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Robert Solow has a lengthy and very interesting review (subscription required) of Gregory Clark’s "A Farewell to Alms: A Brief Economic History of the World" in the New York Review of Books. Anything Solow writes on growth is compulsory reading, as far as I am concerned. He summarises Clark’s main thesis like this:

According to the now traditional view, the presence of institutions with the required qualities serves to create and maintain incentives that favor innovation, enterprise, and trade. Clark claims that these prerequisites were adequately present in medieval England, China, and Japan, but without the expected result. Something must have been missing, and he identifies it as the capacity or willingness of people to respond effectively to economic incentives. You might think of these as bourgeois virtues. So why were late-eighteenth-century Englishmen able and willing while medieval Englishmen and eighteenth-century Chinese and Japanese were not?

Clark resolves the puzzle in a novel way. In England—and everyplace else —in those early days before the demographic transition, the better off had more children than the less well off. More of the well-off women married; they lived longer and survived childbirth better; they were healthier and cleaner, and more of their children survived to grow up. Clark calls this pattern of differential fertility of the well off the "survival of the richest." It is a neat phrase that may seem to have the right Darwinian overtone, though not as cute as the title of the book itself. Demographic statistics for China and Japan are not nearly as good as for England, but they seem to exhibit the same pattern. However, the pattern of differential fertility in favor of the well-off appears to have been much more pronounced in England than elsewhere

…

Clark’s pessimism about closing the gap between the successful and less successful economies may derive from the belief that nothing much can change unless and until the mercantile and industrial virtues seep down into a large part of the population, as he thinks they did in preindustrial England. That could be a long wait. If that is his basic belief, it would seem to be roundly contradicted by the extraordinary sustained growth of China and, a bit more recently, India. Embarrassingly for Clark, both of those success stories seem to have been set off by institutional changes, in particular moves away from centralized control and toward an open-market economy.

Solow concludes as follows:

Toward the end of his book Clark spends a few paragraphs in stereotypical complaint about how modern economic theory has lost touch with any reality; its endless refinements are useless for dealing with the basic problems of economic growth that engage him and the world. This amounts to a severe bite at the hand that feeds him, since much of this sometimes fascinating and thought-provoking—and sometimes irritating—book is based quite precisely on applying the insights and methods of modern economic theory.

I reviewed the book in the FT. I found it fascinating and thought-provoking throughout, not just in parts–and, unlike Solow, I never thought it irritating. But I agree with Solow in finding the main thesis unconvincing, and the more I have reflected on the book since reading it, the less convinced I am.

November 7th, 2007 in Uncategorised | Permalink