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The (Interestingly Accumulated) Wealth of Nations

Lots of big histories read rather like compendia of colorful occurrences--lists of Good and Bad Things, in Sellar and Yeatman's formulation. But the last decade has seen a surge in ambitious histories that not only cover a lot of ground, but also offer big explanations for why the world is as it is. Even if you commit yourself to only a short shelf bearing the most daring recent works of global scale and scope, you probably have Jared Diamond’s Guns, Germs, and Steel, David Landes’s The Wealth and Poverty of Nations, Niall Ferguson’s Cash Nexus, and perhaps my colleague Greg Clark’s A Farewell to Alms. All try to explain the biggest question of the modern world: why some are rich and others poor. Now, we have Ronald Findlay and Kevin O’Rourke’s Power & Plenty, a tome that combines the interpretive focus of the new school of explainers with the breadth and depth of the old narratives.

Although 1997’s Guns, Germs, and Steel was the first of the modern big-explanation blockbusters, the books that have come since owe more to Ferguson’s edited collection of the same year, Virtual History, which tried to restore both the fun and respectability of counterfactual explanations to historical narrative. The logic of counterfactualism is simple, though it remains surprisingly controversial: If you want to say what's good and bad in history, you can’t just apply your judgment, but must rather explain what the better or worse alternative might have been. It’s not enough to declare that (say) the United States shouldn’t have taken the Philippines; one has to argue that had the U.S. refrained, a better x would likely have happened and the worse y would not have. The counterfactualist argues not from absolutes, but from costs and benefits. Ferguson, for example, used the method to argue that the world was better off for the British Empire. (The crude version: You wouldn’t want to get colonized by Germany, would you?)

In Power & Plenty, Findlay and O'Rourke use this approach to ask how empires like Britain's led to the modern world. They also put neoliberal economic theory to the historical test by asking what it would predict, and then contrasting those forecasts with history's actual path.

They begin their exploration with what they call “the economic consequences of Genghis Khan.” The conquering hordes imposed a Pax Mongolica, creating a wider system of trade that turned the known world into a single Petri dish through which plagues spread: populations of feudal societies thinned, serfdom eroded, and the living standards of the survivors rose.

Findlay and O'Rourke argue that European nations paradoxically benefited from their position on the periphery of the Mongol empire. At the mercy of Muslim middlemen controlling access to Eastern markets, the Europeans sought oceanic avenues to trade. The Iberian nations secured the New World’s first riches, and the Dutch benefited by becoming the early entrepot for colonial products. But Britain slowly wrested power from these pioneers by controlling its colonial commerce with the Navigation Acts of the seventeenth century, forcing tobacco and sugar to travel through the home islands before going on to Europe. Without this exercise of power to take position from the Dutch, Britain would never have enjoyed such plenty.

This colonial system, Findlay and O’Rourke explain, led straight on to the Industrial Revolution, enabled by British technological advances. The incentive to innovate in textiles derived from the colonial system: Britain could get cheap cotton from the colonies because the colonies could get cheap labor from slaves. The triangle trade fed the innovation-driven insatiability of British mills.

Only after industrialization could advanced nations benefit from free trade, and they used their empires to force it on the developing world. They thereby prevented the global South from adopting their own mercantilist, or protectionist, policies, leading to an era of inequality among nations known as the Great Divergence. Without imperial free trade, poorer nations might have developed their own industry earlier.

As it was, it took the horrendous shocks of the World Wars and the deglobalization of the interwar period to break up the old empires, making way for the late twentieth-century reglobalization, this time without old-fashioned empires. Today, in a system with collective security and clear international rules, industry spreads to the Third World and bids perhaps to shrink the Great Divergence, so long as further wars don’t disrupt it.

Even if elements of this story seem familiar, Findlay and O’Rourke tell their tale exceptionally well and give lively attention to alternate possibilities: What should have happened, according to theory? What could have happened, in the realm of plausibility? They find they can cede little to neoliberal economists: Power was generally necessary to secure plenty. “Adam Smith and his liberal followers to the present day, however, would, and have, argued that much of this [state] expenditure was wasted, unnecessarily crowding out more productive private investment. The assumption of course is that the markets and raw material supplies … would have existed regardless”--which, history suggests, they would not have. Had your empire not secured them, your neighbor’s would have, with lasting bad consequences to you.

Facing a history in which violence, disease, and the vicissitudes of geography play such a role, Findlay and O’Rourke note, “prediction is a hopeless endeavor.” We cannot expect recent good trends to sustain themselves: “Globalization is a fragile and easily reversible process,” they warn. Resource scarcity, religious conflict, disease, or political backlash could easily scuttle it. So might the actions of a reckless hegemon. Considering Iraq, they hopefully quote Raymond Aron on Vietnam: “Failure becomes success because it ... teaches modesty, and prepares the way for an equilibrium among states.” One imagines that they have their fingers tightly crossed: It will take plenty of care to balance the excesses of power.

Eric Rauchway is a professor of history at the University of California, Davis, and the author, most recently, of Blessed Among Nations: How the World Made America and Murdering McKinley: The Making of Theodore Roosevelt's America.

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