Labor Coercion in the British Industrial Revolution! Surely not?
Thursday, November 14, 2013
Daron Acemoglu and James Robinson

Can’t be true? Didn’t Britain have inclusive institutions? Yes on balance it did, but of course reality is full of grey areas.

One such grey area is labor coercion. There was probably less labor coercion in Britain by the 19th century than most other places at the time — certainly less than the extensive labor coercion in the US South, coexisting with the broadly inclusive set of institutions of the US North.

Less than elsewhere, but still there.

For instance, the Combination Acts banned trade unions until 1824/25, and even then groups of nascent unionists like the Tolpuddle Martyrs were shipped to the penal colony of Australia in 1834. (This was done by invoking obscure laws that made it illegal to, of all things, ‘swear oaths’ …).

In our blog post on why Barbados and Jamaica are different we pointed out how the Masters and Servants Acts have been used to repress labor in Jamaica. In fact Britain had such laws until 1875, and they made employee contract breach a criminal offense. These laws and their implementation were of course a far cry from the punitive measures implemented in the British Caribbean, but coercive they still were.

Why the timing of their abolition?

We think this is not unrelated to the political developments. The Second Reform Act of 1867 enfranchised working class English people for the first time, and they were able to use their new political power to break down some last residual elements of extractive institutions.

Path-breaking research by Suresh Naidu of Columbia University and Noah Yuchtman of Berkeley has investigated the impact of the repeal of the Masters and Servants Laws on the British Labor Market.

Naidu and Yuchtman find that the repeal of these laws had large effects on wages, which rose disproportionately in places that had previously seen a lot of prosecutions under the law. Interestingly, wages also became more responsive everywhere to changes in supply and demand conditions.

Naidu and Yuchtman also find something else that is very interesting – the industries that were the hallmark of the British Industrial Revolution were heavily involved in prosecuting people under the Masters and Servants Acts. Though the origins of these laws in England go all the way back to the fight against wages rising after the Black Death in the 1340s, they were not some anachronistic cultural left-over waiting to be modernized.

They were being involved by the modern parts of the economy. Institutions in practice are full of gray areas.

Article originally appeared on Why Nations Fail by Daron Acemoglu and James Robinson (http://whynationsfail.com/).
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