Was Economic Development in Europe Fuelled by Division?

The ‘Great Divergence’ of European economies from the rest of the world is one of the most striking trends in economic history, and one that economic historians have long sought to explain. Focusing on what set Europe apart from the rest of the world before and during its unprecedented rise in economic growth is an obvious approach, and a key idiosyncrasy of the continent is the constant political tumult that arguably defined it historically. These political divisions fall into three categories linking conflict to economic growth. The first is inter-state political divisions, which arguably drove the uptake of new technologies. The second is intra-state political divisions which constrained European rulers’ ability to expropriate freely and block technological uptake to protect rents. The third regards the way in which warfare interacted with political divisions to spur productivity growth. This essay will examine the veracity of all three proposed causal links between political divisions and economic development.

Europe’s geography is unique in that an abundance of natural barriers practically impassable for most of human history, such as the Alps, Pyrenees and Carpathian Mountains, encouraged the development of many distinct cultures, and eventually states, within a relatively small area. This becomes even more striking when compared with the uninterrupted landscapes of China and the Middle East. Diamond argues that this fragmentation meant technological uptake was much faster in Europe, and gives the example of Chinese ocean-going shipping. He argues that, because China was often politically unified, once a power struggle pitted the winning faction in the Chinese court against a faction associated with shipping and a ban was introduced and shipyards were dismantled, the entirety of China abandoned the ocean going shipping technology they had once been leaders in. In contrast, the discovery of the New World, and the consequent flood of wealth into Spain and Portugal, spurred competing European states to expand their New World Operations. Indeed, Acemoglu et al. argue that ‘inter-state competition’ fuelled by what they call ‘defensive modernisation’ spurred the British and Dutch to exploit the opportunities of the New World despite not pioneering the ‘technology’ as such. Diamond says the story ‘was the same with Europe’s cannon, electric lighting, printing, small firearms, and innumerable other innovations: each was at first neglected or opposed in some parts of Europe for idiosyncratic reasons, but once adopted in one area, it eventually spread to the rest of Europe’. Though the argument is coherent, it arguably fails an out of sample test. China often fell into periods of ‘warring states’ where it was defined by constant conflict until one would emerge victorious, and yet these periods are not characterised by unusual technological development. Rather, it was periods when China was united that it emerged as a technological leader, much like the Middle East, which led the world technologically when it was politically united under dynasties like the Achaemenids or the Abbasids. Furthermore, Europe has exhibited these geographical traits since the dawn of civilisation, and it is unclear why this should only become important in the early modern period when Europe diverged economically from the rest of the world. This suggests that political fragmentation of the inter-state sort is neither a necessary nor sufficient condition for economic development.

An alternative perspective focuses on political divisions within individual states, and suggests that the more multipolar distribution of power seen in feudal Europe created constrained authority which facilitated increased stability and an inability to resist innovations that may jeopardise rent-seeking on the part of the state. Chaney and Blaydes argue that Carolingian Feudalism was inherently adversarial, with power divided between landed nobles and their rulers, who ‘had no choice but to offer fiefs as payment to elites who provided rulers with military support’. This allowed the landed nobility to extract concessions from the state, leading to the emergence of ‘the types of institutions that are believed to be growth inducing’ under the New Institutional Economics framework. This lies in contrast to the Islamic world, where rulers had the financial capacity to maintain the ‘mamluk’ system of importing slaves from outside the realm, thereby avoiding any constraints on their authority. This argument is evidenced by a clear trend in Europe of longer periods of rule, in stark contrast to the stagnation exhibited by the Islamic world. This is illustrative of an increased stability fuelled by the multipolar distribution of power; the more power is distributed, the less the incentive to rebel against the status quo and generate instability as there is more to be lost. Similarly, Acemoglu et al. argue that, later, the Atlantic trade empowered merchants and city bankers, yet another pole of power within the European state, further re-enforcing the effect outlined by Chaney and Blaydes. This view is more convincing than the inter-state hypothesis because Carolingian feudalism and the development of sustainable constraints on authority truly were uniquely European phenomena. Though causally the theory is water-tight, it is yet to be explained why Europe tended towards an institutional setup that incentivised such outcomes.

Finally, a different approach investigates how the aforementioned conflict-ridden nature of the European continent interacted with its political divisions to serve as a blessing in disguise. In a Malthusian world, the warfare induced by Europe’s divided geography served to ‘create higher incomes for survivors’. This cycle was one initiated by the cataclysmic Black Death. Though these Malthusian effects are usually transitory, the population loss was so massive in this instance that, as Voth and Voigtländer argue, it permanently shifted the European population equilibrium, allowing the continent to exploit the productivity gains to be had from adopting new technologies. Indeed, the Black Death not only killed many itself, it also spurred further conflict and death as rulers increasingly appropriated the newfound surplus to finance their military campaigns. Voth and Voigtländer’s data suggests regions that experience more warfare saw higher rates of urbanisation, though this may simply be because richer regions were more attractive targets. More convincing is the fact that European and Chinese levels of urbanisation begin to diverge after 1100, suggesting this period’s conflict-ridden nature, catalysed by the Black Death, may have been related to the continent’s economic development. However, periods of perpetual conflict were certainly not unique to Europe. As previously mentioned, China experienced periods of ‘warring states’ and the post-Abbasid Middle East saw numerous statelets and dynasties rise and fall in quick succession. What differentiates Europe is the way conflict interacted with its internal political divisions. The weakness of European rulers, who shared power with their feudal lords, made it harder to expropriate and organise a states resources for warfare. Therefore, warfare may have had a more profound impact on European states and their populations. Furthermore, Voth and Voigtländer argue that Europe’s fragmented geography meant warfare was a more potent destroyer of lives. The main cause of this was not armed force itself, but the spreading of disease, and Europe’s geography meant ‘the movement of armies brought populations into contact with new germs’. Though the causal link between Europe’s economic success and Malthusian mechanisms of productivity growth needs more fleshing out, Europe’s fragmented geography, and its fragmented politics, clearly meant warfare was a more potent destroyer of lives and dynasties. The Black Death represents a crucial turning point and it interacted with Europe’s political landscape in a unique way.

Investigating political division as a cause of Europe’s economic success yields interesting conclusions. Though it may seem internally coherent, the argument that European success was fuelled by inter-state conflict and competition cannot provide significant explanatory power for Europe’s divergence. Intra-state conflict provides more promising insights within the broader institutionalist framework. The idea that Europe benefitted from constrained rulers and decentralised power is convincing given that such phenomena were only consistently observed on the continent. Finally, the interaction of Europe’s political divisions with warfare and disease is a sound argument, connecting higher pre-industrial European productivity to a shift in population equilibrium triggered by the Black Death, though it is unclear to what degree this theory can help explain the much wider divergence in economic performance observed during and after the Industrial Revolution.

 

BIBLIOGRAPHY:

  • D. Acemoglu, S. Johnson, J. Robinson, ‘The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth’, American Economic Review, vol. 95, no. 3, 2005, pp. 546-579
  • J. Diamond, Guns, Germs and Steel, New York, Vintage, 1998
  • L. Blaydes, D. Chaney, ‘The Feudal Revolution and Europe’s Rise: Political Divergence of the Christian West and the Muslim World before 1500 CE’, American Political Science Review, vol. 107, no. 1, 2013, pp. 16-34
  • N. Voigtländer, H. Voth, ‘Gifts of Mars: Warfare and Europe’s Early Rise to Riches’, Journal of Economic Perspectives, vol. 27, no. 4, 2013, pp. 165-186

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