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Tuesday, July 1, 1986

A Reviewers Notebook: How the West Grew Rich

Students of Hayek, Mises, and Milton Friedman will find much that is an old story in How the West Grew Rich (351 pp., Basic Books, $19.95), but Nathan Rosenberg, a Stanford professor of the history of technology, and L.E. Birdzell, a lawyer, have collaborated to produce a book with certain subtle differences.

To begin, Rosenberg and Birdzell stress the geographical factors. The Europeans often trailed the Chinese in inventiveness, but the Chinese man-darinate was self-satisfied, thinking China, as the center of the world, had all it needed without building up foreign commerce.

Europe, on the other hand, was fragmented, a big peninsula that had its own smaller Scandinavian, Greek, Italian, and Spanish peninsulas, plus the British Isles just off the northwest coast. Water travel by sea and river between the fragments was easy. After the collapse of the western Roman Empire nobody, not even Charlemagne, was able to put the fragments together politically.

The feudal system resulted in attempts to sustain local autarchies, with all production centered on the manor, but there was always the question of the need for raw materials (iron for the soldier’s armor, for instance), which meant that there had to be trade. The disintegration of political authority into the hands of often quarreling local barons resulted in many modes of travel and warfare. European pluralism came before capitalism. The necessity for trade called forth the early towns, a prerequisite for supplying needy barons and kings. The medieval church frowned on interest and had ideas about the “just price,” but the traders in the towns were irked by limitations that affected their buying and selling. So the market system came into being, with free pricing replacing the fixed “just price.”

Fad, Fashion, and Fascination

The market called for inventive-ness. But Rosenberg and Bird-zell warn their readers to beware of any direct causal relationship here. Their point is that man is curious and seeks knowledge for its own sake. In a time when agriculture was the occupation of the great majority, there was no special need for clocks. Planting and reaping were done by the sun. Nevertheless, horology became an early medieval fad. The making of clocks and watches, status symbols at the beginning, called for extreme mechanical ingenuity, which came long before the industrial revolution. One must allow economic need to include fad, fashion, and fascination with complex mechanisms if one is to sustain the ordinary pattern of causal relationship of economic need to technological response.

Marx and Engels saw history as the displacement of one class by another. There is truth in this, but Rosenberg and Birdzell offer proof that the process is normally devoid of revolutionary sharpness. In England the landed aristocrats, who often had coal beneath their sheep runs, simply became part of a new haute bourgeoisie. And, working backward, the self-made bourgeois manufacturer often used his profits to buy his way into the landed classes. Where there is such an interchange, and with labor getting eighty or even ninety per cent of the gross national income anyway, there isn’t much likelihood of sharp changes in modes of governing.

The steam engine made a great difference in modes of production, however. But even here Rosenberg and Birdzell insist there was a cushioning process. They tell us that the shift from cottage industry to factory pro duction did not require the accumulation of vast quantities of capital. Arkwright’s first Cromford mill was insured for only 1,500 pounds. Multi-story spinning mills were to come in due time, but the early factory owners had twenty years of often big profits behind them and hence no need for savings squeezed out of reduced consumption to extend their investments. It was true that consumption suffered in the early years of the industrial revolution, but this was because of the Napoleonic wars. The early factory workers in England had to scratch for housing because timber couldn’t be imported from Scandinavia.

Rosenberg and Birdzell find it peculiar that some two hundred years elapsed between the time of Galileo and the full use of advanced scientific knowledge by industry. Most of the inventiveness of industry before 1880 came from skilled artisans who often lacked college educations. Henry Ford and Thomas Edison were simply inspired amateurs from the orthodox scientific point of view. Today, of course, industry is always ready to hire inventive scientists away from their universities.

When it comes to opening new perspectives How the West Grew Rich is a first-rate job. But it would have benefited from good editing of its often extremely redundant style.

  • John Chamberlain (1903-1995) was an American journalist, business and economic historian, and author of number of works including The Roots of Capitalism (1959). Chamberlain also served as a founding editor of The Freeman magazine.