inventor of the spinning frame), and Isambard Kingdom Brunel (the creator of several revolutionary steamships) were able to take up the economic opportunities generated by their ideas, were confident that their property rights would be respected, and had access to markets where their innovations could be profitably sold and used. In 1775, just after he had the patent renewed on his steam engine, which he called his “Fire engine,” James Watt wrote to his father:
Dear Father,
After a series of various and violent Oppositions I have at last got an Act of Parliament vesting the property of my new Fire engines in me and my Assigns, throughout Great Britain & the plantations for twenty five years to come, which I hope will be very beneficial to me, as there is already considerable demand for them.
This letter reveals two things. First, Watt was motivated by the market opportunities he anticipated, by the “considerable demand” in Great Britain and its plantations, the English overseas colonies. Second, it shows how he was able to influence Parliament to get what he wanted since it was responsive to the appeals of individuals and innovators.
The technological advances, the drive of businesses to expand and invest, and the efficient use of skills and talent were all made possible by the inclusive economic institutions that England developed. These in turn were founded on her inclusive political institutions.
England developed these inclusive political institutions because of two factors. First were political institutions, including a centralized state, that enabled her to take the next radical—in fact, unprecedented—step toward inclusive institutions with the onset of the Glorious Revolution. While this factor distinguished England from much of the world, it did not significantly differentiate it from Western European countries such as France and Spain. More important was the second factor. The events leading up to the Glorious Revolution forged a broad and powerful coalition able to place durable constraints on the power of the monarchy and the executive, which were forced to be open to the demands of this coalition. This laid the foundations for pluralistic political institutions, which then enabled the development of economic institutions that would underpin the first Industrial Revolution.
SMALL DIFFERENCES THAT MATTER
World inequality dramatically increased with the British, or English, Industrial Revolution because only some parts of the world adopted the innovations and new technologies that men such as Arkwright and Watt, and the many who followed, developed. The response of different nations to this wave of technologies, which determined whether they would languish in poverty or achieve sustained economic growth, was largely shaped by the different historical paths of their institutions. By the middle of the eighteenth century, there were already notable differences in political and economic institutions around the world. But where did these differences come from?
English political institutions were on their way to much greater pluralism by 1688, compared with those in France and Spain, but if we go back in time one hundred years, to 1588, the differences shrink to almost nothing. All three countries were ruled by relatively absolutist monarchs: Elizabeth I in England, Philip II in Spain, and Henry II in France. All were battling with assemblies of citizens—such as the Parliament in England, the Cortes in Spain, and the Estates-General in France—that were demanding more rights and control over the monarchy. These assemblies all had somewhat different powers and scopes. For instance, the English Parliament and the Spanish Cortes had power over taxation, while the Estates-General did not. In Spain this mattered little, because after 1492 the Spanish Crown had a vast American empire and benefited massively from the gold and silver found there. In England the situation was different. Elizabeth I was far less financially independent, so she had to beg Parliament for more taxes. In exchange, Parliament demanded concessions, in particular restrictions on the right of Elizabeth to create monopolies. It was a conflict Parliament gradually won. In Spain the Cortes lost a similar conflict. Trade wasn’t just monopolized; it was monopolized by the Spanish monarchy.
These distinctions, which initially appeared small, started to matter a great deal in the seventeenth century. Though the Americas had been discovered by 1492 and Vasco da Gama had reached India by rounding the Cape of Good Hope, at the southern tip of Africa, in 1498, it was only after 1600 that a huge expansion of world trade, particularly in the Atlantic, started to take place. In 1585 the first English colonization of North America began at Roanoke, in what is now North Carolina. In 1600