Book Recommendation: The Wealth and Poverty of Nations.

I Find Karma (
Tue, 31 Mar 1998 17:30:36 -0800

There's this wonderful 650-page new tome on economics available right
now from Amazon for 30% off the cover price of $30 that's worth getting
if you don't mind lugging around such an elephantine book. I was
perusing it in the bookstore earlier today and will probably wait for
the paperback version not so I don't throw out my back carrying it

The volume is called The Wealth and Poverty of Nations: Why Some Are So
Rich and Some Are So Poor, by David S. Landes, and it's a wonderful
attempt to answer the question: "What makes nations grow?"

Great economists of the past, from Adam Smith to John Meynard Keynes,
have kept the view-from-30,000-feet in mind in their various writings.
But as Dan Kohn indicated last week (at least, I think I heard him say
something to this effect), recent economists have been rather myopic in
their pursuit of narrow (often irrelevant) topics. They don't have the
guts to explore macro growth issues head-on.

Enter David Landes, an economic historian at Harvard. Karen Pennar gave
this book a warm review in the 3/23/98 BusinessWeek, which is what sent
me searching for it: "it's possible to learn a great deal from this
book, but the reader will have to shoulder the dross along with the

In this work, Landes ambitiously attempts to give an economic history of
the entire world. The locales may change, but his viewpoint is
unabashedly Eurocentric: "As the historical record shows, for the last
1000 years, Europe (the West) has been the prime mover of development
and modernity."

He credits Western success to a few key variables: the ability to use,
adapt, and invent new technologies; the encouragement of literacy and
learning; and the relative openness of and flexibility of political
systems and social institutions. Innovations that spurred growth in the
West included the essential (eyeglasses, whose widespread adoption in
15th century Florence and Venice phenomenally increased productivity)
and the serendipitous (the discovery of dyes, which led to the
development of the German chemical industry).

Landes is less concerned with the technologies themselves than the
conditions under which growth flourished. For example, he explains that
the French lagged behind the British in steel production and the
adoption of new steel technologies in the early 18th century chiefly
because the French refused to use anything but French iron ore for
reasons of national pride. The British had no such obsession with local
content and were satisfied to import their iron.

Another example: rulers of two very dissimilar nations (Catholic Spain
and Confucian China) followed similar paths in restraining learning and
the dissemination of knowledge and thereby condemned their societies to
slower growth. In this and other examples, Landes conveys much
information and draws useful parallels between past and current events.
For instance, he describes the importance of hydraulics as a symbol of
political power to the despots of ancient China -- reminding us of the
massive Three Gorges Dam in today's China. Likewise, it is hard to
consider the benefits of flexibility that medieval Europe's political
fragmentation encouraged without considering how present-day Europe's
ongoing economic union might diminish growth.

The book is a rich source of bits, even though Pennar claims the book
falls short of its goal of explaining precisely why some nations are so
rich and some are so poor (perhaps feedback cycles are a key to
understanding this?). I look forward to buying it in paperback when it
comes out then...


Breakdown of U.S. Ethnic Groups: 86% European or Caucasian (including 6%
Hispanic), 11% African American, 3% other (including 2% East Asian and South
Asian, and 0.7% Native American, Aleutian, and Inuitian).