Ideas not Institutions, part 2

[T]he Malthusian epoch is governed by economic forces that will inevitably generate industrialisation and a transition to sustained economic growth. The rapidity of this process may be influenced by different factors including institutions. But institutions, by themselves, do not trigger a take-off from stagnation to sustained economic growth. They simply affect the speed of this transition. Institutions can be viewed as the oil that lubricates the wheels of a train that is already in motion. The presence or absence of oil may affect the speed of the train, but it does not trigger its initial motion.

— Oded Galor in a great interview on Unified Growth Theory (pdf)

(h/t MR)

16 thoughts on “Ideas not Institutions, part 2”

  1. Now I see… I finally read it. There are some good things in there.

    One thing though… “institutions” is such a floating abstraction that it makes little sense to attack it like you want to. “Institutions” means anything and everything so criticizing institutions is equally indeterminate.

    Re: the theoretical claim, I see… that’s a feature of a model. But that’s not what I understand from the interview. But still, can we say that Australian natives would have, eventually, transformed into a modern civilization? I highly doubt it. They had no accumulation of any kind.

  2. ““Institutions” means anything and everything so criticizing institutions is equally indeterminate.”

    Say that to the people that say institutions matter…

    … yes, Australian natives would have eventually transformed into a modern civilization. As time goes by, they would collect more and more ideas, these allow them to produce more stuff (particularly food), which in turn allows for population growth and increasing population densities. With more population, there’s more ideas. With more ideas floating around there’s a bigger and bigger imperative for parents to build their children’s human capital. Around and around we go until eventually parents are so busy making smarter kids, they have less time to make more of them and the economy breaks free of the Malthusian trap that was making technological progress walk lock-step with population growth.

  3. “yes, Australian natives would have eventually transformed into a modern civilization.”

    Not necessarily, if you believe Jared Diamond’s work. The Australian outback is a surprisingly harsh environment, and European agricultural techniques aren’t really sustainable in that ecosystem.

    Ideas are great, but you still need resources to use them on. Apply your argument to the native population of North America, and I think you’ll find better footing.

  4. But there was no idea accumulation! These are the people who erase their own dirt drawings because of superstitions. You have no sign of any form of accumulation in thousands of years! Only repetition and a sense of timelessness.

    The difference is, I think, between tribes, which have the division of labor and learning-by-doing research, and roving bands which don’t.

  5. Um, no. A tribe can also go “around and around” for a few thousand generations and then die out.

    Is there enough surface water in the Australian outback to support higher population densities? Innovation can expand or stretch available supplies, like digging for tubers or storing rainwater, but at some point, a society will start to hit hard environmental limits.

  6. Also – are you counting biological adaptations like disease resistance and mutations like lactose and alcohol tolerance as innovation?

  7. “are you counting biological adaptations l… as innovation”

    I’m not thinking of genetic adaptation as innovations, but with a large enough time frame there are interactions between culture and biology like that.

    “…enough surface water…”

    You seem convinced that there is some limit to human ingenuity. To me, innovation occurs *because* of limits on resources. Each time we come across a limitation, people free to do so, will find a way around it. There is a natural limit to this, but I think we’re very very far away from it. For example, the human mind takes some energy to sustain it. Divide the amount of energy in the Earth’s resources by that amount, though, and you get a very big number indeed.

    “…then die out.”

    I suppose I do have to condition my story on the fact that a group of people survives. But, taking an evolutionary perspective, one group of people not surviving is part of the story…

    “…no idea accumulation!”

    Cultures aren’t fixed. The idea that one should retain ideas (i.e. history) was bound to find itself making the people that had it better off. For example, only by remembering the previous generations mistakes can we learn from them. If we don’t repeat their mistakes than we’re better off. People that are better off produce more offspring and/or they’re culturally imitated. In either case, the idea of having a history catches hold eventually.

  8. Oh, I agree that human ingenuity is a potent force. Humans developed sustainable habitation practices in just about every climate on the planet.

    I suppose, absent external influence and barriers to migration, the best innovation in a harsh climate would be to leave for greener pastures.

    Constrained to a region, though, I can’t think of ways around certain resource limits. I picked water for a very specific reason. Historically, the way around water limits has been to go to war with the people holding water resources, not to invent water substitutes*.

    *I know about beer, but that takes grain crops, which need watering. You can water them with non-potable water, but you can’t water them with -no- water. The problem in Europe that this solved was a lack of clean water, not a lack of water altogether.

  9. I’m not an expert on Australia geography, but I seem to remember a giant ocean surrounding it. One of the constituents of ocean, I believe, is water. Of course, one has to get all the other crap, namely salt, out of it for use by humans, but that would take some sort of innovation or something.

  10. I’d be highly impressed if a stone age culture could bootstrap themselves straight to solar distilleries big enough to support modern advances like the invention of agriculture and division of labor. Conversion to a seafaring society is more plausible.

    Disclaimer: I never read Malthus’ work.

    Denver escaped a Malthusian trap?

  11. Stone age culture bootstraps, etc: Europe. It took about 10k years, but they finally made it.

    I’d say the central and south american empires count too.

    Denver hasn’t geographic advantages yet is a thriving city.

  12. Diamond’s thesis was that specific domestic resources, especially biological resources, gave certain cultures developmental advantages. Not all regions have analogues of these resources.

    Examples? Domesticable crops suitable for agriculture. Some are more labor intensive than others. Domesticable work animals. This frees up labor to specialize in other things.

    The South American empires could have done well. The Central American empires, maybe less so. There isn’t much surface water on the Yucatan peninsula. All of their settlements had to be centered around sinkholes. All told, though, the South American continent is somewhat less forgiving than the south of France.

    I agree, though, stone age culture does tend to bootstrap, if the means are around. Europe actually took around 40k years.

    Denver isn’t descended from a mining settlement built around a water source? I’m pretty sure Denver started as part of a modern civilization when it was founded. It’s not like the settlers had to reinvent fire and division of labor and shoes when they stepped off their wagons.

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