Books: Global Economic History - A Short Introduction

 

 (Drivebycuriosity) -  The world is divided into rich & pour countries. How did that happen? Economic historians try to give an answer. Robert C. Allen presents in "Global Economic History - A Short Introduction" his own ideas on 196 pages (amazon). I find Allen`s explanations interesting and I am impressed how many facts he collected, processed and displayed. The little book is spiced with a lot of valuable tables & charts about standards of living,  national incomes (GDPs) and other economic data of the past. If you want to know how much a Florentine worker earned in the 17th century or how workers in London thrived in the 18th century, this is the book for it. I was impressed how sharp living standards in the Western World spiked in the recent 3 centuries - a real explosion.

Global economic growth was fueled by a lot of innovations, including the development of the square-rigged sailing ships, global navigation, the steamship, the Suez Canal, the railway, the telegraph, the Panama Canal, the automobile, the airplane, the container ship, the telephone, the motorway, the Internet. All of these innovations reduced the cost of international transactions, integrated markets, and brought countries into more intense competition with each other. The author observes that nations realized their "comparative advantages", an idea worked out by the economist David Ricardo in the early nineteens century. A nation focuses on the production of those goods which she can make cheaper (more efficient) than other goods. But Allen ignores other important factor, especially that book printing fostered the spreading of information and promoted so science, economics and later the industrial revolution. He also ignored that double accounting (developed in Italy in 14th century) made it possible to manage banks & other big corporations which were necessary for economic growth and to start the industrial revolution.

Allen claims that the economic development of nation was shaped by regional wages. He notices that America had high wages in the 19th century which was caused by the abundance of land. "Why should people work for low salaries in New York when they could have a farm in the West?" According to Allen the high cost of labor provided the incentive to mechanize (because machines were cheaper than workers). "High wages induced more capital-intensive production that in turn led to higher wages".

I am not convinced, this is basically the chicken-egg question. I rather believe that a high capitalization ( thanks to investments and  inventions) raises productivity and permits higher wages. But anyway. Allen claims that the successful response (to high wages) required a large pool of potential inventors. "The interplay between challenge and response made the USA the world`s productivity leader by the First World War."

Allen tries to explain the different developments of Europe, Asia, Africa, North & Latin America. He writes to understand why Africa is poor today, we must understand why it was poor in 1500, before the Europeans arrived. He explains that some tribes in West Africa specialized on cultivating yams and harvesting oil & wine from palms which did not require much work and provided enough food for subsistence. "People grew enough food to meet their own needs but nothing more, since there was nothing to buy with surplus... cultivation took only part of the year, and for the rest they enjoyed leisure". This differs from Switzerland where people had to work hard over centuries in order to deal with a harsh environment ( driveby). We also learn that slavery was common in Africa before the Europeans arrived and was the basis of many states. History is not always PC.

The little book is a good introduction and gives many suggestions to think of. The Kindle version costs in the moment of writing $6.17, less than a pint of lager.