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<b>Bonhams:</b> MANDELSHTAM, OSIP. 1891-1938. Autograph Manuscript, 2 pp, [Petersburg,] January 1913, entitled

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A Farewell to Alms -- a book considered - By Bruce McKinney A book worth reading By Bruce McKinney This is a brief economic history of the world with a focus on the Industrial Revolution. It is written by Dr. Gregory Clark. In it he offers a fresh perspective on recent economic developments that have intriguing implications for the world economy over the next one hundred years. The difference between mathematics and economics is the difference between certainty and informed speculation. Mathematics looks at numbers and sees fixed if sometimes obscure relationships. Economics is the imposition of explicative theory on those things we do for money and reward. It's the difference between What are you paid and why do you work? Dr. Clark who teaches at the University of California at Davis, has written a thought-provoking book about Industrial Revolution, its causes and uneven spread around the planet. Using historical data available for England for the pre-industrial period [1200 to 1760] he creates a statistical baseline that, when compared to England from 1761 to the present, shows distinctive economic differences in the later period which he describes, as other economists have, as the first Industrial Revolution. In creating a clearer statistical picture of pre-industrial England he has created a unique pre-post comparison. He then interprets the causes for the Industrial Revolution through an examination of what changed. It is not an entirely certain process but original and highly worthwhile. Modern economic theory credits institutions for creating the amalgam of factors that have enabled economic development. He credits the individual or more accurately, the sum of them, who acted from self-interest in an environment that was uniquely pliant to individual initiative. The development of the British Empire with a unifying language, sound laws, low taxes, minimal barriers to technology transfer, and relative peace were the apparent preconditions for the economic development achieved within the British Empire between 1860 and the eve of World War I. His book, A Farewell to Alms, by clarifying the past glimpses the future. And at 377 pages plus reference material, it's a rarity in economic theory, the easily understood book. No doubt, other economists will hold this against him. He sees the world before the Industrial Revolution as stasis or as Dictionary.com defines it: the state of equilibrium or inactivity caused by opposing equal forces. He defines the modern era as beginning about 130,000 BC and being in stasis until 250 years ago. Then, in England, the Industrial Revolution began to take hold. It was, in his view, a thousand years in the making. His perspective is economic so the birth, death and revival of religions, the coming and going of dinosaurs, even the major shifts of humans as hunter-gathers to farmers are simply scenes observed from the window of trucks flying across Kansas on Route 40. They simply confirm his view of pre-industrial life as an equation: P = F where the number of people possible was equal to the amount of food available. When food was more plentiful population expanded. When the food supply diminished population fell. He allows that technology, perhaps more aptly labeled invention, increased food supply in some areas and mentions the production of rice in Japan and China as examples. But he believes that advances in food production, in the pre-Industrial Revolution period, always ultimately were reflected in increasing population that in time ate its way back to starvation and falling population. This is called the Malthusian Trap.
A Farewell to Alms -- a book considered - By Bruce McKinney The rapid increase in human efficiency is very recent. Beginning about 1760 there is evidence of the beginnings of sustained economic development in England. What he sees is 1% growth. It wasn't much but, after 129,750 years of no growth, it was positively exhilarating. The "gathering storm" stage would last the next 100 years. Only at around 1860 did the modern economy as we know it today take shape. For Englishmen and women these were breathtaking events. The economic transformation, first unleashed in England, quickly spread to other European countries and in time to other continents. What is surprising is his data suggesting that for many countries and their economies, the Industrial Revolution has not yet arrived and he completes his book with an examination of why this is so. This leads him to be critical of the way the World Bank and IMF approach development in underdeveloped countries. He suggests that development is the natural out-growth of pre-conditions such as social stability, a rising middle class, a stable government and appropriate economic institutions such as a functioning bank system, a stable currency and infrastructure. He believes, when the environment is right, human instinct simply propels advance. I believe he is correct. Africans flee Africa and Mexicans flee Mexico to become full fledged economic players in the developed world. At home the same people do not generally fare as well. It's tough to play monopoly in a swamp. That said, it is a mystery to me why the author, a man of the 21st century, looks only backward. The implications of this book for the present and future are worth exploring and as he is reticent to do so I'll look ahead. The implication of the 130,000 year perspective and the only recent development of the modern economy suggest economic development as we know it is very new. As things go, the new car smell is still in the air. Dr. Clark points out that a significant portion of the world is not yet developing -- still caught in the Malthusian Trap. He further suggests that several features are always present in emerging economies: reduced dependence on agriculture and a concomitant shift to manufacturing coupled with increasing education [and or training] and population. This suggests that the future role of international economic aid agencies could be to make 10 to 25 year commitments in diverse parts of the world to evaluate his concepts for development. I believe his emphasis would be on the creation of the pre-conditions for development coupled with an expectation that human nature will adjust positively to opportunity. One of the first places to try this will be in northern Mexico. America grows anxious as tens of thousands of illegal immigrants cross the border in pursuit of work. Armed patrols and fences are an absurd response. Create a thriving economic environment in Mexico and perhaps, in time, it will be Americans that are climbing the fences. Such an approach will not only cost less. It will also pay dividends. His analysis creates the hopeful prospect of bringing an increasing percentage of the world's population out of the Malthusian Trap and into the 21st century economy. His model is akin to a fire first lit by rubbing sticks together. His ideas deserve serious consideration.
A Farewell to Alms -- a book considered - By Bruce McKinney none What also seems probable is that the emerging internet economy is already rewriting the rules of economic development. The very definition of a developing country loses resonance as individuals interact globally to the extent they have internet connections. An international economy based on education, communication and personal initiative seems certain to alter current economic theory. An example is Indian and Irish stenographers providing transcription services via the internet to a company in Maine in the United States. The income earned in Maine and paid overseas becomes strengthens local economies and encourages, by example, others to seek similar opportunities. Individuals need not wait for local economic pre-conditions to fully emerge. They can act to join the international economy and thereby change their life, and by extension, the lives of those around them. Finally, over the past 20 years we have seen the growth of the duel economy, none greater than that in the United States. By this I mean the continuation of the traditional economy measured as gross domestic product [GDP] and also the development of the internet economy which is changing our understanding of GDP. Not many years ago, a 2.5% annual increase in GDP in a mature economy was considered close to the maximum sustainable growth possible without inducing inflation. We have since seen 4% growth without inflation, a suggestion that the incremental economic growth occurring through the internet is different and probably has more muted inflation characteristics. Thus the very definition of growth, its elements and scale will be reconsidered and redefined. America's economy from the 1990s on has been robust in substantial part because the internet created unexpected market efficiency by monetizing other-wise difficult to sell things, be they used cars on eBay, new books on Amazon, used books on Abebooks, the purchase of diverse services such as website development by overseas companies, even real estate and on and on and on. To this we are increasingly adding the labor of distant workers via the internet to whom a dollar an hour is a bonanza while to employers, who are perhaps thousands of miles distant, it's a bargain. These dollars may also be a crucial component in the economic development of less favored areas. So I'm looking forward to Dr. Clark's next book. In A Farewell to Alms he makes the economic past understandable. I now look to him to do the same for the future because I think, in clarifying the past, he has given us a map to the future. A Farewell to Alms was published by Princeton University Press in 2007. The published price is $29.95. Amazon is offering it for $19.77. At Barnes & Noble its $23.96, $21.56 for members.

A Farewell to Alms -- a book considered

- By Bruce McKinney

A book worth reading

By Bruce McKinney

This is a brief economic history of the world with a focus on the Industrial Revolution. It is written by Dr. Gregory Clark. In it he offers a fresh perspective on recent economic developments that have intriguing implications for the world economy over the next one hundred years.

The difference between mathematics and economics is the difference between certainty and informed speculation. Mathematics looks at numbers and sees fixed if sometimes obscure relationships. Economics is the imposition of explicative theory on those things we do for money and reward. It's the difference between What are you paid and why do you work? Dr. Clark who teaches at the University of California at Davis, has written a thought-provoking book about Industrial Revolution, its causes and uneven spread around the planet. Using historical data available for England for the pre-industrial period [1200 to 1760] he creates a statistical baseline that, when compared to England from 1761 to the present, shows distinctive economic differences in the later period which he describes, as other economists have, as the first Industrial Revolution. In creating a clearer statistical picture of pre-industrial England he has created a unique pre-post comparison. He then interprets the causes for the Industrial Revolution through an examination of what changed. It is not an entirely certain process but original and highly worthwhile.

Modern economic theory credits institutions for creating the amalgam of factors that have enabled economic development. He credits the individual or more accurately, the sum of them, who acted from self-interest in an environment that was uniquely pliant to individual initiative. The development of the British Empire with a unifying language, sound laws, low taxes, minimal barriers to technology transfer, and relative peace were the apparent preconditions for the economic development achieved within the British Empire between 1860 and the eve of World War I. His book, A Farewell to Alms, by clarifying the past glimpses the future. And at 377 pages plus reference material, it's a rarity in economic theory, the easily understood book. No doubt, other economists will hold this against him.

He sees the world before the Industrial Revolution as stasis or as Dictionary.com defines it: the state of equilibrium or inactivity caused by opposing equal forces. He defines the modern era as beginning about 130,000 BC and being in stasis until 250 years ago. Then, in England, the Industrial Revolution began to take hold. It was, in his view, a thousand years in the making. His perspective is economic so the birth, death and revival of religions, the coming and going of dinosaurs, even the major shifts of humans as hunter-gathers to farmers are simply scenes observed from the window of trucks flying across Kansas on Route 40. They simply confirm his view of pre-industrial life as an equation:

P = F where the number of people possible was equal to the amount of food available. When food was more plentiful population expanded. When the food supply diminished population fell. He allows that technology, perhaps more aptly labeled invention, increased food supply in some areas and mentions the production of rice in Japan and China as examples. But he believes that advances in food production, in the pre-Industrial Revolution period, always ultimately were reflected in increasing population that in time ate its way back to starvation and falling population. This is called the Malthusian Trap.

A Farewell to Alms -- a book considered

- By Bruce McKinney

The rapid increase in human efficiency is very recent.

Beginning about 1760 there is evidence of the beginnings of sustained economic development in England. What he sees is 1% growth. It wasn't much but, after 129,750 years of no growth, it was positively exhilarating. The "gathering storm" stage would last the next 100 years. Only at around 1860 did the modern economy as we know it today take shape.

For Englishmen and women these were breathtaking events. The economic transformation, first unleashed in England, quickly spread to other European countries and in time to other continents. What is surprising is his data suggesting that for many countries and their economies, the Industrial Revolution has not yet arrived and he completes his book with an examination of why this is so. This leads him to be critical of the way the World Bank and IMF approach development in underdeveloped countries. He suggests that development is the natural out-growth of pre-conditions such as social stability, a rising middle class, a stable government and appropriate economic institutions such as a functioning bank system, a stable currency and infrastructure. He believes, when the environment is right, human instinct simply propels advance. I believe he is correct. Africans flee Africa and Mexicans flee Mexico to become full fledged economic players in the developed world. At home the same people do not generally fare as well. It's tough to play monopoly in a swamp.

That said, it is a mystery to me why the author, a man of the 21st century, looks only backward. The implications of this book for the present and future are worth exploring and as he is reticent to do so I'll look ahead.

The implication of the 130,000 year perspective and the only recent development of the modern economy suggest economic development as we know it is very new. As things go, the new car smell is still in the air. Dr. Clark points out that a significant portion of the world is not yet developing -- still caught in the Malthusian Trap. He further suggests that several features are always present in emerging economies: reduced dependence on agriculture and a concomitant shift to manufacturing coupled with increasing education [and or training] and population. This suggests that the future role of international economic aid agencies could be to make 10 to 25 year commitments in diverse parts of the world to evaluate his concepts for development. I believe his emphasis would be on the creation of the pre-conditions for development coupled with an expectation that human nature will adjust positively to opportunity. One of the first places to try this will be in northern Mexico. America grows anxious as tens of thousands of illegal immigrants cross the border in pursuit of work. Armed patrols and fences are an absurd response. Create a thriving economic environment in Mexico and perhaps, in time, it will be Americans that are climbing the fences. Such an approach will not only cost less. It will also pay dividends. His analysis creates the hopeful prospect of bringing an increasing percentage of the world's population out of the Malthusian Trap and into the 21st century economy. His model is akin to a fire first lit by rubbing sticks together. His ideas deserve serious consideration.

A Farewell to Alms -- a book considered

- By Bruce McKinney

none

What also seems probable is that the emerging internet economy is already rewriting the rules of economic development. The very definition of a developing country loses resonance as individuals interact globally to the extent they have internet connections. An international economy based on education, communication and personal initiative seems certain to alter current economic theory. An example is Indian and Irish stenographers providing transcription services via the internet to a company in Maine in the United States. The income earned in Maine and paid overseas becomes strengthens local economies and encourages, by example, others to seek similar opportunities. Individuals need not wait for local economic pre-conditions to fully emerge. They can act to join the international economy and thereby change their life, and by extension, the lives of those around them.

Finally, over the past 20 years we have seen the growth of the duel economy, none greater than that in the United States. By this I mean the continuation of the traditional economy measured as gross domestic product [GDP] and also the development of the internet economy which is changing our understanding of GDP. Not many years ago, a 2.5% annual increase in GDP in a mature economy was considered close to the maximum sustainable growth possible without inducing inflation. We have since seen 4% growth without inflation, a suggestion that the incremental economic growth occurring through the internet is different and probably has more muted inflation characteristics. Thus the very definition of growth, its elements and scale will be reconsidered and redefined.

America's economy from the 1990s on has been robust in substantial part because the internet created unexpected market efficiency by monetizing other-wise difficult to sell things, be they used cars on eBay, new books on Amazon, used books on Abebooks, the purchase of diverse services such as website development by overseas companies, even real estate and on and on and on. To this we are increasingly adding the labor of distant workers via the internet to whom a dollar an hour is a bonanza while to employers, who are perhaps thousands of miles distant, it's a bargain. These dollars may also be a crucial component in the economic development of less favored areas.

So I'm looking forward to Dr. Clark's next book. In A Farewell to Alms he makes the economic past understandable. I now look to him to do the same for the future because I think, in clarifying the past, he has given us a map to the future.

A Farewell to Alms was published by Princeton University Press in 2007. The published price is $29.95. Amazon is offering it for $19.77. At Barnes & Noble its $23.96, $21.56 for members.