Economic Growth and State Capacity in the Ancient World: the Limits of Institutionalism
Abstract: In the last 30 years, historians of Greece and Rome have documented small but sustained rises in living standards in the 1st millennium BC, with per capita consumption perhaps rising by 50%; and in the last 10 years they have used the tools of NIE to help explain this. However, the ancient world’s greatest potential for economic historians lies in the study of huge areas across millennia, providing multiple natural experiments. In the 1st millennium BC, while economies were growing and state capacities increasing in the Mediterranean basin, much the same things were happening in the Ganges and Yellow River valleys. In this paper I present evidence for this, and argue that the ultimate drivers were largely exogenous forces of climate change and population growth. Despite their institutional, cultural, and historical differences, people in the complex societies of eastern, southern, and western Eurasia all responded in similar ways, deepening state capacity, shifting from statist toward market economies, expanding literacy, and developing more rational philosophies. Toward the end of the 1st millennium BC there was some diffusion of innovations between Eurasian regions as empires and trade networks expanded, but the early stages of the process were independent in the three major regions. I conclude that while institutional differences did affect each region’s economic performance, working at a large scale shows the limits of institutionalism. Large groups of people are much the same wherever we find them, and, over the long run, respond to challenges in much the same ways.