The relatively inclusive economic institutions that resulted in
England created unprecedented economic dynamism,
culminating in the Industrial Revolution, while
industrialization did not stand a chance in Spain. By the
time industrial technology was spreading in many parts of
the world, the Spanish economy had declined so much that
there was not even a need for the Crown or the land-owning
elites in Spain to block industrialization.
F EAR OF I NDUSTRY
Without the changes in political institutions and political
power similar to those that emerged in England after 1688,
there was little chance for absolutist countries to benefit
from the innovations and new technologies of the Industrial
Revolution. In Spain, for example, the lack of secure
property rights and the widespread economic decline
meant that people simply did not have the incentive to
make the necessary investments and sacrifices. In Russia
and Austria-Hungary, it wasn’t simply the neglect and
mismanagement of the elites and the insidious economic
slide under extractive institutions that prevented
industrialization; instead, the rulers actively blocked any
attempt to introduce these technologies and basic
investments in infrastructure such as railroads that could
have acted as their conduits.
At the time of the Industrial Revolution, in the eighteenth
and early nineteenth centuries, the political map of Europe
was quite different from how it is today. The Holy Roman
Empire, a patchwork quilt of more than four hundred
polities, most of which would eventually coalesce into
Germany, occupied most of Central Europe. The House of
Habsburg was still a major political force, and its empire,
known as the Habsburg or Aus