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To Have and Have Not

The world may be divided between the haves and the have-nots, or to put it differently, between the eaters and dieters on the one hand, and those who can’t get enough to eat on the other. This division reflects in turn a huge difference in productivity: the eaters and overeaters produce more (though they do not necessarily work harder) and get more; and this difference, if not growing (it depends on whose figures you believe), is not shrinking fast enough to suit the desires of the poor or the conscience of the rich.

This, put crudely, is the so-called North–South problem. A closer look reveals that on both sides of the great divide diversity is the rule. Britain, for example, once Workshop of the World, has grown more slowly than its European neighbors for a century now, so that northern Italy, once a picturesque stop on the Grand Tour, may have passed it by in income per head—much to the astonishment of Liverpool soccer fans who travel to Milan. Over this same period, the Japanese rise has been spectacular, so that our stereotypical images have become staccato in character—from the quaint, gowned figures of The Mikado and Madame Butterfly, to those sly purveyors of dime-store trash, to the brilliant innovators and unbeatable competitors of the electronic age. If trends continue, they will be well ahead of the United States (and own a lot of it) in another generation. We have now incorporated Japan into what we call the West.

In the so-called third world, the same diversity prevails, with oil-producing countries at the top, some of them enjoying incomes higher than those of the richest industrial nations (it’s their oil, but we gave it value); new industrializers such as Korea and Taiwan, poor in material resources but quick to learn modern technologies; old industrializers such as India. Brazil, and Argentina, rich in resources, material and human, but burdened with old ways, social contrasts and conflicts, political instability; would be industrializers that lack the human resources and capital and are running hard to stay in place (the more successful sub-Saharan countries are in this position); and a few backsliders, crippled by bad government, natural catastrophe, unfavorable geography, unhappy history (again Africa furnishes the most examples, but one could also point to postrevolutionary Cuba and long-suffering Haiti).

For all this diversity, the nations of the third world are determined to maintain their psychological and political solidarity vis-à-vis the fat cats of the North or West. In unity there is strength, and they have a common sense of grievance, justified by charges of exploitation and (neo-) colonialism, but resting at bottom on envy and resentment: Why should you be so rich, and we so poor? You so strong, and we so weak? Surely justice commands otherwise.

This sense of grievance has grown with exposure to Western goods and ideas. Where once these distant peoples were isolated, the revolution in communications (radio, film, cassettes, above all, television) and the ease of travel have brought them into our time. People who never thought of themselves as poor now think themselves deprived. They want things they never knew about, much less needed. This “demonstration effect,” moreover, has been exacerbated by a corresponding ideological awareness. The most successful Western export has been ideas—ideas of democracy, equality, freedom, and revolution. The ideas are far ahead of the reality: look at the appeal of Marxism in places that by pristine Karlist standards are utterly unprepared, indeed disqualified, for socialism.

In this arena of claims and counterclaims, history matters. It mattered to Karl Marx and it has mattered to his epigones and adversaries, not only because everyone wants history to be on his side (or to be on the side of history), but because the past must serve as justification and pretext for the future. So it is here: one’s understanding of the roots of the gap in wealth and well-being becomes both cause and effect of one’s position today. Tell me your history, and I’ll tell you your politics; tell me your politics, and I’ll tell you your history. (As a professional historian I deplore this linkage, but that’s the way it is.)

Studies of world economic history, then, may be very roughly grouped into two classes: those that emphasize the autonomy of the Western achievement; and those that attribute it to pillage and exploitation of the rest of the world. Rosenberg and Birdzell (whom I shall henceforth call R & B) fall in the former category. Their thoughts on this subject are matter-of-fact and succinct. “The forms of misconduct most commonly charged to Western economies,” they write, “are increased inequalities of income and wealth, exploitation of workers, colonialism and imperialism, and slavery.” None of these changes, they argue, stands up to scrutiny.

(1) Inequalities they dismiss, not because there are none, but because inequalities will not in themselves yield development and growth. There have been and are poor countries with far greater inequalities than we know in the West, and these haven’t done them any good. What matters is not concentration of wealth, but what one does with it.

(2) As for exploitation, it is true that capitalists are always looking for cheaper labor, which is especially abundant (by definition) in poor countries. Some would no doubt see that search as exploitative, but R & B reject the charge out of hand: “…to countries or regions whose principal economic resource is an abundance of unemployed labor, employment of that labor on the best terms available is likely to seem not only a reasonable path of economic development, but morally imperative.” Such workers, in other words, would clearly be worse off if they were not employed. (There remains the question, which R & B do not consider, of exploitation of workers at home. The Marxist definition makes such exploitation unavoidable: any difference between labor’s wage and the value of product constitutes surplus value, and surplus value is the measure of exploitation. All economic systems, including socialism, create and appropriate such a surplus, without which there is no accumulation of capital.)

(3) R & B reject the imperialism charge because, they say, history refutes it. The earliest overseas imperialists and in some ways the ones that made the biggest strikes, Spain and Portugal, benefited little if at all in the long run. Some would even say that too much good fortune led them into temptation and idleness. (Economists speak today of the Dutch disease: the adverse consequences of windfall wealth, namely the recent discovery and exploitation of North Sea gas. But any economic historian could have told them that the syndrome is far older and is better known as the Spanish disease.) Switzerland and Scandinavia, highly successful industrializers, had no empire. (But were they not part of a European regional trading system that benefited from empire?) Germany and the United States were belated imperialists; they were already industrial giants by the time they began acquisition of overseas territories. “The eighteenth- and nineteenth-century history of most imperialist countries makes their economic growth seem more a cause of imperialism, stimulating overseas political adventures in the irresponsible exercise of new found economic power, than its result.” And this is clearly so: it is inequalities of wealth and power that make for domination.

(4) The same for slavery: as an explanation for Western economic growth, “it suffers from a mismatch” between practice and consequences. What about sugar, chief product of slave labor, condiment turned dietary staple, raison d’être of Europe’s richest colonies? It was, say R & B, a consumption item rather than raw material for Europe’s factories. (True, but it was a new kind of fuel for people.) Cotton was more important, for it was the fiber that fed the Industrial Revolution. But economists would insist that the gain from cultivation of cotton by slaves in the American South has to be measured by the difference in cost between such cultivation and cotton grown by free labor in the South or by peasant labor in Egypt and India. That difference was probably small: “The rate of growth of the British textile industry might have been a little slower in the years up to 1861.”

This is not to say that these charges are worthless. As devices “for encouraging charitable giving, national and international, supporting social legislation, and for checking Western hubris,” such exercises in self-deprecation “have been very useful.” They improve us. But they simply won’t help poor people grow rich. “After all, exploitation has been pervasive outside the West, as well as in the ancient and medieval West itself, without duplicating the modern Western achievement.”

So what is the secret? How does a country grow rich? The answer R & B give seems at first reading circular and untestable: The West grew rich, that is, grew, because it developed a “growth system.” They try to give this system substance by defining it as one that gives effective play to “innovation”—whether in conceiving new products and methods, inventing new machines, or finding new ways to organize production and distribution. Such innovation they see as “virtually an additional factor of production.” But like Marx, and indeed like economists generally, they do not offer an explanation for the impulse or propensity to innovate. Apparently it is some kind of natural response to need and opportunity, a manifestation of homo faber. Remove the shackles, and the system will do the rest.

The point is to unleash innovation, and this is what the West did, and no one else. Where other societies looked upon innovation as socially subversive, where ecumenical, centralized empires could slow and stifle change, Europe, blessed by political fragmentation and multiple sovereignties, was incapable of hobbling novelty and enterprise. In a world of power rivalries, rulers could not afford to treat cavalierly (as would an arrogant nobleman) common merchants and craftsmen. They might not be of gentle birth and might not know how to fight, but they made money, for themselves and for the ruler, and money was power. It was only in Europe that autonomous cities (urban communes) developed as a political and economic institution: they were islands of commercial and industrial sovereignty in a sea of feudal, manorial, and ecclesiastical powers.

Equally important was a system of incentives and rewards. Here property rights were central, for without assurance of the enjoyment of the product of one’s work and wealth, there could be no effective saving and investment. In societies where property is held at the pleasure and whim of the ruler, one can hoard and hide, but visible wealth is an invitation to confiscation and pillage. So it was in China and Mogul India and Persia and Egypt. In the West, however, for reasons that go back to Jewish-Christian tradition, (as in Numbers 16:15; I Samuel 8: 10–17; 12:3–4), which was reinforced by Roman law and Germanic custom, the state found it politic and profitable to affirm and enforce the individual’s right to his land, his chattels, and his labor. He might transfer these things to others, but no one could take them without compensation. Taxes required consent; and even feudal-seignorial dues presumed a quid pro quo and came to be limited by contract and custom. It goes without saying that not every ruler behaved well in these matters. The temptation to seize wealth was sometimes hard to resist, so that some of the great battles for what we would call civil rights centered on issues of property. (We take these things so much for granted that we sometimes forget that our rights were in large part formed through such conflicts: witness Magna Charta.)

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