Why Some Countries Are Rich, Some Poor

The Press, June 19, 1999

Denis Dutton


The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor, by David S. Landes. Boston: Little Brown, $55.95.

At the end of this masterful economic history of the world, David Landes tosses off suggestions about how peoples have overcome poverty and created wealth: what counts is thrift, honesty, patience, tenacity.  Coming from someone in a rich country, he says, that may sound like selfish indifference.  “But at the bottom, no empowerment is so effective as self-empowerment.” It’s also a theme illustrated over and again in the five hundred preceding pages. 

The Industrial Revolution was the basis for wealth in the modern world, but it was made possible by attitudes toward work and money that in turn were built on the evolution of the rule of law in a Civil Society.  Literacy, numeracy, an eagerness to take up new technologies, and respect for honesty in business dealings are crucial factors. 

David S. Landes

Landes thus argues that some nations prosper while others remain backward because of culture. Excepting his belief that industrial society could not have begun in the sweltering tropics, he rejects in general accounts of wealth based on the blessings of geography: minerals, weather, soils, or forests.  These can be important for a time, but the riches of Switzerland or Singapore are built on essential cultural values.

Especially if a nation has not truly earned its wealth, it will not know how to conserve and develop it. Spain, for example, began the great imperial expansion into the New World and thus amassed a fabulous fortune in gold and silver bullion. In the seventeenth century it was the richest country in Europe. It became, and remains today, among the poorest.

Spain chose to spend it new wealth on luxury and on wars. It squandered money in Flanders and Italy, along the way enriching English cannon makers and Dutch provisioners.  It abandoned its indigenous craft traditions and technical talent because it could afford to buy anything it wished from foreigners. One happy Spaniard boasted in 1575 that London could manufacture its cloth to its heart’s content, Milan her brocades, Italy and Flanders their linens: all the world serves Spain, “and she serves nobody.”

Spain in turn bequeathed insecurity, bad government, and economic stagnation to South America. Civil society of the sort familiar to us was unknown there in the nineteenth century, with political leaders looting freely while “the masses squatted and scraped.” The nations of South America became in time economic dependencies of the advanced industrial countries of northern Europe, Great Britain and Germany to begin with, and more recently the United States. Naturally, the nurturing of resentment is as much a South American art form as the tango.

Readers annoyed by such ethnic or national generalisations will find much to object to in this book.  Landes has no time for politically correct views of the equality of cultures. He is scathing, for example, on the attitudes of Arab cultures toward women, insisting that the emancipation of women is among the most important factors in modern economic development.

Equally unblinking is his analysis of the Chinese failure to make progressive use of the technologies they invented (gunpowder, timekeeping, printing). The historic interference of the authroity of the state in the lives of the Chinese created a cultural atmosphere in which innovation was stifled.

Europeans, less deferential to authority, thrived by encouraging the dissemination of novelty, both in technology or ideas. Long before cellphones and the Internet, the European mentality was mad about the latest labour-saving gizmo.  The Romans managed to invent the water wheel when they began to run out of slaves. The device was revived in the tenth century.  Even that backward little hinterland, England, had 5,600 mills in 1086.  There were many more on the Continent.

Eyeglasses, important for skilled handiwork and the spread of literacy, spread rapidly.  Later there were telescopes and microscopes, which the Europeans monopolized for centuries.  The manufacture of these technologies, along with the mechanical clock, required the development of precision skills that would be applied elsewhere, such as the invention of printing. Underlying its industrial development lay a curiosity which evolved into the science that revolutionised thinking in the seventeenth century.

We naively imagine countries as poor because they were never given a chance to have money.  Spain became poor because she had too much.  Take away their oil and many Arab lands would likewise be reduced to poverty.  It’s ideas and culture that count.

It’s a lesson from Landes’s history that if a country gets lucky for a while, it must turn its advantage toward long-term efficiency and productivity. I could not help but thinking of New Zealand, which became relatively wealthy in the 1950s Korean War wool boom. Unfortunately, some New Zealanders then (just as many Americans today) came to view their wealth as a natural, god-given condition.  Like Spain, New Zealand did much less to develop higher education and technology than its overseas peers, expecting that the unprocessed raw materials it exported would provide a permanent meal ticket. Reading Landes is a stark reminder that there are no permanent meal tickets.

The book presents vast array of provocations for meditation about every aspect of life, with endless anecdotes. Although Landes approves of free markets, he recognises the imaginative ingenuity of countries in trying to foil them. Japan once tried to prohibit the import of French skis as unsafe. Japanese snow, they said, is different. The French simply declared that the import of Japanese motorcycles would have to be banned because French roads were different.  The Japanese had another think about the snow.