How Key Was the Seventeenth-Eighteenth Century Commercial Revolution to the Eighteenth-Nineteenth Century Constitutional-Government Revolution?: Thursday Focus: February 13, 2014

I have been thinking about Mauricio Drelichman and Hans-Joachim Voth’s Lending to the Borrower from Hell: Debt, Taxes, and Default in the Age of Philip II. And I just finished ranting about all this over breakfast at Rick and Ann’s to the patient, good-humored, and extremely intelligent Joachim Voth.

So it is only fair that I inflict on the rest of the world what I inflicted on him:

The point at issue is Daron Acemoglu, Simon Johnson, and James Robinson’s “Atlantic Trade” paper [1], which is… not wrong, exactly, but rather which makes things too simple.

AJR’s central argument is that the wave of wealth from the exploitation of the Americas and from the rise of the trans-oceanic carrying trade interacted in western Europe with the state of political economy on the ground. Small differences between Britain and Iberia in the strength of representative and intermediary institutions were amplified by political-economic processes generated by this influx of wealth, and so Iberia ended up poor and absolutist while Britain ended up rich and constitutional–even though as of 1500 the differences had been small, and constitutional government had been on the ropes in both.

This is, I think, much too simple…

So here’s my view of what the argument of Acemoglu, Johnson, and Robinson’s “Atlantic Trade” paper should be:

• It was not the case in 1500 that Britain had a large edge over Iberia in the degree of constitutional government.
• In fact, if there was a difference at all, it went the other way: Iberia had weaker crowns and stronger representative and intermediary institutions than Britain.
  • The traditions of representative government and limited royal power in Aragon were very, very strong.
  • Even in Castile, there were very powerful intermediary institutions–The Mesta guild of sheepherders, the great crusading military orders, and the strong territorial nobles.
  • And there was the 1520 Guerra de las Comunidades de Castilla against Carlos I Habsburg–like nothing in sixteenth-century England
  • Fifteenth-century England, by contrast, had seen the decimation of the English nobility as the Plantagenet dynasty factions and their supporters had torn themselves into pieces in the War of the Roses–the original for GRR Martin’s Game of Thrones.
  • The destruction of the territorial mobility was followed by Henry Tudor’s 1485 coup and the subsequent establishment of Tudor absolutism.
  • To resist Carlos I Habsburg or Felipe II Habsburg via constitutional means was an established mode of doing business in 16th-century Spain.
  • To resist any of the Tudor monarchs was to lose your head rapidly.
• Nevertheless, it is the case the influx of treasure into Spain greatly strengthened–and in fact made possible–Habsburg absolutism and, via a premature Dutch Disease, retarded economics growth; and the influx of money from Atlantic trade into England one and two centuries later did not strengthen the forces pushing for absolutism and did strengthen both constitutional government and economic growth
• Why, if it is not a difference in initial conditions by which England starts with a small edge that is then reinforced by virtuous-circle processes? My guess is that there were five reasons:
  • First, the English–or rather Anglo-Welsh–Tudor dynasty is followed at the start of the seventeenth century by the alien Scottish Stuart dynasty, and by the even more alien Germanic Hanover dynasty. That produced enormous pressure for constitutional government, as Englishmen sought to avoid giving Hanoverian Georges and Stuart Jameses and Charleses powers they had readily conceded to Tudor Henrys and Elizabeths.
  • Second, Atlantic treasure flowed into Seville in the form of coin and precious metal which could be spent immediately. Atlantic trade flowed into Bristol in the form of commodities, which required a thriving mercantile community if they were in their turn to become a source of royal revenue.
  • Third, England spent its earnings on positive-sum war: the British navy and the consequent domination of the global carrying trade; while Spain spent its treasure on negative-sum war: defending Christendom from the Turk, and trying to re-Catholicize the Netherlands, Germany, and Great Britain.
  • Fourth, the key industrial resource of the fifteenth century was Spanish–the wool of the genetically-engineered Merino sheep–while the key industrial resource of the late-eighteenth and nineteenth centuries was to be the very cheap coal of England.
  • Fifth, an interaction effect between Atlantic trade and the first: there is little doubt in my mind that the Tudors would have made the same centralizing use of American treasure and Atlantic trade as did the Habsburgs: the key issue is how the Habsburgs were able to become Spanish so rapidly, and why the Stuarts had such a difficult time.
• Without Atlantic trade would the project of constitutional government have failed in England? Perhaps, but unlikely.
• Had the Tudor dynasty continued would the rise of Atlantic trade have been enough to stop the absolutist project in England? Perhaps, but once again I see it as unlikely.
• That, I think, is “Atlantic Trade” done right…

I am not sure that I could sustain and justify all pieces of that argument to my (let alone anyone else’s) satisfaction, but those are my guesses…

[1] Daron Acemoglu, Simon Johnson and James Robinson: The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth http://www.jstor.org/stable/10.2307/4132729
[2] Jeffrey Williamson: Why Was British Growth So Slow During the Industrial Revolution? http://www.jstor.org/stable/10.2307/2124148