The Ambrosini Critique

Prof. Clark sits in the “what revolution?” camp among economic historians that try to date the industrial revolution. His data:

Why does this matter? Well, if there was no revolution, only evolution, to modern industrial society, you need an underlying evolutionary mechanism. Clark favors genes-based stories, but most other folks are more comfortable with culture-based stories. In either case, its hard to look at Clark’s data and pick a year before 1900 that would look like a revolution in efficiency.

Krugman likes Prof. Clark’s stuff.

…and Clark not wrong?

notsneaky explains why even in Malthusian economies, we can see long episodes of above subsistence living standards.

Speaking of bubbles. Are we in a centuries long Malthusian bubble now? If so, what was the shock that got us there? By notsneaky’s analysis it’d have to be a biggie.

The book reviews, the “real” book reviews, are rolling in:

• Robert A. Margo says,
  

  So, in the end, should you read A Farewell to Alms? If you are into Big Think as a consumer or producer, the answer is a definite “yes” — especially if you are a producer (trust me, you will need to prepare a response to Clark, if you haven’t already). Even if, in the end, you are like me — you don’t care for Big Think but you have graduate students to worry about — the answer is still “yes”. Just make sure that your students realize that the scholarly behaviors they should be emulating are the virtues — patience, hard work and discipline — that produced the articles underlying this book in the first place.

  The review contains a good summary of the book for those of you who have yet to read it. BTW, one of his big complaints is he doesn’t like the “tone” of the book. Booooring.

• Arnold Kling is generally more receptive to Clark’s culture story, but wants institutions to play a bigger role in the story of development. Booooring.

The Author speaks. Excerpt:

The book has provoked strong reactions: praised as ambitious and innovative, denounced as tendentious, derivative, or even “irritating.”

While being vilified on one side as a “social Darwinist,” I have been invited by Jeffrey Sachs, director of the Earthwatch Institute at Columbia University (and friend of Bill Gates, Angelina Jolie and Bono) to address an audience of 1,500 in New York in March 2008 at the State of the Planet Summit on my views of world salvation!

Kings and Emperors were rich, but not all the Rich were Kings and Emperors. So, it follows that historical evidence showing Kings and Emperors had lots of kids doesn’t tell us much about whether or not the Rich had lots of kids.

Laura Betzig makes this error in her critique of Farewell to Alms (pdf). To counter the claim, falsely attributed to Clark, that England was the only place where there was a relationship between fertility and economic status, she cites a long list of Kings and their concubines in various other countries and eras ((Clark only conjectures the connection between fertility and economic status was stronger in England. He doesn’t provide any cross-country evidence support this conjecture, though.)). Its an interesting historical fact that some men in the past had hundreds (and some thousands) of wives and children, but this says nothing about what was happening in the society at large. While Nebuchadnezzar was stealing other Kings’ wives and I’m sure having many sons by them, who knows how reproductive his underlings and other members of the upper classes were.

By definition, Kings are different (they’re Kings!) so they simply can’t be a representative sample. Clark’s wills are as close to a representative sample of the whole population as one can hope for in historical data. Using this data, Clark shows English nobility, on average, had fewer children than their merchant-class counter-parts and he shows that while there’s a relationship between wealth and fertility no such relationship exists between social class and fertility. The data from England should make us even more suspect of previous studies that use the fact of a few highly fecund royalty to suggest links between fertility and economic status in the society as a whole. These guys were just outliers and we usually throw outliers out of the analysis.

This is a common mistake people make when they talk about Clark’s book. I think its caused by history being biased towards Kings. Pre-modern history, as it is taught, is populated by Kings and their loyal subjects. It is full of stories of their conquests (usurpations, wars and treaties). Most of history though, as it was actually lived, is populated with normal every day folk and their stories are more mundane ((Approximately 0% of the total humans that ever lived were Kings, but approximately 100% of pre-1800 history is about Kings.)). This means most of our historical data, and much of our historical thinking, is biased towards describing Kings rather than every day folk. If we want to test theories about every day folk, like Darwinian theories of the Industrial Revolution, we have to remove this bias.

The heavies are weighing in on Farewell to Alms. Not unexpectedly, they like the data but hate the underling thesis.

First, Prof. Clark goes head to head with Prof. Robinson (of MIT Harvard… like there’s a difference…) on the causes of the industrial revolution. Robinson is a big time believer in institutions (his latest paper is called “Property Rights and the Political Organization of Agriculture”) and thinks Clark’s cultural explanations are wrong but doesn’t provide much in the way of reasons for this conclusion. As Clark says:

Jim’s statement is a spirited summary of economists’ beliefs, but not an appeal to any compelling facts. It is a statement of faith, a Nicene Creed. It shows the yearning, the longing, of economists for eventual salvation through institutions. The facts, however, are that the Industrial Revolution was the result of cultural changes in England, not better incentives. By 1800 in successful economies people had embraced “thrift, prudence, negotiation, and hard work.” In most failed economies it is the failure of people to embrace these bourgeois values that explains economic failure.

In the original economic creed — the economics of Adam Smith — government just need to allow free and secure exchange, and growth results. Jim accepts that episodes like the British Raj in India show that libertarian prescription fails. So, he invokes the idea that governments must provide more: education to the masses, infrastructure for growth. But only democratic governments will have incentives to provide such goods the citizenry demand.

Yet, in the first nation to achieve modern economic growth, England, the government did none of this. There was no government support for education in England until 1870. Compulsory education to age 10 came only in 1880. The English educated themselves. The canals and the railways were all private enterprises, without even government subsidy.

Limited government produced growth in England but not in Malawi, because English society was very different from that of modern Malawi. Does limited government explain why Malawi is importing high cost Chinese workers even for unskilled labor?

Second, Solow (THE Solow) reviews the book, likes the data and hates the cultural explanation for growth:

In the end, Clark puts the finger on the workers—not their skills or native ability but their attitudes and aptitudes, their willingness to show up on time, work hard with little supervision, exercise local ingenuity, and so on.

In this context, too, he dismisses the prevailing view that dysfunctional or corrupt economic, social, and political institutions explain the divergence in efficiency. He reasons: if a factory in a poor country produces less than an essentially identical factory in a rich country, how can that be attributed to institutional failure? Here, too, he may be a little hasty. Cronyism at the top, failure to enforce laws, promotion by favoritism, inequitable taxation, capricious hiring and firing—all those practices could easily breed disaffection or even sabotage, and thus inefficient production. Maybe.

Clark’s pessimism about closing the gap between the successful and less successful economies may derive from the belief that nothing much can change unless and until the mercantile and industrial virtues seep down into a large part of the population, as he thinks they did in preindustrial England. That could be a long wait. If that is his basic belief, it would seem to be roundly contradicted by the extraordinary sustained growth of China…

A lot of critics of Farewell to Alms suggest China as a counter-example. I think China’s recent success is definitely a case where institutional changes freed the population to reach their potential. The question though, is why did China have such a huge potential in the first place? Does every country have this potential and are the low-income ones just being held back by institutional barriers?

So says Robert Samuelson in his Washington Post review of Farewell to Alms.

“More important, China’s recent, astonishing expansion (a fact that he barely mentions) demonstrates that economic policies and institutions matter.”

News to me.

I forgot to mention that Tyler Cowen came and talked at UCD last Thursday. Earlier in the afternoon he had the stage all to himself to talk about why people blog ((its a loss leader)) and why people read blogs ((to get their own personalized celebrity gossip)). Felix Simon watched the video of the talk and has a good discussion.

Later on he joined Brad Delong and Greg Clark to talk about Prof. Clark’s book Farewell to Alms (mp4… thanks Gabriel for the link).

• Bryan Caplan continues to misunderstand Clark’s take on Malthusian Logic. Increasing populations lead to greater number of innovations, but populations before 1800 grew very, very slowly ((Also, Kremer’s observation that more people leads to more inventions is more like an empirical fact; he doesn’t really lay out a mechanism. Kremer has a model in his paper — “Population Growth and Technological Change: One Million B.C. to 1990” — but the tests are the most interesting part.)).
• The Economist is upset that Clark did, you know, real economics. How dare he find some data and try to conjecture as to what mechanisms might “connect the dots”!
• Steve Sailer reviews the book and seems two make to errors in his analysis. The first is pointed out by gnxp, there wasn’t much difference between Asia and Europe in birth rates (in England they married older, but in Asia they had fewer kids than the natural limit). The second is that Sailer seems to misunderstand Clark’s argument about the timing of the industrial revolution in England. Clark doesn’t argue that England is the only society to have cultural selection for bourgeois virtues; he argues it happened faster there.