Vorlesung Teil 1: Paleolithicum - Late Middle Ages

Question 1

Geographical determinants of long-term growth

Answer 1

• Climate
• ground/soil conditions
• Plants and animals
• disease

Question 2

Institutional determinants of long-term growth

Answer 2

• Law System
  
  • Germanic (case-law)
  • Romanian (written-law)
  • German (mix of both)
  • Scandinavian (independent branch of early germanic law)
• Open access orders?
• Institutions and rule systems

Question 3

Cultural determinants of long-term growth

Answer 3

• Ethics of working
  
  • Fast or slow?
  • High quality or quantity?
• Trust
  
  • The more trust, the less must be regulated by contracts. Rule keeping is enforced by the law system and police as well.
• Parsimony
  
  • might lead to financing investmens, but is only conducted with a surplus and deferred consumption
• Professional standards
  
  • Is there any kind of vocational training?
• Knowledge and knowledge transfer
  
  • Is there any kind of production and publication of knowledge?

Question 4

Economic determinants of long term growth

Answer 4

• Technology
• Technological progress
  
  • ≠ technological change
• Surplus?
  
  • Subsitence economies only allow reproduction (Y = C)
  • Economy with a surplus allows saving (Y = C +I)
• R&D
  
  • product innovations (design/horizontal or quality/vertical)
  • cost reductions = technological progress (far more important than product innovations)
• Labor Productivity (= Output / Input or working hours)
• Human Capital
  
  • tends to depreciate
  • the longer you’re unemployed the higher your depreciation rate
  • the higher the speed of technological progress the higher the depreciation rate

Question 5

Open access orders (inclusive institutions)

Answer 5

• = Product gets distributed according to the input of each party
• “who does the job gets the benefits”

Question 6

Limited access orders (extractive institutions)

Answer 6

• = you have to pay fees to the landlord of what you produced on his soil (less incentive to produce -> lower productivity -> principal agent problems -> punishment -> cruelty
  
  • “who does the job gets only part of the benefits
• was prevalent in most of history and still is nowadays
• state does not have a secure monopoly on violence, and society organizes itself to control violence among the elite fractions
• common feature of limited access orders is that political elites divide up control of the economy, each getting some share of the rents

Question 7

Hunters and Gatherers (Old Stone Age/Paleolithicum)

Answer 7

• Human mankind lived for approximately 200.000 years as H&G
• Small population density, chances of meeting another group were low
• Fertility was low, because of bad nutrition and the necessity to leave a habitat
• Subsistence economy, because having a surplus would have hindered moving around
• H&G was at most done for 4 hours a day
• Property was personal
• Egalitarian distribution of food (which does not mean every person received the same amount)
• Low life expectancy
• Fertility time rate of women was short
• Nevertheless population grew!!
• 10.000 BC mankind began to settle down = End of H&G/Old Stone age/paleolithicum
  
  • maybe they settled down because of the Ice age (which hindered people from H&G)

Question 8

Neolithic Revolution (10.000 BC)

Answer 8

• 10.000 B.C. mankind began to settle down, and started breeding and agriculture
• Origin of NR = fertile crescent in Syria
• First emergence of generating/producing economoes
• Took it’s cour from Asia minor and then expanded to Asia and Europe
• In Australia and America, it took place between 1.300 and 1.600 A.D.!
• Division of labor:
  
  • women worked on the fields with digging sticks
  • men were responsible for hunting and breeding (cattle-breeding animals)
  • -> later, when oxen were used in ploughing, field-work became men’s work and women took over gardening
• Common property became private property
• Planning behavior became essential for survival
  
  • -> sowing and havesting and storing technologies especially in northern areas
• Work hours increased considerably in comparison to Paleolithicum
• Population increased because of rising quantity of food
• Food quality decreased -> skeletal disease, men were shrinking in height
• Property compromised and territoy became crucial!
• Inequality and stratification emerged more and more
  
  • chiefs, warlords, medicine men and priests are not working on the field, but protectiong those who work on the field
    (surplus from the field must be big enough to feed those not working on the field)
• Systemic conflict: more children imply more male kids and with a growing population young men needed new territories for their families -> aggressive or pacifistic
• All Neolithic societies developed “headquarters” of power
• All Neolithic systems had a gentile system (you have a name and you know where you come from)
• Gentile System was transformed into:
  
  • Patrimonial system (king-priest system) (in Egypt, Inka, China)
  • System of city states (Greece, Phoenicia, Assyria)
  • Primitive kingship and then feudal system (almost exclusively in Europe, where Celto-Germanic kingships merged with the Graeco-Roman culture)

Question 9

Archaic High Cultures - Patrimonial Systems

Answer 9

• Egypt, Inka, China
• highly centralized with kings or priests (who redistribute everything)
• household of king or priest owned the whole land
• production is organized on the level of villages
• village structures emerged

Question 10

Archaic High Cultures - System of city states

Answer 10

• Greece, Phoenicia, Assyria
• villages grew to cities (polis) or villages vanished
• cities were dominated by merchants or craftsmen
• agricultural production happened outside the city walls
• Greek Polis System (ancient greek and roman economic system)

Question 11

Archaic High Cultures - Feudal System

Answer 11

• Europe
• central notion: Suzerainity
  
  • a landlord is economically and politically sovereign (except in the time of war)
  • decentralized territories that exhibit a certain degree of autonomy
• All services and production were monopolized by the feud
• merging of celto-germanic cultures and graeco-roman tribes
• happened easily, because of their similar views towards religion, they both distinguished between chiefs (kings = political leaders) and priests (healers/medical doctors = never political leaders)

Question 12

Ancient Greek and roman economic system

Answer 12

• Oikos (oikonomia - to study how a farm works) and Polis (politics - to study how a city works)
• Autonomy is the target because it guarantees means that the oikos is independent
• people who were independent were allowed to take part in political elections
• Non-independent people (slaves) were not autonomous and should therefore not have the right to vote
• Latifundia system = enlarged oikos
• The roman system stopped, when there were no more slaves, because decreasing production and therefore missing consumption led to riots and eradicated the system from an economic view

Question 13

Early Middle Ages (500-1000 A.D.) and Feudalism

Answer 13

• Feudal system:
  
  • Feudal relation between two persons is based on the seigniory (“Lehensherrschaft”)
  • Vassals were given a certain piece of land by the feud and had to do several services for him (like milling)
  • taxes were paid by the vassals to the landlord but the landlord had to pay no taxes
  • the mill service is a right of the feud and a duty for the vassals of the feuds area
  • All services and production were monopolized by the feud running the mill
  • Vassals got other rights in exchange (like shelter in the feuds castle in case of war)
• The Villication-system (from Villa):
  
  • a manorial estate system (“herrschaftliche Siedlung”)
  • 1/4 of the estate was “Salland” (land of the lord) and 3/4 was distributed to farmer families/peasants
  • The peasants (Bauern) were bond slaves/serfs who had to work on the salland for 2-3 days of the week and 2-3 days in their hide
  • Scale of trade was low, cause only a few cities existed in that time -> subsistence economies
• Heavy plough got invented (in Greece)
  
  • made it possible to harness areas with clay soil, which was more fertile than the lighter soil types
  • this led to more prosperity and created breeding ground for economic growth and cities
• also helped establishing the 3-field-system:
  
  • a system of land cultivation under which the common land is divided into three parts of which on or two in rotation lie fallow each year and the rest is used
• Heavy Plough, 3-field-system and high temperature triggered:
  
  • land productivity -> more food -> less deaths -> more births
• > Population increase

Question 14

Middle Ages (1000 A.D. - 1300 A.D.)

Answer 14

The emergence of money and cities:

• With the increased population and the increasing surplus, the subsistence level was overcome and trade was emerging
• Market places were founded which were to become cities
• Monetary economy became importan because of landlord’s interest in luxury goods, so there was no more pay in terms of output
• Families produced their output and exchanged it into money on the markets/citites
• Cities were inhabited by self-employed craftsmen, the only working people in the city were working for the city
• exchange between cities emerged
• FIRST CAPITALISTIC ORGANIZATION OF PRODUCTION, because people brought commodities from the fields into the city where they were produced into final goods

-> Putting-Out-System: In putting-out, work is contracted by a central agent to subcontractors who complete the work in off-site facilities, either in their own homes or in workshops with multiple craftsmen

• organized by merchants in the city
• relied on the work of serfs at home
• ACCUMULATION OF CAPITAL STARTED (which is the beasis of capitalism), generated by merchants

Temperature was high (from 900 A.D. - 1300 A.D.), which gave an agricultural boost as well (maybe to the sun cycle or gulf-stream)

Summing up:

• geographical determinants: warming -> positive for agriculture
• technological determinants: heavy plough, 3-field-system
• institutional influence: ora et labora (et lege) - pray and work (and read)
• -> more agricultural output -> rising birth rate, falling death rate -> population growth
• -> wages decreased, corn prices increased

Question 15

Late Middle Ages (1300-1650 A.D.)

Answer 15

• heavily influenced by the Black Death (1347)
• pestilence and other epidemic diseases spread over Europe and 1/3 of the population died (2/3 in cities, 1/3 in the countryside)
• cold climate epoch (“small glacial period”), with cold and wet summers and cold winter with a lot of snow -> bad harvest
• malnutrition -> bad health -> higher mortality -> higher death rates -> lower birth rates
• WORKFORCE DECREASED AND PRODUCTION DECREASED FASTER THAN CONSUMPTION
• -> AN ECONOMIC CRISIS FOLLOWED
• agricultural production slowed down due to climate
• meat consumption increased (because animals were nit infected by the pestilence)
• the price of corn declined sharply, real wages increased (less workers)
• LANDLORDS THAT PERSISTET BECAME RICH AND MONOPOLIZED THE LAND -> ARISTOCRACY, which leased land to the capitalistic producers in the green revolution
• land which was not used was transformed into pastureland for sheep breeding -> mutton and wool (mostly in england)
• MIGRATION TO CITIES, since cities attracted most people by citizenship, freedom and relatively good economic perspectives
• > Urbanization
• In order to become a citizen, you had to learn a craft
• GUILD SYSTEM was founded. It regulated how many craftsmen of one craft were allowed in a city, it also provided a learning community, and the network of the guild system resulted in high quality products (positive externality)
• but the guild system was protectionist -> high quality low quantity

Inventions:

• Letter printing: beginning of spread education -> cultural growth factor
• Mill: usually located at rivers, allowed peopl to forge iron through waterpower (1.5 tons with 2-3 bpm)
• Latin sail: allowed people to sail against the wind, without it people could’ve only sailed around coastal areas -> precondition for expedition
• Flute: narrow and long form of ship which was much faster than the “galleon” and could carry a lot of commodities

From 1618 - 1648 the 30 years war took place: destruction of trade routes and business relations. Centre of international trade moved from northern Italy -> NL/B

Summing up:

• geographical determinants:
• pestilence
• cold/”small glacial” period from 1350 - 1860 -> bad harvests
• trade routes changed to NL/B
• technological influence: mills, flute, latin sail, letter printing
• institutional influence: P-O-system, guilds and crafts in the cities
  (and the Hanse-Trading Association of northern merchants (1250-1670)