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A Farewell to Alms: A Brief Economic History of the World by Gregory Clark

A Farewell to Alms: A Brief Economic History of the WorldA Farewell to Alms: A Brief Economic History of the World by Gregory Clark

My Rating★★★☆☆ 

Jared Diamond should be given the Nobel. If not for anything else but for getting historians and economists up in arms shouting “Our field is not That simple, Mister!!”. He has kicked off so many responses and counter-responses that it has enlivened an entire gamut of fields. This is one more response/alternative to how the modern world is the way it is. In fact in the very beginning the author classes himself with the Diamonds, the Adam Smiths and the North & Thomass of the world and puts his own book in the same league. Talk about building up expectations.

The Malthusian World

To make a simple theory work – that is a major achievement. And for much of the book, Clark gives the impression that he is going to pull it off. The book builds its argument very painstakingly, with numerous diagrams and with a surfeit of statistics. A lot of effort is put in to build the foundations of the argument.

This foundation rests on proving that the whole world was more or less uniform before 1800 – that we were in a Malthusian trap (a long-term one, granted) from which no society could make a true break. A ‘true break’ being a sustained long-term deviation from the Malthusian norm.

This “Malthusian world’ is built on some very simple conditions. And it encompassed the human and animal world equally. Economically the whole world had the same constraints: that for any species, its population could never outstrip its food supply. Of course humans are ingenious and made many advances over the course of history. But for every technological advance that results in more food, the population would respond by rising until the extra food available is cancelled out. This means that in a Malthusian world, the living conditions (on average) could never rise above a certain level.

Tech improves:

=> (leading to) more food (or income)

=> more population

=> less food (or income) per person

=> back to earlier living conditions. Simple.

(Use the conditions from Engel Curve to derive changes in food from changes in income as required.)

So in this world, living conditions (on average) could never rise above the pre-agrarian levels in spite of any technological innovation. This persisted till the Industrial Revolution. So overall until 1800 there was in all societies an inherent, but shifting, trade-off between income and mortality rates that tied long-run incomes to the level which balanced fertility with mortality and maintained a stable level of standard of living.

The Industrial Escape Hatch

Then, around 1800, in northwestern Europe and North America, man’s long sojourn in the Malthusian world ends. The iron link between population and living standards, through which any increase in population caused an immediate decline in wages, was decisively broken. A new era dawned. The seemingly sudden and unpredictable escape from the dead hand of the Malthusian past in England around 1800, this materialist crossing of the Jordan, was so radical that it has been forever dubbed the Industrial Revolution.

The ‘Industrial’ part of the label is, Clark says, unfortunate and misleading. It was conferred mainly because the most observable of the many changes in England was the enormous growth of the industrial sector: cotton mills, potteries, foundries, steel works. There is, in fact, nothing inherently industrial about the Industrial Revolution. Since 1800 the productivity of agriculture has increased by as much as that of the rest of the economy, and without these gains in agriculture modern growth would have been impossible.

Clark says that we have to resign ourselves to the fact that one of the defining events in human history has been mislabeled.

The ‘Industrious’ Revolution

The Malthusian era was one of astonishing stasis, in terms of living standards and of the rate of technological change. Wages, returns, income and living standards – all should have remained the same on average from the dawn of market economies to the end of the Malthusian era. This only reinforces the puzzle of how the economy ever escaped the Malthusian Trap. How did stasis before 1800 transform itself into dynamism thereafter? This is the central question of the book.

The author has much to say about alternate theories, especial on researches such as Acemoğlu’s (review pending) who insist on Institutional explanations:

Commentators, having visited climate, race, nutrition, education, and culture, have persistently returned to one theme: the failure of political and social institutions in poor countries. Yet, Clark asserts, this theme can be shown to manifestly fail in two ways. It does not describe the anatomy of the divergence we observe: the details of why poor countries remain poor. And the medicine of institutional and political reform has failed repeatedly to cure the patient.

Yet, like the physicians of the prescientific era who prescribed bloodletting as the cure for ailments they did not understand, the modern economic doctors continue to prescribe the same treatment year after year through such cult centers as the World Bank and the International Monetary Fund. If the medicine fails to cure, then the only possible conclusion is that more is needed.

Strong words. And after all the build up, in answering this central question is where Clark disappoints.

Q: So what is the final solution to the great puzzle?

A: Sustained advances in efficiency.

And the reason for this unprecedented advance in efficiency of utilization of resources?

In answering this, Clark plays his final lame card. The answer is that there was no Industrial Revolution after all. It had been long in the making, this gradual advance in efficiency.

And how did this come about? Here we have to understand a bit more about the Malthusian world, we have to peer deeper into the society, look beyond the averages that was the basis of all discussion till now.

On the average, living standard might have been stagnant – but how was this average achieved? By the benefits of every advance in achievement being cornered by select groups. This would mean an advance in income for the privileged and a decrease in income for the underprivileged.

Now, what happens in a Malthusian world when income increases? You got that right: the fertility rates increases as well.

Hence, the rich consistently outproduced the poor throughout history. This might seem like a crazy thing to say, but Clark asserts that in the now counterintuitive world of the pre-industrial times, this was exactly what happened. There was a huge difference in offsprings by the rich and by the poor. So over the long-term, what would be the effect of this? The number of the relatively well-off keeps on increasing and that of the relatively worse-off keeps on decreasing. And since Malthusian pressures apply to the rich as well, they get less rich as time goose on. One would think that eventually they would fall back into the average, given enough time. But there’s the rub.

According to the author, the rich, even as they tend towards the average, also carry with them the values that enabled their fathers or forefathers to become rich in the first place. So this meant that these industrious values began to spread across the society. Eventually this accumulating industriousness of the people reached a tipping point around the time of the industrial revolution and society has not looked back since. And that explains the world.

Well, not quite. One more thing had to happen before the inevitable trend towards the mean by the rich could be checked. They had to stop out-producing the poor so that income wouldn’t be redistributed in Malthusian fashion as soon as it is accumulated by one generation.

The Demographic Revolution

Along the way somewhere, humanity seemed to realize that children was an ‘inferior good’ (anything that you consume less of as income increases) and this turned Malthusian logic on its head. What triggered the switch to the modern demographic regime with few children despite high incomes? This is where I feel the author finally trips comprehensively.

Clark has no explanation to offer on why this demographic revolution should have happened only in England. The only explanation forthcoming is that perhaps in England alone the diffusion (mentioned above) of values reached its tipping point earlier. Now this may well be the best explanation but it leaves the reader disappointed.

Conclusion

In the end, the reader has to applaud the statical dexterity of the author and the very creditable model that has been built up. The conclusion is unavoidably weak but it fits fairly well into the model itself and hence is acceptable within those frameworks.

As a critique on current models available, this book works well. But as an alternate theory, not so well.

Firstly, Clark brackets all of pre-1800 humanity into one single average. But history is not about the mean curve, it is about the people at the edges of the curve, continually creating it, changing it. Clark can surely learn a thing or two from Armesto on how history is much more about human drama than about statistics.

The progress that humanity was making was affecting radical changes at the edges of the curve even if the curve itself might not have ben shifting. So to me the Malthusian world is not so much different from today’s world – the difference has always been about how the gains from any advance in technology was apportioned among the population. It might well be the case that we are in a slightly prolonged deviation from the curve currently and will return to the curve once the free lunches that we have unearthed get exhausted. The Industrial Revolution might well then be called The Industrial Aberration by future historians. Cheers to the reviewer for the biased conclusion please. Thanks.

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Posted by on August 23, 2013 in Book Reviews, Books, Thoughts

 

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Civilizations : Culture, Ambition, and the Transformation of Nature

Civilizations : Culture, Ambition, and the Transformation of NatureCivilizations : Culture, Ambition, and the Transformation of Nature by Felipe Fernández-Armesto

My Rating★★★★☆

The eloquent historian Felipe Fernández-Armesto has clearly meant this book to be a counter-proposal to the geographic determinism espoused by scholars such as Jared Diamond. And for the most part he does an admirable job of convincing the reader that ‘civilization’, as defined by him, is a truly random and almost inevitable accretion wherever human societies develop. Even though he agrees that geography has always been a vital factor in any civilization’s progress, thus providing ammunition for the “geography is destiny’ cry of the determinists, he also quickly pulls that argument down.

In Armesto’s vision, the geography a civilization finds itself in, or the latitude to be more accurate, is not a determining factor in its history, but a limiting factor in their growth. It is something to be overcome, a basic tenet of the ‘civilizing impulse’ that Armesto believes is a part of all of mankind – the desire to modify the environment as much as possible. To show that geography can be transcended thus, he takes us on a long tour that encompasses all the major geographic niches that the earth has to offer – spanning the frigid snow-lands, the arid deserts, the sultry tropics, the gloomy marshes, the cloudy highlands, the loamy riversides, the stormy coastal areas and the lonely islands – and shows magnificent examples of stunning civilizational attempts that flourished and faded on those vastly different habitats in every latitude of the world. The current predominance of certain civilizations is less than a few centuries old, and could just be a freak of history; after all quite a few civilizations that were less strategically placed geographically have had longer reigns in the past. Armesto makes a compelling case and argues that a lot of things go into the cauldron that spawns civilization and to limit the explanation to any single ingredient is clearly an over simplification.

But then, Armesto too is a historian and like all historians, unfortunately, he cannot avoid trying to construct a story that can explain the present from the past. Why write a history book if it has no thesis to offer on how things got this way? So Armesto proposes his own counter-thesis: Though he struggles throughout the book to avoid any kind of determinism, he goes on to admit in his concluding argument that “geography, in the broadest sense, the palpable realities of the planet, the exigencies of nature, the soils and seeds, the winds and waves has shaped the world presented in these pages.”

He says that even though civilizations might have grown out of their environments of origin, they have been borne by the wind. This forms his principal argument of the book, and it takes shape only at the very end, catching the reader by surprise, after lulling him into the belief that civilizations are a chaotic emergent phenomena of complex human interactions. I would have liked him to stop there and I really don’t buy his causation arguments that make up the last 100 odd pages of the book. But, they are still compelling and thought-provoking and deserves to be presented too.

The crux of Armesto’s final argument then is that instead of the 10,000 BC that Diamond takes to be the point of divergence that led to the current state of the world, Armesto chooses 1490 AD (or the 1490s) as the diverging year that scripted the story of modern colonizations and formed our present. Armesto claims that the unique location of the ‘Western Civilization”, which he prefers to call the “Atlantic Civilization” along with their extremely fine timing to choose their moment for civilizational expansion was what contributed to their world domination – a case of luck and industry going hand in hand. The Europeans, he argues, were always backward in terms of technology, especially sea-faring tech, in comparison to China, India and even the Ottomans,.While they had trade across the Mediterranean (inherited from the Romans), the Atlantic was largely an unexplored territory even while the Indian Ocean had established itself as the preeminent, busiest and most profitable trade route in history. This was due to the fact that the civilizations that rimmed the Indian Ocean enjoyed the Monsoon winds which helped in promoting trade and making travel safe, fast and orderly, with its cyclic nature and seasonal reversal – aiding ships to and fro in their travels.

The unidirectional and turbulent winds of the Atlantic were much harder to decode, especially by sailors anxious about how they would ever make it back if they hitched a ride on these winds that never returned. Armesto claims that the Indian Ocean was so busy and so rewarding that it used up all the available resources (ships) in its own internal trade and the rich nations there had no reason to risk the treacherous voyage to the Atlantic and to Western Europe. The Western Europeans on the other hand, wanted to be in on the high-return trade of the Indian Ocean and was willing to take risks, and over time they decoded the cipher that is the Trade Winds of the Atlantic and eventually learned how to link the two wind systems (trade winds and the monsoon) when Vasco da Gama finally reached Calicut. Armesto says:

That may be the simple reason why Vasco da Gama appeared in Calicut, before an Indian or Arab or Chinese or Indonesian merchant “discovered” Europe by sea, despite the superior equipment and longer tradition enjoyed by the seafarers of the East. It was not because of any superiority on the Europeans part but, on the contrary, because of the urgings of a kind of inferiority: laggards have to catch up. In pursuit of the kind of advice Lazarillo de Tormes got from his mother, “the relatively poor reach out to the relatively rich in the hope that something will rub off”

This along with Columbus linking Europe to the New World set in motion the period in which Atlantic took over as the oceanic center of trade, catapulting all the countries on its rim (Armesto calls them the Rimlands) first into financial security, then trade dominance, then imperial eminence and finally into a common civilizational bowl. This western civilization coalesced into a single gel and then set about trying to remake the rest of the world in its image, borne by the new-found winds, and fueled by missionary zeal; infecting the coastal regions first and gradually encroaching inwards. The consequence was the creation of a single Atlantic civilization which spanned both shores of the ocean. In the seventeenth century, this inchoate civilization came to embrace North as well as Central and South America, and Africa as well as Europe, steadily seeping into the rest of the world as well.

That then is Armesto’s thesis, except for the concluding chapter which sketches a possible future in which the power base shifts from the Atlantic to the Pacific, thus altering everything again. This is not as believable since the world we know today is not shaped by marine trade as much as the world of the East India Companies.

This scholarly and poetic work tries to give us the history of civilization by giving us glimpses of the images that were the high-watermarks of each of the great civilizations that has graced this world. It is evocative of the splendor of these ancient wonders, even while being more descriptive than narrative. The sheer ease with which Armesto manages to make us feel that we are traveling with a Marco Polo or an Ibn Batutta of our own, enjoying the rise and fall of Rome, pondering the mysterious disappearances of the central American cultures, navigating the glory of Venice in its prime and shuddering at the all-conquering Ottomans bearing down on us – all these experiences ensures that the laborious and careful reading that a book like this demands is entirely worth the effort. Armesto’s masterpiece leaves you with a sense that you have witnessed history in all its nebulousness and that there is no history, no single narrative that can ever be told. It can only be glimpsed and appreciated, never understood.

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Posted by on June 14, 2012 in Book Reviews, Books

 

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