http://www.nytimes.com/2007/08/07/science/07indu.html

In Dusty Archives, a Theory of Affluence

By NICHOLAS WADE
Published: August 7, 2007

For thousands of years, most people on earth lived in abject
poverty, first as hunters and gatherers, then as peasants or
laborers. But with the Industrial Revolution, some societies
traded this ancient poverty for amazing affluence.

Historians and economists have long struggled to understand
how this transition occurred and why it took place only in
some countries. A scholar who has spent the last 20 years
scanning medieval English archives has now emerged with
startling answers for both questions.

Gregory Clark, an economic historian at the University of
California, Davis, believes that the Industrial Revolution -
the surge in economic growth that occurred first in England
around 1800 - occurred because of a change in the nature
of the human population. The change was one in which
people gradually developed the strange new behaviors
required to make a modern economy work. The middle-
class values of nonviolence, literacy, long working hours
and a willingness to save emerged only recently in human
history, Dr. Clark argues.

Because they grew more common in the centuries before
1800, whether by cultural transmission or evolutionary
adaptation, the English population at last became productive
enough to escape from poverty, followed quickly by other
countries with the same long agrarian past.

Dr. Clark's ideas have been circulating in articles and
manuscripts for several years and are to be published
as a book next month, "A Farewell to Alms" (Princeton
University Press). Economic historians have high praise
for his thesis, though many disagree with parts of it.

"This is a great book and deserves attention," said Philip
Hoffman, a historian at the California Institute of Technology.
He described it as "delightfully provocative" and a "real
challenge" to the prevailing school of thought that it is
institutions that shape economic history.

Samuel Bowles, an economist who studies cultural evolution
at the Santa Fe Institute, said Dr. Clark's work was "great
historical sociology and, unlike the sociology of the past, is
informed by modern economic theory."

The basis of Dr. Clark's work is his recovery of data from
which he can reconstruct many features of the English
economy from 1200 to 1800. From this data, he shows,
far more clearly than has been possible before, that the
economy was locked in a Malthusian trap _ - each time
new technology increased the efficiency of production a
little, the population grew, the extra mouths ate up the
surplus, and average income fell back to its former level.

This income was pitifully low in terms of the amount of
wheat it could buy. By 1790, the average person's con-
sumption in England was still just 2,322 calories a day,
with the poor eating a mere 1,508. Living hunter-gatherer
societies enjoy diets of 2,300 calories or more.

"Primitive man ate well compared with one of the richest
societies in the world in 1800," Dr. Clark observes.

The tendency of population to grow faster than the food
supply, keeping most people at the edge of starvation,
was described by Thomas Malthus in a 1798 book, "An
Essay on the Principle of Population." This Malthusian trap,
Dr. Clark's data show, governed the English economy from
1200 until the Industrial Revolution and has in his view
probably constrained humankind throughout its existence.
The only respite was during disasters like the Black Death,
when population plummeted, and for several generations
the survivors had more to eat.

Malthus's book is well known because it gave Darwin the
idea of natural selection. Reading of the struggle for
existence that Malthus predicted, Darwin wrote in his
autobiography, "It at once struck me that under these
circumstances favourable variations would tend to be
preserved, and unfavourable ones to be destroyed. ...
Here then I had at last got a theory by which to work."

Given that the English economy operated under Malthus-
ian constraints, might it not have responded in some way
to the forces of natural selection that Darwin had divined
would flourish in such conditions? Dr. Clark started to
wonder whether natural selection had indeed changed
the nature of the population in some way and, if so,
whether this might be the missing explanation for the
Industrial Revolution.

The Industrial Revolution, the first escape from the Mal-
thusian trap, occurred when the efficiency of production
at last accelerated, growing fast enough to outpace pop-
ulation growth and allow average incomes to rise. Many
explanations have been offered for this spurt in efficiency,
some economic and some political, but none is fully
satisfactory, historians say.

Dr. Clark's first thought was that the population might
have evolved greater resistance to disease. The idea
came from Jared Diamond's book "Guns, Germs and
Steel," which argues that Europeans were able to
conquer other nations in part because of their greater
immunity to disease.

In support of the disease-resistance idea, cities like
London were so filthy and disease ridden that a third
of their populations died off every generation, and the
losses were restored by immigrants from the country-
side. That suggested to Dr. Clark that the surviving pop-
ulation of England might be the descendants of peasants.

A way to test the idea, he realized, was through analysis
of ancient wills, which might reveal a connection between
wealth and the number of progeny. The wills did that, ,
but in quite the opposite direction to what he had expected.

Generation after generation, the rich had more surviving
children than the poor, his research showed. That meant
there must have been constant downward social mobility
as the poor failed to reproduce themselves and the
progeny of the rich took over their occupations. "The
modern population of the English is largely descended
from the economic upper classes of the Middle Ages,"
he concluded.

As the progeny of the rich pervaded all levels of society,
Dr. Clark considered, the behaviors that made for wealth
could have spread with them. He has documented that
several aspects of what might now be called middle-class
values changed significantly from the days of hunter gatherer
societies to 1800. Work hours increased, literacy and
numeracy rose, and the level of interpersonal violence
dropped.

Another significant change in behavior, Dr. Clark argues,
was an increase in people's preference for saving over
instant consumption, which he sees reflected in the steady
decline in interest rates from 1200 to 1800.

"Thrift, prudence, negotiation and hard work were becom-
ing values for communities that previously had been spend-
thrift, impulsive, violent and leisure loving," Dr. Clark writes.

Around 1790, a steady upward trend in production
efficiency first emerges in the English economy. It was this
significant acceleration in the rate of productivity growth
that at last made possible England's escape from the
Malthusian trap and the emergence of the Industrial Revolution.

In the rest of Europe and East Asia, populations had also
long been shaped by the Malthusian trap of their stable
agrarian economies. Their workforces easily absorbed the
new production technologies that appeared first in England.

It is puzzling that the Industrial Revolution did not occur first
in the much larger populations of China or Japan. Dr. Clark
has found data showing that their richer classes, the
Samurai in Japan and the Qing dynasty in China, were
surprisingly unfertile and so would have failed to generate
the downward social mobility that spread production-
oriented values in England.

After the Industrial Revolution, the gap in living standards
between the richest and the poorest countries started to
accelerate, from a wealth disparity of about 4 to 1 in 1800
to more than 50 to 1 today. Just as there is no agreed
explanation for the Industrial Revolution, economists
cannot account well for the divergence between rich and
poor nations or they would have better remedies to offer.

Many commentators point to a failure of political and
social institutions as the reason that poor countries
remain poor. But the proposed medicine of institutional
reform "has failed repeatedly to cure the patient," Dr. Clark
writes. He likens the "cult centers" of the World Bank and
International Monetary Fund to prescientific physicians
who prescribed bloodletting for ailments they did not
understand.

If the Industrial Revolution was caused by changes in
people's behavior, then populations that have not had
time to adapt to the Malthusian constraints of agrarian
economies will not be able to achieve the same
production efficiencies, his thesis implies.

Dr. Clark says the middle-class values needed for
productivity could have been transmitted either culturally
or genetically. But in some passages, he seems to lean
toward evolution as the explanation. "Through the long
agrarian passage leading up to the Industrial Revolution,
man was becoming biologically more adapted to the
modern economic world," he writes. And, "The triumph
of capitalism in the modern world thus may lie as much
in our genes as in ideology or rationality."

What was being inherited, in his view, was not greater
intelligence - being a hunter in a foraging society
requires considerably greater skill than the repetitive
actions of an agricultural laborer. Rather, it was "a
repertoire of skills and dispositions that were very
different from those of the pre-agrarian world."

Reaction to Dr. Clark's thesis from other economic
historians seems largely favorable, although few agree
with all of it, and many are skeptical of the most novel
part, his suggestion that evolutionary change is a factor
to be considered in history.

Historians used to accept changes in people's behavior
as an explanation for economic events, like Max Weber's
thesis linking the rise of capitalism with Protestantism.
But most have now swung to the economists' view that
all people are alike and will respond in the same way
to the same incentives. Hence they seek to explain
events like the Industrial Revolution in terms of changes
in institutions, not people.

Dr. Clark's view is that institutions and incentives have
been much the same all along and explain very little,
which is why there is so little agreement on the causes
of the Industrial Revolution. In saying the answer lies in
people's behavior, he is asking his fellow economic
historians to revert to a type of explanation they had
mostly abandoned and in addition is evoking an idea
that historians seldom consider as an explanatory
variable, that of evolution.

Most historians have assumed that evolutionary change
is too gradual to have affected human populations in the
historical period. But geneticists, with information from
the human genome now at their disposal, have begun to
detect ever more recent instances of human evolutionary
change like the spread of lactose tolerance in cattle-
raising people of northern Europe just 5,000 years ago.
A study in the current American Journal of Human
Genetics finds evidence of natural selection at work in
the population of Puerto Rico since 1513. So historians
are likely to be more enthusiastic about the medieval
economic data and elaborate time series that Dr. Clark
has reconstructed than about his suggestion that people
adapted to the Malthusian constraints of an agrarian
society.

"He deserves kudos for assembling all this data," said
Dr. Hoffman, the Caltech historian, "but I don't agree
with his underlying argument."

The decline in English interest rates, for example, could
have been caused by the state's providing better
domestic security and enforcing property rights, Dr.
Hoffman said, not by a change in people's willingness
to save, as Dr. Clark asserts.

The natural-selection part of Dr. Clark's argument "is
significantly weaker, and maybe just not necessary, if
you can trace the changes in the institutions," said
Kenneth L. Pomeranz, a historian at the University of
California, Irvine. In a recent book, "The Great Diver-
gence," Dr. Pomeranz argues that tapping new sources
of energy like coal and bringing new land into cultivation,
as in the North American colonies, were the productivity
advances that pushed the old agrarian economies out
of their Malthusian constraints.

Robert P. Brenner, a historian at the University of
California, Los Angeles, said although there was no
satisfactory explanation at present for why economic
growth took off in Europe around 1800, he believed
that institutional explanations would provide the answer
and that Dr. Clark's idea of genes for capitalist behavior
was "quite a speculative leap."

Dr. Bowles, the Santa Fe economist, said he was "not
averse to the idea" that genetic transmission of capitalist
values is important, but that the evidence for it was not yet
there. "It's just that we don't have any idea what it is, and
everything we look at ends up being awfully small," he said.
Tests of most social behaviors show they are very weakly
heritable.

He also took issue with Dr. Clark's suggestion that the
unwillingness to postpone consumption, called time
preference by economists, had changed in people over
the centuries. "If I were as poor as the people who take
out payday loans, I might also have a high time preference,"
he said.

Dr. Clark said he set out to write his book 12 years ago
on discovering that his undergraduates knew nothing
about the history of Europe. His colleagues have been
surprised by its conclusions but also interested in them,
he said.

"The actual data underlying this stuff is hard to dispute,"
Dr. Clark said. "When people see the logic, they say
'I don't necessarily believe it, but it's hard to dismiss.' "
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