-1823) Image courtesy of the Warren J. Samuels Portrait Collection at Duke University.

  22. What Malthus and Ricardo forgot. Thomas Robert Malthus (1766-1834) • Diminishing returns. • Wildly underestimated the potential for productivity growth. • Malthusian population doctrine. • Missed the demographic transition. David Ricardo (1772-1823) Image courtesy of the Warren J. Samuels Portrait Collection at Duke University.

  23. Malthusian responses. Thomas Robert Malthus (1766-1834) • When a Malthusian society generates economic surplus. • Migration to new land. • A Malthusian crisis. • Technological, institutional, and organizational change to increase productivity.

  24. What causes (intensive) growth? • Resources help. • Climate, geography. • Guns, germs, and steel. • Lack of resources helps. • Hong Kong versus Argentina. • The resource trap.

  25. The spread of human populations.

  26. The Neolithic era. • Pleistocene take-off (circa 50,000 B.C.E.) • Evolution of brain or voice box? • Cro-Magnon enter Europe (circa 40,000 B.C.E.) Cave painting (32,000-30,000 B.C.E.) from the Chauvet cave at Vallon-Pont-d'Arc in the Ardèche region of France.

  27. Hunter-gatherer society. • Dependence on natural foodstuffs: nomadism. • Generate surplus with technological change. • Common-pool problem. • Migration when land abundant. • Intergroup warfare when land scarce. Hunter-gatherers maximize population.

  28. The first economic revolution. VMPL VMPHG VMPAGR N* Population (labor force)

  29. Settled agriculture. • Population pressure creates “demand” for settled agriculture. • First stage: defending naturally occurring foodstuffs. • Women cultivate crops by while men hunt. • Climate, geography, resources create “supply” of settled agriculture.

  30. Guns, germs, and steel. The major axes of the continents.

  31. The advantages of Eurasia. • Plant domestication. • Large connected belt of Mediterranean climate. • Wider availability of domesticable varieties (cereals). • Animal domestication. • Coevolution of humans and animals. • Prevents mass extinctions during hunter-gatherer era. • Evolved immunity to animal-borne diseases.

  32. The Fertile Crescent. Sites of food production before 7,000 B.C.E. The geographical distribution of the seven Neolithic founder crops in the Fertile Crescent (yellow) of the Near East. Large mapshows the distribution of wild chickpea (red line) in a core area (green line) within the upper reaches of the Tigris and Euphrates rivers (present-day southeastern Turkey/northern Syria). Inset maps show the distribution of founder cereal crops — einkorn wheat (cross indicates the putative site of its domestication), emmer wheat, and barley — and founder legumes (lentil, pea, bitter vetch). Blue lines delineate the range of genetic founder stocks for lentil and pea, and red lines the range of emmer wheat, barley, and bitter vetch (no data are available on their genetic founder stocks). Red lines also indicate the distribution of einkorn wheat, lentil, and pea beyond that of their genetic founder stocks. Source: Simcha Lev-Yadun, Avi Gopher, and Shahal Abbo, “The Cradle of Agriculture,” Science2(288): 1602-1603, June 2000

  33. The spread of agriculture to Europe.

  34. The Indo-Europeans. • Common origins of European and Indo-Iranian languages (4000-2500 B.C.E). • Who were the Indo-Europeans? • Theory 1: pastoral nomads. • Mobility of domestic horse, wheeled carts. • Economic advantages of pastoralism. • Capital intensity. • The secondary-products economy. • Theory 2: masters of settled agriculture. • Genetic evidence. • Population pressure from settled agriculture.

  35. Diffusion of innovation. 1500 2000 WOOL 2500 HORSE 3000 PLOUGH, CART 3500 4000 4500 MILKING? Reconstruction of Ötzi the ice mummy (c. 3300 BCE), in the South Tyrol Museum of Archeology, Bolzano, Italy. 5000 5500 6000 6500 AGRICULTURE Years BCE

  36. Bronze Age Europe. Baltic Germanic Slavic Celtic Italic Greek

  37. Early cities and civilizations. Jericho (c. 7,000 BCE) Sumeria and Baylonia(c. 3100-1600 BCE) Egypt (c. 2705-332 BCE) Mycenaea(c. 2000-1350 BCE)

  38. The urban revolution. • Specialization. • Artisans. • Soldiers. • Kleptocracy. • Bureaucrats. Irrigated settled agriculture. Economic surplus. Bull-headed lyre from the Royal Tombs of Ur. University of PennsylvaniaMuseum of Archeaology and Anthropology.

  39. North’s theory of the state. • The state (monarch) is a revenue-maximizing natural monopolist in the use of force. • The minimum efficient scale of defense. • Revenue-maximization and the Laffer curve.

  40. Revenue maximization. The Laffer curve Revenue 0% t* 100% Tax rate

  41. “Oriental despotism.” • High MES of agricultural production. • Labor-intensive irrigation projects. • Slave or near-slave labor force. • Workers “deskilled” and can’t appropriate benefits of innovation. • Appropriation of surplus by aristocracy. • Lavish monumental construction rather than reinvestment. • Specialists focus on luxury goods for aristocracy. • Low rate of technological change. • Slow economic growth.

  42. The Phoenicians and Greeks.

  43. The Roman Empire.

  44. The Rise of Rome. • Agriculture. • Irrigation and servile production. • But, unlike Egypt, agriculture private: the Villa system. • Organization and law. • Military technology. • Discipline and large numbers. The Pont du Gard aqueduct, near Nîmes, France.

  45. Early Roman economic policy. • Importance of trade and commerce. • Octavian defeats Antony (31 B.C.E.) • The pax romana and the Mediterranean “common market.” Head of the Emperor Augustus (ruled 27 B.C.E. – 14 C.E.), from the Kelsey Museum, University of Michigan.

  46. The Roman Empire about 117 C. E.

  47. International trade in the Roman era.

  48. The fall of Rome. • External causes. • Change in military technology? • Learning by “barbarians.” • Internal causes. • End of expansion eliminates source of revenue. • Need to “bribe” political challengers. • Bread and circuses. • Tax exemptions for nobility.  Spiraling fiscal crisis.

  49. Roman fiscal crisis. • Emperors raise tax rates to meet revenue demands. • Tax base erodes as goods and services flee the money economy. • Reduced tax base leads to further increases in the tax rate, and so on in a vicious cycle. Roman coin bearing the likeness of the Emperor Diocletian (284-305 C.E.) Tax revenue = tax rate * tax base

  50. Monetary Policy. Debasement of the currency (another kind of tax) leads to hyperinflation in the third century. • Gresham's Law. • (“Bad money drives out good.")

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