A Farewell to Alms -- a book considered
A book worth reading
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.
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
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
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
A Farewell to Alms -- a book considered
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
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
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.