We take it as a given, almost a fact of nature like the seasons or the geography of continents, that different parts of the world enjoy different levels of prosperity. But there’s nothing “natural” about this since this is almost entirely within human control. The differences are stark, and at one end of the scale, heartbreaking. Consider the extremely rich first. Luxembourg has an annual per capita income of over $110,000, Norway over $100,000, Switzerland around $85,000. Those are small countries and outliers with perhaps little to tell us. But the US is large and has an annual per capita income of $53,000. Why is it so rich?
At the other end of the scale are Burundi and Malawi with only $200 or so annual per capita incomes. Why are they so poor? The richest countries are around 500 times richer in per capita terms than the poorest. What accounts for this inequality in incomes of countries? That question has engaged the attention of people for hundreds of years — starting with of course the great Scottish economist Adam Smith who inquired about “The Nature and Causes of the Wealth of Nations” in his famous 1776 book.
That fact of present inequality in the wealth of nations has a twin: the fact that nations move in their rankings. The fortunes of nations, like that of families, change with time. Nations once rich become poor, and vice versa. India and China are prime examples of large nations that failed to maintain their prosperity. Others enjoyed spectacular economic growth over relatively short periods. In less than a couple of generations, little Singapore went from a backward poor nation to a rich nation with an annual per capita income $55,000 — higher than that of the US. Singapore increased its per capita GDP around 100-fold between 1961 and 2011. Compared to Singapore, India hardly moved during that same period. Why?
Aside from the question of inequality among nations is the question of inequality within nations. The population of most nations are not equally rich or poor; some segments of the population routinely do better or worse than other segments. Also, the ranking of the segments are not stable over time. There is mobility among the segments in economic ranking. What could the reason for that be?
One explanatory factor for inequality among nations is that they use differing levels of technology. Populations do not differ in their natural endowments (which include physical and mental capabilities, availability of natural resources, etc) to the same dramatic degree as they do in their material prosperity. But they do use technology to differing degrees. Technology enters the production function multiplicatively, meaning it amplifies the production given a certain amount of other factors such as labor, human capital and other resources. A person with a bulldozer can get more stuff moved than a person can with his bare hands.
Technology, and its correlate human capital, explains to some extent the inequality among nations.
So why do some groups (nations or specific segments within nations) do better or worse than others? The straightforward answer is that poorly performing groups are slow at adopting technology. Technology is worth defining at this point. Broadly it refers to knowing how to do something. Technology is know how. We usually think of technology as high tech gadgets and gizmos. That view is too narrow. The gizmos are technological tools. They have technology — know how — embodied in them. Populations that adopt technologies prosper. Adopting technology means learning the know how. If there are systematic barriers to learning, it leads to lack of progress. It’s a fast changing world, and “it takes all the running you can do, to keep in the same place” as the Red Queen told Alice in Through the Looking Glass.
Not a question frequently asked, we should ask what precisely does it mean that the world is changing, and what is causing the world to change? The world used to not change much at all in the distant past. The world of 20 million years ago was pretty much the same a million years later. Plants and animals (including humans) went about their lives that were invariant to the passage of millions of years. Generations lived and died the same way that their ancestors did. That has changed for us humans, a change that would have been unimaginable to our ancestors just a couple of hundred years ago. Today’s generation lives in a world that is dramatically and saliently different from just a couple of generations ago.
The cause of that change is us humans. We must recognize that that change is in essence a consequence of an increase in know how, which as previously noted is an increase in technology. The mantra “technology is know how” cannot be repeated too often. Substitute “know how” every time you read the world “technology.”
Technology is the change, technology caused the change, and technology will change the world at an ever increasing rate. Humans are the active agents of change through their ability to learn how to do things, and we humans have to cope with that change. Those who cannot or do not want to change are doomed to suffer, if not go extinct.
Change is technologically driven meaning as we learn more of how to do things, the more the world changes due to human action. That is the key to understanding the modern world. One immediate consequence of change is that what used to work in the past is not guaranteed to work any more, or at least not work very well. In the past, you could get by without knowing how to read, write and do arithmetic; now illiteracy and innumeracy are serious handicaps. A world that was shaped by literacy and numeracy (the foundational skills for developing science and thus increase the know how) is a world in which illiteracy and innumeracy are penalized severely.
Physical strength mattered in the past. That’s because physical strength was required for getting things done. More hands meant more production in in a pre-industrialized world. Not just for production, physical was required for defense and offense. There were two ways of getting rich, both of which required brute force: make stuff yourself, or take away stuff by hitting others on the head. Physical aggression and violence worked in the past as a means to prosperity, temporary though that prosperity was. What you take without producing is soon consumed, and in the end leaves you no richer. Violence has to be repeated to maintain that lifestyle.
Even a cursory glance at the history of humanity reveals the fact that in the past, conquest through violence was a common strategy among some peoples to acquire wealth from others. For them, pillage and plunder was the main source of material advancement without creating wealth. People who followed ideologies that sanctioned pillage and plunder thrived at the expense of those who were more pacific. Great big empires were built on foreign conquest fueled by ideological zeal. The Islamic conquest of India is a prime example. Violence was at its core. As the British historian Will Durant (1889 – 1975) put it, “the Islamic conquest of India is probably the bloodiest story in history.”
Centuries of Islamic violence was overtaken by centuries of European violence because they had better know how. But eventually, the know how that mainly the Europeans developed rendered physical violence obsolete. What mattered was the ability to learn and use that know how to create wealth. When you can make more and better stuff on your own, you give up murdering others to take their stuff. The world has changed in a way that knowing is an easier and more sustainable way to get wealth than thieving it from others. Only those who are unable to learn are forced to fall back on the older, outmoded, inefficient, costly, and ultimately futile strategy of violence to acquire wealth.
The conclusion appears to the inescapable that technology is implicated in the wealth of nations, and lack of technology in the poverty of people who consequently resort to violence. Though it may be hard to precisely state all the necessary conditions (certainly more than one), the sufficient condition for lack of prosperity is the inability to use technology. Distinguishing between necessary and sufficient conditions is worth a mention here.
While you cannot easily answer the question “What causes a system to function?” you can say this about any functioning system that it satisfies, however imperfectly, all the necessary conditions required for it to function. And about any system that fails to function, you can safely conclude that at least one necessary condition for it to function is not being met. Just one failure is sufficient to wreck the system.
To illustrate that point, consider a working car. It could be a beat-up 1960’s Ford but if it is functional, you can be sure that its engine, its transmission, etc, are working. But if just one system — say the electrical system — is not working, never mind that it is a fancy 2016 BMW with all other bits in perfect shape, the car is not going anywhere. One fault in an essential subsystem is sufficient for the whole system to fail.
For economic prosperity, all sorts of necessary conditions have to be met. What precisely they are is a matter of debate and much disagreement. Still we could all agree that a certain country is prosperous without exactly agreeing on the necessary and sufficient causes. But just one fault is sufficient to prevent a society from economic prosperity. It is my submission that the sufficient condition for lack of prosperity is an inability or a dogged refusal to use technology, which in other words is an inability or unwillingness to learn and know how to get things done.
One of the primary barriers to learning is ideological. Ideologies that devalue learning hinder technological adoption. I will illustrate that using Islam, primarily because it is politically incorrect to do so. The temptation to break a taboo is too hard for me to resist.
Islam makes extremely tall claims for itself, primarily that it is the perfect work of the monotheist god, and that all that one needs to know is revealed in one particular book. Being perfect, it is unalterable, sufficient, and immutable. Consequently, it puts a stop to all inquiry and therefore it prohibits the learning of anything new. Since it enjoins its followers to oppose and indeed annihilate others who don’t subscribe to it, violence is inherent in it. Violence worked in the ancient world and Muslims prospered through conquest. But the world has changed. Now violence is not a means to prosperity but to poverty.
The distribution of violence in the world today is disturbingly congruent with the distribution of Islam in the world, and the distribution of economic dysfunction. This should not mean that Islam is the only ideology that prevents prosperity. Communist and socialist ideologies also present insurmountable barriers to prosperity and consequently peace. But the mechanisms differ.
Islam prevents the adoption of technology, and therefore necessarily inhibits the development of technology. If someone is prevented from learning, that someone is not going to add to the stock of knowledge. Communism and socialism allow the adoption and advancement of technology. But they are ideologically opposed to granting freedom to individuals — a trait that’s shared with Islam. Communism and socialism fail because individuals are prevented from freely exploiting the technology they have.
This brings us to the question that I started off with. Why isn’t prosperity evenly distributed in nations across the world, and why is it not distributed evenly in a nation? India is a good case study to consider both those questions. India as a whole is not prosperous relative to other countries, large and small. Socialism explains the comprehensive failure. India under socialism is a country that denies individual autonomy, property rights, and freedom to enter into unfettered private contracts. The result is predictable and certain: widespread poverty.
Yet, all segments of the Indian population are not equally poor. The Muslims in India are significantly poorer than the non-Muslims. The poverty of Indian Muslims is often used as a big club to beat up the non-Muslims of India. But that is not just a parochial Indian phenomenon. Across the world, Muslims are the underclass in the modern world. We should remember that the ancestors of today’s Indian Muslims were part of the dominant class — as they are quick to point out proudly. That was when violence was the default winner in any conflict. Now that the world has changed, violence doesn’t yield what it used to. There is violence but it is pointless and vain. What matters today is technology — which the Muslims by and large are prevented from developing and using because of Islam.
Technology is non-rivalrous. My use of a non-rivalrous good does not reduce the amount available for use by others. My use of some know how does not reduce the same know how available to you. Indeed, the more I learn, the more I am capable of adding to what is already known, and thus technology has positive spill-over (the technical word is externalities) effects. The more people use technology, the greater is the capacity for developing more technology.
I am an optimist. I believe that the world is getting better. It is getting better because humans have an almost infinite capacity to learn. It is that capacity to learn and increase the stock of know how that is at the center of all the change that we see in the world. And it is learning that will help humanity prosper in a world of change. Three cheers for technology.
The final point — and this is going to stick in the craw of the “secular” of India and get their collective knickers in a terrible twist — is that technology spells the doom of ideologies that are inconsistent with it. Meaning those ideologies that inhibit learning and knowing. Basically those that prohibit free speech and inquiry. Islam, socialism, communism are cats of the same breed and are going to go extinct rather quickly because technology advances exponentially. That’s the good news. But the bad news is that in its final death throes, it will cause a great deal of death and destruction. That’s what the aptly named “Islamic State” is demonstrating to the world.
As I say, it’s all karma, neh?
Related post: Fermi’s Martians.