Wednesday, August 29, 2007

Adam Smith's 'History is Not all That Different from Gregory Clark's to page 189

I have not yet got to Greg Clark’s presentation of his central thesis that selection pressure caused a cultural or genetically transmitted change on humans living in ‘England’ (I presume he means what we Scots call ‘Britain’) so that from 1800 onwards economic development promoted what some historians, but by no means all, call the ‘industrial revolution’, a vague designation for forty to sixty years development of power-driven machinery that enabled the commercial economy to become a capitalist economy and mobilised the people who made this possible.

So far, I have read to page 189, from strictly following Tyler Cowen’s ‘rules’ for participating in the on-line debate on Marginal Revolution.

The most salient feature is Greg Clark’s statistical evidence that shows that people in the 1800 were no better of in subsistence (mainly calorie) levels than their foreparents were 10,000 years ago. More specifically and problematically, Greg Clark asserts that there were no ‘institutional changes’ changes from 1250 to 1800. Perhaps Greg elaborates ahead on what he means by this?

Running through the book so far, there is an implied, occasionally specific, idea that the ‘Washington Concensus’ in the World Bank and IMF have got the wrong concepts of development. This is bound up with a critique of neoclassical economists, wrapped together, misleadingly, with Adam Smith and Wealth Of Nations. I have challenged Gregory Clark on this last assertion that Adam Smith’s ideas have anything to do with neoclassical economics or with their development nostrums for the World Bank and IMF. To his credit he accepts that point but he does not withdraw it on the grounds that ‘Smithian economics’ is now bound up with the neoclassical attribution, somehow making his own attribution acceptable if not correct! I am disappointed at his stance on this point.

Let me take up some general points to see if we have consensus.

That subsistence standards did not rise, and may have regularly fallen, in the period covered (whether from 10,000 years ago or from 1250) is not challenged. It was a necessary consequence of what Greg calls the ‘Malthusian Trap’. If subsistence rose, more children would survive and per capita subsistence would fall back to where its ‘normal’ level. True. For the overwhelming bulk of the people. Forager societies were stable for thousands of years because they did not (could not) save surplus sustenance much above subsistence (no refrigerators). Foragers continued, and continue, to survive as small bands spread across the world (to mid-18th century, known and unknown).

But in agriculture (another so-called ‘revolution’, this time lasting thousands of years), a surplus could be stored (herds, flocks, seedstock and feedstock) ‘owned’ as property by rich elites, who used the surpluses to mobilise armed force and found civilisations, the dertritus of which abounds in the northern hemisphere of Europe, the near East and India and China. These civilisaitons came and went. The serfs, armed retainers and slaves remained and survived on ‘normal’ subsistence throughout.

With the appearance of settlements, from groups of hovels to brickbuilt towns, later cities, the age of commerce (‘at last’, wrote Adam Smith) emerged, with trade between town and country, long distance trade and conquest among territories. The average intake of subsistence for the mass of people hardly changed because though output grew, so did population. But the scale of the ‘magnificance’ of the stone monuments, artifacts and such like continued for thousands of years too, having no effect on the subsistence statistics, as shown in Greg Clark’s data.

He measures one important criterion of consumption, but it does not measure ‘progress’ either materially in cities, power and technology under the control of the elites, or intellectually in myth, superstition, beliefs in ‘invisible gods’, mathematics, science, knowledge, and literature, art and ‘dance’. All of it socially transmittable across space and time. I do not know about genetically.

Adam Smith’s (NOT neoclassical) growth ‘model’ (more a ‘process’) attempted to capture necessary changes brought about by traded exchange of produced goods, inclusive of annual surplus (net profits). Capital in foraging was of the ‘grub-stake’ kind – for a few days while hunting. Capital in agriculture and shepherding could sustain people between seasons, and on war campaigns
between sowing and harvests. Capital in commerce, through invented mediums of money, and accounting, within price systems, could be used to put materials and new employment together in ‘wheels of circulation’ that caused ‘perpetual’ growth trajectories, perfectly consistent with level subsistence standards over many generations, indeed over millennia.

Smith wrote of the institutional environment (a preferable but NEVER a sufficient condition) that would accumulate social contributions into higher growth rates. He did NOT describe these social conditions as pre-conditions of development or growth. Minute compound growth rates (well below 1 per cent) would have long term, slow and gradual effects, without necessarily affecting mass per capita subsistence levels. Indeed, he viewed the fall of Rome and the destruction of the commercial society in a thousand year period, from 476 BC to the 15th century, as the prelude to a commercial revival that by the 18th century was manifest in Britain and parts of Western Europe. Wealth Of Nations (is NOT an economics textbook) is about these processes. It should be read along with his Lectures On Jurisprudence.

So far, I have seen nothing in ‘Farewell to Alms’, excellent as it is and great to read, that endorses his assertion that Adam Smith (from Kirkcaldy, not Chicago) is far in his thinking from Greg’s history account. I cannot say the same thing for the neoclassical consensus. On this point Gregory and I may find agreement.


Blogger Ken Houghton said...

"To his credit [Clark] accepts that point but he does not withdraw it on the grounds that ‘Smithian economics’ is now bound up with the neoclassical attribution, somehow making his own attribution acceptable if not correct! I am disappointed at his stance on this point."

But hardly to be surprised. That you believe there is a need for this blog, and titled it "LOST Legacy," tells us that you know as well as he or I that his usage was connotatively correct, if denotatively bollocks.

Perhaps after a few more years, Smith's reputation can be saved from what the neoclassists have wrought. But that time is not yet here, though you are bringing it closer.

6:31 p.m.  
Blogger Gavin Kennedy said...

Well taken point Ken.

My disappointment with Greg's response was that I expect scholars when shown to be making incorrect attributions that they not only accept the correction but they undertake to put it right at the first opportunity.

I agree it will take some time. In my book, Adam Smith's Lost Legacy', I actually envisaged that by 2176, the 300-year anniverasry of Wealth of Nations, the record would be set straight and the celebrants would be celebrating what Smith actually wrote.

So, I am if nothing else patient. As I will not see anything like that happening (I am 67), I hope someone else will carry on...

Thanks for your comments.

8:04 p.m.  

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