Marginal Revolution’s Tyler Cowen has a (p)review of Gregory Clark’s “A Farewall to Alms: A Brief Economic History of the World” in today’s NYT.
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It takes 3 men to replace one good woman? |
Clark follows in the footsteps of recent mass market developmental econ books such as Jared Diamond’s Pulitzer-winning Guns, Germs and Steel and William Easterly’s The Elusive Quest for Growth. All three attempt to tease apart resources, institutions, culture, money, colonialism, and the like in trying to answer the age old question of why some nations are rich and others are poor.
Clark comes down firmly in favor of culture while using the somewhat oblique, econ-centric term “Quality of Labor”. The example Cowen chooses to excerpt in his NYT review comes from India –
…A simple example from Professor Clark shows the importance of labor in economic development. As early as the 19th century, textile factories in the West and in India had essentially the same machinery, and it was not hard to transport the final product. Yet the difference in cultures could be seen on the factory floor. Although Indian labor costs were many times lower, Indian labor was far less efficient at many basic tasks.For instance, when it came to “doffing” (periodically removing spindles of yarn from machines), American workers were often six or more times as productive as their Indian counterparts, according to measures from the early to mid-20th century. Importing Western managers did not in general narrow these gaps. As a result, India failed to attract comparable capital investment.
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p>Contrary to the “race to the bottom” thesis, Clark argues that the real driver of globalization is interconnectedness amongst others who’ve mastered the strange calculus of economic growth rather than simple exploitation of the poorest –
Professor Clark’s argument implies that the current outsourcing trend is a small blip in a larger historical pattern of diverging productivity and living standards across nations. Wealthy countries face the most serious competitive challenges from other wealthy regions, or from nations on the cusp of development, and not from places with the lowest wages. Shortages of quality labor, for instance, are already holding back India in international competition.
Sparking my curiosity, I dug into the original manuscript online to learn a bit more about the delta’s that Cowen summarized above. Interestingly, unlike Guns, Germs and Steel which gives rather cursory treatment of India, Clark’s book has an outsize focus on it.
But, let’s start with some interesting data on the comparative rate of “doffing” and how productivity differences became more pronounced over time – Figure 15.1.
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Your Grandmother was a Doffer! And a bad one at that! |
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p>It’s interesting to note that even with the innumerable advances from the turn of the century to 1978, the Indian doffer only improved productivity by about 40% from a very low baseline. More importantly, the productivity growth gap of 6:1 presumably growing to over 10:1 between the US and India by 1959 would readily drive the capital flows that Clark notes earlier.
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p>So why the delta? — [pg 409]
The cotton mills in England were noted for their early introduction of strict systems of factory discipline. Workers, even those who were on the piece rate, were expected to appear at the opening time each morning, to work all the hours the mill was open, to stay at their own machines, and to refrain from socializing while working.
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p>Uh oh, can’t you feel Indian Standard Time (IST) about to rear its ugly head?
Indian mills by comparison were very undisciplined…substantial fraction of workers would be absent on any given day…[nearby] eating places, barbers, drink shops [catered to workers on break]… relatives of workers would bring food to them…. those at work were often able to come and go from the mill at their pleasure to eat or to smoke…10-30% of work time was spent in the yard (not working)
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p>…as well we a host of other issues. A quote from an exasperated mill manager in India summarizes the situation well [p 410]
…the worker “washes, bathes, washes his clothes, smokes, shaves, sleeps, has his food, and is surrounded as a rule by his relations.”
Of course, living / working in San Francisco, that description sounds an awful lot like the bohemian dotcom worklife ideal today. And therein lies two sources of hope. The first one is that work requirements really do change as tech transforms the office – less discipline, more creativity; less brawn, more brain; fewer humans serving machines, more machines serving humans, and so on. BUT, and perhaps more importantly given the relatively miniscule number of folks employed in SoMa and Wipro, underlying cultures – particularly in India – are undergoing rapid change and far more readily embracing an economic growth oriented mindset.
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p>Figure 13.6 from the manuscript plots US vs. India and UK vs. India GDP over time and the author is forced to note the dramatic post 1991 inflection point in income ratios.
But 1991, as Clark would argue, wasn’t merely a point change in policy but rather a convenient marker for a broader gradual change in cultural attitudes towards capitalism and productivity. For ex., folks tracking desi productivity growth see an interesting inflection point starting as early as 1980.
A different NYT article from several years ago had a few interesting quotes –
..The change in values, habits and options in India — not just from his day,but from a mere decade ago — is undeniable, and so is the sense of optimism about India’s economic prospects.…”The culture is changing,” she said. “People are becoming more broad-minded.”
…before economic liberalization began in 1991, “there was a great deal of guilt associated with spending of any kind; saving was the done thing.” But today’s youth — those born in the 1980’s — never experienced either the shortages or the psychological constraints of the country’s socialist, Soviet-oriented past, he said.
“Consumerism as a term is no longer seen as a bad word,” Mr. Samat observed,”and the acquisition of material things is no longer seen as going against Indian traits.”
While technology has ensured that the call center workers interviewed are far from toiling over “doffs”, underlying cultural changes in India have also ensured that they are no longer washing, bathing, shaving, sleeping and surrounded by relatives in the workplace. Well, the relatives might still be there – they are Desi after all. 
interesting analysis. Will certainly read the book in full.
fascinating, thank you
Very very interesting, I am defenitely forwarding this to my dad, now I finally have proof!
How much of the lag in productivity, pre-cultural shift, is due to the fact that Indian workers would not see any benefit from increased productivity? That is, I assume, and could be wrong, that many of the textiles were produced for export or for sale to classes to which the workers did not belong. Therefore, there would be no incentive for increased productivity. Whereas in the U.S. and England, the working class started to see some improvement in quality of life in parallel with the industrial revolution. Is that correct, or am I totally off?
very interesting perspective sriram. also consistent with the shift observed in the 90’s as note d by the author. The opening of the markets flooded the country with those consumer goods that had yet been out of reach – and so the working masses had to evolve.
I definitely need to read this book. Then la familia can talk about something else at Thanksgiving besides the elections…
many of the textiles were produced for export or for sale to classes to which the workers did not belong. Therefore, there would be no incentive for increased productivity.
Are you saying Ferrari auto workers are not motivated to work hard. They get paid to do the work.
Perhaps the lower productivity was due to the fact that Britishers prolly owned these mills/factories and being lazy was a form of brown rebellion. The workers didn’t want to make money for their oppresors.
THAT’S desi culture!
Did it uccor to Vinod to take every research with a grain of nemak or his he being a nemakhalal to another alliegience. Several points have been missing, including composition of labor and managers in india, The role of british in acquiring a monopoly in cotton farming(Indian farmers ever wonder why the land lease document refers to a lease given to you by president of india…Hint replace that with the Queen(and I mean the Queen in the Faggoty sense not how antiGay people use it)). How those acts essentialy destroyed a freer market is never looked well upon. Also A fact to be noted the productivity of slave labors in farms in south of US was low, but offset near land grabs and huge land area that made it a profitable business.
I’m with Sriram. Desi ppl were taken all over the world from africa to south america to fiji. The quality of labor couldn’t be all that bad. I think it is a very interesting read, but flawed by a very biased point of view.
Culture is certainly to blame to the extent it restricts freedom of ideas. Quality of labor will be low and efficiency less in places where people are not allowed to implement new ideas (that are born pretty much uniformly and randomly, regardless of class, race, wealth, etc.), and resistance to change is entrenched in the culture. This may be due to local vested interests or a rigid feudal structure. Whatever it is, change does not happen and the society persists with the same old patterns of functioning, while the rest of the world moves on. Cultural and political change is essential to end poverty.
There is another well-known book that tackles this same question: “IQ and the Wealth of Nations” by Dr’s Lynn and Vanhanen. Its politically incorrect, controversial conclusion: the indian subcontinent is poor and backward because of the very low average intelligence of desis.
Clark’s conclusion that indian “quality of labor” is very poor because of indian culture still begs the question: why are indians unable to learn and transform their work culture? It took Japan not much more than a single generation to transform itself into a modern, industrialized world power. The koreans and now the chinese are replicating that feat. While India has steadily slipped further behind the rest of the world after the British left. Lynn concludes that the reason for this is that East Asians have a substantially higher IQ than South Asians.
that are born pretty much uniformly and randomly, regardless of class, race, wealth, etc Does such a place really exist? anyway, i wonder about the role of stability in all these indices. The subcontinent has been arguably the most politically instable place on earth, up until independance. S Asia probably ranked at the bottom of every human development index at about the time of independance. Poverty and illitracy were rampant. How do you test the IQ of someone who has never taken a regular math test? I wonder…RAZIB… if there are more reliable/unbiased statistics.
So several centuries before when India amounted for close to 20% of world GDP, its citizen had higher IQ and the Europeans had low IQ?? Sounds bogus to me.
GREAT post, btw Vinod !!! This is one of my favorite topics. I dont agree with all being said, but I love to read these studies and learn.
The same applies in America as well. When you go to small towns in the mid-west you see a lot of people wearing elastic pants and ugly clothes from Wal-mart. And when you shop in San Francisco, you can go to boutiques and Nordstrom’s and Bloomingdales and get things more fashion forward and made much better.
And you are forgetting the most importatnt thing, most of the cotton clothes you buy here and made in India. Don’t you ever look at the tag and see where the items are made? They are of good quality and made by people who live in those small towns.
When my gori friend traveled in India this annoyed her as well. I’ll tell you what I told her: GET OVER IT! That’s the way life is there and if you don’t like, don’t go to visit.
SM intern, how come you didnt delete this comment as well?
so you deleted the source itself
kudos to you brother!
don’t forget that lifespans in the U.S. nearly doubled between 1907 and 1978. all through that time, americans were enjoying advances in medicine/health care, and plentiful access to nutritious food. meanwhile, the tripling indian population was plagued (and in some regions, like bihar, continues to be plagued) by unchecked spread of infectious disease– largely because of climate/environment issues that North Americans never had to deal with. and the des didn’t have its green revolution until the 1960s-70s (operation flood was launched in 1970), so hunger and famine remained major barriers to economic growth from ’07 to ’78. when you’re hungry/malnourished and chronically ill, of course you’re not going to be able to work “efficiently”.
What a perverse example of exploitation of the poor. Workers in outsourced industries(BPO, IT) can hardly be called poor or exploited. I thought agricultural subsidies in EU,US would be the proper example of exploitation of poorest.
What happens when both are true as in India/china.
this is the 2nd post on culture and wealth where max weber’s The Protestant Ethic and the Spirit of Capitalism hasn’t been mentioned.
weber observed that northern europe was an economic basket case until the reformation wiped out the catholic notion that wealth was a sin and replaced it with the notion that it was a gift to those with puritan ethics. he traces the emergence of capitalism to the rise of protestantism and it’s advocation of worldly activities.
since then, many have associted the backwardness of latin america to the prevalence of Roman Catholicism, the anti-commercial or anti-materialist values of islam to the poverty of muslim countries, and the anti-materialist aspect of hinduism as an explanation of india’s poverty. Niall Ferguson notes that the protestant values of america help explain it’s superiority over europe.
values drive history.
nice post Vinod, quite juicy.
I’m glad you referenced the Rodrik/Subramanian paper because it has been important in attempting to make mainstream the position that growth did not begin 1991 with the partial slaying of the Permit Raj. It’s a nice soundbite but void of the necessary nuance. Nonetheless, 1991 remains the predominant marker in mainstream economic (ie. Daniel Yergin’s Commanding Heights). Anyhow, did you read the brief debate about the Rodrik paper? TN Srinivasan was not a fan and Rodrik/Subramanian took exception to his criticism and tone.
With regards to the attitudinal shift, I like Rodrik’s distinction between pro-business and pro-market orientations if for no other reason that it allows politics to enter into the equation,
Srinivasan in turn favors a more technocratic and empirical explanation- “…the distinction made by the authors has no economic logic behind it.”
Capitalism has many hues, too many in fact, which makes the term problematic. Another reason why I like the pro-business/pro-market distinction is that the attitudinal shift you speak is not an out-and-out embrace of capitalism, nor the market. I think it is more specifically pro-business, pro-Indian business. I expect economic nationalism to increase based upon this premise. A hypothetical to illustrate this point is a large but secular & fundamental change in the value of the US dollar. Recent history has shown that given the dollars dominant position in the int’l economy, it is holders of dollar denominated assets that bear the most burden on such a change. The response, if a crisis follows, is typically a call to protect vital yet vulnerable domestic industries.
GGS is ok. It’s understandable why economists don’t like his thesis. However, the farther you go back in history (before European colonialism), the more relevant it becomes. I think a more enlightening book on roughly the same subject matter from an institutional perspective is Michael Mann’s Sources of Social Power Volume 1. I’m reading it right now and is great so far.
Thanks for the blogcrack.
Desis were taken all over the world by the British (after slavery was made illegal) as indentured servants to work in agricultural plantations run by white bosses; not to work in modern factories. The quality of labor required to work in sugarcane fields is obviously not that high.
Several centuries ago wealth was measured in agricultural produce, animal husbandry, small crafts etc. The scientific and industrial revolutions changed all that. India boasting 20% of world GDP with an equivalent (or greater?) proportion of the world population in the pre-industrial age, doesn’t mean much at all. The issue being addressed here is: why is South Asia such a laggard in the modern scientific/industrial age.
Stop playing the victim already. The British have been gone for more than half a century. India has actually slipped further behind the world since they left. What’s your excuse for that?
No it didn’t.
But now, after decades of “independence”, there are more malnourished women and children, children working as slaves/bonded laborers, homeless people etc in India than anywhere else on earth . Explanation?
Firstly, the “hungry/malnourished and chronically ill” weren’t the ones hired to work in the colonial factories. Secondly, if (as you falsely claim) this “barrier” was removed in 1978, where are the results? Why after 3 decades of this barrier being removed India still has a per capita income of around $600, which is very low even by third world standards? And thirdly, who is to blame for the malnourishment of India? Are Indians too stupid, or too callous? Thats the question.
But now, after decades of “independence”, there are more malnourished women and children, children working as slaves/bonded laborers, homeless people etc in India than anywhere else on earth . Explanation?
Remember that India started off at a fairly low base after 200y of being p!llaged. then after independence, there were decades of socialism and burocracy, salary caps, etc. For this period, growth was at around 3%. This was called the “Hindu growth rate”. Now, 3% growth in itself isnt horrible. This is around the growth rate of the US. But, the US is already weathy, growing at around 3%. now, if your starting out in bad shape and growing slowly, with a fast growing population, that is a problem. India has been growing very fast recently, but, growth takes time. 8% growth over the next 50-100 years would make india look pretty good. (assuming such rapid growth is sustainable across decades). This was written really fast while im doing other work, so take it for what its worth…
this was supposedto be in quotes
That is not at all what I’m saying. I’m saying that Ferrari auto workers probably receive benefits (decent wages, benefits, working conditions) that indian factory workers have traditionally not received and therefore there is an incentive to work hard whereas in there was probably no such incentive in the indian demographic that is the subject of the article.
Thats a hotly debated topic. There are no single point answers. A host of factors are at play, how do you separate confounding factors is a huge challenge involving multiple disciplines. There is much we do not know/understand about how economies/countries perform. culture too is a factor, but it has become scapegoat for everything we cannot explain. It is good to conjecture about it, but incontrovertible evidence for its exact effect is lacking.
My personal take is that they are too intelligent.
India is a not a monolith. Some parts of the population live very comfortable lives, with quality comparable(not eqiv) to west. Per capita doesn’t capture the full or even fragmentary picture of Indian economy.
Brilliant! Thank you for the insight, voiceinthehead. Sometimes it takes a genius to point out the obvious.
It is indeed the superior intelligence of indians that accounts for India’s so called poverty and backwardness. You should really write a book expanding on this thesis.
Right again! Per capita income does ignore all the indians who are making more, some much more, than the $600 a year mentioned above. How ignorant of these western scholars to use per capita income as a measure of a country’s prosperity!
That was a tounge-in-cheek reference to centralized planning.
Something I didn’t say.
I think the primary reason for the productivity differentials across cultures is work ethic. Only those societies that can inculcate a strong work ethic among the population can expect to have a highly productive workforce that can rise to the competitive demands of globalization. The bottom line is all about work ethic as this more than anything else shapes attitudes to work, motivation, efficiency and a lot more. Though the total work time i.e. the number of minutes worked per day varies considerably from one country to another, higher work time need not necessarily lead to greater output. Total Work Time