Why did the industrial revolution happened where and when it did, breaking out of the malthusian trap?
Why did it not happen in Song China (which invented gunpowder, printing, etc..)? or the Roman Empire (which had steam power, mechanical clocks, advanced mining, huge trade networks..)?
I think there were two key ingredients that determined that a virtuous cycle of capital accumulation, investment and compounding growth happened in western Europe during the 1800s.
1. FREE SPEECH
2. PROPERTY RIGHTS
Free speech was key in driving the enlightenment and rationalism which were the foundations of a culture of innovation and experimentation.
But eras of enlightenment and innovation ahd happened before... the Greek golden age gave us the school of Athens, Pythagoras, Archimedes, Euclid and many others.
Secure property rights in England, the Netherlands and other parts of central Europe were the other necessary ingredient for long term investment. If the king or Emperor can take your mine, factory or canal... nobody is going to make huge long term investments.
But why did (parts of) western europe have free speech and (relatively) secure property rights?
I think that political decentralisation in Medieval Europe made it possible. It was a lengthy process... and far from peaceful, but after many religious wars, the peace of Wesfalia established some kind of religious freedom. Religious freedom eventually lead to Free Speech as a human right.
Similarly decentralisation allowed wealthy merchants to escape from the most predatory kingdoms and gradually accumulate wealth, which in turn they used to protect their property. After revolutions in England, the Netherlands and other places Private Property gained strong legal protections, even from the king.
Compound interest is very powerful, but it starts very slow. It took a century of capital accumulation from the 1770s to the 1880s to really speed up and show results which were impossible to ignore.
