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How the East Grew Poor.

Imperial weather and the poverty of nations

The "development gap" that divides advanced nations from the Third World in income, wealth, and many other measures of human welfare is a scandal of both politics and economics. The present magnitude of this gap is indicated succinctly, though incompletely, by comparisons of per capita gross national product: $450 for India, $780 for China, and $22,640 for the United Kingdom, according to 1999 World Bank figures.

Mike Davis' new book, Late Victorian Holocausts, is one of several recent attempts by sensitive Westerners, among them David S. Landes and Jared Diamond, to demonstrate that this gap is no fault of the Third World countries, nor due to any superiority of the West except in the arts of war and oppression. Davis became widely known for his contrarian views of urban growth and planning in Los Angeles, expressed in City of Quartz (1990) and Ecology of Fear(1998). In his preface, Davis offers a "key thesis" that "income and wealth inequalities" between the Third World and the rich economies "were shaped decisively in the last quarter of the nineteenth century, when the great non-European peasantries were initially integrated into the world economy."

Davis claims that the difference in living standards in 1789 between a French sans culotte and an Indian farmer of the Deccan plain were "insignificant" compared to the difference between them and their respective "ruling classes." In contrast, by the end of Victoria's reign (1901), "the inequality' of nations was as profound as the inequality of classes." In a surprising triumph of pessimism over the widely known achievements of several former Third World countries such as Japan and South Korea, Davis informs us that by the start of the 20th century, "Humanity had been irrevocably divided."

In support of this thesis, Davis devotes six chapters to late-19th-century famines in India, China, Egypt, Africa, and Brazil. Most of these were caused by drought. For reasons not easy to follow, Davis keeps referring in these chapters to the possible connection of El Nino to the droughts. (Davis defines El Nino not as the familiar Christmastime warm currents off the coast of Ecuador and Peru, but as the warm extreme of a Pacific Basin--wide oscillation in air mass and ocean temperature known as ENSO, for El Nino Southern Oscillation.) Davis finally offers a more focused discussion of the El Nino literature in two subsequent chapters.

But the connection between 19th-century weather and El Nino's oscillations back and forth in the Pacific suffers from lack of records and uncertainties about El Nino's chronology, which Davis candidly outlines in the concluding pages of Chapter 8. Such lack of proof might have led a skeptic to leave the subject to further necessary research.

Davis quite rightly argues that by the 1870s, advances in transportation had made the death toll from famines mainly a function of the adequacy of government and private relief, not an inevitable consequence of natural disaster. El Nino's oscillations had no conceivable connection to the government failures that turned the "Victorian" famines into mass killers, other than providing an opportunity for the exercise of governmental misjudgment and incompetence. Weather was surely not under British management. Under the circumstances, the issue seems a dispensable digression from the book's main argument--perhaps it was simply research the author could not bear to omit.

Chapter 9, titled "The Origins of the Third World," argues that the rise of commercial agriculture increased the vulnerability of India's villages to famine: "The forcible incorporation of smallholder production into commodity and financial circuits controlled from overseas tended to undermine traditional food security." This theme is expanded in the chapters for India, China, and Brazil, with emphasis on the adverse effects on the Asiatic poor of British tariff policy, the gold standard, the sale of Bengal opium to China, and terms of trade.

To evaluate the claim that British imperialism, political and economic, explains the development gap, we need to start by recognizing that the gap was a very long time coming. The living standards of Western European farmers and other humble folk began to improve about A.D. 1000 at a rate fast enough to be noticeable from century to century, though not from decade to decade. Asian and Islamic farmers were probably living better than Europeans in 1000, but they did not experience a comparable, long-sustained improvement during the second millennium. At some much-debated time between 1450 and 1820, European living standards inched past Asian and Asiatic standards.

Then, about 1820, as Europe settled down from the Napoleonic wars, the European rate of improvement turned up sharply, which, in this context, means an increase from an average rise in per capita real national income from about 0.3 percent a year to around 1.5 percent a year. There was no similar upturn in the Third World, and the wonders of compounding growth over 180 years produced the present large and growing gap.

Thus the gap "shaped decisively," according to Davis, in the last quarter of the 19th century, had begun to widen unmistakably by 1820, more than half a century earlier. It continued to widen through the late Victorian period, the decades until India gained its independence in 1947, and still continues to expand more than half a century later.

A large part of the present development gap is attributable to rural poverty, particularly in India and China, and Davis is right to stress rural poverty and its causes. Here, too, the roots of poverty are ancient. The limitations of agricultural technology before the 19th century required that the great majority of the people of all civilizations be farmers. Over a period of more than 5,000 years, wherever farmers produced a surplus of food over their own needs, the urban elites, possessing military power, could be counted on to take advantage of their power to appropriate their food supply and in the process reduce the farmers to penury.

Economic historian Alan Macfarlane recounts the emergence of a viable agriculture of family farms in England (in 1978's The Origins of English Individualism). He describes the history of peasant societies as a crisis cycle of population expansion, followed by a reduction in population through war, famine, or disease.

Modern economic development literature is concerned with two very different types of growth, not always clearly separated. One type roughly parallels the upswings in Macfarlane's "crisis" cycles, when societies recovering from disaster repopulate themselves and, one hopes, experience a recovery in living standards. This is a painless and ever-welcome kind of growth, in that it consists in a moderate rise in per capita output of much the same goods by people in the same occupations as before, without severely discommoding anybody. Significant technological advances are welcome but by no means required. The peaks are remembered as "Golden Ages," though they are golden only in comparison to the troughs. By the standard of modern growth economies, the golden ages were marked by short life expectancy, high infant-death rates, deficient nutrition, dwarfed human beings, coerced religious conformism, negligible medical care, widespread illiteracy, little or no vertical economic mobility, and despotic government. Tha t is what made a fall from a Golden Age truly a disaster.

The other type of growth is the one that produced the $22,640 side of the development gap. This type of growth is not linked to any historical cycles and is uniquely Western European in origin. In contrast to Third World countries, growth economies moved from labor-intensive production to capital-intensive and energy-intensive production. The result was an immense increase in physical output. Labor did not respond with a fully off-setting rise in the birth rate, as Malthus had predicted, and the effect was a shift to economies in which labor is scarce and expensive and capital and energy are abundant and cheap--though that is not the way populists usually perceive them.

Western European growth and its $22 640 incomes depended critically upon a rate of scientific and technological advance more rapid than any experienced anywhere before 1600. It entailed a slow but complete change in society and almost everybody's role in it. For example, advances in agricultural technology have reduced the current proportion of the American population engaged in agriculture from 44 percent in 1880 to 2 percent currently. The whole pattern of economic output changed, not once but continuously. Over the past 200 years, economically advancing societies transformed themselves from rural to urban to suburban, from despotic to democratic, from work-energy supplied by wind, waterwheels, humans, horses, and oxen to work-energy supplied by steam and other mechanical sources, and from majority illiteracy to nearly universal literacy. They transformed themselves also by repeated radical physical changes in their infrastructures, housing, and stocks of capital goods. The West's numerically dominant "pea santries" faded into small, government-subsidized minorities practicing capital-intensive and land-intensive agriculture.

The simplest strategy for Third World countries that want to become growth economies is to imitate, to the best of their ability, the Western institutions and practices that appear to have played a part in growth. The feasibility of doing so has been demonstrated by a number of countries that deliberately imitated Western means to economic growth and are, by and large, well on their way to imitating Western results.

In the process they have overcome most of the differences of geography, history, politics, culture, and experiences with war, foreign conquest, and natural disaster that have been advanced as reasons why progress was impossible. Even in China and India, the per capita income of urban dwellers is rising, and the South Koreans, whose colonial experience at the hands of the Japanese was exceptionally degrading, shine in contrast to the leftist famine culture of their fellow Koreans to the north.

Given the existence of an obvious and tested development strategy, there are at least two reasons for the long delay in closing the development gap. One is the intrinsic difficulty of shifting the huge rural populations of China and India to a land-and capital-intensive agriculture. The other is that objections to some or all of the institutional means of Western economic growth are part of the working ideologies of influential people in both Western and Third World polities. A faithful soldier of the left like Mike Davis should have no difficulty understanding why Asian and African societies did not quickly borrow the economic institutions that produced the gap. They agreed with neo-Marxist, anti-free market, anti-individualist ideology similar to his.

Russia was perhaps the first deliberate cross-cultural imitator, beginning with Peter the Great's Western European tour of 1697-8. The next, Japan, began its effort 161 years later, after 1859. The Chinese were much slower to decide to emulate "foreign devils" (if indeed they ever made such a conscious decision), and India may not have reached the required consensus until 30 years after Gandhi's death. In both China and India, even after a certain consensus to "modernize" emerged, the beginnings of success were postponed by experiments with socialism, so that the effective adoption, even sub silentio, of a policy of borrowing Western economic institutions can be dated as late as 1991, when the implosion of the Soviet system clarified a good many minds.

Islam, Africa, and Latin America each have their own stories, but in some countries (fortunately a declining number) straightforward attempts to follow the Western path to the pot of gold at the end of the rainbow are either very recent or yet to begin. Everybody wants economic growth, but nobody wants to give up old ways that offer high pay, status, and power.

That said, there is no reason to be optimistic about an early solution to the immense problem of Third World rural poverty, notably in China and India, but for reasons far from Davis' version of Victorian economic and political history. In India and China, as well as some other Third World economies, farmland has been scarce and people plentiful. Small farming is a high-risk business, in which long-term survival requires farms large enough and productive enough to enable the farmer to set aside adequate reserves for bad years.

If there is a chronic choice between immediate hunger and adequate reserves, the reserves will likely suffer, whether they are in cash or kind, or set family-by-family or by a village patriarch or commissar. The communal village visualized by Davis is not and never was a solution for the real system fault: too little land for too many people.

Converting a labor-intensive agriculture to a land- and capital-intensive agriculture, with far fewer workers but a much higher marginal product, is arithmetically impossible without a reduction in the supply of agricultural labor. The desirability of shifting rural workers into urban employment is limited by the depressing effects of an excess supply of labor on urban labor markets.

Europe went through such a shift, and wage rates did not clearly escape its effects until well into the 20th century. Birth rates can change, as is illustrated by lower birth rates in cities almost everywhere. But the circumstances that make large families appear highly desirable in rural areas are not easily changed, and policy attempts to reduce birth rates lead to intractable, highly emotional conflicts over religion, sociology, morality, and politics. Those conflicts are unlikely to be resolved by discovering an obligation in urbanites or foreigners to subsidize Third World rural poverty indefinitely. The Indian and Chinese farmers most immediately concerned may not think a solution that ends their way of life is worth the cost.

L. E. Birdzdll Jr. a clawyer, is co-author with Nathan Rosenberg of How the West Grew Rich: The Economic Transformation of the Industrial World (1986).
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Title Annotation:Review
Author:Birdzell Jr., L. E.
Publication:Reason
Article Type:Book Review
Date:Aug 1, 2001
Words:2269
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