Tuesday, August 07, 2007

Exciting New Study of the Age of Commerce Announced

Nicholas Wade reviews a new book (out in a few weeks) in The New York Times: “In Dusty Archives, a Theory of Affluence” (7 August):

For thousands of years, most people on earth lived in abject poverty, first as hunters and gatherers, then as peasants or laborers. But with the Industrial Revolution, some societies traded this ancient poverty for amazing affluence…
Gregory Clark, an economic historian at the University of California, Davis, believes that the Industrial Revolution — the surge in economic growth that occurred first in England around 1800 — occurred because of a change in the nature of the human population. The change was one in which people gradually developed the strange new behaviors required to make a modern economy work. The middle-class values of nonviolence, literacy, long working hours and a willingness to save emerged only recently in human history, Dr. Clark argues

'Because they grew more common in the centuries before 1800, whether by cultural transmission or evolutionary adaptation, the English population at last became productive enough to escape from poverty, followed quickly by other countries with the same long agrarian past.'

'Dr. Clark’s ideas … are to be published as a book next month, “A Farewell to Alms” (Princeton University Press). Economic historians have high praise for his thesis, though many disagree with parts of it.'

'The basis of Dr. Clark’s work is his recovery of data from which he can reconstruct many features of the English economy from 1200 to 1800. From this data, he shows, far more clearly than has been possible before, that the economy was locked in a Malthusian trap _ — each time new technology increased the efficiency of production a little, the population grew, the extra mouths ate up the surplus, and average income fell back to its former level.

'This income was pitifully low in terms of the amount of wheat it could buy. By 1790, the average person’s consumption in England was still just 2,322 calories a day, with the poor eating a mere 1,508. Living hunter-gatherer societies enjoy diets of 2,300 calories or more.'

Primitive man ate well compared with one of the richest societies in the world in 1800,” Dr. Clark observes.

The tendency of population to grow faster than the food supply, keeping most people at the edge of starvation, was described by Thomas Malthus in a 1798 book, “An Essay on the Principle of Population.” This Malthusian trap, Dr. Clark’s data show, governed the English economy from 1200 until the Industrial Revolution and has in his view probably constrained humankind throughout its existence. The only respite was during disasters like the Black Death, when population plummeted, and for several generations the survivors had more to eat….

Given that the English economy operated under Malthusian constraints, might it not have responded in some way to the forces of natural selection that Darwin had divined would flourish in such conditions? Dr. Clark started to wonder whether natural selection had indeed changed the nature of the population in some way and, if so, whether this might be the missing explanation for the Industrial Revolution.
The Industrial Revolution, the first escape from the Malthusian trap, occurred when the efficiency of production at last accelerated, growing fast enough to outpace population growth and allow average incomes to rise. Many explanations have been offered for this spurt in efficiency, some economic and some political, but none is fully satisfactory, historians say

Around 1790, a steady upward trend in production efficiency first emerges in the English economy. It was this significant acceleration in the rate of productivity growth that at last made possible England’s escape from the Malthusian trap and the emergence of the Industrial Revolution.

The ‘Malthusian Trap’ is a sub-plot within a wider social change in the modes of subsistence (as shown by Adam Smith in a theory of the ‘Ages of Mankind’ in which quite large changes in the mode of subsistence occurred, but at different rates across the Earth’s human population that had spread out, we now know, about 60,000 years ago from Africa, reaching Australia 40,000 years ago, and the America’s from about 11,000 years ago.

The last ice-age coincided with a the change in the mode of subsistence from hunter-gathering - Smith’s first age of humankind, which the majority of the human population remained in – and shepherding – Smith’s second age of mankind – to agriculture – Smith’s third age. Agriculture began over several thousand years from around 8,000 years ago in the Near East (Syria, Turkey, Lebanon, Israel/Palestine, Egypt, etc.,). Evidently the departing emigrants did not take agriculture with them to the America’s and by no means did all of the ‘stay-at-homes’ adopt the new mode of subsistence, at least at first.

Per capita food consumption remained fairly flat for thousands of years, with occasional famine and feast years. Each new mode of subsistence, once the adjustments had taken place (and this was very fragile and for many generations) they experienced a worsening of per capita consumption along with slowly growing populations.

It was the slow beginning of Smith’s fourth age – the age of commerce - that set the stage for the subject of Dr Gregory Clark’s new book “A Farewell to Alms” (Princeton). This appeared almost conterminous with the age of agriculture, because along river and seas, small towns appeared and with them, emerging commerce.

Smith’s life’s work centred on this very problem: what was the nature and causes of the changes brought about with the fourth age of commerce? This is the most exciting promise of Dr Clark’s new book and I am looking forward to reading it. Adam Smith worked within the strict confines of the existing knowledge of the 18th century; we can work within a vastly expanded knowledge base, and can answer many of the gaps and missing parts in Smith’s analysis. The so-called diversions in Wealth Of Nations are really about Smith wrestling with the unanswered, and in the state of 18th-century knowledge, unanswerable questions; being a leading figure in the Enlightenment Smith did quite a good job, nevertheless.

I shall return to this topic when I have read ‘Farwell to Alms’, hopefully with a glowing report. In the meantime, read the full review in The New York Times here:


Blogger Tim Worstall said...

It's excellent: although it could be better edited (then again, I was reading a proof copy).
I'll beinterested to see what you think of it.

10:33 am  

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