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?Vital?a cogent, timely journey through the economic history of the modern world.? ? Publishers Weekly
In The Birth of Plenty, ...
“Vital—a cogent, timely journey through the economic history of the modern world.” — Publishers Weekly
In The Birth of Plenty, William Bernstein, the bestselling author of The Four Pillars of Investing, presents his provocative, highly acclaimed theory of why prosperity has been the engine of civilization for the last 200 years.
This is a fascinating, irresistibly written “big-picture” work that highlights and explains the impact of four elements that when occurring simultaneously, are the fundamental building blocks for human progress:
Meticulously researched, splendidly told, and featuring a new preface and introduction, The Birth of Plenty explains the interplay of the events, philosophies, and related phenomena that were nothing less than the crucible of the modern age. This is one of the rare books that will change how you look at the world.
Bernstein divides The Birth of Plenty into three parts: why, how and whither. First, he defines economic growth's ultimate sources; then he describes how these factors played out in various nations. He then focuses on the sociological, political and military consequences of the modern world's explosive economic growth.
By exploring the sources of economic growth, he provides insights into many of the questions that people seek about themselves, including:
While digging into the story of world economic growth, Bernstein ventures into the fields of law, history, philosophy, celestial mechanics, theology, public policy, sociology and economics. By bringing together these disparate fields into a single story that tackles some of the largest questions people can ask, the author paints a vivid picture of the past that gives readers deeper insight into the future to which they are headed. Bernstein synthesizes numerous issues into specific and understandable theories about why world economic growth - and the technological progress that fueled it - suddenly exploded when it did. At the root of his question is why life in the 18th century, described by one author as "solitary, poor, nasty, brutish, and short," changed so drastically in less than two centuries.
To describe how technological progress has actually been slowing since 1850, not accelerating, Bernstein writes that the average inhabitant of the Western world alive in 1950 would have no trouble grasping the technology of the year 2000, but "a citizen from 1800 would have been completely disoriented by everyday life 50 years later." As an example, the author points out that in 1801, nothing moved faster than the speed of a horse. But, he writes, the invention of the telegraph and instantaneous communication in 1837 "abruptly altered the face of economic, military, and political affairs in ways that dwarf the changes wrought in this century by the airplane and the computer."
According to Bernstein, there are four factors that are essential ingredients for igniting and sustaining economic growth and human progress: property rights, scientific rationalism, capital markets, and improvements in transport and communication. Bernstein first examines the nature, causes and consequences of the transformation in human well-being that began to unfold shortly after 1820, and identifies the points in both time and space where economic growth bloomed after thousands of years of dormancy.
Next, Bernstein describes how and when those four factors came into play, from Holland and England, to the rest of Europe and East Asia. The Birth of Plenty describes the sociological, political, economic and military consequences of the discrepancies in personal and national wealth that have risen from this birth of plenty, and their present and future implications.
Why We Like This Book
Bernstein's rich examination of the effects of economic growth are made even more relevant by his additional insight into the role this growth has played in various peoples' lives. By seeking to learn more about how our world prospered when and where it did, Bernstein provides us with a better idea of where we are all heading. Copyright © 2004 Soundview Executive Book Summaries
A Hypothesis of Wealth
The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together.
—Karl Marx, Manifesto of the Communist Party
It's all too tempting to lament the state of the world, particularly when you focus on the melodramas of mankind—violent conflicts, large-scale malfeasance and failure, and the latest installments in the age-old racial and religious hatreds that permeate the human story.
A paragon of such fashionable pessimism has been journalist Anthony Lewis, who, at the end of a long and distinguished career, was asked whether the world had gotten to be a better place since he had begun covering it a half century earlier:
I have lost my faith in the ideal of progress. I mean that in the sense that it was used at the beginning of the twentieth century, that mankind is getting wiser and better and all—how, how can you think that after Rwanda and Bosnia and a dozen other places where these horrors have occurred?
Mr. Lewis' problem is that his subjective criterion—that mankind has not achieved moral perfection as defined in Ivy League universities and the editorial suites of the New York Times—sets the bar too high. Mr. Lewis seems unaware that we can measure the welfare of mankind; in fact, we can do it superbly. Contrary to his gloomy impressions, the second half of the twentieth century was far less murderous than the first. Further, the proportion of the world's population subjected to totalitarianism, genocide, starvation, war, and pestilence has been steadily decreasing over the past two centuries, with most of the improvement coming in the half century that so depressed Mr. Lewis.
Consider that from 1950 to 1999, average life expectancy in the developed world increased from 66 years to 78 years; in the developing world, it increased from 44 years to 64 years. The nearly universal Western outcome of living to old age, rather than resulting from the rare stroke of luck, may be the greatest accomplishment of the past fifty years. Or consider that over the same period, the world's real per capita gross domestic product (GDP)—the amount of goods and services produced by the average person, adjusted for inflation—nearly tripled. Or that by the year 2000, real per capita GDP in Mexico was significantly greater than that of the world leader in 1900, Great Britain. And if you're not impressed with mankind's material progress in the last fifty years, as measured in dollars and cents, you should at least note that almost any measure of social progress you wish to examine—infant mortality, literacy and mortality rates, or educational levels—has dramatically improved in all but a few still-benighted corners of the planet.
ESCAPING THE TRAP
The modern world seems to stagger under the load of ever-increasing population, with each year adding scores of millions of new mouths to feed. At the birth of Christ, Earth supported slightly more than 250 million people, by 1600, about a half billion. Sometime around 1800, the one billion mark was reached, the second billion was added by 1920, and the third attained in 1960. Presently, there are in excess of six billion souls on our planet. The increasing congestion of urban life, particularly in the third world, gives the impression that the world's population is growing far faster than the 1.85% annual rate of the past half-century.
Overcrowding on our planet is a recent phenomenon, an artifact of the world's newfound prosperity. Before the modern era, famine, disease, and war more often than not overwhelmed the human inclination to procreate. Over the first two million years of human history, population growth did not greatly exceed 0.001% per year. After the advent of agriculture 10,000 years ago, the rate of population growth increased to approximately 0.036% per year, and in the first century A.D., to 0.056% per year. After 1750 the growth rate climbed to 0.5% per year, passing 1% only in the early twentieth century.
In modern times, the dismal economics of increasing population is virtually synonymous with Thomas Malthus. Born of local gentry in 1766, he graduated from Cambridge with honors in 1788. Like many bright young university men of the time in England and Scotland, he fell under the sway of Adam Smith's new science of "political economy" and devoted his life to the quantitative study of humankind.
The England of the aspiring economist's formative years seemed as Hobbesian as Smithian—a time of worsening food shortages and not a little famine, particularly in neighboring Ireland. In 1795–96 and 1799–1801, war and poor harvests combined to cause food riots in England. The root cause of the shortage was obvious to Malthus: "The power of population is infinitely greater than the power of the earth to produce subsistence for men." Humans can reproduce rapidly, whereas agriculture is subject to the law of diminishing returns. The natural tendency, then, is for humanity to outrun its food supply. (The common conception of Malthus's thesis is that population increases geometrically, while the food supply increases arithmetically.)
Malthus's infamous "positive checks" were not limited to the classic fama, pestis, et bellum (famine, plague, and war), but also included a host of lesser evils: unhealthy working conditions, backbreaking labor, overcrowded and unsanitary housing, and poor child rearing. If, for a brief moment, food became plentiful, population would rise rapidly. Soon enough, though, the increased supply of workers would drive down wages. This would make food less affordable and, discouraging marriage, would slow population growth. Low wages would then induce farmers to hire more workers, which would, in turn, bring more land into production, starting the whole process again at a slightly higher level of population and food production—the notorious "Malthusian Cycle."
In Malthus's harsh world, a nation's food supply—and its population—grew slowly, if at all, so the standard of living was inversely proportional to the number of mouths to feed. Were population to increase, there would not be food enough to go around. Prices would rise, while wages, and the standard of living in general, would fall. If, on the other hand, the population were suddenly to plunge, as happened during the Black Death of the mid-fourteenth century, the survivors' food supply, wages, and standard of living would rise dramatically.
Malthus had observed firsthand the late-eighteenth century famines, which burned this sequence of events into his consciousness. Figure 1–1 plots the per capita GDP of England from 1265 to 1595 versus population size. The thin, crescent-shaped distribution of the data points depicts the "Malthusian Trap." Historian Phyllis Deane neatly summarizes the concept:
When population rose in pre-industrial England, product per head fell: and, if for some reason (a new technique of production or the discovery of a new resource, for example, or the opening up of a new market), output rose, population was not slow in following and eventually leveling out the original gain in incomes per head.
In this eternal cycle, agricultural production might rise, but population followed in lockstep, dooming mankind to a near-subsistence-level existence.
Paradoxically, soon after Malthus immortalized this grim state of affairs in 1798 with his Essay on the Principle of Population, it abruptly came to an end in Western Europe. Figure 1–2 shows that a bulge developed in the cr
Excerpted from THE BIRTH OF PLENTY by WILLIAM J. BERNSTEIN. Copyright © 2004 by The McGraw-Hill Companies, Inc.. Excerpted by permission of The McGraw-Hill Companies, Inc..
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Posted September 2, 2013
We read for many reasons, all of which pertain to enjoyment. Beyond the good laugh, or a thoughtful provocation wrapped in satire, we also expect to become a bit more enjoyably educated for having read.
Then there's the notion of polemic: we also frequently read in order to glean arguments that support pre-conceived ideas. This is called 'ideology', and aptly describes both Bernstein's project and his readership's intent.
In the first paragraph or so, one finds a sneering remark towards Ivy League and New York Times. These, to return barb for barb, are all-too-familiar tropes of the quasi-fascist amerikan right.
Having pronounced upon these, the author declares his mission to create a bizness community version of history--far from both the ivy tower and the madding crowd of pointy-headed coastal intellectualism. Well, not.
Sensibility demands that we accept diverse opinion from other sensible individuals. Moreover, we should read contrary to our beliefs in order to challenge them, which is why I jumped into this particular project. But the author doesn't deliver.
Nothing could be more off-putting than to label Aristotelian science 'totalitarain'. And why would he slaver over Cambridge, the birthplace of Keynesian socialism that stated, in so many words, that economic success is dictated by government policy?
In any case, his main guy, the Cambridge-educated Angus Maddison, is both mis-used and cited in highly-debated circumstance.
Working for the OECD, Maddison remarkably developed a set of indicators thast might predict GDP/PC growth amomg developed nations. These, in extenso, might arguably be employed to facilitate growth in developing nations, the most salient examople being China.
Now assuming access to labor, resources, and money, no one denies that the ancilliary factors of applied intellect and infrastructure are important, too. How all of these work themselves out to offer the optimal return is what 'the Maddison group' is all about. That the devil is in the details of the formula, is far, far above the head of our neurologist turned ideologue.
Or to return the favor in his own field: "In neurology we study axions, dendrites, and electrochemical impulses. How this electro-chemical stuff works is really complicated. So maybe you should just go see a chiropractor."
In passing, I might also mention that Nobel Laureates such as Krugman write PhD thesis that emphasize the role of trade in establishing incremental GDP growth. But there I go again--citing both NY Times and Columbia U in the same breath!
Maddison also went on to figuratively apply his method to long-scale 'One-AD' tendencies of growth. This, regrettably is where both his peer-reviewed credibility stops and the narration of Bernstein begins. So in reality, Bernstein is exploiting the name of Maddison, much as to say that the universe is invinite because Einstein said so.
A quantitative account of personal wealth is impossible without a consistent unit of measure; anthropology informs us that we write ethnographic accounts becausse there is no said common measure. In any case, no one denies that around 1820, there was an ecomonic explosion of sorts, and how it precisely happened is an interesting story.
Yet we dervive absolutely no insight by stating that pre-1820 was nothing but an impovershed, two thousand year-old mess. To his credit, Maddison looked long and hard for the 'seeds' that spawned this remarkable spurt. To his shame, Bernstein cites nothing but a version the businessman's credo.
In this bowlderized account, there was no transition from wool to cotton based upon the exploitation of India, thereby secured by opium trade from China.
There was no virtual enslavement of the Scots population after 1710, thereby offering both the mills and coal mines a cheep source of labor.
America did not exist: no slaves to produce the cotton, nor grow the rice that enabled an inexpensive food source.
Of course, the native injuns were all to happy to fairly contract away their mineral resources such as high-grade iron ore, copper, tin, nickel,gold and silver...
No, all we have is the fallacious creation of prop-tee laws (hardly an English invention!) fused with (state constructed) transport, combined with engineering (applied science), and credit (backed up by Spanish-American gold). And voila!
'Not bad for a neurologist turned invester. And if I were to cite that this book lacks peer-review interest, the response, doubtless, would be. "indeed". Rather, his motivation was to create a vision of history adequate for bar and cocktail party-- high-sounding chit-chat-- of the like-minded.
Corporate-believers of the world unite! You have only your soul to lose, and money to gain!
Posted December 30, 2012
No text was provided for this review.