A Farewell to Alms

I have just read A Farewell to Alms by Gregory Clark. The book is subtitled a Brief Economic History of the World, but it is most an attempt to understand the causes of the industrial Revolution in in England and Europe.

Clark amasses an amazing array of statistical information and uses a standard growth model to determine the cause of growth. I am a bit uneasy about this. I know how hard it is to produce reliable statistics for the current period, so calculating reliable measures of production and capital and labour inputs for earlier centuries must be fraught with difficulties. International comparisons compound the problems.

Nevertheless, Clark produces some very interesting results. For example, he shows that the traditional view that the Industrial Revolution created misery for the working classes is wrong.

By 1815, real wages in England for both farm labourers and urban unskilled had begun the exorable rise that has created affluence for all.

Nor it is the case that the gains to land and capital exceed those of labour. From 1790 to 1860, real wages in England rose faster than real output per person.

The innovating, the owners of capital, the owners of land, and the owners of human capital all experienced moistest rewards, or no rewards from the advance in knowledge. The modern growth, right from the start, by benefitting the most disadvantaged groups, particularly unskilled workers, has reduced inequality within society (271).

Land in the long run recovered none of the gains from the Industrial Revolution. Physical capital owners also received none of the gains from growth. Total payments to capital have expanded enormously since the Industrial revolution, but only because the stock of capital grew rapidly (275).

The Industrial Revolution in England in 1760-1860 saw dramatic changes in the English economy. The upturn in productivity growth rates was a long drawn out process. The advancing innovation began much earlier (257).

The textiles innovators of the industrial revolution, even those who were successful and became famous, typically earned small returns. James Kay who invented the flying shuttle in 1733 died in poverty. James Hargreaves who invented the Sinning Jenny in 1769 died in a workhouse.

Clark argues against the institutional view of development, which has become popular in recent years. He argues that cultural change led people to develop economic habits—hard work, innovation and education.