industrial revolution

All posts tagged industrial revolution

Book review: Why Nations Fail: The Origins of Power, Prosperity, and Poverty, by Daron Acemoglu and James Robinson.

This book claims that “extractive institutions” prevent nations from becoming wealthy, and “inclusive institutions” favor wealth creation. It is full of anecdotes that occasionally have some relevance to their thesis. (The footnotes hint that they’ve written something more rigorous elsewhere).

The stereotypical extractive institutions certainly do harm that the stereotypical inclusive institutions don’t. But they describe those concepts in ways that do a mediocre job of generalizing to non-stereotypical governments.

They define “extractive institutions” broadly to include regions that don’t have “sufficiently centralized and pluralistic” political institutions. That enables them to classify regions such as Somalia as extractive without having to identify anything that would fit the normal meaning of extractive.

Their description of Somalia as having an “almost constant state of warfare” is strange. Their only attempt to quantify this warfare is a reference to a 1955 incident where 74 people were killed (if that’s a memorable incident, it would suggest war kills few people there; do they ignore the early 90’s because it was an aberration?). Wikipedia lists Somalia’s most recently reported homicide rate as 1.5 per 100,000 (compare to 14.5 for their favorite African nation Botswana, and 4.2 for the U.S.).

They don’t discuss the success of Dubai and Hong Kong because those governments don’t come very close to fitting their stereotype of a pluralistic and centralized nation.

They describe Mao’s China as “highly extractive”, but it looks to me more like ignorant destruction than an attempt at extracting anything. They say China’s current growth is unsustainable, somewhat like the Soviet Union (but they hedge and say it might succeed by becoming inclusive as South Korea did). Whereas I predict that China’s relatively decentralized planning will be enough to sustain modest growth, but it will be held back somewhat by the limits to the rule of law.

They do a good (but hardly novel) job of explaining why elites often fear that increased prosperity would threaten their position.

They correctly criticize some weak alternative explanations of poverty such as laziness. But they say little about explanations that partly overlap with theirs, such as Fukuyama’s Trust (a bit odd given that the book contains a blurb from Fukuyama). Fukuyama doesn’t seem to discuss Africa much, but the effects of slave trade seem to have large long-lasting consequences on social capital.

For a good introduction to some more thoughtful explanations of national growth such as the rule of law and the scientific method, see William Bernstein’s The Birth of Plenty.

Why Nations Fail may be useful for correcting myths among people who are averse to math, but for people who are already familiar with this subject, it will just add a few anecdotes without adding much insight.

Book review: The Beginning of Infinity by David Deutsch.

This is an ambitious book centered around the nature of explanation, why it has been an important part of science (misunderstood by many who think of science as merely prediction), and why it is important for the future of the universe.

He provides good insights on jump during the Enlightenment to thinking in universals (e.g. laws of nature that apply to a potentially infinite scope). But he overstates some of its implications. He seems confident that greater-than-human intelligences will view his concept of “universal explainers” as the category that identifies which beings have the rights of people. I find this about as convincing as attempts to find a specific time when a fetus acquires the rights of personhood. I can imagine AIs deciding that humans fail often enough at universalizing their thought to be less than a person, or that they will decide that monkeys are on a trajectory toward the same kind of universality.

He neglects to mention some interesting evidence of the spread of universal thinking – James Flynn’s explanation of the Flynn Effect documents that low IQ cultures don’t use the abstract thought that we sometimes take for granted, and describes IQ increases as an escape from concrete thinking.

Deutsch has a number of interesting complaints about people who attempt science but are confused about the philosophy of science, such as people who imagine that measuring heritability of a trait tells us something important without further inquiry – he notes that being enslaved was heritable in 1860, but that was useless for telling us how to change slavery.

He has interesting explanations for why anthropic arguments, the simulation argument, and the doomsday argument are weaker in a spatially infinite universe. But I was disappointed that he didn’t provide good references for his claim that the universe is infinite – a claim which I gather is controversial and hasn’t gotten as much attention as it deserves.

He sometimes gets carried away with his ambition and seems to forget his rule that explanations should be hard to vary in order to make it hard to fool ourselves.

He focuses on the beauty of flowers in an attempt to convince us that beauty is partially objective. But he doesn’t describe this objective beauty in a way that would make it hard to alter to fit whatever evidence he wants it to fit. I see an obvious alternative explanation for humans finding flowers beautiful – they indicate where fruit will be.

He argues that creativity evolved to help people find better ways of faithfully transmitting knowledge (understanding someone can require creative interpretation of the knowledge that they are imperfectly expressing). That might be true, but I can easily create other explanations that fit the evidence he’s trying to explain, such as that creativity enabled people to make better choices about when to seek a new home.

He imagines that he has a simple way to demonstrate that hunter-gatherer societies could not have lived in a golden age (the lack of growth of their knowledge):

Since static societies cannot exist without effectively extinguishing the growth of knowledge, they cannot allow their members much opportunity to pursue happiness.

But that requires implausible assumptions such as that happiness depends more on the pursuit of knowledge than availability of sex. And it’s not clear that hunter-gatherer societies were stable – they may have been just a few mistakes away from extinction, and accumulating knowledge faster than any previous species had. (I think Deutsch lives in a better society than hunter-gatherers, but it would take a complex argument to show that the average person today does).

But I generally enjoyed his arguments even when I thought they were wrong.

See also the review in the New York Times.

Book review: The Institutional Revolution: Measurement and the Economic Emergence of the Modern World, by Douglas W. Allen.

What do honor duels, purchases of commissions in the army, and privately managed lighthouses have in common?

According to Allen, they were institutions which made sense in the pre-modern age, but were abandoned when improvements in measurement (of labor quality, product quality, time, location, etc) made them obsolete in the nineteenth century.

Allen presents a grand theory of how large variations in job performance, product quality, etc, before 1800-1850 created large transaction costs which caused widespread differences from modern life, and which explain a wide variety of institutions which seem strange enough to people with a presentist bias that most have dismissed many pre-modern institutions as obviously foolish.

What starts out as an inquiry into some apparently quirky and unusual practices finishes as an ambitious attempt to explain the industrial revolution as a revolution whose institutional changes were more pervasive and valuable than the technological advances which triggered them.

The book convinced me that it explains the timing of some important and often forgotten social changes. But the frequent implication that the institutions in question were the most rational way to deal with limitations of pre-industrial life seem overdone. I suspect that there was often a mixture of reasons behind those institutions that included some foolishness and some catering to special interests.

For example, his theory requires that honor duels be designed so that skill at dueling is fairly unimportant compared to random luck. He provides some evidence that people tried to introduce randomness into the dueling process, but leaves me doubting that it made skill unimportant.

The book provides a framework that might be valuable in predicting future institutional changes as technological change further reduces transaction costs, and does a valuable job of offsetting the tendencies of economists other than Coase to downplay the importance of transaction costs.

This was the first book I’ve read in several years that seems too short.

Book review: 1493: Uncovering the New World Columbus Created, by Charles C. Mann.

This book is about the globalization triggered by Columbus. The book’s jacket describes this set of changes as “the most momentous biological event since the death of the dinosaurs”. But that was probably written by a poorly informed marketing person. The contents of the book promote a more plausible claim that the effects were bigger than most realize.

Some of the ideas that this book reports are surprising, potentially important, but also somewhat speculative. E.g. large-scale reforestation resulting from smallpox killing existing inhabitants apparently contributed to the little ice age by sequestering carbon.

Much of the book is devoted to the spread of non-human species, but there are long sections on slavery, including speculation about how cheap land might have made slavery more important, and how the differences between Algonkian and Mississippian Indian cultures may have affected attitudes toward slavery in northern and southern U.S.

The first quarter of the book seemed well written, but the remainder of the book wanders through anecdotes of unclear importance. If I’m trying to focus on long-term effects of the globalization that Columbus triggered, why should I care about the details of numerous battles?

The book might come closer to living up to the jacket’s hype if it argued that Columbus caused the industrial revolution. But Mann seems confused about what the industrial revolution was – he treats rubber as a necessary component of the industrial revolution, but that happened well after experts say the industrial revolution started.

It wouldn’t be hard to use the ideas in this book to generate speculation that Columbus caused the industrial revolution, e.g. the potato’s ability to feed several times as many people as wheat, as well as cheaper security due the difficulty of stealing potatoes which are left in the ground until needed, made more people available to invent technology, and might have generated wealth and predictability that enabled inventors to focus on more distant rewards. But my guess is that this is only a small part of what caused the industrial revolution.

Some of the ideas in the 10,000 Year Explosion have got me wondering whether the spread of the Ashkenazi culture played an important role in starting the industrial revolution.

The Ashkenazi developed a unique culture that was isolated for many centuries from the mainstream. Then around 1800, western Europe allowed Jews to interact much more with the rest of society (The 10,000 Year Explosion suggests that it started in 1791 in France).

At about the same time, the same region experienced a sudden shift in values that increased the status of merchants, which is what you’d expect if Ashkenazi culture that had previously been shunned became partially accepted. Those values may have contributed significantly to the industrial revolution.

The 10,000 Year Explosion explains why the Ashkenazi had some unique values that were somewhat unlikely to have been duplicated elsewhere, which would help explain why the industrial revolution didn’t start somewhere other than northern Europe.

This isn’t a complete explanation of the industrial revolution – for one thing, it doesn’t explain why England developed faster than France.

A completely unrelated idea of how agricultural diversity helped British farming productivity around the same time: Agricultural biodiversity crucial to the agricultural “revolution”.

Yet another hypothesis for why the industrial revolution happened in Europe is that higher infectious disease levels elsewhere caused most cultures that might have produced technological development were more collectivist in order to reduce the spread of disease.
Collectivism may have inhibited scientific and technological innovation by discouraging trial-and-error learning and ideas which signal an absence of group loyalty.

collectivists make sharp distinctions between coalitional in-groups and out-groups, whereas among individualists the in-group/out-group distinction is typically weaker (Gelfand et al. 2004). A consequence is that collectivists are more wary of contact with foreigners

I suspect this effect is real but not strong enough to be the primary cause of the industrial revolution. It does, however, provide a good clue about why a relatively tropical region such as the Yangtze River Delta lagged behind more temperate England.

Book review: The Birth of Plenty : How the Prosperity of the Modern World was Created by William Bernstein.
This book contains many ideas about the causes of economic growth that are approximately right, but rarely backs them up with good arguments.
He starts by saying four institutions are needed to escape from a Malthusian trap: property rights (rule of law), reason (scientific methods), capital markets, and fast transportation/communication. But later when discussing why some countries were slow to develop, he adds ad hoc explanations (e.g. “excessive military expenditure” “reliably derails great nations”).
The biggest shortcoming of the book is that it ignores evidence that China provides a counter-example to his main claims. He doesn’t acknowledge expert claims that parts of China around 1800 had a degree of property rights and rule of law that was comparable to England at that time, nor does he discuss the recent dramatic Chinese takeoff that happened with a mediocre degree of property rights and rule of law.
He gives many hints about why those four institutions are helpful, but provides little evidence that any one is essential. About the closest he comes to providing rigorous evidence is a graph indicating how much of economic growth appears to be explained by a Rule-of-Law indicator. He follows that with a similar graph of how government spending levels explain economic growth, and claims the negative effect of government spending would be invisible without the computed trend line, but the rule-of-law trend is more impressive. I see those graphs differently. The most obvious trend is that government spending over about 15 to 18% (of GDP?) reduces growth, with no obvious pattern for lower spending levels. The most obvious trend in the rule-of-law graph is that low values on the rule-of-law indicator are associated with larger variations in economic growth, which is somewhat contrary to his claim that such values reliably prevent growth.
The section I found most valuable was the one describing reasons for thinking that 16th century Holland created the beginnings of the industrial revolution.
There are enough misleading or false statements in the book to convince me not to trust him. For example, he refers to eclipse prediction around 1700 as a spectacular change to what was previously a mystery. He appears unaware that eclipses had been predicted more than a millennium earlier.
He often digresses into anecdotes that have no apparent relevance. For example, he claims “a healthy market for government debt is, in fact, essential for funding business”. After giving two implausible theoretical reasons for that claim, he says it was “vividly demonstrated in the U.S.” in 1862, but then gives a description of how government bonds were sold, without mentioning anything about the effect on business.
His discussion of the possible trade-offs between inflation and unemployment makes a claim that increased unemployment caused more unhappiness than “an identical rise in inflation”. But inflation is measured in different units that unemployment. If we happened to measure inflation in percent per presidential election, the naive comparison would work much differently. (He is subtly misinterpreting a serious paper that is hard to fully explain to laymen).
His advice to undeveloped nations includes “before a nation builds roads … it must first train lawyers”, which makes me doubt his understanding of what causes the rule of law.

Book review: A Farewell to Alms: A Brief Economic History of the World by Gregory Clark
This book provides very interesting descriptions of the Malthusian era, and a surprising explanation of how parts of the world escaped Malthusian conditions starting around 1800. The process involved centuries of wealthier people outreproducing the poor, and passing on traits/culture which were better adapted to modern living. This process almost certainly made some contribution to the industrial revolution, but I can’t find a plausible way to guess the magnitude of the contribution. Clark is not the kind of author I trust to evaluate that magnitude.
His arguments against other explanations of the industrial revolution are unconvincing. His criticisms of institutional explanations imply at most that those explanations are incomplete. But combining those explanations with a normal belief that knowledge/technology matters produces a model against which his criticisms are ineffective. (See Bryan Caplan for more detailed replies about institutional explanations).
He makes interesting claims about how differently we should think about the effects in Malthusian world of phenomena that would be obviously bad today. E.g. he thinks the black plague had good long-term effects. He made me rethink those effects, but he only convinced me that the effects weren’t as bad as commonly believed. His confidence that they were good depends on some unlikely quantitative assumptions about benefits of increased income per capita, and he seems oblivious to the numerous problems with evaluating these assumptions. His comments in the last few pages of the book about how little average happiness has changed over time leads me to doubt that his beliefs are consistent on this subject.
While many parts of the book appear at first glance to be painting a very unpleasant picture of the Malthusian era, he ends up concluding it wasn’t a particularly bad era, and he describes people as being farther from starvation than Robert Fogel indicates in The Escape from Hunger and Premature Death, 1700-2100. Their ability to reach somewhat different conclusions by looking at different sets of evidence implies that there’s more uncertainty than they admit.
He does a neat job of pointing out that economists have often overstated the comparative advantage argument against concerns that labor will be replaced by machines: horses were a clear example of laborers who suffered massive unemployment a century ago when the value of their labor dropped below the cost of their food.

Book Review: The Great Divergence: China, Europe, and the Making of the Modern World Economy, by Kenneth Pomeranz
This book does a good job of criticizing many Anglo-centric explanations of why Europeans industrialized first by providing detailed evidence that the area near the Yangzi river delta was mostly as advanced as England when England started the industrial revolution.
It does a less convincing job of arguing that coal and new world land were the main reasons for England’s success. I’m tempted to believe that American sugar provided desperately needed calories to break out of a Malthusian trap, but the evidence doesn’t show that became significant until the industrial revolution had already started.
Conveniently located coal undoubtedly gave England a boost, but not a big enough boost that there is a practical way to decide it was more important than the numerous cultural differences which might have given England the edge it needed.
The book makes a serious effort to dismiss those cultural explanations, but is not thorough enough. In particular, I’m disappointed with the cryptic way that it dismisses the relevance of the ideas in Helmut Schoeck’s book Envy.
The style is often deadening, with lengthy descriptions of details whose relevance is unobvious.