As Amazon readers may note this is a controversial book, generating more than 140 reviews since it was first published in 1998. The continuing interest is due at least in part to its promotion by some political conservatives as an answer to books like Guns, Gems, and Steel by Jared Diamond. Indeed the very relevance of this book to contemporary policy-making is the fuel that maintains the flames of a healthy debate between those on the Left and Right. Landes' arguments are forceful and convincing as far as they go and his book is essential reading for every student of world history and economics. Whether his model takes us ultimately in the direction we as a civilization really want to follow is a more subtle and profound question.
First, let's refute some false charges against Landes. He is not a racist, or an apologist for capitalist exploitation, or an ethno-centrist. He fully acknowledges the influence that geography and natural resources have on a nation's development potential and his critique of European colonialism is devastating. He completely rejects the theory of comparative advantage and long sections of the book are devoted to describing the exploitation of women and children in the early industrial periods of England and Japan.
Landes is equally critical of forces that restrict or deny freedom of thought, showing clearly how they held back nations that should have played a more dominant role in world economics. In the case of European development the single most important villain was the Catholic Church but authoritarian and totalitarian regimes of all stripes come in for condemnation.
In a nutshell Landes argues that cultural values like honesty, thrift, initiative, respect for property rights, and openness to new ideas are the key determinants of whether nations succeed or fail economically. We've heard this argument before and Landes explicitly acknowledges his debt to Max Weber, the nineteenth century sociologist who popularized the idea of the `Protestant ethic' as a historical force.
China is a major test case for Landes. Despite an impressive lead in technology, from gunpowder to printing, during the early years of European expansion, China failed to take advantage of that lead and came under European domination. The problem was not a lack of technical ability on the part of the Chinese but the fact that the nation was controlled by an imperial court that had no interest in using practical knowledge. The people at the top had everything they needed and saw no reason to allow local entrepreneurs to develop a free market economy. Such an economy might create local power centers which could challenge central authority so all such efforts were quashed before they could begin.
The centralized totalitarian rule of Chairman Mao in the twentieth century can be viewed as just a modern manifestation of this continuing characteristic of Chinese civilization. When, after Mao's death, the communists changed course and decided that capitalism was not so bad after all, the result has been the fastest growing economy in the world, fueled by foreign investors who had enough confidence that they would see a return on their investment. All of which seems to prove Landes' argument that initiative, openness to new economic (but not political) ideas, etc. bring wealth to a society just about every time.
At least for some in the society. The problem for emerging economic giants like China and India is that only one in five, chiefly city dwellers, enjoy the fruits of their society's newfound prosperity. As to how to solve this problem of equitable distribution or the problem of workers who lose their jobs to cheaper labor markets overseas Landes admits he has no answers.
Thus, The Wealth and Poverty of Nations is a splendid analysis of world economic development up until the beginning of the 21st century but it does not address the really profound problems now emerging. In particular it says nothing about the coming revolution on the horizon brought about by genetic engineering, robotics, and nanotechnology. Nor does it address the equally important issue of global economic fragility due to extreme interdependence and complexity. For these the key books are The Collapse of Complex Societies by Joseph Tainter, arguably the most important book of the 20th century; Collapse: How Societies Choose to Succeed or Fail by Jared Diamond; and, if one is up to a darker but nonetheless carefully reasoned analysis, The Long Emergency by James Howard Kunstler.
Society is far more fragile than most Americans realize. This reviewer, having lived and worked in places like Cambodia, Rwanda, Bosnia, El Salvador and many others, knows from first hand experience that the civilization we take for granted is a frightfully thin veneer. Once shattered it cannot be easily restored. Nor should we be lulled into the false belief that it could never happen here. We have only to look at our government's grossly incompetent response to a catastrophe affecting just a handful of states (Hurricane Katrina) to realize the impossibility of an effective response to a catastrophe national in scope.
Which is why The Wealth and Power of Nations and the others cited above are so important. Heaven forbid that an economic or natural catastrophe should thrust upon us global political and economic disintegration but an honest analysis must admit the possibility. Should that happen we may hope that the wisdom and insights contained in books like these will guide those who survive toward a new, wiser, more responsible, and more gentle civilization.
