How the West Grew Rich: The Economic Transformation of the Industrial World

How the West Grew Rich: The Economic Transformation of the Industrial World

How the West Grew Rich: The Economic Transformation of the Industrial World

How the West Grew Rich: The Economic Transformation of the Industrial World

Synopsis

How did the West- Europe, Canada, and the United States- escape from immemorial poverty into sustained economic growth and material well-being when other societies remained trapped in an endless cycle of birth, hunger, hardship, and death? In this elegant synthesis of economic history, two scholars argue that it is the political pluralism and the flexibility of the West's institutions- not corporate organization and mass production technology- that explain its unparalleled wealth.

Excerpt

It is by now relatively easy to write a history of the development of capitalist institutions, because everyone knows what those institutions are: free markets, private property, money, deposit banking, insurance, bills of exchange, freedom to organize economic enterprises, and so on. It is more difficult to write a history of the development of the wealth of Western economies, because there is little agreement on how it happened. Perhaps we need to take a hint from the experience of biologists, who, in the last century-and-a-half, have learned that evolutionary processes in nature can generate systems, ranging from protein molecules to the ecology of a swamp, whose subtle and even devious complexities overtax human powers of understanding. There is an analogous absence of overall human design, as well as an analogous presence of accident, experiment, and survival standards, in the evolution of the West's system for generating economic growth. in any case, the West's achievement of wealth is historically unique, and the least the biological analogy can do is to warn us against the expectation that the explanation lies ready at hand.

Before we turn to the history of Western economic growth and the search for its causes, we want to raise some preliminary points. the first is the part played by noneconomic factors in the West's escape from poverty, including the part played by nineteenth-century governments. the second is the importance of organization to economic activity and a caution against the assumption that hierarchies are the only way to organize. the third is the propriety of applying the term capitalism, or any other term with the ideological connotations of a word form ending . . .

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