Reviews

Exodus to the Virtual World Edward Castronova (Palgrave Macmillan, 2007)

So far, online virtual worlds are arguably just a sophisticated form of electronic

A Farewell to Alms

escapism, with economic effects roughly

A Brief Economic History of the World

equivalent to the direct and ancillary

Gregory Clark (Princeton University Press, 2007)

spending generated by television and

At just over 400 pages, this survey of world economic development is not exactly brief. But the author’s engaging style and (relatively) jargon-free descriptions of the economic principles in play before, during, and after the Industrial Revolution in England turn this rich and detailed account into more of a sprint than a slog. Indeed, A Farewell to Alms reads less like a history book and more like the script of a good police procedural. Clark, an economics professor at the University of California, Davis, aims high here. He attempts to answer questions he says have vexed economists for decades. Among them, why did the Industrial Revolution happen in late-eighteenth-century England and not at some other time or place? And what has prevented some nations from fully capitalizing on the benefits of industrialization? Like CSI’s Gil Grissom in the crime lab, Clark obsessively sifts through a wealth of economic and anthropological data from the 1200s to the 1800s – fertility rates, life expectancies, labor statistics, and even physiological factors such as average height and average daily caloric intake. In the first half of the book, he describes economic life in England during the pre-industrial Malthusian era, in which advances in technology prompted a population boom that ate away at the standard of living. The average English inhabitant in the late 1700s and early 1800s was arguably working harder and longer to achieve the same level of subsistence as hunter-gatherers of previous eras, Clark contends. In the book’s second half, Clark examines the mechanisms of societies that broke out of the so-called Malthusian trap. England, he says, was ripe for industrialization not because of its large supply of coal or other resources, as others have argued. Rather, a set of cultural factors were present that helped the country evolve socially and, hence, economically: slow but steady population growth between 1300 and 1760; legal, political, and economic institutions that were established long before the technological advances of the revolution occurred; and a stable government. As abundant numbers of relatively well-off children grew up and entered society – as apprentices and tradesmen, primarily – so-called middle-class values (hard work, education, and so on) spread throughout England. In China and India, by contrast, that cascade of values was slower to materialize – and so was economic growth. Culture and social evolution, not institutions, shape economies, Clark argues. That holds true in today’s world, where outside help from institutions such as the World Bank and the International Monetary Fund have little effect in lifting up ailing nations. Instead of lining the pockets of corrupt leaders with foreign aid, the West would do better to create liberal immigration policies for people from Third World countries, offering them opportunities for advancement in the world’s major cities. Whatever your reaction to this decidedly un-PC take on economic aid, the book serves as a useful explanation of how we got where we are today and a reminder that new approaches are needed to close the yawning gap between the world’s richest and poorest societies.

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movies. But Castronova, an economist, contends that participating in multiplayer synthetic worlds is different from watching TV and films. The interactive and intrinsically social nature of this major entertainment medium is attracting far more market segments than the stereotypical teenage boy associated with such games. As technology advances, gaming will draw people away from other entertainment media in droves. Castronova also suggests that gamers will push public policy in a libertarian direction, as they seek in life the same freedom from rules and responsibilities that they enjoy in game environments. While much of the book is highly speculative, it is an intelligent introduction to an important industry.

The Conscience of a Liberal Paul Krugman (W.W. Norton, 2007)

Is inequality bad for business? Krugman, the prominent economist and columnist, argues that American wealth differentials are endangering the country’s meritocracy, not to mention social fabric. Already it’s harder for poor but talented kids to get ahead in the United States than in Europe, the supposed bastion of class barriers. And he points out that social parity and a booming economy often go hand in hand: The post–World War II golden age of equality in the U.S., with high taxes and strong unions, was a time of prosperity. He doesn’t prove that egalitarian measures will work well today – the United States faced less international competition in those decades, after all. But he does show that inequality has arisen more from political decisions than from economic forces. This powerful manifesto for egalitarian public policy makes for provocative reading.

–John T. Landry

– Roberta Fusaro

hbr.org

11/1/07 8:29:31 PM