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August 12, 2007
David Warsh, Proprietor

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Sink or Swim?

Economic Principals is a news-oriented weekly, not a newspaper or a book review.  A Farewell to Alms: A Brief Economic History of the World, by Gregory Clark, an economic history professor at the University of California at Davis, won’t be published until September. Most of the professionals whose opinions are relevant haven’t seen it yet, much less read it.

Still, the book has made enough of a splash already that it seems necessary to say something about it. So I spent most of a couple of days last week reading its 400 pages. Here goes. 

In case you missed it, in a story in the science section of The New York Times last week, headlined “In Dusty Archives, A Theory of Affluence,” reporter Nicholas Wade noted that historians and economists have long struggled to explain both the Industrial Revolution and the related leveling-off of population growth that has occurred whenever societies have grown rich. (The cynosure “average woman” goes from giving birth to five or six children to two or fewer in the space of a generation or two.)

“A scholar who has spent the past twenty years scanning medieval English archives has now emerged with startling answers for both questions,” wrote Wade.

A couple of days later, in the Financial Times, under the headline “Let the rich go forth and multiply,” columnist Clive Crook asserted that “any book that is as bold, as fascinating, as conscientiously argued and as politically incorrect as this one demands to be read.”  

Meanwhile, the peripatetic Tyler Cowen of George Mason University is planning an online book forum in the blogosphere.

So what’s the startling new idea? Nothing less than that “social evolution in England had a biological basis,” according to Clark — “that it was driven by the selective survival of types….”   Does that sound like race to you?  It does to me.  Social Darwinism is just around the corner.

A little background:  according to Clark, broad-brush world economic history boils down to just three big questions. (Many other economic historians would take exception to his stylized facts.)

Why did an iron “Malthusian trap” persist so long, such that any technological improvement learned by humankind — agriculture, stock rearing, the wheel — translated, not into greater individual well-being, but simply into more mouths to feed? The average person in the world of 1800, he insists, was no better off than the average person of 100,000 BC.

Why did the initial escape from the trap, the Industrial Revolution, occur in one tiny island, Britain?

And why weren’t other countries able to follow suit? Clark makes much of “the Great Divergence,” the phrase coined a few years ago by historian Kenneth Pomeranz to describe the differential in growth rates that developed between Europe and East Asia after 1750. But apparently Clark means mainly sub-Saharan Africa today.

Well, all right, then, why England?  Clark conjectures that a long slow buildup was necessary for the ten thousand years once humankind settled down to Neolithic times (after, say, 7000 BC), during which agricultural societies gradually became less impulsive, violent, lazy and illiterate/ilnumerate, followed by a sudden breakthrough in which the rich simply crowded out the poor in the little country known as England.

“The answer hazarded here is that England’s advantages were not coal, not colonies, not the Protestant Reformation, not the Enlightenment, but the accidents of institutional stability and demography: in particular the extraordinary stability of England back to at least 1200, the slow growth of population between 1300 and 1760, and the extraordinary fecundity of the rich and economically successful.”

Working from a careful study of English wills that he made with Gillian Hamilton (and published in the Journal of Economic History in 2006), Clark found a reproductive advantage of rich men over poor between 1585 and 1638 — the richest testators leaving twice as many children as the poorest. From this he concluded that the offspring of the rich had quickly spread throughout society, bringing with them middle class attitudes and culture, while the poor proportionately died off. In the Malthusian world, downward social mobility was the rule.

Literacy; numeracy; the taste for thrift, prudence, negotiation and hard work.: it was the embedding of these bourgeois values in the culture, “and perhaps even the genetics,” that gave England its head start, suggests Cark. The reason the same thing didn’t happen in China and Japan was that, for whatever reason, the rich in those countries didn’t breed fast enough to spread their influence down very far in the population.

About the evolutionary biology, I have nothing to say.  Darwin famously got his initial inspiration from Malthus. The re-importation of Darwin into economics has barely begun. The idea that certain populations differ importantly from one another because of the relative frequency of some gene or set of genes is familiar enough. Clearly the possibilities for mischief are very great. We’ll see if biology and psychology eventually provide scientific underpinnings to certain old folk-ideas about common ancestry and “race.”  It will be the work of very many years to narrow it down and give meaning to the concept of “fitness” in the context of economics.

There are, however, two things about A Farewell to Alms that are within my competence to quickly assess. One has to do with scholarly bad manners. The other concerns a policy prescription so central to the author’s intention that apparently it inspired the title of the book.

First, the manners, a relatively small concern in the great scheme of things.  Clark’s book is, to put it frankly, self-aggrandizing to the point of being intellectually dishonest. In fact, many of the best minds in economics have been involved for twenty years in an intensive re-thinking of the technological, demographic and behavioral changes that accompanied what is loosely summed up as the Industrial Revolution, in connection with problems of global development today.  Since the late 1990s, part of the debate has gone forward under the banner of “unified growth theory,” a term introduced by Oded Galor and David Weil, both of Brown University.

Moreover. it was Galor and and  Omer Moav, of Hebrew University, who wrote the 2002 paper in the Quarterly Journal of Economics, “Natural Selection and the Origin of Economic Growth,” that Clark acknowledges got him thinking about the survival of the richest — or, as he puts it, got him thinking about it again.

In a footnote Clark explains, “I first became interested in this idea in 1989. [I] and [Alan] McGinley [in a paper presented to the Berkeley-Stanford Economic History Seminar but otherwise unpublished] argued through a simulation exercise that the logic of the Malthusian era implied that people evolved after the Neolithic Revolution toward greater patience and lower fertility. These ideas then seemed to conflict with the historical record and biological possibilities.  My interest was reignited by a theoretical paper, making the same argument, by Galor and Moav.”

Five years and one empirical journal article later, Clark’s book winds up in the highly-regarded science section of The New York Times.  Meanwhile, the Thomson Web of Science last spring described Galor’s topic as an “emerging research front” and published an interview with him. ( ) The Handbook of Economic Growth includes his essay on unified growth theory:

To be sure, Clark is a full-fledged participant in these debates. For example, his review of Avner Grief’s book, Institutions and the Path to the Modern Economy, will appear in the Journal of Economic Literature this fall. But he is only one of many members in a vibrant community, and far from the most celebrated. So why not give a clearer picture of work being done elsewhere in economics on the same topics?

Perhaps in anticipation of the question, he begins, “[This book] is an unabashed attempt to write big history, in the tradition of The Wealth of Nations, Das Kapital, The Rise of the Western World, and, most recently, Guns, Germs, and Steel.” But surely Adam Smith, Karl Marx and Douglass North considered that they were writing theory, not history — that is, discerning underlying laws of social motion. And, for the most part, that seems to be what the historian Clark thinks he is doing, too. His superheroic stance probably is best understood as a symptom of the schism between economics and economic history, and historians’ desire to enjoy some of the attention generally showered on the economists. To outsiders, economics seems a tidy and well-governed field. Insiders know that it’s much more complicated than that.

But it is the policy prescriptions that Clark says flow from his work that are the most disturbing aspect of A Farewell to Alms.  The title is a bad pun on th name of an Ernest Hemingway novel; the “alms” he seems to have in mind are the aid, advice and other sorts of helping hands that the industrial nations have to offer the newly industrializing countries today. He has very little to say about the poor countries that have grown rich — the spectacular rise of Japan and the extraordinary transformations now occurring in the economies of China and India — except to venture that economies seem to him to alternate more or less randomly between relatively energetic phases and periods of somnolence. After all, didn’t the Dutch economy stagnate for 150 years after its 1550-1650 “golden age?”

Instead, he castigates the community of development economists in general, and the “cult centers” of the World Bank and the International Monetary Fund, in particular, for their failure to recognize that culture — “socially induced lethargy” — is the problem. . “[L]ike physicians of the pre-scientific 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” — namely, democracy, public health, openness, the rule of law and education — for countries that lack the social (and perhaps biological?) capacity to take advantage of modern institutions.

“History shows, as we have seen repeatedly in this book, that the West has no model of economic development to offer the still-poor countries of the world. There is no simple economic medicine that will guarantee growth, and even complicated economic surgery offers no clear prospect of relief for societies afflicted with poverty.  Even direct gifts of aid have proved ineffective in stimulating growth.  In this context the only policy the West could pursue that will ensure gains for at least some of the poor of the Third World is to liberalize immigration from these countries…”

That, and recognize that the industrial nations, too, may soon face “the gloomy dystopia feared by so many writers, in which the wages of unskilled labor drop below the socially determined ‘subsistence wage’ and societies are forced to support a large fraction of the population permanently through the public purse.”

The implicit proposition of A Farewell to Alms is that we should stop giving money to the poor. They’ll just become more numerous. Hoist as many as possible aboard; let the others sink or swim. Let selective pressure do its work. Only thus will the poor eventually escape their poverty.

From a scholar to come blinking out of the library where he has been studying English wills in the age of Shakespeare, this is simply offensive. For a sense of how completely at odds it is with the situation in present-day Africa, see is Is Anywhere Stuck in a Malthusian Trap?, an unpublished paper on the personal blog of World Bank senior economist Charles Kenny. Enough with the “big history” already. There were a lot of things I would have rather done last week than read A Farewell to Alms. But then I wasn’t won over by Jared Diamond’s Guns, Germs, and Steel, either. And it was a much better written book..

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