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Markets before economic growth: the grain market of medieval England

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Abstract

England from 1200 to 1600 was a society caught in apparent technological stasis, typical of the pre-industrial world. Many believe this pre-industrial stagnation was the result of political and cultural constraints, such as those on the operation of markets. Indeed medieval English law outlawed many arbitrage activities in markets. The paper shows using information of grain yields and prices at 227 different locations that the most important of all markets, that for grain, was nevertheless both extensive and relatively efficient as early as 1209. Whatever the rhetoric of medieval law and social thought the real effect of constraints on the operation the grain market seems to have been minimal. England had an elaborate market economy at least 500 years before it had sustained economic growth.

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Notes

  1. Thus, Douglass North in his Nobel Prize lecture noted that “Most societies throughout history got ‘stuck’ in an institutional matrix that did not evolve into the impersonal exchange essential to capturing the productivity gains that came from the specialization and division of labor that have produced the Wealth of Nations.” North (1994, p. 364).

  2. Bridbury (1992, p. 264).

  3. Campbell et al. (1993) gives a nice description of the operation of the market. See pp. 87–106.

  4. Gras (1915, p. 72).

  5. Kowaleski (2003, p. 189).

  6. There is a similar notation in 1347-8. Beveridge MSS., Box P3. Thorold Rogers annotates some of his grain sale listings with “King,” but such annotations are rare, and the reported prices are not much less than others of the same year. See, for example, Rogers (1866, p. 98), Cuxham, 1331-2.

  7. Campbell et al. (1993, pp. 193–198) give transport costs. Water transport costs were even lower, being only about one-tenth of the land transport costs.

  8. See Beveridge (1930), Farmer (1977), Farmer (1991a, b, pp. 499–501).

  9. If grain typically flows from a rural location to urban markets, then its price level will on average be lower than those in the urban markets by the amount of the transport cost.

  10. Note also that there is no sudden rise in prices after harvest as Persson (1996) finds, such a sudden rise being inconsistent with efficient storage. Place fixed effects were used in estimating the monthly prices.

  11. Brunt and Cannon (1999) looking at the price rise in the years 1264–1400 with the Thorold Rogers data use different procedures but derive results that are broadly similar to these.

  12. This result follows since lnP t  = a + b(g + lnhY t−1 + u t−1) + e t , and since lnP t−1 = a + blnY t−1 + e t−1, so that lnY t−1 = (lnP t−1 – a − e t−1)/b, the connection between lnP t and lnP t−1 follows.

  13. There is also a compensating upward bias in the correlation created by the fact that the account year used by Farmer to construct yearly prices does not coincide exactly with the harvest year. Thus, the prices of 1348, for example, include some prices determined by the harvest of 1349 in the last month of the year. This would drive up the autocorrelation by about 0.083.

  14. This was done by including in the regression year trends up to a cubic term.

  15. There were currency devaluations which would affect the autocorrelation of the raw prices, such as in 1351, 1411, and 1464. But by calculating, prices relative to long-term trends should control for long-term movements in currency values.

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Acknowledgments

This paper draws heavily on the work of four great compilers of medieval data—James Thorold Rogers, Lord Beveridge, Jan Titow, and David Farmer—without whom we would be a lot poorer. I thank Bob Allen, Peter Lindert, Deirdre McCloskey, Joel Mokyr, Alan Olmstead, Debra Swenson, Alan Taylor, and Leon Wegge for helpful suggestions. Matt Rafferty and Brian Harris provided able research assistance. Cheryl Avery of the University of Saskatchewan Library Archives was extremely helpful when I visited Saskatchewan to study the papers of the late David Farmer.

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  1. Department of Economics, University of California-Davis, Davis, CA, USA

    Gregory Clark

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Clark, G. Markets before economic growth: the grain market of medieval England. Cliometrica 9, 265–287 (2015). https://doi.org/10.1007/s11698-014-0117-7

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