XPost: or.politics, alt.economics

On 6/5/2022 8:22 PM, hal lillywhite wrote:

On Sunday, June 5, 2022 at 8:04:31 PM UTC-7, a425couple wrote:

from
https://www.vox.com/future-perfect/2022/6/1/23138463/how-the-world-became-rich-industrial-revolution-koyama-rubin

About 200 years ago, the world started getting rich. Why?
Two economic historians explain what made the Industrial Revolution,
and modern life, possible.

Interesting but there are some factors I'm convinced were extremely important which I did not notice in your summary:

The banking and maritime advances --
The discovery of America also allowed for people to get away --

And also try the brand new experiment of democracy.

The Protestant Reformation led Gutenberg to invent his printing press for the express purpose of

printing Bibles. That led to widespread literacy and once people learned
to read they didn't stop with the Bible. Available information exploded.

Technological advances which all of the above facilitated. Aristocrats seldom make technological advances, they tend to be happy with the way things are. As Sowell wrote, they didn't need running water, they had running servants. And allowing people to

profit from their inventions encouraged innovation. Patent and copyright laws have helped us make those advances. And of course, widespread literacy also drives technology.


I agree.
I think the book, "How the West Grew Rich---"
is truly excellent and pretty complete in it's explanations.

https://www.amazon.com/How-West-Grew-Rich-Transformation/dp/0465031099/ref=sr_1_1?adgrpid=1332609457768082&hvadid=83288287065457&hvbmt=be&hvdev=c&hvlocphy=111532&hvnetw=o&hvqmt=e&hvtargid=kwd-83288996317122%3Aloc-190&hydadcr=21902_10502347&keywords=how+
the+west+grew+rich&qid=1654534132&s=books&sr=1-1

How the West Grew Rich: The Economic Transformation Of The Industrial
World – June 1, 1987
by Nathan Rosenberg (Author), LE Birdzell Jr. (Author)
4.2 out of 5 stars 31 ratings

Paperback
$20.31
40 Used from $3.24

How did the West—Europe, Canada, and the United States—escape from immemorial poverty into sustained economic growth and material
well-being when other societies remained trapped in an endless cycle of
birth, hunger, hardship, and death? In this elegant synthesis of
economic history, two scholars argue that it is the political pluralism
and the flexibility of the West's institutions—not corporate
organization and mass production technology—that explain its
unparalleled wealth.

This is Gustafsson's review of How the West Grew Rich

4.0 out of 5 stars
Institutions as the fundamental cause, March 21, 2006
By Fredrik Gustafsson (Lund, Sweden) - See all my reviews

This review is from: How The West Grew Rich: The Economic Transformation
Of The Industrial World (Paperback)

Monographs dealing with West's rise from a backward feudal society to
the most technologically advanced and wealthiest civilization this world
has ever seen, seem to come a dime a dozen nowadays. Given the large
amounts of books available on this topic, and the fact that it was
published twenty years ago, what reasons are there for reading How the
West Grew Rich? Quite a few I would argue.

The main question of the book is of course: how, or rather why, did the
West (as opposed to the South or the East) achieve modern economic
growth? The authors come to the correct conclusion that standard growth
models can only provide the proximate causes of growth. Innovation and accumulation of capital, labour and natural resources is growth, it does
not explain growth.

So what, according to R&B, are the fundamental causes of growth? The
answer lies in favourable institutions and freedom from political
restrictions - more specifically, secure property rights and the freedom
to engage in any line of business and to acquire and sell goods at an unregulated price. This meant that the process of innovation was
delegated to private firms and that individuals themselves were forced
to bear full responsibility for their failures and reap the full
benefits of their successes.

Why then did such favourable institutions and political and economic
freedoms arise in the West? The answer according to R&B is political fragmentation and competition between different territories in Europe. Investments and the merchant class were drawn to areas were property
rights were respected and where they could carry out their business
without too much political interference. There was no single empire in
Europe. The growth of markets - especially that of cities and
long-distance trade - further spurred this development.

The arguments in How the West Grew Rich are, which should be apparent by
now, very similar to those found in The Rise of the Western World by
North and Thomas, although they focus a lot less on population growth.
As they should, R&B refer to this book on several occasions. Despite
this fact, How the West Grew Rich proves to be an interesting read: the familiar arguments are explored further and the book includes several interesting examples of how institutional innovations lowered
transaction costs and facilitated further development.

There are a number of objections one could raise against R&B's account
of the rise of the Western world - their account of the middle ages and alternative explanations behind West's success are far from
satisfactory, to name a few. There are however a few things speaking in
favour of this book. First of all, it has a clear message. It does not,
like some other books on the same topic, name hundreds of different
reasons for why the West grew rich. Rather, it presents a clear
hypothesis that is present throughout the book and it also provides very
clear policy recommendations to current developing countries wanting to
emulate West's success. Secondly, and perhaps because it has such a
clear message, it is fun to read!

-------------------------------------------
The origins of capitalism revealed!, December 20, 2000
By
Chad M. Brick (Japan) - See all my reviews
This review is from: How The West Grew Rich: The Economic Transformation
Of The Industrial World (Paperback)
"How the West Grew Rich" is a thorough treatise on the rise of
capitilism in the nation-states of the west, from feudal society towards
modern times. Rosenthal and Birdzell discuss in the appearances of the requirements for capitilism, such as acknowledgment of property rights
and consistent and predictable law. Also discussed are the political,
social, or economic changes that caused feudal society to crumble and a
variety of free markets to gradually take root and then blossom in Europe.

This book was thorough and informative, though a bit repetitive and
somewhat dry. It makes a wonderful companion to Diamond's "Guns, Germs,
and Steel", filling in where the later left off. -----------------------------------

"adaptation takes place through the formation of enterprises that are,
at least initially, small," ie., decentralization=growth., December 26, 2006
By
komyathy (U.S.A. & elsewhere traveling) - See all my reviews

This review is from: How The West Grew Rich: The Economic Transformation
Of The Industrial World (Paperback)
It is entirely safe to generalize: innovation is more likely to occur in
a society that is open to the formation of new enterprises than in a
society that relies on its existing organizations for innovation."
Feudalism thus had to be eclipsed for serious change to occur since it
"was a society which dealt with the risks of life by legislating rigidity.

Economic growth is inherently a byproduct of change,

and the political and religious ideology of the Middle Ages guarded
against the heresies of change in every way it could," argues the
authors herein as they set out to explain "how the West generated the organizational and technological skills required to produce and exploit"
its wealth. A "decentralization of authority," thus was crucial...and
this was greatly spurred by the Protestant Reformation, the long term
effect of which, economically,

"was the progressive removal of religion from intimate involvement in
the sphere of business activity."

"In the course of the sixteenth and seventeenth centuries , the business
sphere was, in a word, secularized." "Protestantism sanctioned a high
degree of individual responsibility for moral conduct and reduced the
authority of the clergy." Under these circumstances, it would have been
too much to expect the Catholic clergy to continue to stress doctrines
which could only turn prosperous parishioners toward Protestantism." The authors argue moreover that this "was not wholly a question of the
theological content of either Catholicism or Protestantism. It was
partly a question of the competition inherent in the existence of
several rival religions, which, like the existence of competition
inherent in the existence of several rival national states, enabled a
rising merchant class chafing under the restraints of one authority to
take refuge with another more congenial" as trade & exchange, both
domestic and foreign, became ever more prevalent in the prevailing
economy of the day. But how did such a merchant class even gain a
foothold in the first place since feudalism was already petering out
during the 15th century, ie., before the Protestant Reformation and the
later rise of capitalism. As the authors remark: "the decline of
feudalism is complete a century before the beginnings of capitalism."

"For if one thing is clearer than another, it is that the merchant class
did not get its economic power from the feudal nobility, or by
displacing or super-ceding the feudal nobility in agricultural or other economic activities. The merchant class gained economic power by
expanding the trading activities in which it had always engaged." That's
the key herein, trade and exchange; or rather, the ability of people to
be able to engage in such. So the authors argument herein is not that democratization shall necessarily lead to an economic boom, but that the reverse is far more likely; that "economic growth was [and remains, I'd
add] a force for democratization." Marx was thus, the authors assert,
wrong yet again: Capitalism wasn't a natural stage progressing out of feudalism, and capitalism doesn't inherently lead to monopolistic centralization of wealth; nor can monopolistic control of the economy
(under the banner of communism or socialism) drive continued economic
growth.

After all, "one must keep in mind that growth implies change and
adaptation, and that much of the adaptation takes place through the
formation of enterprises that are, at least initially, small." Hence the authors' view that "the strength of the tendency to decentralization in
Western economies is chronically underestimated."

You may bemoan the influence of such mega companies as Microsoft, Exxon,
& Walmart now and worry how much influence they may have in 20 years,
but such is but a parlor game of sorts. (Look at the once great US
Steel, or General Motors, or IBM, or any one of a dozen railroad
companies, and you can see the futility of simple extrapolation.) Such
high fliers now are not hurting the American economy. Such companies are stimulating it. That's the point, after all, is it not? Not to penalize success, but to focus on "the value of advancing the material welfare of
human beings as measured by the means available to THE GREAT MAJORITY of individuals to choose and shape the quality of the lives they
lead"(emphasis added). And as long as the Microsofts and Walmarts of our economy continue to add to the growth of such they shall be secure as
entities, but there shall come a time when innovations (think Linux,
Google, Apple multimedia platforms to come, home grocery delivery and
internet shopping---you name it) will seek to dethrone them. To wit, the authors point out that a "seldom praised function of competition in
economic growth is that it eliminates obsolete forms of economic
activity." (Contrast this to "the difficulty experienced by the
political sphere in getting rid of programs that are obsolete or that
have simply failed.")

Hence "the real point...essential to understanding why the benefits of
Western growth were so widely diffused is that the West's system of
economic growth offered its largest financial rewards to innovators who improved the life-style not of the wealthy few, but of the less-wealthy
many.

This is a point that bodes ill for 3rd world ever-developing
disappointments (ie., Russia, Venezuela, slews of countries in
Africa/The Middle East) who are hopelessly (or so it seems) overly
centralized and concerned only with enhancing the riches of the elites
in such societies. Corrupt self-interested cliques are simply
instinctively hostile to bottom-up anything. Regarding most African and
Middle Eastern states, some would say that the Western economic path
"involves a diffusion of power and a degree of individualism which is incompatible with many modes of social life" in such parts of the world,
but the authors herein suggest that such could have been once said about European peoples, too...until power diffused within such societies to an
extent made possible by trade-generated economic growth. Nothing is
guaranteed, of course, but as long as power remains centralized in
backwater states the chance of real sustainable economic growth and
seriously better lives for the average citizens of such societies will
remain but a hopeful wish. (Interestingly, many European economies have
begun to grow rather sluggishly since the European Union has been
increasingly taking power back from individual states and localities
with them.) Thanks for reading my words of review of this worthy book.
Cheers

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