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Published by EH.Net (June 2023).

Oded Galor. The Journey of Humanity: The Origins of Wealth and Inequality. New York: Dutton, 2022. 301 pp. $28 (hardcover), ISBN 978-0593185995.

Reviewed for EH.Net by Nicolas L. Ziebarth, Auburn University and NBER.

 

Oded Galor is not one for understatement. In the introduction he states that the goal of this book is nothing less than “develop[ing] a unified theory that seeks to encompass the journey of humanity in its entirety,” putting himself in a line of thinkers including “Plato, Hegel, and Marx.” I admit that there is something almost refreshing about such bold pronouncements and lofty goals. Economists have gotten very good at answering very small questions very precisely, but too often that has come at the expense of trying to answer the big questions at all.

The problem is that the book doesn’t really deliver on this unified theory, which I assume should cover both the takeoff of economic growth, the first half of the book, and the divergence in living standards, the second half. The first half does have a unified theory in the form of the aptly named Unified Growth Theory (UGT) to which Galor has made major contributions. The thing is that this theory is never really brought forward in an explicit manner. If you did not know what UGT was before you read this book, you would probably miss it. Instead, the discussion of UGT is mixed with a lot of discussion about the role of institutions, culture, and pretty much every other hypothesis ever put forward for the “great enrichment.” Galor is evenhanded in discussing these alternative hypotheses to the point that you could easily forget he is trying to argue for a “unified” explanation.

That search for a unified theory gets even murkier when the book in its second half switches to a focus on explaining variations in living standards. In this half, we get a summary of some of the greatest hits of the institutional literature, from the Spanish forced labor system known as the mita to settler mortality to the effects of slavery on trust. Again, I thought Galor was quite reasonable in his presentation of this other work. I was happy to see that I’m not the only one who thinks the exclusion restriction in the seminal Acemoglu, Johnson, and Robinson paper (2001) is rather implausible. (Their exclusion restriction was that “the mortality rates of European settlers more than 100 years ago have no effect on GDP per capita today, other than their effect through institutional development” (p. 1371).)

It was only in the last two chapters, in which Galor goes rummaging through the very ancient history of humanity to find the determinants of inequality today, that he lost me. The last chapter makes the audacious claim that a country’s current living standards are related to the distance humans coming out of East Africa long, long ago would have had to travel to arrive at that particular place. Galor argues that the observed inverted U-shape pattern between living standards and this migratory distance from East Africa is due to differences in “population homogeneity.” Places with low diversity are dull but stable. Places with lots of diversity are interesting but a mess. So there is a “sweet spot” (Galor’s term) level of diversity in terms of a country’s level of development.

But why is migratory distance related to diversity in the first place? Galor appeals to the serial founder effect from evolutionary biology. The logic for this effect is simple. A small number of “founders” will not be able to represent all the diversity of the population from which they were drawn. In Galor’s example, if you start with one red, one blue, and one yellow bird and draw one to be the “founder” of a new population, that new population is not going to have all the colors of the original population represented. Hence the diversity of populations started by a small number of founders will appear to have been put through a funnel. In the case of humans, the process of migration out of Africa was a process of successive generations of founders pushing further and further away from that starting point somewhere in Ethiopia, decreasing (genetic) diversity at each step of the way. Galor points to anthropological and genetic evidence for this decline in diversity as the distance from East Africa grows.

The question is whether this diversity really amounts to anything. The genetic evidence is so-called “neutral” genetic diversity, meaning diversity in alleles that have no discernible effect on fitness. The anthropological evidence is in the form of “particular dental attributes, pelvic traits and the shape of the birth canal.” We have to take on faith that these measures of diversity are correlated with the dimensions of diversity that actually cause societies to fracture. Moreover, Galor is frustratingly vague on whether he thinks deep down the dimensions of diversity that matter are genetic or cultural. It is true that the serial founder effect would also apply to cultural evolution. The problem is that, as Galor admits, for this to work, “the rate of migration has to exceed the rate of mutation.” Is there any reason to believe this is true in the cultural context?

So after this whole discussion of institutions, the Agricultural Revolution, and the migration of humans out of East Africa, I was left wondering what exactly is Galor’s unifying theory of differences in living standards. Is it simply that these differences have “deep roots”? Would anyone deny that claim (at least at some level of generality)? Galor, in any case, thinks that establishing the deep roots of economic and cultural institutions is critical for formulating good policy. But, of course, institutions are sticky, slow to change, and have a history. If they did change rapidly, we wouldn’t call them institutions in the first place. So does it really matter if the institutions were determined 25 years ago? 100 years ago? At the dawn of the Neolithic era? At the Big Bang? While there are certainly interesting intellectual questions here, what is at stake when it comes to formulating policy?

There is, in fact, a weird inconsistency between the determinism Galor has so strenuously argued for (if subtly) throughout the book and the “voluntarist” thinking that overtakes him at this point. Galor (rightly?) pans the “misguided approach” of the Washington Consensus with its “one size fits all” policy recommendations that did not take into differences between countries in their “social and cultural prerequisites for growth.” Yet only five pages earlier, Galor makes the pronouncement that if only Bolivia would “foster its cultural diversity, its per capita income could increase as much as five-fold.” Who knew it was that easy?

In the end, this is a book of economic history, but not one that any card-carrying economic historian would write. Galor approaches the study of history with a totally different mindset than a historian. Nothing is out of place in Galor’s world: “Random events – dramatic and substantial as they loom in our minds – have played a transitory and largely limited role in the progression of humanity as a whole.” “Everything in its right place,” as the Radiohead song goes.

There was a time when I found this view of history very attractive. I went through a UGT phase as a graduate student and read (too many) books of evolutionary psychology. I think I was, at least, partly drawn to the type of thinking reflected in both UGT and evolutionary psychology because, like Galor, it seemed like the only two choices were determinism or randomness, and randomness didn’t seem all that fun. I’m not sure what changed, but at some point, I realized that those aren’t the only two possibilities, and, in fact, being able to integrate both of those viewpoints is the defining mark of true economic history.

References

Acemoglu, Daron, Simon Johnson and James A. Robinson. “The Colonial Origins of Comparative Development: An Empirical Investigation.” American Economic Review 91(5): 1369-1401 (December 2001).

 

Nicolas L. Ziebarth is the Ekelund and Hebert Professor of Economics at Auburn University and a Research Associate at NBER. His publications include Credit Relationships and Business Bankruptcy During the Great Depression” (American Economic Journal: Macro, 2017) and “Identifying the Effects of Bank Failures From a Natural Experiment in Mississippi During the Great Depression” (American Economic Journal: Macro, 2012).

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