A Farewell to Alms: A Brief Economic History of the World, deals with the Industrial Revolution; what caused it and what didn’t. There is quite a bit of supporting evidence and there is some math too, but it is easy to follow especially if you look at the graphs. In addition to looking at Economics the books also looks at Sociology. Clark looks at a number of concepts, he had my brain firing all the while I was reading his book, so I was quite happy with it. Not sure if I agree 100% with his thesis but he supports it well, and I will definitely be thinking about it from here on out.
Understanding Modern Economics…
For, although modern economies are deeply complex machines, they have at heart a surprisingly simple structure. We can construct a simple model of this complex economy and in that model catch all the features that are relevant to understanding growth. (page 197)
This is fundamental understanding of all complex systems as understood by Chaos theory.
Thus investments in knowledge capital that generate efficiency growth not only explain most modern economic growth at a proximate level, they explain all modern growth. (page 207)
To my mind this is pretty obvious, but what is less so: in England during the Industrial Revolution it was the workers and not the owners that were rewarded most by these gains.
Clark spends many pages looking at historic birth rates, estates, food, health, and life spans. He shows how the Malthusian Trap worked up until 1800 and what element allowed Britain to escape.
Thus the question “Why England? Why not China, India, or Japan?” the answer seems to be as follows. China and Japan, with their longer history of settled stable agrarian systems, were independently headed on a trajectory similar to that of northwestern Europe during the period 1600-1800. They were not static societies. However, this process occurred more slowly than in England. Two important factors may help explain this. Population growth was faster in both China and Japan than in England in the period 1300-1750. And the demographic system in both these societies gave less reproductive advantage to the wealthy than in England. Thus we may speculate that England’s advantage lay in the rapid cultural, and potentially also genetic, diffusion of the values of the economically successful society in the years 1200-1800. (page 270)
By the mid-nineteenth century the efficiency of the English economy was clearly growing at an unprecedented pace. That this improvement in efficiency was based on knowledge creation, rather than the accumulation of physical capital or the exploitation of natural resources, seemed to imply the rapid worldwide spread of the techniques and industries of the Industrial Revolution. For while developing knowledge is an arduous task, copying the invention of others can be easy. (page 303)
Knowledge did spread rapidly. I was surprised how few barriers there actually were back then. What is really interesting was efficiency gains didn’t always follow the technologies.
…we saw that one of the surprising root cause of the increasing differences in in come across the world was low output per worker, with no compensating gain in output per unit of capital, even when the most modern technologies were in use. This finding makes institutional explanations for the Great Divergence hard to sustain. Why would institutions influence the internal efficiency of production enterprises once they have been established? … these differences in labor productivity must stem form differences in the quality of labor in production across societies, differences that stem largely from the local social environment. That much can be firmly established. (page 352)
That is a stunning statement in this politically correct world.
Why are some rich and some poor? In the future will we all be among the lucky? In this book I have suggested ways in which the Malthusian ear, though differential survival of individuals, can predict success or failure for modern societies, and also predicts a continuing future of economic growth. But even if that hypothesis is correct, is still leaves unexplained much of the variation in modern incomes across countries. In the modern world local social interactions that determine the attitudes of people toward work, and cooperation in work, are magnified by the economic system to generate unprecedented extremes of wealth and poverty. (page 372)