The OFS: economic analysis.
analysis
ƒ Fi
Fine-tuned
t
d adaptation
d t ti tto
diversified autarkic production.
ƒ Pastoralism and crop rotation.
ƒ Many tasks, with different levels
of economies of scale and
g
different costs of monitoring.
ƒ Manage tasks collectively when
economies of scale high and
monitoring costs low.
ƒ Assign private property rights when
economies of scale low and
monitoring costs high.
July, from Les très Riches Heures du Duc de Berry (c.
1412). The Chantilly Museum, Paris.
1
The success of the OFS.
OFS
Y
Year
W Europe
W.
E
All Europe*
E
*
1000
12-15 million 15-20 million
1300
45-59 million 60-70 million
ƒ Population densities highest where the
manorial/OFS was most extensive.
ƒ Northern France,, Northern Italy.
y
ƒ Population growth in Eastern Europe the
result of migration.
*All Europe includes Norway, Sweden, most of Eastern Europe, and Christian Spain.
2
Results of population growth.
growth
F
From
11th to
t 13th century,
t
a frontier
f ti movement.
t
ƒ Clearing the
waste.
ƒ Colonizing
Eastern Europe.
ƒ The Crusades
as a frontier
movement.
3
Thi t
Thirteenth
th century:
t
llooming
i
crisis.
i i
ƒ Frontier movement
ceases, population growth
continues.
ƒ General increase in land
rents.
Pieter Bruegel the Elder, The Harvesters (1565 )
Metropolitan Museum of Art, New York
ƒ Increase in relative prices of
cereals.
ƒ Some shift from pasture to
cultivation.
ƒ Diminishing returns and
declining real wage.
4
Thi t
Thirteenth
th century:
t
response.
Refeudalization:
f d li i
return to direct
di
cultivation
l i i off the
h demesne.
d
ƒ Feudal obligations
transformed into money
rents in many places by 11th
century.
ƒ Money rents seen as fixed:
f d
origin of the word “farm.”
Pieter Bruegel the Elder, The Harvesters (1565 )
Metropolitan Museum of Art, New York
ƒ A farmer (fermier) held a right
to rents that were fixed or
firm (ferme).
ƒ Why return to feudal
obligations?
bli ti
?
5
Wh refeudalization?
Why
f d li ti ?
ƒ Lords dig in their heels.
heels
ƒ Fixed rents allows peasants to
capture the gains from
increasing land rents.
ƒ Return to demesne avoids
renegotiation costs.
ƒ Proto-enclosure.
Pieter Bruegel the Elder,
Elder The Harvesters (1565 )
Metropolitan Museum of Art, New York
ƒ A move toward specialized
production?
Either way:
y the failure of institutional transformation.
6
Th calamitous
The
l
it
fourteenth
f
t
th century.
t
Population of Western Europe,
Europe 1200-1550
1200 1550 (millions)
(millions).
1200 61
1400 45
1250 69
1450 60
1300 73
1500 69
1350 51
1550 78
Albrecht Dürer, The Four Horsemen of
the Apocalypse (1498).
7
Th calamitous
The
l
it
fourteenth
f
t
th century.
t
P
Population
l ti off England,
E l d 1086-1603
1086 1603 ((millions).
illi )
1086 1.1 1374 2.25
1348 3.76 1377 2.23
1350 3.13 1400 2.1
1360 2.75
2 75 1430 2.1
21
1369 2.45 1603 3.78
Albrecht Dürer, The Four Horsemen of
the Apocalypse (1498).
8
Malthusian crisis.
crisis
ƒ Famine.
ƒ War.
ƒ The Black Death.
Les Quatres Morts, from the Danse Macabre of the
Cemetery of the Innocents, Paris, 15th century.
ƒ Bubonic plague, 1348-51
ƒ Recurred many times
through 15th century.
ƒ Population didn
didn’tt stop
falling until mid 15th
century, and did not
recover untill 16
6th century.
9
E
Economic
i effects
ff t off population
l ti
d
decline.
li
S
P
P’
D
D
’
Supply and demand for agricultural
products in Europe before (D) and after
(D’) the plague.
ƒ Price fluctuations, with
general deflation after
1375.
ƒ Prices of agricultural
goods fall relative to
manufactured
f
d goods.
d
ƒ Real wages increase.
ƒ Rents decline
decline, as does
cultivation of marginal
lands.
10
I tit ti
Institutional
l effects
ff t off population
l ti
d
decline.
li
ƒ Transformation of servile obligations into
property rights.
ƒ Competition
p
for peasant
p
labor leads to attractive
rental contracts.
ƒ Rents fixed — renegotiated on death of peasant.
ƒ Eventually,
Eventually life leases become hereditary by custom
custom.
ƒ Inflation reduces value of “quit rent” to nominal sum.
g
in fee simple.
p
ƒ Hereditaryy leases become rights
ƒ Soil tilled by free tenants and wage workers.
ƒ Trading rights for revenue.
11
Institutional transformation.
transformation
Pieter Bruegel the Elder, The Harvesters (1565 )
Metropolitan Museum of Art, New York
ƒ Like the 13th century, the
16th century was a period
of rising population and
increasing land rents.
ƒ But this time Europe
p
responded with an
institutional innovation
that led to continual
increases in productivity.
12
The enclosure movement.
movement
ƒ Physical
enclosure.
ƒ Legal enclosure.
ƒ Voluntary
V l
enclosure.
ƒ Parliamentary
enclosure.
13
Th timing
The
ti i
off E
English
li h enclosure.
l
Period
<1550
1500-1599
1600-1699
1700-1799
1800-1914
>1914
Percentage
enclosed.
45
2
24
13
11.4
46
4.6
Percentages approximate. Source: Wordie (1983).
14
S
Symmetric
t i tragedies.
t
di
ƒ Common pool:
ƒ Everyone has use rights.
ƒ No one has exclusion rights.
g
ƒ Common pool a function of scheme of
property rights, not (just) technology.
ƒ Tragedy
T aged of the commons
commons:
ƒ Overuse of resources.
ƒ In the limit, full dissipation of rents.
ƒ Correctives:
ƒ Create and enforce exclusion rights.
ƒ Collective management schemes (like
the OFS).
15
S
Symmetric
t i tragedies.
t
di
ƒ Anticommons:
ƒ Many entities have exclusion rights
(veto power).
ƒ Tragedy of the anticommons:
ƒ Underuse of resources.
ƒ In the limit
limit, full dissipation of rents.
rents
ƒ Examples:
ƒ Bureaucracy, especially in postpost
Soviet/developing countries.
ƒ Patents in complex systems products.
ƒ The
Th Open
O
Field
Fi ld System.
S t
16
T
Transaction
ti
costs
t off enclosure.
l
ƒ Voluntary enclosure.
enclosure
ƒ Required unanimity, side-payments.
ƒ Complex property law geared to protect hereditary
estates from profligate descendants.
ƒ Enclosures with highest net benefits take place first.
ƒ Parliamentary enclosure
enclosure.
ƒ
ƒ
ƒ
ƒ
Case-by-case exemption from common law.
Majority
j y not unanimity.
y
A form of eminent domain.
Not important until mid-18th century.
ƒ “Hardest” enclosures Parliamentary
Parliamentary.
17
The benefits of enclosure.
enclosure
ƒ Benefits of specialization
and trade.
ƒ Greater appropriability of
innovation.
ƒ Reduced costs of
collective decisionmaking.
g
Enclosure for pasture in Britain reflected Britain’s
growing
i comparative
ti advantage
d t
in
i wool.
l
18
The benefits of enclosure.
enclosure
ƒ McCloskey: Enclosed land
rented for twice
common-field land.
ƒ £2.1 million per year gain in
productivity, about 1.5% of
national income or about 3.5%
of ag
agricultural
ic lt al income.
income
ƒ Rate of return of 17% per year.
ƒ An average village 13% more
productive.
productive
Source: McCloskey (1975)
ƒ But was this all productivity
increase, or was it a transfer
f
from
peasants
t tto llandlords?
dl d ?
19
Institutional transformation.
transformation
Pieter Bruegel the Elder, The Harvesters (1565 )
Metropolitan Museum of Art, New York
ƒ Like the 13th century, the
16th century was a period
of rising population and
increasing land rents.
ƒ But this time Europe
p
responded with an
institutional innovation
that led to continual
increases in productivity.
Why? A more developed market economy.
economy
20