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Sunday, January 20, 20081200866100

Review of "A Farewell to Alms" by Gregory Clark

Greg Clark's book could easily be called "In Inquiry into the Nature, Causes, and Effects of the Industrial Revolution." But that's a boring title, unfit for the world-altering subject matter. So instead the book's titled A Farewell to Alms, which sounds like the title of an adventure story -- which of course, it is.


A Brief Economic History of the World


A Farewell to Alms focuses on three questions: What caused the Industrial Revolution? What were the Industrial Revolution's positive outcomes? And what were the bad effects of the Industrial Revolution? Answers to these questions follow below.

1. What caused the Industrial Revolution

Clark's analysis is generally limited to the past 800 years, though on occasion he reaches back as far as the roman Empire. Thus, causes that preceded the Christian era are not addressed. Books such as Before the Dawn or potentially Guns, Germs, and Steel better serve to lay the deep-foundations for why some places have more advanced civilization than others.

Thus, A Farewell to Alms focuses on comparing Europe, China, and Japan. In the centuries preceding the Industrial Revolution both the European states and the Chinese empire experienced territorial growth, through the use of navies to settle distant colonies or the settling of agricultural lands by Han under the late Ming and the Qing. Technologies improvements allowed Japan to outpace Europe during this time, in spite of being confined to a few islands.

PeriodEnglandJapanChina
ca. 13005.9 million6 million72 million
ca. 17506.2 million31 million270 million

Table 13.1, pg 267


Clark argues that by about the time of the American Revolution, an Industrial Revolution was inevitable in all three cultures. Europe, China, and Japan were all undergoing population growth limited by starvation. This meant that there was constant downward selection, meaning that even if here was no variation in thrift, prudence, and other virtuous traits at the beginning, these traits would be selected over time. (Clark does not go into the genetics, but these traits are highly heritable).


Higher European birthrates, according to Clark, just made this process faster in the West than the East.



Using literacy rates and interest rates, Farewell argues that China and Japan were on the same path towards industry, but were a few centuries behind.

2. What good came of the industrial Revolution

The first casualty of the Industrial Revolution was the landed class. Agriculture rent as a portion of gross domestic product has plummeted throughout the west. While this started before the Industrial Revolution, and in deed may be a cause of it, return on capital and return on skills also fell in this period.



There has never been time to be a propertyless worker with minimum marketable skills than right now, at least in the industrialized world.



Similarly, Industrialization led to massive building subsidies in much of the world. India benefited, for instance, from Western technology, capital, infrastructure, telecommunications, and management in spite of having a workforce much less efficient than Europe's. Similarly, most of the benefits of the industrial production of England at the start of the revolution went to industrialized countries -- such as the Netherlands and the United States -- and the customers of the factories, rather than the Industrial Magnates.

Over the long run, economic growth has been a major force for lessening inequalities in the industrialized world since the Industrial Revolution.

3. What were the bad effects of the Industrial Revolution?

Some countries have been harmed by the Industrial Revolution. Clark emphasizes here the misery of some states in sub-Saharan Africa. For them, the major consequence of the Industrial Revolution is that modern medicine low allows people to be kept alive at a lower level of subsistence than was fomerly the case. Drugs, in other words, substitute for calories.

A Farewell to Alms is written at a level appropriate for an introductory, graduate-level seminar outside of economics. The book is denser than most, similar to The Blank Slate in its density of coverage. still, it's not an economic ext, and the "technical appendix" doesn't go much beyond algebra.

Also at tdaxp: Why no Industrial Counter-Revolution?

Comments

I just started reading this book over the weekend. It is fascinating.

Posted by: PurpleSlog | Monday, January 21, 2008

I'm about a third of the way through it. It is a really interesting read. However, Clark does say some pretty wild things. I'm not going to dismiss him as a crank, but his position on (economic) institutions, for e.g., seems to be at odds with most of his profession.

Here's Robert Solow defending institutional economics:

Clark's pessimism about closing the gap between the successful and less successful economies may derive from the belief that nothing much can change unless and until the mercantile and industrial virtues seep down into a large part of the population, as he thinks they did in preindustrial England. That could be a long wait. If that is his basic belief, it would seem to be roundly contradicted by the extraordinary sustained growth of China and, a bit more recently, India. Embarrassingly for Clark, both of those success stories seem to have been set off by institutional changes, in particular moves away from centralized control and toward an open-market economy.

http://blogs.ft.com/crookblog/2007/11/solow-on-clark.html

Bryan Caplan's series of reviews / posts in response are well worth the read:

http://econlog.econlib.org/archives/2007/09/a_farewell_to_a.html

Posted by: vimothy | Tuesday, January 22, 2008

Purpleslog,

Agreed!

vimothy,

I wonder how far Clark actually goes in his anti-institutionalist bent. He mentions Communism in passing as economically backwards, so clearly he has some view of its importance.

I took the book as an argument for the view that individual differences combined with economic system explain much of the variation in national wealth.

Posted by: Dan tdaxp | Tuesday, January 22, 2008

dan,

He actually accuses the economics profession of peddling un-provable idiocies, myths that institutions affect growth.

For instance, have a look at this conversation between Clark and James Robinson of Harvard.

Clark: Jim's statement is a spirited summary of economists' beliefs, but not an appeal to any compelling facts. It is a statement of faith, a Nicene Creed. It shows the yearning, the longing, of economists for eventual salvation through institutions. The facts, however, are that the Industrial Revolution was the result of cultural changes in England, not better incentives. By 1800 in successful economies people had embraced "thrift, prudence, negotiation, and hard work." In most failed economies it is the failure of people to embrace these bourgeois values that explains economic failure.

http://online.wsj.com/article/SB119135743412446729.html

Posted by: Vimothy | Tuesday, January 22, 2008

vimothy,

Agreed on the criticisms. While Clark doesn't appear to be an evolutionary psychologist, his perspective is very close to the Tooby/Cosmides "Psychological Foundations of Culture" line. In other words, he apparently views culture as merely a product of psychology, so therefore institutions are the result of psychology, and not a cause.

[1] http://tdaxp.blogspirit.com/archive/2007/12/31/guns-genomes-and-steel.html

Posted by: Dan tdaxp | Wednesday, January 23, 2008

dan,

Are you familiar with Michael Shermer? He works along similar vectors, but is less anti-economics and doesn't rely on such a contentious reading of Malthus. There's a good recording of a recent talk at Cato on their website here:

http://www.cato.org/event.php?eventid=4297

Posted by: Vimothy | Wednesday, January 23, 2008

Also, institutional economics explicitly recognises the role that norms and values have in gestating and supporting institutions. For instance, to quote North et al from their paper, "Order, disorder and economic change":

"The place to begin is the beliefs held by the members of society, because it is the beliefs which translate into the institutions which shape performance. Shared mental models reflecting a common belief system will translate into a set of institutions broadly conceived to be legitimate."

Posted by: Vimothy | Wednesday, January 23, 2008

I haven't read Shermer's latest work, but I have been disappointed whenever I have come across him. He seems much better as a rhetorical bomb thrower (as seen in Why People Believe Weird Things) than as someone who transmits productive ideas: but again, I haven't read his latest, so perhaps this has changed.

Posted by: Dan tdaxp | Wednesday, January 23, 2008

Right -- I assume that's the Skeptic Magazine stuff he mentions in the talk. Not familiar with that at all, I'm afraid. I was mentioning him really as someone who melds science and economics with perhaps more success (though perhaps less verve) than Clark.

Posted by: Vimothy | Wednesday, January 23, 2008

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