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HECKSCHER RELOADED? MERCANTILISM, THE STATE, AND EUROPE'S TRANSITION TO INDUSTRIALIZATION, 1600–1900*

Published online by Cambridge University Press:  11 May 2015

PHILIPP ROBINSON RȪSSNER
PHILIPP ROBINSON RȪSSNER*
Affiliation:
University Of Manchester
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Extract

Recent years have seen an increase in the number of historical studies dealing with the state and its involvement in the process of economic growth, both prior to and during the transition known as industrialization. This is striking inasmuch as for a long time the state as an actor had been absent from the master narratives in history. It is still lacking in most studies on the Great Divergence, i.e. the story explaining the long-run differential growth trajectories between Europe and Asia, c. ad 1500–2000. It has been, likewise, missing in the more ‘Euro-centrist’ accounts on the perceived ‘European miracle’ – models that were to an extent influenced by neoclassical theory about market performance and economic development, which quite naturally saw little room for the pro-active state in the explanation of economic success, and against which much of the Great Divergence narrative was developed as an alternative model. As an actor, the state has also been missing from most of the accounts on Europe's first transition to industrialization. And it has had, until very recently, very little place in modern economic theory explaining long-run growth and economic change. Even the wider public opinion – just think of journalist T. Friedman's early 2000s best-seller The world is flat – had, by the late twentieth century, increasingly subscribed to the idea that free markets, unfettered globalization, and the ‘invisible hand’ were the best means to achieve economic health.

Type
Review Article
Information
The Historical Journal , Volume 58 , Issue 2 , June 2015 , pp. 663 - 683
Copyright
Copyright © Cambridge University Press 2015 

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References

1 For the pre-industrial period – the focus of the present article – see, e.g., Parthasarathi, Prasannan, Why Europe grew rich and Asia did not: global economic divergence, 1600–1850 (Cambridge and New York, NY, 2011)CrossRefGoogle Scholar; Ashworth, William J., Customs and excise: trade, production, and consumption in England, 1640–1845 (Oxford and New York, NY, 2003)CrossRefGoogle Scholar; Ormrod, David, The rise of commercial empires: England and the Netherlands in the age of mercantilism, 1650–1770 (Cambridge and New York, NY, 2003)Google Scholar, as well as other contributions too numerous to name here. Epstein, S. R., Freedom and growth: the rise of states and markets in Europe, 1300–1750 (London, 2000)CrossRefGoogle Scholar.

2 E.g. Pomeranz, ‘Kenneth, The great divergence: China, Europe, and the making of the modern world economy (Princeton, NJ, 2011)Google Scholar; Frank, Andre Gunder, ReOrient: global economy in the Asian age (Berkeley and Los Angeles, CA, 1998)Google Scholar; or Wong, Roy Bin, China transformed: historical change and the limits of European experience (Ithaca, NY, 2000)Google Scholar.

3 E.g. Landes, David S., The wealth and poverty of nations: why some are so rich and others so poor (New York, NY, 1998)Google Scholar, or Jones, Eric L., The European miracle: environments, economies and geopolitics in the history of Europe and Asia (3rd edn, Cambridge, 2003)CrossRefGoogle Scholar. Ironically, the first global comparison of state intervention in the economic process comes from a self-confessed ‘Euro-centrist’: Vries, Peer, ‘Governing growth: a comparative analysis of the role of the state in the rise of the West’, Journal of World History, 13 (2002), pp. 67–193CrossRefGoogle Scholar, and the same author's forthcoming State, economy and the great divergence: Great Britain and China, 1680s–1850s (London, 2015).

4 Friedman, Thomas L., The world is flat: a brief history of the twenty-first century (New York, NY, 2005)Google Scholar.

5 E.g. the relevant sections in Schmoller, Gustav, Umrisse und Untersuchungen zur Verfassungs-, Verwaltungs- und Wirtschaftsgeschichte besonders des Preußischen Staates im 17. und 18. Jahrhundert (Leipzig, 1898)Google Scholar, and idem, The mercantile system and its historical significance: illustrated chiefly from Prussian history: being a chapter from the Studien ueber die wirthschaftliche Politik Friedrichs des Grossen (New York, NY, 1884).

6 Heckscher had not been quite happy with the English translation of his magnum opus. I have used the German translation instead, which Heckscher approved of, providing some additions and revisions: Heckscher, Eli F., Der Merkantilismus, trans. Mackenroth, G. (2 vols., Jena, 1932)Google Scholar.

7 We should note, however, that to think of mercantilism as either a coherent theory or policy programme would make it quite unique in world history, as it would be hard to pinpoint any other period or world region in history where there has ever been either a dominant and ‘unified’ paradigm, or a unified policy agenda when applied in practice.

8 I am indebted to one of the anonymous referees for this rather apt phrase.

9 For the pre-1750 period, a related argument may be found in Epstein, Freedom and growth.

10 To name but some of the most recent contributions – apart from those works discussed in the present article – Pincus, Stephen A., ‘Rethinking mercantilism: political economy, the British empire, and the Atlantic world in the seventeenth and eighteenth centuries’, William and Mary Quarterly, 69 (2012), pp. 3–34CrossRefGoogle Scholar, as well as the same author's 1688: the first modern revolution (New Haven, CT, 2009); Dudley, C., ‘Party politics, political economy, and economic development in early eighteenth-century Britain’, Economic History Review, 2nd ser., 66 (2013), pp. 1084–100Google Scholar; Magnusson, Lars, Mercantilism: the shaping of an economic language (London, 1994)CrossRefGoogle Scholar.

11 An excellent if concise discussion can be found in Roncaglia, Alessandro, The wealth of ideas: a history of economic thought (Cambridge, 2009; 1st edn 2005)Google Scholar, ch. 1, and, more extensively, Ziegler, Bernd, Geschichte des ökonomischen Denkens: Paradigmenwechsel in der Volkswirtschaftslehre (2nd edn, Munich, 2008)CrossRefGoogle Scholar.

12 Pars pro toto: Ekelund, Robert B. and Tollison, Robert D., Mercantilism as a rent-seeking society: economic regulation in historical perspective (College Station, TX, 1981)Google Scholar, and, more recently, with regard to Britain: Mokyr, Joel, The enlightened economy: an economic history of Britain, 1700–1850 (New Haven, CT, 2009)Google Scholar, esp. ch. 4.

13 Especially Chang, Ha-Joon, Kicking away the ladder: development strategy in historical perspective (London, 2003)Google Scholar; Reinert, Erik S., How rich countries got rich…and why poor countries stay poor (London, 2007)Google Scholar; Rodrik, Dani, The globalization paradox: democracy and the future of the world economy (New York, NY, and London, 2011)Google Scholar.

14 Again, the literature is vast. The following works are important: Priddat, Birger P., ‘Kameralismus als paradoxe Konzeption der gleichzeitigen Stärkung von Markt und Staat: Komplexe Theorielagen im deutschen 18. Jahrhundert’, Berichte zur Wissenschaftsgeschichte, 31 (2008), pp. 249–63CrossRefGoogle Scholar; Burkhardt, Johannes and Priddat, Birger P., eds., Geschichte der Ökonomie (Frankfurt am Main, 2009)Google Scholar. See also Tribe, Keith, Strategies of economic order: German economic discourse, 1750–1950 (Cambridge, 1995)CrossRefGoogle Scholar, ch. 1; Schefold, Bertram, ‘Glückseligkeit und Wirtschaftspolitik: Zu Justis “Grundsätze der Policey-Wissenschaft”’, in idem, ed., Vademecum zu einem Klassiker des Kameralismus: Johann Heinrich Gottlob von Justi, Grundsätze der Policey-Wissenschaft (Düsseldorf, 1993)Google Scholar; Bog, Ingomar, ‘Ist die Kameralistik eine untergegangene Wissenschaft?’, Berichte zur Wissenschaftsgeschichte, 4 (1981), pp. 61–72CrossRefGoogle Scholar.

15 Harcourt, Bernard, The illusion of free markets: punishment and the myth of natural order (Cambridge, MA, 2011)Google Scholar.

16 Pribram, Karl, History of economic reasoning, Ger. Geschichte des ökonomischen Denkens, i (Frankfurt am Main, 1994)Google Scholar, has a large section on mercantilist thought, discussing the epistemological drift within the ‘mercantilist’ paradigm between the late sixteenth and eighteenth centuries.

17 A quite untranslatable term denoting the overall institutional framework (including rules, traditions, customs of inheritance, etc.) governing early modern German agricultural production and agrarian life under the catch-all term of ‘feudalism’.

18 Usefully but quite uncritically summarised in Mokyr, Enlightened economy, ch. 4.

19 See n. 13 above.

20 William D. Grampp, ‘An appreciation of mercantilism’, in Magnusson, ed., Mercantilist economics, pp. 59–85 (to be discussed below).

21 Harcourt, Illusion of free markets, for an extended discussion.

22 Ibid.

23 Parthasarathi, Why Europe grew rich; Chang, Kicking away the ladder; Reinert, How rich countries got rich.

24 See also the discussion in Magnusson, Nation, state and the industrial revolution: the visible hand, pp. 15–19.

25 Meaning that the more (effort, labour, capital) you put in, the lesser you get out in terms of incremental yields.

26 A point made in Chang, Kicking away the ladder, and Reinert, How rich countries got rich.

27 Reinert, How rich countries got rich, esp. ch. 3, has made an important head start.

28 See the above-named works by Chang, Reinert, and Ashworth for example.

29 E.g. Trentmann, Frank, Free trade nation: commerce, consumption, and civil society in modern Britain (Oxford and New York, NY, 2008)Google Scholar.

30 Boldizzoni, Francesco, ‘The domestication of the economic mind: a response to the critics’, Investigaciones de Historia Económica – Economic History Research, 9 (2013), pp. 71–4CrossRefGoogle Scholar.

31 E.g. North, Douglass C., Understanding the process of economic change (Princeton, NJ, 2005)CrossRefGoogle Scholar, or Jones, E. L., Cultures merging: a historic and economic critique of culture (Princeton, NJ, 2006)Google Scholar; Lal, Deepak, Unintended consequences: the impact of factor endowments, culture, and politics on long run economic performance (Cambridge, MA, 1998)Google Scholar.

32 See also the remarks in Vries, Peer, Ursprünge des modernen Wirtschaftswachstums: England, China und die Welt in der Frühen Neuzeit (Göttingen, 2013), pp. 152–64CrossRefGoogle Scholar.

33 Small's earlier work (1909), as well as Tribe's contributions, remain fairly exceptional. See the works referred to in n. 14 above, as well as the volumes specifically devoted to pre-classical continental economics in the Studien zur Entwicklung der ökonomischen Theorie / Schriften des Vereins für Socialpolitik, v, x, xi, xvi, xxi, and xxiv (Berlin, 1986–2010).

34 See previous note and n. 14.

35 Including Mokyr, Enlightened economy.

36 See the works by referred to in n. 1, esp. Parthasarathi and Ashworth, and the discussion in Pincus, 1688, and Dudley, ‘Party politics’.

37 Summarized in Harcourt, Illusion of free markets.

38 Chang, Kicking away the ladder; Reinert, How rich countries got rich.

39 Harcourt, Illusion of free markets.