Economic History Cheat Sheet

The core ideas of Economic History distilled into a single, scannable reference — perfect for review or quick lookup.

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Quick Reference

The Industrial Revolution

The period of rapid technological and economic transformation that began in Britain around 1760-1840, characterized by the shift from agrarian handicraft economies to machine-powered manufacturing, urbanization, and sustained economic growth.

Mercantilism

The dominant economic doctrine in Europe from the 16th to 18th centuries, which held that national wealth was measured by accumulated gold and silver, and that governments should promote exports, restrict imports, and maintain favorable trade balances.

The Great Depression

The severe worldwide economic downturn that began with the U.S. stock market crash of 1929 and lasted through most of the 1930s, characterized by massive unemployment, deflation, banking failures, and a collapse in international trade.

The Gold Standard

A monetary system in which a country's currency is directly linked to a fixed quantity of gold. Countries on the gold standard could exchange their paper currency for gold at a guaranteed rate, which constrained monetary policy but facilitated international trade.

Comparative Advantage

David Ricardo's principle (1817) that nations benefit from specializing in producing goods for which they have the lowest opportunity cost, even if one nation is more efficient at producing everything. This theory became the intellectual foundation for free trade.

Institutional Economics

An approach emphasizing that economic performance is fundamentally shaped by institutions—the formal rules (laws, property rights, constitutions) and informal constraints (norms, customs, conventions) that structure human interaction and reduce transaction costs.

The Bretton Woods System

The international monetary order established in 1944 at Bretton Woods, New Hampshire, which pegged currencies to the U.S. dollar (itself convertible to gold at $35 per ounce) and created the International Monetary Fund and the World Bank.

Creative Destruction

Joseph Schumpeter's concept that capitalist economies grow through a continuous process in which innovative entrepreneurs introduce new products, methods, and organizational forms that render existing ones obsolete, simultaneously creating and destroying economic value.

The Malthusian Trap

Thomas Malthus's theory (1798) that population growth tends to outstrip food supply, keeping living standards near subsistence. Any temporary increase in income leads to population growth that drives per capita income back down.

The Great Divergence

The dramatic widening of income and living-standard gaps between Western Europe (and its offshoots) and the rest of the world that accelerated from approximately 1800 onward, driven by industrialization, institutional development, and colonial exploitation.

Key Terms at a Glance

Autarky:Economic self-sufficiency; a policy of minimizing trade with other nations and producing all needed goods domestically.

Balance of Payments:A record of all economic transactions between residents of a country and the rest of the world during a given period.

Bretton Woods System:The postwar international monetary framework (1944-1971) in which currencies were pegged to the U.S. dollar, itself convertible to gold.

Capital Accumulation:The process of acquiring additional capital goods (machinery, infrastructure, technology) that increase productive capacity over time.

Cliometrics:The application of economic theory, statistical methods, and quantitative analysis to the study of history.

Colonialism:The practice of acquiring political control over other territories, exploiting their resources and labor for the economic benefit of the colonizing power.

Comparative Advantage:David Ricardo's principle that nations gain from trade by specializing in goods where they have the lowest opportunity cost.

Creative Destruction:Schumpeter's concept that capitalist innovation inherently destroys existing industries while creating new ones.

Deflation:A sustained decrease in the general price level of goods and services, increasing the real value of money but often associated with economic depression.

Enclosure Movement:The historical process of consolidating open fields and common land into private holdings, particularly in England from the 16th to 19th centuries.

Fiat Money:Currency that has no intrinsic value and is not backed by a physical commodity; its value derives from government decree and public trust.

Gold Standard:A monetary system in which the value of currency is directly linked to a fixed quantity of gold.

Gross Domestic Product (GDP):The total monetary value of all finished goods and services produced within a country's borders in a specific time period.

Hyperinflation:Extremely rapid and out-of-control inflation, typically exceeding 50% per month, destroying the purchasing power of currency.

Industrialization:The transformation of an economy from primarily agricultural to one based on manufacturing and machine production.

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