The Wealth and Poverty of Nations: Why Some Are So Rich and Some Are So Poor.

by David Landes, New York: W.W. Norton, 650 pages, $30.00

It's nice to know someone willing to attack every politically correct opinion in history. David Landes, a retired Harvard professor of history and of economics, has come to play, and if Edward Said or anyone else wants to play rough, he stands ready to give it back double.

Landes plays squash on the Harvard courts and in his younger days was said to have beaten regularly the members of Harvard's squash team. He writes well, too, and has read broadly, beating in this sense quite a few other Harvard types. There are few historians with as much argumentative verve as Landes, and few living economists with his breadth of learning. He has combined these talents in his big, rambling, readable book about why the West (and now the East) has grown rich.

On page after page, intense intellectual squash matches develop, a hundred or more of them, a season's play: a deceptive serve, a full-strength volley, a passing shot whipped just out of his opponent's reach. Now that he is in his 70s, Landes's game must be slowing down, and one can picture him these days using an old man's guile, and winning with it. You see a lot of that in the book, too. It's tremendous fun, delivered with folksy sophistication.

Landes's theme will outrage the politically correct: "Over the thousand and more of years...that most people look upon as progress, the key factor - the driving force - has been Western civilization and its dissemination." There. We Europeans did it. You late-comers want to argue with success? Wham!

And the way to wealth? As Adam Smith said in 1776, so Landes in 1998: Leave people alone, enforce the laws justly, provide a few public goods, and in 50 years Scotland can be as wealthy as Holland, or Korea as wealthy as France. Do as we Europeans did. Slam! Point and game.

It's the kind of book I want to write someday, a what-happened-in-history book that counters Karl Polanyi's wrongheaded 1944 classic, The Great Transformation. Polanyi's work remains a catechism of historical dogma for the left's faithful; the Marxists (who have all the best songs) have too many of the best historical books.

Landes's book is one of a number of anti-marxoid attempts to usurp the position of Polanyi as the typical New York Times reader's guide to What Happened. It's not an easy task, since economic history can be made b-o-r-i-n-g. Yet there are a number of lively contenders: William McNeill's The Pursuit of Power (1982), Nathan Rosenberg and L.E. Birdzell's How the West Grew Rich (1986), Eric Jones's Growth Recurring (1988), Joel Mokyr's The Lever of Riches (1990), and others more or less distinguished: a crowded field.

It should be crowded. We need to get beyond the understanding of the economic past that was plausible in 1848, before the development of professional history: sweet peasants, wicked mill owners, alienated workers. The Marxist view of economic history has poisoned our political lives for a century and a half. If we're going to have a future, it's urgent that we know what really happened. Landes takes us from the Stone Age to the Asian financial crisis, but his main interest is the past 1,000 years. In the year 1000 no one would have thought Europe a likely place for world leadership. By 1492, says Landes, it was a sure thing.

Landes - whose elusive politics seem to resemble Lester Thurow's or Robert Reich's - spends almost a quarter of his book attacking the notion that the Europeans did it by being empire builders. It was not by stealing from the Third World that the West grew rich, says Landes, noting at length how Portugal and then Spain threw away their advantage in a frenzy of Catholic orthodoxy.

Success came through ingenuity, which arose, he argues, from the special freedoms of Protestant Europe. Like the Northwestern School of Joel Mokyr and Eric Jones, Landes admires the Middle Ages. Far from the period of stagnation the men of the Renaissance claimed it to be, the Middle Ages, according to Landes, was the time when Europe surged ahead of the rest of the world, applying the ox plow, eyeglasses, the mechanical clock, the water mill, the printing press, and gunpowder with an enthusiasm bordering on insanity. These were all possibilities elsewhere - China or Japan or India or the Middle East - but the other places, he says, with their despotisms trying to keep society fixed the better to control and tax it, entirely muffed it. (Well, almost entirely. Landes admires Japan, which he reckons was on the way to its own industrial revolution.)

The book is comparative, as any story of Why We Got Rich has to be. As Adam Smith realized, you can't know why Britain succeeded if you have no account of why Madras or Satsuma failed. Landes's answer, like Smith's, is an optimistic - and Europe-admiring - story of Greek city-states and Germanic law leading to free institutions, contrasted with oriental despotism and God-kings. As history, it has a musty odor, because Europeans have been making the claim for two centuries. In China, said Adam Smith, "the poor or the owners of small capitals...are liable, under the pretense of justice, to be pillaged and plundered by the inferior mandarines." Concludes Landes: "All this made Europe very different from civilizations around." The rich are different from you and me: They're smarter.

And freer. The differences among European countries are to be explained the same way as the differences between Europe and China. Landes scorns "the thought control that proved a curse in Islam" and attributes to it the Muslim lack of invention - including forgetting the wheel. So too within Europe. After the age of Henry the Navigator, little Portugal stopped asking questions and stopped allowing free answers: "[T]hose immeasurable qualities of curiosity and dissent that are the leaven of thought" were simply dropped. An English diplomat in 1670 declared of Portugal that "the people are so little curious that no man knows more than what is merely necessary for him." Literacy especially, marketed from the relatively if not absolutely free presses of Northern Protestantism, makes for a lively economy. By 1900, when illiteracy in Britain was down to 3 percent (though one wonders at such a figure), in Portugal it was 78 percent.

The "Whig" story (the term comes from British history) of liberty leading to wealth is as attractive now - in view of Indonesia's troubles - as it was two centuries ago to Tom Paine. Landes argues, as did Mary Wollstonecraft, that (northern) European freedom for women, at least relative to purdah and footbinding, made for economic growth. I was stunned to find Landes, that macho squash player, expressing - in italics - my own belief that "violence is the quintessential testosteronic expression of male entitlement." Good for him. As Aristotle said, those numerous societies that enslave their women are throwing away half of their creativity.

Landes's book is wonderful bedside reading, and if read by as many people as it deserves to be it will make us all rich. Him, too. It's lively, intelligent, a wonderful piece of economic popularization, of which we need more.

But, but, but. It is popularization, and - little wonder - on many subjects it looks weak from a specialist's point of view. When Landes speaks on the subjects of his other three books - 19th-century Egyptian finance, technical change in the past 200 years, clocks in history - you believe him. His forte is the clinching anecdote. He gets less believable when he ventures into the two areas in which he doesn't claim expertise - numbers and theory.

I've known Landes and his work for over 30 years - my dissertation at Harvard was an attack on his views of British economic "failure" in the late 19th century (views he repeats without revision in the present book). What's wrong with Landes's method now is what has always been wrong with it: Like the aristocrat buying up art by the roomful, he doesn't ask "how much?" Historians can't raise the question unless they are trained in some quantitative discipline, such as demography or economics. Although Landes has taught quantitative methods, he has never troubled to learn them. So he gives lists of "factors" in the classic historiographic style, and you never know how to weigh them.

A minor instance among hundreds is his repetition of the usual calumnies against "Sicily's persistent backwardness." Backward by what standard? Where on the scale of economic success does Sicily now fall? Landes waxes eloquent: "[I]n spite of huge subsidies...the landscape is dotted with idle factories, unfinished housing developments, roads that go nowhere." Unlike what? Massachusetts? "This slough of failure and despond testifies to deep failings: ignorance, bias, want of community, organized criminality." One wonders if Landes has thought economically about what he saw in Sicily. Sicily by the standard of most of the world is a fantastic economic success. If Sicily were a country it would have an income comfortably within the top decile of the world's population. Failure?

Head-shaking disbelief is not a counter-argument, but Landes is always doing it. About A.G. Frank's notion that Europe did not break away materially until around 1800 his only reply - in a footnote - is, "Bad history." No, bad shot selection, quantitatively speaking. Recent findings in China and India have persuaded most economic historians who have troubled to examine them that in 1800 some parts of those countries were as wealthy as Western Europe. "European exceptionalism" may have its roots in the Middle Ages, but in the 18th century the plant was not much different from Chinese or Japanese or Indian varieties. Which is just what the Blessed Smith said in 1776.

As to theory, Landes's book is full of sage evocations of "theoretical" reasoning, but that sort of thinking is not his strong point. A small example among scores: He attacks throughout the book the economist's notion of comparative advantage. But of course he does not understand it. His obduracy is bound to annoy an economist. For God's sake, you can get comparative advantage right once and for all, and never again misapply it (as Landes does in about half the instances), by reading the chapter on it in any economics text. I have to agree with Paul Krugman, who is quoted by Landes as saying that nationalist economics is "based on a failure to understand even the simplest economic facts and concepts." Comments Landes: "Peremptory and dismissive." But how much patience are we economists supposed to have? When Landes says that "[c]omparative advantage is not fixed, and it can move for and against," he is combining a truism with nonsense.

Even so, we agree on an awful lot. He says, "[C]ulture does not stand alone. Economic analysis cherishes the illusion that one good reason should be enough, but the determinants of complex processes are invariably plural and interrelated." The first big paper I wrote in college about economics was an attack on the social psychologist David McClelland's notion of "need for achievement." I was a sophomore, a very wise fool, and did not agree with McClelland. Landes does agree. Of the Asian Tigers, he writes, "this achievement reflects in my opinion the culture of these societies."

I wish I knew as much now as I did as a sophomore, but I now think my younger self was wrong. You can't just drop the Sacred and Sociology (the S variables) in favor of an exclusive focus on the Profane and Profit and Price (P variables). That's what economics has tried to do since Jeremy Bentham - with some successes and a lot of silliness. To do the science right you have to control for all the variables, not just pray that the S variables won't interfere. That said, Landes and I would now get back to quarreling about numbers. He would say that S variables are not measurable. Fiddlesticks. (A drop shot: Handle it if you can.)

The trouble is that culture is startling, ironically unpredictable. "Culture makes all the difference," Landes says frequently, adding, "Here Max Weber was right on."

Fine. Let's perform a mental experiment to test how culture can "make all the difference." No fair using hindsight. Suppose in a very backward country named R the established church decides to clean up the liturgy by eliminating some old corruptions. A group of believers, themselves stupidly conservative in every way, rejects the new liturgy. Which of the following occurs?

1) The establishment is hostile to these Old Believers.

2) The Old Believers retreat into self-imposed isolation.

3) The Old Believers sink into poverty and obscurity, on account of 1) and 2).

4) The Old Believers go on to become the dominant force in the country's economy for the next two centuries, on account of 1)and 2).

This bizarre scenario played out in 17th-century Russia, and the correct answer to our quiz is 1), 2), and 4), as Alexander Gerschenkron noted in Russia in the European Mirror (1970). The example does not refute Landes; but it shows as difficult what he thinks is easy: to tell who will win. The Old Believers in Russia were the only successfully bourgeois portion of Russian society in the 17th through 19th centuries, except for an occasional Jew and lot of what Landes calls "metics" (noncitizen workers).

There was nothing easy or inevitable about this: Some minorities do well when the establishment tries to crush them and they shrink back into their own ghettoes - witness the Old Believers, but also the overseas Chinese. But some badly treated minorities just do badly. It can go either way. One is reminded of Arnold Toynbee and his famous - and empty - theory of "challenge and response." Too much challenge, as in Greenland, or too little, as in 18th-century China, and you get stagnation. It's difficult - even impossible - to say which will apply.

Landes takes a too simple view of the inevitability of what happened. It's the historian's vice: What happened, so it must have been. His main intellectual tool is hindsight. He claims, for example, that "one could have foreseen the postwar economic success of Japan and Germany by taking account of culture. The same with South Korea vs. Turkey, Indonesia vs. Nigeria."

I don't think so. If things that always eventually happen (from hindsight) are foreseeable and therefore useful for policy or journalism or politics, why wasn't Germany's success foreseen? Most economists and historians in 1945 thought Germany would take 50 years to recover. It took 15. The reason Germany's recovery after the war was called a "miracle" is because people very willing to take culture as "predictive" made wrong predictions. The error is well known in social psychology: the tendency to attribute to character what is in fact a result of conditions. Landes and I have been quarreling about character vs. conditions since 1966, historian vs. economist, S variables vs. P variables. You'd think we'd learn that it's both.

But these are learned quibbles. I can't fault Landes for not writing the book on What Happened in History that I would like to write. How can you not like a man so willing to play the game, and so willing to take on the politically correct?

To Landes, the Palestinian activist and Columbia professor of literature Edward Said is the Great Satan of Political Correctness. Of Said's charge of Orientalism, the West's misperception of the East, Landes writes, "Insofar as the critique holds that only insiders can know the truth about their societies, it is wrong. Insofar as one uses this claim to discredit the work of intellectual adversaries, it is polemical and unscientific." Landes concludes that "[t]he effort...has become an assault on knowledge." Zowie.

Landes never lets up. No region or body of scholarship is exempted. Wittfogel's "hydraulic thesis has been roundly criticized by a generation of Western sinologists zealous in their political correctness (Maoism and its later avatars are good). ...The facts gainsay them." The Aztec diet "embarrasses politically correct ethnologists, who see in such descriptions of cannibalism a justification for foreign contempt and oppression." He explains British success in India not by their violence: "[N]othing other than a reputation for unconditional honesty could have enabled Britain to maintain its empire in India at so little expense." So much for blaming an imperialism that ended 50 years ago for India's present problems.

On the still-poor Balkans: In the "absence of metics [those outsider workers], they war on one another and blame their misery on exploitation by richer economies in Western Europe. It feels better that way." Tsarist Russia: "Communist spokesmen and their foreign adulators rewrote history so as to blacken the reputation of the tsarist regime, while throwing favorable testimonies down the memory hole." Native Americans: "Many Americans are sorry now, while Europeans invite Indian chiefs to Paris and Zurich to recount the litany of white wrong-doing."

On American migration: "Some portray the great flood as a kind of huge kidnapping operation. (Europeans, especially, have trouble dealing with the repudiation implicit in this 'massive exodus.') Nonsense." Latin America: "For many Latin American historians and ideologues, it has been vital to emphasize the wickedness of the gringos who came to dominate the Americas." Landes writes, "The failure of Latin American development...has been attributed by local scholars and outsider sympathizers to the misdeeds of stronger, richer nations. Of these ideas, he concludes in italics, "Even if they were true, it would be better to stow them." About the P.C. doubt that there is anything at all to Western progress: "This line of anti-Eurocentric thought is simply anti-intellectual; also contrary to fact."

You gotta love him, squash playing, Eurocentrism, quantophobia, anti-economism, and all. Read the book.

Contributing Editor Deirdre McCloskey ([e-mail]) is John P. Murray Professor of Economics and Professor of history at the University of Iowa, and Tinbergen Distinguished Professor at Erasmus University of Rotterdam. Her most recent book is a revised edition of The Rhetoric of Economics (University of Wisconsin Press).