Talk about an ambitious title! Take it as given that, by the eighteenth century, Europeans had a huge advantage in gunpowder-based technology and tactics, and that this was the primary reason they were able to colonize large swaths of the globe. Why was it that Europeans had such an advantage? The substance gunpowder did not originate in Europe, as is well-known. But Europeans did not even originate certain important tactics, like volley fire with layers of infantry. Nonetheless, from 1600-1800, weapons manufacturing productivity, firing rate, and naval firepower had all increased at an annual rate in Europe which far exceeded the rate of total economic growth or total productivity growth anywhere in the world up to that point. Why?
A common story is that competition in Europe was important. There were many small states who fought often, and hence better and better technology was selected. And Europeans were belligerent indeed! From 1500-1800, the Austrians were at war with a power 24% of the time, the English 53 percent, and the Spanish 81 percent of the time. The problem with the competition thesis, Hoffman points out, is that we have other similar entities: the Chinese were constantly fighting nomads in the north and west, the Japanese were in frequent warfare until the Tokagawa in 1600, and the small states of India were no peaceful assembly before the conquests of the British East India Company. So why, then, Europe?
Hoffman’s explanation is the following. Technology improves from learning by doing. It improves faster the more and the longer you practice, and disseminates easier when costs of dissemination are low. In war, then, gunpowder improves rapidly when countries fight, and when their fighting involves heavy expenditure. Countries go to war when the expected gain from fighting exceeds the expected cost (and they fight rather than settling immediately based on their expectations of the outcome because arbitrary transfers are not easy when the “prize” for winning is something like glory). Countries differ in their variable costs of war because of, for instance, differential abilities to extract tax revenue, and they differ in their benefits from winning war; Indian states may have, for example, had lower benefits from winning war because interdynastic conflict was frequent compared to Europe, and hence the winner of a war may have been sacked by his brother before even having a chance to bask in the glory of victory. Note that “death and destruction” was not a cost of war for most states in this period; indeed, from 1500-1790, not a single European monarch was deposed due to loss in battle in anything but a civil war! Shall we call this the original agency problem?
This model looks a lot like a micro theory tournament plus diffusion of inventions gained from learning by doing. Solve for the equilibrium, as Hoffman does, and you will see that rapid progress in arms technology requires that there is a lot of war using a lot of resources among combatants geographically close enough for technology to transfer easily, and conditions for that to happen are that countries for which gunpowder is effective in war are evenly matched in their ability to raise an army, and that the prize for winning (measured in glory or whatever) is high compared to the costs of battle (measured in the cost of raising revenue for an army, etc.). The Ottomans in this period had too little ability to raise revenue for war. The Chinese were unified internally and fought externally mostly with cavalry, since guns were not terribly effective against steppe nomads. Japan was unified by 1600, hence had no incentive to fight internally and improve their weapons technology, and the fixed cost of invading China or Korea was seen to be too high after some late 16th century adventures. In India, interdynastic battles were so frequent that the benefit of total warfare, as opposed to light skirmishes, was too limited, and hence even though war was frequent, it was at such a low level that there was limited learning-by-doing.
An interesting hypothesis. As invention is my own field of research, I am a bit skeptical of the learning-by-doing mechanism, however. Despite what schoolkids are taught, necessity is absolutely not the mother of invention. We need many things, but we only invent very few of them. Rather, technological feasibility tends to be the important constraint on technological improvement. My hunch is that a detailed investigation of specific microinventions in European military technology would show that they rely heavily on complementary developments in private industry, in scientific research, or in “common” engineering. Indeed, I would suspect that many of the important inventions come from places not known for their belligerence; Hoffman even mentions an important Swiss cannon foundry whose technology was critical to French artillery in the 1700s. Such importation from non-military external sources is not uncommon: later on, we have the American engineer Hiram Maxim inventing an early machine gun, and the Dutchman Fokker playing the most important role in airplane technology in World War I. The ability of the UK and Germany to procure these inventions has less to do with the frequency of war in those countries, but instead simply results from the fact that Western Europe and America had, by this time, developed large amounts of non-military engineering talent.
March 2012 working paper (no IDEAS version). This paper was published in the September 2012 issue of the Journal of Economic History. If you find it interesting, Hoffman recently published a book Why the West Rules – For Now which has come highly recommended to me by a well-known historian of this era. [CORRECTION: As noted by Mark Schaffer below, Why the West Rules is by Ian Morris, not Philip Hoffman. Nonetheless, it is still a great book!]