Book Report: Economics and World History, Myths and Paradoxes

I’m a little more than halfway through Paul Bairoch’s Economics and World History: Myths and Paradoxes. I wanted to organize his major findings on the history of industrialization into two sets and put them together to draw out some larger observations.

In the discussion below, “developed” = industrialized, as in Europe, Russia, US, Canada, Japan (at least from the late 1800s on), and Australia. “Third World” includes all other countries up until the late 20th century. By the end of the 20th, China, Brazil, India, South Korea, and Singapore all move out of this category to varying degrees.

Set one: The history of Western industrialization

  1. Britain was the first to industrialize and had a nearly 150 year head start on most of Continental Europe by the early 1800s.
  2. Nearly all industrializing countries developed under strong protectionist measures, though the level of protectionism varied over time and location. A few small nations filled free trade niches.
  3. A strategy to maximize gains from development is for the leading industrial power to switch from protectionism to free trade and encourage its less developed competitors to adopt free trade as well.
  4. Britain’s enormous head start led it to push for free trade in Europe by the 1800s. It succeeded for a brief window from 1860 – 1880, but other Continental powers eventually went back to more effective protectionism.
  5. This free trade period is coincident with an economic depression in Europe, though causation is not completely clear.
  6. The US consistently had very high tariffs on imports, generally the highest of all developed countries, right up until the end of WWII. It switched to free trade in the post-war era in order to maximize gains from its position as “leading industrial power,” much like Britain in the pre-war era.
  7. Historically, the US tended to grow fastest when it had higher tariffs and its competitors engaged in free trade.
  8. Industrialization among the Western developed countries was achieved largely with materials and energy from the developed countries. Some numbers are warranted:

“Therefore, on the eve of World War I when the developed world already had a volume of per capita manufacturing production some seven to nine times higher than that of the world in 1750, 98% of metal ores used by the developed countries came from the developed world; 80% of its textile fibers; and, as we have seen, over 100% of its energy [due to next exports to the Third World]. In terms of the volume of the rest of raw materials (such as those used in glass, cement, paper, and clay industries), the degree of local autonomy was over 99%.

…As a very approximate estimate of the self-sufficiency of the developed countries during the 1800 – 1913 period I would suggest 96 – 102% (the upper figure implying some room for export).”

  1. Enormous imports of raw materials from Third World countries into developed countries is a post-WWII phenomenon in all but a handful of cases.
  2. Europe was likely just as poor as the Third World when it began to industrialize. It had little or no inherent advantage in resources.
  3. Colonialism was made possible by the Industrial Revolution, not the other way around.
  4. Colonial empires tended to grow slower than other developed nations, probably because they diverted more resources to administration, the military, and trade with less developed areas.

Set two: Impacts on the Third World

  1. The Third World had free trade imposed on it by the developed world powers and was not allowed to protect its markets from imported goods. In a few cases (e.g. the Ottoman Empire), free markets were already-existing state policy, and these polities still tended to do poorly.
  2. Up until 1938, the total volume of production exported by developed countries to Third World markets was approximately 1.3 – 1.7% of total developed world production, with Britain as an extreme outlier at 4 – 6%. If measured as a fraction of total exports, the average was around 17%. Half of this (9%) was exports from Britain to its colonies, the remaining half was from all other developed nations combined.
  3. The effects of just a few percentage points of total production being exported to a forcibly non-protectionist Third World were devastating. A tiny portion of a vast market is capable of destroying a vast portion of a tiny market.
  4. Subsequent deindustrialization of the Third World resulted in a loss of roughly 70% of its total industrial capacity from 1750 to 1913. More remote regions, especially in China, “only” suffered about a 40% loss, while others lost upwards of 95%.
  5. Exportation of cash crops from the Third World to developed countries increased greatly while deindustrialization took place, leading to poorer land for food crops, export of profits (foreign-owned plantations backed by militaries), and loss of political rights as local and foreign elites sought to profit.
  6. Colonization brought immense population growth in some Third World areas, but concomitant industrialization to support this population was not allowed to happen.
  7. The combination of forcibly open markets, deindustrialization, intensified cash crop exports, and large population growth essentially destroyed the welfare of the Third World. Standards of living in these countries in 1950 were lower on average than in 1800. It is only in recent years, with the ascension of China, Brazil, South Korea, India, and others, that living standards have begun to catch up a little.

Observations

Bairoch himself notes that what happened to the Third World wasn’t necessary, not even on “greater good” utilitarian grounds. There was no greater good to the devastation. On the one hand, it is a relief that industrialization can occur without necessitating the exploitation of an enormous hinterland for resources. On the other, we see the horror of what can happen when more technologically advanced and organized societies exert just a small portion of their energies toward exploiting their weaker neighbors.

The Third World absorbed only a very minor portion of the developed world’s total output but was conquered and economically destroyed by it. It’s exposure to only a small fraction of developed world markets did this, and it was kept from adapting by the owners of those same markets. The developed world was mostly self-sufficient up until the two world wars. Forays into the Third World were for political aggrandizement, power politics, and the enrichment of a few countries (*cough* Britain *cough*) and a few well-connected sectors within those countries.

This provides some new perspective on the Native American genocide in North America as well. If I may borrow from Jared Diamond, in places without exposure to the germs of Europe and without the same level of urbanization to breed their own “supergerms,” plague was the first and major impact. This was then followed up by direct military confrontation and displacement of the weakened and reduced populations. It’s easier to justify the confiscation of an entire continent if there aren’t so many people living there to protest in the first place. Germs paved the way for aggressive military expansion and eventually complete replacement.

In parts of the globe that already had some contact with Europe and had a long tradition of dense settlements, plagues had a smaller effect but economic imperialism enforced by overwhelming military superiority carried the day. The destruction of these other regions still only required a small fraction of the developed world elite to want to turn Third World societies into their own private cash cows and playgrounds (e.g. the Belgian Congo). However, minus the biological warfare capability of Europe that presented itself in North America, the populations in these other regions largely survived even if the more sophisticated portions of their political economies were heavily damaged or destroyed.

Bairoch’s research shows that industrialization occurred thanks to protectionist policies in most countries, and that free trade is typically used by more industrialized countries to exploit less industrialized ones. More advanced countries typically produce more and better goods, so removing import barriers in other countries allows their superior products to beat local products and their superior numbers to flood the market. However, superior free trade countries are themselves making a trade-off, as once they “win” in some subset of foreign markets they end up with high profits but low motivation to improve. They can become complacent monopolists and slowly lose their edge over other countries that have not opened up to them and which have been actively catching up.

That is not to say that free trade must always used in this manner, as relatively equal countries could probably engage in it and not suffer. Countries such as the Netherlands did well under free trade regimes, but they are small and fill more of a niche role in the global economy. Even Britain, the champion of free trade in the 1800s, benefited from protectionist policies for well over a century prior. To borrow from Erik Reinert and The Other Canon, trading partners should be as equal as possible, and any trade between more advanced and less advanced areas must be performed very carefully or not at all.

I also can’t help but think that the Third World as portrayed by Bairoch has many parallels to Jane Jacobs’ observation about what happens when city capital, markets, etc. reach out into less developed supply regions unequally. Jacobs theorizes that there are a handful of economic forces that cities exert on their rural hinterlands. When in balance, this hinterland becomes absorbed into a larger “city region” and prospers. When unbalanced, when only a few of these forces function correctly or at the right time, the hinterland is impoverished, depopulated, or otherwise warped and the city simply expropriates from it rather than absorb it. While it wasn’t necessary for the developed countries to interact with the Third World as they did, they seem to have exhibited similar dynamics. Since cities are where manufacturing and technological development happens, one could recast the developed nations as alliances of cities under larger political banners, reaching out into the global hinterlands. But I suspect that much of this outreach was promoted not by the cities themselves but by the larger state political apparatus and high-level industrial elites, leading to forced and premature interactions characterized by exploitation and power-seeking rather than mutual trade, and ending in warped economies and societies around the world.

This book was written in 1993, and its curious to note that China hardly rates a mention in the present tense. It has, by page 111, thus far only been referenced in the colonial period and further back. This is a clear reminder that in only the last 20 years (roughly 1995 – 2015), China has gone from “economically depressed Third World country that might be on a bit of an upswing” to “second largest economy on the planet and rapidly gaining on the US.” The time to industrialize, even for a country of 1 billion people, has shrunk from centuries to a few decades. Industrialization is a self-reinforcing process—the more capacity to produce that is out there, the faster capacity to produce can be developed. It is a problem with a known solution set, though it does give rise to further problems that are remain unsolved.

Finally, the post WWII period saw an increase in the exploitation of resources in the Third World by the developed world, with some moderation starting in the 1980s. I don’t mean to downplay the tragedies and horrors of the colonial period from 1750 to 1950, but it appears that in terms of control and exploitation of foreign resources, the developed world must be worse today than it was at the height of imperialism. Perhaps WWII created a system of international bodies that replaced direct state/empire ownership and allowed the people of the developed regions to increase the use of corporate or indirect ownership and exploitation. This may be related to the trend, since the late 1960s in the US at least, of abrogating political power to distribute wealth to “the market” as a means to justify unpalatable policies via impersonal “market forces.” From the point of view of global elites, it’s more efficient for people to believe in the power of markets, that the world just works a certain way, instead of having them believe it’s forced on them by overt state power backed by wealthy and well-connected individuals.

In the final analysis, the post-WWII period has been dominated by a free-trade advocating, hugely militarized superpower that oversees an international system of extraction that exceeds the colonial period in volume if not in brutality. This superpower advocates freedom, democracy, human rights, and development, while perched atop a system that actively suppresses them.

The net loss to human developmental potential was bad enough from 1750 – 1950. Since then, it has been staggering.

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Death Is a Disease

The one that takes us all in the end, and one which we remain strangely hesitant to actually cure.  There are so many other diseases that we all agree should be cured and prevented, such as AIDS, cancer, diabetes, and various afflictions of the circulatory, digestive, nervous systems and more.  The entire point of trying to cure these diseases is so that we can all live better and longer lives.

Why do we stop short of advocating a cure for death by old age?  The argument I often hear is that it’s not natural to do so, that we have evolved (or been granted by a higher power) the ability to live for a particular length of time on this Earth.  But by curing someone’s cancer, we enable them to live longer than they would have in the absence of treatment.  Why are those extra years valid, but extra years gained beyond the ceiling of about 90 are not?

I would have died at age 23 without chemotherapy drugs developed in the past half century.  Why are the years that I live from 24 to 90-ish (I hope!) acceptable, and why are the years that I could potentially live past that, using life extending technologies, not acceptable?  If I was born not in 1982 but in 1882, the cancer would have quickly killed me.  But now that treatments have been developed, we use them and we accept that as normal.  For all of human history and pre-history, up until the mid-20th century, aggressive cancer at 23 would mean death.  That’s a span of hundreds of thousands of years, and I am lucky enough to live in the 50 years (and counting) where I could be cured.  If we go by how things used to be in human societies or how they still happen among other species, then there is nothing natural about the entire field of modern medicine.  Everything from vaccines to antibiotics to laser eye correction goes out the window.

Whether it’s natural or not is a moot point.  We have developed certain capabilities that measurably improve and extend the lives of billions, and may continue to do so if we choose.

At this point, counterarguments go two possible ways.

First, it is immature to want to live forever.  I hope I’m not creating an easy strawman here, but I have actually come across this argument.  And it misses something important.

Immortality is only a utopian concept, something to aspire to that is probably not achievable.  Someone may be made capable of living forever, but they may only be able to do so inside a completely isolated environment, say, on a minor planetary body orbiting a red dwarf star outside of any major galaxies or superclusters.  Very isolated, you might stand a chance to see the heat death of the universe.  But accidents happen.  Intentional destruction happens.  Apathy and ennui happen.  The immortal will die.  Most people will probably just want to at some point, for a variety of reasons.

Immortality gives people the option to choose how long they live, or at minimum gives them the option to live more than their allotted cap of 120 years.  Immortality means opening up this range and giving us the choice to live longer.

It may indeed be immature to want to live forever, but it seems quite mature to decide how long you will live, and, barring accident or malicious acts, to choose the place and time of your death.  If someone thinks they want to live for one million years, I want them to have that option.

The second argument is that society could not survive the transition to immortality, that the cure would be worse than the disease.  I take this very seriously.  Any discussion about people living longer must touch on the topics of suicide, reproduction, and social order.

Life extension, especially to allow for immortality, requires a cultural shift.  Suicide is currently stigmatized as unnatural, it is restricted and illegal, even sinful.  On the other hand, having children is expected, natural, promoted, and given a relatively laissez faire treatment.  It’s up to parents to decide how many children they will have, and even giving them the option to choose to restrict this number is mired in controversy over birth control, abortion, and family planning.

A society containing immortals will have to moderate and in some ways gently reverse these positions.  If living forever is an option, then choosing not to do so must be one as well.  Suicide must be allowed as a valid choice that anyone may make, though with due accounting for the mental health and circumstances of the individual so choosing.  Depending on the circumstances, choosing to age until death could be considered a form of suicide.

Reproduction must become something which is rarer and much more controlled, with control exercised either via communal norms or more direct authoritative intervention.  The history of state intervention in reproductive choice is terrible, but this is territory we must revisit and correct if we’re to pursue life extension.  On a planet heading for nine billion people, we’d be insane not too.  The problem lies not with the very idea of regulating our numbers, but with the mechanisms for doing so and any abuses perpetrated through them.

This latter concern brings the conversation up to a higher institutional level.  If there are immortals, and if people do want to keep reproducing, we must provide room for the newer generations to live and experiment.  Death is the means by which time clears out the preceding generations and gives the young a chance to live and adapt, albeit constrained by the society that their forbearers created.  Eliminate death and you risk removing the freedom of the young and replacing it with the accumulation and possible stagnation of the immortals.  (An aside:  One perspective on human civilization is that it is the means by which the slow grind of Darwinian evolution is replaced by a much quicker technological Lamarckian process.  In this view, the idea of non-reproducing immortals does not halt evolution and change since that evolution now takes place via fundamentally different mechanisms than in the past.  Instead, the problem becomes one of cognitive stagnation and ideological lock-in.  People’s minds are flexible, but how flexible will they be after one million years of life?)

The general form of the solution is to trade time for space.  You can live forever but you can’t stay here.  Make room for the young, make room for the new, go out into space and live there.  Retain a small number of immortals to oversee the proper functioning of this system among the young.  Treat Earth and certain other locations as renewable resources of human lives and minds, as fresh injections into the larger immortal societal superstructure.  We may even be able to do this just on Earth if we choose to stay, with the immortal living in enclaves, arcologies, etc., though lack of physical distance is likely to increase the chances of breakdown.

Develop a system where the old and immortal only intervene in the affairs of the young and/or mortal to keep the whole arrangement viable.  Otherwise, let the young and mortal voluntarily choose to join the immortal and, once they join their ranks, be subject to restrictions on their actions.  Call it the “Heaven Model” of immortality.

I can see a few different paths this would take, and the system would need additional controls or else risk spiraling out of control as the ranks of the immortal swell over the eons.  But the point is that societies and cultures adapt and change and we can adapt to living much longer lives.  It will require planning, foresight, and compassion, all of which are in very short supply among those who lead our global civilization right now.

That will have to change too.