Adam Smith concluded the first chapter of The Wealth of Nations with an observation intended to shock his readers out of their complacency. So miraculous is the power of economic growth, he wrote, that “the accommodation of an European prince does not so much exceed that of an industrious and frugal peasant, as the accommodation of the latter exceeds that of many an African king”.
What was the magic formula that had allowed Europe’s economies to furnish even their poorest citizens with such unprecedented material comfort? Smith made this the ur-question of economic history — and in his masterwork, he supplied the ur-answer. The secret sauce is trade, and the division of labour which it permits. That led to his central policy conclusion: a liberal economic order that gives free rein to trade is to be protected at all costs from the partisans of protectionism and monopoly.
More, a lucid and wide-ranging new history of the global economy from Philip Coggan, is a book firmly in the Smithian tradition. Like Smith, Coggan — a senior Economist journalist and former FT columnist — is concerned that the sheer scale of what compound economic growth has achieved is not generally appreciated. Like Smith, he locates the roots of these tremendous improvements in the spread of markets and the growth of trade. And like Smith, Coggan’s ultimate goal is to defend the virtues of a liberal economic order in an age when those virtues are under siege.
In one respect, his task is easier than his illustrious predecessor’s. To begin with, we know much more about the distant past — so Coggan is able to begin his tale of how trade remade the world as far back as 7000BC, with Cappadocian obsidian wending its way from Asia Minor via Cyprus to modern-day Iran.
Then there is the spectacular acceleration and internationalisation of growth and technological development over the past two and a half centuries. When The Wealth of Nations was published in 1776, life expectancy in the UK was under 40; James Watt’s steam engine had only just reached the market; and China was a byword for economic stagnation. Today, the average newborn will live past 80; electrification, automation and digitisation are everywhere; and China’s economy has grown by a factor of 10 in the past two decades alone.
The arc of material progress has extended way beyond Smith’s wildest dreams. The benefits of sustained economic growth are clearer than ever.
In other ways, however, Coggan’s task today is much more difficult. Surveying the achievements of the British economy in the last quarter of the 18th century, Smith’s thesis that free trade and the growth of specialisation led inexorably to greater and greater prosperity was novel, concise and compelling. In an era desperate to escape from secular stagnation but racked by divisions over globalisation, this oven-ready recipe looks quaint — even perhaps naive.
More encompasses thousands more years of economic development, a far greater geographical scope, and a global economy infinitely more diverse, more complex and technologically sophisticated than the one Smith knew. That inevitably makes it much more difficult to weave a unifying thread through the narrative. The book also has to confront the dark sides of economic development, such as slavery, environmental degradation, and the instability of global finance. That demands a somewhat more nuanced take on where all this material wealth has come from.
Coggan finds a deft way around these challenges by interspersing a pacy linear narrative with thematic chapters covering major factors of economic development which have been important in every age. These cross-cutting essays — on the roles in economic history of energy, immigration, transport and government, for example — are vivid, lively and rich in insight.
When he is tempted to tease a simple Smithian motto out of his gloriously complex history, the result is inevitably a bit anodyne. Trade remains the philosopher’s stone of prosperity, because economic history “is all about connections. The more people with whom we connect, the more likely it is that those connections will be useful. Either we will find someone whose expertise is helpful, or we will find someone who can offer a good or service that we desire but cannot provide for ourselves.”
This momentary lapse into Facebookism is an uncharacteristic anticlimax to a truly amazing story — and one which Coggan, like Smith, is right to insist has to be told.
More: The 10,000-Year Rise of the World Economy, by Philip Coggan, Profile, RRP£25, 480 pages
Felix Martin is author of ‘Money: The Unauthorised Biography’
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