In How the World Became Rich, Mark Koyama and Jared Rubin have produced what I think will become a beloved economic history classic, like Power and Plenty or The British Industrial Revolution in Global Perspective from over a decade ago. I fawn over a refreshingly readable book and raise a couple of concerns about the thesis:
Thank you Davis. I’m here from Marginal Revolution, and this post has been a joy to read. I look forward to my copy of the book arriving and to your next post here!
This was a great and informative review! Just a comment re: the Rodrik/IP/developmental state stuff. I think generally an issue I have with a lot of economic history that stresses the criticality of constrained governance is that "constrainment" is acknowledged without a matching emphasis on strong decisive governance (the so-called "state capacity"). For an example, a lot of the Dutch Republic's power came from its constrained governance of course, but this constrained governance allowed its state to expand its capabilities (Marjolein 't Hart has a lot of good work on this topic). It just seems like ignoring or placing the state as the antagonist of economic growth seems to be the source of K&R's dismissal of Soviet growth, skepticism of the the East Asian Tiger's IP or the uncritical embracing of Indian liberalization in the 90s. There's good work in poly sci (Mark Dincecco and Yuhua Wang) who I feel do a good job of matching constrained governance with state strength in a more cohesive story, and I'd like to see more work connecting this to economic growth. I think there must be some continuity between this statist skepticism and embracement of the Glorious Revolution as causal rather than symptomatic of growth, right?
Thanks for the kind words. I think there's something to what you say, and the anti-statist tone was a big part of what I objected to in the review (which says something, because it's a position toward which I tend to be sympathetic). I do think that the authors have a more nuanced take that you might think—Mark, for example, places great importance on state capacity in his work, and on Twitter mentioned to me that he buys "the Gerschenkron thesis that development short-cuts can be taken by followers (eps. speeding up the demographic transition or entry of women into the workforce) and the SU did do these things and reap benefits." But state capacity in this vision involves more passive competence than active management/planning and thus meshes with a "constraints" view of the state. I'm familiar with Dincecco's work and I don't think that there is necessarily a contradiction. You can have a strong, centralized state that is limited and non-interventionist, and this is the ideal (for revenue purposes) that he portrays in his 2009 paper. But yes, if you see the state as a source of "blockages" then you're more likely to see the "liberalization" as the causal story rather than activism (mercantilism, estate bills (which they mention) etc.).
Hello Davis! Thank you for this informative comment. I see now how if you see the state as a source of "blockages" you aren't necessarily against higher state strength so long as you take a sympathetic position towards a centralized but limited state like in Dincecco's paper. This nuance of state capacity as allowing developmental short cuts to follow Britain et. al is an interesting nuance, but I really am unconvinced that this is the end of the state's role.
I suppose I was just bothered by how one can tell a story of the how the world got rich, especially most rapidly in the last two hundred years, without having the role of the activist or developmental state as a greater actor in the tale, since the last two hundred years have been pretty exceptional for the institution of the state as well. I am by no means a statist as well (my error if I came off as one) and I am sympathetic to the state as a source of blockages but I am not convinced that is a holistic story, so I just found your critiques very cogent. I appreciate your comment, this kind of state as a "constraint/blockage" vs as a positive actor is an interesting dichotomy that does divide the EH "why the did the west rise" literature across (occasionally political) lines.
I think you should be a lot more cautious about accepting Rodrik's work, especially about India. Panagariya has shown in his IMF paper that the growth in the 80s was also based on liberalising reforms, which, given that they were not as far reaching, led to lower growth with much higher variance. The growth after 1991 has been substantially higher and more stable. The Indian growth story is very much 'inspite' of government, not because.
I am surprised to hear that institutions are a strength of Koyama and Rubin, because, like you, I found their discussions of institutions deeply unsatisfactory.
I confess I have read only the first half of the book so far, and I understand the limitations of a book of this sort and length, but I found their assertions about "institutions" to be vague, ahistorical, and full of lacunae. Which institutions exactly, in which regions? In which periods? (It's nonsensical to talk about "the Netherlands" before the 19th century, for instance.) Assuming them to be unchanging and classifying them as "helpful" or "unhelpful" is not the approach I would expect from a senior researcher.
They, or you, might respond that I am seemingly asking them to undertake several history degrees' worth of study of various regions around the world. Yes, I am. Children's stories are unlikely to lead to solid understanding.
Similarly, summarily dismissing the role of coal because "China had coal" demonstrates superficial understanding at best. China has thermal coal, Britain had ample easily accessible coking coal. The difference is very important: you can't make good quality metals without coking coal.
This century we are undertaking several "natural" (uncontrolled) experiments that may help clarify the roles of demographics, energy, institutions / state capacity, culture and human capital, and geography/climate/resources. I look forward to seeing the state of the discussion in the 2050s.
Thank you Davis. I’m here from Marginal Revolution, and this post has been a joy to read. I look forward to my copy of the book arriving and to your next post here!
Welcome Kyle! Thanks for reading.
This was a great and informative review! Just a comment re: the Rodrik/IP/developmental state stuff. I think generally an issue I have with a lot of economic history that stresses the criticality of constrained governance is that "constrainment" is acknowledged without a matching emphasis on strong decisive governance (the so-called "state capacity"). For an example, a lot of the Dutch Republic's power came from its constrained governance of course, but this constrained governance allowed its state to expand its capabilities (Marjolein 't Hart has a lot of good work on this topic). It just seems like ignoring or placing the state as the antagonist of economic growth seems to be the source of K&R's dismissal of Soviet growth, skepticism of the the East Asian Tiger's IP or the uncritical embracing of Indian liberalization in the 90s. There's good work in poly sci (Mark Dincecco and Yuhua Wang) who I feel do a good job of matching constrained governance with state strength in a more cohesive story, and I'd like to see more work connecting this to economic growth. I think there must be some continuity between this statist skepticism and embracement of the Glorious Revolution as causal rather than symptomatic of growth, right?
Hi Rumi,
Thanks for the kind words. I think there's something to what you say, and the anti-statist tone was a big part of what I objected to in the review (which says something, because it's a position toward which I tend to be sympathetic). I do think that the authors have a more nuanced take that you might think—Mark, for example, places great importance on state capacity in his work, and on Twitter mentioned to me that he buys "the Gerschenkron thesis that development short-cuts can be taken by followers (eps. speeding up the demographic transition or entry of women into the workforce) and the SU did do these things and reap benefits." But state capacity in this vision involves more passive competence than active management/planning and thus meshes with a "constraints" view of the state. I'm familiar with Dincecco's work and I don't think that there is necessarily a contradiction. You can have a strong, centralized state that is limited and non-interventionist, and this is the ideal (for revenue purposes) that he portrays in his 2009 paper. But yes, if you see the state as a source of "blockages" then you're more likely to see the "liberalization" as the causal story rather than activism (mercantilism, estate bills (which they mention) etc.).
Hope this helps.
Hello Davis! Thank you for this informative comment. I see now how if you see the state as a source of "blockages" you aren't necessarily against higher state strength so long as you take a sympathetic position towards a centralized but limited state like in Dincecco's paper. This nuance of state capacity as allowing developmental short cuts to follow Britain et. al is an interesting nuance, but I really am unconvinced that this is the end of the state's role.
I suppose I was just bothered by how one can tell a story of the how the world got rich, especially most rapidly in the last two hundred years, without having the role of the activist or developmental state as a greater actor in the tale, since the last two hundred years have been pretty exceptional for the institution of the state as well. I am by no means a statist as well (my error if I came off as one) and I am sympathetic to the state as a source of blockages but I am not convinced that is a holistic story, so I just found your critiques very cogent. I appreciate your comment, this kind of state as a "constraint/blockage" vs as a positive actor is an interesting dichotomy that does divide the EH "why the did the west rise" literature across (occasionally political) lines.
I think you should be a lot more cautious about accepting Rodrik's work, especially about India. Panagariya has shown in his IMF paper that the growth in the 80s was also based on liberalising reforms, which, given that they were not as far reaching, led to lower growth with much higher variance. The growth after 1991 has been substantially higher and more stable. The Indian growth story is very much 'inspite' of government, not because.
I am surprised to hear that institutions are a strength of Koyama and Rubin, because, like you, I found their discussions of institutions deeply unsatisfactory.
I confess I have read only the first half of the book so far, and I understand the limitations of a book of this sort and length, but I found their assertions about "institutions" to be vague, ahistorical, and full of lacunae. Which institutions exactly, in which regions? In which periods? (It's nonsensical to talk about "the Netherlands" before the 19th century, for instance.) Assuming them to be unchanging and classifying them as "helpful" or "unhelpful" is not the approach I would expect from a senior researcher.
They, or you, might respond that I am seemingly asking them to undertake several history degrees' worth of study of various regions around the world. Yes, I am. Children's stories are unlikely to lead to solid understanding.
Similarly, summarily dismissing the role of coal because "China had coal" demonstrates superficial understanding at best. China has thermal coal, Britain had ample easily accessible coking coal. The difference is very important: you can't make good quality metals without coking coal.
This century we are undertaking several "natural" (uncontrolled) experiments that may help clarify the roles of demographics, energy, institutions / state capacity, culture and human capital, and geography/climate/resources. I look forward to seeing the state of the discussion in the 2050s.
Very nice review. Thank you.