The Institutional Revolution: Measurement and the Economic Emergence of the Modern World

Abstract

For Douglas Allen, the past can be divided roughly into two eras: the old times, characterized by peculiar and exotic institutions, such as dueling, venality, and patronage, and the modern era, characterized by wages and prices, technology, and meritocracy. Allen argues that the transition, c. 1850, from the old world to the new was effected by more precise, standardized systems of measurement. Before the modern era it was impossible to measure the most basic things: time, distance, trade volume, labor productivity. As economies gradually expanded with the onset of the Industrial Revolution, new institutions, such as standardized forms of measurement, were created to reduce transactions costs, making growth and wealth creation possible.

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