Bryan Caplan’s Critique of A Farewell to Alms

Monday, September 24th, 2007

In A Farewell to Alms: Overview of My Critique, Bryan Caplan starts by criticizing Gregory Clark’s understanding of Malthusianism:

Even worse, Clark repeatedly misstates the implications of his own model. He delights in counterintuitive claims like “[I]n 1776, when the Malthusian economy still governed human welfare in England, the calls of Adam Smith for restraint in government taxation and unproductive expenditure were largely pointless.” To the contrary, even in a Malthusian model, more production and less waste is unambiguously good for living standards. Population growth eventually returns living standards to their original level, but that may take generations.

I don’t see that contradicting Clark’s Malthusian point at all. He clearly recognizes that population growth only eventually reduces living standards. As he says in How to Save Africa:

Before the Industrial Revolution all societies were caught in the same Malthusian Trap that imprisons Africa today. Living standards stagnated because any improvement caused births to exceed deaths. The resulting population growth, pressing on fixed land resources, inevitably pushed incomes back down to subsistence.

But living conditions did vary across pre-industrial societies. Perversely, rich societies were those where nature or man created high death rates. In such settings living conditions could be good as long as the population did not grow. In the Malthusian era, what is now vice in economic policy — violence, poor public health, war, inequality — was virtue in terms of living standards. And what is now virtue, vice.

(Emphasis added.)

Caplan’s second point is that Clark ignores the power of institutions and policies:

He also ignores massive, long-lasting policy disasters like Communism; comparisons between West and East Germany, and North and South Korea.

A commentor, Jason Malloy, notes that Clark doesn’t ignore those policy disasters; he just takes a much longer view of history:

You may disagree with his conclusions, but he doesn’t ‘ignore’ Communism, which he argues dissolved in an eye-blink of history, consistent with a view that destructive institutions are in an unstable balance with the evolved dispositions of the population.

This complaint is the one I’d like to focus on though:

In the face of all this evidence, Clark throws up his hands and says that economists don’t know how to create growth. Give me a break. If voters and politicians around the world since 1800 had just done what Adam Smith told them to do in The Wealth of Nations, poverty would already be a thing of the past. Economists have known how to create growth for centuries. The problem is that, all too often, non-economists choose not to listen.

(Again, emphasis mine.)

While I largely agree with him, perhaps we should attempt to solve the larger problem of actually creating growth, rather than the fairly narrow problem of coming up with a “solution” that won’t get implemented.

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