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A History of the Global Economy: The Inevitable Accident

Author(s):White, Colin
Reviewer(s):Coelho, Philip R. P.

Published by EH.Net (May 2019)

Colin White, A History of the Global Economy: The Inevitable Accident. Cheltenham, UK: Edward Elgar, 2018. x + 495 pp. $195 (cloth), ISBN: 978-1-78897-197-3.

Reviewed for EH.Net by Philip R. P. Coelho, Department of Economics, Ball State University.
This book is intended as a comprehensive overview of the growth of the human economy from the ancestral past to the present. It has some insights that specialists may benefit from, but its manifest shortcomings limit its utility. It is much like an encyclopedia — wide-ranging, containing considerable scholarship and information — but, like an encyclopedia, the underlying intellectual framework is debatable and there are bits that are just wrong. Its subtitle — The Inevitable Accident — is suggestive of an underlying teleology that an examination of the evidence does not justify. The emergence of a species whose individual members use and manipulate technology to achieve goals has occurred only once on this planet, while eyes, flight, echo-location, social-living, and many other traits have evolved separately in different animals numerous times. This suggests that in the ancestral environment where evolutionary selection occurred intelligence was not as valuable as other traits for evolutionary success (survival and reproduction). The evolution of Homo sapiens was not inevitable, but accidental. There is a substantial literature on the evolution H. sapiens that makes precisely this point.

A History of the Global Economy has twenty-four chapters grouped into seven sections (“Parts”) with each Part having a brief introductory segment. The book is wide-ranging, starting with the evolution of humanity and ending in the present (2017). Almost every page has an insight worth pondering, but, simultaneously, the same page will likely have erroneous conventional wisdom, basic facts that are incorrect or missing, and faulty economic analysis. The author professes to adhere to a Malthusian view of history, but simultaneously believes in progress (increasing output per capita) with periods of “reversal” of relatively short duration (p. 6). Elsewhere he provides/cites estimates of the long-term growth annual rate of output per capita of 0.15 percent and 0.1 percent (p. 213), and 0.05 percent (p. 351). That may not seem very much, but since civilizations came into being some 8,000 years ago, at a growth rate 0.069 percent per year there would be approximately eight doublings. If incomes 8000 years ago were equivalent to $400, then mean incomes throughout the world today would be approximately $98,000. According to the CIA Factbook, at purchasing power parity world income per head in 2017 was $17,500. This tells us that the since the beginnings of civilization the world economy has not averaged an annual growth rate of 0.069 percent, and that, if the rates of growth during the heydays of ancient Greece and Rome were correct, then periods of “reversal” were not short. Regardless of the actual numbers, if you rely upon Malthusian Theory, long-run economic growth cannot occur unless you stipulate various ad hoc “fixes” to explain anomalies. In that case, the theory becomes incoherent.

Throughout the book there are problems with basic economic theory. The author believes that people trade because there is a surplus. This has it backwards. Trade occurs because there are differences in relative prices (opportunity costs). Production increases in those goods and services where there is a comparative advantage; as a result, summing over all parties, total output increases. Implying that a region has a persistent surplus (goods that are neither consumed nor sold) suggests producers are intellectually challenged. Why would anyone spend economic resources to produce things they do not want and cannot be sold? This elementary insight into the basis for trade and specialization is unrecognized too many times by the author; still on other pages he correctly analyzes the economic basis of comparative advantage. I do not know what to make of this except that the book should have had a competent and hard-nosed editor.

Keeping on trade, the author repeats and accepts that European development was able to by-pass Malthusian constraints because of “ghost” acres. Ghost acres are those lands that were outside of Western Europe that provided Western Europe with food, which, in turn, allowed the European population to increase and industrialize. The purveyors of “ghost” acres appear to believe that the raw materials were somehow provided gratis to Europe. If it were otherwise and the Europeans paid New World producers for their produce, it would be considered trade and the economics of comparative advantage. If you believe in “ghost” acres, then we can say the Chinese development over the past forty years is overstated, because it depended upon the ghost acres in Brazil, Canada, and the United States among others. This is nonsense; the Chinese (and the Europeans before them) paid for imports. Again, this is trade and comparative advantage at work. The nonsense of ghost acres pollutes some otherwise respectable scholarship. Still, it remains nonsense.

Major and minor errors abound: The international slave trade did not end in 1807, only the (legal) American and British involvement; colonialism was not a source of net economic benefit to the Mother countries; enclosures did not mean that small landholders lost their rights to the commons; capitalism does not mean that countries lose creative innovativeness; and it goes on and on. The reification of countries is particularly harmful to economic analysis; countries do not industrialize, create or innovate, people do. Certainly, the reification of a country can be a valuable shorthand in writing, but it should not delude one into eliminating the primacy of individual incentives. Otherwise, history becomes inchoate. Try to explain the changes in the Chinese economy from 1950 to the present without reference to individual incentives; it is impossible.

Finally, there is a substantial amount of hubris embedded here. It is best illustrated in the discussion of the “great divergence.” The great divergence is the argument that prior to the nineteenth century, output per capita and living standards were very similar between Western Europe and East Asia. The argument has persuaded me that Chinese output per capita was at least 75% of that of Western Europe circa 1780, but by 1900 European output per capita was five (maybe ten times) greater than Chinese. The author attributes this to increased European output, and has almost nothing to say about Chinese nineteenth century history. During the nineteenth century China experienced the Taiping Rebellion (estimated deaths from 10 million to 100 million), the Dungan Revolt (deaths about 10 million), the Panthay Rebellion (about 1 million deaths) and a host of assorted smaller wars and conflicts. The Chinese population in 1850 was approximately 430 million, about 36% of the world’s population; by 1930 the Chinese population grew to about 475 million and about 24% of the world’s. From 1850 to 1930 world population grew by about 64% (from 1.26 billion to 2.07 billion), while during the same period Chinese population grew by a little less than 10%. Nineteenth century conflicts were demographic and economic catastrophes for China. (As an aside, the major wars of nineteenth century China were religious (the Taiping Rebellion “Christian” based, the other two Islamic); given history one can understand the contemporaneous Chinese reluctance on giving free reign to religion.) The author does not mention Chinese nineteenth century history in his discourse on the “Great Divergence.” Authors cannot be expected to know everything, still they should have some knowledge of what they are writing about. The attribution of the Great Divergence entirely to European exceptionalism rather than to a more nuanced and historically accurate account suggests unconstrained intellectual hubris.

In sum the flaws in this book overwhelm the substantial scholarship embedded in it. A critical reading of almost every contention that the author makes is required because too often he is mistaken.

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Subject(s):Economywide Country Studies and Comparative History
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative
Prehistoric