It would be unthinkable for American undergraduates to be offered courses in the economic history of their own state, rather than the United States as a whole. In sharp contrast, most existing textbooks on European economic history are country-specific, implying the risk that students will misinterpret continent-wide phenomena as having been purely national in scope, and as having had purely national causes. The time has come for a textbook on European economic history that takes an explicitly pan-European approach, with the material organized by topic rather than by country.

This project thus aims to provide a unified economic history of modern Europe, explicitly modeled on R. Floud and D. McCloskey's (1981) path-breaking Cambridge Economic History of Britain. Each chapter has been written by two or three leading experts in the field, who between them have been able to cover all of the three major European regions (northern Europe, southern Europe, and central and eastern Europe). Following the pattern established by Floud and McCloskey, we have broken down the project into two volumes covering the periods 1700–1870 and 1870–2000. Each volume contains chapters based on the dominant themes of modern economic history: aggregate growth and cycles; sectoral analysis; and living standards. The approach is quantitative and makes explicit use of economic analysis, but in a manner that is accessible to undergraduates.

It would be unthinkable for American undergraduates to be offered courses in the economic history of their own state, rather than the United States as a whole. In sharp contrast, most existing textbooks on European economic history are country-specific, implying the risk that students will misinterpret continent-wide phenomena as having been purely national in scope, and as having had purely national causes. The time has come for a textbook on European economic history that takes an explicitly pan-European approach, with the material organized by topic rather than by country.

This project thus aims to provide a unified economic history of modern Europe, explicitly modelled on the pathbreaking Cambridge Economic History of Britain (Floud and McCloskey, 1981). Each chapter has been written by two or three leading experts in the field, who between them were able to cover each of the three major European regions (northern Europe, southern Europe, and central and eastern Europe). Following the pattern established by Floud and McCloskey, we have broken down the project into two volumes, covering the periods 1700–1870 and 1870–2000 respectively. Each volume contains chapters based on the dominant themes of modern economic history: aggregate growth and cycles, sectoral analysis, and living standards. The approach is quantitative and makes explicit use of economic analysis, but in a manner that is accessible to undergraduates.

Introduction

Human capital is widely seen by economists as a key determinant of growth and productivity performance (Lucas, 1988; Romer, 1990). And yet surprisingly little is known about the quantitative dimensions of human capital accumulation before very recent times, beyond years of formal schooling, an indicator which suggests only minor differences between the major industrialized countries (Maddison, 1987, table A12). In this paper we present data on key aspects of human capital accumulation in the manufacturing sectors of Britain, Germany and the USA, and relate them to comparative productivity performance. We find that developments in human capital accumulation in the major industrialized countries can only be understood in relation to overall production strategies.

We emphasize competition between technological systems geared to mass production and craft/flexible production, with very different human capital requirements. We see the evolution of a mass production system in the USA in the early twentieth century, building on the American system of manufactures from the nineteenth century (Hounshell, 1984). In mass production, special-purpose machinery and resources were substituted for skilled shopfloor labour to produce standardized products. This involved heavy investment in fixed capital and the managerial aspects of human capital, but on the shopfloor involved the use of relatively unskilled labour. Over time, the investment in human capital above shopfloor level was strengthened by heavy investment in research and development. Furthermore, American R&D evolved in a ‘missionoriented’ direction, concentrating on the emergence phase of new technologies (Ergas, 1987).

Introduction

In this chapter we provide a survey of the long-run evidence for convergence of productivity levels among the advanced industrialized countries. In addition to work based on Maddison's (1991) well-known national income data we also survey evidence from two other sets of data. Broadberry (1994c) examines labour productivity in manufacturing for twelve countries while Williamson (1991) provides evidence on real wages of unskilled workers for fifteen countries. We argue that the evidence is best seen as consistent with a process of local rather than global convergence, with more than one ‘convergence club’, even amongst the advanced industrial economies. Furthermore, the convergence process has not been smooth or continuous. In short, both geography and history matter.

Definitions

Exogenous and endogenous growth

Underlying the convergence debate is a conflict over the vision of the growth process. The standard neoclassical growth model predicts global convervence of productivity and living standards (Lucas, 1988). Rejection of global convergence thus implies a move away from the model which has dominated economists' thinking about growth in recent decades. Rather than seeing growth as exogenously given by population growth and technical progress and independent of savings and investment as in the standard neoclassical model, in the more recent literature the rate of growth has been endogenized and can be influenced by the accumulation strategy of individuals and governments. The new growth literature has placed a new emphasis on the accumulation of human capital (Lucas, 1988, 1993; Romer, 1990). Learning effects and externalities mean that there is no guarantee of convergence in a world of competitive economies since social and private returns often differ.