Here is a copy of a critique I wrote back in March about a fascinating non-fiction book which my father gave to me for Christmas. It is called A Farewell to Alms and it is an economic commentary written by Gregory Clark.
Alright, here goes:
Gregory Clark is an economics professor at UC-Davis. Clark is also the author of A Farewell to Alms: A Brief Economic History of the World. In his 2007 “blockbuster of economics,” as a reviewer dubs it, he takes a journey through human economic history, analyzing particular constants along the way. He grapples with fellow scholars such as Thomas Malthus, William Godwin, Adam Smith, Michael Kremer, Kenneth Pomeranz and Jared Diamond. Clark makes the claim that income per person remained constant up until about 1800. If this is true, wouldn’t that mean that total wealth is generated when society’s population expands? No, says Gregory Clark. In the long run it may work out that way, but this is because wealth generated by advances in technology which would benefit the population as a whole are offset by population growth. This situation was turned around at about 1800 by the Industrial Revolution. Thus, according to Clark, Thomas Malthus, an 18th-19th century political economist who studied population discovered how the world works just as the world stopped working that way. Clark does not explicitly point this out himself, but it is an ironic twist that is noticeable. Adam Smith, by contrast, orchestrated hypothesizes that were relatively irrelevant to the old world but became the basis for economics in the modern world.
On the whole, A Farewell to Alms is fascinating and should in time intrigue anyone who takes the time to read it. However, it requires a very patient reader and the structure of the writing is questionable. Clark states the problems he tries to solve at the beginning. Why are some parts of the world better off than other parts? What caused the Industrial Revolution? Why was it England that initiated it? Clark then appears to leave these questions behind for the bulk of the book and come back to them near the end after giving a mountain of background information. The reader may have to flip back to the beginning to remember what Clark’s mission was when he starts discussing it again. Or, if the reader was hooked by the questions he asked, they will probably be disappointed when he does not address them right away. In the end, Clark contends that long-term cultural trends and values played a role in creating our new modern economy.
A Farewell to Alms is divided into three parts. The first part, which lasts up until chapter 9, is an analysis of what life was like in the pre-industrial world. It seemed to be excessively long and repetitive. Much space was devoted to further proving that income per person was constant in the Malthusian Era (as the pre-industrial era is sometimes entitled.) Chapter 2 seems to explain this over and over with different statistics. The essential part of the chapter was the charts and explanation of how the equilibrium is sustained. Chapter 3 talks about the living standards of the Malthusian Era. There were a cornucopia of interesting facts in there, but the chapter itself was mostly not necessary to Clark’s central purposes. Apparently a laborer in Athens in around 400 BCE earned a higher wage than that of a laborer in any major city on the eve of the Industrial Revolution. What chapters 4 and 5 accomplish is basically setting the reader in the right mindset for later chapters. It is precisely this that makes the overtly long introduction tolerable.
Chapter 6 Is where Clark dives into one of the most important cornerstones of his argument made in A Farewell to Alms, which is that of downward social mobility. Richer people before the Industrial Revolution reproduced more than their poorer counterparts. One might think it would be the other way around with the tone that history is discussed nowadays. This gives way to the image of a poor pre-19th century large family struggling to make ends meet. Using the case study of England, Clark shows that the genes of the rich survive longer due to higher reproductive success. This is not merely because of inheritance. The biggest reason is that rich people tended to value hard work more and passed their values onto their offspring, which in turn made them more successful. One might believe upon hearing this that society’s hierarchy would disseminate with the time because of this. However, Clark proceeds to say that the hierarchy of social positions of the time were stagnant, so there were too many rich people to fill all the high levels and too few poor people to fill the low levels. This reminds one of the classic fable of the ant and the grasshopper. In the end the ant has enough food to survive the winter and the grasshopper dies of starvation. The rational result is that descendants of the rich have less income than their fathers. If one follows through with this principle over time into modern times, eventually everyone in a given society will be a descendant of the upper class. This concept of Clark’s is a breakthrough and possibly the most critical part of the whole book. It is also probably critical to economic history in general. If there is anything in A Farewell to Arms that could make it to future generations what Wealth of Nations is to today’s generations, this is it. When Clark finally gets around to talking about his thesis, this is what he talks about again.
My primary concern with the Malthusian Trap concept the logic behind A Farewell to Alms rests upon has to do with technology. It is hard to believe that the income or material well-being of the average person was exactly the same in 100,000 BCE as the equivalent for 1790 CE. One must consider the standard of living, including food, clothing and shelter. All of these basic necessities improved so much in quality over time. And there was a lot more specialized labor in the 18th century than during the hunter-gatherer time period. Also, although technology did not improve nearly as fast as it does today, over time in the Pre-Industrial Era significant advances were made. What would someone in 1800 say if they were told their living standards and utility were equal to that of a caveman? The richest man in United States history is John D. Rockefeller, whose wealth in today’s dollars amounted to over $200 billion, which is double that of Bill Gates. However, during most of his life time he couldn’t drive a car, surf the internet, make a telephone call, watch a color movie or fly on an airplane. Would someone today give up all the conveniences he lived without in his time for $200 billion? Maybe not.
Clark attempts to respond to the technology question by pointing out that progress was much slower than that of today. He attempts to summarize the concept of wealth related to technology over time, which is very hard, if not impossible. In the end he says that technology was 24% better in 1800 than in hunter-gatherer times because food production was 24% higher. But food production is but one sector of the economy. Also, there is an inconsistency in chapter 7. In his main thesis Clark said gains from technology were offset by population, but he later shows numbers over time and the population growth rate was significantly greater than that of technology. Despite setbacks, I concede that Gregory Clark has proven that economic growth rate per person was marginally less in Pre-Industrial times than today, even if there was some growth before 1800.
An example of a clever use of a primary source by Gregory Clark demonstrates the widespread presence of illiteracy in the pre-industrial world. The source is the reported age of a prosperous landowner named Aurelius Isidorus in third-century Roman Egypt. His declarations in the censuses were inconsistent with one another, with five different implied birth years for five different declarations that range from 262 CE to 271 CE. Since Isidorus was unaware of something as basic as his own age, he must have been illiterate. This sounds astonishing since he was supposedly an upper middle class citizen and one would expect more from him. Clark points out that four of his five declarations were multiples of five. Mathematically it would be most likely that only one of them is. If one is making up a number rather than giving the truth, one is more likely to give a multiple of five, like 25 or 50 than a number like 36. Therefore, the more people in a society identify themselves as having an age with a multiple of five, the more people are illiterate. Age declarations can be found on tombstones, in diaries, in censuses, etc. The compilation of primary sources to deduce a complicated modern theory from an Ancient Civilization should seem fascinating to an outsider of the field and Clark deserves to be applauded for that.
One aspect that Clark admits was not around in the days of the Malthusian Trap was that of intellectual property rights. This may have explained partially why growth tended to be stagnant prior to 1800. Even though Clark asserts that other institutions were similar, this is an important one even by itself because of the obvious effect on innovation. This is the reason why in contemporary times there is enormous pressure on the People’s Republic of China to defend intellectual property.
The second part of A Farewell to Arms discusses the mysterious phenomenon of the Industrial Revolution. The result of the Industrial Revolution was an immense technological boom. The poor today are comparatively much better off than they were before 1800. The average person below the poverty line today has a house, a car and internet access in America. Such a thing would be unthinkable in other situations, including years ago and in poorer countries today. Not every country has made it yet. Chapters 10, 11 and 12 state that the presence of raw materials, increased trade opportunity and population growth were responsible for breaking the Malthusian bubble. Clark tries to explain the Industrial Revolution, discussing one internal or external preexisting theory at a time. In the end, he states his scholarly opinion that the Industrial Revolution was the inevitable result of societal trends over time. Clark says England was chosen for the Industrial Revolution because of its unique sociopolitical and economic situation since around 1200. In Chapter 13 he elaborates on this further by saying England won over India, China or Japan because their population growth rate was slower and, therefore the downward social mobility was weaker, since the rich did not grow in as big proportion over time. He finally revisited his downward social mobility concept.
Part Three of A Farewell to Alms wraps it all up with explanations of the growth since 1800, the new institutions/corporations and elitist structure. In short, it is a narrative on how the better off economy is different after the great divergence from the Malthusian world. Also, he finally addresses the question of why some countries have not made it yet, citing their cultures.
The way that one reviewer evaluated A Farewell to Alms was that while you probably will not agree 100% with everything said throughout the book, it will make you think and challenge conventional views of history and economics. I agree with such preposition. In the places that I agree with Clark 100%, I was star-struck with awe. In the places where I disagreed partially or fully I still felt that I could respect his case and understand his line of thought. Near the end of A Farewell to Alms it says poorer countries in today’s world haven’t broken through because of their cultural values. I am not sure that is relevant since England has already industrialized. If we waited for a country with less downward social mobility to industrialize it might take thousands of years longer, since the trend is not as fast. However, when England broke through they opened the door for the entire world and now anyone can access it in the information age through diffusion. Therefore, the whole world (while it may take a LONG time) at least has the potential to be rich. The challenge is therefore to tap into it.
