Fundamental changes in information technologies have profound implications for labour markets, for the production and spread of knowledge, and for the evolution of politics and beliefs. But competition among producers also influences the use of these technologies and their impact on multiple dimensions of life. The introduction of Gutenberg’s printing press crystallised these dynamics and profoundly shaped the long-run evolution of European society.

Printing was a revolutionary technology. Usher (1929) observed that: ‘Printing is one of the first instances of the substitution of mechanical devices for direct hand work in the interests of accuracy and refinement in execution as well as reduced cost. By capitalistic methods and mass production, a new and superior product was evolved.’

Printing was not only a new technology: it also introduced new forms of competition into European society. Most directly, printing was one of the first industries in which production was organised by for-profit capitalist firms. These firms incurred large fixed costs and competed in highly concentrated local markets.

Equally fundamentally – and reflecting this industrial organisation – printing transformed competition in the ‘market for ideas’. Famously, printing was at the heart of the Protestant Reformation, which breached the religious monopoly of the Catholic Church. But printing’s influence on competition among ideas and producers of ideas also propelled Europe towards the scientific revolution.

While Gutenberg’s press is widely believed to be one of the most important technologies in history, there is very little evidence on how printing influenced the price of books, labour markets and the production of knowledge – and no research has considered how the economics of printing influenced the use of the technology.

The price of books

The high price of storing and transmitting ideas was one of the fundamental features of pre-modern civilisation. While the price of books provides a summary measure of costs of storing and accessing ideas, detailed quantitative evidence on the price of books has not previously been assembled.

Archival evidence on the price of books paints a remarkable picture. The introduction of printing led not to a once-and-for-all decline in prices: rather, it initiated a sustained decline that made books widely affordable by the 1500s.

Figure 1 shows the prices of handwritten and printed books before and after the introduction of printing into European society. Following the introduction of printing, book prices fell steadily. The raw price of books fell by 2.4 per cent a year for over a hundred years after Gutenberg. Taking account of differences in content and the physical characteristics of books, such as formatting, illustrations and the use of multiple ink colours, prices fell by 1.7 per cent a year.

Figure 1. The prices of manuscripts and printed books

These price declines indicate modern rates of productivity growth and steady real declines in the price of storing and transmitting ideas. Over these years, the share of books written in local vernaculars increased dramatically. In the first years of printing, almost all books were in Latin; by the late 1500s, both popular and scholarly books were written in the vernacular.

How printing shifted the rewards for elite education and skill

Printing initiated a process that transformed the production of knowledge in Europe. The economic process involved the interaction between two markets: the market for ideas; and the labour market. Printing delivered a shock to markets for ideas, understood broadly as the interactions between producers and consumers of ideas. Printing reduced prices for consumers and increased the size of the market facing producers. This shock was transmitted to the labour market, in which universities and states competed over talent and employed highly trained personnel.

In the labour market, printing acted through and transformed the implications of existing institutions. Historic universities and governments were important employers in part because the direct returns to innovation in the market for ideas were relatively modest: the market for books was small and authors’ intellectual property rights were weak. Printing dramatically changed how ideas were assessed and acquired, and how reputations were made. This mattered for the labour market.

To gauge how printing influenced the labour market, one must consider where to look. A large body of scholarship has found that the relative incomes of skilled and unskilled workers were remarkably stable in Europe from the late 1300s through the 1700s. But virtually no quantitative research has examined the incomes or educational choices of the most educated Europeans, for whom printing had the most profound implications.

Following the introduction of printing, salaries of university professors rose dramatically. For example, before printing, professors’ pay at an Italian university was on average 70-90 per cent higher than that of skilled workers, but the median professor earned the same as a skilled worker. Printing spread to Rome in the late 1460s and to other Italian cities in the 1470s. As Figure 2 shows, following the spread of printing, professors’ salaries rose sharply.

Figure 2. Salaries of professors at Italian universities

By way of comparison, the mid-twentieth century was marked by a ‘great compression’ of pay, reducing inequality in advanced economies, including across educational groups. Goldin and Katz (2009) compare professors’ salaries to workers’ wages and show that in the United States an associate professor earned three times a worker in 1908 but only 1.6 times a worker in 1960.

The levels and magnitude of the shift in professors’ salaries in Renaissance Italy were similar. But with the introduction of printing, the incomes associated with elite human capital rose, and there was a ‘great expansion’ in inequality.

The introduction of printing also shifted labour market returns specifically towards scientific knowledge. While the introduction of printing was associated with pay rises for professors, the greatest increases went to professors in scientific fields, who taught anatomy, astronomy, medicine and natural philosophy. Moreover, as Figure 3 shows, university course offerings shifted towards these scientific subjects and away from non-scientific subjects such as law, rhetoric and theology.

Figure 3. The share of university courses on scientific subjects

The fundamental role of market power and competition

Printing changed the transmission of ideas by introducing both a new technology and new forms of competition. Regulation was light: printing fell outside guild regulation and was one of the first industries in European history in which firms organised production. Market structure and competition varied across cities and time. It was extremely costly to trade books across cities. Many cities had local monopolies. Others had two, three or a small number of firms.

Influential historical research argues that Gutenberg’s printing technology transformed European society as a whole (Eisenstein, 1980). Previous economic research has studied the extensive margin of technology diffusion, comparing the development of cities that did and did not have printing in the late 1400s (Dittmar, 2011; Rubin, 2014).

But rich new evidence indicates that competition among printers at the local level profoundly shaped how the technology was used. In our research, we study how competition in printing influenced the prices of books, the spread of revolutionary religious ideas during the Protestant Reformation, and the diffusion of radical ideas that changed how Europeans did business.

Prices

While the overall price of books in Europe declined steadily, in places where there was an increase in competition among printers, prices fell swiftly and dramatically. We find that when an additional printing firm entered a given city market, book prices there fell by 25%. The price declines associated with shifting from monopoly to having multiple firms in a market was even larger.

Price competition drove printers to compete on non-price dimensions, notably on product differentiation. This had implications for the spread of ideas.

Ideological and religious competition in the media

Printing famously changed the landscape of political and religious debate. A large body of historical research suggests that printing played an absolutely central role in the diffusion of Protestantism and, more broadly, in fostering religious competition.

To understand the nature of the shift in religious ideas, we study the language used in books. Historical book titles provided long descriptive glosses on the thrust and content of books. These titles were on average longer than the maximum length of a 140-character tweet. To illustrate how religious media changed, we classify titles as more Protestant and more Catholic. We do this based on the distribution of language, using methods applied to social media content today.

Figure 4 shows the shifting content of religious printing in what is now Germany before and after Martin Luther circulated his 95 theses criticising the Catholic Church in 1517. In Figure 4, each marker shows the average content of religious printing in a given year, with the marker sizes themselves reflecting the number of publications produced.

Figure 4. Religion in the media during the Protestant Reformation

The shift in religious ideas and in subsequent legal changes reflected the underlying economics of printing at the local level. The transmission of Protestant media was greatest in more competitive local media markets. In cities where multiple printers were engaged in competition just prior to Martin Luther’s intervention, Protestant ideas spread more.

Cities with more competitive media markets, and where Protestant ideas spread most, were more likely to adopt formal legal changes, initiating new commitments to public education and the provision of social welfare services. We find that shifts in competition drove the spread of radical ideas even when we consider chance events that altered local industrial organisation.

The spread of knowledge about business practices

Classic arguments in the social sciences suggest that knowledge-based business practices had a profound impact on the historical development of European capitalism. Printing provided a new channel for the diffusion of knowledge about business practices. The first mathematics texts printed in Europe were ‘commercial arithmetics’, which provided instruction for merchants. With printing, a business education literature emerged that lowered the costs of knowledge for merchants. The key innovations involved applied mathematics, accounting techniques and cashless payments systems.

The evidence on printing suggests that, indeed, these ideas were associated with significant differences in local economic dynamism and reflected the industrial structure of printing itself. Where competition in the specialist business education press increased, these books became suddenly more widely available and in the historical record, we observe more people making notable achievements in broadly bourgeois careers.

The bigger picture

It is sometimes presumed that new information technology carries relatively direct implications for output and economic life. The evidence from the Gutenberg revolution suggests that profound effects are likely to emerge on multiple dimensions, including through long-run feedbacks on the returns to and production of knowledge itself.

The evidence from history also strongly indicates that competition and market structure in printing profoundly shaped the diffusion of ideas and radical social changes commonly ascribed to the technology alone. Competition among printers promoted the spread of business practices that drove individual achievement and local growth.

Competition in printing also mattered for the diffusion of revolutionary religious ideas. In an environment in which political freedom, representation and voice were severely restricted, competition among printers promoted the diffusion of religious and political ideas that drove institutional change during the Protestant Reformation.

In an era of economic concentration in the use of cutting-edge technologies, the evidence from our past strongly suggests that the interaction between technology and competition may have considerable implications.

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Notes:

Jeremiah Dittmar is an assistant professor in the LSE economics department and a research associate in CEP’s growth and trade programmes. He has a PhD in economics from the University of California, Berkeley. He has expertise in economic growth, economic history, macroeconomics and applied econometrics.

Skipper Seabold is director of data science at Civis Analytics in Chicago. He previously worked in a number of roles at statsmodels, the World Bank and DataPad, and as an adjunct professor of computer science at American University, in Washington, D.C., where he got a master’s degree in financial economics and a PhD in economics.