As I noted in yesterday's post, I recently finished reading Gregory Clark's book A Farewell to Alms. In the book, Clark covers thousands of years of economic history, and tries to provide some answer to three interconnected problems of economic history:
Why did the Malthusian Trap persist for so long? Why did the initial escape from the trap in the Industrial Revolution occur on one tiny island, England, in 1800? Why was there the consequent Great Divergence?
I wrote about the answer to the first question in my post yesterday. Clark pins the answer to the second question down to changing societal norms:
So the market nature of settled agrarian societies stimulated intellectual life in two ways. It created a demand for better symbolic systems to handle commerce and production. And it created a supply of people who were adept at using these systems for economic ends. While living standards were not changing, the culture, and perhaps even the genes, of the people subject to these conditions were changing under the selective pressures they exerted. All Malthusian societies, as Darwin recognized, are inherently shaped by survival of the fittest. They reward certain behaviors with reproductive success, and these behaviors become the norm of the society.
So the Industrial Revolution:
...was the product of the gradual progress of settled agrarian societies toward a more rational, economically oriented mindset...
On why the Industrial Revolution happened in England, rather than Japan, China, or somewhere else, he notes that:
China and Japan, with their longer history of settled stable agrarian systems, were independently headed on a trajectory similar to that of northwestern Europe during the period 1600-1800. They were not static societies. However, this process occurred more slowly than in England. Two important factors may help explain this. Population growth was faster in both China and Japan than in England in the period 1300-1750. And the demographic system in both these societies gave less reproductive advantage to the wealthy than in England. Thus we may speculate that England's advantage lay in the rapid cultural, and potentially also genetic, diffusion of the values of the economically successful throughout society in the years 1200-1800.
These points about the source of the Industrial Revolution and why it occurred in England rather than anywhere else challenged my preconceptions, as well as challenging how that material is taught in my ECONS101 class (although I'm not entirely culpable here - I am mostly following the required textbook for the ECONS101 paper). It's good to read something that challenges our priors, and Clark supports his arguments with a wealth and breadth of data and illustrations that I found quite convincing.
On the Great Divergence, Clark concludes that there are three reasons why developed countries diverged from less developed countries in terms of income per person:
The first is that in the preindustrial world, because of the Malthusian Trap, differences in labor effectiveness had no consequences for the average level of output per person across societies... Since the Industrial Revolution income per person has longer been constrained by Malthusian mechanisms. So existing differences in capabilities between societies could now express themselves through income per person rather than population densities...
The second is that modern medicine has substantially reduced the subsistence wage in such areas as tropical Africa, allowing populations to continue growing at incomes which are substantially below the average of the preindustrial world...
The third reason, more tentatively, is that the new production techniques introduced since the Industrial Revolution have raised the wage premium for high-quality labor...
On that last point, Clark includes one of the best explanations I have read of recent Nobel Prize winner Michael Kremer's 'o-ring theory of development'.
Having read a number of economic history books, the challenge in writing this sort of book is to avoid either trying to create a 'grand narrative' that encompasses everything (perhaps that could be referred to as the 'Jared Diamond approach'), or getting bogged down in minutiae, especially when you have thousands of years of disparate data that you are trying to corral into a coherent story. Clark does a wonderful job of navigating in between those two extremes. And he does it with the occasional flash of humour - consider this, from one of the footnotes on trial by combat:
It is not clear, however, whether armed combat is any worse a way of settling disputes than hiring high-priced attorneys to wield the niceties of legal theory in courtroom battles.
I truly enjoyed this book, and I wish I had not taken a decade or more to get around to reading it. Highly recommended for anyone who wants to understand long run economic development, and in particular the Industrial Revolution, from an economic perspective.
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