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An Economic History of Europe, CH: 1,2,3,9 (Europe form obscurity to…

- - - - carolingian empire represented the revival of political order
      - The Carolingian Empire (800–888) was a large empire in western and central Europe during the early Middle Ages. It was ruled by the Carolingian dynasty, which had ruled as kings of the Franks since 751 and as kings of the Lombards of Italy from 774. In 800, the Frankish king Charlemagne was crowned emperor in Rome by Pope Leo III in an effort to revive the Roman Empire in the west during a vacancy in the throne of the eastern Roman Empire. After a civil war (840–43) following the death of Emperor Louis the Pious, the empire was divided into autonomous kingdoms, with one king still recognised as emperor, but with little authority outside his own kingdom. The unity of the empire and the hereditary right of the Carolingians continued to be acknowledged.
    - - nations form because they offer economies of scale
      - difference in size distribution etc has more to do with politics and ethnicity then economics
  - - - the two factors are the national income and the distance between them
      - border effects
        
        insight from Henri Pirenne that differences in religion and culture etc have a negative effect as well. We call these border effects. :pencil2: This is an interesting point here because it shows that trading is not purely rational but depends on cultural effects etc.
        
        can be eroded through trade because it promotes a lingua franca etc. Trade generates similarities of nations.
        
        modern research suggests that trade actually did not decline as much as stated by Pirenne
        
        After the conquests of the Arab peninsula int he 8th and 9th centuries the trade in the Meditarraneun stopped or slowed down and shifted towards central and western europe -> this is because of religious differences. Pirenne argues that they did not trust each other. trust: hard to enforce things because people could not be trusted (or agents could not be trusted)
        
        religious unity in the northern region with christianity etc.
  - - - Russias backwardness
        
        Russias institutions remained distinct -> serfdom was introduced in Russia in the 16th century when it was abolished elsewhere.
        
        Russia was late in industrialising etc.
        
        Russias poor state prevented it from joining europe. income was very low and the economy was not very developed
        
        when technology and income differ among trading partners then trade volumes will be low
      - Catch up
        
        caught up at the beginning of the 19th century
        
        did not lead to integration because of antagonism in western Europe
        
        Nowadays russia is still an insignificant trading partner
  - - - formative of the EU were the 1950s
      - EEC was founded in 1958 with the Treaty of Rome
      - GB was excluded and formed the EFTA
      - EFTA
        
        The European Free Trade Association (EFTA) is a regional trade organization and free trade area consisting of four European states: Iceland, Liechtenstein, Norway, and Switzerland.[1] The organization operates in parallel with the European Union (EU), and all four member states participate in the European Single Market.[2] They are not, however, party to the European Union Customs Union.
        
        EFTA was historically one of the two dominant western European trade blocs, but is now much smaller and closely associated with its historical competitor, the European Union. It was established on 3 May 1960 to serve as an alternative trade bloc for those European states that were unable or unwilling to join the then European Economic Community (EEC) (which subsequently became the European Union). The Stockholm Convention, to establish the EFTA, was signed on 4 January 1960 in the Swedish capital by seven countries (known as the "outer seven"). Since 1995, only two founding members remain, namely Norway and Switzerland. The other five, Austria, Denmark, Portugal, Sweden and the United Kingdom, have joined the EU in the intervening years.
        
        was doomed because its countries traded much more wth the countries of the EEC
      - GB was admitted in 1970
- - - - division of labour is necessary
    - - households produce those which they can produce at low opportunity costs.
- - - - slow growth until the 18th century
      - between 200 and 600 the european population halved before it started to grow again
      - Black Death i 1347, reducing the european population by at least 1/3
      - correlation between harvests and epidemics because poor harvest results in migration which carried the diseases
      - Malthus
        
        world population has grown by facto 6 since his books
        
        that he is wrong about current data does not mean that he is wrong about the past
        
        The malthusian theory of population growth and stagnation
        
        it is logical and simple -> therefore still appealing
        
        as the population grows ou have diminish returns
        
        he assumed that there is no technological progress
        
        economy will settle at equilibrium
        
        evidence suggest that at most times land was still available for production
        
        validity
        
        at the beginning of the 16th century real wages in england declined but population increased after the Black Death
- - - - World systems: Bretton Woods was monetary autonomy and fixed exchange rates. The international gold standard was fixed exchange rate and unrestricted capital mobility and the post Bretton woods world is unrestricted capital mobility and monetary autonomy
      - the international Gold standard
        
        Wikipedia
        
        The gold standard is a monetary system where a country's currency or paper money has a value directly linked to gold. With the gold standard, countries agreed to convert paper money into a fixed amount of gold. A country that uses the gold standard sets a fixed price for gold and buys and sells gold at that price. That fixed price is used to determine the value of the currency. For example, if the U.S. sets the price of gold at $500 an ounce, the value of the dollar would be 1/500th of an ounce of gold.
        The gold standard is not currently used by any government. Britain stopped using the gold standard in 1931 and the United States followed suit in 1933 and abandoned the remnants of the system in 1971. The gold standard was completely replaced by fiat money. The term fiat money is used to describe currency that is used because of a government's order — or fiat — that the currency must be accepted as a means of payment. So for the U.S., the dollar is fiat money, and for Nigeria it is the naira
        
        book
        
        1870 - 1914
        
        has its origins in Britains Resumption Act of 1819 which resumed and institutionalised the practice of exchanging currencies notes for gold op a fixed rate
        
        previously countries had often practiced bimetallism: Bimetallism[a] is the economic term for a monetary standard in which the value of the monetary unit is defined as equivalent to certain quantities of two metals, typically gold and silver, creating a fixed rate of exchange between them.
        
        Scandinavian monetary union and and the Latin monetary union (LMU) from 1865 between a large number of european countries. The French quest for economic power played a large role -> by 1970 almost all countries were basing their currency on gold.
        
        small deviation were possible because of the transport costs for gold
        
        governments took the approach of laissez faire (hands off). this was justified by theory. David Hume wrote in 1752 that the gold standard should automatically ensure balance of payments
        
        central banks often sterilised gold inflows -> preventing them from coming into the money stock.
        
        the interwar years
        
        during the first world war the gold standard was suspended for economic and political reasons -> German hyperinflation went wild
        
        gold standard played a large part in worsening the depression
        
        France and the USA were sterilising gold and absorbing it until they held 70% of the reserves. in the great crash countries needed to restrict their gold supplies because the USA and France had them all
        
        the UK could not handle the outflow of gold in 1931 and left the gold standard, other countries followed soon, the united Satets in 1933
        
        those countries who left early could devalue and leave the gold standard early and recovered faster
        
        France for instance took his time to leave and left in 1936 and needed more time to recover
      - Bretton Woods
        
        Wikipedia
        
        The Bretton Woods Agreement is the landmark system for monetary and exchange rate management established in 1944. It was developed at the United Nations Monetary and Financial Conference held in Bretton Woods, New Hampshire, from July 1 to July 22, 1944. Under the agreement, currencies were pegged to the price of gold, and the U.S. dollar was seen as a reserve currency linked to the price of gold.
        
        book
        
        reaction to the great depression was a disaster and protctoinsism increased and countries became more autartic
        
        autkarky: Autarky is the quality of being self-sufficient. Usually the term is applied to political states or their economic systems. Autarky exists whenever an entity can survive or continue its activities without external assistance or international trade. If a self-sufficient economy also refuses all trade with the outside world then it is called a closed economy
        
        John Maynard Keynes was the Britisch representative wanted a much more flexible system than the original gold standard. They beleived that a floating exchange rate had been the reason for the instability
        
        similar to the gold standard but countries were able to use monetary policy.
        
        it was aimed to ensure more flexibility of countries
        
        the Brton Woods is named after a skiing resort and was a contest between intellect and power. the intellect was represented by Keynes and the power by Harry Dexter White who was the chief negotiator for the US. White was later revealed to be a soviet spy. the US dollar became the reserve currency and the US exploited this until the very end.
        
        all countries were required to use monetary policy in normal times to tie their currency to the dollar, only the US had the power to set their interest rate. This was acceptable as long as all countries were prepared to follow US monetary policy and for their inflation to follow that in America.
        
        however, in the 1960s expansion of the welfare state and got involved in the Vietnam war. this let to budget deficits and a monetary policy. European governments had other inflation targets but were forced to import US monetary policy. The German solution was to revalue in 1961 and 1969. the US Dollar became overvalued and this eventually was unsustainable and they devalued against gold in 1971.
      - The world of floating exchange rates
        
        originally meant only as a temporary measure
        
        in the EMS Germany was the conductor of monetary policy just like the US had been in the Bretton Woods system. France and Denmark pegged their currencies to the German Mark because it was quite stable in terms of inflation. This idea seems to have been well-founded.So it has been disproved that gold is necessary to curb inflation
      - The Eurozone Crisis in the light ion the historical experience
        
        the European Economic and monetary Union (EMU) differs form previous attempts at monetary unification in that it combines a single currency and a single central bank
        
        1992 Maastricht Treaty laid down the framework for EMU recognised the role that national debt could play in destabilising the euro and the criteria were laid down in the Stability and Growth pact
        
        The Stability and Growth Pact (SGP) is an agreement, among the 28 Member states of the European Union, to facilitate and maintain the stability of the Economic and Monetary Union (EMU). Based primarily on Articles 121 and 126[1] of the Treaty on the Functioning of the European Union, it consists of fiscal monitoring of members by the European Commission and the Council of Ministers, and the issuing of a yearly recommendation for policy actions to ensure a full compliance with the SGP also in the medium-term.
    - - Denmark still fixes its currency. A monetary unions an extreme form of a fixed exchange rate, where exchange rates are altogether abolished.