The article “Gifts of Mars: Warfare and Europe’s early rise to riches” by Nico Voigtländer and Hans-Joachim Voth illustrate how the political situation in Europe had shaped the economic development of the continent in the fourteenth century. Europe has historically been a fragmented continent, characterized by constant wars and religious conflict, at the cost of human life. Voigtländer and Voth believe that this socio-political scenario largely affected the picture of the economic development of the continent (168).
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The first implication of the war-driven continent was a massive human loss. This resulted in a high fatality rate. Malthusian economics dominated developmental parameters prioritized land per person as the prime determinant of per capita output (Voigtländer and Voth 168). Due to the constant state of war, Europe had a significantly high average death rate, reducing population pressure that resulted in higher land-labor ratio and per capita income (Voigtländer and Voth 168).
This simply explains why Europe’s per capita income and urbanization rate was higher than that of China since 1700. However, the shortcoming of the Malthusian theory lies in its assumption of land as the fixed capital. Consequently, with population growth, the land-labor ratio declined. However, advancement in technology diminished the importance of this ratio, as productivity growth no longer depended on the land-labor ratio (Voigtländer and Voth 169).
The difference among modern economists regarding the effectiveness of Malthusian theory in explaining the development pattern in Europe before the industrial revolution creates a puzzle. Voigtländer and Voth point out that the Malthusian theory did not give any weightage to technological advancement, and hence, it played a negligible role in economic development. All importance was given to population growth. However, this logic is not sufficient to explain economic growth (Voigtländer and Voth 149). This becomes more evident when empirical data of the economy is reviewed after the Black Death in 1348-50.
Due to the Black Death, Europe faced a massive population loss, resulting in an increase in per capita income. However, this gain eroded with time, as mortality rate stabilized but in the case of Europe, this did not happen. Even after two generations, there was a large surplus income to tax. This, Voigtländer and Voth believe, was due to the surge in the frequency of wars fought (183). Due to the high degree of fragmentation of Europe, there was greater channeling of war income to the economy (183). Voigtländer and Voth believe that in Europe, war has played a pivotal role in the continent’s prosperity (184).
Voigtländer and Voth used two indicators of economic development – urbanization and per capita GDP – to assess the impact of war on economic development (177). They used cross-section data from early modern Europe to provide an empirical basis for their study (177). Their study indicates that whenever there is a greater frequency of war, there has been an increase in urbanization and per capita income in Europe (Voigtländer and Voth 178).
However, evidence from China did not show a similar trend. Though China had an impressive developmental pattern since the Middle Ages, as the empire was unified and peaceful, it fell behind Europe in per capita income and urbanization rate since the fourteenth century (180). China was politically stable and the country fought fewer wars. Therefore, China faced increasing population pressure, which was absent in Europe due to a high mortality rate. Further, the Chinese fertility rate was higher than that of Europe, causing a higher population growth rate (181). Therefore, this was one reason why Europe outperformed China in the Middle Ages before the industrial revolution.
The second interpretation for Europe’s economic success has been pinned on organizations that fostered commerce (Voigtländer and Voth 181). Some others believe that Europe developed its technological arsenal while that in other places, like China, underwent a decline (181). The main reason for this was the shortage of labor that induced the development of labor-saving devices (181). However, both these interpretations fall short of explaining the significant gain in per capita income during the Malthusian era. Voigtländer and Voth point out that it was due to a high level of mortality in Europe and a continuous state of war.
However, with an increase in income, the mortality rate rose and the cities noted a high rate of urbanization with sustained income. Further, Voigtländer and Voth point out, due to cultural and social constructs, the idea of family planning differed widely in Europe and in other continents (182). Further, the participation of women in economic activities also varied. This had a strong effect in determining the high economic development of Europe compared to others.
The article points out that war has been one of the determining factors that influenced economic development. The policy implications from this study are not as immense as this deals with the economic development in the Malthusian era. The Malthusian explanation of economic development does not hold for modern economies, as the underlying assumptions of the predominance of land-labor ratio as the primary factor affecting economic development has been substituted by innovation. Policy for the modern economy cannot be suggested based on a theory that does not hold a basis on the modern economy. However, it has been used effectively to explain the sudden growth of the European economy even when the continent has been at war most of the time.
Voigtländer, Nico, and Hans-Joachim Voth. “Gifts of Mars: Warfare and Europe’s early rise to riches.” The Journal of Economic Perspectives 27.4 (2013): 165-186. Print.