These gains were realized only slowly. Not until the nineteenth century did improvements in transport open the American Midwest to commercial agriculture. These same advances made immigration much cheaper and easier, just in time to tap an unprecedented upswing in European population. But even the smaller movements of the earlier period made possible a substantial North American contribution to the food supply of the colonial plantations and the mother countries; and all the rest was there in prospect. European economic and demographic growth in the eighteenth and nineteenth centuries had its strains and pains; but no continent ever modernized more easily. Much of that was due to the New World—was done on the backs of Amerindians, African slaves, indentured servants.
If Spain has neither money nor gold nor silver, it is because it has these things, and if it is poor, it is because it is rich…. One would think that one wanted to make of this republic a republic of enchanted people living outside the natural order.
—Martin Gonzales de Cellorigo, 16004
Well before the agriculture and manufactures came the loot and booty. The Columbian exchange redistributed wealth as well as flora and fauna—a one-stage transfer from old rich to new. The primary economic significance of the influx of wealth from overseas, however, lay in its uneven effects. Some people got rich only to spend; others to save and invest. The same with countries: some were little richer in the end than at the beginning, while others used their new fortune to grow more money.
Ironically, the nations that had started it all, Spain and Portugal, ended up losers. Here lies one of the great themes of economic history and theory. All models of growth, after all, stress the necessity and power of capital—capital as substitute for labor, easer of credit, balm of hurt projects, redeemer of mistakes, great enterprise’s second chance, chief nourisher of economic development. Given capital, the rest should follow. And thanks to empire, Spain and Portugal had the capital.
Spain particularly. Its new wealth came in raw, as money to invest or spend. Spain chose to spend—on luxury and war. War is the most wasteful of uses: it destroys rather than builds; it knows no reason or constraints; and the inevitable unevenness and shortage of resources lead to ruthless irrationality, which simply increases costs. Spain spent all the more freely because its wealth was unexpected and unearned. It is always easier to throw away windfall wealth.
Who got the money? Short of hoarding, money will be used somehow, go round and come round, for better or worse. Spain wasted much of its wealth on the fields of Italy and Flanders. It went to pay for soldiers and arms, including iron cannon from the English intermittent enemy; for provisions, many of them bought from the Dutch and Flemish intermittent enemy; and for horses and ships.
In the meantime, the wealth of the Indies went less and less to Spanish industry because the Spanish did not have to make things any more; they could buy them.5 In 1545, Spanish manufacturers had a six-year backlog of orders from the New World. At that time, in principle, the overseas empire was required to buy from Spanish producers only. But customers and profits were waiting, and Spanish merchants turned to foreign suppliers while using their own names to cover the transactions. So much for rules. Nor did the American treasure go to Spanish agriculture; Spain could buy food. As one happy Spaniard put it in 1675, the whole world is working for us:
Let London manufacture those fabrics of hers to her heart’s content; Holland her chambrays; Florence her cloth; the Indies their beaver and vicuna; Milan her brocades; Italy and Flanders their linens, so long as our capital can enjoy them. The only thing it proves is that all nations train journeymen for Madrid and that Madrid is the queen of Parliaments, for all the world serves her and she serves nobody.6
Such foolishness is still heard today, in the guise of comparative advantage and neoclassical trade theory. I have heard serious scholars say that the United States need not worry about its huge trade deficit with Japan. After all, the Japanese are giving us useful things in exchange for paper printed with the portrait of George Washington. That sounds good, but it’s bad. Wealth is not so good as work, nor riches so good as earnings. A Moroccan ambassador to Madrid in 1690-91 saw the problem clearly:
…the Spanish nation today possesses the greatest wealth and the largest income of all the Christians. But the love of luxury and the comforts of civilization have overcome them, and you will rarely find one of this nation who engages in trade or travels abroad for commerce as do the other Christian nations such as the Dutch, the English, the French, the Genoese and their like. Similarly, the handicrafts practiced by the lower classes and common people are despised by this nation, which regards itself as superior to the other Christian nations. Most of those who practice these crafts in Spain are Frenchmen [who] flock to Spain to look for work…[and] in a short time make great fortunes.7
Reliance on metics (outsiders) testifies to the inability to mobilize skills or enterprise.
Spain, in other words, became (or stayed) poor because it had too much money. The nations that did the work learned and kept good habits, while seeking new ways to do the job faster and better. The Spanish, on the other hand, indulged their penchant for status, leisure, and enjoyment—what Carlo Cipolla calls “the prevalent hidalgo mentality.” They were not alone. Everywhere in Europe, genteel living was honored and manual labor scorned; in Spain, however, more so, partly because a frontier, combative society is a poor school for patience and hard work, partly because the crafts and tasks of industry and agriculture were long especially associated with despised minorities such as Jews and Muslims. As the chronicler Bernaldez put it, writing of the Jews at the end of the fifteenth century:
…all of them were merchants, dealers, tax farmers; they were stewards of the nobility and skilled shearers (oficiales tondadores), they were tailors, shoemakers, tanners, beltmakers, weavers, grocers, peddlers, silkmakers, smiths, goldsmiths, and other like professions. None of them cultivated the land; none was a farm worker, carpenter, or mason. All of them looked for easy trades and for ways to make a living with little work.
What is accursed is left to pariahs; and what the pariahs do is accursed.8 Better to be poor and unemployed. The poor in Spain played a most important role: they helped the rich buy salvation.9
By the time the great bullion inflow had ended in the mid-seventeenth century, the Spanish crown was deep in debt, with bankruptcies in 1557, 1575, and 1597. The country entered upon a long decline. Reading this story, one might draw a moral: Easy money is bad for you. It represents short-run gain that will be paid for in immediate distortions and later regrets.*
The nations of northern Europe would have agreed. They throve on the opening of the world. They caught fish, tapped and refined whale oil, grew and bought and resold cereals, wove cloth, cast and forged iron, cut timber and mined coal.10 They won their own empires, fortunately not endowed with gold and silver. Looting and pillaging when the opportunity offered, they nonetheless built largely on renewable harvests and continuing industry (including the industry of slaves, but that was a negative) rather than on depletable minerals. They built on work.
Europe’s shift in economic gravity northward obviously transcends the inglorious Spanish fiasco. The great old mercantile and industrial city-states of Italy—Venice, Florence, Genoa—also lost out. Italy had been at the forefront of the medieval commercial revolution and had led the way out of autarky into international trade and division of labor. As late as the sixteenth century, Italy was a major player, splendid in its manufactures, preeminent in the commercial and banking services rendered to Spain and northern Europe. Yet Italy never really seized the opportunities offered by the Great Opening: one does not find Italian ships in the Indian ocean or crossing the Atlantic. Italy was centered in, caught in, the great Inland Sea. Caught also by old structures: guild controls fettered industry, made it hard to adapt to changing tastes. Labor costs stayed high because manufacture was largely confined to urban, corporate workshops employing adult male craftsmen who had done their years of
apprenticeship.11
The advance of North over South attracted notice. In the eighteenth century already, observers commented on the difference in psychological terms. Northerners were said to be dour, dull, and diligent. They worked hard and well but had no time to enjoy life. In contrast, the southerners were seen as easygoing and happy, passionate to the point of needing close watching, and given to leisure rather than labor. This contrast was linked to geography and climate: cloudy vs. sunny skies, cold vs. warmth. Some people even found analogous differences within countries: between Lombards and Neapolitans, Catalans and Castilians, Flemings and the gens du midi, Scots and Kentishmen.
These stereotypes held an ounce of truth and a pound of lazy thinking. It is easy to dismiss them. But that still leaves the question, why do some fall from high estate and others rise? The “decline and fall” of Spain is like that of Rome: it poses the fascinating problem of success vs. failure, and scholars will never get tired of it.
Probably the most provocative explanation is the one offered by the German social scientist Max Weber. Weber, who began as a historian of the ancient world but grew into a wonder of diversified social science, published in 1904-05 one of the most influential and provocative essays ever written: “The Protestant Ethic and the Spirit of Capitalism.” His thesis: that Protestantism—more specifically, its Calvinist branches—promoted the rise of modern capitalism, that is, the industrial capitalism that he knew from his native Germany. Protestantism did this, he said, not by easing or abolishing those aspects of the Roman faith that had deterred or hindered free economic activity (the prohibition of usury, for example); nor by encouraging, let alone inventing, the pursuit of wealth; but by defining and sanctioning an ethic of everyday behavior that conduced to business success.
Calvinistic Protestantism, said Weber, did this initially by affirming the doctrine of predestination. This held that one could not gain salvation by faith or deeds; that question had been decided for everyone from the beginning of time, and nothing could alter one’s fate.
Such a belief could easily have encouraged a fatalistic attitude. If behavior and faith make no difference, why not live it up? Why be good? Because, according to Calvinism, goodness was a plausible sign of election. Anyone could be chosen, but it was only reasonable to suppose that most of those chosen would show by their character and ways the quality of their souls and the nature of their destiny. This implicit reassurance was a powerful incentive to proper thoughts and behavior. As the Englishwoman Elizabeth Walker wrote her grandson in 1689, alluding to one of the less important but more important signs of grace, “All cleanly people are not good, but there are few good people but are cleanly.”12 And while hard belief in predestination did not last more than a generation or two (it is not the kind of dogma that has lasting appeal), it was eventually converted into a secular code of behavior: hard work, honesty, seriousness, the thrifty use of money and time (both lent us by God).* Time is short, “admonished the Puritan divine Richard Baxter (1615-1691), “and work is long.”13
All of these values help business and capital accumulation, but Weber stressed that the good Calvinist did not aim at riches. (He might easily believe, however, that honest riches are a sign of divine favor.) Europe did not have to wait for the Protestant Reformation to find people who wanted to be rich. Weber’s point is that Protestantism produced a new kind of businessman, a different kind of person, one who aimed to live and work a certain way. It was the way that mattered, and riches were at best a by-product.
A good Calvinist would say, that was what was wrong with Spain: easy riches, unearned wealth. Compare the Protestant and Catholic attitudes toward gambling in the early modern period. Both condemned it, but Catholics condemned it because one might (would) lose, and no responsible person would jeopardize his well-being and that of others in that manner. The Protestants, on the other hand, condemned it because one might win, and that would be bad for character. It was only much later that the Protestant ethic degenerated into a set of maxims for material success and smug, smarmy sermons on the virtues of wealth.
The Weber thesis gave rise to all manner of rebuttal. Roman Catholics did not know whether to accept it as praise or denounce it as criticism. Materialist historians rejected the notion that abstractions such as values and attitudes, let alone those inspired by religion, could motivate and shape the mode of production. This refusal was the stronger for Max Weber’s explicit and sacrilegious intention to rebut Marx on this score. To get cart and horse in proper order, some argued that the rise of capitalism had generated Protestantism; or that Protestantism appealed to the kinds of people—tradesmen, craftsmen—whose personal values already led to hard work and business success.14
In an influential study called Religion and the Rise of Capitalism, the English social historian R. H. (“Harry”) Tawney rejected the link between Protestantism and economic growth. The English economy, he said, took off in the sixteenth century only when religious influence diminished, to be replaced by secular attitudes. One thing he did grant to the Puritan-Dissenter ethic: it shielded tradesmen and manufacturers against the slings and arrows of genteel contempt. It gave them a sense of dignity and righteousness, armor in a world of anticommercial prejudices. And so, not yielding to the temptation of a higher leisure, good Calvinists kept at their task from generation to generation, accumulating wealth and experience along the way.15
The same kind of controversy has swirled around the derivative thesis of the sociologist Robert K. Merton, who argued that there was a direct link between Protestantism and the rise of modern science. He was not the first to make this point. In the nineteenth century Alphonse de Candolle, from a Huguenot family of Geneva, counted that of ninety-two foreign members elected to the French Académie des Sciences in the period 1666-1866, some seventy-one were Protestant, sixteen Catholic, and the remaining five Jewish or of indeterminate religious affiliation—this from a population pool outside of France of 107 million Catholics, 68 million Protestants. A similar count of foreign fellows of the Royal Society in London in 1829 and 1869 showed equal numbers of Catholics and Protestants out of a pool in which Catholics outnumbered Protestants by more than three to one.16
Much of this no doubt reflected the greater access of Catholics in Catholic countries to the older liberal professions and the governing bureaucracy, and hence their preference for a different kind of schooling. But much was dictated by the fears of the clerical hierarchy, by their distaste for the findings and paradigms of a science that negated religious doctrine. As the English chemist and Unitarian minister Joseph Priestley put it, the pope, in patronizing science, “was cherishing an enemy in disguise,” for he had “reason to tremble even at an air pump, or an electrical machine.”17
Against all of this, one scholar has categorically asserted that there is no empirical basis for the alleged link;18 that Weber’s data on differential education of Catholics and Protestants in the Germany of the turn of the century (Protestants more inclined to commercial and scientific programs) are badly calculated; that Catholic and non-Calvinist businessmen did as well as Weber’s ideal Calvinist types; that one might as well explain the differences between northern and southern Europe by geography or race; and that Max Weber is like the tailors who clothed the Chinese emperor, and his Protestant connection much ado about nothing.
Indeed, it is fair to say that most historians today would look upon the Weber thesis as implausible and unacceptable: it had its moment and it is gone.
I do not agree. Not on the empirical level, where records show that Protestant merchants and manufacturers played a leading role in trade, banking, and industry.19 In manufacturing centers (fabriques) in France and western Germany, Protestants were typically the employers, Catholics the employed. In Switzerland, the Protestant cantons were the centers of export manufacturing industry (watches, machinery, textiles); the Catholic ones were primarily agricultural. In England, which by the end of the sixteenth century was overwhelmingly Protestant, the Disse
nters (read Calvinists) were disproportionately active and influential in the factories and forges of the nascent Industrial Revolution.
Nor on the theoretical. The heart of the matter lay indeed in the making of a new kind of man—rational, ordered, diligent, productive. These virtues, while not new, were hardly commonplace. Protestantism generalized them among its adherents, who judged one another by conformity to these standards. This is a story in itself, one that Weber did surprisingly little with: the role of group pressure and mutual scrutiny in assuring performance—everybody looking at everyone else and minding one another’s business.
Two special characteristics of the Protestants reflect and confirm this link. The first was stress on instruction and literacy, for girls as well as boys. This was a by-product of Bible reading. Good Protestants were expected to read the holy scriptures for themselves. (By way of contrast, Catholics were catechized but did not have to read, and they were explicitly discouraged from reading the Bible.) The result: greater literacy and a larger pool of candidates for advanced schooling; also greater assurance of continuity of literacy from generation to generation. Literate mothers matter.
The second was the importance accorded to time. Here we have what the sociologist would call unobtrusive evidence: the making and buying of clocks and watches. Even in Catholic areas such as France and Bavaria, most clockmakers were Protestant; and the use of these instruments of time measurement and their diffusion to rural areas was far more advanced in Britain and Holland than in Catholic countries.20 Nothing testifies so much as time sensibility to the “urbanization” of rural society, with all that that implies for rapid diffusion of values and tastes.
The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor Page 21