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Oct 02,2009
European City-States and Cardwell’s Law
+ Brandon Fuller
Mark Koyama points to an interesting new working paper by NYU political scientist David Stasavage. Using population growth as a proxy for economic growth, Stasavage examines the effect of political autonomy on city population growth in Europe from 1000AD to 1800. He found that cities that became independent enjoyed faster growth rates than non-autonomous cities for about 100 years but that beyond a century of independence, the growth advantage disappears.
Stasavage suggests that the stagnation is related to the political structure of autonomous cities in Europe at the time. Such cities tended to be ruled by a narrow group of elite merchants. Initially this elite had an incentive to establish a legal environment that was more favorable for conducting business, thereby boosting growth. Yet, the elites also had an incentive to put up barriers to competition from merchants outside of the city, thereby discouraging innovation and growth over time.
Paul Romer mentioned that Stasavage’s result reminded him of what Joel Mokyr calls Cardwell’s Law:
This law states essentially that every society, when left on its own, will be technologically creative for only short periods. Sooner or later the forces of conservatism, the “if-it-ain’t-broke-don’t-fix-it,” the “if- God-had-wanted-us-to-fly-he-would-have-given-us-wings,” and the “not-invented-here-so-it-can’t-possibly-work” people take over and manage through a variety of legal and institutional channels to slow down and if possible stop technological creativity altogether. Technological leaders like 17th-century Holland or early 19th-century Britain lost their edge and eventually became followers.From a global point of view, the historical process can be likened to a relay race: Each society carries a torch for a short time before it hands it on to the next bearer; but all bask in the light. As long as there is a society to hand the torch to the next one, once the current bearer has worn itself out, technological progress can continue. There is thus safety in numbers: If there are enough states whose institutions are independent of each other, a replacement is likely to be found when the institutions of a technological leader turn against innovation, as they almost inevitably will.
Perhaps autonomous cities helped to facilitate the passing of the torch in Europe even as they themselves were subject to the limitations of Cardwell’s Law.