------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (March 2008)
Gregory Clark, _A Farewell to Alms: A Brief Economic History of the
World_. Princeton, NJ: Princeton University Press, 2007. xii + 420
pp. $30 (cloth), ISBN: 978-0-691-12135-2.
Reviewed for EH.NET by Robert A. Margo, Department of Economics,
Boston University.
"Big Think" refers to the genre of economic history that asks The Big
Question. Why England and not China? Do institutions "matter" or is
it something else, or many things? Why is the United States rich and
Bolivia poor?
Reviewers should be upfront about their ex ante biases. Here is one
of mine: I do not care for Big Think. The Big Question per se is not
the problem -- in economics, there is nothing more important. For me,
the problem with Big Think is that it is inherently Too Big. One
cannot hope to answer The Big Question by tackling it head on. One
must break The Big Question into a great many very tiny precisely
posed questions, and get the answers to them right. In economic
history we are still _very_ far from completing this task even for a
country whose economic history is as well-worn as the United States.
Big Think is a Big Distraction from our true purpose in life.
Personal tastes notwithstanding, I do teach (or at least try to
teach) Big Think to my graduate students. I do so because I teach to
the market, not what I like or dislike. Each part of the economics
world needs a reason to live and the market seems to be saying that
it wants economic historians, at least some of the time, to Think
Big. To some extent the market is a reflection of supply. As economic
historians age, they need something to work on other than university
promotion and tenure committees. Big Think is attractive as it seems,
well, Big and, most importantly, can be practiced successfully
without paying much attention to the latest advances in formal theory
or econometrics, or for that matter, _any_ theory or econometrics.
This is not a life-cycle career path open to, say, labor economists
doing structural estimation or freshwater macroeconomists. Economic
history may also self-select individuals who derive utility from
talking about the fate of man and assorted related conundrums.
However, demand also plays its part. Some of this demand comes from
pundits who are angry because they feel that today's economics is too
mathematical or not focused enough on the "real world." Other
interest in Big Think is genuine in the sense that it derives from a
public that routinely sees physicists contemplate the Big Bang or
biologists the Mystery of Life (Evolution) and would like economists
to behave similarly. Surely economic history has something to tell us
about The Big Question -- which brings me to the task at hand.
One day last summer I got up very early, played the lute for a while,
made breakfast, and then read the _New York Times_ online. There, in
the "Science" section, was a big article on Greg Clark's new book.
At the time I was, and still am, genuinely pleased for Greg. Economic
historians are underserved by the popular media, and we should cheer
when one of our own is so celebrated. Greg is disciplined, hard
working and highly productive, not afraid of big data sets or getting
his hands dirty. Many of his articles appear on graduate reading
lists, one barometer of their net worth. He is an excellent citizen
of the profession and of his university. (Clark is Professor of
Economics (and Chair) at the University of California, Davis.) Not
long ago I attended a seminar of Clark's at the Harvard Economic
History Workshop. The paper was about total factor productivity
growth in England during the Industrial Revolution His talk bogged
down early as several in the assembled multitude asked Greg many Big
Questions. I sat in the back of the room, dozing off periodically (a
hazard on Friday afternoons) but woke up sufficiently in time to
raise my hand at an appropriate juncture. I pointed out that the
total factor productivity (TFP) series in Clark's paper, if taken
seriously, would appear to render irrelevant much previous work on
the Industrial Revolution, including work by some of the people in
the room. The conversation, therefore, should be about whether my
reading was correct and, if so, we should believe his new series, the
key issue being that it is based on the dual (prices) rather than
quantities. For the next few minutes the conversation did grapple a
bit with this issue but soon returned to Big and I went back to
day-dreaming. I think, however, it was the right conversation to have
at the time, and still do (see below).
So, what's in the book and how do I feel having read it? First things
first, I dislike the title. It's the sort of title that draws groans
from the humanists for good reason. I wish Princeton's editor has
exercised more discretion, not the only time I felt this way (see
below).
_A Farewell to Alms_ is divided into eighteen chapters organized in
three Parts, a technical appendix that reviews the basics of growth
accounting, and a bibliography. The Introduction provocatively begins
with Figure 1.1, "World economic history in one picture: Incomes rose
sharply in many countries after 1800 but declined in others",
self-explanatory. This will be a book about the (very) long run
persistence of the Malthusian economy before its abrupt demise, in
some countries, with the Industrial Revolution (IR), followed by
ever-widening gaps in living standards between rich and poor. It will
also be a book (p. 8), however, about how the long "pre-industrial
era was shaping people, at least culturally and perhaps also
genetically," by which Clark means the development in the West of key
behaviors, especially patience. The Great Divergence happened because
the post-revolutionary industrial technologies of the West are
designed to be complementary with hard work; appearances perhaps to
the contrary, Clark believes that people in poor countries don't
really work very hard. In the final analysis, though, none of this
matters because, as Richard Easterlin has told us many times, money
doesn't buy (absolute) happiness.
Part I of the book consists of seven chapters that comprise a long
meditation on Malthus. The basics of the Malthusian model are set
forth in Figures 2.1 through 2.5. Land is fixed in supply and subject
to diminishing returns. The problem is not that there were no
improvements in technology prior to the IR. The problem is that such
improvements were just too sporadic and limited. Consequently, as the
saying goes, life was nasty, brutish, and short. And if we were to
imagine a sudden pre-IR improvement in institutions, this wouldn't
matter either -- in fact, welfare would decline, if good institutions
somehow promoted higher population growth. To get sustained economic
growth we need sustained TFP growth. The remaining chapters elaborate
on these themes, focusing on living standards (chapter three),
fertility behavior (chapter four), mortality (chapter five),
technology (chapter seven), and institutions (chapter eight). The
most interesting material is in chapters six and nine. Chapter six
presents evidence drawn from wills that shows a positive correlation
between reproductive success (how many children men fathered) and
wealth at death. To the extent that the wealth itself was created
though patience and hard work -- "middle class' values -- the
behaviors could be (and Clark believes were) passed on from one
generation to the next, just waiting to take advantage of sustained
improvements in technology if such ever arrived. Chapter nine
presents disparate evidence on the "rise" of "modern man": long-term
reductions in real interest rates, greater awareness of "time"
because of increases in literacy and understanding of numbers, and an
increased willingness to work more intensely and for longer hours.
Part II, made up of five chapters, is about the Industrial Revolution
proper. Chapter ten argues the IR represented a fundamental break
with the past in terms of TFP growth not capital accumulation.
Chapter eleven briefly considers, and rejects, various theories as to
why the discontinuity in TFP growth occurred: institutions, multiple
equilibrium (the pre-IR was caught up in a bad one), scale economies
or endogenous growth. Chapter twelve suggests that the discontinuity
may be more apparent than real, the confluence of a much longer
process of innovation (with long lags in the effects of innovations
on the real economy) coupled with (according to Clark) unrelated
population growth. Chapter thirteen asks why England and not China
(or India or Japan). Clark answers by saying that China et al had
even faster population growth (more Malthus) and less reproductive
success among the wealthy, hence less diffusion of the behaviors that
Clarks sees as the key to modern economic growth.
Part III, the shortest, is made up of three chapters. Chapter
fourteen restates the well-known (to economic historians and
development economists at least) fact that per capita incomes have
diverged since at least the dawning of the industrial revolution. Of
course whether they will continue to do so in the next two centuries
remains to be seen; my guess is "not." Chapter fifteen asks why the
IR didn't spread everywhere. Clark's answer is that in poor countries
lots of workers get assigned to foreign machines with little or no
gain in efficiency. Chapter sixteen burrows into the reason for the
inefficiency: the capital (and technology) that was (and is) imported
into poor places is complementary to the sort of behaviors --
"industriousness" -- that took a long time to develop in the West and
which are in short supply elsewhere. Chapter eighteen concludes with
a few zingers levied at the alleged irrelevance of modern economics
along with musings about the failure of the IR to spread happiness
around the globe and on the West's "biological" inheritance from the
IR -- perpetual discontent.
_A Farewell to Alms_ is a mixed bag. Like peacocks Big Thinkers are
expected to strut their stuff and without question Clark has stuff to
strut. His knowledge of the economic history and related social
science literature is encyclopedic -- in particular, I learned a
considerable amount about what anthropologists have been doing of
potential relevance to economic history. The writing style is
engaging, moves along at a brisk pace, and when occasion demands,
suitably humorous. The book truly does summarize into a coherent
whole a gargantuan, disparate and influential opus. As such, it is an
effective window on Clark's world, especially for those who lack the
time (or knowledge) to dissect his many working papers and journal
articles. As previously noted, these working papers and articles are
based on seriously hard work over a long period of time with primary
sources and are worthy of the highest professional respect.
Taken as a whole, however, _A Farewell to Alms_ doesn't do it for me.
One key reason is the tone: it is too argumentative. Clark goes out
of his way, and then some, to differentiate his product and attack
his rivals (see, for example, the first full paragraph on p. 147 and
the corresponding footnote on Avner Grief). He is particularly
scornful of those who would attribute long-run economic success to
secure rights to private property, arguing that all the relevant
institutions were in place in England long before the IR. The second
paragraph on p. 372 declares that, in today's world, the "deluge of
economics journal articles ... serves more to obscure than to
illuminate" and "booming demand ... has driven up the salaries of
even academic economists to unprecedented levels" -- except,
according to footnote 2 on the same page, at "the University of
California, Davis" which "seems to be the sole exception to this
salary inflation." For my entire working life (and I am sure, longer
than that) there has been an undercurrent of hostility in the
economic history world towards formal economics. The hostility is
based on its alleged irrelevance to history, but its real source is
probably envy. I am sorry to see Clark give in to this tendency (to
be charitable, perhaps this is part of his marketing plan).
I recently had occasion to re-read Robert Fogel's presidential
address to the Economic History Association, which was a response to
his many and varied critics on the social savings of the railroad.
Even when his critics were at their nastiest Fogel was always
gracious in battle, praising the criticisms as empirically or
theoretically valuable even while he was hard at work demolishing
them. Personally, I think it very unlikely that any single story can
explain the wealth of nations. It is much more likely, it seems to
me, that Acemoglu, Engerman, Epstein, Galor, Goldstone, Grief, Jones,
Kremer, Lucas, McCloskey, Mokyr, North, Pomeranz, Sokoloff, Thomas
and many others, along with Clark, are _all_ correct, to some extent.
From the other angle, I find it strange to think that any economic
historian would dispute seriously the notion that the sort of
behaviors Clark emphasizes -- or more generally, "culture" -- were
present as causal factors in the IR. The real question, as always, is
how much.
As for the real question, I think Clark enjoys going where no man has
gone before and, therefore, beyond -- sometimes well beyond -- what
the evidence may actually support. Chapter six, as noted, gives us
some data from wills linking wealth positively to reproductive
success. Even taken on face value, should I trust these data? Why or
why not? Even if I believe the data to be trustworthy, how do I know
I am observing a causal link between "good" behaviors (for example,
patience) that, in the best of circumstances (and these are far from
the best) are barely, if at all, observable to the econometrician?
What, precisely, are the mechanisms that allow good behaviors to be
transmitted across generations? Don't institutions of one type or
other play a role? Well, you could say to me, read the paper. Except
I did happen to go to a seminar not too long ago on this work -- and
I didn't think the questions were answered satisfactorily there,
either. I'm not cherry-picking; almost every chapter has something
like this.
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.
Robert A. Margo is Professor of Economics and of African-American
Studies at Boston University and Research Associate, National Bureau
of Economic Research. He is also the editor of _Explorations in
Economic History_ (until July 2008).
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