Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries
In the 1940s, Joseph Needham, a British academic, began cataloging China's achievements in science and technology in an effort to understand why they were inferior to the West's. In his 40 years of study, he found that even though China may have seemed behind in such achievements at the moment, it had led the world in science a millennium before. He concluded that Confucianism and Taoism made a Chinese scientific revolution less likely because they allowed for only slow, incremental innovation, rather than overnight breakthroughs. Still, he recognized that this was only a partial explanation. Religions are not fixed, and if China's loss of scientific leadership stemmed from its religious attitudes, then what could account for the emergence and persistence of those attitudes?
Although Needham failed to resolve this great mystery, he made it impossible for other historians to continue to ignore questions about why some societies pull ahead and some fall behind. At a time when most Western, and even many non-Western, intellectuals believed in the intrinsic superiority of the West, Needham showed that both China's apparent shortcomings and the prevailing Western supremacy needed a historical explanation. His agenda became known as "the Needham question."
Broader analogues to the Needham question exist around the world. In the Middle Ages, the Middle East was at the forefront of optics, metallurgy, and mathematics. Its largest cities, libraries, and marketplaces dwarfed those in Europe. Subsequently, over the next half millennium, the Middle East slipped behind Europe in many realms, including science and medicine, finance and business, and literacy and living standards. But just as Confucianism and Taoism could not explain China's failures, Islam, often blamed for the Middle East's shortcomings, raises more questions than it answers. If Islam's supposedly retrograde system of beliefs explains the Middle East's recent failures, what accounts for its earlier successes?
Students of civilizational development have tended to approach disparities between the development of regions in two ways. The first, called "long-term lock-in," asserts that some essential advantage, such as a location with an abundance of natural resources, efficient governance, or values conducive to innovation, makes a civilization fundamentally and inevitably superior. For example, in explaining the rise of Europe, some scholars argue that the rise of Christianity under the political control of the Roman Empire prepared the West for modernization and ultimately the Industrial Revolution, which reinforced its superiority.
The second approach identifies some short-term accident as the cause of a temporary gap or reversal of fortune. When Christopher Columbus set sail for India and found a continent blocking the way, so goes a popular short-term accident theory, he initiated a string of events that accelerated the West's economic development and allowed the West to dominate the world. Another such theory holds that the Middle East was developmentally handicapped because of the devastation the Black Death wrought in the fourteenth century.
In Why the West Rules -- For Now, the classicist Ian Morris blends these two approaches. He finds that historical accidents affected the relative performance of the East and the West, sometimes for millennia. At the same time, he invariably sees geography as the principal determinant of performance trends. The taming of nature started in the West, he argues, because it had more plants and animals conducive to domestication. And Westerners initiated the global explorations that expanded the known world because it was easier for them to cross the Atlantic than for Easterners to cross the Pacific. Yet the advantages of geography have not made the West permanently superior. Every dominant civilization sooner or later reaches the limits of its capabilities, Morris argues. As its progress slows, other civilizations may catch up and leap ahead.
Morris gives the term "the West" an elastic and curiously broad meaning. The West, he writes, first included those societies that originated in the "Hilly Flanks," an arc-shaped area now split among Israel, Syria, Turkey, Iraq, and Iran, where the domestication of plants and animals began around 9500 BC; over time, it expanded to include the Mediterranean basin, Europe, the Americas, and Australia. "The East" initially consisted of societies that originated in the area between China's Yellow and Yangtze rivers, where the domestication process started around 7500 BC; later, it also came to include the countries between Japan and Indochina. For Morris, then, what is now called the Middle East has always been part of the West. Of course, the Middle East eventually fell behind, and much of it was colonized by Europe, making its trajectory more like that of the East. If the purpose of this book is to explore "why the West rules," surely this poses a major problem -- one that it neglects to confront.
Having defined "the East" and "the West" -- however problematically -- Morris turns to comparing the relative development of the two civilizations across the centuries. He uses his own index of social development to quantify social progress. The index takes into account energy capture, or the amount of calories the typical individual consumes per day; urbanization, a proxy for organizational capability, as determined by the size of the largest city; war-making capability, measured by the quality and quantity of weapons systems; and information technology, based on how easily people can communicate. In terms of his index, Morris finds that the West led the East continuously from 14,000 BC, when the earliest known pottery was produced, to around AD 541, when the East jumped ahead. By 1100, the East's score was about 40 percent higher than the West's. The gap narrowed thereafter, and the West regained the lead around 1773 -- a lead it has maintained since. Some may criticize Morris' index as simplistic, and much of his data for premodern times are based on guesswork. Nonetheless, he manages to capture something real about the relative performances of the East and the West.
THE GOOD NEW DAYS
Early in the book, Morris notes that only the latest reversal, when the West started to pull ahead, allowed one side to colonize and subjugate the other. This point fades from view as he turns to interpreting historical events. But it is no small matter. Until the 1700s, the East and the West remained politically independent of each other, regardless of which side was ahead, and neither side enjoyed unchallenged military supremacy. The last reversal, moreover, had another unique trait: self-reinforcing growth. In both regions, the level of development had been constrained for millennia by the limitations of agrarian life. Since 1700, when world trade fell under European control, the West has developed at a dramatically accelerating rate. Today, its development, as measured by Morris, is over 20 times as high as its 1700 level. The East, with some lag, has also developed to unprecedented heights: Morris calculates its level of development to be about 13 times as high as its record level before 1700.
Modern growth is not a replay, or even a faster version, of earlier episodes. The organizational and technological innovations that are driving modern growth are continually evolving, keeping societies and the global political and economic order perpetually in flux. In turn, societies must continuously adjust their economic expectations, relationships, and routines. In Morris' telling, the difference between premodern and modern life is lost. Someone born in the age of Julius Caesar would have understood daily life in 1700. A person born in 1700 would find daily life in 2011 -- with its skyscrapers, air travel, computers, banks, cars -- bewildering.
The lack of a unifying theory to explain why the present growth spurt is so different is the book's key shortcoming. According to Morris, whereas geography defines opportunities, sociology and human motivations determine how those opportunities are exploited. But the sociological side of the book's narrative is weak. Morris describes history as the formation and fall of dynasties, political centralization and decentralization, spurts of creativity followed by inertia, and the evolution of beliefs. Yet he does not weave these stories together within an overarching theory of history. Once geography has defined opportunities, history is just "one damned thing after another" -- to use Arnold Toynbee's characterization of inadequately theorized historical narratives.
By itself, of course, the lucky geography of the West and the resources it generated through global exploration cannot explain the explosive growth of modern times. Morris' index has the East ahead of the West until the eve of the Industrial Revolution. But for centuries, Europe had been building a new type of economic infrastructure, based on impersonal exchange and a commercial life dominated by large, durable, and structurally complex profit-making enterprises. Those are the developments that fueled Europe's global exploration in the first place and prepared the ground for the Industrial Revolution. They also set the stage for the West's colonial empires. In fact, the roots of the West's economic modernization stretch back to the beginning of the second millennium, when, according to Morris' development index, China under the Song dynasty led the world. It is then that Italian families in the West started forming private medieval "supercompanies," or firms that pooled the resources for dozens of investors over generations, to conduct finance and trade. These enterprises enabled private capital pooling and accumulation on an unprecedented scale.
As they grew, these supercompanies faced coordination, communication, and enforcement problems, which induced experimentation with ever more complex organizational structures and business techniques. By the sixteenth century, profit-making European enterprises were already using a corporate form of organization. Comparably complex private enterprises could be found nowhere else, not even in the rest of what Morris defines as the West. Thus, by the time Europe started benefiting from the resources of its colonies and its own conveniently located coal deposits, it already had the economic infrastructure necessary for mass production, industrialization, and mass transportation. Geographic advantages were not enough to propel Europe forward; the institutions invented in the West were necessary to exploit those advantages.
The regions that failed to keep up with Europe could not match the West's economic infrastructure. Most important, they failed to develop institutions for pooling labor and capital on a large scale and to develop sustainable organizations capable of reallocating resources efficiently. In the Middle East, religion, and culture more broadly, mattered, but not for the cosmological reasons that Needham might have thought. Rather than Islam's supposed conservatism, lack of curiosity about the natural world, or unwillingness to learn from foreigners, it was Islam's inheritance and marriage rules that created the stumbling block. These rules fragmented capital, blocking the establishment of large and durable private enterprises. Meanwhile, in South Asia, Hinduism hindered large-scale, impersonal cooperation by encouraging families to hold capital within family enterprises.
Some believe that China, India, and the Middle East would have eventually industrialized on their own if the West had not done so first and colonized them. Morris is skeptical: "Even though Eastern and Western development scores were neck-and-neck until 1800, there are few signs that the East, if left alone, was moving toward industrialization fast enough to have begun its own takeoff during the nineteenth century." That is true. Yet having ignored economic institutions, Morris is not able to justify his claim, exposing the inadequacy of his index as a measure of development. If by 1800, Europe had already developed all the key components of the modern economy and China had not, the two regions could not have been equal in any meaningful sense. The problem here lies in Morris' use of city size as a proxy for organizational capacity. Lagos is now about as large as New York, but the organizational capabilities of Nigeria and the United States obviously differ. Nigeria is not yet ready to put a man on the moon, for example. A more refined measure of organizational capacity -- one that accounted for the organizational options available to private commercial enterprises -- would have shown Europe to be in the lead centuries earlier.
As it happened, modern economic institutions failed to emerge organically in the East. After colonization, Eastern leaders tried to overcome this deficiency by adopting Western institutions so as to achieve, in short order, the transformation that Europe went through over an entire millennium. Still today, the reforms remain incomplete. For modern economic organizations to work well, a country needs to have developed a host of complementary institutions, such as fair courts, norms of impersonal exchange, and trust in organizations. These are hard to transplant. In most parts of the East, they are still developing and spreading slowly.
As the book's title suggests, Morris' purpose is not only to interpret the past but also to identify what the future holds for the East-West development gap. By extrapolating from present trends, Morris predicts that, according to his index, the East will probably have regained the lead over the West by 2103. If China's output, war-making capacity, informational capacity, and per capita energy use keep growing faster that the West's, the East's Morris score will be higher within a few generations.
Although it is possible that China, India, and the Middle East will catch up economically, this conclusion does not follow from the book's core arguments. Those regions will catch up when the economic institutions that were responsible for putting Europe ahead really take root. There are reasons to be skeptical: centuries of poorly organized private sectors have left civil societies weak throughout the East and democratic institutions fragile. In the absence of a stable democratic system based on political checks and balances, incentives to make long-term investments in new businesses and the freedom to innovate are limited. There is no guarantee that China and the Middle East will develop healthy democracies anytime soon, and both may face long periods of political turbulence. For all its present challenges, the West may continue ruling in the twenty-second century.