Sunday, September 23, 2007

Bryan Caplan Summarises his Critique of a Farewell to Alms

Bryan Caplan, co-athor of the Blog: EconLog (‘issues and insights in economics’) writes a lucid summary of his critique of Gregory Clark’s ‘A Farewell to Alms’ (Princeton University Press).

You should read his critique (here)

I commented on EconLog and I append my comments (on one aspect of Bryan Caplan’s critique) below:

“The Malthusian Trap is compelling but highly limited in what it explains. As production rises, per capita incomes rise above subsistence (itself slowly changing in content, as changing notions of subsistence take effect over long periods), which has the effect over generational time that more children survive to adulthood and reproduce, and continue the Malthusian ‘cycle’. Eventually, population increases reduces per capita income to subsistence, child mortality increases, and growth in population ceases, and occasionally reduces overall.

Gregory Clark documents the Malthusian Trap with data, showing that over millennia long periods, per capita incomes remained at subsistence (the calorific count) to around the year 1800, and concludes that before then, no economic growth was strong enough to overcome the recurring constancy of the Trap. After 1800 per capita incomes rose and continued rising for the first time in human history.

Clark’s central question is why only from 1800? What happened to locate what the discipline calls the ‘industrial revolution’ in England and not elsewhere in Europe, and, as an extension of that conundrum, why didn’t it happen in other countries and at other times in history (including some surely marginal candidates)?

Excluding institutional (widely defined) influences and qualitative growth in knowledge, this represents a challenge to current conventional thinking among economists and historians.

What does the Malthusian Trap argument leave out? In my view, it is too narrow a view of history. That the majority of a population remained on subsistence for 10,000 years, despite the agricultural ‘revolution’ – which ‘event’ that took several millennia – is not decisive.

The agricultural mode of subsistence (Adam Smith’s second ‘age of man’) did not do much better in subsistence terms, and perhaps did worse, pace Jared Diamond, than hunter-gathering, it did bring about definite changes that made it possible for an ‘industrial revolution’ (basically the invention and diffusion of power assisted machinery) to occur millennia later, which if humans had persisted with hunter-gathering only, they would not have ever industrialised, and nowhere did they create a mode of subsistence that did not require the entire population of the hunting-gathering band to produce the per capita subsistence of the entire population.

This change in economic roles created the inequality in per capita subsistence, power, and non-work roles for a minority and new work roles for what became ‘armed retainers’, servants and religious strata. It also created, or activated, the human ‘propensity to truck, barter, and exchange’, which led directly to divisions of labour in production and differential levels of per capita consumption (Adam Smith).

In the course of history, the ‘surplus’ of subsistence above that required for the producers of subsistence, net of the amount required for the per capita consumption of increases in population. It is not the constancy of the per capita consumption (an arithmetical result that hides the differential rates of consumption, and, tellingly, the subsistence of those ‘elites’, including producers of knowledge and innovators of technology) that is decisive for answering Gregory Clark’s conundrum. It is what the elite that controlled the modes of subsistence did with ‘their’ net surplus over long periods of time, which was derived from their ownership of property.

That is why I have argued that the history of what made modern commercial society possible is not a history of the labouring majority of the population; it is the history of the minority of elites. This not an ethically acceptable statement to some people who confuse their social preferences, admirable as they are (and which I share) for what drove history through all its diversions in waste, cruelty, rapine and vileness, memorialised in the detritus of past-failed civilisations, and the wanton cruelties of the elites.

So, we should examine what the elite, their retainers, innovators, philosophers and preservers of knowledge, artists, architects and infra-structure builders did during these millennia, and, crucially, what those who traded were doing in creating the foundations of the commercial society (Smith’s 4th age of man), from which in due course, given the concatenation of evolutionary processes and circumstances that brought about the new possibilities), created what eventually became Clark’s ‘1800’ and thereafter.”


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