A physicist, a chemist, and an economist are stranded on an island, with nothing to eat. A can of soup washes ashore. The physicist says, “Let’s smash the can open with a rock.” The chemist says, “Let’s build a fire and heat the can until it bursts open.” Recognizing the messiness of those solutions, the economist says, “Let’s assume a can-opener . . .”
Glenn Hubbard and Tim Kane, Balance: The Economics of Great Powers from Ancient Rome to Modern America
The Industrial Revolution, as we know it, could have occurred five centuries earlier. While Europeans were living short, subsistence-level lives, the rest of the world was witnessing an explosion in technology and trade coming out of Ming China. Why the revolution didn’t materialize then and there are among the subjects authors Glenn Hubbard and Tim Kane take on in their book Balance: The Economics of Great Powers from Ancient Rome to Modern America.
Here’s how the story goes: When the last vestiges of Rome were crumbling in Byzantium, China had already experienced over almost two millennia of innovations that included the casting of iron (200 bc), the discovery of paper ( ad 105), and movable type (ad 1041-1048). But according to Hubbard and Kane, China’s most important development was its mastery of maritime engineering, anticipating innovations that wouldn’t appear in the Europe for another six centuries. The emergence of the first imperial navy in 1132 under the Song Dynasty coincided with imperial incentives in the form of cash rewards to spur innovation in maritime engineering. As a result, this era saw an explosion of oceangoing vessels. This expanded trade, which in turn promoted unprecedented levels of interaction with surrounding cultures. Institutions and policies created conditions promoting a virtuous cycle of trade and innovation.
Enter the Mandarins.
The Mandarins were the dominant political class of China. They had enormous influence in the Forbidden City, regardless of which emperor or dynasty reigned at any given time. The Mandarins found the order they were charged with protecting slipping away: Under the reign of emperor Zhu Di of the Ming Dynasty, an upstart slave by the name of Zheng He revolutionized trade, making seven voyages to the West and opening of trade relations with Japan and India.
In early eighteenth century England (when the Industrial Revolution did happen) there were laws protecting property rights and entrepreneurial innovation. No such institutions existed in Ming China. China was governed not so much by rule of law as by the dictate of imperial rule and the dominant political class. The Mandarins saw protecting the virtue of their nation as their primary responsibility. Being Confucians, they favored agrarianism over industry and had a jaundiced view of profit seeking and entrepreneurial ambition. They were suspicious of changes that challenged the rigid order of caste and hierarchy. In the words of Confucius, “Good government consists in the ruler being a ruler, the minister being a minister, the father being a father, and the son being a son.”
The Mandarins successfully used their influence after Zhu Di died and the next emperor took the throne: By the time the following emperor would come to power, the ships that once visited the other side of the continent were destroyed. Coinciding with this reassertion of Mandarin influence and policy came a precipitous economic decline. The world would have to wait until the eighteenth century for a small island nation in Europe to usher in the Industrial Revolution.
Hubbard and Kane suggest a common pattern underlies most of the historic examples of decline: A national power emerges, often due to some institutional feature that provides a competitive edge over its rivals. The nation experiences a dramatic ascent, but at some pivotal point, the same institutions that helped facilitate national prosperity refuse to adapt to new circumstances, preferring to protect their narrow interests at the long term expense of the society they were supposed to serve. Rome was not brought down by military overextension, but rather by the institution Augustus Caesar formed to protect the emperor, the Praetorian Guard: A century after Augustus, the Guard would be killing emperors and selling the throne. Similarly, the Ottoman Empire would become the so-called “sick man of Europe” because its military class, the Janissary Corps, refused to recognize the staggering advances in European Warfare and resisted any reforms to their outdated modes of war.
The authors are certainly on to something and they give compelling support for their theory (albeit a theory that has been in currency at least since Mancur Olsen’s work in the 70s). But when Hubbard and Kane turn their attention to our present state of affairsour stagnant economy, our exploding entitlements dilemma, and so onwe are given a list of usual suspects as our present day Praetorians: partisan factions, public sector unions, a self-serving political class.
Hubbard and Kane explain that our present dysfunction is the product of perverse incentives produced by poorly conceived laws and institutions, but their solution is to institute new laws and amendments. But how are laws and amendments supposed to right a ship operated by a political culture already invested in the present day state of affairs? In Hubbard and Kane’s recommendations, we have the equivalent of an economist who solves the problem of opening the can by assuming a can opener.
The story of Mandarin China ought to give us pause. As our institutions, laws, and governing principles such as the separation of powers, continue to fray, a political class with ever greater powers of discretion over the country is emerging in their place. This reflects a broad cultural problem, against which new institutions and laws will prove useless.
If our present political state is ruled by a particular class, then any solution ought to begin by investigating our political class and the conditions that brought it about. By focusing on institutions, Hubbard and Kane miss that institutions are also a reflection of the character of the people. Instead of economists, we need a Tacitus: someone willing to offer us an account of the facts that quotes quotes and names names. Then, perhaps, we can begin to understand the nature and magnitude of the challenge.
Forfare Davis lives in Southern California with his wife and two children. He blogs for First Things. You can follow Mr. Davis on twitter @Pseudoplotinus.