Social Organizations, Violence, and Modern Growth

Social institutions were often founded by the elite to avoid social upheavals. Institutions helped mitigate the threat of violent social responses to labor-saving innovations. But their organizational forms were influenced by preexisting cultural and social factors. The differences in Chinese and English social institutions explain why England became the first modern economy. Using an English panel of poor relief and social unrest from 1650 to 1830, we document that poor relief was statistically significant in reducing social disorder. Social instability, in turn, negatively influenced innovations, while innovations were positively and significantly related to poor relief.