I'd go even farther than Eisenstein. Printing soon brought literacy to vast numbers of people (eventually to the vast majority of us). Printing, especially printing in newly standardized vernaculars, changed the very consciousness of people, and turned a small corner of the world, Western Europe, into a culture that in many ways conquered the world. Widespread decentralized printing and the accompanying book markets, new schools, and rise of literacy gave rise to a new form of consciousness -- book consciousness.
Colombus was among the first generation of navigators who had been reading avidly and widely since a child. On his bookshelf was Marco Polo's Travels. On his voyages he carried maps made by geographers who had been literate sincethey were children, and he carried astronomical tables that had been printed widely across Europe. These tables had been made by a Hungarian-Italian mathematician whose bookshelf was full of ancient Greek science and mathematics. Such information had been rather inferior and far less available just a few decades before.
With the easy conquest by tiny Portugal of Asia's vast and ancient sea trade routes, rapidly literizing Western Europeans were by the early 16th century demonstrating a vast superiority in naval affairs. In navigation as in battle officers using accurate charts and astronomical tables were at a premium. (Europeans did not have quite such good luck on land against the Turks). Western Europeans would retain completely uncontested (except among each other) naval superiority on the world's oceans until the Japanese victory over Russia in the early 20th century. The Japanse by then had long since taken up printing and had a very well read population . Even on the ground by the 18th century English merchants, officers, and civil servants, practically all of them literate and widely read since young children, were finding it quite easy to conquer and take over the administration in far larger and otherwise highly advanced civilizations like India.
Soon after the spread of the printing press, the very fundamentals of organization in Western Europe began to change. In the late Middle Ages organizations, even royal and papal bureaucracies and banking "super-companies", rarely engaged more than a few dozen employees. Organizational size came up against the severe limit of the Dunbar number. By the end ofthe 16th century, the colonial companies and bureaucracies of Spain and Portugal were vast, highly literate, and well coordinated. Officer corps had often been raised on military books and thus able to draw lessons from a wide variety of ancient and recent battles. Even a minor salt extractor in Wear, England, was employing 300 men by the mid 16th century. (Large organizations in manufacturing would largely have to wait until the 18th century and the industrial revolution, however).
Before book consciousness there had been no national languages, but only a range of often mutually incomprehensible dialects and in Western Europe the language of the tiny literate elite, Latin. With newly unified national vernaculars, organizations were able to coordinate and grow in an unprecedented manner. A much larger group of people, raised on the same written language, increasingly also came to look and speak similarlyand become far more mutually trusted. It was the birth of national loyalty and nationwide webs of trust. The "tribe" to which we are instinctively loyal vastly increased in size. The pool of already somewhat trusted "same tribe" people from which a bureacracy could recruit new members vastly increased. National polities and militaries were able to coordinate political, economic, and battlefield strategies in an unprecedentedmanner. The 16th century saw the first major growth of the joint-stock corporation, enabling far more capital to be invested in the enlarging organizations that engaged in mining and manufacture as well as government and conquest. This development is probably a response to the new ability to form larger organizations, since the basic ideas (corporate law, shares of stock, etc.) had already been in use in Europe for quite some time. Some of the early English 16th century joint-stock companies included military expeditions (Drake's privateering voyages and naval actions were financed through joint stock companies: a different company for each expedition), trading and slaving companies (the Muscovy and Guniea companies) and mining and manufacturing companies (the Royal Mining Company and the Royal Batteries & Mines Company). The most famous became the English East India Company, but many of the American colonies were also joint-stock corporations. The first widely traded and initially most successful joint-stock company was the Dutch East India company,which quickly grew far beyond the Dunbar number to have thousands of employees.
Book consciousness changed almost every profession. Good books on a trade could greatly increase the knowledge imparted during apprenticeships, and indeed eventually led to the end of the apprecenticeship system. Meanwhile, widely printed books on mathematics and science, such as Euclid's Geometry, gave knowledge that could be used in a wide variety of occupations, and training was often restructured to assume and build upon such new general knowledge. This led to a profound change in labor productivity, moving mankind away from the Malthusian curve and (along with the expansion of organizational size beyond the Dunbar limit) eventually to the industrial revolution.
A typical example of the rise of book consciousness was the radical improvement in how cases were reported in the English legal system by the late 16th century. For the first time, cases and statutes were widely and accurately cited. This reflected the fact that judges, barristers, attorneys, and even some of the parties had for the first time printed books of statutes and cases at their fingertips -- instead of having to find the single copy of a scroll hidden away in some monk's or bureacrat's library. The first great English opinion writer, Sir Edward Coke, dates from this period. In turn, the wide availability of printed statute and case law led to basic changes in the way we interpret and view the law.
Almost invariably, during the colonial period, when largely illiterate cultures (i.e. cultures where mostof the second-tier nobility, military officers, and merchants, and almostall craftsmen and farmers, had not been raised on books) were encountered by literate Europeans, the latter described the former with severe ephithats, suchas "savages." This makes our forbears seem odious to us, who understand that all human races are capable of literacy, and indeed by now book consciousness has spread to most of the globe and most of us encounter a widevariety of highly literate people every day. However, at least in the 16th century for book-raised Western Europeans this was not so much a racialprejudice as a largely accurate observation. "Savage" was applied not only to neolithic Africans and Americans, but also to Irish backlanders and Scottish highlanders. There was a similar Western European attitude to otherwise very advanced civilizations in India and China. From the 16th century onward, any culture that did not have book consciousness was a culture of savages.
It's possible that today the availability of thousands of times still more material to read, readily accessible by search engine, and the expansion of a small number language groups (but especially English) to a worldwide real-time network is creating a new "Internet consciousness." People within this network may soon come to see people outside of it as savages. But that is a topic for another post.
This data contradicts the idea that nothing remarkable happened to the economy before the industrial revolution got going in the late 18th century. It also contradicts the theory that a qualitative shift occurred due the the Glorious Revolution of 1689 in which Parliament gained more power, some Dutch financial pratices were introduced, and soon thereafer the Bank of England founded.
Rather, the theory that comes most readily to mind to explain an economic revolution in 17th century England is the rather un-PC theory of Max Weber. I'll get back to that, but first Clark debunks the theory of Becker et. al. regarding family investment. According to this theory, parents choose between the strategy of having a large number of children and having a small number of children in whom they invest heavily, teaching them skills. This is basically the spectrum between "R strategy" and "K strategy" along which all animals lie, except that with humans there is a strong cultural component in this choice (or at least Becker et. al. claim or assume that family size has always been a cultural choice for humans -- see my comments on this below).
According to this family investment theory, until quite recently (perhaps until the industrial revolution) having more children was the better bet due to lack of reward for skill, and overall underdevelopment of the economy limited the reward for skill, so the world was caught in a Malthusian trap of unskilled labor. However at this recent point in history rewards for skilled labor went up, making it worthwhile for parents to invest in skills (e.g. literacy). Clark's data contradicts this theory: his data show that the ratio of wages for skilled to unskilled laborers did not rise either in the 17th century revolution or during the industrial revolution, and actually were in substantial decline by 1900. Indeed, a decline in demand for skilled labor is what Adam Smith predicted would happen with increasing specialization in manufacturing. Thus, there was no increase in reward for skill investment which would have pulled us out of the Malthusian trap. Thus, Clark also rejects the family investment theory.
I think, however, that part of the family investment theory can be rescued. Clark's and other data on literacy demonstrate a substantial rise in literacy just prior to and at the initial stages of the qualitative change in productivity. Literacy in England doubled between 1580 and 1660. Parents were in fact making substantial investments in literacy despite an apparent lack of incentive to do so. Why?
My own theory to explains Clark's data combines Becker, Weber, and the observations of many scholars about the cultural importance of printing. Printing was invented in the middle of the 15th century. Books were cheap by the end of that century. Thereafer they just got cheaper. At first books printed en masse what scribes had long considered to be the classics. Eventually, however, books came to contain a wide variety of useful information important to various trades. For example, legal cases became much more thoroughly recorded and far more easily accessible, facilitating development of the common law. Similar revolutions occurred in medicine and a wide variety of trades, and undoubtedly eventually occurred in the building trades that were the source of Clark's data.
Printing played a crucial role in the Reformation which saw the schisms from the Roman Church and the birth in particular of Calvinism. The crucial thing to observe is that, while per Clark the gains from investment in skills did not increase relative to unskilled labor, with the availability of cheap books and with the proper content the costs of investing in the learning did radically decrease for many skills. Apprenticeships that used to take seven years could be compressed into a few years reading from books (much cheaper than bothering the master for those years) combined with a short period learning on the job. This wouldn't have been a straightforward process as it required not just cheap books with specialized content about the trades, but some redesigning of the work itself and up-front investment by parents in their children's literacy. Thus, it would have required major cultural changes. That is why, while under my theory cheap books were the catalyst that drove mankind out of the Malthusian trap, many institutional innovations, which took over a century to evolve, had to be made to take advantage of those books to fundamentally change the economy.
Probably the biggest change required is that literacy entails a very large up-front investment. In the 17th century that investment would have been undertaken primarily by the family. Such an investment requires delayed gratification -- the trait Weber considered crucial to the rise of capitalism and derived from Calvinsim. However, Calvinist delayed gratification under my revised theory didn't cause capitalism via an increased savings rate, as Weber et. al. postulated, but rather caused parents to undertake a costly practice of investing in their children's literacy. Once that investment was made, the children could take advantage of books to learn skills with unprecedented ease and to skill levels not previously possible. So the overall investment in skills did not increase, but instead the focus of that investment shifted from long apprenticeships of young adults to the literacy of children. At the same time, the productivity of that investment greatly increased, and the result was overall higher productivity.
Protestants, and in particular sects like the Quakers derived from Calvinism, plaid a leading role in the early industrial revolution in England. For example the Quaker Darby family pioneered iron processign techniques and the use of iron for railroads and in architecture.
Investment in literacy would have both enabled and been motivated by the famous Protestant belief that people should read the Bible for themselves rather than depending on a priest to read it for them. This process would have started in the late 15th century among an elite of merchants and nobles, giving rise to the Reformation, but might not have propagated amongst the tradesmen Clark tracks until the 17th century. It is with the spread of Huguenot, Puritan, Presbyterian, etc. literacy culture to tradesmen that we see the 17th century revolution in real wages and the first major move away from the Malthusian curve.
This theory that the Malthusian trap was evaded by a sharp increase in the productivity of skill investment explains why population growth did not fall in the 17th century as Becker et. al. would predict. Cheap books substantially lowered the cost of skill investment, so the productivity gains could come without increasing the overall investment in skills and thus without lowering family size.
The family size/skill investment tradeoff is more likely to explain the second and sharper departure from Malthusian curve starting around 1800. However again I think Becker is wrong insofar as this was not due to an increase in returns on skill (Clark's data debunks this), but due to (1) technology improving faster than humans can have children, and (2) the rise of birth control (without which there is little control by choice or culture over family size -- no cultural family size choice theory really works before the widespread use of birth control). The catalyst in moving away from the Malthusian curve was thus not, per Becker et. al., an increase in the returns on investments in skills, but rather a decrease in the costs of such investments once cheap books teaching specialized trades were available and the initial hill of literacy was climbed by Calvinist families. If the Calvinist literacy-investment theory ("The Roundhead Revolution") is true, we should see a similar departure from the Malthusian curve at the same time or perhaps even somewhat earlier in the Netherlands, and also in Scotland, but probably not in Catholic countries of that period.
(Earlier versions of this article appeared on the authors' blog, Nick Szabo's Papers and Concise Tutorials