October 4, 2017

Why are just a few countries rich and so many others still poor? It’s a question that economists have pondered since the days of Adam Smith’s Wealth of Nations. It is also one which deeply divides them. Whilst the relative role of markets and the state (as well as numerous other factors) are open to debate, most of us can agree that it helps to have a state that is capable, democratic and which works with – rather than against – markets.

The question of how rich economies like Britain managed to develop such a state is currently gripping economic historians. Given that so many parts of the world have been unable to do so, one can understand why. Much talked about factors include favourable geography that fosters common experiences and a history of having to defend oneself – including, in Britain’s case, against the pesky Vikings. However, just as important – but regularly ignored – is the way in which individuals engaged with one another on a day-to-day basis. To understand how a little island off the edge of Europe managed to build a capable and democratic state, together with a whirl of commercial activity, we have to open up the black box that is the home.

Economic prosperity is built on women’s freedom

In the centuries before the Industrial Revolution, Britain was little more than a backwater on the international stage. Whilst in 1500 the Italians, Spanish and Portuguese were busy looking outwards, developing magnificent port cities with endless connections overseas but little connection to the mainland, Britain was doing the opposite: building a deep and well integrated internal market.1

Women’s freedom, in other words, created an entrepreneurial and capitalist spirit – or what Weber termed the protestant work ethic.

This early emergence of markets provided British women with opportunities that, whilst far from perfect, bought economic freedom, enabling them to escape from under the thumbs of their fathers. In medieval Britain, it was entirely normal for women to work, and marriage records from the sixteenth through the eighteenth centuries reveal that the average woman did not marry until she was around 26 years of age.2 That compares rather strikingly with other parts of Europe at the time, such as Italy, where women regularly married in their late teens (often to older men), and, of course, to modern day poor countries.

This relative freedom for women supported prosperity creation in a number of crucial ways. Later marriage helped to keep fertility and population growth in line with the economy’s ability to produce, creating a higher wage economy. This in turn encouraged mechanisation and the development of new technologies, culminating in the Industrial Revolution.3 Higher wages and lower numbers of offspring also better enabled families to save and to educate their children, providing the savings and skills that would be needed alongside a more capital-intensive and innovative economy.4

By shifting family life away from a traditional to a nuclear family structure, women’s freedom also fostered a ‘capitalist spirit’. Brides would no longer be young and absorbed, helplessly, into the households of their parents-in-law. Instead, and with a husband of their own choosing, they set up their own household. That meant that to get married – to have a sexual life and to start a family – people had to be able to afford it. From a young age, people knew that their future depended upon their own actions, not on the match their parents would make for them. Women’s freedom, in other words, created an entrepreneurial and capitalist spirit – or what Weber termed the protestant work ethic.

Women’s freedom also drives democracy

From the day we are born, we are each ‘socialised’ by the norms and behaviour we observe within the family. Sociologist Emmanuel Todd argues that democracy and family life thereby feed on one another. Where family life is patriarchal, women become accustomed to not having a voice and young adults are encouraged to be deferential. When young people are encouraged to speak up (rather than shut up), and men and women are considered equal, it helps to build a population that demands democratic government. Indeed, where we find authoritarian and undemocratic political institutions in the world today, we also tend to find family institutions – in the form of norms and practices – that are ‘unfriendly’ to women. It should be of little surprise that attempts to ‘export’ democracy do not work well where family life remains undemocratic.

Greater equality within the home, therefore, helped foster demand for democracy, and democracy, in turn, fed greater equality within the home. As the divine rights of kings came to be questioned in the seventeenth century, so too did patriarchal power. Political scientist Valerie Bryson notes in her recent book that:

“Questions of authority in state and family were…intimately linked in the political theory of the time. Conservative defenders of absolute monarchical power argued that the authority of the king over his people was sanctioned by God and nature in exactly the same way as that of a father over his family; this meant that ‘patriarchy’ (the rule of the father) in the home was used as justification for a parallel power in the state. Opponents of such state power, who argued that authority was not divinely ordained but must rest on reason and consent, were therefore forced to re-examine arbitrary power within the family as well: logically, it seemed, patriarchy in state and home must stand or fall together.”5

As economic opportunities for women outside of the home began to spread, this Old Poor Law system (though far from perfect) helped to fill the hole left by a retreating family-based welfare system – supporting the market by facilitating labour market participation and the movement of people for work or trade.

Democracy drives public services, and that supports growth

Not only are democracy and women’s freedom intimately tied, so is the emergence of state capabilities that we commonly take for granted today. ‘Votes for women’ and the expansion of the state into the provision of public goods, healthcare and education, all helped to support economic prosperity. It is in the parts of Europe, such as Britain, where women first began to earn their freedom that a welfare system also began to emerge. Instead of a burden to market activity, this deserves to be understood as something rather more positive.

In traditional societies, ‘welfare’ is provided within the family. Higher income earners help support those on lower incomes whilst women spend their time taking care of the young and elderly – even being pawns in the marriage market to enable their family to access more resources. Individual freedom and family needs can, as a result, conflict. Where markets enable people to ‘escape’ such practices – by giving them a way out – it leaves a welfare gap that needs to be filled. Enter the state.

The British welfare state dates back to Tudor times. Local parishes used land taxes to help support the elderly and ‘infirm’ and chased fathers who had abandoned their children. As economic opportunities for women outside of the home spread, this Old Poor Law system (though far from perfect) helped to fill the hole left by a retreating family-based welfare system – supporting the market by facilitating labour market participation and the movement of people for work or trade. Recent research by economic historians Bas Van Basel and Auke Rijpma has enabled us to compare welfare spending in different parts of Europe over the last 600 years. The results are striking: “from a European perspective the degree to which the English state succeeded in enforcing a nation-wide tax-based system of poor relief was exceptional”.6

Looking to history it should be clear that the links between the state, the market and women’s freedom cannot be ignored. If we want to understand why so many parts of the world are still poor today – and why they have states that are undemocratic and inimical to growth – we need to start within the home. We need to bring women and family life into the Wealth of Nations.

  1. Victoria Bateman, Markets and growth in early modern Europe, 2012
  2. E.A. Wrigley and Roger Schofield, The Population History of England, 1981
  3. Robert C. Allen, The British Industrial Revolution in Global Perspective, 2009
  4. See, for example, Tine De Moor and Jan Luiten Van Zanden, ‘Girl power’, Economic History Review, 2010
  5. Valerie Bryson, Feminist Political Theory, 2016
  6. Bas Van Basel and Auke Rijpma, ‘How important were formalized charity and social spending before the rise of the welfare state? A long-run analysis of selected western European cases, 1400–1850‘, Economic History Review, 2016