The Past Speaks

In the last couple of decades, most historians who think about the institutional underpinnings of economic activity have come to view the Glorious Revolution as one of the causes of the Industrial Revolution. More precisely, they refer to the Glorious Revolution of 1688 in the course of explaining why the Industrial Revolution of the eighteenth century took place in Britain rather than in France or, say, China. This question is clearly connected to the wider debates about the reasons for the Great Divergence.

The standard view is that the Glorious Revolution put in place a package of institutions that promoted economic growth. The post-1688 constitutional system alleged did a better job of restraining the growth of the state, preventing rent-seeking, and securing property rights than either the pre-1688 English constitution or the constitutions of the absolutist monarchies of continental Europe. As a result, British people had a stronger incentive to save, invest, and invent. This interpretation has been disseminated by the New Institutional Economics, a school of thought that shares many of the assumptions of neo-liberals and the 1990s Washington Consensus.  Needless to say, how we interpret the causes of the British Industrial Revolution has tremendous policy relevance for developing countries in the present, so getting our understanding of the Glorious Revolution right is very important. Until last year, I taught the standard view to my undergraduates.

A new book challenges the traditional view of the relationship between the Glorious and Industrial Revolutions. It’s Questioning Credible Commitment: Perspectives on the Rise of Financial Capitalism (edited by D’Marris Coffman, Adrian Leonard and  Larry Neal). (Cambridge University Press, 2013) (ISBN: 9781107039018).    D’Marris Coffman is at the Centre for Financial History at Cambridge. Adrian Leonard is also at the University of Cambridge and Larry Neal is at the University of Illinois, Urbana-Champaign.

Here is the Table of Contents:

1. Introduction D’Maris Coffman and Larry Neal

2. Could the crown credibly commit to respecting its charters? England, 1558–1640 Ron Harris

3. Contingent commitment: the development of English marine insurance in the context of New Institutional Economics, 1577–1720 Adrian Leonard

4. Credibility, transparency, accountability and the public credit under the Long Parliament and Commonwealth, 1643–53 D’Maris Coffman

5. Jurisdictional controversy and the credibility of common law Julia Rudolph

6. The importance of not defaulting: the significance of the election of 1710 James Macdonald

7. Financing and refinancing the War of the Spanish Succession, then refinancing the South Sea Company Ann M. Carlos, Erin K. Fletcher, Larry Neal and Kirsten Wandschneider

8. Sovereign debts, political structure, and institutional commitments in Italy, 1350–1700 Luciano Pezzolo

9. Bounded leviathan: fiscal constraints and financial development in the Early Modern Hispanic world Alejandra Irigoin and Regina Grafe

10. Court capitalism, illicit markets, and political legitimacy in eighteenth century France: the example of the salt and tobacco monopolies Michael Kwass

11. Institutions, deficits, and wars: the determinants of British government borrowing costs from the end of the seventeenth century to 1850 Nathan Sussman and Yishay Yafeh

The essays in this collection show that the Glorious Revolution did few of the things with which it has traditionally been credited. In the aftermath of the Glorious Revolution, taxes went up and onerous new regulations were imposed on trade, yet Britain nevertheless emerged as the world’s first industrial nation.  The book suggests that we need to go back to the drawing board in coming up with an explanation of the institutional preconditions of industrialisation.

The book has received considerable attention outside of the academic bubble. For instance, it was discussed a few days ago on The Economist’s blog. I’m certain this exposure is music to the ears of the contributors and editors, since academics are encouraged by their employers to do research that is relevant to non-academics.

The book is interesting to me for two reasons. First, the subject matter is intrinsically important. Moreover, the publication format is significant: although it is an edited collection, this publication has made a very big splash. For several years, the conventional wisdom has been that edited collections have a very limited impact. It has been said that edited collections contain papers that weren’t quite good enough to be in journals. Many people feel that publishing research in edited collections a recipe for burying their work: few people will read and cite a paper if it is in an edited collection. Relative to articles in highly-ranked journals and monographs, edited collections are “low status” publications in the academic world: investing a unit of time in producing an edited collection is said to generate a lower ROI in terms of promotion, employability, and prestige than working on an article. The problem with this view is that many non-academics still gravitate towards books rather than gated articles, which means that books remain one of the best ways of disseminating knowledge to journalists, policymakers, and other non-academics.

I suspect that this important edited collection may encourage university research managers to rethink the relative value of different publication formats.