What do you think? Leave a respectful comment.

The key to England’s economic growth: The rich outlived the poor

Editor’s Note: Why do some societies get rich when others don’t? It’s one of the oldest intellectual puzzles, and one that economic historian Gregory Clark tackled in his 2007 book, “A Farewell to Alms.”

His thesis, which he develops in this third installment of his never-before published interview with Paul Solman, makes the controversial argument that, in England, the survival of the wealthiest had a lot to do with it.

In the beginning of economic history, we were all hunter-gatherers, and life was pretty good – better even, Clark argues in part one of this interview, than in pre-industrial England. That’s because the world conformed to a “Malthusian” view of economic history: population limited by the limited resources for keeping humans alive. With more violence and more death in hunter-gatherer society, the surviving hunter-gatherers had more of the bounty.

But, according to Clark, that economic view no longer holds with the arrival of the Industrial Revolution. Suddenly, steady growth made the West rich; material life became easier.

But why were the English open to this kind of rapid economic growth when other societies weren’t? In part two of his conversation with Paul, Clark dismissed prevailing theories that institutions – both market and political – distinguished the English and set them up for success. Instead, he explained how an evolutionary shift in psychology set them apart.

From hunter-gatherer society to 1800, he said, there was a change in people’s personalities: people became more envious and more patient.

He takes the Darwinian argument further in this third installment. Simply put, the takeoff of the Industrial Revolution in England can be explained by “the survival of the richest.”

Simone Pathe, Making Sen$e Editor

Greg Clark: Now, why would something like that [people’s personalities] change? It turns out that another essential component of the Malthusian world is that if it’s Malthusian — if living standards are going to be driven down to a subsistence minimum by population — that world also has to be Darwinian. It has to be the case that those who somehow command more resources in these societies end up with more surviving children, and eventually take over the population, and those who don’t succeed in that competition for the resources are going to die out.

Paul Solman: And why?

Greg Clark: It has to be the case because if you get more income in the society, then people produce more children, and those children survive better. So you end up with more than your allotted two surviving children. If you can’t command that income, you can’t produce the children, and the children you produce are not going to make it, and you’ll end up with no children, and that’s quite common in this pre-industrial world.

In hunter-gather society, we can observe that competition, and it seems to be based in part on success in violence and aggression.

Paul Solman: So that if I can beat you, then I get the field, or the extra resources to feed my kids.

Greg Clark: Right.

Paul Solman: You’ve been beaten down, but my kids pass along either the tradition of violence or the violence gene that I have.

Greg Clark: Right. But in England, it’s the people who are commercially successful and also successful at farming, the people who did the ordinary, boring, middle class stuff, who had extraordinary reproductive success. Typically in the 17th century, instead of producing two surviving children, they were producing four to five surviving children. The poor, on the other hand, are actually dying out. You can observe their families disappearing, all the way back to the Middle Ages, again in the 17th century.

And so what’s happening in a commercial society like England, in this pre-industrial world, is that the economically successful are populating the entire society. They are becoming everyone in the society. If you’re descended from someone in medieval England, it’s not likely to be a landless peasant. It’s very likely to be someone who was in the commercial elite of that society.

We also can observe in pre-industrial England that if fathers were successful in this way, their sons followed them. They inherited the success of their fathers. And we can often say that it’s not just because they inherited the money from their fathers; they inherited something about the attitudes or ability, or even the genetics of their fathers.

The reason that people were more innovative, more commercially active, more alive to these possibilities in England was that we had a survival of those who were driven by material success, those who couldn’t be happy unless they were making more money. So again, in some sense, the envious have inherited the earth, and that’s why we’ve got modern growth.

This is not saying that these people were in any sense better, or smarter. It’s just that they had a set of attributes that go well with modern capitalism.

Paul Solman: So survival of the richest means survival of the most competitive, or most envious, or most bourgeois.

Greg Clark: Yes.

Paul Solman: Really?

Greg Clark: In the context of pre-industrial England, those are the people who made it through. And another competing explanation – other people have believed that cultural change is key to the Industrial Revolution. So if you look at the work of Joel Mokyr, he roots that cultural change in a kind of earlier scientific revolution, in a kind of intellectual movement. He thinks of this as a top down movement — intellectual discoveries that lead to a new kind of social structure.

This intellectual movement was actually grounded in very mundane economic activities — it had an economic foundation. But there’s actually an interconnection between cultural and intellectual movements and the basic economies of pre-industrial societies.

Paul Solman: Aren’t you being disingenuous, though, about those inherited traits not being smarts ? I mean, you’re talking about literacy, you’re talking about numerousy, you’re talking about ingenuity, at least by implication. That’s smarts. You use the word “intellectual.”

Greg Clark: I’ve read many anthropological studies of hunter-gatherer societies, and it’s very clear from those studies, and someone like Jared Diamond would absolutely emphasize this, that there’s no unique directional sense in which people in a society like England are going to be judged to be smarter than people in New Guinea or the Brazilian Amazon.

People in hunter-gatherer societies have amazing sets of abilities in terms of their ability to visualize and remember, and it’s just that modern commercial life, in part, depends on various formal calculating abilities, and that these are the kind of things that may have been rewarded in somewhere like pre-industrial England.

And so it’s just there’s many dimensions to people’s abilities, but it’s possible that in the pre-industrial world and the commercial world of England, a certain set of characteristics were actually being pooled out there that may not have resulted in a lot of good British art or music, but that did result in this strong commercial impulse.

Paul Solman: Well, what about the old British cliché, “shirtsleeves to shirtsleeves in three generations”? Meaning the first generation works really hard (shirtsleeves), then builds a fortune for the second generation, then the third one lives off the fortune, and by the third generation, it’s back to shirtsleeves because they’ve blown all the money.

Greg Clark: Right. One of the bizarre features of pre-industrial England is that because it was this Malthusian economy with very slow growth, there’s only a certain number of land possibilities and only a certain number of commercial possibilities, so these abundant children of the rich were actually being forced systematically down the social scale.

If you were a laborer in 1750, chances were that your grandfather or great-grandfather had been a small land owner or a small petty capitalist. And so there is definitely this downward mobility, and it’s a strange feature of this world.

When we move to the modern world, mobility tends to be in the other direction. But the argument of the book is that that downward mobility meant that permeating all levels of British society in this period were people with certain types of attitudes — that the working classes of Britain and the Industrial Revolution are not the unthinking automatons later portrayals of the Industrial Revolution would suggest. These were people who, even at the lowest level, had a lot of energy, a lot of initiative, and who were often more literate than the upper classes of ancient Greece or ancient Rome.

Paul Solman: But now this had to be happening everywhere, right? Didn’t this happen in Russia? Didn’t this happen in France? I mean, rich people have more kids. If there’s only a certain number of people in the society, then the same thing is going to happen everywhere, right?

Greg Clark: Unfortunately, we don’t have this kind of data for a number of other societies. We do know in 19th century Sweden exactly the same kind of process is occurring, and what the book is emphasizing is that this was a general phenomena of settled agrarian pre-industrial societies. You can observe it in Japan in the pre-industrial era. You can observe it in China in the 18th and 19th century.

England, though, may have had certain peculiarities. One thing is that with English history, we have better data than almost any other society back to the middle ages. The reason for that is, tragically, that not much happened actually in England in the pre-industrial world, and so there’s very little internal violence; there’s very little insurrection. Most of the wars are fought somewhere else.

Paul Solman: So they didn’t burn the documents.

Greg Clark: Documents from the medieval period can survive untouched in a cupboard in the bishop’s palace for 600 years before someone decides to have a look at them again.

But that very kind of boringness to British history may have allowed this process to work more rapidly than in other societies where there was turmoil, insurrection, violence and fighting. And so that was one event that Britain had. And then the second thing has just been the nature of the demographic regime, where for whatever reason, rich men in Britain were able to produce many more children.

In other societies like China, there seems to have been more fertility limitation for reasons that we don’t know, whereas in England if you were rich, you produced children. And it just seems to have been the social characteristic of that society. And so there may well be systematic elements linked with what kind of institutions did this society have, where the more stable they are, the more favorable it is to these processes operating.

But all this book is saying is that we can observe this process in general. England may have gone ahead of other societies, but if you look at Japan in the Tokogawa period, it’s evolving in a similar way to England. It’s just several hundred years behind in terms of its social structure, or looking at things like interest rates. It looks more like medieval England, but it’s moving, it’s changing in similar ways.

Paul Solman: But that is survival of the richest.

Greg Clark: Right. That process is much weaker somehow in Japan. The Samurai, where we can observe their fertility, were producing surplus sons who couldn’t be accommodated in the Samurai ranks, but only very few, so there isn’t the same flood of these kind of upper classes into the lower commercial realm in somewhere like Japan that there is in somewhere like Britain.

Paul Solman: So this is happening world-wide, but it might be happening faster in England, and it any case, it would explain why at some point, these values have taken hold around the world.

Greg Clark: Yes. I mean, the argument of the book is that one of the big puzzles is, was an Industrial Revolution inevitable? Could we — given that we went 100,000 years with very slow rates of technological advance — could we have stayed stranded in the Malthusian era forever?

One of the ideas of the book here is that in some sense, eventually, a society was going to emerge which could have rapid economic growth. Why that society was England as opposed to China, which is not a very good candidate, may have depended then on accidental features of demography, location, geography and things like that.

But I think what you do see now is that once that growth process had started in China, China looked like it was just waiting all of these years to grow. It looks more capitalist than almost any other society we’ve seen, despite a generation of the attempt to impose this completely different ideology.

And so, there is this kind of worrying possibility, which is in the book and which, I must say, personally I don’t like, which is to say that the long history of societies might have left some mark in terms of the potential of those societies now for economic growth.

I recently went to Australia, and the plight of the Australian Aboriginals is terrible. The contact with Europeans has essentially brought them nothing but misery.

We really worry that the fact that Australian Aboriginals never went through this phase of settled, agrarian society actually means that culturally, it just may be very difficult for them to adapt to the demands of modern capitalism.

Support for Making Sen$e Provided By:

Support for Making Sen$e Provided By:

The Latest