How the World Became Rich: The Historical Origins of Economic Growth

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How the World Became Rich: The Historical Origins of Economic Growth

How the World Became Rich: The Historical Origins of Economic Growth

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In a way, K&R are making a meta-argument resembling Robert Brenner ( 1976)’s explanation for why the impact of the fourteenth-century demographic crises differed to the east and west of the River Elbe, and in England and France. In the west, where peasants were relatively well-organized, population collapse led to the defeat of reactionary forces and the collapse of serfdom; but in the east, where landlord control was greater, a “second serfdom” was instituted permitting greater exactions by seigneurs. Thus the impact of demography cannot be understood until one takes into account the pre-existing structure of institutions and class relations in a region. To me, this is exactly what K&R are saying, albeit for all factors that determine economic development. We know the partial effects of lots of things in the abstract, but unless we control for context-specific characteristics, we cannot know how natural resources or climate crises will alter outcomes. I don’t know about you, but this seems pretty reasonable to me. How the World Became Rich traverses the major theories to answer this question while leaving out one.

The ecumenical and balanced approach the authors take to these questions is much like the Rabbi in a famous Jewish story. According to the legend, a rabbi is holding court in front of a large audience of his pupils. A husband and wife appear before the rabbi, to discuss their troubled domestic life. First the husband gets to lay out his case, and he lists all the sins and vices of his wife. The Rabbi listens carefully and pronounces his verdict: the husband is in the right. Then his pupils appeal to him: you should hear the wife’s case as well. The Rabbi consents and listens to the woman lays out her powerful case against her lazy and violent husband. He then announces his second verdict: the wife is in the right. His best pupil protests: but Rabbi, how can they both be in the right? The Rabbi listens and pronounces: the pupil is right too. Briefly on to the spread of development. K&R favor human capital-based explanations for the Second Industrial Revolution, stressing (a la Goldin-Katz / Galor-Moav) the role of educated white-collar workers in putting new science-based technologies into place. They stress the role of institutions, this time operating through railroad investment and mass education, especially in Prussia and the United States. I won’t stop prating on about how skeptical I am about schooling-based stories of 19th-century growth—most people weren’t doing jobs that required more than rudimentary literacy and numeracy. But I've mostly lost hope of convincing anyone.A broader perspective on its strengths and weaknesses emerges when comparing “How the World Became Rich” to other books or literature on economic growth. Although an exhaustive list of all relevant literature is unavailable, a general evaluation can be made based on common characteristics and knowledge of pertinent works. Key points of comparison include the book’s comprehensive coverage, clarity of explanations, integration of multiple perspectives, use of real-world examples, and recognition of historical context and long-term trends. This distinguishes it from other books such as “Theories of economic growth” (Lewis, 2013), which, despite its title, is not focused on worldwide growth but on agricultural development and underdeveloped countries.

Berg, Maxine, and Pat Hudson. 2021. “Slavery, Atlantic Trade and Skills: a Response to Mokyr’s ‘Holy Land of Industrialism’” Journal of the British Academy, Vol. 9, pp. 259–281. Explaining the sustained economic growth that certain parts of the world have experienced since the First Industrial Revolution in the latter half of the eighteenth century has become something of its own field of study in the world of economic history. In fact, according to authors Mark Koyama (George Mason University) and Jared Rubin (Chapman University) it is “the biggest question in the social sciences.” Why should we consider the development of an ecosystem of universities as the cause, rather than the effect, of the rise of global wealth? Alberti, M., Marzluff, J. M., Shulenberger, E., Bradley, G., Ryan, C., & Zumbrunnen, C. (2003). Integrating Humans into Ecology: Opportunities and Challenges for Studying Urban Ecosystems. BioScience, 53(12), 1169–1179. https://doi.org/10.1641/0006-3568(2003)053[1169:IHIEOA]2.0.CO;2

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Two more notes before I close. First, I am surprised that K&R discuss the Soviet Union in such a negative light without contending with Bob Allen's illuminating Farm to Factory. The book's not perfect (I don’t even agree with that much of it), but the main points—pre-Soviet growth was limited and living standards/urbanization did rise under the Five-Year plans—are not really compatible with the more standard view (planning failed and was unsustainable) that the authors espouse. Stalinism's unsavory aspects, according to Allen, are separable from the extent to which the planned economy—output targets plus soft budget constraints mobilizing unemployed labor—broke the USSR out of a low-equilibrium trap by establishing heavy industry, attracting peasants to the cities, and lowering female fertility. Consumption was not ignored, as the authors assert, but rather arose as a direct consequence. If this narratie is correct, I would have had K&R produce evidence to rebut it. The authors of How the World Became Rich make a strong case for the interaction of demographics and culture, geography and colonialism, in shaping the institutions that determine differential national economic development. Any reader interested in understanding the reasons behind the graphs above will gain enormous insight by investing time in reading this book. In conclusion, “How the World Became Rich” (Koyama & Rubin, 2022) is a valuable and informative book contributing to understanding economic growth since the Industrial Revolution. Its strengths in comprehensive coverage, clear explanations, integration of multiple perspectives, and consideration of social and environmental implications make it a practical resource. While it has limitations, the book is recommended for students, professionals, and general readers seeking a comprehensive exploration of economic growth. References Gilley, B. (2021). The case for colonialism. In Taylor & Francis. https://www.tandfonline.com/doi/abs/10.1080/01436597.2017.1369037 Adam Smith’s An Inquiry into the Wealth and Poverty of Nations (1776) in many ways marked the founding of modern economics.[1] This opus examined the phenomena of growth and industrialization occurring at the time through the institutional analysis of markets, governments, and society. Mark Koyama and Jared Rubin follow in Smith’s footsteps by providing a sweeping review of the economic history literature concerning the rise and spread of modern economic growth in How the World Became Rich (Policy, 2022).[2] In their review, they discuss how geography, institutions, demography, culture, and colonial history affect economic development, and how the interplay between these factors has led some countries to experience tremendous growth while others remain stagnant.



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