|Reviewer(s):||Margo, Robert A.|
Published by EH.NET (March 2008)
Gregory Clark, A Farewell to Alms: A Brief Economic History of the World. Princeton, NJ: Princeton University Press, 2007. xii + 420 pp. $30 (cloth), ISBN: 978-0-691-12135-2.
Reviewed for EH.NET by Robert A. Margo, Department of Economics, Boston University.
“Big Think” refers to the genre of economic history that asks The Big Question. Why England and not China? Do institutions “matter” or is it something else, or many things? Why is the United States rich and Bolivia poor?
Reviewers should be upfront about their ex ante biases. Here is one of mine: I do not care for Big Think. The Big Question per se is not the problem ? in economics, there is nothing more important. For me, the problem with Big Think is that it is inherently Too Big. One cannot hope to answer The Big Question by tackling it head on. One must break The Big Question into a great many very tiny precisely posed questions, and get the answers to them right. In economic history we are still very far from completing this task even for a country whose economic history is as well-worn as the United States. Big Think is a Big Distraction from our true purpose in life.
Personal tastes notwithstanding, I do teach (or at least try to teach) Big Think to my graduate students. I do so because I teach to the market, not what I like or dislike. Each part of the economics world needs a reason to live and the market seems to be saying that it wants economic historians, at least some of the time, to Think Big. To some extent the market is a reflection of supply. As economic historians age, they need something to work on other than university promotion and tenure committees. Big Think is attractive as it seems, well, Big and, most importantly, can be practiced successfully without paying much attention to the latest advances in formal theory or econometrics, or for that matter, any theory or econometrics. This is not a life-cycle career path open to, say, labor economists doing structural estimation or freshwater macroeconomists. Economic history may also self-select individuals who derive utility from talking about the fate of man and assorted related conundrums. However, demand also plays its part. Some of this demand comes from pundits who are angry because they feel that today’s economics is too mathematical or not focused enough on the “real world.” Other interest in Big Think is genuine in the sense that it derives from a public that routinely sees physicists contemplate the Big Bang or biologists the Mystery of Life (Evolution) and would like economists to behave similarly. Surely economic history has something to tell us about The Big Question ? which brings me to the task at hand.
One day last summer I got up very early, played the lute for a while, made breakfast, and then read the New York Times online. There, in the “Science” section, was a big article on Greg Clark’s new book.
At the time I was, and still am, genuinely pleased for Greg. Economic historians are underserved by the popular media, and we should cheer when one of our own is so celebrated. Greg is disciplined, hard working and highly productive, not afraid of big data sets or getting his hands dirty. Many of his articles appear on graduate reading lists, one barometer of their net worth. He is an excellent citizen of the profession and of his university. (Clark is Professor of Economics (and Chair) at the University of California, Davis.) Not long ago I attended a seminar of Clark’s at the Harvard Economic History Workshop. The paper was about total factor productivity growth in England during the Industrial Revolution His talk bogged down early as several in the assembled multitude asked Greg many Big Questions. I sat in the back of the room, dozing off periodically (a hazard on Friday afternoons) but woke up sufficiently in time to raise my hand at an appropriate juncture. I pointed out that the total factor productivity (TFP) series in Clark’s paper, if taken seriously, would appear to render irrelevant much previous work on the Industrial Revolution, including work by some of the people in the room. The conversation, therefore, should be about whether my reading was correct and, if so, we should believe his new series, the key issue being that it is based on the dual (prices) rather than quantities. For the next few minutes the conversation did grapple a bit with this issue but soon returned to Big and I went back to day-dreaming. I think, however, it was the right conversation to have at the time, and still do (see below).
So, what’s in the book and how do I feel having read it? First things first, I dislike the title. It’s the sort of title that draws groans from the humanists for good reason. I wish Princeton’s editor has exercised more discretion, not the only time I felt this way (see below).
A Farewell to Alms is divided into eighteen chapters organized in three Parts, a technical appendix that reviews the basics of growth accounting, and a bibliography. The Introduction provocatively begins with Figure 1.1, “World economic history in one picture: Incomes rose sharply in many countries after 1800 but declined in others”, self-explanatory. This will be a book about the (very) long run persistence of the Malthusian economy before its abrupt demise, in some countries, with the Industrial Revolution (IR), followed by ever-widening gaps in living standards between rich and poor. It will also be a book (p. 8), however, about how the long “pre-industrial era was shaping people, at least culturally and perhaps also genetically,” by which Clark means the development in the West of key behaviors, especially patience. The Great Divergence happened because the post-revolutionary industrial technologies of the West are designed to be complementary with hard work; appearances perhaps to the contrary, Clark believes that people in poor countries don’t really work very hard. In the final analysis, though, none of this matters because, as Richard Easterlin has told us many times, money doesn’t buy (absolute) happiness.
Part I of the book consists of seven chapters that comprise a long meditation on Malthus. The basics of the Malthusian model are set forth in Figures 2.1 through 2.5. Land is fixed in supply and subject to diminishing returns. The problem is not that there were no improvements in technology prior to the IR. The problem is that such improvements were just too sporadic and limited. Consequently, as the saying goes, life was nasty, brutish, and short. And if we were to imagine a sudden pre-IR improvement in institutions, this wouldn’t matter either ? in fact, welfare would decline, if good institutions somehow promoted higher population growth. To get sustained economic growth we need sustained TFP growth. The remaining chapters elaborate on these themes, focusing on living standards (chapter three), fertility behavior (chapter four), mortality (chapter five), technology (chapter seven), and institutions (chapter eight). The most interesting material is in chapters six and nine. Chapter six presents evidence drawn from wills that shows a positive correlation between reproductive success (how many children men fathered) and wealth at death. To the extent that the wealth itself was created though patience and hard work ? “middle class’ values ? the behaviors could be (and Clark believes were) passed on from one generation to the next, just waiting to take advantage of sustained improvements in technology if such ever arrived. Chapter nine presents disparate evidence on the “rise” of “modern man”: long-term reductions in real interest rates, greater awareness of “time” because of increases in literacy and understanding of numbers, and an increased willingness to work more intensely and for longer hours.
Part II, made up of five chapters, is about the Industrial Revolution proper. Chapter ten argues the IR represented a fundamental break with the past in terms of TFP growth not capital accumulation. Chapter eleven briefly considers, and rejects, various theories as to why the discontinuity in TFP growth occurred: institutions, multiple equilibrium (the pre-IR was caught up in a bad one), scale economies or endogenous growth. Chapter twelve suggests that the discontinuity may be more apparent than real, the confluence of a much longer process of innovation (with long lags in the effects of innovations on the real economy) coupled with (according to Clark) unrelated population growth. Chapter thirteen asks why England and not China (or India or Japan). Clark answers by saying that China et al had even faster population growth (more Malthus) and less reproductive success among the wealthy, hence less diffusion of the behaviors that Clarks sees as the key to modern economic growth.
Part III, the shortest, is made up of three chapters. Chapter fourteen restates the well-known (to economic historians and development economists at least) fact that per capita incomes have diverged since at least the dawning of the industrial revolution. Of course whether they will continue to do so in the next two centuries remains to be seen; my guess is “not.” Chapter fifteen asks why the IR didn’t spread everywhere. Clark’s answer is that in poor countries lots of workers get assigned to foreign machines with little or no gain in efficiency. Chapter sixteen burrows into the reason for the inefficiency: the capital (and technology) that was (and is) imported into poor places is complementary to the sort of behaviors ? “industriousness” ? that took a long time to develop in the West and which are in short supply elsewhere. Chapter eighteen concludes with a few zingers levied at the alleged irrelevance of modern economics along with musings about the failure of the IR to spread happiness around the globe and on the West’s “biological” inheritance from the IR ? perpetual discontent.
A Farewell to Alms is a mixed bag. Like peacocks Big Thinkers are expected to strut their stuff and without question Clark has stuff to strut. His knowledge of the economic history and related social science literature is encyclopedic ? in particular, I learned a considerable amount about what anthropologists have been doing of potential relevance to economic history. The writing style is engaging, moves along at a brisk pace, and when occasion demands, suitably humorous. The book truly does summarize into a coherent whole a gargantuan, disparate and influential opus. As such, it is an effective window on Clark’s world, especially for those who lack the time (or knowledge) to dissect his many working papers and journal articles. As previously noted, these working papers and articles are based on seriously hard work over a long period of time with primary sources and are worthy of the highest professional respect.
Taken as a whole, however, A Farewell to Alms doesn’t do it for me. One key reason is the tone: it is too argumentative. Clark goes out of his way, and then some, to differentiate his product and attack his rivals (see, for example, the first full paragraph on p. 147 and the corresponding footnote on Avner Greif). He is particularly scornful of those who would attribute long-run economic success to secure rights to private property, arguing that all the relevant institutions were in place in England long before the IR. The second paragraph on p. 372 declares that, in today’s world, the “deluge of economics journal articles … serves more to obscure than to illuminate” and “booming demand … has driven up the salaries of even academic economists to unprecedented levels” ? except, according to footnote 2 on the same page, at “the University of California, Davis” which “seems to be the sole exception to this salary inflation.” For my entire working life (and I am sure, longer than that) there has been an undercurrent of hostility in the economic history world towards formal economics. The hostility is based on its alleged irrelevance to history, but its real source is probably envy. I am sorry to see Clark give in to this tendency (to be charitable, perhaps this is part of his marketing plan).
I recently had occasion to re-read Robert Fogel’s presidential address to the Economic History Association, which was a response to his many and varied critics on the social savings of the railroad. Even when his critics were at their nastiest Fogel was always gracious in battle, praising the criticisms as empirically or theoretically valuable even while he was hard at work demolishing them. Personally, I think it very unlikely that any single story can explain the wealth of nations. It is much more likely, it seems to me, that Acemoglu, Engerman, Epstein, Galor, Goldstone, Greif, Jones, Kremer, Lucas, McCloskey, Mokyr, North, Pomeranz, Sokoloff, Thomas and many others, along with Clark, are all correct, to some extent. From the other angle, I find it strange to think that any economic historian would dispute seriously the notion that the sort of behaviors Clark emphasizes ? or more generally, “culture” ? were present as causal factors in the IR. The real question, as always, is how much.
As for the real question, I think Clark enjoys going where no man has gone before and, therefore, beyond ? sometimes well beyond ? what the evidence may actually support. Chapter six, as noted, gives us some data from wills linking wealth positively to reproductive success. Even taken on face value, should I trust these data? Why or why not? Even if I believe the data to be trustworthy, how do I know I am observing a causal link between “good” behaviors (for example, patience) that, in the best of circumstances (and these are far from the best) are barely, if at all, observable to the econometrician? What, precisely, are the mechanisms that allow good behaviors to be transmitted across generations? Don’t institutions of one type or other play a role? Well, you could say to me, read the paper. Except I did happen to go to a seminar not too long ago on this work ? and I didn’t think the questions were answered satisfactorily there, either. I’m not cherry-picking; almost every chapter has something like this.
So, in the end, should you read A Farewell to Alms? If you are into Big Think as a consumer or producer, the answer is a definite “yes” ? especially if you are a producer (trust me, you will need to prepare a response to Clark, if you haven’t already). Even if, in the end, you are like me ? you don’t care for Big Think but you have graduate students to worry about ? the answer is still “yes”. Just make sure that your students realize that the scholarly behaviors they should be emulating are the virtues ? patience, hard work and discipline ? that produced the articles underlying this book in the first place.
Robert A. Margo is Professor of Economics and of African-American Studies at Boston University and Research Associate, National Bureau of Economic Research. He is also the editor of Explorations in Economic History (until July 2008).
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|Subject(s):||Markets and Institutions|
|Geographic Area(s):||General, International, or Comparative|
|Time Period(s):||General or Comparative|