Saturday, August 25, 2012

On global inequality

Western Europe began to overtake the rest of the world long before it established colonial empires in Africa, Asia, and the Americas (source)

In Why Nations Fail, economist Daren Acemoglu sees global inequality as a legacy of colonialism. Wherever European settlers were numerous enough, they formed inclusive, democratic societies that aimed for sustainable growth. Wherever they were few in number, they created exclusive, undemocratic societies that sought to extract resources and do little else.

Colonialism thus caused a “reversal of fortunes”:

Among the countries colonized by Europeans, those that were more prosperous before colonization ended up as relatively less prosperous today. This is prima facie evidence that, at least in the sample that makes up almost half of the countries in the world, geographic factors cannot account—while institutional ones can—for differences in prosperity as these factors haven’t changed, while fortunes have. (Acemoglu & Robinson, 2012b)

Acemoglu is half-right. These differences in fortune are at least partly due to the different ways human societies organize themselves, i.e., their “institutions.” But is European colonialism responsible? Would non-European societies have continued onward and upward had it not been for the great European expansion that began around 1500 AD?

These questions have caught the interest of another economist, Michael Cembalest, who has charted per capita GDP in different world regions over the past two thousand years (Thompson, 2012). His conclusion? Europe, and Western Europe in particular, had already overtaken the rest of the world by the year 1500. The relative poverty of the non-European world cannot therefore be due to European colonialism. Instead, the arrow of causality seems to run in the other direction. Europe was able to expand into Asia, Africa, and the Americas because it already had a lead over those regions socially, economically, and technologically.

Europe’s rivals

This conclusion is all the more certain if we look at the two regions that still rivaled Western Europe in 1500. One was the Muslim world, centered on the Ottoman Empire. The other was East Asia, with China as its center. Neither region would suffer European encroachment and colonialism until much later, essentially no earlier than the late 1700s. But by then Western Europe had an even more commanding lead.

Acemoglu is right in saying that failed states suffer from ruling classes that seek to plunder wealth rather than create wealth. He is wrong, however, in seeing such rapaciousness as a perverse result of European colonialism. This mentality actually used to be normal among elites throughout the world, including those of Western Europe.

All states originate in warrior bands that seize power with a view to plunder and self-aggrandizement. In so doing, they seek to keep the plundering to themselves. Rival bands are outlawed, and the use of violence greatly limited. The State thus becomes a means for pacifying society and providing an environment that favors people who create wealth rather than steal wealth (Frost, 2010).

In time, this new economic environment leads to a new cultural environment. The violent male goes from hero to zero. Instead of being a desired sexual partner and a role model for younger males, he becomes a despised criminal to be tracked down and killed. The role model now becomes the industrious family provider. This cultural evolution is described by Gregory Clark with respect to England from the 11th century onward. With the pacification of society and the State’s monopoly on violence, successful individuals were now those who would settle disputes peacefully and display thrift, foresight, and sobriety—what would become known as middle-class values (Clark, 2007; Clark, 2009).

This process can lead to steady economic and material advancement. But it can also abort. There is no reason to assume that Europe’s rivals would have kept on going onward and upward. In fact, they were developing serious internal contradictions long before Europeans were able to exploit these weaknesses for their own benefit.

In some areas, like West Africa, this cultural evolution stalled during the early stages of State formation, specifically the one where the State imposes a monopoly on the use of violence. Lasting internal peace was impossible because of the large surplus of single males, itself due to a high polygyny rate. For these excess males, war of any sort was often their only means of securing women and becoming real men (van den Berghe, 1979, p. 65).

Ottoman Empire

Elsewhere, Clark’s model of cultural evolution would abort at a later stage. This was the case with the Ottoman Empire, which by 1500 had encompassed the Middle East, North Africa, southeastern Europe, and much of Ukraine and southern Russia. Yet pacification within this territory remained incomplete. Even at the height of its power, the countryside was often controlled by warlords, called ayans, who commanded their own private armies. Typically, the Ottoman state would try to co-opt the most powerful ones by appointing them to official posts or endeavor to play one off against another. And typically the results were disastrous. Furthermore, since the ayans were Muslim, effective action against them often meant arming the empire’s Christian subjects, but such action offended the sensibilities of Ottoman leaders (Jelavich & Jelavich, 1977, pp. 16-17, 28).

Thus, societal pacification was much less complete in the Ottoman Empire than in Western Europe. It was also largely confined to the empire’s non-Muslim subjects, who could not serve in the army and were normally forbidden to bear arms (Jelavich & Jelavich, 1977, pp. 5-6). They were thus the ones who would experience the kind of economic and demographic dynamism that was already making Western Europe so successful. Trade and industry became dominated by Greeks, Armenians, and Sephardic Jews. Slavic nations like the Bulgarians were able to rise from a position of subservience to one of relative dominance:

Thereafter [after 1829] Bulgaria became the chief supplier of food and of textiles for uniforms, blankets, and other military needs. From 1830 until 1878 the country enjoyed the market of the entire empire. It traded its agricultural products, including grains, honey, wax, silk, cattle, wine, and also manufactured goods such as pig iron, leather items, iron and metal work, and shoes and clothing. An active cottage industry specializing in woolen cloth developed in the Balkan Mountains (Jelavich & Jelavich, 1977, p. 129)

In contrast, Muslim Turks avoided trade and tried to become rentiers of one sort or another, e.g., landowners of estates worked by tenant farmers, soldiers in the pay of the army or local warlords, or civil servants:

It was estimated that half the people of Istanbul lived off the state in some way. Many, both in Istanbul and in the provincial capitals, became unsalaried hangers-on of pashas, hoping that position or graft would come their way. The crowd of relatives and parasites in the anterooms of every high official was one of the great curses of Ottoman administration, leading to favoritism, inefficiency, and bribery (Jelavich & Jelavich, 1977, p. 111)

The Muslim population thus missed out on opportunities in the expanding market economy and, hence, on opportunities for demographic growth:

By the end of the eighteenth century the Muslim population had entered a period of comparative economic and moral decline. […] This process of decay was clearly illustrated in the eighteenth century in the changing demography of the Balkan towns where Christian and national elements formed an increasingly larger proportion of the population (Jelavich & Jelavich, 1977, pp. 6-7)

We see here the same sort of change that Gregory Clark has described with respect to England: a steady expansion of what would become the middle class at the expense of less productive classes (Clark, 2007; Clark, 2009). During this early phase of capitalist development, early marriage and childbearing were the easiest way for a successful farmer or artisan to expand his workforce. Through downward mobility, such family lineages created an ever larger middle class while steadily replacing the lower classes through downward mobility. By 1800, they formed the bulk of the English population.

In England, this process of population replacement strengthened the country. In the Ottoman Empire, the consequences were different. As the Christian subject peoples grew in numbers and relative wealth, they increasingly saw secession as both feasible and desirable. What other option was there? The Ottoman Empire would never come under their control, and even the possibility of joint Muslim-Christian rule seemed unrealistic. The empire was, by definition, a Muslim state.


What about China? Here we see many similarities with Western Europe: a steady demographic expansion of middle-class lineages at the expense of the lower classes (Unz, 1980). Yet this process failed to translate into middle-class domination of Chinese society. Nor did it form a basis for sustained economic growth and technological progress. Indeed, from the 11th century onward, China entered a period of stagnation and relative decline.

One reason was that power fell into the hands of foreign elites: first the Mongols and then the Manchus. China’s population actually declined during the 12th and 13th centuries as a result of Mongol depredations. But the most lasting damage was done by the Manchus, who came to see their own subjects as potential enemies:

Some Chinese writers have argued that the conquest by the Manchus in 1644 (the Qing Dynasty) was a major setback for China. Thanks to inventions like paper and the printing press, China was arguably on the path toward capitalism. But under the Manchus, the amount of cultivated land fell, gunpowder weapons and naval technology was lost almost completely, and scientific thought was suppressed.

Deepak Lal follows this line of reasoning in greater depth. After 1433 the Chinese abandoned their navy and began to restrict foreign trade and contacts. The shipbuilding and sea-going skills thereafter degenerated. And China remained in relative isolation until the 19th century. This closure to the outside world amounted to a closing of the Chinese mind, comparable to that in Japan following its adoption of the policy sakoku under the Tokugawa. (The Great Divergence, 2009)

Chinese merchants were also impeded by the slow development of a true market economy. Economic transactions generally occurred face-to-face between buyer and seller in a specific location, either a shop or a marketplace. That was the “market.” The underlying reason seems to have been a low level of trust—a problem that still exists in China—which may in turn have reflected an incomplete pacification of Chinese society, as seen in the prevalence of banditry well into the 20th century. There was thus a strong tendency to favor close friends and kinfolk, while feeling indifferent to anyone beyond this charmed circle. In the absence of a high-trust environment, China became an economy of markets but not a market economy. Economic activity tended to be confined to specific places and specific points in time.

This lack of trust beyond close friends and kin might have reflected the family-centeredness of Chinese religions, particularly Confucianism, and their correspondingly weak and passive role in society beyond the family level. In European societies, religion assumed a more active and binding form, to the point that it could even dictate how the elites should behave (Fukuyama, 2011).


Circa 1500, the European world began a great expansion that would extend its domination over most of the planet. This expansion was far from fortuitous and seems to have resulted from internal processes that had been under way for some time within Europe itself. By 1500, there remained only two other civilizations of comparable strength: the Ottoman Empire and the Chinese Empire. Both, however, suffered from internal contradictions that prevented a similar sustained expansion. These contradictions were even more evident three centuries later when both empires began to face penetration by European powers on their own territory.


Acemoglu, D. & J. Robinson. (2012a). Why Nations Fail: The Origins of Power, Prosperity, and Poverty, Random House.

Acemoglu, D. & J.A. Robinson. (2012b). ‘Why Nations Fail’ , comment on review by J. Diamond, August 16, The New York Review of Books,

Clark, G. (2009).The Domestication of Man: The Social Implications of Darwin, ArtefaCToS, 2, 64-80

Clark, G. (2007). A Farewell to Alms. A Brief Economic History of the World, Princeton University Press, Princeton and Oxford.

Frost, P. (2010). The Roman State and genetic pacification, Evolutionary Psychology, 8(3), 376-389

Fukuyama, F. (2011). The Origins of Political Order: From Prehuman Times to the French Revolution, Farrar, Straus and Giroux.

Jelavich, C. & B. Jelavich. (1977). The Establishment of the Balkan National States, 1804-1920, Seattle: University of Washington Press.

Lal, D. (2001). Unintended Consequences: The Impact of Factor Endowments, Culture, and Politics on Long-Run Economic Performance, MIT Press.

The Great Divergence (2009), MrGlobalization, August 22

Thompson, D. (2012). The Economic History of the Last 2000 Years: Part II, The Atlantic, June 20,

Unz, R. (1980). Preliminary notes on the possible sociobiological implications of the rural Chinese political economy, unpublished paper.

van den Berghe, P.L. (1979). Human Family Systems. An Evolutionary View. New York: Elsevier.


Beyond Anon said...

Curiously, the elites in most western countries have come to regard their own people as their enemies.

Beyond Anon said...

What about India?

JayMan said...

2I would add that at least in China, traits of the Chinese themselves conspired against them.

One obvious one is Chinese clannishness, which HBD Chick discusses a lot. Trust just wasn't the same as was in NW Europe.

The other is perhaps Chinese incuriousity, given, for example, the absence of long versions the DRD4 gene. The Chinese have indeed been historically less interested in the world outside their borders.

And of course, perhaps as well, the Chinese penchant for communal systems, given their historical family structures (also discussed by HBD Chick).

Anonymous said...

One part seems wrong:
The underlying reason seems to have been a low level of trust—a problem that still exists in China—which may in turn have reflected an incomplete pacification of Chinese society, as seen in the prevalence of banditry well into the 20th century.
Incomplete pacification? I doubt it. China was probably the most pacified for the longest time. (Periodic banditry, as when the state collapsed in the 20th century, notwithstanding.)

Anonymous said...

After 1433 the Chinese abandoned their navy and began to restrict foreign trade and contacts.

Yes, they burned their entire merchant fleet upon the use of that fleet to return African slaves to China.

A wise move that we may have done well to emulate. The cultivation of lands previously held by hunter gatherers by Europeans may turn out to be small compensation for the loss of our homelands — especially if the newly cultivated lands turn out to be lost to multiculturalism.

China wisely abandoned world trade and colonization upon merchant ship contact with Africa and that, and that alone, is what is giving them the exceptional control they have over their own territory. Though as Peter has shown that is changing in contemporary China. But they are still in a better position than we are, and will be in a better position to resolve the issue down the line, especially as they observe us degenerate since we're much further along.

Give them credit for burning their merchant fleet after contact with Africa. How many of us would be willing to trade all the European colonies for the preservation of our homelands?

Sean said...

Population replacement of the less productive does not always follow - Wikipedia: Bengal famine of 1943 "... the highest mortality was not in previously very poor groups, but among artisans and small traders whose income vanished when people spent all they had on food and did not employ cobblers, carpenters, etc"

In England the 'difficult' stupid people died out. Gregory Clark chose well for a comparison; Japan was similar to England, but public health was far far better in Japan.

The Ottoman Empire became unstable after it was prevented from expanding by the Habsburg Empire. Who is to say what would have happened if it had been facing small commercial states like England?

China is so different in so many ways that it's difficult to say what their problem was.

Anonymous said...

"Europe was able to expand into Asia, Africa, and the Americas because it already had a lead over those regions socially, economically, and technologically."

Obviously true.

What's so odd about the official narrative - in all its aspects - is that it's both extreme anti-white racism and a weird kind of white supremacism at the same time.

White people are responsible for all the bad in the world - is the anti-white part.

but at the same time

White people are responsible for all the bad in the world - only grants white people with moral agency, like everyone else are just children.

The relentless top-down cultural propaganda war against white people fits the early stages of a preparation for genocide.

Anonymous said...

The slope appears to be steepest for West Europe from ~1200 to 1500. Was this due to the Black Death?

There also appears to have been a rise in the slope for China in the same period. What happened in China at that time?

Was East Europe really that far behind West Europe? I recall that feudalism lasted very late in Russia, but I did not know that E. Europe was that behind.

Does a per capita GDP of $400 really reflect everything from agriculture and feudalism in Europe and Asia to foraging, hunting and gathering, and agriculture in the Americas and Africa?

Anonymous said...

"The slope appears to be steepest for West Europe from ~1200 to 1500. Was this due to the Black Death?"

One theory is that it correlates with the rise of the unique (until 20th century) West European marriage pattern.

"The region's late marriage pattern has received considerable scholarly attention in part because it appears to be unique; it has not been found in any other part of the world prior to the Twentieth Century. The origins of the late marriage system are a matter of conjecture prior to the 16th Century when the demographic evidence from family reconstitution studies makes the prevalence of the pattern clear."

Peter Fros_ said...

Beyond Anon,

I discussed the case of India in a previous post:

Basically, the caste system limited the sort of internal population replacement that Clark described.


All of those traits used to characterize Europeans. And it was only after a long struggle that they overcame clannishness and subservience to revealed truth.

It looks like China's cultural and intellectual evolution stalled at a point corresponding to Europe's late Middle Ages. There was no revolt against revealed truth. There was no Galileo, no Descartes, and no Francis Bacon.


Banditry was common in China during the 18th and 19th centuries as well.


Yes, colonialism was a tragic error. The "scramble for Africa" in particular was motivated by blind jingoism and little else.


Clark describes a process of internal population replacement that was driven by the normal conditions of life, as opposed to sudden disasters. The English middle class tended to have more children who survived to adulthood, with the result that the entire population became dominated by these middle class lineages.


An entire field of academia, "whiteness studies", peddles this sort of idea. And surprisingly few people challenge them. Yet they have become the very thing they claim to denounce. They have become "purveyors of hate."


This is something that historians argue about. It is generally accepted that the Black Death helped to destroy serfdom and put Western Europe on the road to a market economy. But this might have happened anyway. I'm coming around to Clark's argument that the most crucial changes flowed from an in situ process of internal population replacement.

China outperformed Western Europe during the Sung Dynasty. In 1078, China was manufacturing iron in quantities that would not be matched by Europe until 1700. That era of economic growth was halted by the Mongols and then the Manchus.

Eastern Europe was held back by the depredations of the Tatar-Mongols. The internal demographic processes that began around the year 1000 in Western Europe would not begin until four centuries later in Eastern Europe.

Calculating GDP is difficult in a society where most activity takes place outside the market economy. I'm trying to find out the methodology that underlies this chart.


Yes, but then again, the shift to late marriages might have been a consequence of increased foresight and willingness to accept short-term pain for long-term gain. Which is the cause and which is the effect?

Anonymous said...

One theory is that it correlates with the rise of the unique (until 20th century) West European marriage pattern.

That's not a theory. That's a correlation. A theory explains correlations and other statistical facts.

Anonymous said...

Looking at the graph again, it doesn't appear that the slope between 1000-1500 for West Europe should be steepest. The graph is misleading because the x-axis values are not even units.

The rise in GDP/capita accelerated from 1500 to 1700, and again from 1700 to 1800.

With even units along the x-units, the slope between 1000-1500 would be flattest.

Sean said...

Maybe all successful civilisations have instabilities because wealth creation requires a level of genetic pacification that results in passivity in the face of real danger. (The Roman state and genetic pacification) Hence successful societies have a predictable life cycle.

On the other hand Turchin is predicting civil strife in the west around 2020. Human cycles. I think he's wrong; Western societies are in a terminal stage where the dynamic upheavals will not longer occur.

JL said...

This new study challenges Acemoglu's institutional theory using a clever method. In the Africa of colonial times, adjacent areas were often ruled over by different European powers, resulting in different political institutions across geographically close areas. Previous research shows that the economic development of modern African countries differs as a function of what colonial power used to rule over them, even when comparing neighboring countries. Considering that Africa was partitioned into political units with little concern for the fact that many ethnic groups ended up divided by borders, this research supports Acemoglu's theory that institutional history and not geographic or other local factors (such as ethnicity) is what determines economic development.

The new study looks into the economic development not of African nations but subnational regions. In particular, it compares the economic development of ethnic homelands that ended up partitioned under different colonial powers and national governments. Because of the dearth of reliable economic data for subnational regions, they use satellite data on nighttime luminosity as a proxy for economic development, i.e., areas with more electric lighting are coded as more developed.

If Acemoglu is right, the level of economic development should differ across partitioned ethnic homelands -- people who ended up under good political institutions should be more prosperous than their unlucky ethnic kin across the border. However, the study found that overall the level of development is the same within ethnic homelands even if national borders divide them. There's a correlation between institutions and economic development at the national level, but it's spurious because it does not hold at the subnational, ethnic level. This suggests that persistent differences in human capital between different ethnic groups as well as geographic factors are what explain differences in economic development in Africa. National political institutions aren't that important, which is not surprising considering that few African governments actually have much power outside of capital cities.

educatedbywiki said...

"That's not a theory. That's a correlation. A theory explains correlations and other statistical facts."

i need to remember that.

Sean said...

China was conquered by a small number of Manchu (here), that suggests the Ming dynasty was very weak. "Towards the end of the Ming dynasty, from the late sixteenth century on, intellectuals had become increasingly disaffected with the Ming and had tacitly withdrawn their support. Many scholars had spent most of their lives preparing to hold an official post, only to end up with nothing. "

Sounds like what Turchin is saying about a surplus of graduates.

European colonialism gave an outlet to the ambitious young men who would have become disaffected and disrupted society.

RS said...

peter i was in walmart when a dude on the radio (or some infomercial) spoke of an (academic I think) finding that smoothness and evenness of complexion were more important to esthesis (ie sexual attraction) than wrinkles were.

it occurred to me that light skin, if you live at high latitude and dont have a problem getting scorched, may permit a woman to more prominently display a relatively low mutation burden that might be reflected in this trait. im assuming that whites or north asians are more likely to have a manifest lousy complexion, whereas the same problems might remain partially obscured and less-manifest when skin tone is darker.

dont know if that would fit with the hair thing, dont know if it would be of interest to you as a partial or primary explanation... or whether the notion is novel to you at all.

Anonymous said...

im assuming that whites or north asians are more likely to have a manifest lousy complexion, whereas the same problems might remain partially obscured and less-manifest when skin tone is darker.

I think this is one reason tanning may be popular. A nice tan can often conceal blemishes and irregularities and make the skin appear more uniform and smooth.

Anonymous said...

"whereas the same problems might remain partially obscured and less-manifest when skin tone is darker."

It's like paint. Light paint reflects light so it highlights any blemishs in the surface being painted. Dark paint absorbs light so it hides it better. Maybe foundation does the same thing with skin?

Anonymous said...

It looks like China's cultural and intellectual evolution stalled at a point corresponding to Europe's late Middle Ages. There was no revolt against revealed truth. There was no Galileo, no Descartes, and no Francis Bacon.”
(28 August, 2012 12:32:00 PM EST
Peter Fros_ said...)“

If Europe’s sudden surge at a time had a lot to do with Black Death which maimed the far left end of the bell curve, then perhaps China’s sudden stall had something to do with curing lots of deadly diseases successfully? If no, it must have something to do with the society/system/culture.

I’ve always argued that if Alexander de Great had been greater enough to have united Europe at the time of the First Emperor Qin did in China, there would probably have had no European Enlightenment nor British Industrial revolution, since Europe would have been very similar to China: a united entity with politically uber strong central government that has impeded and punished most “outliers” such as Galileo, Descartes, and Francis Bacon who dared to stick out with their “outrageous” ideas - obviously threatening the stability of the society.

Anonymous said...

I think this supposed advanced bygone era of China is bogus. I don't think China ever surpassed Europe or the Middle East. I think because of it's size and East Asians' obsession with material wealth that it outperformed Europe quantitatively but not qualitatively. For these reasons estimated GDP can not tell what East Asian places were like in comparison to the West.

Red said...

Rather than looking at china, why not look at japan? High trust, hard working, massively awesome people. They like Europeans went through 1000 years of feudalism that the Chinese never went through.