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A Farewell to Alms

A Farewell to Alms: A Brief Economic History of the World

Gregory Clark
Copyright Date: 2007
Edition: STU - Student edition
Pages: 432
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  • Book Info
    A Farewell to Alms
    Book Description:

    Why are some parts of the world so rich and others so poor? Why did the Industrial Revolution--and the unprecedented economic growth that came with it--occur in eighteenth-century England, and not at some other time, or in some other place? Why didn't industrialization make the whole world rich--and why did it make large parts of the world even poorer? InA Farewell to Alms, Gregory Clark tackles these profound questions and suggests a new and provocative way in which culture--not exploitation, geography, or resources--explains the wealth, and the poverty, of nations.

    Countering the prevailing theory that the Industrial Revolution was sparked by the sudden development of stable political, legal, and economic institutions in seventeenth-century Europe, Clark shows that such institutions existed long before industrialization. He argues instead that these institutions gradually led to deep cultural changes by encouraging people to abandon hunter-gatherer instincts-violence, impatience, and economy of effort-and adopt economic habits-hard work, rationality, and education.

    The problem, Clark says, is that only societies that have long histories of settlement and security seem to develop the cultural characteristics and effective workforces that enable economic growth. For the many societies that have not enjoyed long periods of stability, industrialization has not been a blessing. Clark also dissects the notion, championed by Jared Diamond inGuns, Germs, and Steel, that natural endowments such as geography account for differences in the wealth of nations.

    A brilliant and sobering challenge to the idea that poor societies can be economically developed through outside intervention,A Farewell to Almsmay change the way global economic history is understood.

    eISBN: 978-1-4008-2781-7
    Subjects: Economics

Table of Contents

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  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Preface
    (pp. ix-x)
  4. Acknowledgments
    (pp. xi-xii)
  5. 1 Introduction: The Sixteen-Page Economic History of the World
    (pp. 1-16)

    The basic outline of world economic history is surprisingly simple. Indeed it can be summarized in one diagram: figure 1.1. Before 1800 income per person—the food, clothing, heat, light, and housing available per head—varied across societies and epochs. But there was no upward trend. A simple but powerful mechanism explained in this book, theMalthusian Trap, ensured that short-term gains in income through technological advances were inevitably lost through population growth.

    Thus the average person in the world of 1800 was no better off than the average person of 100,000 BC. Indeed in 1800 the bulk of the...

  6. PART I The Malthusian Trap:: Economic Life to 1800

    • 2 The Logic of the Malthusian Economy
      (pp. 19-39)

      The vast majority of human societies, from the original foragers of the African savannah through settled agrarian societies until about 1800, led an economic life shaped and governed by one simple fact: in the long run births had to equal deaths. Since this same logic governs all animal species, until 1800 in this “natural” economy the economic laws for humans were the same as for all animal species. The break between the economics of humans and the economics of the rest of the animal world occurred within the past two hundred years.

      It is commonly assumed that the huge changes...

    • 3 Living Standards
      (pp. 40-70)

      The logic of the Malthusian economy is clear. There should be no systematic gain in living standards on average across societies between earliest man and the world of 1800 on the eve of the Industrial Revolution. Disease, war, infanticide, and customs regulating marriage and sex could elevate material living standards. But on balance the happy circumstances that made for Tahiti in 1769, or the unhappy ones that made for Tierra del Fuego in 1832, were no more likely in AD 1800 than in 100,000 BC. In this chapter I consider the empirical evidence for this first crucial contention of the...

    • 4 Fertility
      (pp. 71-90)

      Given that societies before 1800 were Malthusian, the only ways human agency could improve living standards were by reducing fertility or increasing mortality. Reducing fertility had two effects in a Malthusian economy. First it would increase living standards. Second it would increase life expectancy. If the birth rate was at the biological maximum of 60 per thousand, life expectancy at birth would be a mere 17 years. If the birth rate could be reduced to 25 per thousand, life expectancy would rise to 40.

      The demography of northwestern Europe before 1800 has been intensively researched. Parish records of baptisms, burials,...

    • 5 Life Expectancy
      (pp. 91-111)

      In this chapter we consider two main questions. The first is whether, as assumed in the Malthusian model, preindustrial mortality was a declining function of income. In England, for example, in the years 1540–1800, just as for birth rates, there is no sign of any association between national mortality rates and national income levels, as would be expected in the Malthusian model. Did England, and perhaps also the Netherlands, escape the Malthusian constraints long before 1800?

      The second question involves the role of differences in mortality rates (at a given income level) in explaining income differences across societies before...

    • 6 Malthus and Darwin: Survival of the Richest
      (pp. 112-132)

      As has been emphasized, in the Malthusian era the economic laws that governed human society were the same as those that govern all animal societies. Indeed Charles Darwin proclaimed in his autobiography that his inspiration forOn the Origin of Specieswas Malthus’sEssay on the Principle of Population.² Then inThe Descent of ManDarwin employed his theory of natural selection to explain how humans evolved from earlier progenitors. He even went so far, in the conclusion of that work, to endorse the theory that came to be known as social Darwinism: “Man, like every other animal, has no...

    • 7 Technological Advance
      (pp. 133-144)

      Despite the sluggishness of preindustrial technological advance, there was over time—agonizingly slowly, incrementally—significant technological progress. Europe of 1800 was technologically significantly advanced over Europe of 1300. And Europe of 1300, surprisingly, had a much better technology than the ancient Romans or Greeks. Even the supposedly technologically stagnant eras of the Dark Ages and the Middle Ages saw many innovations.²

      Thus the list of basic technologies which were unknown or unused in the ancient world is surprisingly long. None of the Babylonians, Egyptians, Persians, Greeks, or Romans, for example, managed to discover the stirrup for horse riders, simple as...

    • 8 Institutions and Growth
      (pp. 145-165)

      The popular misconception of the preindustrial world is of a cowering mass of peasants ruled by a small, violent, and stupid upper class that extracted from them all surplus beyond what was needed for subsistence and so gave no incentives for trade, investment, or improvement in technology. These exclusive and moronic ruling classes were aided in their suppression of all enterprise and innovation by organized religions of stultifying orthodoxy, which punished all deviation from established practices as heretical. The trial and condemnation of Galileo Galilei by the Holy Inquisition in 1633, for defending the Copernican view that the earth revolved...

    • 9 The Emergence of Modern Man
      (pp. 166-190)

      The Malthusian era was one of astonishing stasis, in terms of living standards and of the rate of technological change. It was thus an economy in which we would expect that only one economic feature, land rents, would change across the ages. Wages, returns on capital, the capital stock per person, hours of work per person, skill premiums—all should have remained the same on average from the dawn of market economies to the end of the Malthusian era. This only reinforces the puzzle of how the economy ever escaped the Malthusian Trap. How did stasis before 1800 transform itself...

  7. PART II The Industrial Revolution

    • 10 Modern Growth: The Wealth of Nations
      (pp. 193-207)

      Around 1800, in northwestern Europe and North America, man’s long sojourn in the Malthusian world ended. The iron link between population and living standards, through which any increase in population caused an immediate decline in wages, was decisively broken. Between 1770 and 1860, for example, English population tripled. Yet real incomes, instead of plummeting, rose (figure 10.1). A new era dawned.

      The seemingly sudden and unpredictable escape from the dead hand of the Malthusian past in England around 1800, this materialist crossing of the Jordan, was so radical that it has been forever dubbed the Industrial Revolution.


    • 11 The Puzzle of the Industrial Revolution
      (pp. 208-229)

      The mystery of why the Industrial Revolution was delayed until around 1800 is the great and enduring puzzle of human history. In this chapter I outline what makes explaining the Industrial Revolution an almost impossible challenge and describe various attempts to resolve this challenge.

      We have seen that economic growth after 1800 was the product of small, but highly productive, investments in expanding the stock of useful knowledge in societies. Since most of the benefits of these investments did not flow to the investors, the result was a seemingly costless expansion of the efficiency of the economy. These gains in...

    • 12 The Industrial Revolution in England
      (pp. 230-258)

      The Industrial Revolution in England—the seemingly abrupt escape of this tiny island nation, within less than a generation, from millennia of pitifully slow economic progress—is one of history’s great mysteries. Its apparent suddenness, in a society that was (and still is) noted for the evolutionary nature of all social change, poses a baffling challenge to those who would supply an economic explanation.

      In one of the more delicious ironies of history the Industrial Revolution was precisely coupled with that other model of human liberation, the French Revolution. But the political revolutionaries who proclaimed their love for all humanity...

    • 13 Why England? Why Not China, India, or Japan?
      (pp. 259-271)

      The previous chapter stresses that the suddenness of the Industrial Revolution in England was more appearance than reality. The coincidence of major population growth and improved trade prospects with raw material producers such as the United States made a modest acceleration of the rate of technological progress in England circa 1800 seem like an overnight transformation of the economy. In fact England by 1850 was, technologically speaking, little ahead of such competitors as the United States and the Netherlands.

      Chapter 12 also emphasizes that the acceleration of advances in productivity came from the supply side. People responded differently to incentives...

    • 14 Social Consequences
      (pp. 272-300)

      The Industrial Revolution was driven by the expansion of knowledge. Yet, stunningly, unskilled labor has reaped more gains than any other group. Marx and Engels, trumpeting their gloomy prognostications inThe Communist Manifestoin 1848, could not have been more wrong about the fate of unskilled workers. Figure 14.1 shows a typical image of Industrial Revolution misery that somehow has worked its way into modern popular consciousness.² The reality is very different. By 1815 real wages in England for both farm laborers and the urban unskilled had begun the inexorable rise that has created affluence for all.³

      Nor was it...

  8. PART III The Great Divergence

    • 15 World Growth since 1800
      (pp. 303-327)

      By the mid-nineteenth century the efficiency of the English economy was clearly growing at an unprecedented pace. That this improvement in efficiency was based on knowledge creation, rather than the accumulation of physical capital or the exploitation of natural resources, seemed to imply the rapid worldwide spread of the techniques and industries of the Industrial Revolution. For while developing knowledge is an arduous task, copying the inventions of others can be easy.

      The increasing prosperity and economic power of Britain impressed both foreign governments and individuals, especially since it was accompanied by growing military and political power. Thus there were...

    • 16 The Proximate Sources of Divergence
      (pp. 328-351)

      Why has world development since the Industrial Revolution demonstrated the surprising divergence described in the previous chapter? This question has occasioned a mountain of printed pages, and a storm of debate, ever since the increasing gap between rich and poor nations became apparent in the late nineteenth century.

      Commentators, having visited climate, race, nutrition, education, and culture, have persistently returned to one theme: the failure of political and social institutions in poor countries. Yet, as we shall see, this theme can be shown to manifestly fail in two ways. It does not describe the anatomy of the divergence we observe:...

    • 17 Why Isn’t the Whole World Developed?
      (pp. 352-370)

      In the previous chapters we saw that one of the surprising root causes of the increasing differences in income across the world was low output per worker, with no compensating gain in output per unit of capital, even when the most modern technologies were in use. This finding makes institutional explanations for the Great Divergence hard to sustain. Why would institutions influence the internal efficiency of production enterprises once they have been established?

      These international differences in output per worker had appeared in the cotton textile industry by the 1840s, and they are even more pronounced in many sectors now....

  9. 18 Conclusion: Strange New World
    (pp. 371-378)

    God clearly created the laws of the economic world in order to have a little fun at economists’ expense. In other areas of inquiry, such as the physical sciences, there has been a steady accumulation of knowledge over the past four hundred years. Earlier theories proved inadequate. But those that replaced them encompassed the earlier theories and gave practitioners greater ability to predict outcomes across a wider range of conditions. In economics, however, we see instead that our ability to describe and predict the economic world reached a peak around 1800. In the years since the Industrial Revolution there has...

  10. Technical Appendix
    (pp. 379-382)
  11. References
    (pp. 383-408)
  12. Index
    (pp. 409-418)
  13. Figure Credits
    (pp. 419-420)