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Global Economic History: A Very Short Introduction, by Robert C. Allen
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Global Economic History A Very Short Introduction. Oxford University Press, 2011.
- Sales Rank: #5500704 in Books
- Published on: 2011-11-15
- Binding: Paperback
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Very High Density Information
By Jerry Ward
The general question Professor Allen addresses is why some countries are rich and others poor. He notes that around 1500 CE there was no marked difference among most economies, and divergence only began when long distance commerce was enabled by the advent of full rigged sailing ships. He identifies this as the birth of globalization. The gains from this long distance trade were not enjoyed uniformly, thus beginning the "great divergence".
Both England and the Netherlands profited by this globalization, and had pulled away from the rest of the world by the 17th century. England became the home of the Industrial Revolution. This period, say 1760 to 1850, was replete with innovations in many areas, including the first steam engine.
The steam engine was the first practical demonstration that heat could be turned into power. He does a good job of describing it's early evolution and its initial impact, but he doesn't explicitly note its crucial role in opening the technical door to the much more widespread exploitation of the power contained in high energy fuels like coal and oil and, much later, nuclear fission. Escaping the power limitations inherent in animal muscle put the west on an entirely new trajectory of economic growth.
The last two-thirds of book presents a description of the economic development of many individual areas of the world and their economic interactions. In addition to GDP/head, his yardstick of comparison is often the relative wages of workers. The Economists magazine's Big Mac Index was not available in those early days to normalize currency differences, so he constructed his own: he estimated the bare subsistence wage for each country, and then compared countries in terms of wages as a factor of bare subsistence.
He describes the standard model of development: the integration of internal markets through the improvement of transportation and the elimination of internal tariffs, the protection of infant industries through tariffs, banks to produce stable financing, and mass education to upgrade the labor force. He describes its application to Russia before WWI, where it failed, and to Japan where it ultimately succeeded. In the 19th century, with singular boldness, the Japanese completely rejected the ancient cultures and practices, introduced and emphasized mass education, and began the adoption of western technology modified to their needs. In the early 20th century, full implementation of the standard model transformed them into a modern nation. A still different story was told for the USSR and for China.
Data is presented that clearly shows how GDP per worker rises dramatically with capital invested per worker throughout the world. He argues that low wage countries have remained poor because there is little incentive to substitute capital for cheap labor. This is one of Africa's many problems, still suffering from its colonial legacy.
I have one criticism: I would have appreciated more discussion of the differences stemming from different political-economic practices, such as state planning versus free-market capitalism. Issues such as the sanctity of private property and the relative economic freedom accorded individuals as it affects the level of innovation and entrepreneurship. Such factors are briefly mentioned early on, but essentially dismissed.
Overall, it is an impressive work. The data he has amassed is comprehensive, and his descriptions are truly enlightening. It is not a casual read; he is economical with words and conveys a lot of information in a short book. I regret that it was not published soon enough to be a resource for me in writing my own book, The Evolution of Riches: An Economic History of Innovation and Capitalism, the Role of Government, and the Hazards of Democracy.
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