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9 A fourth approach to measuring the efficiency of various kinds of institutions, also making it possible to distinguish between horizontal and vertical institutions, is developed in Maarten Bosker, Eltjo Buringh, and Jan Luiten van Zanden, From Baghdad to London: the dynamics of urban growth in Europe and the Arab world, 800–1800, London: Centre for Economic Policy Research, 2008.

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11 The McCloskey and Nash hypothesis is that the higher the interest rate, the more expensive it will be to store (for example) grains after the harvest, and the larger the seasonal variation in grain prices will be; in fact, the price of these grains in month t+1 will be the price in month t plus the monthly interest rate plus additional storage costs. See Donald N. McCloskey and John Nash, ‘Corn at interest: the extent and cost of grain storage in medieval England’, American Economic Review, 74, 1, 1984, pp. 174–87. See also Nicholas Poynder, ‘Grain storage in theory and history’, paper for the Third Conference of the European Historical Economics Society, Lisbon, 1999, available at http://www.iisg.nl/hpw/poynder.pdf (consulted 28 August 2008).

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18 McCloskey and Nash, ‘Corn at interest’; Poynder, ‘Grain storage’.

19 The figure is based on the data collected and analysed in Cornelis J. Zuijderduijn, Medieval capital markets: markets for renten between state formation and private investment in Holland (1300–1550), PhD thesis, Utrecht University, 2007. The number of observations before 1250 is limited, owing to the fact that the capital market was rather thin at that time, but this does not affect the main point of Figure 1: that is, that, during the thirteenth century, a capital market emerged with already relatively low interest rates. See the almost identical figure in Clark, Farewell to alms, p. 169.

20 Adam Smith, The wealth of nations, Harmondsworth: Penguin, 1974 (first published 1776), p. 198.

21 Henley and Boomgaard, Credit and debt.

22 Peter Boomgaard, ‘Buitenzorg in 1805: the role of money and credit in a colonial frontier society’, Modern Asian Studies, 20, 1, 1986, pp. 33–58. See also Jan Luiten, van Zanden, ‘On the efficiency of markets for agricultural products: rice prices and capital markets, 1823–1853’, Journal of Economic History, 64, 4, 2004, pp. 1028–55.Google Scholar

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33 This is a summary of a more detailed paper on this topic: Jan Luiten van Zanden, ‘The skill premium and the Great Divergence’, to be published by European Review of Economic History.

34 Johan Söderberg, ‘Prices in the medieval Near East and Europe’, paper for ‘Towards a Global History of Prices and Wages’ conference, Utrecht, 19–21 August 2004, available at http://www.iisg.nl/hpw/globalhistory.php (consulted 28 August 2008).

35 Persson, Karl G., Pre-industrial economic growth: social organization and technological progress in Europe, Oxford: Blackwell, 1988Google Scholar. See also David, Jacks, ‘Market integration in the North and Baltic Seas, 1500–1800’, Journal of European Economic History, 33, 3, 2004, pp. 285–329Google Scholar; Victoria N. Bateman, ‘The evolution of markets in early modern Europe, 1350–1800: a study of grain prices’, Economics Series Working Papers, University of Oxford, 2007, available at http://ideas.repec.org/p/oxf/wpaper/350.html (consulted 28 August 2008).

36 Van Zanden, ‘The skill premium’.

37 Carol H. Shiue and Wolfgang Keller, ‘Markets in China and Europe on the eve of the Industrial Revolution’, American Economic Review, 97, 4, 2007, pp. 1189–1216; Studer, ‘India and the Great Divergence’.

38 The price data have been made available on the website of the Global Price and Income History Group at UCDavis, http://gpih.ucdavis.edu/ (consulted 28 August 2008); I thank Osamu Saito for his kind assistance in interpreting the price data. The source is Masaru Iwahashi, Kinsei Nippon Bukka-shi no Kenkyu, Tokyo: Ohara Shinseisha, 1981, pp. 460–5. The Indonesian price data are from the Colonial Reports of 1878–1896 (Koloniaal Verslag, included in Handelingen der Staten Generaal, Den Haag: Landsdrukkerij, 1878–1896).

39 Studer, ‘India and the Great Divergence’, p. 407.

40 Bateman, ‘Evolution of markets’.

41 Christopher, Dyer, Standard of living in the later Middle Ages, Cambridge: Cambridge University Press, 1998Google Scholar; B. J. P. van Bavel, ‘Rural wage labour in the sixteenth-century Low Countries: an assessment of the importance and nature of wage labour in the countryside of Holland, Guelders and Flanders, Continuity and Change, 21, 2006, pp. 37–72.

42 Tine de Moor and Jan Luiten van Zanden, ‘Girlpower: the European marriage pattern (EMP) and labour markets in the North Sea region in the late medieval and early modern period’, paper for ‘The Rise, Organization, and Institutional Framework of Factor Markets’ conference, Amsterdam, 23–25 June 2005, available at http://www.iisg.nl/hpw/factormarkets.php (consulted 28 August 2008).

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46 Boomgaard, ‘Buitenzorg in 1805’.

47 Boomgaard, ‘Why work for wages?’; Jan Lucassen, ‘Proletarianization in Western Europe and India: concepts and methods’, paper for ‘The Rise, Organization, and Institutional Framework of Factor Markets’ conference, Utrecht, 23–25 June 2005, available at http://www.iisg.nl/hpw/factormarkets.php (consulted 28 August 2008).

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50 Christine Moll-Murata, ‘Chinese guilds in the Qing Dynasty (1644–1911): an overview’, paper for ‘The Return of the Guilds’ conference, Utrecht, 5–7 October 2006, available at http://www.iisg.nl/hpw/papers/guilds-mollmurata.pdf (consulted 28 August 2008); Mary Louise Nagata, ‘Brotherhoods and stock societies: guilds in pre-modern Japan’, paper for the same conference, available at http://www.iisg.nl/hpw/papers/guilds-nagata.pdf (consulted 28 August 2008). Both papers to be published in International Review of Social History, 2008.

51 Clark, ‘The cost of capital’; Epstein, Freedom and growth; Zuijderduijn, Medieval capital markets.

52 Dyer, Standard of living, p. 102.

53 Bosker, Buringh, and van Zanden, From Baghdad to London, p. 40, table A2.

54 But income redistribution favouring low-income earners may have annulled some of this effect: real wages, for example, more or less doubled, whereas incomes from land and from capital fell relative to those from other sources.

55 De Moor and van Zanden, ‘Girlpower’, p. 23.

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67 Ibid., p. 54.

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74 Brian Tierney, as cited in Toby E. Huff, The rise of early modern science: Islam, China and the West, Cambridge: Cambridge University Press, 1993, p. 134.

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81 Phil Hoffman, ‘Why is that Europeans ended up conquering the rest of the globe? Prices, the military revolution, and western Europe’s comparative advantage in violence’, paper for ‘Towards a Global History of Prices and Wages’ conference, Utrecht, 19–21 August 2004, available at http://www.iisg.nl/hpw/papers/hoffman2.pdf (consulted 28 August 2008).

82 Robert C. Allen, Jean-Pascal Bassino, Debin Ma, Christine Moll-Murata, and Jan Luiten van Zanden, ‘Wages, prices, and livings standards in China, Japan, and Europe, 1738–1925’, paper for ‘The Rise, Organization, and Institutional Framework of Factor Markets’ conference, Utrecht, 19–21 June 2005, available at http://www.iisg.nl/research/jvz-wages_prices.pdf (consulted 28 August 2008).

83 Robert C. Allen, ‘Science, economics and the British Industrial Revolution’, paper for the Global Economic History Network conference, Leiden, 2004.

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