Market Economies Before the Industrial Revolution

Many of the expected trends in labor have not materialized. In the 1970s, historians and economists still assumed strong unions, shorter working weeks and more permanent contracts. What went wrong here? Historian Jan Lucassen comes up with new insights.

A few months ago, Lucassen, who works at the IISH (International Institute of Social History), started his farewell speech. At first he had no idea what he wanted to talk about, but gradually the pieces of the puzzle fell into place. His speech did not become an overview of recent years, but the beginning of new insights. Lucassen:“I had to work hard until the day of the deadline to get the story right on paper.” His retirement was in sight, but that didn't mean he would stop working, on the contrary.

Intellectual Giants

While writing his speech, Lucassen came to the conclusion that social scientists, including social historians, are poor at predicting trends in labor developments. This is because they still quote the theories of the three giants in the field, Karl Marx (1818-1883), Adam Smith (1723-1790) and Max Weber (1864-1920). Not that he is 'anti', not at all, but these men had their limitations, in time, place and social milieu. They were bourgeois intellectuals and they looked only at the male workers and not at the entire working class. Furthermore, they were fully focused on the European economy and society.

Meanwhile we live in the 21^e century and we can look further. It is not only about white men in the western factory and also the labor for the Industrial Revolution is relevant. Lucassen, who has also read Marx himself, says:“The history of labor is still defined by the ideologies of this 19^e century thinkers. It's time we developed their theories further. The empirical data on which their ideas are based are too limited. As a result, the predictive value is small, whether it concerns positive or negative theories.”

In his speech, Lucassen gives a nice summary:“The well-known theories of Adam Smith, Karl Marx and Max Weber are based on a kind of engine that drives social and economic historical developments, however heartily they may otherwise disagree about the fuel. , the displacement and especially the economy. What they have in common is the defining force they attribute to the market from the moment it was able to develop in Western Europe, and especially in the Republic, in the Early Modern Age." Smith only had much more positive expectations of the market:he saw the creative effect of supply and demand, while Marx saw in this the oppression of the workers.

Weber's theory was that people had to have a certain mental attitude aimed at making a profit. Without this capitalist slant, there could be no market economy. For example, according to Weber, the land-owning elite in Classical Antiquity did not possess this mental attitude. So it was not for the rich landowners to make a profit. Lucassen shows in his speech, however, that Greek philosophers, including Pythagoras, already warned against the excesses of the market economy and the pursuit of profit.

Multiple market economies

Today, historians also study labor and industrial relations outside the West. Lucassen compares these research results and discovers that market economies have emerged and disappeared several times and in several places in the world. This also applies to large-scale wage labour, slave labor and self-employment.

In the case of wage labour, the workers did not receive the expected starvation wage, but their wage level fluctuated between the minimum and a level two or three times higher. These wage fluctuations were determined not only by the market but also by (joint) actions of the workers. Outside Europe, it turned out that they were already revolting before the Industrial Revolution to force a wage increase.

Long-term trends

These new developments not only break new ground in the field of employment history, but also help us to better predict long-term trends. Politicians could also make good use of this knowledge for their policy. It is important that historians collaborate better with other social scientists. They can use the valuable component time add to the predictions of trends in labor developments.

Trends that are already in the 19^e century had been predicted, especially after the oil crises of the 1970s, proved to be no longer true. For example, machines would slowly take over the work of people, so that we had to work shorter and shorter. The unions would become increasingly powerful and permanent work would be the norm.

If we now look at the European economy and the developments that have taken place in recent years, the opposite is true. Temporary contracts are very popular and not only among employers, the unions have fewer and fewer members and we have all started working again.

The latter is mainly due to the increasing number of women in paid employment. Especially as a couple we work more in paid employment than in the past. According to Lucassen, the main reason is status and the associated consumption level. Real wages have fallen, but because we still want that new bathroom or kitchen, we work more hours.

Eureka moments

The discovery of the reasons behind these trends caused a true Eureka moment for Lucassen while writing his farewell speech. But he has had more moments like this during his career. “Then I thought, 'Now I have it!', although that turned out not always to be the case,” Lucassen laughs. One of his most important discoveries is the work cycle (and he immediately grabs a pen to draw the cycle on my notepad). This work cycle shows that workers leave for part of the year for seasonal work while women and children keep things going on their own small farm.

Another fairly recent discovery is that of the money culture. The presence of coins says something about the existence of a market economy. The presence of small change, in particular, of which the daily shopping is done, has caused Lucassen to deep monetization mentioned:the circulation of a lot of change points to the presence of wage workers and small self-employed persons in front of the market. This was already the case in India, for example, well before our Industrial Revolution. Linking this theory of currency circulation to archaeological finds will allow the discovery of more early market economies. However, this process is currently still in its infancy.

The prediction

Now that Lucassen has discovered that we need to look at trends in labor developments in a different way, it's time for a prediction. We put to him a currently popular thesis:Are the Chinese taking over the world economy? Lucassen:“I don't see it happening yet. The Chinese also want more prosperity and that is their right. Why should we in the West only be allowed to enjoy prosperity? But that means that their wages have to go up and with that the production costs will rise.”

One of China's main competitive resources, cheap labour, is being overhauled. Chinese factory workers, who want to work for an apple and an egg, are increasingly difficult to find there. Where Europe still has to catch up, according to Lucassen, is education. Too few young people follow a science education, which means that new technologies are increasingly conceived and developed in countries such as India and China. And these new technologies offer the opportunity to work less.

About Jan Lucassen

Jan Lucassen studied history at Leiden University and obtained his PhD at Utrecht University on the subject of labor migration. He kind of rolled into the history of labor, it wasn't a specific choice. After having also taught history for several years, Lucassen and a few colleagues were able to start his own research department at the IISH in 1988. They decided that labor was a nice core theme. In those years, with the fall of the Berlin Wall and the communist Soviet Union, the subject of labor was huge. But Lucassen and his colleagues wanted to show that the history of labor was important and contained more than the male factory workers in the West. “One day the theme would be 'in fashion' again. Almost everyone works, we have always had to work and we will have to continue to do so in the future.” An important topic and now completely in.