How the West Grew Rich: The Economic Transformation of the Industrial World

by Nathan Rosenberg, L.E Birdzell, LE Birdzell Jr.

Book Overview

How did the West--Europe, Canada, and the United States--escape from immemorial poverty into sustained economic growth and material well-being when other societies remained trapped in an endless cycle of birth, hunger, hardship, and death? In this elegant synthesis of economic history, two scholars argue that it is the political pluralism and the flexibility of the West's institutions--not corporate organization and mass production technology--that...

• Format: Paperback
• Language: English
• ISBN: 0465031099
• ISBN13: 9780465031092
• Release Date: June 1987
• Publisher: Basic Books
• Length: 368 Pages
• Weight: 1.26 lbs.
• Dimensions: 1.1" x 6.1" x 9.2"

Customer Reviews

"adaptation takes place through the formation of enterprises that are, at least initially, small," i

It is entirely safe to generalize: innovation is more likely to occur in a society that is open to the formation of new enterprises than in a society that relies on its existing organizations for innovation." Feudalism thus had to be eclipsed for serious change to occur since it "was a society which dealt with the risks of life by legislating rigidity. Economic growth is inherently a byproduct of change, and the political and religious ideology of the Middle Ages guarded against the heresies of change in every way it could," argues the authors herein as they set out to explain "how the West generated the organizational and technological skills required to produce and exploit" its wealth. A "decentralization of authority," thus was crucial...and this was greatly spurred by the Protestant Reformation, the long term effect of which, economically, "was the progressive removal of religion from intimate involvement in the sphere of business activity." "In the course of the sixteenth and seventeenth centuries , the business sphere was, in a word, secularized." "Protestantism sanctioned a high degree of individual responsibility for moral conduct and reduced the authority of the clergy." Under these circumstances, it would have been too much to expect the Catholic clergy to continue to stress doctrines which could only turn prosperous parishioners toward Protestantism." The authors argue moreover that this "was not wholly a question of the theological content of either Catholicism or Protestantism. It was partly a question of the competition inherent in the existence of several rival religions, which, like the existence of competition inherent in the existence of several rival national states, enabled a rising merchant class chafing under the restraints of one authority to take refuge with another more congenial" as trade & exchange, both domestic and foreign, became ever more prevalent in the prevailing economy of the day. But how did such a merchant class even gain a foothold in the first place since feudalism was already petering out during the 15th century, ie., before the Protestant Reformation and the later rise of capitalism. As the authors remark: "the decline of feudalism is complete a century before the beginnings of capitalism." "For if one thing is clearer than another, it is that the merchant class did not get its economic power from the feudal nobility, or by displacing or super-ceding the feudal nobility in agricultural or other economic activities. The merchant class gained economic power by expanding the trading activities in which it had always engaged." That's the key herein, trade and exchange; or rather, the ability of people to be able to engage in such. So the authors argument herein is not that democratization shall necessarily lead to an economic boom, but that the reverse is far more likely; that "economic growth was [and remains, I'd add] a force for democratization." Marx was thus, the authors assert, wrong ye

Institutions as the fundamental cause

Monographs dealing with West's rise from a backward feudal society to the most technologically advanced and wealthiest civilization this world has ever seen, seem to come a dime a dozen nowadays. Given the large amounts of books available on this topic, and the fact that it was published twenty years ago, what reasons are there for reading How the West Grew Rich? Quite a few I would argue. The main question of the book is of course: how, or rather why, did the West (as opposed to the South or the East) achieve modern economic growth? The authors come to the correct conclusion that standard growth models can only provide the proximate causes of growth. Innovation and accumulation of capital, labour and natural resources is growth, it does not explain growth. So what, according to R & B, are the fundamental causes of growth? The answer lies in favourable institutions and freedom from political restrictions - more specifically, secure property rights and the freedom to engage in any line of business and to acquire and sell goods at an unregulated price. This meant that the process of innovation was delegated to private firms and that individuals themselves were forced to bear full responsibility for their failures and reap the full benefits of their successes. Why then did such favourable institutions and political and economic freedoms arise in the West? The answer according to R & B is political fragmentation and competition between different territories in Europe. Investments and the merchant class were drawn to areas were property rights were respected and where they could carry out their business without too much political interference. There was no single empire in Europe. The growth of markets - especially that of cities and long-distance trade - further spurred this development. The arguments in How the West Grew Rich are, which should be apparent by now, very similar to those found in The Rise of the Western World by North and Thomas, although they focus a lot less on population growth. As they should, R & B refer to this book on several occasions. Despite this fact, How the West Grew Rich proves to be an interesting read: the familiar arguments are explored further and the book includes several interesting examples of how institutional innovations lowered transaction costs and facilitated further development. There are a number of objections one could raise against R & B's account of the rise of the Western world - their account of the middle ages and alternative explanations behind West's success are far from satisfactory, to name a few. There are however a few things speaking in favour of this book. First of all, it has a clear message. It does not, like some other books on the same topic, name hundreds of different reasons for why the West grew rich. Rather, it presents a clear hypothesis that is present throughout the book and it also provides very clear policy recommendations to current developing countries wanting to emulate Wes

The origins of capitalism revealed!

"How the West Grew Rich" is a thorough treatise on the rise of capitilism in the nation-states of the west, from feudal society towards modern times. Rosenthal and Birdzell discuss in the appearances of the requirements for capitilism, such as acknowledgment of property rights and consistent and predictable law. Also discussed are the political, social, or economic changes that caused feudal society to crumble and a variety of free markets to gradually take root and then blossom in Europe.This book was thorough and informative, though a bit repetitive and somewhat dry. It makes a wonderful companion to Diamond's "Guns, Germs, and Steel", filling in where the later left off.