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A Farewell To Alms Part II: Why Have Some Countries Profited From The Industrial Revolution?
[See also last week's A Farewell To Alms: Why Did The Industrial Revolution Happen Where It Did?]
In A Farewell to Alms, economic historian Gregory Clark asks: Why has the Industrial Revolution of the last two centuries caused a Great Divergence, making some nations so rich, while others have stayed so poor.
This is a social scientist's question, not a historian's, because there are enough separate countries in the world that general patterns can be perceived that can be reasonably well explained by a limited number of factors.
There are a lot of data to work with, folks.
A quick survey of the globe shows, for example, that countries tend to be poorer when they are ruled by crazed ideologies (e.g., North Korea vs. South Korea) or are far inland (e.g., Paraguay vs. Uruguay).
But another factor is so obvious that we aren't supposed to mention it.
If you rank the 156 countries with populations of one million or more in order of per capita GDP, the top 23 are made up of one Arab oil country (the United Arab Emirates), four Northeast Asian countries—and 18 countries with populations primarily of European origin.
Number 24 is Israel, where Europeans make up a little less than half the population, but dominate the economy. Not until 33rd place do we find a non-oil country without a predominant European or Northeast Asian population: Trinidad and Tobago, which is 40 percent South Asian and 38 percent black.
The poorest European country is Serbia, which is still ahead of 66 others.
As of 2006, the 43 countries with majority European populations average $22,000 each, the eight Northeast Asian countries $21,000, and the 105 other countries $5,225.
Economists, however, have intellectually disarmed themselves from tackling this second question. Clark complains:
"Although the disparities in performance across countries remained unchanged, the 'labor quality' explanation disappeared from the economics literature after WWII. … Unskilled labor is assumed to be of the same quality everywhere."
Can humans really have evolved in just the last few millennia, as Gregory Clark implies?
Ironically, despite being a critic of the last 200 years of economics, Clark still suffers somewhat from the economist's syndrome of not paying attention to non-economists. Clark doesn't make a good case for his theory because he hasn't read the basics of behavioral genetics, such as Nicholas Wade's many New York Times articles on the subject of rapid recent human evolution (as summarized in Wade's 2006 book Before the Dawn).
So Clark doesn't cite any of the abundant evidence that humans can evolve new tendencies quite quickly. For example, as Gregory Cochran and Henry Harpending pointed out in 2005, the Jews of the Roman Empire were not known for being particularly smart (at least not compared to the Greeks), but they now have the highest average IQ of any known group.
Clark has read a lot of anthropology. He points out that hunter-gatherers and primitive farmers in the rain forests don't act on average exactly like modern Englishmen:
"Based on observation of modern forager and shifting cultivation societies we would expect that early agriculturalists were impulsive, violent, innumerate, illiterate, and lazy. Ethnographies of such groups emphasize high rates of time preference, high levels of interpersonal violence, and low work inputs. Abstract reasoning abilities were limited."
In general, hunter-gatherers have not made the transition to the modern world terribly well, with the plight of the Australian Aborigines being particularly notorious at present.
As Wade pointed out in Before the Dawn, human skulls have been getting thinner since the invention of agriculture, presumably because we get whacked upside the head less than our ancestors did, and thus our brains need less protection from skull fractures. (That's probably why Australian Aborigine hunter-gatherers have the thickest skulls on average of any modern human group.) Because farmers settled down in one place, their personalities had to settle down too, so they weren't so ornery and could get along with larger numbers of people.
Still, it's hard to determine whether the contemporary troubles of hunter-gatherers are caused by a general lack of adaptation to the modern world or by their specific genetic vulnerability to alcoholism. Their ancestors have only been culled by alcohol-related disasters for the last few generations, so they are currently undergoing the horrors that Mediterranean peoples presumably underwent when they invented wine many thousands of years ago. See the stories of Noah and Lot in the early Old Testament for lurid examples of drunkenness that aren't very common among modern Jews—who have extremely low rates of alcoholism, perhaps due to the newly discovered ADH2*2 genetic variant.
On the other hand, Clark's readings in anthropology aren't all that helpful to his theory because the vast majority of people alive today are descended not from recent hunter-gatherers, but from thousands of years of agriculturalists. In fact, the English started farming and keeping cattle millennia later than did, say, the Iraqis of the Fertile Crescent, which raises a conundrum: Why did European and Northeast Asian farmers adapt so rapidly to the Industrial Revolution, while other farming peoples are still struggling?
For instance, by careful study of the oldest industry of the Industrial Revolution, cotton textiles, Clark shows that English and American workers have been (and remain) much more productive than Indian workers, even when using the same machines with imported English managers.
On average, tropical peoples seem to take work less seriously. A 1909 inquiry into the cotton mills of India found:
"One manager even stated that the typical worker 'washes, bathes, washes his clothes, smokes, shaves, sleeps, has his food, and is surrounded as a rule by his relations.'"
Leaving out the bits about smoking and shaving, that is an accurate description of my work habits while attempting (and repeatedly failing) to complete this book review in my home office. Which may explain why my productivity resembles that of an Indian mill worker.
So the real question is why some farmers' descendents are now more productive than other farmers' descendents. Over the summer, physicist Michael A. Hart offered a simple explanation in his book Understanding Human History: winter. Groups that have evolved under harsher climates tend to be smarter (which Richard Lynn and Tatu Vanhanen documented in 2002's IQ and the Wealth of Nations.)
I have some concerns with Hart's model. Notably, wouldn't the dry seasons common in the tropics encourage farmers to work hard to pile up surpluses during the growing season, just as farmers in the wintry north had to make hay while the sun shines?
Still, it's a better starting point that any economist has come up with yet.
For instance, economics' latest wunderkind, MIT's Daron Acemoglu, the winner of the 2005 John Bates Clark medal for best economist under 40, has posted the draft of his enormous upcoming textbook Introduction to Modern Economic Growth online. Despite being 1192 pages long, the terms "intelligence" and "IQ" never appear in it!
Clark at least mentions intelligence—only to bring up Jared Diamond's sophistry to dismiss it. Wade writes:
"What was being inherited, in his view, was not greater intelligence—being a hunter in a foraging society requires considerably greater skill than the repetitive actions of an agricultural laborer."
Okay, sure, but, according to Clark himself, the people whose descendents survived in England weren't agricultural laborers so much as their bosses, the farmers who told the laborers what to do. So, the ones who were good at figuring out how to farm had lots of surviving kids.
I'm not saying that only IQ matters. The traits that Clark emphasizes, such as cooperativeness and future-orientation, are important, too.
But, because there is so much data readily available on national average IQs and their correlation with per capita income, it makes no sense for economists to continue to ignore it when writing about the wealth of nations.
Still, despite its flaws, Clark's Farewell to Alms will endure as a landmark in the revival of economics.