October 9, 2007

"A Farewell to Alms:" My VDARE.com review, Part 1

Here's my new VDARE.com book review. The second part will run next Sunday night.

A Farewell to Alms: Why Did the Industrial Revolution Happen Where it Did?

By Steve Sailer

An ambitious and provocative new book by University of California at Davis economic historian Gregory Clark, A Farewell to Alms: A Brief Economic History of the World, attempts to explain two huge questions:

Why did one part of the human race finally break out of the "Malthusian trap"—in which growth in per capita income is washed away by subsequent population growth—namely England, at the end of the 18th Century, through rapid and sustained technological advance?

And why did the prosperity made possible by the Industrial Revolution successfully spread to some countries but not to others?

In the process, Clark offers a stunning rebuke to economists:

"God clearly created the laws of the economic world in order to have a little fun at economists' expense. In other areas of inquiry, such as the physical sciences, there has been a steady accumulation of knowledge over the past four hundred years. … In economics, however, we see instead that our ability to describe and predict the economic world reached a peak around 1800. In the years since the Industrial Revolution there has been a progressive and continuing disengagement of economic models from any ability to predict differences of income and wealth across time and across countries and regions."

In other words, economists were closer to understanding the wealth of nations in 1776 when Adam Smith wrote The Wealth of Nations than they are today.

The pioneering economic works of Smith and Thomas Malthus (1798) accurately described the world before the Industrial Revolution that was just getting underway then with the employment of the steam engine in cotton mills. By 1817, when David Ricardo was pessimistically propounding what later came to be known as "the Iron Law of Wages," England was moving in a new, liberating direction unexpected by economists.

In the modern world, a shortage of cheap labor turned out to be a blessing rather than a curse. The future belonged to countries with high wage, high quality work forces.

But the prestige of the economists and their Scroogeonomic emphasis on cheap labor was so great that Britain didn't even effectively outlaw the use of five-year-old boys as chimney sweeps until 1875.

Clark's book idiosyncratically combines the strengths and weaknesses of both economists and historians.

Although economists were long the butt of angry jokes, the improvement of the economy after the early 1980s has raised their prestige and self-confidence. As shown by the three million copies sold of Steven Levitt's Freakonomics, economists are the hot academics of the moment, the glamour professors, just as cultural anthropologists were back in Margaret Mead's heyday in the 1950s.

The strong point of economists is that they believe in "theory" in the same sense that hard scientists do—as a tool for simplifying our understanding of reality and for making more accurate predictions. (In contrast, professors of English literature use the word "theory" to mean the hateful mumbo-jumbo that they wield as a barrier to entry to their otherwise appealing profession—a barricade of bad writing that repels many of the huge number of people who love good writing and would otherwise want to be English professors.)


My published articles are archived at iSteve.com -- Steve Sailer


max said...

For example, interest rates were much higher in the past until the last few centuries. Clark argues that this is because the supply of savings was lower, due to people being more impulsive.

Hrmm. Archaeology Review had an article a coupla years ago arguing that interest rates went up because (essentially) of the difficulty doing the math of compound interest. The simple methods only allowed room for a few different interest rate pegs, so everytime the expense of a given interest rate rose higher than the peg the interest rate would shift to the next peg up.

['I'd need to reread the article to say much more than that.']

Anonymous said...

John Kelly made the same case in his book "The Great Mortality," about the Bleack Death of 1348.

After the plague the "shortage" of labor caused farmers to begin using more mechanization in the harvesting and processing of food. Innovation and productivity soared.

Interestingly (and not surprisingly), the labor "shortage" (always use quotes when referring to such nonsense) was opposed by the nobility, who did everything they could to keep down the newly liberated serfs.

Anonymous said...

Steve, this is a great addition to your "Why Economists are Idiots" position. However, I am curious what your opinion is of "Austrian Economists"? Especially, say, Friedrich Hayek. I ask because I know that Hayek spoke quite a bit about Culture.

I am not an expert on Austrian Economics, but it seems that they are more likely to be "Reasonable" on Immigration and I know that you link to LewRockwell.com.


Bruce Charlton said...

"Nor does there seem to be much point in looking for genetic differences that would explain why the Industrial Revolution happened in England rather than in, say, Holland. Another researcher into wills has found the same pattern of the rich out-reproducing the poor in centuries past in Austria and southern Germany; it's been found among the Ashkenazi Jews of medieval Europe; and it probably will be found in many places at many times when others bother to look."

But Clark says that it is the *middle* classes which outreproduced both the upper and the lower classes. So it was (he argues) middle class characteristics that were amplified - hard work, thrift (deferred satisfactions), peacefulness etc.

In most historical societies it is the upper classes who reproduce most, and they are usually warriors/ gangsters. Interestingly, the middle class intellectuals in these societies are often slaves, eunuchs, foreigners, or chaste.

Anonymous said...

Bingo Bruce G and you poked a mighty hole in Steve's theory.

In short, the extraordinary progress in Europe between say, A.D. 900 and 1500, and the Enlightenment from say, 1740-1790, can be explained not by isolation but by marriage and reproduction patterns.

China for example produced gunpowder, working guns, printing, paper money, and many other useful inventions. But they never went anywhere. Why? Because the men who created them were eunuchs, by and large. Who had no patrimony to pass on to their sons.

One of the interesting things that Clark found was the pattern of small farmers also producing cottage-industry goods. That mixed with craftsmen passing on their craft (with proprietary improvements) to their sons had a powerful incentive towards incremental improvement.

For example, Caslon (an Englishmen) was able to produce typefaces that was original, improved by his descendants, and is still used today. No Chinese Eunuch would have thought of that. The universe ended with him.

The "secret sauce" of the West is harnessing the full productivity of the beta male and restraining the Alphas from ruining things. Among the things that enabled that process was monogamy enforced by the Church AND State, competition between Church and State, and a concept of limitation of powers of the monarchs and aristocracy.

Anonymous said...

I just started re-reading Hayek, b/c I'm curious what he would say about various modern issues: immigration, pollution, environment, health-care, etc.

Hayek is unfairly accused of being a libertarian. However, he was actually quite in favor of establishing benefitial regulatory systems.

Anonymous said...

1. I think many fields have the most interesting and profound insights coming earlier in time and coursework. And subsequent work becomes both more difficult and less crucial.

2. Need to differentiate between micro and macro. Micro has had many successes and dramatic insights (for instance in finance, game theory, monopoly pricing, etc.) Macro has had less for partially overlapping reasons of a more fluffy subject matter and more politicized aspects. That said, even in macro, there are advances in understanding. Particulary, but not exclusively, when macro uses micro-like tools and analytical gumption.

3. There are many economists who recognize the importance of the rule of law, contracts, etc. And the impact of deviations from them. And these are interesting areas of current research.

4. Some economists (e.g. Phil Parker down at UCSD) are very aware of deviations from ideality, the role of culture, etc. Heck, Phil is a Montesque fan and talks about how convergence is over-rated and south versus north European traits more important than one would think. He comes from a marketing perspective vice economic performance, but the intuition covers all. Fun in the sun versus work in the snow.

4. (sorry, not MECE) Your complaints are a bit like a smart high schooler saying physics is useless because his homework problems don't include friction in the ballistics problems. I completely disagree. The idealized picture of frictionless balistics is useful directly and as a foundation for more complicated ideas.

Anonymous said...

Interestingly enough, you make it sound like the Japanese may have been too bourgeois. Maybe bourgeois values are like pH--can't be too high or too low.

Anonymous said...

The "secret sauce" of the West is harnessing the full productivity of the beta male and restraining the Alphas from ruining things. Among the things that enabled that process was monogamy enforced by the Church AND State...

Want to know one major difference between Europe and the rest of the world? When you read your history books you'll often read about Emperor X having 10 or 50 or 200 wives and concubines. Can anyone think of even one example of that in Europe? I can't. Even the most powerful pre-Christian rulers don't seem to have had very large harems.

I'm sure that European rulers could get plenty of action on the side if they wanted it, but clearly it wasn't tolerated in the way it was elsewhere. And given the general sexual desires of most men there can really only be one explanation for that: European men were too damned stubborn to tolerate a leader who abused his power to monopolize the females.

And if the king can't get away with having more than one wife, then he sure as hell ain't gunna let Joe Schmoe get away with it.

...competition between Church and State, and a concept of limitation of powers of the monarchs and aristocracy.

I recall pointing out in one of my college history classes that feudalism was better than imperialism. The reason being that you have a balance of power. In an empire, the entire government is appointed by the emperor. Your position is in his hands, giving you no independent base of power.

In a feudal society, however, you have numerous individuals with an independent, inherited base of power. The king can't dismiss them so easily (or he'll anger all the others). That's why feudalism (bad as it was) was better than empire.

Of course, I got laughed at for saying that. But the Magna Carta wasn't invented in China, was it?

Anonymous said...

"But the Magna Carta wasnt invented in China,was it?" No,but if you want to buy a copy,THEY will all be made in China! :)

Anonymous said...

I think this must be the first time a book on economics that proposes a theory based on genetics was considered "respectable" and reviewed widely in the mainstream media.
In an article in the Times in which the author outlined his theory, he added that it might also explain why post-colonial countries outside Europe haven't yet developed successful economies, i.e. there hasn't been time for this genetic shift to take place.
Considering that his theory rests on the supposition that a substanteial genetic difference existed within a relatively homogeneous white population,(i.e. the British), it seems strange that he should assume that all races must be capable of building a technologically advanced capitalist society.

Anonymous said...

In a feudal society, however, you have numerous individuals with an independent, inherited base of power. The king can't dismiss them so easily (or he'll anger all the others). That's why feudalism (bad as it was) was better than empire.

Not a bad point (even Jared Diamond has said as much.) But how come the age of absolutism came as Europe began to advance? Shouldn't it have stopped that in its tracks?

Anonymous said...

There have been numerous books you've discussed or reviewed that I've been eager to read until after comments about it have been posted. Despite the fact that the author may not agree with the conclusions spouted by the many psuedo-pundits who visit iSteve, they become inextricably linked with said work which becomes a distasteful reminder of some moron's agenda.

I know I should be more detached, letting the author speak for himself but the sense that I will have spent good money on a book that supports odious views on this or that subject stifles my natural curiosity. In fact, I've gone so far as to make a list of books you've recommended so that if I do decide to research a subject broached here, I won't make the mistake of contaminating myself with that writer's theories which, since promoted on this site, will most certainly be contortions of reality spiced with outlandish interpretations of the meaning of observed/researched phenomena.