This collection of articles is the result of a workshop organised to consider technology and productivity in historical perspective, drawing in particular on the evolutionary approach. The workshop was organised by the N.W. Posthumus Institute for Economic and Social History, the Netherlands Institute for Advanced Study in the Humanities and Social Sciences (NIAS) and the Groningen Growth and Development Centre. Economic historians with backgrounds in both evolutionary and neoclassical traditions came together in the pleasant surroundings of the NIAS at Wassenaar in May 1999, to re-examine technology and productivity experience in Europe since the Industrial Revolution. An important focus was provided by recent theoretical developments, which have seen the incorporation of many evolutionary ideas into mainstream economics. Until quite recently, there seemed to be little common ground between approaches to technology and growth based on Solow's (1956) neoclassical growth model and Nelson and Winter's (1982) evolutionary, neo-Schumpeterian model. Now, however, the evolutionary approach has entered the mainstream through the work of writers such as Grossman and Helpman (1991) and Aghion and Howitt (1998) on endogenous innovation, and David (1985) and Arthur (1994) on path dependence. This is a particularly welcome development from the perspective of the European Historical Economics Society, the sponsors of the European Review of Economic History, holding out the promise of a genuinely ‘historical economics’.

Estimates of employment structure, agricultural output, and agricultural labour productivity are developed for the leading European countries from 1300 to 1800. The employment estimates are developed from estimates of the total, urban, and rural populations. The output estimates are derived by positing a demand curve for agricultural goods.

For individuals to enter mutually beneficial exchange relationships they have to recognise them as such and they have to be able to commit to fulfil their contractual obligations. The ways in which a society's institutions mitigate this fundamental problem of exchange determine its efficiency and distribution. This article calls attention to the need, ability, and promise of studying the historical evolution of institutions that mitigated the fundamental problem of exchange. It elaborates on the essence of this problem and the related institutions, and demonstrates the ability and importance of studying them by drawing on various studies of historical institutions. Our understanding of the different economic performances and evolutions of various societies over time can be greatly enhanced by studying how they mitigated the fundamental problem of exchange.

Technological change is often measured by economists and economic historians through productivity growth, but this article argues that technological change and productivity change are conceptually different. This proposition is demonstrated by considering the diffusion of technologies first within industries, and second across industries. In both cases, economic growth reaches higher levels when the technology becomes diffused, not when it is being generated via major technological breakthroughs. This emerges through high ratios of patents (as a measure of technological change) to industrial production when countries undergo their industrial revolutions. Finally I compare across countries, to show that leader countries developed the technologies before they developed education systems to extend them, whereas some catching-up countries probably drew on their depth of human capital to absorb new technologies from the leaders.

Before 1880, the British soda industry dominated world export markets and held a substantial share of the German domestic market. After 1880, the German soda industry displaced British imports and then became a leading exporter. We investigate the contribution to these developments of German tariffs, particularly the decline in tariffs on soda in 1873 and the increase in 1880. We develop a model, based on developments in the ‘new trade theory’, of oligopolistic competition in the German soda market, we calibrate this model using historical data, and we then apply the calibrated model in simulating the effects of counterfactual tariff rates. Results show that the 1880 tariff increase promoted, but was not decisive for, the rise of the German industry. More important were the decline in German input prices and the shift to the ammonia process for producing soda.

A survey of industrial households conducted in 1889–90 is used to investigate participation in self-help organisations, such as sickness and death benefit clubs and friendly societies, and to examine whether payouts were important in seeing families through earnings crises. Formal self-help has been hypothesised to underpin the male breadwinner family form, reducing the risk incumbent in reliance on one source of earnings. The results here show that those households with multiple earners took out most insurance and also had recourse to informal strategies, such as eliciting greater labour force participation from other family members and economising on rent, when adversity carried male earnings down. Those reliant on a male breadwinner were left vulnerable. They insured less, benefits were insufficient to make up earnings shortfalls and they were unable to compensate for deficits through labour market strategies. Formal self-help was a complement to, not a substitute for, family employment.

This article addresses two issues that feature prominently in the recent historiography. First, how does the Habsburg Empire's economic performance compare to the record for other European economies in terms of levels and growth of national income? Second, to what extent was the Austrian economy subject to prolonged stagnation after 1873? These questions are examined on the basis of new annual estimates of GDP for Austria and Hungary for 1870 to 1913. The article argues, first, that over the whole period under review Austrian per capita income failed to expand at a pace broadly commensurate with the country's relative income position. The Austrian economy did not catch up with the leaders and failed to keep pace with other ‘followers’. Second, the Hungarian economy recorded a markedly higher rate of per capita income growth, placing it about mid-range in a European growth comparison. Third, the new evidence supports the notion of a ‘great depression’ in the western half of the empire (Austria) after 1873. The distinct periodicity and differential rates of Austrian and Hungarian growth are consistent with the argument that the outflow of Austrian capital to Hungary after the 1873 Vienna stock market crash was crucial in prolonging economic stagnation in Austria, whilst fuelling the first widespread wave of industrialisation in Hungary. The reversal of this capital outflow in the early 1890s was associated with an increase in Austrian economic growth and a decrease in Hungary's rate of expansion.

France presents an unusual case because, unlike several other European countries, there are no estimates of the income distribution for the eighteenth and nineteenth centuries. This is a serious deficiency because it limits the ability to understand how an important dimension of the socio-economic fabric changed during the years preceding and coinciding with the beginning of France's industrial development. In this article we provide estimates that use tax data and the social tables of the eighteenth and nineteenth centuries. While this data does not provide a basis for a perfectly accurate assessment of the income distribution, it does permit an evaluation of the general magnitude of inequality and how it varied in that period. The results suggest that inequality during the eighteenth century was large but decreased during the revolutionary period (1790–1815). Afterwards, and in accordance with Kuznets' hypothesis, when industrialisation began about 1830, inequality increased until sometime in the 1860s when it began its slow decline towards greater equality that characterises the twentieth century.

Since technology is localised and context-specific, the technological trajectories of large firms tend to lock-in to particular national configurations. This article examines evidence on the industrial patterns of technological development in the largest firms originating from the US, Germany, the UK, France, Switzerland and Sweden, through their corporate patenting in the US since 1920. It is shown that in each national group the profile of development is path-dependent, but with some selected convergence between groups leading to the formation of three clusters of groups (the US and UK, German and Swiss, and French and Swedish) that share common characteristics.

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.

Electricity and electrotechnical industry have taken a central position in Swedish industrial development ever since the breakthrough of the high-voltage technique in the 1890s. Some reasons for the importance of electricity are quite obvious. Due to her natural resources, Sweden had at an early stage developed many energy intensive industries such as iron and steel works and pulp and paper mills. She lacked, however, deposits of fossil fuels while the supply of water power was abundant. Hence, early on there was a strong stimulus to develop a system of generation and transmission of electrical power as well as to invest in electrotechnical equipment. Similarly, there was a strong stimulus to the development of a domestic electrotechnical engineering industry. This industry became a backbone of the more sophisticated manufacturing that spurred Swedish industrialization from the 1890s onwards.

Recent research on the Great Depression has concluded that a worldwide decline in aggregate demand, emanating from the United States, was propagated into a fall in real activity through sticky nominal wages. The question remains: Why were nominal wages so sticky? Based on a wide range of evidence for Sweden, I argue that the 1930s depression is compatible with a coordination failure in wage setting, as first suggested by Keynes.

It took the British iron industry a hundred years to transform from a small producer at high cost in the early eighteenth century, to become the leading supplier of iron products for the world market by switching from charcoal fuel to coal fuel techniques. In a long-drawn transition, the coal-using techniques were transferred to Belgium, France and Germany, in part indirectly with British iron exports embodying the new technology. Behind protective walls in Belgium and France, new ironworks imitated the British model. Traditional ironworks succeeded in integrating only parts of the new technology (i.e. puddling) and increased their productivity by applying modern fuel-saving strategies. Thus old and new coexisted for a long time. The demand for low quality railway iron made most of the British-type ironworks on the continent profitable. From 1860 on, coal iron was produced in ever better qualities which left only niches for the high quality charcoal iron.

This article constructs nominal and real multilateral effective exchange rates for Britain, France, Germany and the US during the period of the classical Gold Standard, 1879–1913. The new data indicate that the major industrial countries saw trend variations in their nominal effective rates, which appear to have been stochastic in nature, and reflected a significant exchange rate variation with non-gold countries. The movements of nominal effective rates display common trend patterns across the major industrial countries, reflecting similar trading structures in the pre-1914 period. In contrast, the movements of the real effective rates reflect national-specific influences. The implications of the new data with regard to business cycles and the international adjustment mechanism under the Gold Standard are considered.

In this article time series on labour productivity in the manufacturing sector are the starting point of the analysis. Using a growth accounting framework (Cobb-Douglas production function) we try to assess to what extent increases in labour productivity are due to rises of total factor productivity or to a growth of capital intensity. The results of this accounting exercise seem to contradict the views expressed by a great number of historians who have written on this subject. By relaxing some of the strong assumptions regarding perfect competition, a new view on the determinants of long-term industrial growth can be developed. The increase in the capital/labour ratio – which undoubtedly has been the engine in the process of industrial growth – cannot be explained exclusively by changes in relative factor prices. Also changes in institutional arrangements as well as demand shocks (resulting in economies of scale) play an important role. By taking imperfect competition (and non-equilibrium prices) into consideration, the puzzling results of the Cobb-Douglas accounting experiment can be reconciled with traditional literature on this subject.