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Acemoglu on Growth

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The New Economist quotes from a preliminary draft of a magnum opus from wunderkind Daron Acemoglu on economic growth.


The central questions are these:
(1) Why did the world economy not experience sustained growth before 1800?
(2) Why did economic takeoff start in 1800 and inWestern Europe?
(3) Why did some societies manage to benefit from the new technologies and organizational forms that emerged starting in 1800, while others steadfastly refused or failed to do so?

The blogger says that Acemoglu's answers to these questions constitute "the best summary of the economic growth literature I have read."

If you and your computer are up for an enormous download, you can read the book (it's in draft form) here.


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COMMENTS (20 to date)
Matt writes:

By 1720, the French township governments had established procedures to order quaranteen and blockades to stop the spread of plague "poisons". This precedes the 1750 establishment of french industry and banking by 30 years.

Somewhere between 1700 and 1750 European anti-plague measures began to pay off. By 1750 we are seeing a generation in Europe born with the early expectation of a longer life. This is the first generation of children whose games and toys did not end with childhood. Parents and teachers began to believe that crazy dreams of invention by young kids could come to fruition.

It's only 7.25mb.

My computer handled it but my brain couldn't.

Steve Sailer writes:

I didn't find the words "IQ" or "intelligence" anywhere in this 1000+ page book.

Isn't that kind of sad?

On p. 1079, he more or less admits that he mostly doesn't know why some countries are so rich and some are so poor. Well, that will happen to you if you intentionally ignore a big piece of the puzzle.

Jose writes:

I'll have to pick up the book, but the underlying reason that comes to mind is an explosion of curiosity and experimental behaviour by the new and emerging middle class in Liberal Western Europe that gave us such gems as steam travel, the telegraph and later wireless communication, etc., and a sense that by rational thought western man could uncover the secrets of the world and rule it effectively and efficiently.

Ars Magna, Baby ;)

eric writes:

Any book over 1000 pages, which laments it doesn't really know why, say, Japan adopted all the good institutions, policies, and technologies while Liberia didn't, seems to being saying everything and nothing.

General Specific writes:

Reductionism. My definition: The tendency to explain the complex with the simple. Sometimes warranted, often the result of the reductionist's unwillingness--or inability--to purview, appreciate, and even understand the complexity in and of itself.

Example of reductionism: Searching through a large analysis of economic growth for the word "intelligence." Are there intelligence tests, performed periodically through history, that we can draw upon to motivate that analysis? Or are we just to assume that winners must be intelligent--by definition? Let's see--who wrote the intelligence tests? Oh, that's right, the winners.

Reductionism has its place. Intelligence has its place. But when considering the historical remapping process in which the biological organism called homo sapiens transform matter and energy, erring on the side of complexity and nuance is warranted.

Reducing a proton to a combination of quarks helps us understand the proton, but is of no use when anaylzing a process such as photosynthesis. Intelligence, particularly intelligence as many consider it, may prove to be a similarly constrained concept, useful only in highly confined and controlled realms, less useful otherwise.

Dr. Troy Camplin writes:

In order to have a living complex system, which means that grows at an exponential rate, you have to have a few attributes. 1) You have to have a sufficient density of entities in the system; 2) they have to be able to interact freely to create rules that allow for complex interactions; 3) there must be a hierarchy of complex subsystems within the system as a whole that are themselves capable of freely creating their own rules of behavior. All of which means that 4) there must be a reduction of top-down control, meaning a reduction of dominance of one particular subsystem in the system as a whole.

An understanding of how one gets the creation of complex systems with emergent properties of behavior (Smith's "Invisible Hand") would go a long way to helping one to understand growth in general, and economic growth in particular.

General Specific writes:

"you have to have a few attributes."

True. But let's add another critical ingredient: Energy. One always needs a source of low-entropy.

In addition, let's always remember that the human organism itself, individually, is a complex system, and most of the cells in that complex system have very little flexibility. They are highly constrained to act within tightly controlled parameters, overseen by something called a brain or mind which takes into account longer term or more general issues and then constrains the individual cells to act accordintly. E.g. the mind might decide that blood flow to certain organs is unnecessary in order to maximize blood flow to muscles, thereby increasing the speed of escape from an attacker.

A distributed system is more efficient, quite clearly. Minimizing controls at the top are important. But not all controls. It's getting the balance right that is important.

Similarly, a human society might decided that a carbon tax is an appropriate response to a phenomenon such as human caused global warming. Higher level mind acting on or constraining lower level processes.

ArtD0dger writes:

As I recall, Adam Smith devoted quite a lot of space to economic growth before 1800.

Badger writes:

In the short extract reproduced by "The New Economist" the word "elite" appears not less than eight times. Besides making for boring economics reading (to not say bad economics), it makes me think of one of those hippie history teachers I had in High School...

TGGP writes:

GS, perhaps the average book on history & growth should not need to mention intelligence. But this is a huge one. It could have briefly noted it. Jared Diamond did, if only to dismiss it, in GS&S.

Steve Sailer writes:

General Specific writes:

"Example of reductionism: Searching through a large analysis of economic growth for the word "intelligence.""

Exactly how is it reductionist to point out that Dr. Acemoglu left out of his vast tome a variable that would have added nuance, sophistication, and predictive power?

GS writes:

"Are there intelligence tests, performed periodically through history, that we can draw upon to motivate that analysis?"

Yes.

In fact, I made up a convenient table of Lynn and Vanhanen's data on national average IQ, which goes back as far as 1914 in one case, and you can examine it here:

http://www.isteve.com/IQ_Table.htm

Lynn has since uncovered another 100 or so studies from around the world.

Dr. Troy Camplin writes:

It took a very long time for a central nervous system to evolve. Even it had to evolve from the bottom-up.

Steve Sailer writes:

If the theory, as promoted by Arnold and Bryan's colleague Garrett Jones, that differences in national average IQ have an influence on per capita GDP is fatally flawed, then Acemoglu had plenty of room in his 1100 page textbook to explain why it was wrong. That he chose simply to ignore the theory suggests other explanations, such as Acemoglu deciding that discretion was the better part of valor. Perhaps he reasoned that discussing IQ differences in a textbook would limit his sales on campuses because other economics professors would be terrified of being charged with political incorrectness. After all, if the President of Harvard can't get away with discussing IQ differences, how can a textbook author expect to?

I know the concept that economists can be motivated by self-interest is shocking ...

eric writes:

The bottom line is there isn't a big or important idea in this book, just a collection of novel stories and elegant models that explain lots of little things, but they are about as compelling as Blanchard and Fischer's Lectures on Macroeconomics or Robert Hodrick's book on Interest Rate Parity: the Best Economist at that Time showing how various models explain various things, but is still left very confused by the 'data'. The difference between knowledge and wisdom.

Jason B. writes:

On page 2 of the draft Dr. Acemoglu asks for comments and corrections. Has anybody asked him why he doesn't mention intelligence or IQ?

General Specific writes:

Steve Sailer wrote: "which goes back as far as 1914"

I'm looking for data that goes back at least to the beginning of the industrial revolution, but even further back would be useful. Does that data exist? I really suspect not.

For those interested in bringing IQ into the discussion, let's hear it: what's your narrative?

TGGP: If Jared Diamond has already dismissed it, why bring it up again?

Dr. Troy Camplin wrote: "Even it had to evolve from the bottom-up."

I'd put it slightly differently. I'd say it evolved from the top-down-bottom-up. Once the centralization process begins, one observes an interaction between the distributed portions and the environment, as well as the distributed portions and the center. All three evolve together. Turning to government and society, this argues for as much focus on getting the center right as it does for combating the center and destroying it (along the lines of Norquist and his strangulation and drowning obsession).

TGGP writes:

I'm looking for data that goes back at least to the beginning of the industrial revolution, but even further back would be useful. Does that data exist? I really suspect not.
The concept of IQ or intelligence testing was created by Alfred Binet in 1905. That's well after the Industrial Revolution. There may be proxies correlated with IQ we could look at though.

If Jared Diamond has already dismissed it, why bring it up again?
AHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!
Sure, Jared Diamond has the last word. If he discusses something, no need for any academic to ever mention it again. Diamond doesn't even have to spend more than a sentence on a topic and it is closed forever. I have no idea what caused you to say that.

Troy Camplin writes:

I'm not arguing for destroying the center by any means. I'm arguing for a complex system that is not centered on the center, so to speak. Decentralization does not mean anarchy. It means recognizing that a complex system is not run from a central location. In the brain, there is no "central processor" no homonoculus running things. What we have are good rules allowing for the most complex actions. If we think of the central nervous system as a "center" that runs the body, we have to recognize that the brain itself has distributed processing as its way of running the brain. When we set up governments and attempt to set up societies and economies, we take a top-down approach -- this does against nature.

ralph r. emmers writes:

Quite inclusive. In academics knowing your enemy is important in order to fight him better, but these enemies are way too scary for me. Evasive maneuvers are called for.

I did find a good quote on p.1076:

"These constitutional regimes that emerged, first in Britain and the Netherlands, then in
France and other parts of Western Europe, paved the way for sustained economic growth
based on property rights for a broad cross-section of society, investment in contract enforce-
ment, law and order, and infrastructure, and free entry into existing and new business lines."

So we can skip all the formulas in the book and focus on how the environment that gave rise to the rules necessary for Capitalism emerged in the West and not in the Rest. That would be more inteResting, and might speed up our ability to help the rest also say a farewell to alms.

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