False Economy: A Surprising Economic History of the World [Hardcover]

If chronologically authored, an account or analytical narrative about economic history of the world would have taken-up many volumes. Instead, Alan Beattie, world trade Editor of the Financial Times, chose to employ his wit, knowledge and researching skills to conjure up this book comprising of short thematic chapters offering viewpoints coupled with historical contexts on anything from natural resources and agriculture to urbanisation and economic progress (or lack of it in some cases).

As for the element of surprise, Beattie is true to his word. He begins the narrative by fictionally staging the 9/11 attacks in Argentina and economic collapse of the U.S. Of course, in 2001 actual events occurred the other way round, but the author suggests it could so easily have been different. For most of the 19th century both nations held similar economic potential, yet the U.S. evolved into a superpower while Argentina went into near-terminal decline. He argues that such a trajectory was not preordained but down to differing employment of resources and political will. Both countries, he opines, were given "similar hands" at one point in history, but played them very differently.

Continuing down this path, Beattie offers a similar type of analysis about why, for instance, abundant natural resources turn out to be a curse for some nations or why religion is no hindrance to economic progress or prowess of others. Spread over ten chapters, in this short book, the auther has picked and chosen his way through history, commerce, business practices, politics and religious texts to make his arguments. Chapter 2 (on urbanisation, especially in Latin America), Chapter 3 (on trade) and Chapter 4 (on natural resources) are the ones I particularly liked.

On the other hand, one minor criticism I offer is that Beattie, at times, comes across as working needlessly overtime to live-up to the "surprising" bit in the book's title. Fictionally moving 9/11 to Argentina or opining that if the U.S. does not sort out some of its problems in the financial system, it too could head down Argentina's path is a bit over the top if not downright silly. The content of this book does not need steroid shots. However, regrettably it has escaped the author. Nonetheless, an overt eagerness to impress the reader should not be held against him.

Overall, it is a good book and by the time the reader reaches concluding pages, the author seems to have pulled ample lessons from our economic history that we ought to take note of. Rounding off with Shakespeare's words - "Our remedies oft in ourselves do lie" - is not half bad an idea, either.

Clearly Alan Beattie can put together a series of anecdotes well enough, but therein lies the problem. Economists like this one have all appeared as if by magic over the past couple of years claiming to have all the answers. frankly the truth is something more along the lines of being wise after the event. Some parts of this were certainly educational and interesting to read about making this more of a starting off point than a destination. One cant help but get the feeling that the author (and others of similar pop-econ books) has cherry picked anecdotes and phrases. he does come close at times to wearing his capitalist heart on his sleeve, particularly when wheeling out the well worn cliche that government should "get out of the way".
In summary, there are points of interest here and there but this book is really far too superficial to be anything other than a light read.

As axiom-based and model-driven economics met its ignominious fate, economic history jocks emerged, ready to hawk alternative (hi)stories to the bemused public. Few such products are of lasting value: and this in not one of them.

The underlying theme of the book is that economic development is path-dependent - which is another way of saying: `historical phenomenon'. Decisions are taken, and they have consequences. Once basic decisions are taken, it is difficult to reverse them. Some decisions turn out to be wise (Botswana), some foolish (Zambia or Sierra Leone). Most, however, were inadvertent. "It seemed like a good idea at the time" - most politicians criticised in the book would have answered. So what else is new? History is a heady mix of structure and contingency. Contingency dominates. Small causes can make a big difference. Nothing is pre-determined. So we cannot `learn' from Botswana's experience or, put it another way, we would not even be able to replicate it in Botswana itself if we were to rewind the tape of history and let it out again (S. J. Gould on evolution).

The economic history served up as `surprising truth' is either blandly formulated received knowledge, or superficial criticism. Take the chapter on trade: Venice and Genoa grew wealthy on trade? Well - they'd exploited beforehand their respective salt monopolies in Comacchio and Hyeres to the hilt. Florence became a banking centre? Hmm - only after a surreptitious and systematic debasing of the coin had impoverished the countryside in favour of the centre. England grew strong on overseas trade? Rather, it prohibited the export of raw wool and the end of the Middle Ages - destroying the clothing industry of Florence and much of Flanders - and stopped imports on Indian cottons in 1721 until it could beat them through mechanised production. The `free' trade flows between the Americas and Britain were sustained by a ruthless monopoly on shipping - thanks to the British Navy and the fact that Britain was an island where harbours could be easily controlled (these later aspects are referred to in a later Chapter on "politics of development": by degrading them to an amusing lecturette on the dismal politics of trade policy they empty the measures of their development impact).

The chapter on religion is particularly weak. As they famously say: guns don't kill people, people kill people. The same with religion: when religion becomes an instrument of mass coercion freedom and economic development suffer. It suffered after Christianity took over from paganism, during the counter-reformation, under Aurangzeb in India. More is difficult to generalise about - pace Huntington. We are thrown back to power struggles, and each one is unique. The attempt to frame religion as the dominating factor across continents - as it is done here with Islam is plain hopeless. The result is a confused and confusing discussion switching back and forth between empires, with throwbacks to legal commercial systems and more. One further point: originally, Arabs, Turks, and Mongols were all nomadic societies with a system of laws to fit their mode of life. These laws were overlaid on the existing system of laws of sedentary societies and local family systems. It worked, for a time, but not always. As for the section on India, it fails to integrate dominant economic role of minorities - Jains, Parsees, and Marwaris. A few howlers lighten the reading: the French Huguenot Protestants were hardly present in Medieval Europe (pg. 147), and China's predominant religion is not Buddhism (pg. 144), which in any case is not a religion to begin with.

Innovation is not even mentioned as a serious driver of development - let alone the impact of emulation. Manias, crises and crashes do not rate a word - as if only trade mattered. Finally, economic history has long been a whiggish history of the West - a luminous process of virtuous innovation and capital deepening around lofty principles like industrious toiling and free trade. Slavery has yet to be accommodated within this trope. The role of women in economic development is largely ignored, despite the fact that on a reliable daily basis the `gatherers' were providing far more calories than the lazy hunters. Settlement owes much to the willingness of women to pound acorn for hours. And the role of women in agriculture, cottage industry, domestic service, and in the factories is hardly mentioned. A `surprising' chapter could have focused on gender issues, in particular on the role of women in family education which, far more than `increase in agricultural productivity, is causing the demographic transition.

The occasional whiff of prejudice is regrettable. I thought bald sentences like: "only a highly skilled privately owned foreign company like De Beers had the expertise actually to dig diamonds out" had gone out with the admission of women to London Clubs. Another nugget is: "Trade unions that can halt production, particularly while mineral prices are high, are in a similar position to bandits blocking a mountain path". For good measure the image is repeated a few paragraphs later. One wonders what terms the author uses for bankers who (many of them high on cocaine according to author) - drove their financial companies into the ground as they hauled in hundred of millions in boni and golden parachutes.