False Economy: A Surprising Economic History of the World.

Published by EH.NET (August 2010)

Alan Beattie, False Economy: A Surprising Economic History of the World.? New York: Riverhead Books, 2010.? xii + 353 pp.? $16 (paperback), ISBN: 978-1-59448-444-5.

Reviewed for EH.NET by Eric Jones, LaTrobe University.

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This is a work of haute vulgarization by the world trade editor of the Financial Times, where Alan Beattie writes about economics, globalization, and development.? He does here, too, though concentrating on the historical background to an extent that presumably would not appeal to the everyday newspaper reader.? The book is framed around a number of contrasts and puzzles, including why the performance of the United States exceeds that of Argentina and how Washington, D.C. outclasses ancient Rome.? It asks why Egypt imports half its staple food; why asparagus is imported from Peru; why oil and diamonds can be more trouble than they are worth; why Africa does not grow cocaine; why Islamic countries sometimes perform poorly; why Indonesia prospered under a corrupt ruler whereas Tanzania stalled under an honest one; and why many situations are path-dependent.

This is a wide range of topics treated half as development issues and half as supposed lessons from the past.? Sometimes the selection is obscure, as when the United States rather than Australia is contrasted with Argentina.? But most of the material will be known to economic historians and the economist?s take on the problems involved will also be familiar, though this may not be true for the general reader and Beattie does possess a facility for finding piquant facts with which to illustrate his points.? I did not know, for instance, that one of Sir Robert Peel?s descendants has been battling protectionism as a policy director of the British Food and Drink Federation, though with less success than his illustrious forebear.? Nor did I know that the Bretton Woods conference was held in that remote place merely to buy off an isolationist New Hampshire senator.

In themselves such amusements do not take us far.? The motors of history, as Beattie seems to conceive them (he is always more definite-sounding than definite), are the choices made by governments and individuals.? He is dismissive of material constraints.? This approach, perfectly arguable though it may be, leaves unresolved the phase transitions between stultified and expansionary episodes.? Beattie tends to cut the Gordian Knots and forge ahead.? To cite a single case, he asserts that the difference between Islamic and Christian merchants was that the latter were powerful enough to overturn inconvenient laws.? Moreover, they were happy to alter the religious justifications for their behavior.? This emphasis on cultural malleability is a recurrent theme, and although I am happy to agree, it does leave hanging the question of the Christian merchants? special access to power.? Beattie does not investigate this but moves straight on to pull another rabbit out of another hat in a manner that is a tantalizing feature of his style.

The work is most successful when the author turns to his metier, world trade.? He notes that protection typically surrounds declining industries, exposes many of the ironies and absurdities of agricultural protection, and explains the success of small group lobbying in standard Olsonian terms.? The chapter on trade is followed by one on supply chains.? This introduces the disruptive technology of the shipping container and the more recent way in which mobile telephones have reduced information asymmetries.? Here, material factors somewhat mysteriously make an appearance, as when we are told that Africa does not grow the coca it re-exports in the form of cocaine because its transport and logistics are too poor.?

Bearing in mind the author?s job, I was reminded of the instructions supposedly given to journalists on the FT?s sister publication, The Economist: Simplify, then exaggerate.? Beattie over-fulfils these norms, skipping blithely from one topic and one anecdote to the next and larding them in passing with dogmatic interpretations.? An unexpected aspect of the book is that it is written in a jokey, slangy style quite unlike the sobriety of leading English newspapers.? At times the enfant terrible in Beattie?s make-up does make one laugh — his case for letting the Panda go extinct is effrontery writ large — but mostly it grates.?

The book lacks footnotes and lists only a very limited number of sources.? Though the range of topics covered often is interesting, False Economy fails to persuade the reader of its seriousness of purpose.? This is surprising in a work which claims to be offering poor countries the lessons of economic history and it misses a distinct opportunity to widen the reference base of non-specialists.? What is to be done about the market distortions that continue to beset us?? Beattie offers a paragraph of prescriptions that seems to me utterly empty, summed up in the stellar sentence, ?be aware when your country is getting stuck on the wrong path and be alert for opportunities to shift it.?? Will do.

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Eric Jones, Emeritus Professor, La Trobe University, and former Professorial Fellow, Melbourne Business School, is the author of The European Miracle (Cambridge University Press, third edition 2003) and Locating the Industrial Revolution: Inducement and Response (World Scientific, 2010).

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