motion a set of institutional changes that would make the
emergence of inclusive institutions very unlikely. In some of
them they explicitly stamped out whatever burgeoning
industry or inclusive economic institutions existed. Most of
these places would be in no situation to benefit from
industrialization in the nineteenth century or even in the
twentieth.
The dynamics in the rest of Europe were also quite
different from those in Australia and the United States. As
the Industrial Revolution in Britain was gathering speed at
the end of the eighteenth century, most European countries
were ruled by absolutist regimes, controlled by monarchs
and by aristocracies whose major source of income was
from their landholdings or from trading privileges they
enjoyed thanks to prohibitive entry barriers. The creative
destruction that would be wrought by the process of
industrialization would erode the leaders’ trading profits
and take resources and labor away from their lands. The
aristocracies would be economic losers from
industrialization. More important, they would also be
political losers, as the process of industrialization would
undoubtedly create instability and political challenges to
their monopoly of political power.
But the institutional transitions in Britain and the Industrial
Revolution created new opportunities and challenges for
European states. Though there was absolutism in Western
Europe, the region had also shared much of the institutional
drift that had impacted Britain in the previous millennium.
But the situation was very different in Eastern Europe, the
Ottoman Empire, and China. These differences mattered
for the dissemination of industrialization. Just like the Black
Death or the rise of Atlantic trade, the critical juncture
created by industrialization intensified the ever-present
conflict over institutions in many European nations. A major
factor was the French Revolution of 1789. The end of
absolutism in France opened the way for inclusive
institutions, and the French ultimately embarked on
industrialization and rapid economic growth. The French
Revolution in fact did more than that. It exported its
institutions by invading and forcibly reforming the extractive
institutions of several neighboring countries. It thus opened
the way to industrialization not only in France, but in