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Working paper 295

John H. Munro, "Tawney's Century (1540-1640): the Roots of Modern Capitalist Entrepreneurship in England", 2007-07-11
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Abstract: Richard Tawney (1880-1962), who taught at the London School of Economics from 1917 to 1949, was unquestionably one of the very most important economic historians that England has ever produced: so much so, indeed, that the era of his major research and publications, 1540 - 1640, has justly come to be known as �Tawney�s Century�. Those publications, and the debates that they provoked, concern the origins or roots of modern capitalism and (implicitly) capitalist entrepreneurship that were supposed to have been established in this century. Though the roots of those economic developments, in particular those leading to more modern forms of industrial capitalism, may indeed lie in that century, nevertheless the main thesis of this study is that most of their positive fruits are instead to be found in the ensuing century of 1640 - 1740, the century preceding the advent of the modern Industrial Revolution.
Tawney�s seminal scholarship, towards these ends, was concerned with two major issues. The first considered in this study is his 1926 monograph: Religion and the Rise of Capitalism, which in part was designed to promote, in the English-speaking world, Max Weber�s famous thesis (1905) on �The Protestant Ethic and the Spirit of Capitalism�. Both works focused on how three elements of one Protestant sect in particular, the Calvinists (from 1536), came to influence so deeply that Protestant Ethic and new ethos of modern capitalism: Predestination, the Calling, and �Worldly Asceticism�. The significance of this form of Protestantism in England is that Calvinists and other Non-Conformists or Dissenters, those who refused to conform to the Church of England after the 1660 royalist Restoration, constituted about one half of the known scientists, innovators, and entrepreneurs from the later 17th century and through the Industrial Revolution era (1760-1820), though constituting only 5 percent of the population. The debate concerns the roles of their restricted (legislated) minority status and of schools and superior educational systems that they had to establish, but also the applicability of the Weber-Tawney thesis, in explaining their superior economic performance. Tawney�s second major issue was that of �agrarian capitalism�, along with the supposed �rise of the gentry�: involving the transfer of vast amounts of land from the old aristocracy, the crown and church together, and finally the free-holding yeomanry into the hands of a non-aristocratic upper class who were far more predisposed and able to engage in profit-maximizing agriculture, especially through enclosures and the technology of the New Husbandry. But if Tawney dates this shift from Henry VIII�s Dissolution of the Monasteries, in 1536, this study contends that the real shift, but certainly a major shift, to �agrarian capitalism�, involving enclosures and the New Husbandry, again came only after the 1660s.
To provide a contrast to Tawney�s work, this study examines two alternative theses on the origins of modern industrial capitalism within Tawney�s century (1540-1640): (1) Earl Hamilton�s thesis of �Profit Inflation�, one fully endorsed by Keynes; and (2) John Nef�s �Early Industrial Revolution in Tudor-Stuart England�. The Hamilton thesis is rejected in this study, with the contention that its true importance was to inspire Nef�s counter-thesis: on the decisive shift from wood and charcoal fuels to coal fuels, which in turn required very major technological changes (in furnace designs), which in turn led to major increases in industrial scale, and (for Nef) to true �industrial capitalism�. This study, noting the importance of Wrigley�s similar thesis on a shift from an organic (wood-based) to an inorganic (coal-based) industrial economy, supports the essence of the Nef thesis � but only for the period after 1640 (with new data).
Finally, this study considers two other related changes so necessary for the development of early-modern capitalism, in this era: the development of the Full Rigged or Atlantic Ship (but from the 1450s) and the overseas joint-stock trading companies. Again, their major impact came after 1660, with the �New Colonialism� (Hobsbawm) or �Commercial Revolution� (Davis). The study also considers the history of the English joint stock companies, from the first joint-stock company, in overseas trade (the Muscovy Company of 1553) to the Bubble Act of 1720, which restricted their formation until 1825. Also included is their role in the so-called �Financial Revolution� from 1694 to 1757 (�Pelhams�s Conversion� of the national debt).

Keywords: entrepreneurship; capitalism; Calvinism; Weber-Tawney thesis; Dissenters; the Gentry; New Husbandry; joint-stock companies; Financial Revolution

JEL Classification: B11; B52; D23; D74; I20; L20; N43; N54; N64; N83; O31; O33.