The Cambridge Economic History of Europe

This chapter discusses the analytical models, capital-output ratio and savings-investment process. The contribution of capital formation to economic growth depends upon the rate of growth of the capital stock and the elasticity of output with respect to capital. If appropriate conditions are met, the elasticity of output with respect to capital can be measured by the share of national income earned by capital. The share of real net national product invested and the capital-output ratio both rose over at least the last six decades of the nineteenth century. Models of economic growth often associate savings with property income or some component thereof, a convention dating back at least as far as the work of David Ricardo. The United States clearly benefited from the 'work ethic', since such values greatly reduced the valuation placed on leisure and made investments in agriculture and the local infrastructure appear profitable.

Large business enterprises have come to dominate American production, distribution, transportation, finance, and services. Such enterprises have been products of the rapid industrialization of the United States. Modern business enterprise makes use of more workers, managers, owners, machines, materials, and money than any other economic institution in history. The evolution of enterprise in the United States falls into three broad chronological periods. The first, occurring from the formation of the national economy in the late eighteenth century to the 1840s, was one in which the expansion of the market encouraged specialization in business. During the second period, from 1840 to the First World War, new technologies revolutionized the processes of transportation, production, and distribution and encouraged the rise of the modern integrated multi-unit business enterprise. In the third period, from the 1920s to the present, multi-unit enterprises appeared in nearly all sectors of the economy.

This chapter analyses the relationship between the input of capital and economic growth in Japan during the past century. It then discusses the pre-modern background of the Japanese economy, focusing on certain broad trends during the Tokugawa era, which lasted from the early 1600s until 1868. Next, the chapter focuses on the Meiji restoration by outlining the main economic trends from the 1860s to the turn of the century as necessary background information. It examines the evidence concerning investment in twentieth century, and provides an interpretation of the role of capital in twentieth-century growth. The twentieth century is analysed by outlining some of the major quantitative aspects of investment and focusing on the rate of growth of private non-agricultural capital formation. Quantitative analysis of Japanese capital formation covers a period of nearly one hundred years, from the present back to the 1870s. For this long period, the pattern has been remarkably stable.

This chapter traces the societal and personal developments in the course of Japanese industrialization. It covers major aspects of the factory system as the hiring, training, structuring, and rewarding of the work force, the fashioning of principles, rules, and procedures of industrial relations, and the use of state power to regulate and resolve conflicts between workers and managers. By the early 1870s, a substantial proportion of Japan's rural inhabitants had come to depend for livelihood on day labour. One of the oldest branches of manufacturing is weaving, which during the feudal period was an important by-employment of the peasant households. The production of raw silk was an offshoot of agriculture. Factory-like establishments were fewer in silk-reeling than in weaving during the feudal period. Large-scale factory production in the private sector spread rapidly in the late 1880s and the 1890s, led by the cotton textile industry. The Meiji Government encouraged cotton-spinning by both direct investment and favourable credit to entrepreneurs.

The process of Japanese industrialization is a fascinating subject of study for economists and economic historians. Studies of Japanese entrepreneurship and management are fragmentary because each study deals with only a sub-period of time, without providing a historical perspective and a cohesive analysis of all related issues. This chapter presents the salient tenets of the 'orthodoxy' and several recent suggestions for the revision of this orthodoxy. Entrepreneurs are a group of individuals who precipitate changes in the method and manner of producing goods. The group includes government officials, business leaders, bankers, and any other individual who is instrumental in effecting such changes. The chapter focuses on general frameworks of analyses such as Gerschenkron's or Schumpeter's, or upon economic theory. The Japanese economy, like the rayon kimono, is a product of industrialization, but the modernization which accompanied it has not Westernized Japan to the point of emasculating those distinct historical and cultural heritages of its past.

Economic historians commonly describe the period from the late 1880s until the First World War as a period of intensive industrialization in Russia, during which a number of structural changes in the economy and society took place. This chapter presents an overview of the Russian economy at the beginning and end of early industrialization. It then examines the process of capital formation in Russia during the period 1890-1913. Capital formation in agriculture, regardless of various policies to stimulate capital investments in other sectors of the economy, was still very important in terms of size. In Russia, as in many other countries, the early phase of the industrialization process was marked by the phenomenon of allocating a large share of reproducible capital to construction. In accordance with conventional practice, industrial capital was calculated by its main components, two of which, such as structures and equipment, represented fixed capital and the third the level of inventories.

In the long run, and at a pace and in patterns differing with individual economies, industrialization releases processes of change in the nature of society, in the composition of the labour force, in the structure of the GNP, and in incomes per head. Industrialization in the sense of a massive development of modern industry in Russia was essentially a development of the last three and a half decades before 1914. The study of the formation of an industrial labour force requires recruitment, training in skills, and discipline, which may reasonably go beyond the stage at which factory production based on machinery, became a mass phenomenon. The evolution of wage-earning employment and of the factory labour force reflects the interaction of various factors upon labour supply. Changes in the labour forces of individual industries mirrored a variety of processes. The main ones were connected with expansion or contraction of production owing to cyclical factors, capital investment, and technological change.

Regulation has been the substitute for entrepreneurship in Russia during the thousand years of its recorded economic history, and in the past five decades regulation has eliminated entrepreneurship altogether. Russia's first entrepreneurs, the gosti, appear in history in Prince Igor of Kiev's treaty with Byzantium and can be classified as merchants in so far as they took the goods of others for sale to the Greeks, as opposed to the chieftains who crossed the Black Sea to dispose of spoils. This chapter focuses on the groups of persons for whom entrepreneurial conditions were created, or on whom regulations were imposed and facilitates comparison between governmental intervention under Peter and under Stalin. The long history of Russian economic regulation before and after Peter has shaped many of the institutions and activities characterizing Soviet economic management, but that management allows no scope formally for the entrepreneur.