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Questions and Answers
What is the implication of increased risk associated with enclosure for farmers and landowners?
What is the implication of increased risk associated with enclosure for farmers and landowners?
Which factor is NOT associated with the timing of enclosure according to Clark?
Which factor is NOT associated with the timing of enclosure according to Clark?
What was a key finding regarding the internal rate of return (IRR) on enclosure around 1700?
What was a key finding regarding the internal rate of return (IRR) on enclosure around 1700?
Which of the following is NOT a method proposed to re-estimate net rent following enclosure?
Which of the following is NOT a method proposed to re-estimate net rent following enclosure?
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What does the analysis suggest about the contribution of enclosure to the overall industry revolution?
What does the analysis suggest about the contribution of enclosure to the overall industry revolution?
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What was one significant disadvantage of the open field system mentioned?
What was one significant disadvantage of the open field system mentioned?
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Which advantage of the open field system contributed to risk management among villagers?
Which advantage of the open field system contributed to risk management among villagers?
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How do negative externalities affect the open field system?
How do negative externalities affect the open field system?
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Why was decision making in the open field system considered conservative?
Why was decision making in the open field system considered conservative?
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What trade-off is involved in the decision to enclose land?
What trade-off is involved in the decision to enclose land?
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What complication arises when measuring the potential value of net benefits from enclosures?
What complication arises when measuring the potential value of net benefits from enclosures?
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What is a consequence of free riding in the open field system?
What is a consequence of free riding in the open field system?
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Which economic implication follows from the weak incentives within the open field system?
Which economic implication follows from the weak incentives within the open field system?
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What is the main effect of the timing of enclosures during the Agricultural Revolution?
What is the main effect of the timing of enclosures during the Agricultural Revolution?
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Which factor contributed to the decrease in the costs of enclosure?
Which factor contributed to the decrease in the costs of enclosure?
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What was the impact of enclosure on agricultural productivity?
What was the impact of enclosure on agricultural productivity?
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How did domestic market integration influence farmers during the Agricultural Revolution?
How did domestic market integration influence farmers during the Agricultural Revolution?
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Which of the following best describes Ricardian surplus in the context of enclosures?
Which of the following best describes Ricardian surplus in the context of enclosures?
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What role did the political interests of landowners play during the enclosure movement?
What role did the political interests of landowners play during the enclosure movement?
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What was a consequence of the rising income for farmers during the Agricultural Revolution?
What was a consequence of the rising income for farmers during the Agricultural Revolution?
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How did government policy changes aid the enclosure process?
How did government policy changes aid the enclosure process?
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Study Notes
ECON 231: Agricultural Revolution, Property Rights, and Enclosure
- Week 8 and 9 focus on the agricultural revolution, property rights, and enclosure.
- Required readings are McCloskey (1972) and Allen (1982).
The British Agricultural Revolution
- Began in the late 1600s.
- Characterized by rapid productivity gains in agriculture, increasing output per acre and per worker.
- This period is referred to as the agricultural revolution.
- Increased agricultural productivity likely influenced UK's industrial transformation.
- Shift from agriculture released labor (L) for urban/industrial sectors, impacting wages (WL).
- Increased food supply to cities led to lower food prices (P food).
- Landowners capturing increased rents (shift in supply curve SK) affected worker wages (WK).
Two Key Questions
- Why did UK agricultural productivity rise in the late 1600s?
- Could increased agricultural productivity cause the Industrial Revolution (IR)?
Agricultural Revolution (Continued)
- Institutional changes like shifting from communal to private property rights over land played a key role.
- Enclosure movement: transitioned from communal/open field systems to private enclosed fields.
- Open field system: mid-1300s to mid-1700s (parliamentary enclosures).
- Open fields organized by parishes/villages—rotating four fields with fallow, crops, and pasture.
- Every family had private plots and access to common land for resources, with communal decision-making.
- Improvements of yields from communal lands, including incentives and long-term leases, incentivized changes to land use.
Agricultural Revolution (Continued)
- Farmers' average output (across the entire village), along with incentives for effort, risked taking, investment, and innovation, may have drove productivity gains.
- Long-term leases (e.g., 99 years) allowed farmers to capture surpluses.
- Market existence of land led to increased land concentration.
- Rent was paid in money.
- Increased use of mobile wage labor (L) during planting and harvesting.
Enclosure Movement
- Voluntary enclosures: mid-1500s to mid-1700s, required unanimous support, and hold-outs could face pressure.
- Parliamentary enclosures: 1750s to 1850s—legislation to incentivize enclosures. Government used force if necessary to complete enclosures.
- Small, scattered strips of land consolidated into larger private plots.
- Common pasture and waste were also divided and included into private property.
- Communal decision-making was replaced by official registration of land ownership.
- Physical separation by fencing, hedges, and drainage ditches.
- Improvements in transportation infrastructure, such as railroads, occurred alongside enclosure.
- Long-term customary leases replaced by shorter-term leases, requiring regular renegotiations.
- Changes coincided with increased productivity, average size of farms, and capital intensity.
- Labor was released from the agricultural sector and shifted towards urban-industrial sectors as a result of enclosure, which also impacted women and children due to poverty.
Enclosure Movement (Continued)
- Other changes observed in association with enclosure included increased productivity and the growth in the size/scale of farms.
- The release of labor from agriculture played a part in the development of urban-industrial sectors. An increase in seasonal waged labor contributed to substituting farm families for mobile labor.
- Changes in the timing and patterns of enclosure are discussed.
McCloskey (1972)
- Emphasizes enclosure as one of the first examples of cliometrics in economic history.
- Two key questions about enclosure to consider are: the determination of its timing and its contribution of capital to the industrial revolution.
McCloskey (1972): Enclosures
- Happen when the present value of net benefits exceeds zero. These net benefits are the gains from enclosing land, minus the costs. The gains include higher values of enclosed land, and the costs include foregone income from remaining open fields.
- They depend on income constraints; expenses paid at time zero.
- Open fields survived alongside enclosed fields for centuries.
McCloskey (1972): Enclosures (Continued)
- Not all investors bought up land.
- Enclosure of land accelerated quickly during the early to mid 1700s
McCloskey (1972): What Changed?
- Open fields: opportunity cost↓, and enclosure costs ↑
- Income constraints eased
- Total benefit of enclosure: Disadvantages of open fields ↑? Productivity gains?
McCloskey (1972): Disadvantages to Open Fields
- Scattered strips of land led to high transportation costs for labor and capital
- Negative externalities: spread of weeds, diseases, and poor drainage
- Weak incentives for decision-making, rewards, and penalties affecting everyone in the village
- Access to public goods (water, sewage, drainage) subject to free riding.
- High transaction costs related to communal decision-making with highly conservative nature.
McCloskey (1972): Advantages to Open Fields
- Economies of scale and coordination due to the considerable man power needed for investments and coordination.
- Capital investments exceeded the capacity of individual farms, emphasizing the need for village pooling
- Equitable distribution of returns within the village and amongst farmers and land owners given the long-term leases in place.
- Farmers were also able to mitigate risk through wider sharing and spreading of risk amongst the village
- Decisions to enclose land often made because of the trade-off between lower risk and lower average returns. Risk could be distributed more equally if farms were enclosed.
McCloskey (1972): Data Problems
- Problems with measuring the present value of net benefits of enclosure.
- Data unavailability in 1972 when McCloskey was writing the article, such as prices of farm inputs and outputs, output differences, legal costs, surveying costs, infrastructure costs, and appropriate discount ratings.
McCloskey (1972): What Changed During the 1700s?
- An increase in the present value of net benefits and a decrease in present value costs.
- The causes of these changes need to be examined to assess their connection with the Industrial Revolution.
- Were these changes exogenous or endogenous to the transitions to the industrial revolution?
McCloskey (1972): Costs of Enclosure
- Costs fall as more parishes enclose.
- Specialized services (legal, surveying, registration) develop
- Prudence in conflicts while enclosing—law services required ↓.
- Owners of land and industry have aligned interests and political influence increased.
- The government is more willing to spend to incentivize/force enclosure
McCloskey (1972): Timing of Enclosure: Costs and Learning
- Learning by Doing: enclosure costs ↓ because of specialization in services as enclosure continues.
- Specialized services develop for enclosure (e.g., legal services, surveying).
- Improved legal frameworks/prudence that emerge during conflicts.
- Political interests alignment: landowner/industrialists influence ↑.
- Government support increased enclosure and reduced costs .
McCloskey (1972): Timing of Enclosure: Finance and Income
- Income constraint eased due to access to capital (K).
- Financial intermediation (banks) spread to rural areas.
- Increased willingness to lend for enclosure is anticipated with future increased productivity.
- Farmers’ income rose, which resulted in ↑ domestic saving rates ↓ borrowing requirements.
McCloskey (1972): Timing of Enclosure: Opportunity Cost
- Opportunity cost ↓ with the emergence of alternative risk spreading mechanisms. These alternative methods made open fields less appealing.
- Agricultural/crop insurance began to emerge as an example. Other government social services like healthcare and poor relief increased as well, which were factors that changed the trade-off for farmers.
- Government spending increased on social support like education, poor relief, and general health care, potentially influencing the changes in cost-benefit calculations.
- L market diversification. Increased seasonal opportunities outside of agriculture led to increased risk-spreading mechanisms. Increased domestic market integration, reducing the risk of famine.
Allen (1982)
- Provides an alternative view on UK enclosures that challenges the aspects of the earlier model, for timing and also the role of productivity.
- Suggests different assumptions might be inaccurate
Allen (1982): Alternative View: Assumptions
- Competitive land markets: rent = VMP of land.
- Input and output prices unaffected by enclosure.
- No land quality change.
Allen (1982): Definitions
- Ricardian surplus: total return on land, which can be calculated with productivity and prices.
- Ricardian surplus split between farmers, landowners, and other entities (e.g., govt).
- Farmer's surplus
Allen (1982): Evidence on Enclosed Villages
- Collected data on Ricardian surplus, rent, taxes, and farmer surplus across time by using journal entries and cross-sections of enclosed and open fields.
- A comparison of cross-sectional results with McCloskey's findings and the role of both assumed production and price factors, to assess changes in productivity and changes in distributional effects, are discussed.
Allen (1982): Questions
- Why was rent so low on enclosed farms?
- Why was surplus so low on enclosed farms?
- Why were land owners able to capture more of the surplus from enclosure?
Allen (1982): Evidence and Assumptions Assessment
- Did enclosure ↓ productivity?
- Was the change in rent related to productivity changes or more distributional effects?
- Did the assumptions in McCloskey´s analysis affect the conclusions?
Allen (1982): Productivity Analysis
- Measures productivity differences between open and enclosed farms to understand whether enclosures ↑ productivity, by looking at differences in land use/quality or labor or capital productivity.
- Analysis compared to assess whether enclosure had a direct impact on farm productivity.
Allen (1982): Productivity Analysis/Results
- No statistical difference in productivity between open and enclosed field farms after controlling for land quality and access to common/waste.
- The farms that were least productive were also the ones that were enclosed first.
What Have We Learned?
- Enclosures may have primarily redistributed surplus from farmers to landowners. This was not from changes in productivity or efficiency and should not be assumed.
- Both McCloskey and Allen agree that enclosures led to increases in rent and that it accelerated capital accumulation needed for industrial revolution despite disagreements about the exact causes.
- Changes in return to capital (K) and labor (L) could explain potential changes in productivity. Data analysis methods for land quality and use, labor, capital, and output changes should be controlled and assessed when studying productivity changes alongside enclosure.
Clark (1998)
- Provides a critical assessment of McCloskey and Allen arguments.
- Emphasizes the timing of enclosures, and the competitive nature of land markets.
- Problems with prior analysis includes the possible premature existence of competitive land markets and financial intermediaries when the enclosure moved from open fields to enclosed fields.
Clark (1998): Problems with Previous Analysis
- Existing land markets and finance intermediaries existed in Britain before the movement to enclosures (this affects arguments relating to the timing of enclosures and enclosure’s role in the Industrial Revolution).
- Survival of open fields for such a long time—if the increased productivity or redistribution from enclosure was the reason, why were open fields not replaced sooner?
- If the main benefit of open fields was the lack in rent to pay for common usage of common open and waste land, then why did the number of rent-paying acres not rise after enclosure?
- If common land and waste were in common property, then why should overuse of such resources result in their output value being zero?
- Risk factors may be underestimated with an approach that only considers averages for output
Clark (1998): Timing of Enclosure
- Assesses the changes in return on enclosure.
- Net return on enclosure ↑ slowly during the late 1600s and opportunity cost of funds ↓ slowly over time.
- Enclosure's internal rate of return became positive around 1700.
- Rapid enclosure of land acres coincided with the timing of ↑ internal rate of return.
- Increases in the internal rate of return coincided with lower costs and opportunity costs of enclosing land.
Clark (1998): What Have We Learned?
- Enclosures were motivated by rational decision-making and competitive markets.
- Enclosures had only a small positive role in the development of the industrial revolution.
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Description
This quiz explores the economic implications of land enclosure for farmers and landowners, as well as the timing and methods related to net rent estimation. Key findings related to the internal rate of return and contributions to the industrial revolution are also discussed. Test your understanding of the advantages and disadvantages of open field systems.
