ÿþ <html> <head><title>Le Secret de l'Occident cité par P. Hoffman en octobre 2006</title></head> <body bgcolor="#FFFFFF"> <table width=100%> <tr><td> <div align="left"> <b><a href=../dcfr/dc288hoffman23oct06fr.htm>French</a></b> </div> <p> </td><td> <div align="right"> <b><a href=../index.htm>Home</a></b> </div> <p> </td></tr> <p> <tr><td width=60% bgcolor=#EEEEFF> <div align=left> <i>The Secret of the West</i> (<i>Le Secret de l'Occident</i>) quoted by Philipp Hoffman in California in an on-line paper about the causes of the Western miracle (<a href=#dc01>shortcut 1</a>, <a href=#dc02>shortcut 2</a>). <a href=dc289hoffman23oct06.pdf>PDF-version of article</a>. Unfortunately, <nobr>P. Hoffman</nobr> misquotes this book, being mistaken about its philosophy. Besides, he does not realize that his own idea, and much more, is already encompassed in <a href=dc200lso.htm><i>The Secret of the West</i></a>. <br> <font size=-1> (Philipp T. Hoffman: "Why Is It That Europeans Ended Up Conquering the Rest of the Globe? Prices, the Military Revolution, and Western Europe s Comparative Advantage in Violence", 23 October 2006) </font> <br> <br> Safety copy: <nobr>August 2007</nobr>. <nobr><b> <a href=http://law.usc.edu/academics/assets/docs/hoffman.pdf> Source</a></b></nobr> </div> </td><td valign=top nowrap> <div align="right"> <b><a href=dc100.htm#lso>The Secret of the West</a></b> <br> <b><a href=dc001.htm>Cosandey</a></b> </div> </td></tr> </table> <p> <hr> <a name=start></a> <hr> <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"> <HTML> <HEAD> <TITLE>Why Is It That Europeans Ended Up Conquering the Rest of the Globe? Prices, the Military Revolution, and Western Europe s Comparative Advantage in Violence</TITLE> <META http-equiv="Content-Type" content="text/html; charset=UTF-8"> <META name="author" content="Philip Hoffman"> <META name="date" content="2007-04-02T08:37:37+00:00"> </HEAD> <BODY vlink="blue" link="blue"> <!-- Page 1 --> <a name="1"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- .ft0{font-size:16px;font-family:Times;color:#000000;} .ft1{font-size:16px;line-height:20px;font-family:Times;color:#000000;} --> </STYLE> <DIV style="position:absolute;top:1044;left:108"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1045;left:594"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1047;left:108"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1048;left:594"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1050;left:108"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1051;left:594"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1053;left:108"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1054;left:594"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1055;left:108"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1057;left:594"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1058;left:108"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1060;left:594"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1061;left:108"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1062;left:594"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1064;left:108"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1059;left:455"><nobr><span class="ft0">1</span></nobr></DIV> <DIV style="position:absolute;top:109;left:108"><nobr><span class="ft1">Why Is It That Europeans Ended Up Conquering the Rest of the Globe? <br>Prices, the Military Revolution, and Western Europe s Comparative Advantage in Violence </span></nobr></DIV> <DIV style="position:absolute;top:150;left:459"><nobr><span class="ft1"> <br> </span></nobr></DIV> <DIV style="position:absolute;top:191;left:393"><nobr><span class="ft0">Philip T. Hoffman </span></nobr></DIV> <DIV style="position:absolute;top:212;left:385"><nobr><span class="ft0">pth@hss.caltech.edu </span></nobr></DIV> <DIV style="position:absolute;top:233;left:336"><nobr><span class="ft0">California Institute of Technology </span></nobr></DIV> <DIV style="position:absolute;top:253;left:317"><nobr><span class="ft0">HSS 228-77 Pasadena, CA 91125 USA </span></nobr></DIV> <DIV style="position:absolute;top:274;left:396"><nobr><span class="ft0">October 23, 2006 </span></nobr></DIV> <DIV style="position:absolute;top:295;left:459"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:316;left:428"><nobr><span class="ft0">Abstract </span></nobr></DIV> <DIV style="position:absolute;top:336;left:459"><nobr><span class="ft1"> <br> </span></nobr></DIV> <DIV style="position:absolute;top:378;left:108"><nobr><span class="ft1">Why did Europeans conquer the rest of the world? The likely cause was a tournament among <br>western European rulers that fostered military innovation. Price data from England, France, and <br>Germany support such an argument, as do physical measures of military productivity; they show <br>that the military sector in western Europe was experiencing rapid and sustained technical change <br>well before the Industrial Revolution. The price data shed new light on this military revolution <br>and its economic consequences. Comparisons with the rest the world explain why it was <br>peculiar to Europe and why it gave western Europe a comparative advantage in violence.</span></nobr></DIV> </DIV> <!-- Page 2 --> <a name="2"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- .ft2{font-size:9px;font-family:Times;color:#000000;} --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:455"><nobr><span class="ft0">2</span></nobr></DIV> <DIV style="position:absolute;top:109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <a name=dc01></a> <DIV style="position:absolute;top:109;left:189"><nobr><span class="ft0">In recent years, historians, economists, and other social scientists have </span></nobr></DIV> <DIV style="position:absolute;top:129;left:135"><nobr><span class="ft1">energetically debated when Western Europe first forged ahead of other parts of the <br>world in particular, advanced parts of Asia in the race toward economic development. <br>Was it only after 1800, with the Industrial Revolution well underway, that Western <br>European per-capita incomes, labor productivity, or technology diverged (Wong 1997; <br>Pomeranz 2000; Goldstone forthcoming)? Or was it earlier, before the Industrial <br>Revolution (van Zanden 2003; Allen 2005; Broadberry and Gupta 2005)? And what was <br>the cause of the divergence? Was it beneficial institutions, which encouraged investment <br>and the accumulation of human and physical capital (North and Thomas 1973; North and <br>Weingast 1989; Acemoglu, Johnson et al. 2002)? The Scientific Revolution and the <br>Enlightenment, which spread useful knowledge and political reform (Jacob 1997; Mokyr <br>2002; <font style="color:black;background-color:99ff99">Cosandey</font> 1997)? Or was it simply an accident that the Industrial Revolution <br>started in Western Europe (Clark 2003)? <br> </span></nobr></DIV> <DIV style="position:absolute;top:378;left:189"><nobr><span class="ft0">In this debate, one area in which Western Europe possessed an undeniable </span></nobr></DIV> <DIV style="position:absolute;top:398;left:135"><nobr><span class="ft1">comparative advantage well before 1800 seems to have been overlooked namely, <br>violence. The states of Western Europe were simply better at making and using artillery, <br>firearms, fortifications, and armed ships than other advanced parts of the world and they <br>had this advantage long before 1800. By 1800, Europeans had conquered some 35 <br>percent of the globe, and they controlled lucrative trade routes as far away as Asia <br>(Parker 1996, 5). Some of the land they subjugated had come into their hands because of <br>new diseases that they introduced into vulnerable populations, and in these instances in <br>the Americas in particular their advantage was not military, but biological (Diamond <br>1997). But other inhabitants of densely populated parts of Eurasia would have had the <br>same biological edge. Why was it therefore the Western Europeans who took over the <br>Americas, and not the Chinese or the Japanese? <br> </span></nobr></DIV> <DIV style="position:absolute;top:626;left:189"><nobr><span class="ft0">The history of conquest is not the only evidence for Western Europe s military </span></nobr></DIV> <DIV style="position:absolute;top:647;left:135"><nobr><span class="ft1">advantage before 1800. States elsewhere China, Japan, and the Ottoman Empire <br>certainly possessed firearms or ships equipped with artillery, but by the late seventeenth <br>century, if not beforehand, nearly all of them had fallen behind in using this technology. <br>The case of the Ottoman Empire is illustrative. There the military gap may reach back as <br>far as 1572, when Venetian cannon founders judged that guns captured during the naval <br>battle at Lepanto were simply not worth reusing. The Ottoman cannons had to be melted <br>down and new metal had to be added to the mixture because  the material is of such <br>poor quality. (Mallett and Hale 1984, 400).</span></nobr></DIV> <DIV style="position:absolute;top:789;left:454"><nobr><span class="ft2"> </span></nobr></DIV> <DIV style="position:absolute;top:792;left:456"><nobr><span class="ft0"> At a time when the high cost of </span></nobr></DIV> <DIV style="position:absolute;top:812;left:135"><nobr><span class="ft1">manufactured goods meant everything was salvaged even clothing from fallen <br>comrades that amounts to strong evidence from revealed preference about how much <br>better Western European weapons had become. The history of trade and of the migration <br>of military experts points in the same direction. Although the Ottomans could threaten <br>Vienna as late as 1683, they were importing weapons from western Europe and often <br>relied on the expertise of European military specialists.</span></nobr></DIV> <DIV style="position:absolute;top:913;left:532"><nobr><span class="ft2">1</span></nobr></DIV> <DIV style="position:absolute;top:916;left:538"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:936;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:936;left:189"><nobr><span class="ft0">The Ottoman Empire was hardly exceptional. From the Middle East to East Asia, </span></nobr></DIV> <DIV style="position:absolute;top:957;left:135"><nobr><span class="ft1">experts from Western Europe were hired in Asia to provide needed help with gun <br>making, tactics, and military organization. They ranged from renegade European gun <br>founders in the sixteenth century to Napoleonic officers the early 1800s. In seventeenth-<br>century China, even Jesuit missionaries were pressed into service to help the Chinese <br>Emperor make better cannons. The evidence for Western Europe s military prowess is so </span></nobr></DIV> </DIV> <!-- Page 3 --> <a name="3"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:455"><nobr><span class="ft0">3</span></nobr></DIV> <DIV style="position:absolute;top:109;left:135"><nobr><span class="ft1">strong that it has even convinced some of the historians who argue against any <br>divergence between Western Europe and advanced areas of China before 1800. <br>Although they would argue that Western Europe was not wealthier or more developed <br>than rich areas of China, they would acknowledge that its military technology was more <br>advanced (Wong 1997, 89-90; Pomeranz 2000, 199-200). <br> </span></nobr></DIV> <DIV style="position:absolute;top:212;left:189"><nobr><span class="ft0">The evidence is thus fairly clear, but it is nonetheless surprising that western </span></nobr></DIV> <DIV style="position:absolute;top:233;left:135"><nobr><span class="ft1">Europe had come to dominate this technology of gunpowder weapons so early. Firearms <br>and gunpowder, after all, had originated in China and spread throughout Eurasia. States <br>outside Western Europe possessed the revolutionary weapons and did become, at least for <br>a while, proficient at manufacturing or exploiting the new military technology. The <br>Ottomans, for instance, made high quality artillery as late as the 1500s. The Japanese <br>independently discovered, at about the same time as Western Europeans, the key tactical <br>innovation (volley fire) that allowed infantry soldiers with slow loading muskets to <br>maintain a nearly continuous round of fire.</span></nobr></DIV> <DIV style="position:absolute;top:375;left:443"><nobr><span class="ft2">2</span></nobr></DIV> <DIV style="position:absolute;top:378;left:449"><nobr><span class="ft0"> Yet by the late seventeenth century, if not </span></nobr></DIV> <DIV style="position:absolute;top:398;left:135"><nobr><span class="ft1">before, Chinese, Japanese, and Ottoman military technology and tactics all lagged far <br>behind what one found in western Europe. <br> </span></nobr></DIV> <DIV style="position:absolute;top:440;left:189"><nobr><span class="ft0">Why did these other powerful states fall behind? Apart from Carlo Cipolla s </span></nobr></DIV> <DIV style="position:absolute;top:460;left:135"><nobr><span class="ft1">(1966) pioneering effort some 40 years ago, economist historians (and social scientists in <br>general) have not paid much attention to this question. Western Europe s advances in <br>military tactics and technology have certainly attracted a number of talented military <br>historians and historians of technology, but their work ignores the economics, even <br>though they acknowledge that the cost of weapons fell.</span></nobr></DIV> <DIV style="position:absolute;top:540;left:531"><nobr><span class="ft2">4</span></nobr></DIV> <DIV style="position:absolute;top:543;left:537"><nobr><span class="ft0"> What happens if we examine the </span></nobr></DIV> <DIV style="position:absolute;top:564;left:135"><nobr><span class="ft1">political economy of the military revolution and look in particular at prices of military <br>goods? What do they tell us about western Europe s military growing military strength? <br> </span></nobr></DIV> <DIV style="position:absolute;top:605;left:189"><nobr><span class="ft0">The price data, it turns out, offer some novel insights into the debates military and </span></nobr></DIV> <DIV style="position:absolute;top:626;left:135"><nobr><span class="ft1">technological historians have had over the nature of the military revolution. They also <br>carry the startling implication that Europe s military sector could sustain technical change <br>for centuries a feat virtually unknown elsewhere in pre-industrial economies. But their <br>greatest signifance lies with what they suggest is the underlying cause of Western <br>Europe s comparative advantage in violence: a tournament among western European <br>rulers that fostered military innovation. Politics made that tournament peculiar to <br>western Europe and led the continent to dominate the technology of artillery, firearms, <br>fortifications, and gunships. <br> <br>The Evidence from Prices <br> <br> </span></nobr></DIV> <DIV style="position:absolute;top:854;left:189"><nobr><span class="ft0">Suppose that we confine ourselves to examining the cost of producing the new </span></nobr></DIV> <DIV style="position:absolute;top:874;left:135"><nobr><span class="ft1">weapons that played a key role in military revolution artillery, handguns, and <br>gunpowder. The question would be whether the cost curves for producing these military <br>goods are declining, once we take into account changes in other prices. If the cost curves <br>are shifting down, then the production functions for the weapons are moving out, and the <br>firms producing them are undergoing technical change. <br> </span></nobr></DIV> <DIV style="position:absolute;top:978;left:189"><nobr><span class="ft0">This sort of exercise certainly has its limits and is probably biased against finding </span></nobr></DIV> <DIV style="position:absolute;top:999;left:135"><nobr><span class="ft1">any technical change. To begin with, it likely to underestimate the magnitude of the <br>military revolution. Ideally, we should be measuring the cost of attaining a given level of <br>military effectiveness, but we are instead simply gauging the cost of producing certain </span></nobr></DIV> </DIV> <!-- Page 4 --> <a name="4"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- .ft3{font-size:16px;font-family:Times;color:#000000;} .ft4{font-size:16px;line-height:20px;font-family:Times;color:#000000;} --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:455"><nobr><span class="ft0">4</span></nobr></DIV> <DIV style="position:absolute;top:109;left:135"><nobr><span class="ft1">military products, and only doing that once the products are available for sale in <br>sufficient numbers to leave a historical record. Restricting our attention to the products <br>leaves out tactical innovations, better training, and improvements in provisioning armies <br>and navies and in raising money to pay for military operations. And by omitting <br>advances in ship construction, seaborn strategy, and maritime forces ability to fight <br>around the globe and in bad weather, it glosses over most of naval warfare, where <br>western Europe s comparative advantage was probably greatest. Similarly, waiting until <br>prices appear in the historical records is likely to omit the initial drop in the cost of <br>producing the weapons right after they were first introduced but before sales and cost <br>estimates left much of trace in the archives. <br> </span></nobr></DIV> <DIV style="position:absolute;top:316;left:189"><nobr><span class="ft0">In an ideal world, we could put together a long, homogenous series of prices for </span></nobr></DIV> <DIV style="position:absolute;top:336;left:135"><nobr><span class="ft1">artillery, handguns, and gunpowder in countries across the world. Unfortunately, we are <br>not at that stage yet, in large part because prices for military goods guns in particular are <br>hard to come by.</span></nobr></DIV> <DIV style="position:absolute;top:375;left:256"><nobr><span class="ft2">5</span></nobr></DIV> <DIV style="position:absolute;top:378;left:262"><nobr><span class="ft0"> For the moment at least, we have to make do with somewhat </span></nobr></DIV> <DIV style="position:absolute;top:398;left:135"><nobr><span class="ft1">fragmentary price data from several western European countries only in particular, <br>England, France, and (for a smaller number of observations) Germany. <br> </span></nobr></DIV> <DIV style="position:absolute;top:440;left:189"><nobr><span class="ft0">What then do the price data for artillery, handguns, and gunpowder from these </span></nobr></DIV> <DIV style="position:absolute;top:460;left:135"><nobr><span class="ft1">countries tell us? Let us begin by assuming that each of these goods is each produced by <br>cost minimizing firms that are small relative to the size of the market they sell in and that <br>entry into these product markets is open. Let us also assume that markets for the factors <br>of production are competitive and that the firms have U-shaped short run average cost <br>curves.</span></nobr></DIV> <DIV style="position:absolute;top:540;left:187"><nobr><span class="ft2">6</span></nobr></DIV> <DIV style="position:absolute;top:543;left:193"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:564;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:564;left:189"><nobr><span class="ft0">These are not unreasonable assumptions for England, France, and Germany. </span></nobr></DIV> <DIV style="position:absolute;top:585;left:135"><nobr><span class="ft1">Factor markets were competitive, and weapons production in these countries was, for the <br>most part, in the hands of a large number of small scale contractors and independent <br>craftsmen. Furthermore, entry into the weapons business did seem to be open, at least in <br>the long run. Craftsmen and contractors moved their production from city to city and <br>even migrated from country to country. While there were some signs of fleeting <br>collusion or high prices in England and France when their rulers wanted to nurture the <br>native arms industry, they seem to have been temporary, because major weapons buyers <br>(this was true in particular of governments) would go elsewhere if they thought prices <br>were high.</span></nobr></DIV> <DIV style="position:absolute;top:747;left:211"><nobr><span class="ft2">7</span></nobr></DIV> <DIV style="position:absolute;top:750;left:217"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:771;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:771;left:189"><nobr><span class="ft0">Under these assumptions, it will be difficult for weapons producers to collude, </span></nobr></DIV> <DIV style="position:absolute;top:792;left:135"><nobr><span class="ft1">and free entry will drive them to produce at minimum average cost. The long run <br>industry supply curve will then be flat, and the cost of producing a quantity <i>y</i> of our <br>military good at time <i>t</i> will be turn out to be <i>y c(w, t)</i>, where <i>c(w, t) </i>is the minimum <br>average cost of producing the good and <i>w</i> is the vector of factor prices. The function <i>c(w, <br>t)</i>, which<i> </i>is also a firm s marginal cost, will be independent of <i>y</i> but will depend on time <br>to allow for the possibility of technical change. If there is technical change, then <i>c(w, t)</i> <br>will be a decreasing function of <i>t</i> for any given <i>w, </i>and the partial derivative of its <br>logarithm will give the rate of technical change. (For technical details here and in what <br>follows, see the appendix.) <br> </span></nobr></DIV> <DIV style="position:absolute;top:978;left:189"><nobr><span class="ft0">Because collusion will be difficult, the price <i>p</i> of the good produced will be the </span></nobr></DIV> <DIV style="position:absolute;top:999;left:135"><nobr><span class="ft1">marginal cost, or <i>c(w, t). </i>Provided that all of our assumptions held, we could therefore <br>test for technical change by regressing the price of each of our military goods on <i>w</i> and <i>t</i>. <br>All we would have to do is to choose a suitable functional form for <i>c(w, t)</i>. Ideally, we </span></nobr></DIV> </DIV> <!-- Page 5 --> <a name="5"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- .ft5{font-size:18px;font-family:Times;color:#000000;} .ft6{font-size:18px;font-family:Times;color:#000000;} .ft7{font-size:11px;font-family:Times;color:#000000;} .ft8{font-size:9px;font-family:Times;color:#000000;} --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:455"><nobr><span class="ft0">5</span></nobr></DIV> <DIV style="position:absolute;top:109;left:135"><nobr><span class="ft1">might want to use some flexible functional form, but lack of enough price observations <br>would probably limit us to deriving it from a Cobb-Douglas cost function, which would <br>at least be a first order approximation to <i>c(w, t).</i> The Cobb-Douglas technology will have <br>to constant returns to scale since the marginal cost is independent of output. If we adopt <br>the Cobb-Douglas functional form, and if the technology changes at a constant rate and is <br>cost neutral, then <br> </span></nobr></DIV> <DIV style="position:absolute;top:254;left:151"><nobr><span class="ft5"> <i>ln (p) = ln (c(w, t)) = a - bt + s</i></span></nobr></DIV> <DIV style="position:absolute;top:263;left:434"><nobr><span class="ft7"><i>0 </i></span></nobr></DIV> <DIV style="position:absolute;top:254;left:448"><nobr><span class="ft6"><i>ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:263;left:490"><nobr><span class="ft7"><i>0)</i></span></nobr></DIV> <DIV style="position:absolute;top:254;left:501"><nobr><span class="ft6"><i> + . . . + s</i></span></nobr></DIV> <DIV style="position:absolute;top:263;left:596"><nobr><span class="ft7"><i>n </i></span></nobr></DIV> <DIV style="position:absolute;top:254;left:606"><nobr><span class="ft6"><i> ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:263;left:654"><nobr><span class="ft7"><i>n)</i></span></nobr></DIV> <DIV style="position:absolute;top:254;left:665"><nobr><span class="ft6"><i> + u (1)</i></span></nobr></DIV> <DIV style="position:absolute;top:256;left:767"><nobr><span class="ft3"><i> </i></span></nobr></DIV> <DIV style="position:absolute;top:278;left:459"><nobr><span class="ft3"><i> </i></span></nobr></DIV> <DIV style="position:absolute;top:298;left:135"><nobr><span class="ft0">where <i>a</i> is a constant, <i>b &gt; 0</i> is the rate of technical change, <i>u</i> is an error term, <i>s</i></span></nobr></DIV> <DIV style="position:absolute;top:306;left:702"><nobr><span class="ft8"><i>i</i></span></nobr></DIV> <DIV style="position:absolute;top:298;left:705"><nobr><span class="ft3"><i> </i>and <i>w</i></span></nobr></DIV> <DIV style="position:absolute;top:306;left:752"><nobr><span class="ft8"><i>i</i></span></nobr></DIV> <DIV style="position:absolute;top:298;left:756"><nobr><span class="ft0"> are </span></nobr></DIV> <DIV style="position:absolute;top:319;left:135"><nobr><span class="ft1">the factor share and price of the i-th factor of production, and the factor shares have to <br>add up to one. Equation 1 is equivalent to assuming that the good s production function <br>is Cobb-Douglas with a multiplicative constant that grows at rate <i>b</i>. Because the factor <br>shares add up to one, we can single out one of the factor prices (say <i>w</i></span></nobr></DIV> <DIV style="position:absolute;top:389;left:638"><nobr><span class="ft8"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:381;left:644"><nobr><span class="ft0">) and actually </span></nobr></DIV> <DIV style="position:absolute;top:402;left:135"><nobr><span class="ft1">estimate the following equation: <br> </span></nobr></DIV> <DIV style="position:absolute;top:422;left:189"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:446;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:443;left:189"><nobr><span class="ft6"><i>ln (p/w</i></span></nobr></DIV> <DIV style="position:absolute;top:453;left:248"><nobr><span class="ft7"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:443;left:255"><nobr><span class="ft6"><i>) = a - bt + s</i></span></nobr></DIV> <DIV style="position:absolute;top:453;left:374"><nobr><span class="ft7"><i>1 </i></span></nobr></DIV> <DIV style="position:absolute;top:443;left:388"><nobr><span class="ft6"><i>ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:453;left:430"><nobr><span class="ft7"><i>1 </i></span></nobr></DIV> <DIV style="position:absolute;top:443;left:440"><nobr><span class="ft6"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:453;left:460"><nobr><span class="ft7"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:443;left:467"><nobr><span class="ft6"><i>) + . . . + s</i></span></nobr></DIV> <DIV style="position:absolute;top:453;left:568"><nobr><span class="ft7"><i>n </i></span></nobr></DIV> <DIV style="position:absolute;top:443;left:578"><nobr><span class="ft6"><i> ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:453;left:626"><nobr><span class="ft7"><i>n </i></span></nobr></DIV> <DIV style="position:absolute;top:443;left:636"><nobr><span class="ft6"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:453;left:656"><nobr><span class="ft7"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:443;left:663"><nobr><span class="ft6"><i>) + u (2)</i></span></nobr></DIV> <DIV style="position:absolute;top:446;left:771"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:467;left:135"><nobr><span class="ft1"> <br>where the only restrictions on the <i>s</i></span></nobr></DIV> <DIV style="position:absolute;top:496;left:387"><nobr><span class="ft8"><i>i</i></span></nobr></DIV> <DIV style="position:absolute;top:488;left:390"><nobr><span class="ft0"> now are that they and their sum lie between zero and </span></nobr></DIV> <DIV style="position:absolute;top:509;left:135"><nobr><span class="ft1">one. <br> </span></nobr></DIV> <DIV style="position:absolute;top:529;left:189"><nobr><span class="ft0">Unfortunately, we do not yet have enough data to do that, although it may become </span></nobr></DIV> <DIV style="position:absolute;top:550;left:135"><nobr><span class="ft0">possible in the future as more prices become available.</span></nobr></DIV> <DIV style="position:absolute;top:547;left:529"><nobr><span class="ft2">8</span></nobr></DIV> <DIV style="position:absolute;top:550;left:535"><nobr><span class="ft0"> But if we let <i>w</i></span></nobr></DIV> <DIV style="position:absolute;top:558;left:655"><nobr><span class="ft8"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:550;left:661"><nobr><span class="ft0"> be the price of </span></nobr></DIV> <DIV style="position:absolute;top:571;left:135"><nobr><span class="ft1">skilled labor (an essential input into weapons production), then we can at least calculate <br><i>p/w</i></span></nobr></DIV> <DIV style="position:absolute;top:599;left:161"><nobr><span class="ft8"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:591;left:167"><nobr><span class="ft0"> and compare how it changes with the variation in the relative prices <i>w</i></span></nobr></DIV> <DIV style="position:absolute;top:599;left:675"><nobr><span class="ft8"><i>1</i></span></nobr></DIV> <DIV style="position:absolute;top:591;left:681"><nobr><span class="ft3"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:599;left:698"><nobr><span class="ft8"><i>0</i> </span></nobr></DIV> <DIV style="position:absolute;top:591;left:707"><nobr><span class="ft0">through </span></nobr></DIV> <DIV style="position:absolute;top:612;left:135"><nobr><span class="ft3"><i>w</i></span></nobr></DIV> <DIV style="position:absolute;top:620;left:147"><nobr><span class="ft8"><i>n</i></span></nobr></DIV> <DIV style="position:absolute;top:612;left:153"><nobr><span class="ft3"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:620;left:170"><nobr><span class="ft8"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:612;left:176"><nobr><span class="ft0">. If <i>p/w</i></span></nobr></DIV> <DIV style="position:absolute;top:620;left:236"><nobr><span class="ft8"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:612;left:242"><nobr><span class="ft0">, the relative price of military goods relative to skilled labor, falls more </span></nobr></DIV> <DIV style="position:absolute;top:633;left:135"><nobr><span class="ft1">rapidly than the relative prices of the other factors of production, then we have evidence <br>for technical change in the military sector, and we can estimate how large the rate of <br>technical change must have been. <br> </span></nobr></DIV> <DIV style="position:absolute;top:695;left:189"><nobr><span class="ft0">If Figures 1 through 5 can be trusted, the price of military goods seems to have </span></nobr></DIV> <DIV style="position:absolute;top:716;left:135"><nobr><span class="ft1">fallen relative to the cost of skilled labor and relative to the cost of major factors of <br>production used in producing weapons in both England and France. Prices dropped for <br>artillery, muskets, and pistols, and they did so as early as late Middle Ages. Of course, <br>one might want to add a rental price of capital to the figures, but if we make reasonable <br>guess at depreciation and suppose that the sales price of capital goods was proportional to <br>skilled wages, then the rental price of capital declines only slightly in the figures, and if <br>the capital is building space, its rental price may have actually risen sharply, at least in <br>some locations (Figures 6 and 7). What the figures suggest, therefore, is that the military <br>sector of the economy witnessed sustained technical change over a long period of time <br>before the Industrial Revolution. <br> </span></nobr></DIV> <DIV style="position:absolute;top:923;left:189"><nobr><span class="ft0">We can get a sense of how large the technical change must have been if we take </span></nobr></DIV> <DIV style="position:absolute;top:943;left:135"><nobr><span class="ft1">our earliest and latest price observations for each military good and use equation (2) to <br>estimate an upper bound for how much of the change in the price can be accounted for by <br>shifts in the costs of the factors of production. We know how much <i>ln(p/w</i></span></nobr></DIV> <DIV style="position:absolute;top:992;left:674"><nobr><span class="ft8"><i>o</i></span></nobr></DIV> <DIV style="position:absolute;top:985;left:680"><nobr><span class="ft3"><i>)</i> changed </span></nobr></DIV> <DIV style="position:absolute;top:1005;left:135"><nobr><span class="ft0">between the first and last observation, and we know how much the terms <i>ln(w</i></span></nobr></DIV> <DIV style="position:absolute;top:1013;left:696"><nobr><span class="ft8"><i>i</i></span></nobr></DIV> <DIV style="position:absolute;top:1005;left:699"><nobr><span class="ft3"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:1013;left:716"><nobr><span class="ft8"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:1005;left:722"><nobr><span class="ft3"><i>)</i> </span></nobr></DIV> <DIV style="position:absolute;top:1026;left:135"><nobr><span class="ft1">changed too, at least for the factors of production listed in Table 1. Our coefficient <i>b</i> will <br>therefore equal </span></nobr></DIV> </DIV> <!-- Page 6 --> <a name="6"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- .ft9{font-size:16px;line-height:23px;font-family:Times;color:#000000;} --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:455"><nobr><span class="ft0">6</span></nobr></DIV> <DIV style="position:absolute;top:111;left:191"><nobr><span class="ft3"><i>( ”</i></span></nobr></DIV> <DIV style="position:absolute;top:109;left:216"><nobr><span class="ft6"><i>ln (p/w</i></span></nobr></DIV> <DIV style="position:absolute;top:118;left:275"><nobr><span class="ft7"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:109;left:282"><nobr><span class="ft6"><i>) + s</i></span></nobr></DIV> <DIV style="position:absolute;top:118;left:332"><nobr><span class="ft7"><i>1 </i></span></nobr></DIV> <DIV style="position:absolute;top:111;left:343"><nobr><span class="ft3"><i>”</i></span></nobr></DIV> <DIV style="position:absolute;top:118;left:353"><nobr><span class="ft7"><i> </i></span></nobr></DIV> <DIV style="position:absolute;top:109;left:357"><nobr><span class="ft6"><i>ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:118;left:399"><nobr><span class="ft7"><i>1 </i></span></nobr></DIV> <DIV style="position:absolute;top:109;left:409"><nobr><span class="ft6"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:118;left:429"><nobr><span class="ft7"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:109;left:436"><nobr><span class="ft6"><i>) + . . . + s</i></span></nobr></DIV> <DIV style="position:absolute;top:118;left:537"><nobr><span class="ft7"><i>n </i></span></nobr></DIV> <DIV style="position:absolute;top:109;left:547"><nobr><span class="ft6"><i> </i></span></nobr></DIV> <DIV style="position:absolute;top:111;left:553"><nobr><span class="ft3"><i>”</i></span></nobr></DIV> <DIV style="position:absolute;top:109;left:563"><nobr><span class="ft6"><i>ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:118;left:606"><nobr><span class="ft7"><i>n </i></span></nobr></DIV> <DIV style="position:absolute;top:109;left:616"><nobr><span class="ft6"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:118;left:636"><nobr><span class="ft7"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:109;left:642"><nobr><span class="ft6"><i>) + </i></span></nobr></DIV> <DIV style="position:absolute;top:111;left:679"><nobr><span class="ft3"><i>”</i></span></nobr></DIV> <DIV style="position:absolute;top:109;left:690"><nobr><span class="ft6"><i>u</i></span></nobr></DIV> <DIV style="position:absolute;top:111;left:700"><nobr><span class="ft3"><i>)/”t</i> </span></nobr></DIV> <DIV style="position:absolute;top:133;left:135"><nobr><span class="ft1">where <i>”</i> denotes the difference in each term between the initial and final period. This <br>expression will be greater than or equal to </span></nobr></DIV> <DIV style="position:absolute;top:177;left:270"><nobr><span class="ft3"><i>( ”</i></span></nobr></DIV> <DIV style="position:absolute;top:174;left:296"><nobr><span class="ft6"><i>ln (p/w</i></span></nobr></DIV> <DIV style="position:absolute;top:184;left:355"><nobr><span class="ft7"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:174;left:362"><nobr><span class="ft6"><i>) + (1  s</i></span></nobr></DIV> <DIV style="position:absolute;top:184;left:450"><nobr><span class="ft7"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:174;left:457"><nobr><span class="ft6"><i>)</i></span></nobr></DIV> <DIV style="position:absolute;top:184;left:464"><nobr><span class="ft7"><i> </i></span></nobr></DIV> <DIV style="position:absolute;top:177;left:468"><nobr><span class="ft3"><i>”</i></span></nobr></DIV> <DIV style="position:absolute;top:184;left:478"><nobr><span class="ft7"><i> </i></span></nobr></DIV> <DIV style="position:absolute;top:174;left:482"><nobr><span class="ft6"><i>ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:184;left:524"><nobr><span class="ft7"><i>i </i></span></nobr></DIV> <DIV style="position:absolute;top:174;left:531"><nobr><span class="ft6"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:184;left:551"><nobr><span class="ft7"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:174;left:558"><nobr><span class="ft6"><i>) + </i></span></nobr></DIV> <DIV style="position:absolute;top:177;left:600"><nobr><span class="ft3"><i>”</i></span></nobr></DIV> <DIV style="position:absolute;top:174;left:610"><nobr><span class="ft6"><i>u</i></span></nobr></DIV> <DIV style="position:absolute;top:177;left:621"><nobr><span class="ft3"><i>)/”t</i> </span></nobr></DIV> <DIV style="position:absolute;top:201;left:135"><nobr><span class="ft0">where <i>s</i></span></nobr></DIV> <DIV style="position:absolute;top:209;left:191"><nobr><span class="ft8"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:201;left:197"><nobr><span class="ft0"> is the factor share of labor and <i>”</i></span></nobr></DIV> <DIV style="position:absolute;top:199;left:435"><nobr><span class="ft6"><i> ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:208;left:483"><nobr><span class="ft7"><i>i </i></span></nobr></DIV> <DIV style="position:absolute;top:199;left:490"><nobr><span class="ft6"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:208;left:510"><nobr><span class="ft7"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:199;left:517"><nobr><span class="ft6"><i>)</i></span></nobr></DIV> <DIV style="position:absolute;top:201;left:524"><nobr><span class="ft0"> is the smallest of the terms <i>”</i></span></nobr></DIV> <DIV style="position:absolute;top:199;left:736"><nobr><span class="ft6"><i> ln </i></span></nobr></DIV> <DIV style="position:absolute;top:223;left:135"><nobr><span class="ft6"><i>(w</i></span></nobr></DIV> <DIV style="position:absolute;top:232;left:156"><nobr><span class="ft7"><i>1 </i></span></nobr></DIV> <DIV style="position:absolute;top:223;left:166"><nobr><span class="ft6"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:232;left:186"><nobr><span class="ft7"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:223;left:193"><nobr><span class="ft6"><i>)</i></span></nobr></DIV> <DIV style="position:absolute;top:225;left:200"><nobr><span class="ft0">, . . . , <i>”</i></span></nobr></DIV> <DIV style="position:absolute;top:223;left:255"><nobr><span class="ft6"><i> ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:232;left:303"><nobr><span class="ft7"><i>n </i></span></nobr></DIV> <DIV style="position:absolute;top:223;left:313"><nobr><span class="ft6"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:232;left:333"><nobr><span class="ft7"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:223;left:340"><nobr><span class="ft6"><i>)</i></span></nobr></DIV> <DIV style="position:absolute;top:225;left:347"><nobr><span class="ft0">. If we take expectations (to make the <i>”u</i> disappear) and </span></nobr></DIV> <DIV style="position:absolute;top:246;left:135"><nobr><span class="ft1">assume that the changes in the prices of the factors of production are all at least as large <br>as smallest one we can derive from Table 1, then we can calculate a lower bound for the <br>expected value of <i>b </i>simply by guessing at <i>s</i></span></nobr></DIV> <DIV style="position:absolute;top:296;left:448"><nobr><span class="ft8"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:288;left:454"><nobr><span class="ft0">. </span></nobr></DIV> <DIV style="position:absolute;top:309;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:309;left:189"><nobr><span class="ft0">If we perform this calculation with a labor share of 0.5 (other reasonable labor </span></nobr></DIV> <DIV style="position:absolute;top:329;left:135"><nobr><span class="ft1">shares yield similar results), the resulting rates of technical change are nearly all larger by <br>preindustrial standards (Table 1). Apart from the 0.1 percent rate of change for French <br>muskets, the rates of growth in productivity are all over 0.5 percent per year, and the <br>figure is 0.9 percent for the manufacture of artillery in late medieval England. These <br>numbers compare favorably with rates of long run total factor productivity growth <br>elsewhere in the preindustrial world, which usually did not exceed 0.1 percent per year, at <br>least in sectors of the economy as large as the military one was in early modern Europe.</span></nobr></DIV> <DIV style="position:absolute;top:451;left:767"><nobr><span class="ft2">9</span></nobr></DIV> <DIV style="position:absolute;top:453;left:773"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:474;left:135"><nobr><span class="ft1">There were some exceptions to this rule English agriculture, for instance, which seems to <br>have sustained long term total factor productivity growth rates of 0.2 to 0.3 percent per <br>year but in most sectors of the preindustrial economy, faster growth could simply not be <br>sustained.</span></nobr></DIV> <DIV style="position:absolute;top:533;left:207"><nobr><span class="ft2">10</span></nobr></DIV> <DIV style="position:absolute;top:536;left:219"><nobr><span class="ft0"> Even during the Industrial Revolution, total factor productivity growth in </span></nobr></DIV> <DIV style="position:absolute;top:557;left:135"><nobr><span class="ft0">Britain seems to have hovered between 0.1 percent per year and 0.35 percent per year.</span></nobr></DIV> <DIV style="position:absolute;top:554;left:756"><nobr><span class="ft2">11</span></nobr></DIV> <DIV style="position:absolute;top:557;left:768"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:578;left:135"><nobr><span class="ft1">How could the defense industry do so well over such long periods of time, and in two <br>economies France and England that for most of the years in the table were largely pre-<br>industrial? <br> </span></nobr></DIV> <DIV style="position:absolute;top:640;left:189"><nobr><span class="ft0">One could of course argue that all the evidence here is a chance result, because it </span></nobr></DIV> <DIV style="position:absolute;top:660;left:135"><nobr><span class="ft1">all depends on initial and final price observations, which could vary randomly and be <br>buffeted about by the costs of factors of production that remain unobserved.</span></nobr></DIV> <DIV style="position:absolute;top:678;left:682"><nobr><span class="ft2">12</span></nobr></DIV> <DIV style="position:absolute;top:681;left:694"><nobr><span class="ft0"> If we </span></nobr></DIV> <DIV style="position:absolute;top:702;left:135"><nobr><span class="ft1">enough data, we could settle the issue by estimating equation (2) and testing hypotheses <br>about the sign and magnitude of the coefficient <i>b.</i> But we cannot do that, even with <br>statistical methods that make up for missing data. <br> </span></nobr></DIV> <DIV style="position:absolute;top:764;left:189"><nobr><span class="ft0">One thing we can do, however, is to compare the price of our military good with </span></nobr></DIV> <DIV style="position:absolute;top:785;left:135"><nobr><span class="ft0">that of a similar civilian commodity that involved a similar production process.</span></nobr></DIV> <DIV style="position:absolute;top:782;left:705"><nobr><span class="ft2">13</span></nobr></DIV> <DIV style="position:absolute;top:785;left:717"><nobr><span class="ft0"> If the </span></nobr></DIV> <DIV style="position:absolute;top:805;left:135"><nobr><span class="ft9">civilian commodity was made with similar factors of production and similar factor <br>shares, and if the same economic assumption held for it too (small firms, open entry, U-<br>shaped short run average cost curves, competitive factor markets, and a Cobb-Douglas <br>production function), then equation 2 would apply to its price q too, and the logarithm of <br>p/q would be: <br> <br> </span></nobr></DIV> <DIV style="position:absolute;top:930;left:189"><nobr><span class="ft6"><i>ln (p/q) = c - dt + e</i></span></nobr></DIV> <DIV style="position:absolute;top:940;left:358"><nobr><span class="ft7"><i>1 </i></span></nobr></DIV> <DIV style="position:absolute;top:930;left:372"><nobr><span class="ft6"><i>ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:940;left:414"><nobr><span class="ft7"><i>1 </i></span></nobr></DIV> <DIV style="position:absolute;top:930;left:425"><nobr><span class="ft6"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:940;left:444"><nobr><span class="ft7"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:930;left:451"><nobr><span class="ft6"><i>) + . . . + e</i></span></nobr></DIV> <DIV style="position:absolute;top:940;left:548"><nobr><span class="ft7"><i>n </i></span></nobr></DIV> <DIV style="position:absolute;top:930;left:558"><nobr><span class="ft6"><i> ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:940;left:606"><nobr><span class="ft7"><i>n </i></span></nobr></DIV> <DIV style="position:absolute;top:930;left:616"><nobr><span class="ft6"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:940;left:636"><nobr><span class="ft7"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:930;left:643"><nobr><span class="ft6"><i>) + v (3)</i></span></nobr></DIV> <DIV style="position:absolute;top:933;left:745"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:954;left:135"><nobr><span class="ft1"> <br>Here <i>c</i> is a constant, <i>d</i> is the rate of technical change for the military good minus that for <br>the non military good, <i>v</i> is an error term, and the <i>e</i></span></nobr></DIV> <DIV style="position:absolute;top:1003;left:496"><nobr><span class="ft8"><i>i</i></span></nobr></DIV> <DIV style="position:absolute;top:995;left:500"><nobr><span class="ft0"> s are differences in the factor shares </span></nobr></DIV> <DIV style="position:absolute;top:1016;left:135"><nobr><span class="ft0">for the two goods. If the factor shares for the two goods are nearly equal, then the <i>e</i></span></nobr></DIV> <DIV style="position:absolute;top:1023;left:739"><nobr><span class="ft8"><i>i</i></span></nobr></DIV> <DIV style="position:absolute;top:1016;left:742"><nobr><span class="ft0"> s </span></nobr></DIV> <DIV style="position:absolute;top:1037;left:135"><nobr><span class="ft1">will be close to zero, and <br> </span></nobr></DIV> </DIV> <!-- Page 7 --> <a name="7"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:455"><nobr><span class="ft0">7</span></nobr></DIV> <DIV style="position:absolute;top:109;left:362"><nobr><span class="ft6"><i>ln (p/q) H" c - dt (4)</i></span></nobr></DIV> <DIV style="position:absolute;top:111;left:556"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:133;left:135"><nobr><span class="ft1"> <br>We could then regress <i>ln (p/q)</i> on time and come up with an estimate for <i>d</i>, the rate of <br>technical change for our non military good less that for our non military good. The <br>estimate will be biased because the variables <i>ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:202;left:498"><nobr><span class="ft8"><i>i </i></span></nobr></DIV> <DIV style="position:absolute;top:195;left:504"><nobr><span class="ft3"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:202;left:521"><nobr><span class="ft8"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:195;left:527"><nobr><span class="ft3"><i>)</i> will be omitted from the </span></nobr></DIV> <DIV style="position:absolute;top:215;left:135"><nobr><span class="ft0">regression, but because the <i>e</i></span></nobr></DIV> <DIV style="position:absolute;top:223;left:341"><nobr><span class="ft8"><i>i</i></span></nobr></DIV> <DIV style="position:absolute;top:215;left:345"><nobr><span class="ft0"> s are small, the bias will be small too and may be either </span></nobr></DIV> <DIV style="position:absolute;top:236;left:135"><nobr><span class="ft0">positive or negative.</span></nobr></DIV> <DIV style="position:absolute;top:233;left:282"><nobr><span class="ft2">14</span></nobr></DIV> <DIV style="position:absolute;top:236;left:294"><nobr><span class="ft0"> If production of the non-military good does not experience any </span></nobr></DIV> <DIV style="position:absolute;top:257;left:135"><nobr><span class="ft1">technical change, then <i>d</i> will be close to the rate of technical change <i>b</i> for the military <br>good. If there is technical change in production of the military good, the <i>d</i> we get from <br>equation (4) is likely to underestimate the rate at which the cost is declining. The key, of <br>course, will be finding non-military goods with factor shares similar to those of the <br>military goods ideally, non-military goods whose production functions did not change. <br> </span></nobr></DIV> <DIV style="position:absolute;top:360;left:189"><nobr><span class="ft0">This we can actually do, although we have to keep in mind that the coefficients </span></nobr></DIV> <DIV style="position:absolute;top:381;left:135"><nobr><span class="ft1">and estimated standard coefficient errors may be biased in an unknown way. In addition, <br>if we have prices of the factors of production for which the share differences <i>e</i></span></nobr></DIV> <DIV style="position:absolute;top:409;left:703"><nobr><span class="ft8"><i>i</i></span></nobr></DIV> <DIV style="position:absolute;top:402;left:707"><nobr><span class="ft0"> are likely </span></nobr></DIV> <DIV style="position:absolute;top:422;left:135"><nobr><span class="ft1">to be relatively large, we can add them to the regression since they are likely to bias our <br>estimate of <i>d</i> the most.</span></nobr></DIV> <DIV style="position:absolute;top:440;left:298"><nobr><span class="ft2">15</span></nobr></DIV> <DIV style="position:absolute;top:443;left:311"><nobr><span class="ft0"> The advantage of doing so is that we can find prices for factors </span></nobr></DIV> <DIV style="position:absolute;top:464;left:135"><nobr><span class="ft1">such as iron or capital, which may be used more intensively in either the military or <br>civilian good. We can include prices for these factors in a regression of <i>ln (p/q)</i> on a <br>constant and time and assume that the small <i>e</i></span></nobr></DIV> <DIV style="position:absolute;top:513;left:464"><nobr><span class="ft8"><i>i</i></span></nobr></DIV> <DIV style="position:absolute;top:505;left:467"><nobr><span class="ft0"> s for the other omitted variables will keep </span></nobr></DIV> <DIV style="position:absolute;top:526;left:135"><nobr><span class="ft1">their contribution to the bias small. That amounts to running regression (3) with some of <br>the <i>ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:554;left:198"><nobr><span class="ft8"><i>i </i></span></nobr></DIV> <DIV style="position:absolute;top:547;left:204"><nobr><span class="ft3"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:554;left:221"><nobr><span class="ft8"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:547;left:227"><nobr><span class="ft3"><i>)</i> omitted, but it is possible to run such a regression when it would be </span></nobr></DIV> <DIV style="position:absolute;top:567;left:135"><nobr><span class="ft0">impossible to get enough data to run a regression with all the variables <i>ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:575;left:684"><nobr><span class="ft8"><i>i </i></span></nobr></DIV> <DIV style="position:absolute;top:567;left:690"><nobr><span class="ft3"><i>/w</i></span></nobr></DIV> <DIV style="position:absolute;top:575;left:707"><nobr><span class="ft8"><i>0</i></span></nobr></DIV> <DIV style="position:absolute;top:567;left:713"><nobr><span class="ft3"><i>)</i>. </span></nobr></DIV> <DIV style="position:absolute;top:588;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:588;left:189"><nobr><span class="ft0">Table 2 shows what happens when we run either a regression based on equations </span></nobr></DIV> <DIV style="position:absolute;top:609;left:135"><nobr><span class="ft1">3 (with some missing variables) or equation 4. Again, the regressions involve the prices <br>of French and English handguns and artillery from the late Middle Ages to the eighteenth <br>century, and now gunpowder is included too. The prices of the English military goods <br>are expressed relative to the cost of spades, a non-military good that presumably had <br>factor shares roughly similar to those involved in the production of handguns, for like <br>spades, handguns were made of wood and metal. Admittedly, the factor shares were <br>probably different for artillery and gunpowder, and it no doubt took more metal to make a <br>firearm than a spade. But even cannons had wooden carriages, and wooden and metal <br>tools were used to manufacture gunpowder. Despite these disadvantages, though, using <br>the price of spades has certain virtues. Technical change in their production was <br>probably small before the eighteenth century, and there are repeated price observations <br>for spades with relatively little price variation at any given time. And where we have <br>enough data, we can compensate for the different factor shares for iron in military goods <br>by adding the relative price of iron to the regressions. <br> </span></nobr></DIV> <DIV style="position:absolute;top:899;left:189"><nobr><span class="ft0">For French military goods, prices are compared to the cost of lathing nails. </span></nobr></DIV> <DIV style="position:absolute;top:919;left:135"><nobr><span class="ft1">Although the price of something like spades might have been a better non-military <br>yardstick for handguns, it proved impossible to find prices for spades or any other good <br>made out of both wood and metal. Lathing nails, however, are not a bad choice for <br>artillery, or for handguns either. Like the fabrication of handguns, the making of nails <br>required metal and skilled labor and it also consumed wood for heating the furnaces. <br>Lathing nails also had to serve as the non-military good for gunpowder, but at least here I <br>could compensate for what were probably different capital intensities by adding the rental </span></nobr></DIV> </DIV> <!-- Page 8 --> <a name="8"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:455"><nobr><span class="ft0">8</span></nobr></DIV> <DIV style="position:absolute;top:109;left:135"><nobr><span class="ft1">price of capital. Because the technology of nail making may have changed beginning as <br>early as the seventeenth century, all of the comparisons between the price of nails and the <br>price of artillery, handguns, and gunpowder may well underestimate technical change for <br>the military goods.</span></nobr></DIV> <DIV style="position:absolute;top:168;left:271"><nobr><span class="ft2">16</span></nobr></DIV> <DIV style="position:absolute;top:171;left:283"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:191;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:191;left:189"><nobr><span class="ft0">Like the prices of arms and gunpowder, the prices of the various non-military </span></nobr></DIV> <DIV style="position:absolute;top:212;left:135"><nobr><span class="ft1">used as yardsticks were fragmentary and not available for the same years for which prices <br>of arms and gunpowder could be found.</span></nobr></DIV> <DIV style="position:absolute;top:230;left:422"><nobr><span class="ft2">17</span></nobr></DIV> <DIV style="position:absolute;top:233;left:435"><nobr><span class="ft0"> To solve this problem, I took 50-year averages </span></nobr></DIV> <DIV style="position:absolute;top:253;left:135"><nobr><span class="ft1">of the lathing nails prices that served as the non-military yardstick, and 25-year averages <br>of skilled wages and iron prices. In England, I had to use 25-year averages for the price <br>of iron and spades. <br> </span></nobr></DIV> <DIV style="position:absolute;top:316;left:189"><nobr><span class="ft0">In the regressions of <i>ln (p/q)</i>, the coefficient of time (the <i> d</i> in equations 3 and 4) </span></nobr></DIV> <DIV style="position:absolute;top:336;left:135"><nobr><span class="ft1">is negative for all the military goods except for French gunpowder, when its price relative <br>to the cost of nails is regressed on time alone (Table 2). With that exception, time always <br>turns out to have a negative coefficient, whether the regressions are run with time alone <br>or whether relative prices of some other factors of production are added. Graphs of <i>ln <br>(p/q)</i> reveal a clear downward trend in the relative price of the military goods in nearly <br>every instance (Figures 8 through 14). The only exceptions are for muskets and <br>gunpowder in France, and the relative price of gunpowder price does at least drop first <br>and then rise before falling again. <br> </span></nobr></DIV> <DIV style="position:absolute;top:502;left:189"><nobr><span class="ft0">The regressions, in short, nearly all point point to technical change, at rates </span></nobr></DIV> <DIV style="position:absolute;top:523;left:135"><nobr><span class="ft1">ranging as high as 2.4 percent per year and over periods stretching from the fourteenth to <br>the eighteenth century. The median rate of technical change in the regressions with the <br>year alone is 0.5 percent per year; if we look instead at regressions with prices of other <br>factors of production added, the median is 0.8 percent per year. Again, these numbers are <br>high relative to rates of total productivity growth elsewhere in the preindustrial world, or <br>even during the Industrial Revolution. How could the defense industry do so well over <br>such long periods of time, and in two economies France and England that for most of <br>the years in the table were largely pre-industrial? <br> </span></nobr></DIV> <DIV style="position:absolute;top:688;left:189"><nobr><span class="ft0">Perhaps one should simply not believe the data. After all, the figures are </span></nobr></DIV> <DIV style="position:absolute;top:709;left:135"><nobr><span class="ft1">fragmentary, the number of observations is small, and there are a huge number of <br>assumptions involved. One could certainly worry that quality differences and biases <br>from omitted prices for factors of production would make all of the tables and regression <br>results purely random.</span></nobr></DIV> <DIV style="position:absolute;top:768;left:296"><nobr><span class="ft2">18</span></nobr></DIV> <DIV style="position:absolute;top:771;left:308"><nobr><span class="ft0"> Suppose, however, that the negative time coefficients in the </span></nobr></DIV> <DIV style="position:absolute;top:792;left:135"><nobr><span class="ft1">regressions were purely random. How often would we expect to get that many negative <br>coefficients if we were simply drawing from a Bernoulli distribution with a probability of <br>getting a negative regression coefficient exactly half of the time? If we limit ourselves to <br>the 7 regressions on time alone, 6 of the 7 coefficients are negative, and if each <br>coefficient represents an independent draw, then the odds of getting six negatives by <br>chance are only 0.06. If we substitute the regressions with the relative prices of other <br>factors of production, all 7 time coefficients are negative, and the probability of getting <br>that many negatives by chance in independent draws from a Bernoulli distribution is only <br>0.008. <br> </span></nobr></DIV> <DIV style="position:absolute;top:978;left:189"><nobr><span class="ft0">We could raise the bar higher by asking whether the regression coefficients in </span></nobr></DIV> <DIV style="position:absolute;top:999;left:135"><nobr><span class="ft1">Table 2 would be likely to arise if we were drawing them randomly from a population <br>with median of negative 0.1 percent per year, or, in other words, from a population <br>presumably typical of the sort of slow technical change one would find in a pre-industrial </span></nobr></DIV> </DIV> <!-- Page 9 --> <a name="9"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:455"><nobr><span class="ft0">9</span></nobr></DIV> <DIV style="position:absolute;top:109;left:135"><nobr><span class="ft1">society. In the regressions on time alone, 6 of the 7 coefficients point to technical change <br>at a rate of 0.1 percent per year or more. The odds of that happening by chance in <br>independent draws from a Bernoulli distribution are 0.06. And if we substitute the <br>regressions with prices of other factors of production, all 7 regressions yield rates of <br>technical change of 0.2 percent or more per year. The probability of that happening by <br>chance are only 0.06, even if the coefficients are drawn from a population with a median <br>as high as 0.3 percent year. <br> </span></nobr></DIV> <DIV style="position:absolute;top:253;left:189"><nobr><span class="ft0">Perhaps the regressions and tables are therefore telling us something. Perhaps the </span></nobr></DIV> <DIV style="position:absolute;top:274;left:135"><nobr><span class="ft1">figures they contain are not as unreliable as it might seem at first glance. After all, <br>careful reading of the sources (and in particular, sensitivity to changes of vocabulary) can <br>help guard against unsuspected changes in quality, and in any case the data are likely to <br>underestimate technical change because they involve no correction for progressive <br>improvements in quality.</span></nobr></DIV> <DIV style="position:absolute;top:354;left:315"><nobr><span class="ft2">19</span></nobr></DIV> <DIV style="position:absolute;top:357;left:328"><nobr><span class="ft0"> There are a number of other reasons why the rates of </span></nobr></DIV> <DIV style="position:absolute;top:378;left:135"><nobr><span class="ft1">technical change are likely to biased downward as well. To begin with, the focus on <br>prices overlooks all the advances in military tactics, organization, and financing that <br>made the European military more effective and yet had nothing to do with the production <br>of military goods. Fortifications are a clear example: although construction techniques <br>may not have improved, the design of fortifications certainly had (to make them <br>impervious to artillery barrages), and so too had the fiscal apparatus the paid the bills. <br>Similarly, the prices we have chosen also gloss over naval warfare, where western <br>Europe s progress and comparative advantage were probably greatest. And Tables 1 and <br>2 do not take into account all sorts of continued technical change in weapons production <br>during the eighteenth century: boring and turning of cannons, or the standardized <br>production of flintlock muskets with at least some interchangeable parts. <br> </span></nobr></DIV> <DIV style="position:absolute;top:605;left:189"><nobr><span class="ft0">One last reason why our rates of technical change may be biased downward </span></nobr></DIV> <DIV style="position:absolute;top:626;left:135"><nobr><span class="ft1">deserves to be stressed too. It is the simple fact that price data for a new weapon (as we <br>noted above) will typically not appear in historical records until well after it is first <br>invented, and that means after the period when costs of production are likely to be falling <br>most rapidly thanks to learning by doing (Lucas 1993). Fortunately, we have one <br>instance where we can verify that this took place, for some of the first handguns that were <br>ever made in this case, ones that the German city of Frankfurt had produced during the <br>years 1399-1431. Thanks to the meticulous research of Bernhard Rathgen, an artillery <br>officer and military historian who died in 1927, we actually have prices for the handguns, <br>along with the wages paid to the metal workers who cast them and the cost of the copper <br>which served as the raw material. These early guns resembled small cannons (Figure 15) <br>with barrels less than 500 millimeters long. Although they were not very effective, <br>German cities like Frankfurt bought them in large numbers.</span></nobr></DIV> <DIV style="position:absolute;top:851;left:564"><nobr><span class="ft2">20</span></nobr></DIV> <DIV style="position:absolute;top:854;left:576"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:874;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:874;left:189"><nobr><span class="ft0">For these early handguns in Frankfurt, we actually have enough data to estimate </span></nobr></DIV> <DIV style="position:absolute;top:895;left:135"><nobr><span class="ft1">equation (2) with prices for all the factors of production included among the explanatory <br>variables.</span></nobr></DIV> <DIV style="position:absolute;top:913;left:205"><nobr><span class="ft2">21</span></nobr></DIV> <DIV style="position:absolute;top:916;left:217"><nobr><span class="ft0"> When we run the regression (Table 3), we end up with reasonable </span></nobr></DIV> <DIV style="position:absolute;top:936;left:135"><nobr><span class="ft1">coefficients (the factor share for copper is 0.307) and a rate of total factor productivity <br>growth of 3.0 percent a year, which is more rapid than what was achieved by the most <br>dynamic sector of the British economy the cotton textile industry during the Industrial <br>Revolution.</span></nobr></DIV> <DIV style="position:absolute;top:996;left:220"><nobr><span class="ft2">22</span></nobr></DIV> <DIV style="position:absolute;top:999;left:231"><nobr><span class="ft0"> And we know why productivity was climbing so fast: the metal workers </span></nobr></DIV> <DIV style="position:absolute;top:1019;left:135"><nobr><span class="ft1">were learning how to make the handguns with less copper, which cut the price of the <br>guns drastically (Figure 16). To us, such an improvement may seem obvious, but given </span></nobr></DIV> </DIV> <!-- Page 10 --> <a name="10"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">10</span></nobr></DIV> <DIV style="position:absolute;top:109;left:135"><nobr><span class="ft1">the frequency with which early cannons exploded and maimed gunners, it was a step that <br>the gunsmiths must have taken with a great deal of trepidation. <br> </span></nobr></DIV> <DIV style="position:absolute;top:150;left:189"><nobr><span class="ft0">Finally, if we turn from prices to physical evidence of greater productivity, the </span></nobr></DIV> <DIV style="position:absolute;top:171;left:135"><nobr><span class="ft1">story is much the same: firing rates for guns increased, misfires diminished, and <br>inventions such as the bayonet made it possible for armies to do away with pikemen and <br>to arm more and more of their soldiers, all of which boosted armies labor productivity. <br>In the French army, the rate of successful fire per solder jumped perhaps 13-fold between <br>the early seventeenth century and the middle of the eighteenth century (Table 4), which <br>translates into labor productivity growth of 1.7 percent a year. Other physical measures <br>of productivity, such as the range of early cannons, also soared.</span></nobr></DIV> <DIV style="position:absolute;top:292;left:592"><nobr><span class="ft2">23 </span></nobr></DIV> <DIV style="position:absolute;top:295;left:610"><nobr><span class="ft0">Firing rates and cannon </span></nobr></DIV> <DIV style="position:absolute;top:316;left:135"><nobr><span class="ft1">ranges bring us much closer to what we would ideally be measuring military <br>effectiveness and they in fact suggest that if effectiveness is the yardstick, then the <br>military s labor and capital productivity were both increasing. <br> <br>Implications for Military History and Economic History <br> <br> </span></nobr></DIV> <DIV style="position:absolute;top:440;left:189"><nobr><span class="ft0">To assert that military production experienced surprising technical change in late </span></nobr></DIV> <DIV style="position:absolute;top:460;left:135"><nobr><span class="ft1">medieval and early modern Europe would of course fit what military historians claim <br>when they write about the military revolution (Black 1991; Parker 1996). More evidence <br>is of course essential; I am currently gathering it in printed and archival sources. But <br>perhaps it is not too early to speculate a bit about what the price trends imply, both for the <br>military revolution and western Europe s comparative advantage in violence, and for <br>more general issues in economic history. <br> </span></nobr></DIV> <DIV style="position:absolute;top:585;left:189"><nobr><span class="ft0">For economic history, the big surprise is the evidence of sustained technical </span></nobr></DIV> <DIV style="position:absolute;top:605;left:135"><nobr><span class="ft1">change over perhaps four centuries before the Industrial Revolution and in a major sector <br>of the economy to boot. If further data bear out this conclusion and demonstrate that the <br>rates of technical change were substantially higher than the 0.1 percent or less that <br>characterized most preindustrial economies, then we will have something to explain. <br>What could possibly account for such unusual sustained growth before the nineteenth <br>century? <br> </span></nobr></DIV> <DIV style="position:absolute;top:729;left:189"><nobr><span class="ft0">One possibility would be the competition among European states, which fought </span></nobr></DIV> <DIV style="position:absolute;top:750;left:135"><nobr><span class="ft1">practically incessantly between the late Middle Ages and the end of the Napoleonic Wars. <br>Until the French Revolution, the states rulers (typically kings or princes) had every <br>incentive to fight: they bore little of the cost of a military buildup, and they were rarely <br>deposed or killed in case of defeat, at least in the major states (Table 5). The political <br>incentives and military competition gave rents to victors (control of lucrative trade routes, <br>for instance), and those rents would conceivably encourage military innovation, both in <br>the realm of military technology and in tactics and military organization. <br> </span></nobr></DIV> <DIV style="position:absolute;top:895;left:189"><nobr><span class="ft0">So too would the glory and honor that most European rulers (and European </span></nobr></DIV> <DIV style="position:absolute;top:916;left:135"><nobr><span class="ft1">aristocrats too) attached to military victory. A European ruler such as Louis XIV could <br>tell his son that war was a means to  distinguish [kings] . . . and to fulfill the great <br>expectations ...inspired in the public. The glory that European rulers attached to warfare <br>stook in sharp contrast to the goals that rulers were supposed to pursue in at least one <br>other part of the world China. There, the Ming emporers advised to focus on peace and <br>use force as a  last resort. </span></nobr></DIV> <DIV style="position:absolute;top:1016;left:328"><nobr><span class="ft2">24</span></nobr></DIV> <DIV style="position:absolute;top:1019;left:340"><nobr><span class="ft0"> Europeans who traveled to China and knew it well were </span></nobr></DIV> <DIV style="position:absolute;top:1040;left:135"><nobr><span class="ft0">struck by the difference. One of them the Jesuit missionary Matteo Ricci, who died in </span></nobr></DIV> </DIV> <!-- Page 11 --> <a name="11"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">11</span></nobr></DIV> <DIV style="position:absolute;top:109;left:135"><nobr><span class="ft1">Peking in 1610 after spending 28 years in China noted that although the China could <br>easily conquer neighboring states neither the emperors nor Chinese officials had any <br>interest in doing so.  Certainly, this is very different from our own countries [in <br>Europe], he noted, for European kings are  driven by the insatiable desire to extend their <br>dominions. </span></nobr></DIV> <DIV style="position:absolute;top:188;left:223"><nobr><span class="ft2">25</span></nobr></DIV> <DIV style="position:absolute;top:191;left:236"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:212;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:212;left:189"><nobr><span class="ft0">The eighteenth-century historian Edward Gibbon invoked the competition </span></nobr></DIV> <DIV style="position:absolute;top:233;left:135"><nobr><span class="ft1">between European states to explain the West s military prowess; so has the modern <br>military and diplomatic historian, Paul Kennedy (Black 1998, 3-7; Kennedy 1989 ). But <br>their insights could be pushed further using economic theory, which could explain why <br>the competition led to productivity gains in the military sector. The key is to model the <br>military competition among the European states as a research tournament in which the <br>prize for the victor would foster high rates of military innovation. Without competition, <br>no state would have an incentive to innovate, but if more than one state was willing to vie <br>for the prize, the tournament could push states to devote enormous effort to military <br>innovation. Some rulers would off course choose not to enter the tournament, and in <br>equilibrium one would expect that only states that could exert themselves at low cost <br>would engage in military competition. But so long as you had two states competing, you <br>could still elicit arbitrary high levels of effort devoted to innovation, and two competitors <br>would in fact be the cheapest way to reach any given level of effort if you were in fact <br>designing such a tournament.</span></nobr></DIV> <DIV style="position:absolute;top:499;left:346"><nobr><span class="ft2">26</span></nobr></DIV> <DIV style="position:absolute;top:502;left:358"><nobr><span class="ft0"> Western Europe of course often had two states or blocks </span></nobr></DIV> <DIV style="position:absolute;top:523;left:135"><nobr><span class="ft1">of states at war with one another in the late medieval and early modern period, such as <br>France versus the Habsburgs in the sixteenth and seventeenth-centuries, or France and <br>England in the eighteenth century. <br> </span></nobr></DIV> <DIV style="position:absolute;top:585;left:189"><nobr><span class="ft0">If the tournament was the driving force behind the technical change in the military </span></nobr></DIV> <DIV style="position:absolute;top:605;left:135"><nobr><span class="ft1">sector, then it could also be considered as the cause of western Europe s comparative <br>advantage in violence. The political incentives created the tournament, and the <br>tournament in turn led to enormous spending on warfare and unceasing efforts to improve <br>the technology of artillery, firearms, fortifications, and armed ships. It is no wonder that <br>western Europe came to dominate this technology. <br> </span></nobr></DIV> <DIV style="position:absolute;top:709;left:189"><nobr><span class="ft0">The same argument also fits certain other parts of the globe. It seems to work for </span></nobr></DIV> <DIV style="position:absolute;top:729;left:135"><nobr><span class="ft1">Japan, where advances such as volley fire came during a period of incessant warfare <br>among clans and warlords that is reminiscent of the European tournament among kings <br>and princes. When the country was unified under under the Tokugawa shogunate, the <br>warfare came to and end, as did the military advances. <br> </span></nobr></DIV> <DIV style="position:absolute;top:812;left:189"><nobr><span class="ft0">The argument corresponds to what we know about China too. There it was clear </span></nobr></DIV> <DIV style="position:absolute;top:833;left:135"><nobr><span class="ft1">to both Chinese and western observers in the 1500's and 1600s that China s military <br>technology lagged behind Europe s (Chase 2003, 142). Yet China had been quite <br>inventive earlier; indeed, it was the birthplace of both gunpowder and firearms. What <br>marks China s innovations, though, was that they came precisely during periods when the <br>Chinese Empire itself was fragmented or non existent and rival powers were fighting <br>with one another under conditions very much like those in Europe.</span></nobr></DIV> <DIV style="position:absolute;top:934;left:615"><nobr><span class="ft2">27</span></nobr></DIV> <DIV style="position:absolute;top:936;left:627"><nobr><span class="ft0"> As the military </span></nobr></DIV> <DIV style="position:absolute;top:957;left:135"><nobr><span class="ft1">historian Kenneth Chase has noted, the Chinese discovered crossbows and trebuchets <br>before the Empire was unified in 221 BC. They began to use heavy cavalry during a <br>second period of disunity between 220 and 589, and two subsequent periods of <br>fragmentation (756 to 960 and 1127-1276) witnessed the invention of gunpowder and <br>firearms (Chase 2003 , 32-33). But for nearly three quarters of the two millennia </span></nobr></DIV> </DIV> <!-- Page 12 --> <a name="12"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">12</span></nobr></DIV> <DIV style="position:absolute;top:109;left:135"><nobr><span class="ft1">between 221 BC and the nineteenth century, the Chinese Empire was intact, which may <br>have lessened the incentive to create new military technology. Western Europe, by <br>contrast, spent much more time fragmented into warring states. After the fall of the <br>Roman Empire, western Europe knew only two short lived empires (the Carolingian and <br>the Napoleonic), and it thus lived through a millennium and a half of nearly uninterrupted <br>disunity. <br> </span></nobr></DIV> <DIV style="position:absolute;top:233;left:189"><nobr><span class="ft0">One might argue that the Chinese emperors could conceivably have encouraged </span></nobr></DIV> <DIV style="position:absolute;top:253;left:135"><nobr><span class="ft1">military innovations simply by offering prizes to inventors. That way the emperors could <br>have better weapons without wasting resources in war. But even if the emperors had <br>tried this, the offer of a prize might not have seemed credible to someone who made a <br>better cannon or devised promising military tactics. Military innovators in China had no <br>one else to turn to if they wanted to commercialize their ideas. They would have had a <br>hard time selling their ideas abroad, and they would not find it easy to interest private <br>purchasers either, for private ownership of weapons was restricted. (The Ottoman <br>Empire imposed similar restrictions on private gun ownership.) In Europe, by contrast, a <br>better cannon could be sold to a private merchant or to a foreign army or navy, and there <br>was even an international market in Europe for military skills and tactical knowledge, in <br>which mercenaries and skilled craftsmen such as gun founders were hired away by other <br>countries. <br> </span></nobr></DIV> <DIV style="position:absolute;top:502;left:189"><nobr><span class="ft0">Another force for productivity growth was the ease with which information about </span></nobr></DIV> <DIV style="position:absolute;top:523;left:135"><nobr><span class="ft1">new military technologies and tactics spread in early modern Europe. European <br>mercenaries and migrant craftsmen transmitted information from state to state; so did <br>books written by commanders and military engineers. (One could say the same of <br>captured ships and weapons and of tactics revealed in battle.) The new technology <br>spread quickly and was available at a competive price, as if the tournament served as an <br>idealized prize system that quickly put winning ideas into the public domain. If we <br>consider technology as a plan that can be used over and over again, all this spread of <br>information would lead to increasing returns, as in models of endogenous growth.</span></nobr></DIV> <DIV style="position:absolute;top:664;left:724"><nobr><span class="ft2">28</span></nobr></DIV> <DIV style="position:absolute;top:667;left:736"><nobr><span class="ft0"> The </span></nobr></DIV> <DIV style="position:absolute;top:688;left:135"><nobr><span class="ft1">same thing would happen when states drew up plans of successful ships and built <br>templates and models of innovative weapons all things that happened as early as the <br>seventeenth century. And yet despite the increasing returns and the competition among <br>states, all the progress in the military realm would fail to ignite economic growth overall, <br>because warfare interfered with trade and destroyed enormous amounts of capital in other <br>parts of the economy.</span></nobr></DIV> <DIV style="position:absolute;top:789;left:291"><nobr><span class="ft2">29</span></nobr></DIV> <DIV style="position:absolute;top:792;left:303"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:812;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:812;left:189"><nobr><span class="ft0">Here one could even ask whether the military competition in Europe actually </span></nobr></DIV> <DIV style="position:absolute;top:833;left:135"><nobr><span class="ft1">delayed economic growth by diverting talent and resources to destructive activity. Joel <br>Mokyr (1990 , 183-86) has argued persuasively that warfare did not spur technical <br>change in the civilian economy, but perhaps the toll war took was even greater than he <br>supposed. A careful assessment would have to take into account the occasional positive <br>technological spillovers from the military sector (in areas such as metal production), and <br>it would have to acknowledge that borrowing for warfare helped create European <br>financial markets. But it would also have to determine whether the tournament among <br>Europe s rulers led to massive overinvestment in the military sector in what were poor <br>economies. What would have happened to the western European economy if the <br>resources and talent that worked such wonders in the military sector had instead been <br>allocated to the civilian economy? Could the resources and talent (and even perhaps </span></nobr></DIV> </DIV> <!-- Page 13 --> <a name="13"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">13</span></nobr></DIV> <DIV style="position:absolute;top:109;left:135"><nobr><span class="ft1">some technology) found ready application in the civilian sector? If so, could this help <br>explain why western Europe industrialized rapidly after 1815, when a century of relative <br>peace allowed talent and inventive effort to shift to the civilian uses? <br> </span></nobr></DIV> <DIV style="position:absolute;top:171;left:189"><nobr><span class="ft0">Those are interesting questions for economic history, but what can the price </span></nobr></DIV> <DIV style="position:absolute;top:191;left:135"><nobr><span class="ft1">trends contribute to military history? In particular, what do the prices say about the <br>military revolution? Military historians have debated when exactly the revolution began <br>and precisely what technology and tactics were involved. The influential historian <br>Geoffrey Parker has claimed that there was such a key technology, and in his view, it and <br>associated tactics appeared at the end of the fifteenth century and then spread throughout <br>much of western Europe over the next two hundred years, giving Europeans an advantage <br>that allowed them to dominate the rest of the world. For Parker, the technology is clear: <br>it consisted of siege artillery and handguns, thick earthwork fortifications that could resist <br>bombardment (the so called trace italienne), infantry soldiers trained to fire their muskets <br>in volleys, and sailing ships armed with cannons. Other historians disagree about the <br>timing or the nature of the technology. They argue that the military revolution spread out <br>over a longer period or that western Europe experienced repeated revolutions in tactics <br>and technology between the end of the Middle Ages and the early nineteenth century, <br>beginning in the fourteenth century, when knights on horseback were supplanted by <br>archers and infantry troops with pikes (Black 1991; Rogers 1993; Parker 1996). <br> </span></nobr></DIV> <DIV style="position:absolute;top:502;left:189"><nobr><span class="ft0">The price data cannot speak to the question of tactics, but evidence for sustained </span></nobr></DIV> <DIV style="position:absolute;top:523;left:135"><nobr><span class="ft1">technical change does support the historians who believe that the improvements in <br>military technology were spread over a longer period or that there were repeated military <br>revolutions. And if the tournament between rulers was the driving force behind the <br>ongoing technical change in military production, it would provide a theoretical <br>explanation for what one military historian has called  punctuated equilibria: repeated <br>improvements in technology and tactics that gave one state an advantage and then were <br>imitated, leaving a new status quo (Rogers 1993). The reason is that other states would <br>eventually imitate successful military innovations, and when they did so, there would be <br>a new equilibrium that would last until another state discovered better tactics or <br>technology. The Dutch, for instance, invented volley fire in 1594 and put it into practice <br>beginning in 1599. The new tactic was described in print as early as 1603, and books <br>explaining it quickly appeared in several languages. It was also spread by foreigners who <br>served in the Dutch army and by Dutch military instructors who taught the tactic to states <br>allied with the Dutch.</span></nobr></DIV> <DIV style="position:absolute;top:789;left:291"><nobr><span class="ft2">30</span></nobr></DIV> <DIV style="position:absolute;top:792;left:303"><nobr><span class="ft0"> Other western European states then adopted volley fire, reducing </span></nobr></DIV> <DIV style="position:absolute;top:812;left:135"><nobr><span class="ft1">the military advantage the Dutch had. <br> </span></nobr></DIV> <DIV style="position:absolute;top:833;left:189"><nobr><span class="ft0">Military history also offers an alternative explanation for Europe s comparative </span></nobr></DIV> <DIV style="position:absolute;top:854;left:135"><nobr><span class="ft1">advantage in violence geography. The military history Kenneth Chase maintains that <br>China had no reason to develop firearms because its enemies were typically horse riding <br>nomads from the steppes of Asia, who fought with bows and arrows and depended on <br>their mobility, rather than any advanced technology. The steppe nomads had no fortified <br>cities to attack with artillery, and firearms were useless against them, for they had to be <br>pursued on horseback and it was impossible for a rider to shoot early hand guns (apart <br>from pistols, which had a very short range) with any effectiveness. A similar argument <br>would apply elsewhere as well. Eastern Europeans, for instance, faced similar enemies <br>from lands further East along with more heavily armed western Europeans, and so they </span></nobr></DIV> </DIV> <!-- Page 14 --> <a name="14"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">14</span></nobr></DIV> <DIV style="position:absolute;top:109;left:135"><nobr><span class="ft1">too had less of an incentive to develop firearms. The same would hold for the Ottomans <br>(Chase 2003). <br> </span></nobr></DIV> <DIV style="position:absolute;top:150;left:189"><nobr><span class="ft0">If we pursue this geographic explanation a bit further, though, we can perhaps get </span></nobr></DIV> <DIV style="position:absolute;top:171;left:135"><nobr><span class="ft1">it to complement the argument about the tournament among rulers. The reason is that the <br>geography is not merely a matter of climate, density of population, and agricultural <br>endowments, which are what Chase stresses. It is also a matter of politics. If the Chinese <br>Empire had disintegrated into separate states, then the ones away from the interior would <br>have faced enemies who were not steppe nomads, but warriors who could have developed <br>very different military technologies. Similarly, if western and eastern Europe had been <br>unified into an Empire, then their common enemy might have been steppe nomads, or <br>powers like the Ottomans, who had to had to spend at least some of their resources <br>fighting nomads. In that case, the western Europeans would have the tournament with <br>one another, and they would probably never have developed their formidable military <br>technology. The big question then would be what held China together and what kept <br>western Europe from coalescing into a cohesive Empire. That is the question we may <br>have to answer if the conclusions from the meager price data hold true. <br> <br> <br> <br> </span></nobr></DIV> </DIV> <!-- Page 15 --> <a name="15"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- .ft10{font-size:17px;font-family:Times;color:#000000;} .ft11{font-size:20px;font-family:Times;color:#000000;} .ft12{font-size:22px;font-family:Times;color:#000000;} .ft13{font-size:20px;font-family:Times;color:#000000;} .ft14{font-size:17px;font-family:Times;color:#000000;} .ft15{font-size:16px;line-height:27px;font-family:Times;color:#000000;} --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">15</span></nobr></DIV> <DIV style="position:absolute;top:109;left:423"><nobr><span class="ft0">Appendix </span></nobr></DIV> <DIV style="position:absolute;top:129;left:135"><nobr><span class="ft15"> <br>Let <i>L = w</i></span></nobr></DIV> <DIV style="position:absolute;top:152;left:207"><nobr><span class="ft10">" </span></nobr></DIV> <DIV style="position:absolute;top:157;left:215"><nobr><span class="ft3"><i> x - »(f(x, t) - y) </i>be the Lagrangian of the firm s cost minimization problem; </span></nobr></DIV> <DIV style="position:absolute;top:178;left:135"><nobr><span class="ft1">here <i>x</i> represents a vector of factors of production, which are chosen to minize cost; <i>w</i> is <br>the vector of their prices; <i>f(x, t) </i>is the production function, which depends on time <i>t</i> since <br>we are considering technical change; <i>y</i> is output produced; and <i>»</i> is the Lagrange <br>multiplier, which by the envelope theorem equals the marginal cost of production when <i>x</i> <br>is chosen optimally. Let <i>c(w, y, t)</i> be the firm s cost of producing <i>y</i> once <i>x</i> is chosen <br>optimally; by the envelope theorem, the partial derivative of <i>ln(c)</i> with respect to time <br>equals <br> </span></nobr></DIV> <DIV style="position:absolute;top:354;left:350"><nobr><span class="ft11">"</span></nobr></DIV> <DIV style="position:absolute;top:354;left:423"><nobr><span class="ft11">= "</span></nobr></DIV> <DIV style="position:absolute;top:338;left:369"><nobr><span class="ft12">» "</span></nobr></DIV> <DIV style="position:absolute;top:370;left:389"><nobr><span class="ft12">"</span></nobr></DIV> <DIV style="position:absolute;top:338;left:461"><nobr><span class="ft12">» "</span></nobr></DIV> <DIV style="position:absolute;top:370;left:516"><nobr><span class="ft12">"</span></nobr></DIV> <DIV style="position:absolute;top:374;left:371"><nobr><span class="ft11">c</span></nobr></DIV> <DIV style="position:absolute;top:342;left:404"><nobr><span class="ft11">f</span></nobr></DIV> <DIV style="position:absolute;top:374;left:407"><nobr><span class="ft11">t</span></nobr></DIV> <DIV style="position:absolute;top:342;left:476"><nobr><span class="ft11">y</span></nobr></DIV> <DIV style="position:absolute;top:374;left:469"><nobr><span class="ft11">c</span></nobr></DIV> <DIV style="position:absolute;top:342;left:546"><nobr><span class="ft11">f</span></nobr></DIV> <DIV style="position:absolute;top:374;left:534"><nobr><span class="ft11">t</span></nobr></DIV> <DIV style="position:absolute;top:342;left:512"><nobr><span class="ft13">ln ( )</span></nobr></DIV> <DIV style="position:absolute;top:387;left:570"><nobr><span class="ft3"><i> </i></span></nobr></DIV> <DIV style="position:absolute;top:404;left:135"><nobr><span class="ft1"> <br> <br>which equals the rate of technical change times the ratio of marginal cost to average cost. <br>Since free entry drives the firms to produce at minimum short run average cost, each <br>firm s marginal cost will equal its average cost, and the rate at which <i>c</i> is declining will <br>therefore equal the rate of technical change (the rate at which the production function is <br>shifting out). Furthermore, since the firms are small relative to the size of the market, in <br>the long run the industry supply curve will be flat at a price <i>p</i> equal to this minimum short <br>run average cost. For each firm, <i>c</i> will therefore equal <i>p</i> <i>y</i>, and the partial derivative of <i>ln <br>c(w, y, t)</i> with respect to time will be <br> </span></nobr></DIV> <DIV style="position:absolute;top:627;left:381"><nobr><span class="ft6"><i>"</i></span></nobr></DIV> <DIV style="position:absolute;top:654;left:407"><nobr><span class="ft6"><i>"</i></span></nobr></DIV> <DIV style="position:absolute;top:627;left:476"><nobr><span class="ft6"><i>"</i></span></nobr></DIV> <DIV style="position:absolute;top:654;left:495"><nobr><span class="ft6"><i>"</i></span></nobr></DIV> <DIV style="position:absolute;top:631;left:398"><nobr><span class="ft14">ln (</span></nobr></DIV> <DIV style="position:absolute;top:631;left:447"><nobr><span class="ft14">)</span></nobr></DIV> <DIV style="position:absolute;top:631;left:492"><nobr><span class="ft14">ln ( )</span></nobr></DIV> <DIV style="position:absolute;top:631;left:424"><nobr><span class="ft10">p y</span></nobr></DIV> <DIV style="position:absolute;top:658;left:421"><nobr><span class="ft10">t</span></nobr></DIV> <DIV style="position:absolute;top:631;left:519"><nobr><span class="ft10">p</span></nobr></DIV> <DIV style="position:absolute;top:658;left:509"><nobr><span class="ft10">t</span></nobr></DIV> <DIV style="position:absolute;top:641;left:460"><nobr><span class="ft10">=</span></nobr></DIV> <DIV style="position:absolute;top:666;left:539"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:683;left:135"><nobr><span class="ft1"> <br>Since the long industry supply curve is flat, the price <i>p</i> will be independent of how much <br>output firms produce and thus will be function of <i>w</i> and <i>t</i> alone. At any time <i>t</i> it will have <br>to equal an individual firm s marginal cost, and since it is independent of <i>y</i>, we can <br>assume that as a function of <i>w</i> it can be derived from a constant returns cost function, <br>with <i>c(w, y, t) = y c(w , t)</i>. If (as in the body of the paper) we use a constant returns <br>Cobb-Douglas cost function as a first order approximation to this cost function and <br>assume that the rate of change of <i>c(w, t)</i> is constant over time and cost neutral, then <br> </span></nobr></DIV> <DIV style="position:absolute;top:869;left:205"><nobr><span class="ft6"><i>ln (p) = ln (c(w, t)) = a - bt + s</i></span></nobr></DIV> <DIV style="position:absolute;top:879;left:482"><nobr><span class="ft7"><i>0 </i></span></nobr></DIV> <DIV style="position:absolute;top:869;left:496"><nobr><span class="ft6"><i>ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:879;left:538"><nobr><span class="ft7"><i>0)</i></span></nobr></DIV> <DIV style="position:absolute;top:869;left:550"><nobr><span class="ft6"><i> + . . . + s</i></span></nobr></DIV> <DIV style="position:absolute;top:879;left:644"><nobr><span class="ft7"><i>n </i></span></nobr></DIV> <DIV style="position:absolute;top:869;left:654"><nobr><span class="ft6"><i> ln (w</i></span></nobr></DIV> <DIV style="position:absolute;top:879;left:702"><nobr><span class="ft7"><i>n)</i></span></nobr></DIV> <DIV style="position:absolute;top:869;left:713"><nobr><span class="ft6"><i> </i></span></nobr></DIV> <DIV style="position:absolute;top:893;left:459"><nobr><span class="ft6"><i> </i></span></nobr></DIV> <DIV style="position:absolute;top:917;left:135"><nobr><span class="ft0">where <i>a</i> is a constant, <i>b &gt; 0</i> is the rate of technical change, <i>s</i></span></nobr></DIV> <DIV style="position:absolute;top:925;left:569"><nobr><span class="ft8"><i>i</i></span></nobr></DIV> <DIV style="position:absolute;top:917;left:572"><nobr><span class="ft3"><i> </i>and <i>w</i></span></nobr></DIV> <DIV style="position:absolute;top:925;left:619"><nobr><span class="ft8"><i>i</i></span></nobr></DIV> <DIV style="position:absolute;top:917;left:623"><nobr><span class="ft0"> are the factor share </span></nobr></DIV> <DIV style="position:absolute;top:938;left:135"><nobr><span class="ft1">and price of the i-th factor of production, and factor shares have to sum to one. We can <br>then calculate <i>b </i>by regressing <i>ln(p)</i> on time and on the logarithms of the factor share <br>prices; the error term in the regression will represent short term deviations from our <br>numerous assumptions (cost minimization, U-shaped cost curves, open entry, small firm <br>size, competitive factor markets, Cobb-Douglas cost function, and cost neutral technical </span></nobr></DIV> </DIV> <!-- Page 16 --> <a name="16"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">16</span></nobr></DIV> <DIV style="position:absolute;top:109;left:135"><nobr><span class="ft1">change). We assume as well that these error terms are identically distributed and <br>independent. <br> </span></nobr></DIV> <DIV style="position:absolute;top:150;left:189"><nobr><span class="ft0">One additional concern with these regressions might be what would happen to </span></nobr></DIV> <DIV style="position:absolute;top:171;left:135"><nobr><span class="ft1">prices if the state acted as a monopsonist. This will not be a problem, for two reasons. <br>First of all, states were not monopsonists in most of western Europe. There were in fact <br>many private buyers of arms and gunpowder besides the state: military contractors <br>bought them, as did privateers merchants, city governments, and even colleges. Second, <br>under our assumptions, even if the state is a monopsonist, the industry supply curve will <br>continue to be flat at the minimum average cost. Weapons producers will not produce <br>anything unless the price they receive at least this minimum average cost, and no <br>monopsonist will ever choose a higher price. The price will continue to equal <i>c(w, t),</i> and <br>the results of the price regressions will be unchanged. <br> <br> <br> <br> <br> <br> </span></nobr></DIV> </DIV> <!-- Page 17 --> <a name="17"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">17</span></nobr></DIV> <DIV style="position:absolute;top:109;left:432"><nobr><span class="ft0">Table 1 </span></nobr></DIV> <DIV style="position:absolute;top:129;left:459"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:150;left:309"><nobr><span class="ft0">Index of Prices Relative to Skilled Wages </span></nobr></DIV> <DIV style="position:absolute;top:171;left:459"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:191;left:113"><nobr><span class="ft0">Military Good </span></nobr></DIV> <DIV style="position:absolute;top:191;left:307"><nobr><span class="ft0">Date </span></nobr></DIV> <DIV style="position:absolute;top:191;left:399"><nobr><span class="ft1">Final Price Relative to Skilled <br>Wages (Index, Starting Date = 100) </span></nobr></DIV> <DIV style="position:absolute;top:244;left:265"><nobr><span class="ft0">Initial Final Good Iron Copper </span></nobr></DIV> <DIV style="position:absolute;top:244;left:613"><nobr><span class="ft0">Wood </span></nobr></DIV> <DIV style="position:absolute;top:191;left:683"><nobr><span class="ft0">Implied Lower </span></nobr></DIV> <DIV style="position:absolute;top:212;left:672"><nobr><span class="ft0">Bound for Rate of </span></nobr></DIV> <DIV style="position:absolute;top:233;left:701"><nobr><span class="ft0">Technical </span></nobr></DIV> <DIV style="position:absolute;top:253;left:682"><nobr><span class="ft0">Change (% Per </span></nobr></DIV> <DIV style="position:absolute;top:274;left:716"><nobr><span class="ft0">Year) </span></nobr></DIV> <DIV style="position:absolute;top:295;left:113"><nobr><span class="ft0">France </span></nobr></DIV> <DIV style="position:absolute;top:295;left:668"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:295;left:737"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:316;left:113"><nobr><span class="ft0">Artillery 1476 </span></nobr></DIV> <DIV style="position:absolute;top:316;left:343"><nobr><span class="ft0">1690 </span></nobr></DIV> <DIV style="position:absolute;top:316;left:423"><nobr><span class="ft0">32 </span></nobr></DIV> <DIV style="position:absolute;top:316;left:483"><nobr><span class="ft0">109 </span></nobr></DIV> <DIV style="position:absolute;top:316;left:550"><nobr><span class="ft0">147 </span></nobr></DIV> <DIV style="position:absolute;top:316;left:634"><nobr><span class="ft0"> 0.5 </span></nobr></DIV> <DIV style="position:absolute;top:336;left:113"><nobr><span class="ft0">Muskets 1451 </span></nobr></DIV> <DIV style="position:absolute;top:336;left:343"><nobr><span class="ft0">1800 </span></nobr></DIV> <DIV style="position:absolute;top:336;left:423"><nobr><span class="ft0">64 </span></nobr></DIV> <DIV style="position:absolute;top:336;left:483"><nobr><span class="ft0">224 </span></nobr></DIV> <DIV style="position:absolute;top:336;left:564"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:336;left:621"><nobr><span class="ft0">116 </span></nobr></DIV> <DIV style="position:absolute;top:336;left:726"><nobr><span class="ft0">0.1 </span></nobr></DIV> <DIV style="position:absolute;top:357;left:249"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:357;left:287"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:357;left:361"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:357;left:432"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:357;left:496"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:357;left:564"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:357;left:634"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:357;left:737"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:378;left:113"><nobr><span class="ft0">England </span></nobr></DIV> <DIV style="position:absolute;top:378;left:287"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:378;left:737"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:398;left:113"><nobr><span class="ft0">Artillery 1382 </span></nobr></DIV> <DIV style="position:absolute;top:398;left:343"><nobr><span class="ft0">1439 </span></nobr></DIV> <DIV style="position:absolute;top:398;left:423"><nobr><span class="ft0">63 </span></nobr></DIV> <DIV style="position:absolute;top:398;left:483"><nobr><span class="ft0">115 </span></nobr></DIV> <DIV style="position:absolute;top:398;left:564"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:398;left:621"><nobr><span class="ft0">117 </span></nobr></DIV> <DIV style="position:absolute;top:398;left:726"><nobr><span class="ft0">0.9 </span></nobr></DIV> <DIV style="position:absolute;top:419;left:113"><nobr><span class="ft0">Muskets 1620 </span></nobr></DIV> <DIV style="position:absolute;top:419;left:343"><nobr><span class="ft0">1678 </span></nobr></DIV> <DIV style="position:absolute;top:419;left:423"><nobr><span class="ft0">63 </span></nobr></DIV> <DIV style="position:absolute;top:419;left:487"><nobr><span class="ft0">77 </span></nobr></DIV> <DIV style="position:absolute;top:419;left:564"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:419;left:625"><nobr><span class="ft0">77 </span></nobr></DIV> <DIV style="position:absolute;top:419;left:726"><nobr><span class="ft0">0.6 </span></nobr></DIV> <DIV style="position:absolute;top:440;left:113"><nobr><span class="ft0">Pistols 1556 </span></nobr></DIV> <DIV style="position:absolute;top:440;left:343"><nobr><span class="ft0">1706 </span></nobr></DIV> <DIV style="position:absolute;top:440;left:423"><nobr><span class="ft0">36 </span></nobr></DIV> <DIV style="position:absolute;top:440;left:487"><nobr><span class="ft0">55 </span></nobr></DIV> <DIV style="position:absolute;top:440;left:564"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:440;left:621"><nobr><span class="ft0">131 </span></nobr></DIV> <DIV style="position:absolute;top:440;left:726"><nobr><span class="ft0">0.5 </span></nobr></DIV> <DIV style="position:absolute;top:460;left:135"><nobr><span class="ft1"> <br>Source: England: Beveridge 1965 (prices of firewood), Phelps Brown and Hopkins 1955 <br>(building craftsmen s wages), Tout 1911 (prices of artillery in 1382-88), Rogers 1993 <br>(prices of artillery in other years), and Rogers and Rogers 1866-1902 (prices of other <br>guns and of iron and firewood). For France: Avenel 1968 (prices of guns), Guyot 1888 <br>(iron prices and prices of fir planks), Levasseur 1893 (mason s wages, copper prices). <br> <br>Note: For France, wages (for masons) are 25-year averages, as are prices of iron, copper, <br>and wood. Levasseur s figures would have changed the final relative price of iron for <br>artillery from 115 to 76, but his iron prices are less reliable than Guyot s. For England, <br>prices of iron (wrought iron) and firewood (fagots) are 25-year averages. Here and in <br>subsequent tables, the French artillery include canons, couleuvrines, serpentines, and <br>pieces de canon. I used only those prices for which d Avenel had converted the prices to <br>francs per kilogram in order avoid problems with different units of weights. Handguns <br>included arquebuzes, fusils, and mousquets; if the context made it clear that the <br>mousquets or arquebuzes were large caliber, they were excluded. I also excluded guns <br>that were made for ornament or collection. As explained in the text, the flintlock fusils, <br>which appeared in the late seventeenth century, represent a qualitative improvement; <br>including them in the table will therefore underestimate technical change. To calculate <br>the implied lower bounds for the rate of technical change, I assumed that the labor factor <br>share was 0.5 and then chose the factor price in the table that would yield the lowest rate <br>of technical change between the initial and final date if prices for all the factors of <br>production other than labor had risen at the same rate relative to wages. Labor shares <br>from 0.25 to 0.75 lead to similar results. <br> <br> <br> <br> <br> </span></nobr></DIV> </DIV> <!-- Page 18 --> <a name="18"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">18</span></nobr></DIV> <DIV style="position:absolute;top:109;left:432"><nobr><span class="ft0">Table 2 </span></nobr></DIV> <DIV style="position:absolute;top:129;left:459"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:150;left:296"><nobr><span class="ft0">Coefficients of Time in Regression of <i>ln(p/q) </i></span></nobr></DIV> <DIV style="position:absolute;top:171;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:192;left:149"><nobr><span class="ft0">Military </span></nobr></DIV> <DIV style="position:absolute;top:213;left:140"><nobr><span class="ft0">Good with </span></nobr></DIV> <DIV style="position:absolute;top:233;left:153"><nobr><span class="ft0">Price <i>p</i> </span></nobr></DIV> <DIV style="position:absolute;top:192;left:242"><nobr><span class="ft0">Non-Military </span></nobr></DIV> <DIV style="position:absolute;top:213;left:231"><nobr><span class="ft0">Good with Price </span></nobr></DIV> <DIV style="position:absolute;top:233;left:286"><nobr><span class="ft3"><i>q</i> </span></nobr></DIV> <DIV style="position:absolute;top:192;left:378"><nobr><span class="ft0">Period Time </span></nobr></DIV> <DIV style="position:absolute;top:213;left:463"><nobr><span class="ft0">Coefficient/ </span></nobr></DIV> <DIV style="position:absolute;top:233;left:469"><nobr><span class="ft0">T-Statistic </span></nobr></DIV> <DIV style="position:absolute;top:254;left:462"><nobr><span class="ft0">(Percent Per </span></nobr></DIV> <DIV style="position:absolute;top:275;left:486"><nobr><span class="ft0">Year) </span></nobr></DIV> <DIV style="position:absolute;top:192;left:561"><nobr><span class="ft1">Factors of <br>Production in <br>Addition to <br>Skilled Labor </span></nobr></DIV> <DIV style="position:absolute;top:192;left:675"><nobr><span class="ft1">Time Coefficient/ T-<br>Statistic with No <br>Other Factors of <br>Production in <br>Regression </span></nobr></DIV> <DIV style="position:absolute;top:192;left:844"><nobr><span class="ft0">N </span></nobr></DIV> <DIV style="position:absolute;top:213;left:831"><nobr><span class="ft1"> <br> </span></nobr></DIV> <DIV style="position:absolute;top:296;left:127"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:296;left:230"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:296;left:351"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:296;left:453"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:296;left:561"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:296;left:675"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:296;left:831"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:317;left:376"><nobr><span class="ft0">France </span></nobr></DIV> <DIV style="position:absolute;top:317;left:831"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:338;left:147"><nobr><span class="ft0">Artillery </span></nobr></DIV> <DIV style="position:absolute;top:338;left:241"><nobr><span class="ft0">Lathing Nails 1476-1690 -0.2 / 2.22 </span></nobr></DIV> <DIV style="position:absolute;top:338;left:561"><nobr><span class="ft0">None </span></nobr></DIV> <DIV style="position:absolute;top:338;left:831"><nobr><span class="ft0">5 </span></nobr></DIV> <DIV style="position:absolute;top:360;left:148"><nobr><span class="ft0">Muskets </span></nobr></DIV> <DIV style="position:absolute;top:360;left:241"><nobr><span class="ft0">Lathing Nails 1475-1792 -0.5 / 1.55 </span></nobr></DIV> <DIV style="position:absolute;top:360;left:561"><nobr><span class="ft0">Iron, Capital -0.1 / 0.71 </span></nobr></DIV> <DIV style="position:absolute;top:360;left:831"><nobr><span class="ft0">36 </span></nobr></DIV> <DIV style="position:absolute;top:381;left:136"><nobr><span class="ft0">Gunpowder Lathing Nails 1359-1765 -0.3 / 1.95 </span></nobr></DIV> <DIV style="position:absolute;top:381;left:561"><nobr><span class="ft0">Capital </span></nobr></DIV> <DIV style="position:absolute;top:381;left:675"><nobr><span class="ft0"> 0.1 / 0.75 </span></nobr></DIV> <DIV style="position:absolute;top:381;left:831"><nobr><span class="ft0">68 </span></nobr></DIV> <DIV style="position:absolute;top:402;left:178"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:402;left:290"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:402;left:402"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:402;left:506"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:402;left:561"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:402;left:675"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:402;left:831"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:423;left:371"><nobr><span class="ft0">England </span></nobr></DIV> <DIV style="position:absolute;top:423;left:831"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:444;left:147"><nobr><span class="ft0">Artillery Spades </span></nobr></DIV> <DIV style="position:absolute;top:444;left:363"><nobr><span class="ft0">1382-1439 -2.4 / 8.65 </span></nobr></DIV> <DIV style="position:absolute;top:444;left:561"><nobr><span class="ft0">None </span></nobr></DIV> <DIV style="position:absolute;top:444;left:831"><nobr><span class="ft0">10 </span></nobr></DIV> <DIV style="position:absolute;top:466;left:148"><nobr><span class="ft0">Muskets Spades </span></nobr></DIV> <DIV style="position:absolute;top:466;left:362"><nobr><span class="ft0">1620-1678 -1.6 / 3.49 </span></nobr></DIV> <DIV style="position:absolute;top:466;left:561"><nobr><span class="ft0">None </span></nobr></DIV> <DIV style="position:absolute;top:466;left:831"><nobr><span class="ft0">7 </span></nobr></DIV> <DIV style="position:absolute;top:487;left:154"><nobr><span class="ft0">Pistols </span></nobr></DIV> <DIV style="position:absolute;top:487;left:230"><nobr><span class="ft0">Spades </span></nobr></DIV> <DIV style="position:absolute;top:487;left:362"><nobr><span class="ft0">1556-1706 -1.1 / 4.85 </span></nobr></DIV> <DIV style="position:absolute;top:487;left:560"><nobr><span class="ft0">Iron, Capital -1.3 / 8.33 </span></nobr></DIV> <DIV style="position:absolute;top:487;left:831"><nobr><span class="ft0">12 </span></nobr></DIV> <DIV style="position:absolute;top:508;left:136"><nobr><span class="ft0">Gunpowder Spades </span></nobr></DIV> <DIV style="position:absolute;top:508;left:363"><nobr><span class="ft0">1650-1706 -0.8 / 9.29 </span></nobr></DIV> <DIV style="position:absolute;top:508;left:561"><nobr><span class="ft0">Capital </span></nobr></DIV> <DIV style="position:absolute;top:508;left:675"><nobr><span class="ft0">-0.5 / 8.53 </span></nobr></DIV> <DIV style="position:absolute;top:508;left:831"><nobr><span class="ft0">62 </span></nobr></DIV> <DIV style="position:absolute;top:529;left:135"><nobr><span class="ft1"> <br>Source: English spade and gunpowder prices were kindly furnished by Greg Clark; the <br>English rent charge prices used in calculating the rental cost of capital came from his <br>2002 article. The French lathing nail and gunpowder prices are from d Avenel, and the <br>legal maxima interest rates used in calculating the cost of French capital came from <br>Guyot 1784-85, s.v.  Rente . All the other prices come from the sources listed in Table <br>1. <br> <br>Note: See text for explanation of regressions; the negative coefficients are a sign of <br>technical change, and N is the number of price observations for the military goods. <br>Where there were more than 10 observations, I ran the regressions on the year alone and <br>with additional factors of production other than skilled labor. The other factors of <br>production were ones whose prices I could find and for which factor shares were likely to <br>different for the military good and the comparison good. It was difficult to find prices for <br>the military and non military goods on the same date, and for that reason, I calculated the <br>price of the non-military goods by computing averages over long periods. In particular, <br>for France, the lathing nail prices (from d Avenel) were averages over 50-year periods; <br>iron prices and masons wages (both from Levasseur) were averages over 25-year <br>periods. There were no lathing nail prices available for 1650-99. Capital rental prices <br>took the legal maximum on perpetual annuities as the interest and assumed that the sales <br>price of capital goods was proportional to labor and that depreciation was 10 percent. <br>Capital rental prices for English goods were calculated in the same way, except that <br>Clark s decennial averages for rent charges were used for interest rates. Prices of iron <br>and spades were 25-year averages. The price of gunpowder was clearly influenced by <br>warfare; the table does not take that into account. <br> </span></nobr></DIV> <DIV style="position:absolute;top:1047;left:189"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1047;left:243"><nobr><span class="ft0"> </span></nobr></DIV> </DIV> <!-- Page 19 --> <a name="19"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">19</span></nobr></DIV> <DIV style="position:absolute;top:109;left:135"><nobr><span class="ft1"> <br> </span></nobr></DIV> <DIV style="position:absolute;top:150;left:432"><nobr><span class="ft0">Table 3 </span></nobr></DIV> <DIV style="position:absolute;top:171;left:459"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:191;left:146"><nobr><span class="ft0">Regression of the relative price of early handguns in Frankfurt on time and the price of </span></nobr></DIV> <DIV style="position:absolute;top:212;left:434"><nobr><span class="ft0">copper </span></nobr></DIV> <DIV style="position:absolute;top:233;left:459"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:262;left:135"><nobr><span class="ft1">Coefficient in equation 2 and <br>associated explanatory variable </span></nobr></DIV> <DIV style="position:absolute;top:262;left:445"><nobr><span class="ft0">Coefficient T-statistic </span></nobr></DIV> <DIV style="position:absolute;top:312;left:135"><nobr><span class="ft3"><i>a </i> (the constant term) </span></nobr></DIV> <DIV style="position:absolute;top:312;left:461"><nobr><span class="ft0">45.062 </span></nobr></DIV> <DIV style="position:absolute;top:312;left:704"><nobr><span class="ft0">6.39 </span></nobr></DIV> <DIV style="position:absolute;top:341;left:135"><nobr><span class="ft1"><i>b </i> (the year; the opposite of the <br>coefficient is then the total <br>factor productivity growth rate) </span></nobr></DIV> <DIV style="position:absolute;top:341;left:463"><nobr><span class="ft0">-0.030 5.92 </span></nobr></DIV> <DIV style="position:absolute;top:412;left:135"><nobr><span class="ft3"><i>s</i></span></nobr></DIV> <DIV style="position:absolute;top:420;left:142"><nobr><span class="ft8"><i>1 </i></span></nobr></DIV> <DIV style="position:absolute;top:412;left:157"><nobr><span class="ft0">(the logarithm of the price of </span></nobr></DIV> <DIV style="position:absolute;top:433;left:135"><nobr><span class="ft1">copper relative to the skilled <br>wage; the coefficient is then the <br>factor share for copper) </span></nobr></DIV> <DIV style="position:absolute;top:412;left:466"><nobr><span class="ft0">0.307 1.98 </span></nobr></DIV> <DIV style="position:absolute;top:504;left:135"><nobr><span class="ft0">R-square 0.73 </span></nobr></DIV> <DIV style="position:absolute;top:504;left:720"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:533;left:135"><nobr><span class="ft0">Adjusted R-square </span></nobr></DIV> <DIV style="position:absolute;top:533;left:470"><nobr><span class="ft0">0.69 </span></nobr></DIV> <DIV style="position:absolute;top:533;left:720"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:562;left:135"><nobr><span class="ft0">Standard error </span></nobr></DIV> <DIV style="position:absolute;top:562;left:470"><nobr><span class="ft0">0.19 </span></nobr></DIV> <DIV style="position:absolute;top:562;left:720"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:591;left:135"><nobr><span class="ft0">Observations 21 </span></nobr></DIV> <DIV style="position:absolute;top:591;left:720"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:613;left:135"><nobr><span class="ft1"> <br>Source: Rathgen 1928, 68-74. <br> <br>Note: The regression covers the years 1399-1431. The dependent variable is the <br>logarithm of the price of the handguns divided by the skilled wage. The wages used were <br>actually a piece rate (the money paid to the metal worker to cast a pound of copper). If <br>metal workers got better at casting in general, then the regression would underestimate <br>the rate of productivity increase. For some of Frankfurt s purchases, the accounting was <br>incomplete, and Rathgen had to assume that the wage rate or price of copper was the <br>same as in other transactions at nearby dates. I have used the prices he calculated for the <br>handguns except in a few instances where his extensive quotes from the archives suggest <br>that the prices were different; these differences were always small. As noted in the text, I <br>have assumed that the interest and depreciation rates were constant and that the sales <br>prices of capital was proportional to the skilled wage. The rental price of capital relative <br>to the skilled wage is then constant, and its coefficient enters into the constant term. <br> <br> <br> <br> <br> <br> <br> </span></nobr></DIV> </DIV> <!-- Page 20 --> <a name="20"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">20</span></nobr></DIV> <DIV style="position:absolute;top:109;left:135"><nobr><span class="ft1"> <br> <br> <br> </span></nobr></DIV> <DIV style="position:absolute;top:191;left:432"><nobr><span class="ft0">Table 4 </span></nobr></DIV> <DIV style="position:absolute;top:212;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:233;left:284"><nobr><span class="ft0">Military Labor Productivity in the French Army: </span></nobr></DIV> <DIV style="position:absolute;top:253;left:271"><nobr><span class="ft0">Rate of Successful Fire per Infantryman, 1600-1750 </span></nobr></DIV> <DIV style="position:absolute;top:274;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:303;left:138"><nobr><span class="ft0">Approximate Date Rate of Successful </span></nobr></DIV> <DIV style="position:absolute;top:324;left:282"><nobr><span class="ft0">Fire per Handgun </span></nobr></DIV> <DIV style="position:absolute;top:345;left:294"><nobr><span class="ft0">(shots/minute) </span></nobr></DIV> <DIV style="position:absolute;top:303;left:436"><nobr><span class="ft0">Handguns per </span></nobr></DIV> <DIV style="position:absolute;top:324;left:442"><nobr><span class="ft0">Infantryman </span></nobr></DIV> <DIV style="position:absolute;top:303;left:559"><nobr><span class="ft0">Rate of Successful </span></nobr></DIV> <DIV style="position:absolute;top:324;left:598"><nobr><span class="ft0">Fire per </span></nobr></DIV> <DIV style="position:absolute;top:345;left:582"><nobr><span class="ft0">Infantryman </span></nobr></DIV> <DIV style="position:absolute;top:366;left:574"><nobr><span class="ft0">(shots/minute) </span></nobr></DIV> <DIV style="position:absolute;top:303;left:720"><nobr><span class="ft0">Assumptions </span></nobr></DIV> <DIV style="position:absolute;top:395;left:135"><nobr><span class="ft1">1600 (1620 for <br>handguns per <br>infantryman) </span></nobr></DIV> <DIV style="position:absolute;top:395;left:303"><nobr><span class="ft0">0.25 to 0.50 </span></nobr></DIV> <DIV style="position:absolute;top:395;left:470"><nobr><span class="ft0">0.40 </span></nobr></DIV> <DIV style="position:absolute;top:395;left:592"><nobr><span class="ft0">0.10-0.20 </span></nobr></DIV> <DIV style="position:absolute;top:395;left:697"><nobr><span class="ft1">0.5 to 1 shot per <br>minute with <br>matchlock; 0.50 <br>misfire rate </span></nobr></DIV> <DIV style="position:absolute;top:486;left:135"><nobr><span class="ft0">1700 </span></nobr></DIV> <DIV style="position:absolute;top:486;left:330"><nobr><span class="ft0">0.67 </span></nobr></DIV> <DIV style="position:absolute;top:486;left:470"><nobr><span class="ft0">1.00 </span></nobr></DIV> <DIV style="position:absolute;top:486;left:611"><nobr><span class="ft0">0.67 </span></nobr></DIV> <DIV style="position:absolute;top:486;left:697"><nobr><span class="ft1">1 shot per minute <br>with flintlock, 0.33 <br>misfire rate; <br>bayonets have led <br>to replacement of <br>pikemen. </span></nobr></DIV> <DIV style="position:absolute;top:619;left:135"><nobr><span class="ft0">1750 </span></nobr></DIV> <DIV style="position:absolute;top:619;left:330"><nobr><span class="ft0">1.33 1.00 1.33 </span></nobr></DIV> <DIV style="position:absolute;top:619;left:697"><nobr><span class="ft0">2 </span></nobr></DIV> <DIV style="position:absolute;top:619;left:711"><nobr><span class="ft0">shots </span></nobr></DIV> <DIV style="position:absolute;top:619;left:752"><nobr><span class="ft0">per </span></nobr></DIV> <DIV style="position:absolute;top:619;left:780"><nobr><span class="ft0">minute </span></nobr></DIV> <DIV style="position:absolute;top:640;left:697"><nobr><span class="ft1">with flintlock, <br>ramrod, and paper <br>cartridge; 0.33 <br>misfire rate. </span></nobr></DIV> <DIV style="position:absolute;top:723;left:135"><nobr><span class="ft1"> <br>Source: Lynn 1997, 457-60, 464-65, 469-72. <br> <br>Notes: The calculation considers only pikemen and infantrymen with firearms; it ignores <br>unarmed solders, such as drummers. The implied rate of labor productivity growth over <br>the 150 year period from 1600 to 1750 is between 1.3 and 1.7 percent per year. <br> </span></nobr></DIV> </DIV> <!-- Page 21 --> <a name="21"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">21</span></nobr></DIV> <DIV style="position:absolute;top:109;left:459"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:129;left:432"><nobr><span class="ft0">Table 5 </span></nobr></DIV> <DIV style="position:absolute;top:150;left:459"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:171;left:140"><nobr><span class="ft0">Probability That a Major European Sovereign Was Deposed After Losing a Foreign War</span></nobr></DIV> <DIV style="position:absolute;top:168;left:778"><nobr><span class="ft5"> </span></nobr></DIV> <DIV style="position:absolute;top:191;left:459"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:212;left:350"><nobr><span class="ft1">Fraction Deposed Because of Defeat in <br>Each Year of War or in Each Year of <br>War Loss </span></nobr></DIV> <DIV style="position:absolute;top:274;left:445"><nobr><span class="ft0">Conditional on: </span></nobr></DIV> <DIV style="position:absolute;top:304;left:377"><nobr><span class="ft0">Being at War </span></nobr></DIV> <DIV style="position:absolute;top:304;left:534"><nobr><span class="ft0">Losing War </span></nobr></DIV> <DIV style="position:absolute;top:325;left:162"><nobr><span class="ft0">Period: 1500-</span></nobr></DIV> <DIV style="position:absolute;top:346;left:369"><nobr><span class="ft0">1799 </span></nobr></DIV> <DIV style="position:absolute;top:325;left:442"><nobr><span class="ft0">1800-</span></nobr></DIV> <DIV style="position:absolute;top:346;left:445"><nobr><span class="ft0">1919 </span></nobr></DIV> <DIV style="position:absolute;top:325;left:518"><nobr><span class="ft0">1500-</span></nobr></DIV> <DIV style="position:absolute;top:346;left:521"><nobr><span class="ft0">1799 </span></nobr></DIV> <DIV style="position:absolute;top:325;left:593"><nobr><span class="ft0">1800-</span></nobr></DIV> <DIV style="position:absolute;top:346;left:596"><nobr><span class="ft0">1919 </span></nobr></DIV> <DIV style="position:absolute;top:366;left:162"><nobr><span class="ft0">Country </span></nobr></DIV> <DIV style="position:absolute;top:408;left:162"><nobr><span class="ft0">Austrian Dominions </span></nobr></DIV> <DIV style="position:absolute;top:408;left:394"><nobr><span class="ft0">0.00</span></nobr></DIV> <DIV style="position:absolute;top:408;left:469"><nobr><span class="ft0">0.07</span></nobr></DIV> <DIV style="position:absolute;top:408;left:545"><nobr><span class="ft0">0.00</span></nobr></DIV> <DIV style="position:absolute;top:408;left:621"><nobr><span class="ft0">0.20</span></nobr></DIV> <DIV style="position:absolute;top:428;left:162"><nobr><span class="ft0">France 0.00</span></nobr></DIV> <DIV style="position:absolute;top:428;left:469"><nobr><span class="ft0">0.06</span></nobr></DIV> <DIV style="position:absolute;top:428;left:545"><nobr><span class="ft0">0.00</span></nobr></DIV> <DIV style="position:absolute;top:428;left:621"><nobr><span class="ft0">0.67</span></nobr></DIV> <DIV style="position:absolute;top:449;left:162"><nobr><span class="ft0">Great Britain </span></nobr></DIV> <DIV style="position:absolute;top:449;left:394"><nobr><span class="ft0">0.00</span></nobr></DIV> <DIV style="position:absolute;top:449;left:469"><nobr><span class="ft0">0.00</span></nobr></DIV> <DIV style="position:absolute;top:449;left:545"><nobr><span class="ft0">0.00</span></nobr></DIV> <DIV style="position:absolute;top:449;left:621"><nobr><span class="ft0">0.00</span></nobr></DIV> <DIV style="position:absolute;top:470;left:162"><nobr><span class="ft0">Hohenzollern Dominions </span></nobr></DIV> <DIV style="position:absolute;top:470;left:394"><nobr><span class="ft0">0.00</span></nobr></DIV> <DIV style="position:absolute;top:470;left:469"><nobr><span class="ft0">0.06</span></nobr></DIV> <DIV style="position:absolute;top:470;left:545"><nobr><span class="ft0">0.00</span></nobr></DIV> <DIV style="position:absolute;top:470;left:621"><nobr><span class="ft0">0.50</span></nobr></DIV> <DIV style="position:absolute;top:491;left:162"><nobr><span class="ft0">Spain 0.00</span></nobr></DIV> <DIV style="position:absolute;top:491;left:469"><nobr><span class="ft0">0.10</span></nobr></DIV> <DIV style="position:absolute;top:491;left:545"><nobr><span class="ft0">0.00</span></nobr></DIV> <DIV style="position:absolute;top:491;left:621"><nobr><span class="ft0">0.33</span></nobr></DIV> <DIV style="position:absolute;top:511;left:459"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:532;left:135"><nobr><span class="ft1">Source: Langer 1968; Hoffman and Rosenthal (2002). <br> <br>Note: The calculation of the conditional probabilities begins with a count of sovereigns <br>who were deposed after losing a foreign war for the Austrian Dominions, France, Great <br>Britain, the Hohenzollern lands, and Spain. The count includes any assassinations <br>provoked by loss in a foreign war, but it excludes assassination or removal from office <br>during civil wars and internal revolutions, unless the cause was the loss of a foreign war. <br>In particular, the executions of king Charles I of England and Louis XVI of France are <br>not counted, and the same holds for the removal of James II of England and the <br>deposition of Ferdinand II in Bohemia in 1618. The calculations also exclude the simple <br>downfall of ministries. The number of deposed monarchs is then divided by the number <br>of years the country was at war; that yields the probability of deposition after losing a <br>foreign war conditional on being at war. War here is defined as any class of armed <br>conflict significant enough to be included in Langer 1968; no formal declaration of war is <br>necessary. It includes colonial fighting, but it excludes civil wars unless foreign powers <br>are involved. The calculation of the probability of deposition conditional on losing a war <br>is similar; the only difference is the number of deposed monarchs is divided by the <br>number of years in which a war ended with a loss for the country concerned. Sovereigns <br>included all monarchs, whether absolute or constitutional. For republics, the sovereign <br>was the parliament or legislative assemblies; if the legislative assemblies shared <br>sovereignty with a president or other executive, then the sovereign was the executive and <br>the legislative assemblies together. <br> </span></nobr></DIV> <DIV style="position:absolute;top:987;left:189"><nobr><span class="ft0">The Austrian dominions exclude Habsburg territory in Iberian Peninsula, Italy, </span></nobr></DIV> <DIV style="position:absolute;top:1008;left:135"><nobr><span class="ft1">Low Countries, and Latin America. Bohemia is excluded before Habsburgs assume the <br>crown in 1526, and Hungary is not counted until it was fully integrated into the Habsburg <br>holdings in 1699. For France, the Convention is counted as a sovereign; Napoleon's </span></nobr></DIV> </DIV> <!-- Page 22 --> <a name="22"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">22</span></nobr></DIV> <DIV style="position:absolute;top:109;left:135"><nobr><span class="ft1">abdication in 1814 is counted as a removal after a loss, but not his second abdication after <br>Waterloo. For Great Britain, the calculation concerns England and Ireland alone up until <br>1603; during the Protectorate, the Lord Protector is counted as sovereign. For Spain, <br>depositions do not include loss of Portugal or of non-Iberian possessions. All the <br>probabilities are ex-post, and they clearly make more sense for monarchies than for <br>republics. </span></nobr></DIV> </DIV> <!-- Page 23 --> <a name="23"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- .ft16{font-size:16px;font-family:Times;color:#000000;} --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">23</span></nobr></DIV> <DIV style="position:absolute;top:109;left:409"><nobr><span class="ft0"> Bibliography </span></nobr></DIV> <DIV style="position:absolute;top:129;left:135"><nobr><span class="ft1"> <br>Acemoglu, D., S. 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Prices relative to mason s wages: French artillery </span></nobr></DIV> <DIV style="position:absolute;top:147;left:236"><nobr><span class="ft18">Prices Relative to Mason's Wages: French Artillery</span></nobr></DIV> <DIV style="position:absolute;top:406;left:199"><nobr><span class="ft19">0</span></nobr></DIV> <DIV style="position:absolute;top:364;left:190"><nobr><span class="ft19">50</span></nobr></DIV> <DIV style="position:absolute;top:322;left:181"><nobr><span class="ft19">100</span></nobr></DIV> <DIV style="position:absolute;top:279;left:181"><nobr><span class="ft19">150</span></nobr></DIV> <DIV style="position:absolute;top:238;left:181"><nobr><span class="ft19">200</span></nobr></DIV> <DIV style="position:absolute;top:195;left:181"><nobr><span class="ft19">250</span></nobr></DIV> <DIV style="position:absolute;top:429;left:236"><nobr><span class="ft19">1476 war</span></nobr></DIV> <DIV style="position:absolute;top:429;left:334"><nobr><span class="ft19">1524 war</span></nobr></DIV> <DIV style="position:absolute;top:429;left:424"><nobr><span class="ft19">1622 peace</span></nobr></DIV> <DIV style="position:absolute;top:429;left:532"><nobr><span class="ft19">1647 war</span></nobr></DIV> <DIV style="position:absolute;top:429;left:630"><nobr><span class="ft19">1690 war</span></nobr></DIV> <DIV style="position:absolute;top:334;left:170"><nobr><span class="ft20">1476 = 100</span></nobr></DIV> <DIV style="position:absolute;top:468;left:308"><nobr><span class="ft19">cannons (per kg)</span></nobr></DIV> <DIV style="position:absolute;top:468;left:505"><nobr><span class="ft19">copper </span></nobr></DIV> <DIV style="position:absolute;top:493;left:308"><nobr><span class="ft19">iron/wages Levasseur</span></nobr></DIV> <DIV style="position:absolute;top:493;left:505"><nobr><span class="ft19">iron/wages Guyot</span></nobr></DIV> </DIV> <!-- Page 28 --> <a name="28"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- .ft21{font-size:13px;line-height:24px;font-family:Helvetica;color:#000000;} --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">28</span></nobr></DIV> <DIV style="position:absolute;top:476;left:135"><nobr><span class="ft1"> <br>Figure 2: Prices Relative to Mason s Wage: French Muskets </span></nobr></DIV> <DIV style="position:absolute;top:125;left:219"><nobr><span class="ft18">Prices Relative to Mason's Wage: French Muskets</span></nobr></DIV> <DIV style="position:absolute;top:376;left:200"><nobr><span class="ft19">0</span></nobr></DIV> <DIV style="position:absolute;top:346;left:191"><nobr><span class="ft19">50</span></nobr></DIV> <DIV style="position:absolute;top:318;left:182"><nobr><span class="ft19">100</span></nobr></DIV> <DIV style="position:absolute;top:289;left:182"><nobr><span class="ft19">150</span></nobr></DIV> <DIV style="position:absolute;top:260;left:182"><nobr><span class="ft19">200</span></nobr></DIV> <DIV style="position:absolute;top:231;left:182"><nobr><span class="ft19">250</span></nobr></DIV> <DIV style="position:absolute;top:202;left:182"><nobr><span class="ft19">300</span></nobr></DIV> <DIV style="position:absolute;top:173;left:182"><nobr><span class="ft19">350</span></nobr></DIV> <DIV style="position:absolute;top:414;left:237"><nobr><span class="ft20">1451</span></nobr></DIV> <DIV style="position:absolute;top:414;left:287"><nobr><span class="ft20">1501</span></nobr></DIV> <DIV style="position:absolute;top:414;left:337"><nobr><span class="ft20">1551</span></nobr></DIV> <DIV style="position:absolute;top:414;left:387"><nobr><span class="ft20">1601</span></nobr></DIV> <DIV style="position:absolute;top:414;left:436"><nobr><span class="ft20">1651</span></nobr></DIV> <DIV style="position:absolute;top:414;left:487"><nobr><span class="ft20">1701</span></nobr></DIV> <DIV style="position:absolute;top:414;left:537"><nobr><span class="ft20">1751</span></nobr></DIV> <DIV style="position:absolute;top:434;left:306"><nobr><span class="ft19">25-year period beginning</span></nobr></DIV> <DIV style="position:absolute;top:322;left:171"><nobr><span class="ft19">1451-75 = 100</span></nobr></DIV> <DIV style="position:absolute;top:251;left:622"><nobr><span class="ft21">Muskets<br>Iron<br>Wood</span></nobr></DIV> </DIV> <!-- Page 29 --> <a name="29"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- .ft22{font-size:12px;line-height:23px;font-family:Helvetica;color:#000000;} --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">29</span></nobr></DIV> <DIV style="position:absolute;top:471;left:135"><nobr><span class="ft1"> <br>Figure 3: Prices Relative too Skilled Wages: English Artillery <br> </span></nobr></DIV> <DIV style="position:absolute;top:125;left:203"><nobr><span class="ft18">Prices Relative to Skilled Wages: English Artillery</span></nobr></DIV> <DIV style="position:absolute;top:408;left:194"><nobr><span class="ft20">0</span></nobr></DIV> <DIV style="position:absolute;top:385;left:181"><nobr><span class="ft20">0.2</span></nobr></DIV> <DIV style="position:absolute;top:361;left:181"><nobr><span class="ft20">0.4</span></nobr></DIV> <DIV style="position:absolute;top:337;left:181"><nobr><span class="ft20">0.6</span></nobr></DIV> <DIV style="position:absolute;top:314;left:181"><nobr><span class="ft20">0.8</span></nobr></DIV> <DIV style="position:absolute;top:290;left:194"><nobr><span class="ft20">1</span></nobr></DIV> <DIV style="position:absolute;top:265;left:181"><nobr><span class="ft20">1.2</span></nobr></DIV> <DIV style="position:absolute;top:242;left:181"><nobr><span class="ft20">1.4</span></nobr></DIV> <DIV style="position:absolute;top:218;left:181"><nobr><span class="ft20">1.6</span></nobr></DIV> <DIV style="position:absolute;top:195;left:181"><nobr><span class="ft20">1.8</span></nobr></DIV> <DIV style="position:absolute;top:171;left:194"><nobr><span class="ft20">2</span></nobr></DIV> <DIV style="position:absolute;top:430;left:197"><nobr><span class="ft20">1380</span></nobr></DIV> <DIV style="position:absolute;top:430;left:250"><nobr><span class="ft20">1390</span></nobr></DIV> <DIV style="position:absolute;top:430;left:304"><nobr><span class="ft20">1400</span></nobr></DIV> <DIV style="position:absolute;top:430;left:357"><nobr><span class="ft20">1410</span></nobr></DIV> <DIV style="position:absolute;top:430;left:409"><nobr><span class="ft20">1420</span></nobr></DIV> <DIV style="position:absolute;top:430;left:463"><nobr><span class="ft20">1430</span></nobr></DIV> <DIV style="position:absolute;top:430;left:516"><nobr><span class="ft20">1440</span></nobr></DIV> <DIV style="position:absolute;top:302;left:170"><nobr><span class="ft20">D/Kg</span></nobr></DIV> <DIV style="position:absolute;top:267;left:581"><nobr><span class="ft22">Artillery<br>Iron<br>Firewood</span></nobr></DIV> </DIV> <!-- Page 30 --> <a name="30"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">30</span></nobr></DIV> <DIV style="position:absolute;top:435;left:135"><nobr><span class="ft1"> <br> <br>Figure 4: Prices Relative to Skilled Wages: English Muskets <br> </span></nobr></DIV> <DIV style="position:absolute;top:125;left:219"><nobr><span class="ft18">Prices Relative to Skilled Wages: English Muskets</span></nobr></DIV> <DIV style="position:absolute;top:372;left:221"><nobr><span class="ft20">0</span></nobr></DIV> <DIV style="position:absolute;top:340;left:213"><nobr><span class="ft20">20</span></nobr></DIV> <DIV style="position:absolute;top:306;left:213"><nobr><span class="ft20">40</span></nobr></DIV> <DIV style="position:absolute;top:273;left:213"><nobr><span class="ft20">60</span></nobr></DIV> <DIV style="position:absolute;top:241;left:213"><nobr><span class="ft20">80</span></nobr></DIV> <DIV style="position:absolute;top:207;left:205"><nobr><span class="ft20">100</span></nobr></DIV> <DIV style="position:absolute;top:174;left:205"><nobr><span class="ft20">120</span></nobr></DIV> <DIV style="position:absolute;top:394;left:224"><nobr><span class="ft20">1600</span></nobr></DIV> <DIV style="position:absolute;top:394;left:276"><nobr><span class="ft20">1620</span></nobr></DIV> <DIV style="position:absolute;top:394;left:327"><nobr><span class="ft20">1640</span></nobr></DIV> <DIV style="position:absolute;top:394;left:378"><nobr><span class="ft20">1660</span></nobr></DIV> <DIV style="position:absolute;top:394;left:430"><nobr><span class="ft20">1680</span></nobr></DIV> <DIV style="position:absolute;top:394;left:481"><nobr><span class="ft20">1700</span></nobr></DIV> <DIV style="position:absolute;top:306;left:194"><nobr><span class="ft20">1620 = 100</span></nobr></DIV> <DIV style="position:absolute;top:219;left:619"><nobr><span class="ft22">Muskets<br>Iron<br>Firewood</span></nobr></DIV> </DIV> <!-- Page 31 --> <a name="31"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- .ft23{font-size:15px;font-family:Helvetica;color:#000000;} --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">31</span></nobr></DIV> <DIV style="position:absolute;top:416;left:135"><nobr><span class="ft1"> <br> <br>Figure 5: Prices Relative to Skilled Wages: English Pistols <br> </span></nobr></DIV> <DIV style="position:absolute;top:124;left:199"><nobr><span class="ft23">Prices Relative to Skilled Wages: English Pistols</span></nobr></DIV> <DIV style="position:absolute;top:353;left:197"><nobr><span class="ft20">0</span></nobr></DIV> <DIV style="position:absolute;top:327;left:189"><nobr><span class="ft20">20</span></nobr></DIV> <DIV style="position:absolute;top:300;left:189"><nobr><span class="ft20">40</span></nobr></DIV> <DIV style="position:absolute;top:274;left:189"><nobr><span class="ft20">60</span></nobr></DIV> <DIV style="position:absolute;top:247;left:189"><nobr><span class="ft20">80</span></nobr></DIV> <DIV style="position:absolute;top:221;left:181"><nobr><span class="ft20">100</span></nobr></DIV> <DIV style="position:absolute;top:194;left:181"><nobr><span class="ft20">120</span></nobr></DIV> <DIV style="position:absolute;top:169;left:181"><nobr><span class="ft20">140</span></nobr></DIV> <DIV style="position:absolute;top:374;left:200"><nobr><span class="ft20">1500</span></nobr></DIV> <DIV style="position:absolute;top:374;left:261"><nobr><span class="ft20">1550</span></nobr></DIV> <DIV style="position:absolute;top:374;left:322"><nobr><span class="ft20">1600</span></nobr></DIV> <DIV style="position:absolute;top:374;left:382"><nobr><span class="ft20">1650</span></nobr></DIV> <DIV style="position:absolute;top:374;left:443"><nobr><span class="ft20">1700</span></nobr></DIV> <DIV style="position:absolute;top:374;left:504"><nobr><span class="ft20">1750</span></nobr></DIV> <DIV style="position:absolute;top:294;left:170"><nobr><span class="ft20">1556 = 100</span></nobr></DIV> <DIV style="position:absolute;top:237;left:568"><nobr><span class="ft22">Pistols<br>Iron<br>Firewood</span></nobr></DIV> </DIV> <!-- Page 32 --> <a name="32"></a> <DIV style="position:relative;width:918;height:1188;"> <STYLE type="text/css"> <!-- .ft24{font-size:12px;font-family:Helvetica;color:#000000;} --> </STYLE> <DIV style="position:absolute;top:1098;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1099;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1101;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1102;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1104;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1105;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1107;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1108;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1109;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1111;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1112;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1114;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1115;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1116;left:621"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1118;left:135"><nobr><span class="ft0"> </span></nobr></DIV> <DIV style="position:absolute;top:1113;left:450"><nobr><span class="ft0">32</span></nobr></DIV> <DIV style="position:absolute;top:616;left:135"><nobr><span class="ft1"> <br> <br>Figure 6. Prices of cannons and capital relative to a mason s wages in France, 1476-<br>1690. There are two measures of the price of capital in the figure: the rental price of <br>housing, and the rental price of a capital good whose sales price is proportional to <br>mason s wage. Both are measured relative to the mason s wage. For the second good, I <br>have assumed 10 percent depreciation and an interest rate <i>r</i> equal to the legal maximum <br>on perpetual annuities. <br> </span></nobr></DIV> <DIV style="position:absolute;top:128;left:207"><nobr><span class="ft18">Price of Cannons and Capital Relative to Mason's </span></nobr></DIV> <DIV style="position:absolute;top:151;left:286"><nobr><span class="ft18">Wages in France, 1476-1690</span></nobr></DIV> <DIV style="position:absolute;top:522;left:213"><nobr><span class="ft20">1</span></nobr></DIV> <DIV style="position:absolute;top:442;left:205"><nobr><span class="ft20">10</span></nobr></DIV> <DIV style="position:absolute;top:361;left:197"><nobr><span class="ft20">100</span></nobr></DIV> <DIV style="position:absolute;top:281;left:189"><nobr><span class="ft20">1000</span></nobr></DIV> <DIV style="position:absolute;top:200;left:181"><nobr><span class="ft20">10000</span></nobr></DIV> <DIV style="position:absolute;top:543;left:244"><nobr><span class="ft20">1476 war</span></nobr></DIV> <DIV style="position:absolute;top:543;left:327"><nobr><span class="ft20">1524 war</span></nobr></DIV> <DIV style="position:absolute;top:543;left:403"><nobr><s<script language=javascript> if(window.yzq_p==null)document.write("<scr"+"ipt language=javascript src=http://l.yimg.com/us.js.yimg.com/lib/bc/bc_2.0.4.js></scr"+"ipt>"); </script><script language=javascript> if(window.yzq_p)yzq_p('P=7KzAo9htfYLroKMTYzbTiwVUPvDAI0avShoABmzs&T=13uhkl2mb%2fX%3d1185892891%2fE%3d96062901%2fR%3dyahoosrch%2fK%3d5%2fV%3d1.1%2fW%3dJ%2fY%3dYAHOO%2fF%3d2918947109%2fS%3d1%2fJ%3d0C7D6DD8'); if(window.yzq_s)yzq_s(); </script><noscript><img width=1 height=1 alt="" src="http://us.bc.yahoo.com/b?P=7KzAo9htfYLroKMTYzbTiwVUPvDAI0avShoABmzs&T=1437qqjah%2fX%3d1185892891%2fE%3d96062901%2fR%3dyahoosrch%2fK%3d5%2fV%3d3.1%2fW%3dJ%2fY%3dYAHOO%2fF%3d3399706193%2fQ%3d-1%2fS%3d1%2fJ%3d0C7D6DD8"></noscript> <!-- cache1.search.dcn.yahoo.com uncompressed/chunked Tue Jul 31 07:41:30 PDT 2007 -->