The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor
“If we learn anything from the history of economic development, it is that culture makes all the difference.” So David Landes sums up the message of his book. The title he chose and the histories of particular nations that he explores with wit and impressive learning are thus part of a sustained criticism of neoclassical economists’ faith in the power of free markets to affect all peoples similarly and thus maximize wealth and well-being. Landes, on the contrary, argues that the historical record shows: 1) “The gains from trade are unequal.” 2) “The export and import of jobs is not the same as trade in commodities.” 3) The “comparative advantage” a nation may have in international trade “is not fixed, and it can move for and against.” 4) “Just because markets give signals does not mean that people will respond timely or well. Some people do this better than others, and culture can make all the difference.”
Yet Landes does not “advocate any particular national policy…. I just want to say that the current pattern of technological diffusion and catch-up development will press hard on the haves, especially the individual victims of economic regrouping, while bringing ‘goodies’ and hope to some of the have-nots, and despair, disappointment and anger to many of the others.” Not a very cheerful prognosis for the United States, therefore, or for the world. Yet the book concludes on a rather different note:
History tells us that the most successful cures for poverty come from within…. What counts is work, thrift, honesty, patience, tenacity…. The people who live to work are a small and fortunate elite. But it is an elite open to newcomers, self-selected, the kind of people who accentuate the positive…. Edu-cated, eyes-open optimism pays; pessimism can only offer the empty consolation of being right. The one lesson that emerges is the need to keep trying.
Landes himself is among the “small but fortunate elite” he admires, a man who “lives to work,” and keeps on trying to understand the economic history of the world. His book is the fruit of an academic tradition of economic history that began in the 1880s when Arnold Toynbee (uncle of the famous historian Arnold J. Toynbee), while lecturing at Oxford on the reign of King George III, invented the term and concept of “Industrial Revolution.” Since then, innumerable scholars have both challenged the concept and reaffirmed it; they have explored its antecedents in Britain and Western Europe, studied the diffusion of the “revolution,” and argued about why it occurred when and where it did. Landes’s earlier book, The Unbound Prometheus (1969), remains a splendid summation of this long debate, with special emphasis on, and sensitivity to, changing technologies of production in Western Europe.
His new book expands the scope of his previous work.
My aim in writing this book is to do world history…. I thought to trace and understand the main stream of economic advance and modernization: how have we come to where and what we are, in the sense of making, getting, and spending…. This is a very big task, long in the preparing, and at best represents a first approximation.
Such modesty is disarming; and the 111 pages of notes and bibliography at the back of the book attest to the depth of Landes’s exploration of the economic history of the entire world that (with a masterly excursion along the way into the history of clock-making* ) has kept him at work ever since 1969.
Yet his vision of the human past remains shaped (and I would say skewed) by his apprenticeship in European economic history, because he has been preoccupied with looking for the medieval and early modern roots of the Industrial Revolution, and then pursuing its course and consequences in loving detail while dismissing economic changes elsewhere as trivial for proper understanding of the world’s present condition.
Landes skips over ancient times entirely, beginning his book with a chapter on geography and the inequities of climate, disease, and other natural conditions. He goes on to compare responses of people in Europe to their natural environment with those of people in China. Europe, he says, was lucky in its climate; but Europeans fostered economic growth by prudently reserving ample space for forest and for fallow land where livestock could forage, thus assuring themselves of more manure, superior transport, and more extensive cultivation. “As a result, Europeans kept a diet rich in dairy products, meat, and animal proteins. They grew taller and stronger while staying relatively free of the worm infestations that plagued China and India.” Europeans also restrained population growth, according to Landes, whereas the Chinese “maximized population,” which “left little room for animals.” Dependent on rice, they suffered from a diet low in protein and a high exposure to schistosomiasis and other nasty infections. No wonder, then, that beginning about the year 1000 Europe surged ahead—the theme of the rest of the book.
Such a sketch of worldwide economic development before the year 1000 is a strange mix of geographic determinism, dubious assertions about the antiquity of European attempts to control population growth (which probably took place in parts of Europe and among some social classes only after the ravages of the Black Death in the fourteenth century), and a rather excessive emphasis on the advantages of animal husbandry. Landes largely defines his criteria of what really mattered for understanding how we got where we are by the agricultural expansion and swift rise of urban manufacture and trade that took place in Western Europe after 1000. Here he detects the roots of the Industrial Revolution, whose heirs we are. Nothing else matters much to him, so Landes neglects Muslim economic leadership before 1000 and the extraordinary surge in Chinese economic and technological accomplishment after that date, which anticipated some important European industrial technologies by six centuries and more. A more convincing perspective on medieval times would recognize that what happened in Europe was the extreme Far Western wing of a pan-Eurasian commercial and technological advance of which China was the principal center and driving force.
To be sure, Western Europe in late medieval and early modern times differed from other parts of the world. Accordingly, Landes devotes ten chapters of his book to examining “European Exceptionalism: A Different Path,” with special attention to the technology and to the ways that disorderly diversity within Europe prevented priests and rulers from inhibiting disruptive economic innovation. This was not the case in China, where the rapid technological and organizational innovations of the Sung era (960-1279) were damaged and disrupted by Mongol conquest and then contained, and in some cases reversed, by deliberate policy under the Ming dynasty (1368-1644). Landes does not try to understand this (to us surprising) history. He impatiently dismisses it as “a weird pattern of isolated initiatives and sisyphean discontinuities—up, up, up, and then down again—almost as though the society were held down by a silk ceiling.”
Landes finds much to deplore in European overseas expansion after 1500 in America and Asia, but he does not think much of Amerindian or Asian rulers either. Spaniards and Portuguese “jumped the traces of rationality and turned their land into a platform for empire”; but the worst that Cortez and Pizarro could do, according to Landes, merely matched Aztec and Inca brutality. “They all deserved one another” is his lapidary conclusion. And the net effect of Europe’s overseas expansion was to shift economic primacy northward, first to Holland, then to England, thus preparing for the Industrial Revolution, toward which everything that went before had pointed, and on which all that followed depended.
The remaining two thirds of Landes’s book survey the nature and causes of that world-transforming change and the ways other regions accommodated it, whether in the United States, South America, China, Japan, the Muslim countries, or India. He goes on to weigh the costs and gains from Europe’s imperialism, analyzing how first Holland and then England responded to their loss of economic primacy. Finally he appraises both winners and losers in the twentieth-century race for wealth and power.
These chapters make up the main part of the book and bring Landes fully into his own. He has read widely, thought carefully, and describes sensitively the divergent reactions to modern industry and machine-made goods that occurred in each of the countries he discusses. His account of the rise of the United States is unabashedly triumphalist; and his chapters on Latin America, the Muslim lands, and China bluntly attribute their fumbling in making progress toward modernity to defects in the culture and institutions of the peoples concerned. Japan, as always, was different—and Landes devotes two fascinating chapters to explaining how very different that nation was, and is. He detects an “industrious revolution” in Japan under the Tokugawa shoguns (1600-1868) and quotes a Zen monk of the seventeenth century, who wrote: “Through work we are able to attain Buddhahood.” Since Landes believes that this sort of outlook on life—comparable to Calvinism in its inner psychological pressures—was essential to Europe’s industrial transformation, he infers “that even without the European Industrial Revolution, the Japanese would sooner or later have made their own.”
But as with Europe, where Landes emphasizes how much early cotton mills relied on exploiting the labor of women and children, he is at pains to point out the underside of Japanese industriousness by describing the life of an orphaned peasant wife who married on the strength of her nimble fingers and willingness to work, only to see her husband leave for an army career in Korea while she labored at the loom under the unremitting discipline of a harsh mother-in-law. She achieved the reputation of being the best weaver in the village before her husband returned after many years with a concubine he had picked up in Korea, complete with silk cloths and extravagant habits. When the concubine moved in, the wife burned the house down, and was duly condemned to prison. There she told her story to a fellow prisoner—a left-wing journalist, who published it after World War II. The tale of her woes is heartbreaking, and Landes tells it well.
This is only the most memorable example of Landes’s prose, for the book abounds in revealing anecdotes, well-turned phrases, and emphatic opinions, as when he writes: “‘Humbly’ was the word: the Japanese are the proudest of people, but that very sense of pride raises humility to an art and a virtue.” Or again:
Where Alexander Hamilton summoned a young America to develop industry and compete with Europe, the viscount of Cairu in Brazil “superstitiously believed in the ‘invisible hand’ and repeated: ‘laissez faire, laissez passer, laissez vendre.”’
Or: “You can fool some businessmen some of the time; politicians much of the time; and voters almost all of the time.”
In brief additions to some of the chapters, moreover, Landes fascinatingly explores obscure byways, like the sugar, cotton, and metallurgical enterprises the Satsuma family erected in southernmost Japan between 1831 and 1867; the extraordinary history of “Jacobin” dictators in Paraguay and of the war in which the last of them perished at the time of the American Civil War; and the deficiencies of historians called “cliometricians,” whose “heroic exercise of imagination and ingenuity” creates statistical models that lend entirely fictitious precision to error, and often lead to a conclusion that “beggars credulity.”
Once again Landes has written a splendidly learned, incisive, and eminently readable history that deals with the European antecedents and world-wide reactions to Europe’s Industrial Revolution. The Wealth and Poverty of Nations is therefore a worthy se-quel and twin to his magisterial survey of that revolution in The Unbound Prometheus.
Yet it seems to me that there are serious defects in his approach to understanding, as he puts it, “how we have come to where and what we are, in the sense of making, getting, and spending.” The first of these is his assumption that only what happened in Europe really mattered, while the rest of the world mostly reacted to innovations Europeans thrust down their throats. This is intrinsically improbable. Most of humankind—four fifths or thereabouts—descend from non-European peoples; and heritages from their differing pasts live on. In particular, local efforts to defend divergent local economic and political ideals never disappeared and continue to influence economic behavior in contemporary Russia, China, and Japan, as well as among Muslims, Latin Americans, and Africans. Landes credits the Japanese with an autochthonous economic history, as we saw; for the others he simply assumes an unchanging “culture” that interferes with efficient use of European (modern) technology and the increase of wealth.
A second limitation of Landes’s angle of vision is that he concentrates almost wholly on commercial and industrial activity located in, or controlled from, cities. Peasant farmers scarcely appear. But until the day before yesterday most human beings lived in villages; they surrendered part of their harvest to landlords and rulers, and survived by consuming whatever portion of the product of their labor was left over. The infiltration of the countryside by urban attitudes, urban values, and urban styles of buying and selling has been a long, slow process. It started with Sumer, in southern Mesopotamia, where a civilization flourished by 3000 BC, and attained mass and velocity in Sung China and, a little later, in medieval Europe. The process assumed catastrophic proportions with the advent of mechanical transport and instantaneous communications since about 1850.
I would maintain that the story of the decay of village autonomy is as important for understanding our world as is the urban innovation to which Landes confines his attention. In other words, he tells half the story, and tells it very well; but he neglects what happened to most human beings. This leaves us ill prepared to understand the reactions of peasants and ex-peasants—the great majority of our contemporaries—to the upheavals of our times.
A third fundamental aspect of the human condition—population growth and decay—is also missing, or all but missing, from this book. Landes does remark, rather casually, that China and other Asian civilizations “maximized population,” whereas “western Europe accepted celibacy, late marriage (not until one could afford it), and more widely spaced births.” This is a misleading, and probably false, proposition. Europe’s demographic history, with bursts of growth followed by collapse, does not look very different from China’s ups and downs as they are reflected in imperial census returns; and these are the only parts of the world where halfway reliable demographic statistics are available from medieval times onward.
In general, Landes simply neglects demography. For example, he says absolutely nothing about the surge in the size of the European population after 1750 that provided an essential background for the Industrial and French Revolutions. He also omits the extraordinary twentieth-century increase in human numbers that so obviously affects wealth and poverty in the Third World today. He is equally oblivious to the swelling population of Western Europe that was an underlying factor in the urban efflorescence of the High Middle Ages; and he says nothing at all about the extensive dying off of about one third of the population that ensued in the fourteenth century.
Yet it seems to me that European responses to the sudden decline in population during the fourteenth century were probably what set the West off on its path to unprecedented levels of wealth and power. This was the time when Europeans eagerly embraced technological imports from China—the compass, gunpowder and printing, improved pumps, and much else; this was when, at least in some social circles, as evidenced by notarial records from a few Italian cities, the habit of regulating procreation by economic calculations took root. It was also the time when goods of common consumption—fish, grain, salt, wool, wine, timber, and the like—became staples of European trade. A much reduced population, commanding the same geographical space and natural resources as before, became wealthier—as it were automatically; and as trade intensified, and reached down to goods of common consumption, the rewards of specialization, which Adam Smith analyzed so persuasively in 1776, began to emerge. Villagers started to participate in urban markets on an expanding scale, and the restless changeability of European experience unfolded: the Renaissance, the Reformation, the opening of the oceans, the scientific revolution, the Enlightenment, and the Industrial Revolution itself. Not the year 1000 but the years of the Black Death, 1346-1349, mark the time when European exceptionalism became unmistakable. Or so it seems to me.
The influence of demography on Western Europe’s postindustrial economic and cultural history is no less critical: during the eighteenth and nineteenth centuries runaway growth was relieved by heavy emigration overseas and overland into Siberia; then during the twentieth century the wars and collapse of birthrates provoked immigration (mainly from Muslim countries) on a scale that begins to match the emigrant flow of the century before, and whose long-range consequences are yet to be seen. All this is absent from Landes’s pages. Surely it belongs in any adequate explanation of how we got to where and who we are.
Finally, I have a quarrel with Landes and almost all of his fellow historians of the Industrial Revolution because they decline to pay any attention to the military market for mass-produced goods: uniform cloth, guns, and all the other items that sailors and soldiers required. Yet the fact that Britain engaged in closely spaced, increasingly intense bouts of war between 1754 and 1815 certainly affected the course of the Industrial Revolution, especially the country’s metallurgical and textile industries, in which innovation was at first concentrated. Boom and bust alternated, when something like a hundred thousand of the poorest of the poor had suddenly to be clothed and equipped as sailors and soldiers, only to be discharged again in peacetime.
Clearly, entrepreneurial decisions were influenced by the prospect of military sales, as the establishment of iron manufacture in Scotland at the Carron works illustrates. And the sudden withdrawal of military contracts whenever peace broke out had the effect of combing out inefficient producers and impelling survivors to seek new civilian markets for their products. Nonetheless, economists and economic historians have long been resolute in assuming that since war is destructive of wealth it can have had nothing to do with advances in wealth production—and this despite the genesis of computers in World War II and innumerable earlier examples of how powerfully military contracts have shaped industrial production.
Heir of that tradition, Landes neglects war as a shaper of Europe’s industrial mutation even though he has much to say about how superior weapons and brutal aggressiveness allowed Europeans to force their way into Asia and America after 1500. This neglect is part of a larger question that troubles Landes: the relation between economics and politics. Landes seemingly cannot make up his mind about how they interact with each other. He is sure that state intervention sometimes helped a country to increase its wealth and power, as with Prussia and later Germany between 1815 and 1914. At other times, he finds that governments inhibited economic growth or even destroyed existing wealth: witness early modern Spain and China. But nowhere does he tell us what sort of government was needed for hard work and all the other private virtues he admires to increase a nation’s wealth. Adam Smith was much clearer on the subject.
When summing up the lessons of his history, Landes observes that “men of money can buy men of power.” This may now be true in many wealthy countries, but still remains exceptional. Instead, in most countries today, and nearly always in times past, men of power battened on men of wealth unmercifully. How could it be otherwise? Rulers had superior force at their disposal; merchants, bankers, and other possessors of spare change were at their mercy. Why then did a few European governments allow rich men to accumulate private fortunes by trade, banking, mining, and eventually even by manufacturing goods of common consumption? Why, like Philip II of Spain, or the Moghul and Chinese emperors, didn’t they seize their ill-gotten gains and, in some cases, right social wrongs by punitive taxation? Landes does not raise the question, much less answer it. Instead, he treats exceptions as the norm (for political toleration of private riches not based on rents also remained rare in Europe) and views what happened in a few cities that gave safe haven to private capitalists as a natural, inevitable unfolding of technological and human capacities.
But the containment by Asian governments of disruptive economic innovation in early modern times came, in my view, far closer to human norms. Correspondingly, the economic history of the past three hundred years looks far less predestined than Landes makes it out to be, being far less dependent on hard work and private morality and far more the product of an always precarious marriage of convenience between men of power and men of money. Indeed I invite him to explore the delicate balance between politics and economics in yet another book to supplement and expand what he offers his readers in his magnificent, yet limited, masterwork.
Revolution in Time: Clocks and the Making of the Modern World (Belknap Press/Harvard University Press, 1983).↩
Revolution in Time: Clocks and the Making of the Modern World (Belknap Press/Harvard University Press, 1983).↩