Sunday, June 22, 2014

Gregory Clark's A Farewell to Alms

In A Farewell to Alms: A Brief Economic History of the World economic historian Gregory Clark confronts the key questions in economic history - why did the Industrial Revolution occur when and where it did and why has it not been replicated everywhere?

Clark argues that living standards remained substantially unchanged for 100,000 years after the appearance of anatomically modern humans. The birth of agriculture 10,000 years ago may actually have led to a decline in living standards. Until 1800 the entire world was held in the grip of what Clark calls a Malthusian Trap - every small improvement in technology merely had the effect of allowing population growth which immediately cancelled out the benefits, leaving living standards basically unchanged. 

All this suddenly changed in England around 1800. The pace of technological improvement suddenly accelerated to the point where escape from the Malthusian Trap was finally possible. Living standards increased rapidly, and have continued to increase. 

But not everywhere. The Industrial Revolution was replicated in many countries, but not others.

Economic historians have come up with many possible explanations of these events, but most of their theories fail to explain why, even when all the necessary pre-conditions for economic growth seem to be in place, some parts of the world stubbornly refuse to advance.

Clark has his own ingenious explanation for the Industrial Revolution in England. Based on  studies of wills Clark argues that the rich in England enjoyed much greater reproductive success than the poor. It is important to note that Clark is not arguing that the ruling class as a whole reproduced at a faster rate than the poor. The aristocracy, being the ones who did most of the fighting in wars during this period, enjoyed no greater reproductive success than the average. Those who did produce significantly more surviving children were the wealthy middle classes. Because of the Malthusian Trap the greater reproductive success of the rich led to downward social mobility for many of their offspring. In this way the genes of the rich middle classes slowly percolated their way downwards into the population as a whole.

And the rich middle classes were the ones who carried the genes most useful in starting an Industrial Revolution. The Industrial Revolution came about by natural selection.

Even more interesting is Clark’s explanation for the perplexing fact that while many countries have achieved the same startling rates of economic growth that England enjoyed in the 19th century, many have not. Most curious of all is that many countries with very low wage rates have been unable to compete successfully in world markets even in industries in which such low wage rates should have offered them astronomical advantages. Clark suggests that the low wage rates in places like Africa and India were offset by the poor quality of the workforce. In the textile industry for example Indian factories typically employed eight workers to do jobs that were done quite successfully by a single worker in England, western Europe and North America.

The reason some countries are rich and others are poor is of course a subject of extreme political controversy. Clark was clearly aware that he was wandering into a political minefield and for this reason he has been very very cautious. At times perhaps too cautious. It is notable that not once does he address the most controversial consequence of natural selection - differences in intelligence. While he is prepared to argue that some countries have failed to advance because of their lower quality workforce he is reluctant to speculate on the ways in which their workforces may be deficient. 

The most important consequence of Clark’s argument is that there is very little that can be done to achieve economic takeoff in much of the Third World. No matter how much time, money and effort are expended in trying to create the right pre-conditions for growth the results are likely to be bitterly disappointing. If natural selection has not favoured some nations with the genes most suitable for economic success then those nations are likely to remain permanently backward.

The weakness of Clark’s argument is of course that not being a geneticist he is unable to offer hard evidence for most of his contentions. However, given that it is increasingly apparent as Nicholas Wade states in his book A Troublesome Inheritance that “human evolution has been recent, copious, and regional” then Clark’s argument that natural selection has played a vital role in economic history seems entirely plausible. It is to be hoped that geneticists will take up the challenge and start looking for the hard evidence.

A Farewell to Alms is an exciting and stimulating and very readable book that raises more questions than it answers, but it raises the right questions. Highly recommended.

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