Market economies, capitalism by Bas van Bavel
Back to the future: How economic history can gain more relevance by abandoning modernization thinking, 2024
Economic history has built a solid scientific foundation over the past decades but may need to en... more Economic history has built a solid scientific foundation over the past decades but may need to enhance its academic and societal relevance. Ways to do so could include a clearer focus on societal issues and using history as a ‘laboratory’ in which to investigate these, strengthening multidisciplinary collaboration, better incorporating social and environmental dimensions, and abandoning modernization thinking to fully employ periods further back in time and across the globe as sources of relevant knowledge.
Journal of Economic Surveys, 2024
Economists and social scientists have widely contributed to the so-called "Beyond GDP" debate-the... more Economists and social scientists have widely contributed to the so-called "Beyond GDP" debate-the view that current measures of economic growth are inadequate to measure well-being and multidimensional indicators. While economic history has not been prominent in these debates, multidimensional indicators have captured the interest of economic historians, with both theoretical and empirical contributions. In this contribution, we examine the areas of consensus
Journal of Institutional Economics, 2021
The advances in economic and social history over the past years enabled me to empirically test as... more The advances in economic and social history over the past years enabled me to empirically test assumptions about the long-run development of markets. The review by Geoff Hodgson of the resulting book, The Invisible Hand?, is lucid but incomplete. I argue that the rise to dominance of factor markets, followed by that of financial markets, took place already in several early cases, and that all market economies, through an endogenous process, saw the accumulation of wealth and, next, the translation of this wealth into political leverage, creating a feedback loop with negative outcomes which is very hard to break.
Human Development Report, 2019
My contribution to the Human Development Report 2019, Beyond income, beyond averages, beyond toda... more My contribution to the Human Development Report 2019, Beyond income, beyond averages, beyond today: Inequalities in human development in the 21st century, United Nations Development Programme (New York, 2019) pp. 60-63.
For the full report: http://hdr.undp.org/sites/default/files/hdr2019.pdf
This paper reconstructs the organization and development of factor markets in early medieval Iraq... more This paper reconstructs the organization and development of factor markets in early medieval Iraq. It shows that from the late Sasanian period on, and accelerating in the early Islamic period, there was a relatively unrestricted functioning of markets for goods, labour, and capital. This stimulated market exchange, associated with growing monetization of the economy, especially in the towns, but also in the countryside, even though coercion remained more pronounced there. We hypothesize that these developments brought economic dynamism but simultaneously increased inequality and furthered the rise of new, powerful elite groups, causing the decline of the same markets
Journal of the Economic and Social History of the Orient, 2014
Socio-Economic Review, 2019
It is often assumed that the market economy and the open society reinforce each other and have ri... more It is often assumed that the market economy and the open society reinforce each other and have risen together. Even those who are more skeptical about their long-run compatibility will usually agree that the rise of the two was part of a process of modernization, starting in early modern England and unfolding in the modern West. This article builds on the latest historical research to reject this assumption. It shows that several market economies existed much earlier in history. These were all preceded by social movements generating a more open society. In each of these cases, the functioning of the market economy slowly eroded social and, next, political openness, and later shriveled itself again. This endogenous, cycle-like process, in which the interaction of the market economy and the open society developed from positive to negative, may also be seen in modern cases, including the present USA.
Economic History Review, 2018
This article contributes to the ongoing debate on the causes of the great divergence by comparing... more This article contributes to the ongoing debate on the causes of the great divergence by comparing the use of expensive labour-saving capital goods—water-mills, windmills, and cranes—in medieval western Europe and the Middle East. Using novel ways of measuring, we find that whereas the use of these goods increased in Europe, in the Middle East their prevalence decreased, or they were not used at all. We investigate several possible explanations and reject most of them, including religion, geography, technological knowledge, and disparities in wages and cost of capital. Our analysis shows that differences in lordship systems and the security of property rights best explain the patterns found.
The conventional view of markets for land, labour, and capital as a modern, Western phenomenon is... more The conventional view of markets for land, labour, and capital as a modern, Western phenomenon is questionable. Factor markets did indeed exist in Iraq, and even thrived, in various parts of its pre-modern history, including the period around 2000 BCE, the “long” sixth century (c. 620-480 BCE) and the eighth and ninth centuries CE. By employing the long-term approach used in the special theme issue and by placing the organization of these markets in their wider social-political context, we can understand better how these markets developed, how they functioned, and why they rose and declined again.
Continuity and …, Jan 1, 2009
Markets for labour, land and capital play important roles in the longterm
evolution of economies... more Markets for labour, land and capital play important roles in the longterm
evolution of economies. In the course of recent centuries, the exchange
of land, labour and capital by way of the market – whereby prices
are mainly determined by supply and demand – has become ever more
important. These exchanges increasingly replaced other systems of exchange and allocation, such as those by way of tribute, voluntary redistribution or systems applying some type of coercion, as in the manorial
system. This rise of what are termed ‘factor markets ’, occurring most
conspicuously in Western Europe, has had profound effects on economic
development. Most economic historians – whether from neo-classical,
neo-institutionalist or neo-Marxist schools – would agree that mobility of
factors of production, specialization and technological change are often
linked with, or promoted by, the rise of wage labour, land leases and
large-scale loans and investments, and the concomitant market competition.
The growth of factor markets is a not a unilinear process, however,
but one fraught with stagnation, crises and even the reversal of trends.
Moreover, the process displays striking regional differences.
The Invisible Hand offers a radical departure from the conventional wisdom of economists and econ... more The Invisible Hand offers a radical departure from the conventional wisdom of economists and economic historians, by showing that 'factor markets' and the economies dominated by them - the market economies - are not modern, but have existed at various times in the past. They rise, stagnate, and decline; and consist of very different combinations of institutions embedded in very different societies. These market economies create flexibility and high mobility in the exchange of land, labour, and capital, and initially they generate economic growth, although they also build on existing social structures, as well as existing exchange and allocation systems. The dynamism that results from the rise of factor markets leads to the rise of new market elites who accumulate land and capital, and use wage labour extensively to make their wealth profitable. In the long term, this creates social polarization and a decline of average welfare. As these new elites gradually translate their economic wealth into political leverage, it also creates institutional sclerosis, and finally makes these markets stagnate or decline again. This process is analysed across the three major, pre-industrial examples of successful market economies in western Eurasia: Iraq in the early Middle Ages, Italy in the high Middle Ages, and the Low Countries in the late Middle Ages and the early modern period, and then parallels drawn to England and the United States in the modern period. These areas successively saw a rapid rise of factor markets and the associated dynamism, followed by stagnation, which enables an in-depth investigation of the causes and results of this process.
theme issue Journal of the Economic and Social History of the Orient 57.2 (2014)., 2014
Even though markets have become a major topic in recent historiography, there are few studies inv... more Even though markets have become a major topic in recent historiography, there are few studies investigating the shifts in the importance of markets and their functioning over the very long run. The present volume offers such a long- term study, by focusing on the case of ancient and medieval Iraq. Markets existed in Iraq from early in its history. At various points in that history they even formed a main system of exchange and allocation in Iraq. This applies not only to the markets for goods and products but also to those for land, labour, and capital—that is, to the factor markets, on which we will concentrate in this volume. The long presence of markets makes Iraq an apt case for an investigation of the formation, functioning, and effects of these markets over the long run. In this volume, we will undertake such an investigation for the period from c. 700 BCE to c. 1100 CE, that is, roughly from the neo-Babylonian to the Abbasid period.
Working Papers
Although the importance of the institutional approach for understanding pre-industrial economic d... more Although the importance of the institutional approach for understanding pre-industrial economic development is widely accepted, it has proven to be difficult to assess, let alone to quantify the effects of institutions on the functioning of markets in this era. In this paper we demonstrate to what degree our empirical research on the rise of markets in late medieval Holland can illuminate the factors behind the development of the specific institutional framework of markets for land, labour, capital and goods, and the effects of these institutions on the actual functioning of the markets. The findings are corroborated by a comparative approach focusing on Flanders and Eastern England: the parts of Northwest Europe where, next to Holland, economic development was most precocious. Both regions, however, were hit hard by the effects of the Black Death, whereas Holland after the mid-fourteenth century underwent remarkable further growth, even despite ecological difficulties. The favourable organisation of markets, enabled by an exceptional balance in Holland society, played a key role in this success
Large parts of the Netherlands saw an early rise in market traffic during the late Middle Ages al... more Large parts of the Netherlands saw an early rise in market traffic during the late Middle Ages already. Exchange via the market became the dominant form not only for goods, but also for land, labour and capital, and this during the course of the sixteenth century already. This contribution investigates why it should be that the market form of exchange arose so early here specifically; how markets were organised as institutions and how they functioned. It will be demonstrated that the markets here had a favourable organisation, with low transaction costs, a high level of integration of the markets and a large degree of certainty for parties entering these markets. Nevertheless, the consequences of the rise of the market were not all positive. The rise of a market economy did not lead to any appreciable economic growth, while the social effects were largely negative. Social polarisation, pollution and the need to work ever harder depressed standards of living for most people in the sixteenth and seventeenth centuries.
Journal of Interdisciplinary History, Jan 1, 2011
Comparative analysis of the markets for land, labor, and capital in north-central Italy and the L... more Comparative analysis of the markets for land, labor, and capital in north-central Italy and the Low Countries in the late Middle Ages and the early modern period reveals that urbanization in itself was not the crucial variable in the quality and effect of developing factor markets. More important was the counterweight offered in this process by territorial lords and rural interests to the influence of urban elites. If this counterweight was missing, urban elites could exploit factor markets to their own ends.
Journal of the Economic and Social History of the Orient, 2014
This paper reconstructs the organization and development of factor markets in early medieval Iraq... more This paper reconstructs the organization and development of factor markets in early medieval Iraq. It shows that from the late Sasanian period on, and accelerating in the early Islamic period, there was a relatively unrestricted functioning of markets for goods, labour, and capital. This stimulated market exchange, associated with growing monetization of the economy, especially in the towns, but also in the countryside, even though coercion remained more pronounced there. We hypothesize that these
developments brought economic dynamism but simultaneously increased inequality and furthered the rise of new, powerful elite groups, causing the decline of the same markets.
Resilience and vulnerability of societies by Bas van Bavel
Humanities and social sciences communications 8, 76 (2021), 2021
Inequality of wealth and its associated power has varied greatly over human history. It is often ... more Inequality of wealth and its associated power has varied greatly over human history. It is often thought that the main levelers of inequality were natural disasters such as epidemics or earthquakes, and social turmoil such as wars and revolutions. Here we critically review evidence of the effects of such events on inequality from medieval times till the present. We show that in spite of the marked differences in character and direct impact of the shocks we consider, most historical disasters were rather followed by a widening of wealth gaps. This can be understood from the wealth distribution and institutional outlay of these societies at the moment of the shock, which to a large extent shaped both the impact and the institutional measures chosen in response to the crisis. As most societies were characterized by economic and political skewness, the result mostly was a further widening of disparities. Over the centuries, exceptions to this rule have occurred in situations where the ordinary people had strong leverage in shaping the response to the crisis through organizations such as guilds, fraternities, trade unions, cooperatives, and political movements. Our results provide empirical support for the view that in nations where such leverage of ordinary people is weak, the responses to novel crises such as the COVID-19 pandemic may boost inequality.
Cambridge University Press (available now in hard copy and open access), 2020
This monograph provides an overview of research into disasters from a historical perspective, mak... more This monograph provides an overview of research into disasters from a historical perspective, making two new contributions. First, it introduces the field of 'disaster studies' to history, showing how we can use history to better understand how societies deal with shocks and hazards and their potentially disastrous outcomes. Despite growing recognition of the importance of historical depth by scholars investigating disasters, the temporal dimensions of disasters have been underexploited up to now. Moreover, the historical record sometimes enables us to make a long-term reconstruction of the social, economic and cultural effects of hazards and shocks simply not possible in contemporary disaster studies material. We can therefore use 'the past' as a laboratory to test hypotheses of relevance to the present in a careful way. History lends itself towards this end because of the opportunity it offers to identify distinct and divergent social and environmental patterns and trajectories. We can compare the drivers and constraints of societal responses to shocks spatially and chronologically, and therefore enrich our understanding of responses to stress today.
Economic History Review, 2018
Wires Climate Change, 2019
Recent advances in paleoclimatology and the growing digital availability of large historical data... more Recent advances in paleoclimatology and the growing digital availability of large historical datasets on human activity have created new opportunities to investigate long-term interactions between climate and society. However, noncritical use of historical datasets can create pitfalls, resulting in misleading findings that may become entrenched as accepted knowledge. We demonstrate pitfalls in the content, use and interpretation of historical datasets in research into climate and society interaction through a systematic review of recent studies on the link between climate and (a) conflict incidence, (b) plague outbreaks and (c) agricultural productivity changes. We propose three sets of interventions to overcome these pitfalls, which involve a more critical and multidisciplinary collection and construction of historical datasets, increased specificity and transparency about uncertainty or biases, and replacing inductive with deductive approaches to causality. This will improve the validity and robustness of interpretations on the long-term relationship between climate and society. This article is categorized under: Climate, History, Society, Culture > Disciplinary Perspectives K E Y W O R D S climate and society, conflict, historical datasets, long-term, plague 1 | NEW OPPORTUNITIES Concerns over the implications of global climate change have given new impetus to the need to understand the effects of climatic changes on society over the long term (Adamson, Hannaford, & Rohland, 2018; Haldon, Elton, et al., 2018). Recent advances in paleoclimatology and historical climate reconstruction have resulted in increased numbers of highly-resolved series of long-term climatic changes (Emile-Geay et al., 2017). Similarly, the digital age has enhanced our capacity to produce bigger datasets on historical variations in human activity than ever before. These new opportunities have led to an increasing use of historical data to untangle climate-society linkages.
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Market economies, capitalism by Bas van Bavel
For the full report: http://hdr.undp.org/sites/default/files/hdr2019.pdf
evolution of economies. In the course of recent centuries, the exchange
of land, labour and capital by way of the market – whereby prices
are mainly determined by supply and demand – has become ever more
important. These exchanges increasingly replaced other systems of exchange and allocation, such as those by way of tribute, voluntary redistribution or systems applying some type of coercion, as in the manorial
system. This rise of what are termed ‘factor markets ’, occurring most
conspicuously in Western Europe, has had profound effects on economic
development. Most economic historians – whether from neo-classical,
neo-institutionalist or neo-Marxist schools – would agree that mobility of
factors of production, specialization and technological change are often
linked with, or promoted by, the rise of wage labour, land leases and
large-scale loans and investments, and the concomitant market competition.
The growth of factor markets is a not a unilinear process, however,
but one fraught with stagnation, crises and even the reversal of trends.
Moreover, the process displays striking regional differences.
developments brought economic dynamism but simultaneously increased inequality and furthered the rise of new, powerful elite groups, causing the decline of the same markets.
Resilience and vulnerability of societies by Bas van Bavel
For the full report: http://hdr.undp.org/sites/default/files/hdr2019.pdf
evolution of economies. In the course of recent centuries, the exchange
of land, labour and capital by way of the market – whereby prices
are mainly determined by supply and demand – has become ever more
important. These exchanges increasingly replaced other systems of exchange and allocation, such as those by way of tribute, voluntary redistribution or systems applying some type of coercion, as in the manorial
system. This rise of what are termed ‘factor markets ’, occurring most
conspicuously in Western Europe, has had profound effects on economic
development. Most economic historians – whether from neo-classical,
neo-institutionalist or neo-Marxist schools – would agree that mobility of
factors of production, specialization and technological change are often
linked with, or promoted by, the rise of wage labour, land leases and
large-scale loans and investments, and the concomitant market competition.
The growth of factor markets is a not a unilinear process, however,
but one fraught with stagnation, crises and even the reversal of trends.
Moreover, the process displays striking regional differences.
developments brought economic dynamism but simultaneously increased inequality and furthered the rise of new, powerful elite groups, causing the decline of the same markets.
indicates that property structures were indeed an important factor in late-medieval population trends. Later sections of the article investigate the various factors which shaped the interrelationships between population growth, density and property structures, thus contributing to a clearer comprehension of the different demographic histories of the three regions and a better understanding of regional diversities in latemedieval population developments in general.
This article focuses on these regional differences, by investigating and
comparing late medieval developments in two different parts of the Low
Countries where rural industries did blossom in the late medieval period, but
each with their own specific pattern: Inland Flanders and Holland. In order to explain these regional differences, the article links the proto-industrial development to the social and economic structures in the regions in question.
Providing a concise overview of social and economic changes over more than a thousand years, Bas van Bavel assesses the impact of the social and institutional organization that saw the Low Countries become the most urbanized and densely populated part of Europe by the end of the Middle Ages. By delving into the early and high medieval history of society, van Bavel uncovers the foundations of the flourishing of the medieval Flemish towns and the forces that propelled Holland towards its Golden Age.
Exploring the Low Countries at a regional level, van Bavel highlights the importance of localized structures for determining the nature of social transitions and economic growth. He assesses the role of manorial organization, the emergence of markets, the rise of towns, the quest for self-determination by ordinary people, and the sharp regional differences in development that can be observed in the very long run. In doing so, the book offers a significant contribution to the debate about the causes of economic and social change, both past and present.
See the attachment for a synoposis of the book and a debate about the book (special issue of the Low Countries Journal of Social and Economic History)
institutions, and explaining the differences in their long-run development between periods and societies, would be to use history as a laboratory, allowing us to test the hypotheses developed in the social sciences. This paper discusses the study by Douglas Allen, The Institutional Revolution, in that context, in order to identify some of the pitfalls in the current attempts by economists to use historical analysis. Next, the paper places his English case into a comparative perspective, helped by the recent insights gained by economic and social history, to see how these pitfalls can be avoided. Based on this, I argue for comparisons at the regional, national and global levels, and for a multidimensional view which includes social contextualization, combined with an open eye for discontinuity in long-run patterns, in order to avoid one-dimensional and teleological approaches to institutional change.
Such high levels of private wealth inequality contrast with relatively
low levels of net income inequality; a paradox that the Netherlands share with other Northern European welfare states. We hypothesise that publicly funded life-time income security limits the wealth-formation by ordinary Dutch households, while the redistributive taxes required to finance this system are targeting income rather than wealth.