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Business Management Book Store > Business Management books beginning with W
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The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor |
Author: David S. Landes
Published: 1999-05-01 |
List price: $18.95
Our price: $12.89
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As of: November 21st, 2008 03:14:31 PM
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Customer comments on this selection.
 Worst book ever
We're reading this in my Business in World History class. The book makes me want to stab my eyes out and jump off of a sky scraper. Yay! :)
 The historian who hates facts
The historian who hates facts
David Landes' The Wealth and Poverty of Nations is at once an impressive display of scholarship and a mortally flawed analysis of, as the author put the question "why some nations are wealthy and others desperately poor." The reason why I say it is flawed is not because I disagree with the main thesis - that attitudes towards innovation and openness to new ideas determine wealth - but rather that the way this thesis is argued is completely a-scientific, if not anti-scientific. In particular, David Landes' contempt for quantifiable facts, banishes the book from the land of scientific inquiry to the land of pure ideology.
Historians who despise facts are nothing new. Marxist historians insisted for half a century, even in the face of the highest economic growth rates seen in human history, that the internal contradictions of capitalism were dragging it to its grave. Professor Landes' contempt for numbers, though, is much more damning than that of the Marxist historians. While they based their analysis exclusively on Marxist theory, and thus had no problem trumpeting their contempt for "bourgeois statistics," he stakes his analysis on the same facts he disparages throughout the book. The Wealth and Poverty of Nations is one long account of experiences of economic growth (or lack thereof) of various nations and thus one would expect it to be empirical.
Professor Landes' disdain for numbers that do not agree with his theory is a recurrent theme throughout the book. It begins with an affirmation that Western Europe is the best place for agriculture because it receives more rainfall than any other area that flies in the face both of rainfall data and agricultural production data. Professor Landes seems especially disgusted by cliometrics. Now cliometrics is one of the most interesting developments in historical analysis. It is the application of the best and most sophisticated statistical methodologies to historical facts in order to shed new light upon historical process than is possible with the paltry pre-existing data. It is, of course, imperfect and cliometricians argue amongst themselves over many of their findings. However, cliometrics is one of the most interesting developments of historical inquiry, showing many pre-existing interpretations to be incoherent with the facts.
When confronted with cliometrical evidence, instead of judging his thesis against this historical evidence, Professor Landes chooses instead to disqualify it, behaving exactly like the Marxist historians he (rightly) criticizes. One passage is particularly illustrating:
"Some historians would argue that these strangers saw and understood less than they thought, or that they blackened the Indian picture by way of brightening the European. A few have even asserted - on the strength of estimates of food intake - that the Indian ryot lived better than the English farm laborer.
Such calorimetric cliometrics seem to me implausible in the light of the gulf between European and Asian techniques. Nor am I persuaded by efforts to project twentieth-century comparative income estimates back to the eighteenth century. The opportunities to distort the result are endless, and the leverage of even a small mistake extended over two hundred years is enormous.
In these speculative exercises, the numbers deserve credence only if they accord with the historical context. That context, for India, was one of limited property rights and technological backwardness. Western Europe, well on its way to the Industrial Revolution, was inventing and improving ingenious, labor-saving devices, in particular, both hand- and power-driven machines. It had long since passed Asia by. It's as simple as that: more productive techniques translate into higher incomes."
(page 165 of the paperback edition)
The numbers deserve credence only if they accord with the historical context. In other words: My analysis is, by hypothesis, correct. Therefore, any evidence to the contrary must be wrong. Dr. Goebbels could not have said it better. No matter that there is a reasonable literature stating that Europe did not have the most productive techniques nor the most complete property rights. (see China Transformed: Historical Change and the Limits of European Experience by R. Bin Wong and The Great Divergence: China, Europe, and the Making of the Modern World Economy by Kenneth Pomeranz). No matter that various stories can, and have been, told in which the economy with the higher wages is not necessarily the one that surges ahead. If it disagrees with me, it is wrong. It's as simple as that.
Mr. Landes' lack of proficiency with numbers is evident even with regard to those that are not at odds with his thinking. For example, when analyzing the war between Paraguay and the Triple Alliance he states that 70% of Paraguay's male population died as a result of the brutality of allied occupation. While the brutality of the occupation is beyond dispute, the number is preposterous. The occupation of Poland for five years by Nazi Germany resulted in 20% reduction of the Polish population. The idea that the Brazilian and Argentinean occupation troops could be 3 ½ more efficient than the Nazi death machine with no concentration camps, machine guns, airplanes or even roads, trucks and railroads for that matter, really makes very little sense. These silly numbers have been re-estimated by more recent historians and cliometricians and have been shown to be much smaller.
Ernest Rutherford is quoted as saying "All science is either empirical or stamp collecting." (actually, he used the word physics, but physics at the time meant empirical). Professor Landes' book is quite an impressive stamp collection, but fatally flawed empirical analysis.
 Outstanding!
Landes provides an interesting and credible explanation of the differences in income/capita (now about 400:1, about 5:1 250 years ago) between the richest and poorest nations. En route, Landes also provides a useful perspective on today's globalization debate.
Most of the differential is attributable to cultural values. Some, however, is geographical. If one marks off a belt a couple thousand miles in width circling the earth at the equator, one finds within it no developed countries. Year-round heat encourages proliferation of disease and parasites. Poor soils and extreme dry areas are added problems, as well as the debilitating heat's effect on workers.
From about 750-1100, Islamic science and technology far surpassed those in Europe - then something went wrong and science became denounced as heresy by religious zealots. Similarly, state control allowed Chinese innovations to fall into disuse. China's flotillas far surpassed Europe's. The biggest ships were about 400' long and 160' wide (Columbus' Santa Maria was about 85' long), and the fleet totaled 317 vessels and 28,000 men. Then new leadership brought an emphasis on agriculture and all ocean-going ships were destroyed in 1525.
Europe enjoyed a monopoly on corrective lenses for 3-400 years, beginning in the 1300s, more than doubling the availability of skilled craftsmen and allowing the further development of microscopes and telescopes around 1600.
Cotton from India proved capable of multiple washings (vs. wool), thereby transforming standards of cleanliness and health.
"Easy money" (eg. gold from Spanish colonies, Holland's discovery of North Sea natural gas) makes for a lazy economy that fails to develop the talents of its people.
The Protestant Reformation gave a big boost to literacy, and spawned dissents that are at the heart of scientific endeavor. Data show a much greater percentage of scientists from Protestant vs. Catholic backgrounds. Unfortunately, after Luther, cleanliness became a particular cause for suspicion of heresy, and smuggling non-approved books led to the death penalty. Thus, the fate of Catholic southern Europe was sealed for 300-some years. Sicily also suffered from intolerance and superstition of Jews, forced them out, and imposed a backwardness in trade on itself.
Landes then goes on to ask "Why did the Industrial Revolution occur in England?" Protestants were persecuted and expelled from France. Weavers from the southern Netherlands sought refuge in England and brought trade secrets with them, while Jews from Spanish persecutions brought networks of trade connections. England also had a much better system of roads, along with an emphasis on transport speed and time in general. Meanwhile, France was undergoing the upheaval of the French Revolution, India's craftsmen avoided using iron and steel (had made no progress in scientific knowledge for centuries), while Russia was hobbled by serfdom's tying peasants to the land to do forced labor. China and Japan had walled themselves off from the rest of the world - in fact, China lost many of its early innovations through disuse.
Another problem for Russia was that serfdom left so much wealth in the hands of the nobility that overall consumer demand was limited. Russia's poor industry was only able to produce inferior rifles, resulting in enormous losses in the Crimean War (1854-56), the war with Japan (1904-05), and WWI. Finally, the Baltic states remained poor because they were tangled in an endless struggle for freedom.
Regardless, once started, the Industrial Revolution proved difficult to copy because division of labor complicated industrial espionage. Across the Atlantic, scarcity of labor in the early U.S. led to high wages and a push for innovation. Thus, European devices were copied and imported, and skilled European craftsmen encouraged to move to high American wages. (Side Note: By the time of the Civil War, firearms production in the North vs. Confederacy was 32:1 due to the South's emphasis on agriculture.)
The Spanish in South America kept Protestants and Jews out; independence came not because of the settlers' strength, rather Spain's weakness. Spain also brought a macho society attitude that adulthood brought males complete independence and idleness; South American immigrants were also less educated than those in North America and the immense landownings lent themselves to simple ranching enterprises. (American immigrants created a squatters' rights culture, with small landownings and a high motivation for self-sufficiency.)
China and Japan both resisted foreigners; the latter persecuted Christians and their converts after being told these groups were part of Spain's control mechanism. Following a period of anti-foreigners, Japan committed to learning from and copying the U.S. and Europe. (The Chinese did also, but much, much later.)
Muslims (Ottoman Empire) cut themselves off from the mainstream of knowledge via banning the printing press - had a problem with a printed Koran. Another major limiter was their diminishment of women. (The Japanese did also, but to a much more limited extent - eg. girls were well educated, they worked until married, and continued to work afterwards if their income was needed.)
The Japanese realized they lost WWII because of greater U.S. industrial output. Landed attributes this to their support for a large, exporting auto industry - American occupiers saw no need for such an industry (comparative disadvantage). Japan's auto producing disadvantages (small market, lag in technology) were turned into advantages through the Toyota Production System.
Landes points out that today's comparative advantage rationality can easily become tomorrow's mistake. His example is Germany - the British economist John Bowring lamented that the foolish Germans wanted to make iron and steel instead of sticking to wheat and rye and buying their manufactures from Britain. Had they heeded him, they would have pleased the economists and ended up a lot poorer. Similarly, the Japanese.
Bottom Line: The most successful cures for poverty come from within. Educated, eyes-open optimism pays; pessimism only offers the empty consolation of being right. Gains from trade are unequal. Some activities are more lucrative and productive than others.
The Wealth and Poverty of Nations
A good and informative read, more so, the second time around. Landes, raises many excellent points for debate between socio-economics and cultural influences of peoples and their leaders, more ofter imposed upon them, as opposed to chosen to lead.
The book chosen for an economics class just finished at Lund University, Lunds, Sweden. As, a retired American ex-patriot with a background in international finance, still interested in learning, this book is highly recommended for anyone seeking to gain a better understanding on the question "how did we get to where we are?" And divides the world's peoples into three catagories: those that spend billions yearly on losing weight; those that eat to live; and, those who don't know where their next meal is coming from! That our wealth (the West) is dependent on others less fortunate. What they can't make, they will take! That wealth is, in and of itself, a magnet for exporting of commodities or products, but when all else fails or is denied -- people (migration) will be the end product that swamps the west.
We'd better wake-up and understand our need to declare World War III, not nation on nation, region on region, or religion against another religion, but a unified "War on Poverty" led by the west.
Everyone should read this book
Landes is the man, and this book pretty much sums it up. His primary thesis, that when humans are given the freedom to be innovative and pursue their own interest, is familiar from Adam Smith, but Landes does it better, it's a convincing argument. Culture is the determining factor in the success and failure of nations, not chance, not geography, not even resources, and Landes makes it obvious, it seems.
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