Power point II. The Industrial Revolution II. The Spread of the Industrial Revolution across the Globe: Convergence dynamics and the Standard Model
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1 POWER POINT INTRO
| -Institutional: Britain had limited government, low taxes, secure property rights (North and Weingast).
• Cultural: Britain had a scientific culture that was practical and suffused much of the population (Mokyr). • Economic: Economic expansion 1500-1750 (Little Divergence) generated incentives to invent technology substituting capital and energy for labour and also the capacity to respond to that challenge (Allen). • Luck: more simply, English IR was fortuitus (Crafts) -Institutional explanation (North and Weingast) North and Weingast explain the IR using institutional reasons. They start with the premise that the key impediment to economic success in the early modern period was that monarchies faced a commitment problem. A commitment problem is a situation in which people cannot achieve their goals because of an inability to make credible promises (or threats). • Why should a state honour its commitment to repay a loan? The need to protect its reputation is not an incentive in view of its coercive power and short time horizon. • Therefore, absolutist states will expropriate wealth and undermine the economy. These severely undermined people’s incentives to invest. The inability to commit caused inefficiencies. For instance, the monarch often needed to borrow to finance wars, but could not because he could not commit to repay those that lent him money. This commitment problem could potentially have been solved in two ways. By setting a precedent of “responsible behavior,” appearing to be committed to a set of rules that he or she will consistently enforce. By being constrained to obey a set of rules that do not permit leeway for violating commitments. The latter story is the one we tell. Institutional explanation ENGLAND James I (1603-25) and Charles I (1625-49) were supposed to govern from traditional revenue sources that proved inadequate. The period under the rule of Charles I witnessed intense conflict between the Crown and other social groups on the extent of the powers of the monarchy, the security of private property, and the extent of royal monopoly in the trading activities. Several times when Parliament refused to give him funds, he dissolved (dismissed) it By 1628, Charles was forced to call Parliament again. This time it refused to grant him any money until he signed a document that is known as the Petition of Right. After agreeing to the petition, Charles ignored it. Even so, the petition was important. It set forth the idea that the law was higher than the king. In 1629, Charles dissolved Parliament and refused to call it back into session. To pay for wars he resorted to ‘forced loans’ and the sale of monopolies and avoided calling a Parliament for the next decade, a period known as the "personal rule of Charles I". The Long Parliament: Charles I issued writs summoning a parliament to convene on 3 November 1640. He intended it to pass financial bills, a step made necessary by the costs of the Wars in Scotland. During the autumn of 1641, Parliament passed laws to limit royal power. Furious, Charles tried to arrest Parliament’s leaders in January 1642, but they escaped. A mob of Londoners raged outside the palace. Charles fled London and raised an army in the north of England, where people were loyal to him. 1642-1649: Opposition to the Stuarts led to the Civil War (1642-49). The two sides of the English Civil War were the Royalists (Cavaliers), who supported the King, and the Parliamentarians (Roundheads), puritans mostly who supported Parliament. At first neither side could gain a lasting advantage. However, by 1644 the Puritans found a general who could win – Oliver Cromwell. In 1645, Cromwell’s New Model Army began defeating the Cavaliers, and the tide turned toward the Puritans. In 1649, Cromwell and the Puritans brought Charles to trial for treason against Parliament. Charles was sentenced to death. The execution of Charles was revolutionary. Kings had often been overthrown, killed in battle, or put to death in secret. Never before, however, had a reigning monarch faced a public trial and execution (January 30, 1649). 1651-1660: Oliver Cromwell’s military dictatorship. He made laws that promoted Puritan morality and abolished activities they found sinful, such as the theater, sporting events, and dancing. Nevertheless, Cromwell favored religious toleration for all Christians except Catholics. 1660-1685: The “Restoration”. Cromwell died and in 1660 King Charles II took power. This is the period in which the monarchy was restored and brought back to power. • 1685-1688: James II. Much like his brother Charles I, he also had a difficult relationship with Parliament. He did not call them often and fought over money. In addition, he was catholic, so threats to start a new catholic descendance line to the throne. 1688-1689: Glorious Revolution. James II and his brother Charles were both Catholics. A Protestant uprising caused James II to flee into exile and to hand the power to William of Orange and James’ own daughter Mary. The succession of William and Mary inaugurated important institutional changes (English Bill of Rights): • Parliamentary supremacy • Parliament controlled taxation • End of royal prerogative powers • Politically independent judiciary The Glorious Revolution of 1688 consolidated parliamentary ascendancy and led to a “fundamental redesign of the fiscal and governmental institutions” which was mostly motivated by a desire to gain “control over the exercise of arbitrary and confiscatory power by the Crown.” (North and Weingast) These changes increased the efficiency of capital markets. Contrast the situation under the early Stuarts: With the new situation: Download 1.62 Mb. 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