Africa: stuck in a ‘Malthusian trap’?
In linking population growth in Africa with declining living standards, economist Gregory Clark presents poverty as a natural given rather than a product of manmade underdevelopment.
Although A Farewell to Alms is a serious work of economic history, it also makes points – often implicitly, sometimes explicitly – about contemporary economic development. As an historical work it raises some interesting questions, but as a guide to present-day problems of development it is flawed.
The key arguments of A Farewell to Alms are illustrated in one simple graph (see below). The author, Gregory Clark, a professor of economics at the University of California, Davis, argues that for all of human history until 1800 the world was stuck in a ‘Malthusian trap’. For this entire period there was no upward trend in living standards. If anything, living standards in 1800 were, he argues, lower than in the Stone Age. Then, starting in Britain, the Industrial Revolution transformed much of the world economy so that living standards could rise rapidly. It also led to a ‘Great Divergence’ where the gap in income per head between rich and poor nations increased from four to one to about 50 to one.
World economic history in one picture (source: Gregory Clark)
The main strength of Clark’s book is that it shows clearly that pre-industrial societies were fundamentally different from contemporary ones. What we consider virtues in modern societies were often vices in the Malthusian era. For example, bad sanitation, violence and infanticide were all virtues during the Malthusian period. This is because, in an economy of a fixed size, rising populations meant falling living standards. So actions which helped reduce the population also tended to raise living standards.
Clark modifies his original schema to help explain how Britain escaped the Malthusian trap and inaugurated the Industrial Revolution. He concedes that the existence of private property rights was an important precondition for the shift, but argues that it is insufficient to explain it. Britain also benefited from an extraordinary period of stability from 1200 onwards.
In addition, the rich in pre-industrial Britain were particularly fecund. They had a relatively large number of surviving children. But, given the logic of the Malthusian trap, the number of rich people was limited. Therefore the rich suffered a downward mobility in which many of their children fell below the social level of their parents. The unintended consequence of this process was for middle-class values to be propagated more widely in society. As a result, such values – including numeracy, literacy and a dislike of inter-personal violence – became common. This diffusion of ideas conducive to development helped create the conditions for the Industrial Revolution in Britain.
At this point, it would be possible to go into a detailed debate about the real causes of the Industrial Revolution. There is a huge discussion among historians about the nature of the Industrial Revolution and a related one about the transition from pre-capitalist to capitalist societies. But for the purposes of this review it is more important to note that Clark is at least partly motivated by contemporary concerns. Whatever the merits of his historical account, the way he uses his Malthusian model to approach present-day questions is illegitimate.
As Clark says at the start of the preface to his book: ‘While the book is focused on history, it also speaks to modern economic policy. For the text details how economists, and institutions they inhabit, such as the World Bank and the International Monetary Fund, have adopted a false picture of pre-industrial societies, and of the eventual causes of modern growth. These fanciful notions underlie current policies to cure the ills of the poor countries of the world, such as those represented in the Washington Consensus.’ (1)
As it happens, neither the World Bank nor the IMF tends to spend time examining societies that existed before 1800. Their main brief is to play a role in stabilising the contemporary world economy. The main academics that Clark attacks are those of the ‘institutional school’, such as Robert W Fogel and Douglass C North, who emphasise the role of such institutions as the free market, private property and low taxation in economic development. For Clark, such thinkers provide the intellectual framework on which the Washington Consensus of free market economics is erected.
The problem is that the relationship between contemporary policy and economic history is not nearly as direct as Clark implies. There are all sorts of debates to be had about the character of economies prior to 1800. But none of them automatically leads to any particular policy conclusions about how to promote economic development today.
After a while it becomes clear that Clark is assuming that today’s impoverished societies are similar to those in the pre-industrial world. Although the theme is understated in the book, it is explicit in a recent article he wrote for the New York Sun:
‘Much of Africa is still trapped in its Malthusian past. Indeed, material consumption has fallen well below the pre-industrial norm as a result of the Western gift of modern medicine and hygiene. A host of countries, such as Malawi or Tanzania, would be better off materially had they never had contact with the industrialised world and instead continued in their pre-industrial state.
‘Modern medicine, airplanes, gasoline, computers — the whole technological cornucopia of the past 200 years — have succeeded there in producing the lowest material living standards ever experienced. Modern medicine has reduced the material minimum required for subsistence to a level far below that of the Stone Age.’ (2)
The argument here is that Malawi and Tanzania follow the logic of a Malthusian society rather than a modern one. Since their economies are stagnant, any measures that increase the population, such as the introduction of modern medicine, decrease living standards. There are more people to share the fixed amount of wealth. Clark backs up this point by showing that the consumption of basic goods – such as flour, potatoes and beef – is lower in contemporary Malawi than it was in England in 1800 (3).
Clark’s numbers may be correct, but he misses the key differences between pre-industrial societies and contemporary poor states. It may be true that prior to 1800 many societies can be viewed as inherently static. But present-day poverty should not be seen as fixed or natural. There is both a world market and the technological means to raise the living standards of the poor countries immensely.
The roots of poverty today are fundamentally different to those centuries ago. They partly reflect the inequality that seems deeply embedded in the market mechanism. Although the market system has provided great growth in many areas, it has also proved uneven and crisis-ridden.
In addition, there is a narrowing of vision about what can be achieved in relation to contemporary development (4). The idea that societies can benefit from industrialisation and urbanisation has gone out of fashion. Instead, the current development orthodoxy is, at best, to attempt to achieve the most modest forms of poverty reduction.
Today’s problems of national poverty and underdevelopment have contemporary roots. They are partly a result of a lack of ambition in relation to development. In addition, they reflect a strong inequality which is intrinsic to the market system. Looking back to societies before the Industrial Revolution only confuses rather than clarifies the problems that exist today.
Daniel Ben-Ami is a financial journalist and author based in London. Visit his website here. He is speaking in the session Trade, aid or development? at the Battle of Ideas festival in London on 27-28 October.
A Farewell to Alms: A Brief Economic History of the World by Gregory Clark is published by Princeton University Press. Buy this book from Amazon (UK).
(1) A Farewell to Alms, p.ix. Reviews of the book and extracts from the text can be found at Gregory Clark’s webpage
(2) How to save Africa, by Gregory Clark, New York Sun, 20 July 2007
(3) A Farewell to Alms, p.43
(4) See Development should mean more than survival, by Daniel Ben-Ami
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