A Farewell to Alms

A Farewell to Alms: A Brief Economic History of the World by Gregory Clark (2007) is a very solid look at the economics of the Middle Ages and the transition to the Industrial Revolution and a short look at why the divergence in wealth between nations has grown during the twentieth century.

What’s great about the book is how data driven it is. Clark has systematically gone through a wealth of sources and presents the data they contain clearly and with ample reference. Even if the book’s conclusions are wrong, the book furthers the quest to understand why growth took off during the Industrial Revolution and why world growth is so uneven.

Clark first characterizes growth before the Industrial Revolution as Malthusian Growth that Clark defines as low growth while the per capita income of each person changes little. The term is curious because Malthusianism in common use tends toward saying that there is a hard limit on population size that populations reach. Clark describes the era from 100 000 BC to 1700 AD as showing very little or almost no growth in wealth per person. He does point out that during this time the world’s population increased from approximately 100 000 people to 770 million, so the total amount of wealth grew enormously. But there are indicators in terms of the amount of rich energy source food consumed and life expectancy that make the point very reasonable. However it is interesting to assert that a citizen of Britain in 1700 was only as wealthy as a cave man. Surely the possessions of the average Briton of the time would have been more than that of the cave man.

Some economists have put forth the idea that the Industrial Revolution occurred in Britain because of British institutions. Clark makes a very good point to suggest this is not the case as he points out that the institutions that fostered the industrial revolution had remained the same for centuries in Britiain with low growth before the Industrial Revolution.

Clark’s thesis is that the Industrial Revolution occurred in Britain because of higher fertility of wealthy people had bred work of the kind that makes modern economies work well. He backs this argument up with data from the long history of British inheritance and number of descendants. He also makes the point that the values that make economies work are not values that are presumably successful for hunter gatherers, hard work, rationality and education.

He goes on to suggest that cultural reasons are the reason for the divergence between the developed world and the less developed world in the 20th Century. He again goes to the data looking at the productivity of works on automated weaving machines. Even if the argument is wrong it is extremely thoroughly and transparently supported.

An alternative thesis for the Industrial Revolution are abundant as described in wikipedia in the entry on The Industrial Revolution. New theories combining elements of previous theories continue to be created. The question is one that will probably never be resolved. The technological argument that coking to produce cheap cast iron lead to coal being more cheaply extractable to produce still cheaper coal and then to the invention of the steam engine that enabled, for the first time in history, the use of the massive amounts of energy in fossil fuels to be used on a huge scale is still strong. Indeed, the book describes the price and amount of coal being mined from 1600 to 1860 which indicates that this was at least occurring even if it was not driving the Industrial Revolution itself.

The divergence in growth between developed and less developed countries over the twentieth century is not, however, explainable by cheap energy which should, if it’s effective were the same regardless of culture and institutions, have reduced the divergence. Only in the developed world where per capita incomes have remained fairly similar to each other is this the case.

The book is, regardless of whether the conclusions are agreed with, a great book. Ross Gittins, reviewing it in the SMH also makes this point. The reviews in most places, including the NYT, have been glowing. The wealth of data, thoroughness and clearness of the explanations contained and the quality of the writing really shine.



One response to “A Farewell to Alms

  1. Pingback: Connections « ReviewSien

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