Sunday, February 22, 2015

Gregory Clark Review of "The Enlightened Economy: An Economic History of Britain, 1700 - 1850" by Joel Mokyr

This review by Gregory Clark of "The Enlightened Economy: An Economic History of Britain, 1700 - 1850" by Joel Mokyr [pdf] is well worth reading. Highlights:

  • The Industrial Revolution is the key break in world history, the event that defines our lives. No episode is more important. Yet the timing, location, and cause of the Industrial Revolution are unsolved puzzles
  • First there is the “incentives” approach, such as that of Allen, and Broadberry and Gupta. This explains the Industrial Revolution by the creation in Britain by 1800 of the incentives needed for economic growth. Next there is the “idealist” approach of Mokyr and McCloskey, which grounds the Industrial Revolution in the arrival of a particular culture or ideology. Finally there are hybrid “historical materialist” approaches like my own book, and perhaps also those of de Vries and van Zanden, which locate the Industrial Revolution in a particular set of values, but think of values as themselves subject to material or demographic forces.
  • Douglass North and Barry Weingast, for example, argue that the Glorious Revolution of 1688-9, which gave Parliament supremacy over the King, created for the first time security of property rights immune from political meddling and so created the incentives to innovate (North and Weingast, 1989). The Glorious Revolution, however, preceded the Industrial Revolution by 80 years, nearly three generations. The Dutch, and even earlier the Venetians, had secure property rights long before the Glorious Revolution, without an Industrial Revolution. And there is little evidence of significant insecurity among private property owners in England prior to 1688.
  • [A]t least from 1300 onwards, coal was always cheap in England: less than 6 days work by a craftsman would buy a ton of coal even in the Middle Ages. England was literally awash in coal. In the northeast coal field around Newcastle the seams were exposed under the sea, and coal would be eroded and wash up on the beaches (as happens to this day). 
  • Italy in the eighteenth century had such Enlightenment luminaries as Galvani, Volta, and Beccaria. Yet in Italy the Enlightenment was accompanied by economic stagnation and decline. Paolo Malanima recently estimated that 1760-1855 output per person in northern Italy declined at 0.12% per year
  • Netherlands in the seventeenth century was–as the richest, most commercially developed European economy then-one of the centers of this new scientific interest. Why was it not the center of an Industrial Revolution?


Unknown said...

Clark's A Farewell to Alms is one of the best big picture books I've read, up there with Tainter's book. It completely changed the way I think about history.

CP said...

Really! Tell us your thoughts about it.

CP said...

Also, someone mentioned it in the comments today:

Unknown said...

Clark's big idea is that downward mobility caused the Industrial Revolution: poor people in pre-modern times had few or no children, richer people tended to have a lot of children, so the things that made rich people rich (thrift, willingness to delay gratification, intelligence, etc) gradually became the norm throughout society, and this was a prerequisite for the I.R.

I used to be a "socially liberal, fiscally conservative" republican, but he made me realize how retarded and unrealistic that is-- you can't have an advanced, successful economy that's full of irresponsible, degenerate hedonists. The commenter in the other thread is right-- welfare is the opposite of the process that made the I.R. possible.

Clark also argues that living standards showed no upward progress before the I.R. There were qualitative improvements in living conditions, like stone houses instead of mud-brick huts, but the amount of food that the average person ate in the Renaissance was no higher than in Classical Greece. Caloric intake fell as the population expanded and people had to work more marginal land-- Malthusian ideas are thought of a failed prophecy, but they were actually just a description of European life before 1800.

Anonymous said...

James, how does that explanation explain why the industrial revolution happened only in England. That's one of the puzzles Clark mentions in the book review. Did he solve it in his book?

High Plateau Drifter said...

"James, how does that explanation explain why the industrial revolution happened only in England?"

You have to remember that the arrival of English settlers in America in 1620 - mostly poor farmers driven of the commons in the brutal "enclosures" and "clearances" - led to a massive rush for free land and, because children are valuable farm labor, colonial American birthrates produced populations doubling every 30 years, whereas in England it took 200 years (prior to the IR) for the population to double.

Thus there were vast markets for farm implements and clothing from a vast and rapidly growing captive market in the American colonies. Post 1789, the land rush was producing towns and cities which provided vast markets. The Industrial revolution was driven not by scribblers, pundits, intellectuals, or theoreticians, but by mechanics constantly tinkering with machines. In the protestant culture of the time, financial success and upward mobility was the outward proof of virtue. "The elect shall be known by their works."

But the American markets and the very large passenger traffic between America and Britain played a big role, and the ability of prosperous Americans with English roots and relatives to influence tariff rates in favor of British exports (notwithstanding the war of 1812) certainly enhanced the profit opportunity for entrepreneurship in England.

Unknown said...

James, how does that explanation explain why the industrial revolution happened only in England.

Clark claims that the downward mobility happened to a greater extent in England than anywhere else. I don't really buy that explanation, I think the same process was going on across Western Europe, but it came to fruition in England first because they started running out of wood before every other country and had to switch to coal.

Viennacapitalist said...

I like Clark's book too.
As to why it happened in Britain:
Could it just that a critical mass was exceeded for the first time? knowledge is cumulative after all.
Also I am not so sure whether the absolute wealth of a Venetian in, say 1400, was much lower that in Victorian England.
Just because there were no coal powered factories, doesn't mean it was not equally sophisticated. Due to comparative advantage and circumstances, Venice specialized in trade, and they ran quite a sophisticated society (double entry, insurance, venture financing...)...

Anonymous said...

Apologies to those who've read it, but Landes' "The Unbound Prometheus" discusses Britain's ascendancy at length. The thesis can be roughly distilled into a.) less hierarchical social structure b.) accumulation of skills and capital c.) access to colonial markets. For those unfamiliar with it, I highly recommend the book--elegantly written and meticulously researched.

Unknown said...

Apologies to those who've read it, but Landes' "The Unbound Prometheus" discusses Britain's ascendancy at length.

Thanks, that looks interesting.

Merkel said...

High Plateau Drifter and James both are right about the relative fertility of rich and poor.

High Plateau Drifter carefully describes a time and place where the fertility of the poor was at least as high as the fertility of the rich--Colonial America. Once he had free land, it took little additional capital for a poor man and his wife to improve themselves in Colonial America. He and his wife needed a flintlock rifle, powder and shot, an axe and something to sharpen it, skillets, pots, some knives and. They could carve, weave or trade for everything else. Children were valuable on such a farm. The couple could use all the children it could make.

Poor men who stayed in England had few choices--the army, the navy, labor on someone else's land, a factory job or unskilled labor. This brought a life like that depicted by Charles Dickens. There was little money for children. The rich lied lives like those depicted by Jane Austen--fine clothes, stately carriages, candle-lit evenings of singing and dancing. Plenty time to breed an heir and a spare. Life was good. So they out-bred the poor. It probably has been like this in most places, for most of human history.

So James is right about the rich outbreeding the poor. It just happens at places and at different times than those the High Plateau Drifter describes for colonial America

Things have changed again. Today, the poor out-breed the rich. This began when Otto von Bismarck, the Chancellor of Germany, introduced a social safety net to Germany. This new idea soon spread elsewhere. Upper-class- and upper-middle-class women quickly reduced their fertility, but still had multiple children. Lower class women did not reduce their fertility.
Fertility declined further, following the introduction of the contraceptive pill, around 1960.

Today, a woman can spread her wings an find emotional fulfillment in grand jobs such as Deputy Assistant Associate to the Assistant Acting Head of the Division of Deputy Affairs and Relations in the federal Department of Industry Strangulation. The result is that the average fertility of middle-class- and upper-middle-class women has fallen to 1.2 children per woman instead of the 2.1 children per woman that is required to maintain population size. The result is that industrial civilization is coasting to a stop because intelligent people refuse to reproduce.

Anonymous said...

This thread and post were excellent.

CP said...

It sure looks like the Industrial Revolution was a big deal. But Paul Christiano argues your eyes may be deceiving you. That graph is a hyperbola, ie corresponds to a single simple equation. There is no break in the pattern at any point. If you transformed it to a log doubling time graph, you'd just get the graph above that looks like a straight line until 1960. On this view, the Industiral Revolution didn't change historical GDP trends. It just shifted the world from a Malthusian regime where economic growth increased the population to a modern regime where economic growth increased per capita income. For the entire history of the world until 1000, GDP per capita was the same for everyone everywhere during all historical eras. An Israelite shepherd would have had about as much stuff as a Roman farmer or a medieval serf.

League of Women Voters said...

This was such a great thread. Maybe when the bear market returns, the CBS commentariat will have the Animal Spirits for these types of discussions again.