The historical data show that the early modern period in Great Britain paved the way to the classical industrial revolution presenting the rst phase of capital accumulation and rise in per capita income. This paper captures the relevant evidence by means of a stylized model describing two engines determining this economic process: the role of the guilds in the manufacturing industry and proto-industrialization. On the evidence of the historical facts, we show that the process of capital accumulation was driven by a class of capitalists, the entrepreneurs-merchants, who shifted manufacturing production to the countryside in order to escape from the guilds' market power in urban environments. In the countryside entrepreneurs-merchants increased their rate of prot, triggering capital accumulation by exploiting cheaper labour costs and the re-allocation of working time from agricultural to manufacturing activity. Finally, we show that the model corresponds to the pattern of historical data on manufacturing production and capital accumulation from the 14th century to the rise of the classical industrial revolution.
