Daily Archives: December 23, 2010

The Wealth and Poverty of Nations – David Landes

Published by Little, Brown and Co 1998 650 pages)

As my old history master never tired of saying, Wealth Is  Power! That is the reason why the cause of  nations becoming rich or staying poor is so fundamental a  political and social question.  It is also an infinitely  intriguing  subject, being  in principle beyond a  definitive answer  because any ascription of importance to any quality or event  judged relevant to the matter is by its nature subjective.  However, objectively  unanswerable as it may be,  it is  important to continue to address the subject because it has become a central part of  the ideological battleground  between the First World and the Third World, East and West,  Left and Right.  

 To this ideological battle David Landes brings an antidote to the anti-western forces which are so strongly entrenched in  the Third World and amongst the elites and ethnic minorities  of the First World. Driven by a deep knowledge of the subject,  he refuses to take uncritically  the “right-on” party line on colonialism, slavery and, indeed, the causes of  national wealth.  In fact, this book is an abattoir for  sacred cows dear to the progressive mind. As Mr Landes  is an American academic, this is a particularly brave stance to adopt  in the hysterical atmosphere of the typical modern US campus. On that count alone he is to be congratulated.

Two themes dominate Mr Landes’ thinking. The first and lesser is  the colonial experience,  particularly of  European  colonialism, since the fifteenth century: the second is industrialisation.

Mr Landes dismisses the claim that colonialism was the primary cause of the wealth of European powers or their  cultural offshoots such as the United States, by pointing to inconvenient  facts such as the experience of Spain, the greatest power in Europe between 1500 and 1650, and Portugal. Despite the immense wealth generated by their American  possessions, as societies they remained poor even during their period of greatest material gain from the Americas. Nor did their rulers achieve financial respectability – the  Spanish Crown managed to go bankrupt in 1557, 1575 and 1597.

As for the slave trade, one may point to the wealth  of  Britain at the time of abolition and in the century which followed. In 1807 Britain’s GNP was approximately 200 million pounds. By 1914 in was over 2 billion pounds. (Prices in 1807 and 1914 were approximately the same as far as these things can ever be judged) At most, Mr Landes  allows that the wealth received by Britain from the slave trade, India and the Americas may, but only may,  have slightly accelerated the first Industrial Revolution.

 The Industrial Revolution drives the book. For Mr Landes,  the question of the wealth or poverty of nations  only becomes  important  after the onset of industrialisation:

“The industrial revolution made some countries  richer,  others  (relatively) poorer;  or more accurately,  some  countries made an industrial revolution and became rich; and  others did not and stayed poor.” (page 231 ) Prior to industrialisation, the disparity in wealth between states, regions and even  continents  was relatively small.  Come the  Industrial  Revolution and massive disparities begin to appear. For Mr  Landes, it is to the success or otherwise in industrialising which is the primary cause of present disparities in national wealth.

 Mr Landes’ general interpretation treads a well worn path.  He views the historical process of industrialisation as twofold. First, comes  a pre-industrial preparatory period  in which irrationality of thought is gradually replaced by scientific  method  and what he calls  “autonomy  of  intellectual inquiry” (page 239) , that is, thought divorced from unquestioned  reliance  on  authority,  irrationality, especially superstition.  At the same time technology begins to be   something more than by- guess-and-by-God. This gives birth to  industrialisation by creating both the intellectual climate  and  the  acquired  knowledge,  both  scientific  and  technological,  necessary  for the  transformation  from  traditional to modern society.

Those are the bare bones of Mr Landes’ argument. He backs it with considerable detail.  All the usual suspects for the causes  of the  Industrial Revolution are paraded  and examined: technological, intellectual, cultural,  social, political, legal, economic, natural resources and climate.  Mr Landes gives greatest weight to intangibles such as intellectual  development,  political  maturity,  legally enforced respect for private property and a sound system of   money and credit.

One of the great strengths of the book is Mr Landes’ refreshing determination to pay attention to what actually occurs rather than what theory says should happen. Thus he goes against the economic fashion of the age and  questions  that  shibboleth of classical and neoclassical economics,  comparative advantage,  the idea that countries  should manufacture what they are most suited to in the circumstances of the international market. Mr Landes cites the instance of the Englishman John Borrow, who in 1840 urged the states of the German Zollverin to concentrate on growing wheat, and sell it to buy British manufactures and comments: “This was a sublime example of economic good sense: but Germany would  have  been  the  poorer for  it.  Today’s  comparative advantage…may not be tomorrow’s.”  

At a time when casual and gratuitous public insult of the  English is commonplace, the book is a salutary reminder of how disproportionate an influence this country has had on  the world. Two of the chapter headings will give a flavour of  this: “Britain and the others” and “Pursuit of Albion”. In the latter Mr Landes is emphatic on England’s importance:

 “The Industrial Revolution in England changed the world and  the relations of nations and states to one another…The world was now divided between one front-runner and a highly  diverse array of pursuers. It took the quickest of the  European “follower countries” something more than a century to  catch  up”.  (page 168). In other  words,  without  England  industrialisation would have been at best greatly delayed and  at worst have never occurred. (To that immense influence, may be added the Empire, the founding of the United States by  involuntary  proxy,  the development  of  parliamentary  government, the international success of the English language   and the individual likes of Newton, Locke and Darwin.)

Mr Landes also gives the modish lie to the idea that  Englishness is a weak or non existent plant. When examining the reasons for the first Industrial revolution occurring in these Islands, Mr Landes (he refers to Britain but it is  clear from the context that he means England) lists among the prime causes precocious English nationhood viz: “To begin with, Britain had the early advantage of being a nation. By that I mean not simply the realm of a ruler, not simply a   state or political entity, but a self-conscious, self-aware unit characterised by common identity and loyalty and by equality of civil status…Britain, moreover, was not just any nation. This was a precociously modern, industrial  nation.” Page 201).  

Before English readers get too bigheaded, it should be added that Dr Landes is distinctly critical of Britain’s failure to maintain the momentum of their initial industrialisation and  cites as dreadful warnings to others such failures as  Britain’s inability  to keep the lead in the chemical   industry in the nineteenth century and the dismal story of our car industry since 1945.

There is one part of the book which the reader should treat with caution. Mr Landes spends the first two chapters lending  rather uncritical  credence to the  distinctly contentious idea, much favoured by the Left and the Third  World,  that Europe was above all of the world especially   favoured  by  climate  and  natural  resources,  while  sub-Saharan Africa was especially disadvantaged by Nature.

 However, even here he redeems himself by refusing  to make this a prime cause of differences in national wealth. At best, in Mr Landes’ eyes,  natural advantages are necessary  but not sufficient conditions for industrial progress.

In the end David Landes, like every historian, economist and sociologist before him who has considered the subject, of necessity fails to provide an absolute explanation for the phenomenon of the wealth of nations.  What he has achieved  is a work of very considerable scholarship, which describes  and  analyses  the  multifarious  possible  causes  of disparities in national material success as comprehensively  and intelligently as any work the reader is likely to put their hands on.

Readers afraid that economic history is dry stuff should put their fears behind them. David Landes has an easy literary style and litters his text agreeably with anecdotes and surprising  facts in the manner of  Fernand  Braudel’s  Capitalism and Civilisation.

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