A Farewell to Alms: A Brief Economic History of the World

Gregory Clark, “A Farewell to Alms: A Brief Economic History of the World” Princeton Univ. Press, 2007, 377 pp.

Tough book to read.  Full of graphs and tables.  Book is essentially based on statistics from England as that is the only society that the author found which had detailed wage and death records.

Many other books I have read explaining the reasons for the rise of the West have convincingly proposed that social and political institutions—democracy, tolerance, the rule of law—are responsible.  This book goes further and investigates where these social and political institutions came from and why the West?

Answer:  Clark proposes that the West’s success can be attributed to natural selection.  He argues that persistently different rates of childbearing and survival, across differently situated families, changed human nature in ways that finally allowed human beings to escape from the Malthusian trap in which they had been locked since the dawn of settled agriculture, 10,000 years before. Specifically, the families that propagated themselves were the rich, while those that died out were the poor. Over time, the “survival of the richest” propagated within the population the traits that had allowed these people to be more economically successful in the first place: rational thought, frugality, a capacity for hard work.  The greater prevalence of those traits in turn made possible the Industrial Revolution and all that it has brought.

In any event, around 1800 in northwestern Europe and North America, the Malthusian world ended.  The iron link between population and living standards, through which any increase in population caused an immediate decline in wages, was decisively broken.  Between 1770 and 1860, for example, English population tripled.  Yet real incomes, instead of plummeting, rose (p. 193).   However, the author proposes, this transition was not as sudden as believed, it was the product of the gradual progress of settled agrarian societies.

My Notes:

Pg. x:  Underlying the book is a wealth of data assembled on the history of the English economy between 1200 and 1870. 

Pg. 1:  Before 1800 income per person varied but there was no upward trend.  A simple but powerful mechanism, the Malthusian Trap, ensured that short term gains in income through technological advances were inevitably lost though population growth.  Thus the person in the world of 1800 was no better off than the average person of 100,000 BC.  Indeed in 1800 the bulk of the world’s population was poorer than their remote ancestors.  Life expectancy of thirty to thirty-five years was no higher in 1800 than for hunter-gatherers. 

Pg. 2:  The Industrial Revolution, a mere two hundred years ago, changed forever the possibilities for material consumption.  Incomes per person began to undergo sustained growth in a favored group of countries.  The richest modern economies are now ten to twenty times wealthier than the 1800 average and the biggest beneficiary has so far been the unskilled. 

Pg. 8:  The stasis of the preindustrial world was shattered by two seemingly unprecedented events in European society in the years 1760-1900.  First was the Industrial Revolution, the appearance for the first time of rapid economic growth fueled by increasing production efficiency made possible by preceding advances in knowledge.  The second was the demographic transition a decline in fertility which started with the upper classes and gradually encompassed all of society.  The demographic transition allowed the efficiency advance of the Industrial Revolution to translate not into an endless supply of impoverished people but into the astonishing rise of income per person that we have seen since 1800.

Pg. 10:  Why did the Industrial Revolution begin in England, not China, India, or Japan?  The answer hazarded here is that England’s advantages were not coal, not colonies, not the Protestant Reformation not the Enlightenment, but the accidents of institutional stability and demography: in particular the extraordinary stability of England back to at least 1200, the slow growth of English population between 1300 and 1760, and the extraordinary fecundity of the rich and economically successful.  The embedding of bourgeois values into the culture, and perhaps even the genetics, was for these reasons the most advanced in England.  China and Japan, though moving in the same direction, did not move as rapidly because the members of their upper social strata were only modestly more fecund than the mass of the population.  Thus there was not the same cascade of children from the educated classes down the social scale.

Pg. 19:  The vast majority of human societies until about 1800, led an economic life shaped and governed by one simple fact: in the long run births had to equal deaths. The break between the economics of humans and the economics of the rest of the animal world occurred within the past two hundred years 

Pg. 20:  Women over the course of their reproductive lives, can give birth to twelve or more children. Yet in the world before 1800 the number of children per woman that survived to adulthood was always just a little above two.  So population growth was very small. 

Pg. 37:  The great economic transformation of the preindustrial era was the Neolithic Revolution: the move from hunter-gather societies to those with economies based on cultivated crops and domesticated animals...  Jared Diamond has argued that “Forced to choose between limiting population or trying to increase food production, we chose the latter and ended up with starvation, warfare, and tyranny.”  (The upper class about whom authors such as Jane Austen wrote were a small group within English society.  The mass of farm laborers in England in 1810 had an annual income of £36 or less per year.)

Pg. 70:  There is ample evidence to support the key contention of the Malthusian model.  Living conditions before 1800 were independent of the level of technology of a society.  But living standards did vary substantially in medieval Western Europe, for example, in the period between the onset of the Black Death* in 1347 and renewed population growth in 1550, was extraordinarily rich, rich even by the standards of the poorest economies of the world today.  In the Malthusian world, the only ways human agency could improve living standards were by reducing fertility or increasing mortality.  Reducing fertility had two effects in a Malthusian economy.  First it would increase living standards.  Second it would increase life expectancy.  Life expectancy at birth in England averaged only 37 years between 1540 and 1800; it was even lower, 28, in preindustrial France (which also had a higher birth rate).

*The Black Death in the years 1347-49 carried away 30-50 percent of the population of Europe.  But the plague continued to strike periodically thereafter for the next three hundred years.  In England between 1351 and 1485 there were thirty plague outbreaks.  As late as 1604, for example, the city of York lost at least a quarter of its population in one year to plague.  Paris had twenty-two plague epidemics from 1348 to 1596 (p. 100).  In the late nineteenth century it spread to China and from there to Bombay, where it killed six million in the 1890s.  Its disappearance from Europe is still a medical mystery; better sanitation and the suppression of rats is probably the reason.

Pg. 92:  Yet there were plenty of elderly people in the preindustrial world.  Fully 15 percent of the English men making wills in the seventeenth century died at age 70 or above.  This longevity reflect the fact that life expectancy at age 20 was as high, or even higher, than life expectancy at birth.  At birth life expectancy at birth was so low because infant and child mortality were so high.  In England from 1580 to 1800 18 percent of infants died within the first year.  Only 69 percent made it to their fifteenth birthday.

Pg. 110:  Beginning in 1492 four major diseases were introduced to the Americas: cholera, measles, smallpox, and typhus.  All these had developed relatively recently under the crowded conditions of the Eurasian landmass and were novel to the Americas, which had been cut off from contact with Eurasia for millennia. 

Pg. 133:  The list of basic simple technologies which were unknown or unused in the ancient world is surprisingly long.  The stirrup was not invented until the third century AD.  The Romans and Greeks also used horse harnesses which wound around the belly and neck of the horse.  Experiments later suggest that horses harnessed in this way lose up to 80 percent of their traction power since the neck strap compresses both the windpipe and the jugular vein.  Only in the eighth century were efficient harnesses, which sit on horses’ shoulders discovered.  The list goes on: horseshoes, windmills, buttons, clocks, spectacles, printing (1453), etc.

Pg. 166:  There were some important changes before 1800 occurring during the Malthusian era.  Interest rates fell from astonishingly high rates in the earliest societies to close to low modern 1800 levels.  Literacy and numeracy went from a rarity to the norm.  Work hours rose from the hunter-gather era to modern levels by 1800.  Finally there was a decline in interpersonal violence.  Thrift, prudence, negotiation, and hard work were becoming values for communities that previously had been spendthrift, impulsive, violent, and leisure loving.  So even though the people of the settled agrarian economies who launched the Industrial Revolution around 1800, lived no better than their grandfathers of the Paleolithic, were systematically different in attitudes and abilities. 

Note: The English Treasury was still employing Roman numerals in its accounts in the sixteenth century.  But from the thirteenth century onward Arabic numerals increasingly dominated commerce.

Pg. 233: Textiles were the flagship industry of the Industrial Revolution.  Efficiency in converting raw cotton into cloth increased fourteenfold from the 1760s to the 1860s, a growth rate of 2.4 percent per year, faster than productivity growth rates in most modern economies.  The machines that allowed this gain were still surprisingly simple in their construction.

Pg. 284:  In the preindustrial world the rich were significantly taller than the poor.  Furthermore, the rich had twice as many surviving children, and nearly triple the chance of being literate. 

Pg. 289:  Income gains of the Industrial Revolution ceased to be translated into more surviving children and instead went into material consumption. 

Pg. 307:  In the mid-nineteenth century the introduction of the telegraph in 1844, and particularly the laying of the first undersea telegraph cable between France and England in 1851, changed by a factor of nearly 100 the speed of travel of information.  The cost of carriage for goods also declined dramatically in the nineteenth century both on land and across the sea.  The great expansion of the rail network and steamship transportation improved the movement of goods immensely.

Pg. 311:  The last of the great technological changes of the nineteenth century was the introduction of the mechanized factory.  Now the unskilled could compete for jobs.  However, the divergence of national incomes and material living standards that began with the Industrial Revolution continues to widen to the present day.  The gap is now more than 50:1, while in 1800 it was probably at most 4:1.  So the poorest economies now, places like Tanzania and Ethiopia, are poorer than the average society before the Industrial Revolution. 

Pg. 334:   The unimportance of resources and the relatively uniform cost of capital, at least in 1870-1913, imply that the differences in efficiency must be the overwhelming cause of differences in income per capita across countries in the modern world.  For example, poor countries used the same cotton textile and railway technology as rich ones.  They achieved the same levels of output per unit of capital.  But in doing so they employed so much more labor per machine that they lost most of the labor cost advantage with which they began.