During the late nineteenth century, technologies to measure the quality of the milk in butter production became available, enabling creameries to pay suppliers of raw milk according to quality. Having identified the advantages to the creameries in terms of incentive provision, we demonstrate that the diffusion among the cooperative creameries was relatively slow, particularly relative to other technologies adopted by the same creameries over the same period, with a large number ‘dragging their feet’. We also observe that late adopters often do not choose the most up-to-date technology and that early adopters who later upgrade their technology in many cases do not choose the current best practice. We consider a number of reasons for the observed patterns, which are at odds with the co-operative creameries being seen as technologically ‘savvy’. A proper implementation created both winners and losers among suppliers, and the size of these widened with newer versions of the technology. We show that the slow and inappropriate implementation can be explained by the need to get the technology accepted by a sufficient number of suppliers.

The market for company stock in Ireland entered its formative period in the mid 1820s with the incorporation of banks and railways. Using data obtained from stockbroker lists, we estimate market capitalisation and construct weighted and unweighted monthly stock market indices for the period 1825–64. Our findings show that the market appears to have been relatively unaffected by the Famine. We suggest that an efficient-market explanation may better explain this finding than a dual-economy explanation. Our findings also show that the stock market increased significantly in value in the post-Famine period. This finding is consistent with an increase in demand for financial assets as well as the rapid commercialisation of the Irish economy.

A popular explanation for the supposed ‘delayed industrialisation’ of the nineteenth century French economy has been the inappropriate attitudes and actions of the managerial classes and family firms. To address these claims we model the supply and demand for entrepreneurship and also management success. We analyse a data set of 244 nineteenth century French businessmen, showing that on the demand side textiles offered greater, and iron and steel less, than average opportunities. On the supply side, secondary and university education were negatively associated with starting a successful firm, as was a father already in business. Surprisingly, Protestantism made no difference to the chances of setting up a firm. In the business performance model, the longer the period the businessman was active, the greater the accumulation – not consistent with life-cycle models of saving. Second, those who started their own business, compared with entering an existing firm, left less wealth at death than they could have expected to acquire over a normal lifetime, other things being equal. Unlike formal education, training – mainly apprenticeship – was associated with greater wealth at death. The pace of wealth accumulation suggests a dynamic sector during the Second Empire, at least where larger businesses were concerned.

This article aims to throw light on why inequality in the distribution of income in Sweden fell from the mid-1920s to the second half of the 1950s. A new database has been created by coding tax records and other documents for the city of Göteborg. In the analysis the Gini-coefficient and its changes are decomposed by income source. The information shows that in the mid-1920s income in urban Sweden was fairly unequally distributed. The compression of the income distribution came about as real income at the lower end increased rapidly, while the real income of the most affluent decile remained more or less constant. Much of the initial decrease in income inequality was due to capital income decreasing in average size and in addition becoming less extremely concentrated at the top of the income distribution. From the mid-1930s onward households paid ever larger shares of their income as income taxes which caused income inequality to decrease.

This paper surveys recent scholarship on the economic growth of Europe during its Golden Age, 1950–73, as represented by three recent collections of essays. The essays generally agree that rapid economic growth in the Golden Age originated in reconstruction from World War II. They explore several different arguments to explain why the Golden Age continued after reconstruction was complete and use a variety of economic tools to argue that the Golden Age was a transitory historical phenomenon. There is far more agreement on the origins of the Golden Age than on its demise. I suggest that insights from new growth theory are limited and that the end of the Golden Age may have been brought about by the ‘shock’ of restrictive monetary policies used to combat inflation after the oil crises of the 1970s.

This article contributes to the debate about the early modern craft guilds’ rationale through the lens of apprenticeship. Based on a case study of the Antwerp manufacturing guilds, it argues that apprenticeship should be understood from the perspective of ‘distributional conflicts’. Fixed terms of service and masterpieces guarded the guilds’ labour market monopsony, enabling masters to distribute the available skilled and unskilled labour among members (among other ways, through the restriction of the number of apprentices per master). Although from the perspective of product quality, this may have enabled masters to prevent adverse selection, the introduction of standardized apprenticeship requirements was the result of social and rent-seeking concerns.

Everyone in the profession knows Angus Maddison. He has written dozens of books and articles on a myriad of issues, and, above all, three books (Maddison 1982, 1991 and 1995) which rank among the major modern interpretations of long-term economic growth. His books, however, stand out even within this literature because of their Statistical Appendices. They contain the most comprehensive data set available on historical trends in GDP (and on much else), and thus, they have become in all likelihood the most quoted books in economic history and perhaps in economics as well. In fact, his latest book (Maddison 2001) is hailed by Paul Krugman as ‘an essential reference for anyone interested in global economic development for many years’ (www.sourceOECD.org). Maddison sets out to accomplish three main tasks: (1) To revise and update to 1998 the data for the ‘industrial’ period (after 1820); (2) To present comprehensive estimates for pre-industrial times, since 0 AD (so the subtitle is not boastful at all); and (3) To explore the main causes of long-term trends.

After 1870 Swedish agriculture was transformed in the direction of more animal husbandry. Small farmers in particular specialized in animal produce. Agricultural protectionism, which was installed in response to increasing imports of overseas grain in the 1880s, primarily served the interest of large landowners specializing in bread-grain production. The impact of agrarian tariffs on the factor rewards of landowners, capitalists and workers is explored by means of a Computable General Equilibrium model of the Swedish economy in 1913. Landowners predictably benefited from agrarian tariffs, the more so if they specialized in bread-grain, as did rural workers. Urban capitalists would generally gain if agrarian tariffs had been dismantled. Real wages of workers in urban industries would most likely also improve, but the gain of urban workers was less clear-cut than for urban capitalists, being dependent on the degree of rural–urban labour mobility in response to wage changes.

There is a lively ongoing debate, led by Stephen Epstein and Sheilagh Ogilvie, about the economic effects of institutions (particularly guilds) on the pre-industrial economies. The focus of the controversy is an article published by Ogilvie in which she points out that there is a new trend, as Epstein puts it, a ‘modern consensus’, aimed at the ‘rehabilitation of guilds’. Based on her study of the Württemberg worsted industry and supplemented with a variety of examples from all over Europe, she develops a theoretical framework outlining the reasons for the economic inefficiency of the guilds. She challenges the view that guilds had a tangible effect on market failures with regard to (1) product quality, (2) innovation and (3) training. She also examines (4) the link between guilds and social capital. This article suggests that the first two issues are the most relevant for an analysis of the economic effects of the activities of the Silesian merchant guilds on regional growth in the eighteenth century. The focal point of this argument is the difference between craft guilds and merchant guilds and thus refers back to the earliest studies by Ogilvie on corporative institutions.

The large-scale structure of world economic history exhibits three steady states punctuated by two phase transitions. The first transition arrived with the domestication of plants and animals; the second with the invention of engines capable of converting thermal to mechanical energy for applications in mining, manufacturing, and transportation. Yet, although both transitions led to increases in the absolute size of the economy, they affected the standard of living differently. Whereas the Industrial Revolution resulted in sustained growth in real per capita income for more than two centuries, over nine millennia the Agricultural Revolution spent itself in population growth that left per capita income insignificantly higher, and possibly lower than the level prevailing under hunting and gathering. This pattern raises three fundamental questions in economic history: why did the first great technological transition produce secular stasis in living standards? Why has the second yielded both steady growth in population and rising living standards? What triggered the transition from the stationary agricultural state to the progressive industrial state?

We show that, because the cost of the war had been so high in France, the size of the French public debt, the budget deficit and the monetary overhang made it impossible to stabilise immediately after World War I, even on the anti-Keynesian assumption that a stabilisation would have had no negative effects on income. The reason for the immediate postwar inflation was then not mismanaged policy but a wise choice in the French context; nevertheless, a stabilisation was historically possible from early 1924, and it would most likely have benefited not only France but the entire international monetary system.

The American novelist Scott Fitzgerald is supposed to have said once to Ernest Hemingway, ‘You know, the rich are different from you and me.’ Hemingway replied, ‘Yes. They've got more money.’ Gregory Clark is of the Fitzgerald school. Most economic historians, among them his critics, follow Hemingway instead.

Most questions about the sources of agricultural growth during the ‘first agricultural revolution’ are still debated. For the Prussian province of Westphalia, we estimated a translog production function to determine the contribution of intensification and technical change from 1830 to 1880. Additionally, we present evidence on the impact that neutral and biased technical change had on growth. Furthermore, we examine whether spatial differences can be identified concerning the sources of agricultural growth and whether they followed a von Thuenen pattern around the demand centre of the rising industrial belt on the Ruhr River. In addition, we explain why, under the conditions of pre-industrial agriculture, regions with the highest output growth did not necessarily have to exhibit the most dynamic TFP-growth, even if they contributed, on average, the most to output growth.

The study of economic growth is arguably the central object of economic history. Our most comprehensive measure of economic growth relies on historical national accounts (HNA). The theoretical underpinnings of present day national accounts have evolved since the first attempts by Gregory King in the seventeenth century and have now become standardised according to the rules of the UN's system of national accounts (SNA). Though grounded in economic theory the SNA system rests in many cases on quite arbitrary definitions that are far from obvious or involve theoretical inconsistencies, as has been pointed out for example by Eisner (1988) and Shaikh and Tonak (1994). This arbitrariness concerns such issues as how to draw the boundary between economically productive activities and forms of private and social consumption, how to account for non-marketed economic activities and how to handle the ‘services’ provided by durable goods.

Economic historians have always assigned a large role to infrastructure in the process of economic growth. For instance, it is commonly agreed that infrastructure endowments made the Netherlands the economic superpower in the pre-industrial era, but depressed economic growth in the first half of the nineteenth century, and then again enabled modern economic growth in the second half of the nineteenth century. However, this hypothesis has never been tested quantitatively, mainly because of the lack of reliable data. A new database on infrastructural investments allows us to confirm the hypothesis for the second half of the nineteenth century. Our main conclusion is that the investments in new infrastructure (mainly railways and waterways), clearly paid off. However, these positive effects lasted only temporarily; the Dutch economy did not switch to a permanently higher growth path. Also, it was some time before entrepreneurs fully reaped the potential benefits of a better infrastructure.

A rapidly growing literature in industrial economics and regional economics uses data sets of individual firms or regional firm creation rates to answer the central question: what makes entrepreneurs? Which factors encourage some people to set up their own business and create jobs, and what prevents potential entrepreneurs from doing so? This contribution explores the determinants of regional differences in firm creation rates by using a new data set of 4,036 individual firms from Southwest Germany around 1900. Agglomeration effects and earlier firm creations stimulate current firm creation. In addition, a small and medium firm environment allows the formation of specific human capital – another favourable factor for a dynamic firm creation process in some regions.

Time-budget studies done among contemporary primitive people suggest that the first farmers worked harder to attain subsistence than their foraging predecessors. This makes the adoption of agriculture in the Stone Age one of the major curiosities in human cultural history. Theories offered by economists and economic historians largely fail to capture work-intensification among early farmers. Attributing a key role to human metabolism, this study provides a simple framework for analysing the adoption of agriculture. It demonstrates how the additional output that farming offered could have lured people into agriculture, but that subsequent population increase would eventually have swallowed up its benefits, forcing early farmers into an irreversible trap, where they had to do more work to attain subsistence compared to their foraging ancestors. The framework draws attention to the fact that, if agriculture arose out of need, as some scholars have suggested, then this was because prehistoric foragers turned down agriculture in the first place. Estimates of population growth before and after farming, however, in the light of the present framework seem to suggest that hunters were pulled rather than pushed into agriculture.

This article assesses the hypothesis that the implementation of sanctions on the export of coal and oil products to Italy by the League of Nations in 1935–36 would have forced Italy to abandon her imperialistic war against Ethiopia. An analysis of the data on coal consumption in the industrial census of 1937–38 shows that Italian industry would have survived a League embargo on coal, provided that Germany continued her supply to Italy. However, the counterfactual on oil and oil derivatives proves that Italy was vulnerable to an oil embargo which included oil residuals (the main input for the petrochemical industries using oil cracking as a refining method), and fuel oil. Therefore, a solitary attempt at such an embargo by the League could have been successful even with only a limited collaboration by the United States in the form of maintaining exports to Italy at ‘peacetime levels’ for each commodity embargoed by the League.

Stagnant levels of output and incomplete recoveries in the interwar business cycle have received fresh attention in recent work. Building on the work of Borchardt (1991 [1979]), Fisher and Hornstein (2001) calibrate an augmented RBC model of Germany's interwar economy. They find that sluggish productivity combined with high wage costs explain the depth of Germany's interwar depression. In the very different context of a dynamic Phillips curve, Dimsdale, et al. (2004) arrive at the same conclusion. Cole and Ohanian (1999, 2002) find that output in Great Britain and the United States failed to recover to historical trends after the Great Depression. Beaudry and Portier (2002) find that the labour policies of the Popular Front government contributed to stagnant output levels in France during the 1930s. A common perspective shared by these papers is that productivity growth was already low during the 1920s and failed to recover to trend before World War II.

My dissertation uses historical records and a context-specific mechanism-design model to investigate the institutional and contractual arrangements that facilitated long-distance trade in late medieval Venice.This dissertation was awarded by the Department of Economics at the European University Institute under the inspiring supervision of Professors Avner Greif and Ramon Marimon with support from the Social Science History Institute at Stanford University. I also wish to thank Andrea Drago, Gavin Wright, Jaime Reis, and Leandro Prados de la Escosura for their help in various ways. The mobilisation of capital and the sharing of risk in long-distance trade could potentially promote economic prosperity, but it required that merchants were able to commit ex-ante not to breach their financial contracts ex-post. Financial contracting entails the exchange of tangible funds for the promise of future payments, but promises can be broken. Therefore, the set of financial relations that actually transpire in a society depends on the society's institutions for contract enforcement, meaning the constraints that ensure compliance with the promised future payments.Institutions are viewed as constraints that enable merchants to commit. For a definition of institutions, see Greif (forthcoming) and North (1990). Distinct institutional arrangements enforce different sets of contractual forms, among which particular ones can be chosen. The selection of various contracts, and their underlying institutional foundations, has significant efficiency effects. The dissertation thus integrates a historical institutional analysis of the emergence and transition of various contracts with the study of their efficiency attributes. This approach enables me to address the following questions: What institutions for contract enforcement enabled the Venetians to commit to the sea loan (a debt-like contract) and the commenda (an equity-like contract)? What caused the transition from the former to the latter? Did the Venetians attain an efficient allocation of risk?