This chapter traces the development of money, credit and banking systems in Europe, from their origins to their modern forms. It examines how the reintroduction of monetary systems following the collapse of the Roman Empire contributed to economic growth. The chapter also discusses the evolution of credit markets, the rise of banks and the development of paper money, with an emphasis on the role these institutions played in supporting economic development. It explores the relationship between financial innovation and economic crises, illustrating how the financial system has both facilitated growth and contributed to periods of instability. The chapter concludes by assessing the impact of financial systems on long-term economic development in Europe.

This chapter explores the economic recovery of Europe following the fall of the Roman Empire, often referred to as the Dark Ages. It highlights the role of technological innovation and the division of labour in revitalizing European economies from the ninth to the fifteenth centuries, building on insights from the work of Adam Smith. The re-establishment of long-distance trade routes and the revival of urban centres were critical factors in this recovery. The chapter also explores the restoration of monetary systems and the development of a more complex economy characterized by the growth of cities and increased production. By focusing on how Europe transitioned from a period of obscurity to one of gradual economic resurgence, the chapter underscores the importance of trade, technology and labour specialization in driving recovery and growth.

The Conclusion reflects on the long-term trajectory of welfare in Europe, highlighting the substantial increases in living standards that have occurred over the past centuries. It considers how technological and institutional developments have enabled sustained economic growth, while also acknowledging the environmental and social challenges that have emerged, particularly in the context of climate change. The Epilogue discusses the potential for future crises, including economic and environmental shocks, and whether Europe’s economic system is resilient enough to manage these challenges. The chapter concludes by emphasizing the importance of learning from historical experiences to address contemporary and future issues related to sustainability, inequality and economic development. By framing modern problems within the context of long-term economic history, the authors offer an optimistic yet cautious outlook on Europe’s ability to continue improving welfare in a sustainable manner.

This chapter traces the early economic history of Europe, focusing on the transition from hunter-gatherer societies to agricultural civilizations. It examines the emergence of cities, the development of trade and the influence of geography on European economic integration. The chapter explores how early agricultural innovations, such as the domestication of crops and animals, laid the foundation for the rise of European civilizations, particularly in Greece and Rome. It also discusses the geo-economic continuity of Europe, showing how trade fostered cultural and political integration despite frequent conflicts. Through an analysis of early European economies, the chapter highlights the role of agriculture and trade as key forces in shaping the region’s development.

This chapter focuses on the role of governments in managing economic growth and development, particularly through macroeconomic policy. It traces the evolution of government intervention in the economy, from the minimal state of the nineteenth century to the more active role governments played in the twentieth century, especially in response to crises such as the Great Depression. The chapter also examines the development of the welfare state and the use of fiscal and monetary policies to stabilize economies. By discussing the successes and failures of government interventions, the chapter highlights the ongoing debate over the appropriate role of the state in managing economic outcomes and ensuring long-term growth.

This chapter explores the transformative role of knowledge and technology in Europe’s economic history, with a special focus on the Industrial Revolution. It examines how the transfer of scientific and technological knowledge contributed to economic growth and convergence between European countries. The chapter highlights the role of education, institutional frameworks and innovation in facilitating the diffusion of technology across borders. It also considers the factors that limited convergence, such as disparities in institutional and educational development. By tracing the evolution of technological and scientific advancements, the chapter provides insight into the processes that allowed Europe to lead global economic development during the Industrial Revolution and beyond.

This chapter explores the globalization of factor markets, particularly focusing on capital and labour, and how international monetary regimes have influenced these markets throughout European history. It discusses the evolution of capital markets and the role of different monetary systems, such as the gold standard and Bretton Woods, in facilitating cross-border capital mobility. The chapter also examines the impact of migration on labour markets, exploring how the movement of people has shaped economic outcomes in Europe. It highlights the benefits of globalization, such as increased efficiency and economic integration, while also acknowledging the challenges, including inequality and labour market disruptions.

This chapter examines the historical evolution of trade and globalization in Europe, focusing on the forces that have shaped trade patterns over time. It explores the impact of technological advancements, such as improvements in transportation and communication, as well as the influence of political decisions on trade policy, including cycles of protectionism and free trade. The chapter also discusses the economic benefits and challenges of globalization, analysing how trade has contributed to economic growth while also creating winners and losers within and between countries. The chapter argues that while globalization has generally increased economic efficiency, its effects have been unevenly distributed.

The Introduction outlines the central themes of economic history, focusing on the efficient use of resources and its implications for welfare. It explains how societies have historically used natural, human and manufactured resources to improve living standards, exploring the critical roles of technology and institutions in driving efficiency and growth. The chapter introduces the concept of total factor productivity as a measure of economic efficiency, and emphasizes how historical developments have shaped the wealth of nations. It also links economic history to contemporary concerns by discussing the United Nations’ Sustainable Development Goals and their relevance to resource management and welfare. By tracing historical improvements in efficiency and productivity, the Introduction sets the stage for understanding how economic history informs modern debates on sustainability and inequality.

This chapter examines economic growth in pre-industrial Europe, focusing on the agricultural sector as the primary driver of progress. It explores how technological innovations in farming, such as crop rotation and selective breeding, allowed for sustained economic growth despite limited resources. The chapter also discusses the Great Divergence, a period in which Europe’s economic development began to outpace that of other regions, and investigates the factors behind this phenomenon. By analysing the nature of pre-industrial growth, the chapter demonstrates how advances in agriculture and slow, but continuous, technological progress in other sectors provided the basis for Europe’s later industrialization. It highlights the importance of both internal and external factors in shaping Europe’s economic trajectory.

This chapter examines the long-term development of inequality in Europe, focusing on disparities between individuals, households and nations. It explores how social and economic inequalities have evolved over time, influenced by economic forces as well as factors such as gender, race and class. The chapter also considers global inequality, discussing the gap between rich and poor nations and the factors that have contributed to economic divergence or convergence. By analysing the historical roots of inequality and the role of institutions in mitigating or exacerbating it, the chapter provides insights into the social and economic consequences of unequal income distribution and how it shapes economic policy debates today.