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Wednesday, September 5, 2007

There is no Chinese Adam Smith and that is because that Europe was pulling decisively ahead in ideas production

Marginal Revolution Small steps toward a much better world.
A Farewell to Alms, through p.272 by Tyler Cowen
Clark reconceptualizes what the Industrial Revolution was all about. It wasn't a huge spurt of technology, circa 1780-1830, but rather there was a prior period of slow and gradual improvement in living standards. That contribution completely revises the "rise of the West debate." While Clark is not the first "gradualist" on this topic, he makes the best and most conceptual case for throwing out previous understandings of the Industrial Revolution.
That point alone makes this one of the most important books of recent times. My main difference with Clark, in these sections...
...comes again on the question of science. He points out correctly that most of the major technological innovators did not get much for their efforts. Clark therefore does not see the late 18th century or early 19th century as giving special incentives for science. I agree as far as he goes, but I view the incentives for science more broadly.
Core Europe, starting in late medieval times, developed a new and still poorly understood organizational technology. This was, very roughly, the ability to work in groups, cumulate technologies and advances, and learn from each other in competitive environments. Most notably, this new technology led the Florentine and Venetian Renaissances, especially in the visual arts. But there was more. The rise of printing. The rise of classical music, starting in 1685 or whenever. The rise of early modern philosophy. Europe goes crazy with inventiveness, albeit in splats and bursts. (Clark's own chapter 12 gives good evidence for this tendency, though it will play a less central role in his version of the story.)
It is also the case that most of these bursts of inventiveness didn't do much for the average standard of living. Yes mastering oil paint technique made Florence richer but not so much.
It just so happened that one of these bursts came in science, technology, and engineering. And it came in England, mostly for reasons of "national character." It just so happened that the English burst did more for the standard of living, for reasons of external benefits. But having had such a burst was not unique to England. England was just one spoke on a more broadly turning wheel, and a European distribution of bursts was well in place prior to most of the special conditions we might find in England.
England, by the way, also had the literary revolution of the 18th century, and England plus Scotland drove the rise of modern economics. There is no Chinese Adam Smith and that is because that Europe was pulling decisively ahead in ideas production. I consider this a fact of great importance whereas for Clark it is a sideshow to some other story.
Most generally, I see the historical problem of growth through the lens of culture -- in the sense of the history of the arts, music, and letters -- more than through the economic history literature. I am very taken by Max Weber's writing on Western music and also his conception of the broader style of Western rationality. And I see the rise of these organizational improvements as a central -- the central? -- story of early modern Europe and the move to prosperity. It simply took a long time to apply these organizational movements to science, and to turn that science into concrete technical advances.
None of this need contradict Clark and indeed you will find parts of this narrative in his book. But unlike Clark I would not superimpose this on a broader Malthusian story or an emphasis on the long run. Nor am I putting much stock in genetic evolution. So these organizational/technological improvements, in my view, move closer to the center of the story of European progress.
Unlike Clark, I think incentives to create matter greatly, but not through patents or other direct pecuniary rate of return effects. The great creators have a burning desire to create, provided they have the opportunity to do so. This new European technology of organization (whatever it should be called), combined with growing wealth for the upper classes, meant that such creative opportunities were far more available than ever before. And powerful intellects grabbed them, for reasons of psychic incentives. So incentives are paramount to the European story, while Clark remains correct in criticizing the standard account of how those incentives might have mattered.
I also see England has having innovated with the quality of its state in particular its fiscal grounding. I wish this played a larger role in Clark's account although of course I understand why it does not. Institutions are not allowed to become a competing force on center stage. The economic returns from colonies might be given more play as well.
Overall I am willing to accept many of Clark's arguments, but I always go back to wanting to superimpose a broader institutional story on his microfoundations.
He resists that move, and that is the major place where I part company with him. I think he is too intent on pushing institutional and ideological factors off the stage; I am happy to allow Clark's factors on the stage -- most of all gradual growth downward mobility and quality of labor -- but I want a very busy and cluttered stage.
I believe, by the way, that if Clark's vision were correct, Australia and New Zealand would be stronger economic powerhouses than has turned out to be the case. Posted by Tyler Cowen on September 4, 2007 at 06:49 AM in Books Permalink

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