From Ancien Régime to Capitalism: The French Revolution as a Natural Experiment

Citation:

Robinson, James A, Daron Acemoglu, Simon Johnson, and Davide Cantoni. 2007. “From Ancien Régime to Capitalism: The French Revolution as a Natural Experiment”. Copy at http://www.tinyurl.com/y2v529w8

Date Published:

Mar 1, 2007

Abstract:

In this paper we exploit the invasion of Europe, particularly Germany, by French Revolutionary armies as a ‘natural experiment’to investigate the causal effect of the institutions of the ancien régime on economic development. A central hypothesis which can account for comparative development within Europe is that economic growth emerged …first in places which earliest escaped ancien régime and feudal institutions. However, though there is a correlation between these two events, this does not demonstrate that it was the collapse of the ancien régime that caused the rise of capitalism. This is because there may be problems of reverse causation and omitted variable bias. We show how the institutional reforms (essentially the abolition of the ancien régime) brought by the French in Germany can be exploited to resolve these problems. These reforms were akin to an exogenous change in institutions unrelated to the underlying economic potential of the areas reformed. We can therefore compare the economic performance of the areas reformed to those not reformed before and after the Revolutionary period to examine the impact of the reforms. The evidence we present is consistent with the hypothesis that the institutions of the ancien régime did indeed impede capitalism.

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