I felt I had to read this book twice to fully appreciate its message, yet it is not difficult to read, indeed to do so is easy and a pleasure. It must have been equally a pleasure to attend the lectures on which it is based. But a large accumulation of facts, each one of which can be seen to be relevant to the thrust of the book, are difficult for the reader (or anyway, by me) to hold ready to slot into a logical structure to be reproduced in a satisfying synthesis in the memory when the book is finished.
As for the “unintended consequences” of the title, these are the results of social structures, political motives and individual actions which often have quite different aims: “We have known since Adam Smith that an unplanned but coherent and seemingly planned social system can emerge from the independent actions of many individuals and in which the final outcomes can be very different from those intended. All this, I hope, is uncontroversial,” writes the author (p. 7). Well, I hope so too – but “we” needed Hayek and the collapse of Communism to convince a lot of other people.
Lal seeks to find an answer to the question why the explosive development that characterised the Industrial Revolution took place in Western Europe, though he merely mentions Great Britain as its origin, without further analysis (p. 20). Why not in the other great areas of civilization – India, China or Islam? He proceeds to examine the civilizations that arose after the development of agriculture from about 10,000 BC; pastoralism as a parallel development is mentioned but left undiscussed, presumably because it is basically predatory on and if successful, assimilated into neighbouring agricultural civilizations.
Such civilizations typically reach an optimum through what Lal labels Smithian growth, where greater efficiency is generated by division of labour and by trade, capitalism being the result (according to the precepts of Adam Smith). They are, however, limited by having only human and animal power and organic, rather than mineral sources of fuel. The breakthrough to Industrial Civilization, technologically based with mechanical power and virtually unlimited energy from mineral resources, Lal calls Promethean growth and this was evolved only in Western Europe. The question is: why? Lal surveys other civilizations, both in time and geographically, to clarify this. The answer seems to be that societies evolve to where the governing class, indeed, in a sense the whole non-producing class, including the military, the priesthood, servants and hangers-on, has achieved a state from which it cannot envisage a change for the better. Lal calls this the “high equilibrium trap” (p. 34). The ideology supporting such a society (in fact, any society) he terms its Cosmological Belief, something rather broader than its religion, though that is often its basis. This, in the case of India, is the caste system; in China, Confucianism, embodied in the mandarinate, with its contempt for trade and technology, while in Islam, the rational, secular, intellectual process has lost out against religious dogmatism. Though this summary is an over-simplification, it can be seen that in each of these societies, merchants and financiers held low status and their property (like everyone else’s) had low security from the “predatory state” (another of Lal’s useful concepts) which renders any capital accumulation difficult if not impossible.
There are some points that come to mind. The success of any Smithian growth may be masked as population growth, so that a larger number of people have the same (albeit low) standard of living. This was the case with both India and China. Although Lal treats India as a “cosmologically” Hindu, caste-ridden society in its failure to achieve Promethean growth, Islam, which conquered much of it, added its responsibility for stultification. He also dismisses “the nationalist hagiography that there were any prospects for indigenous Promethean growth emerging in medieval India … blocked by British colonialism” (p. 35). China seems to have suffered from being too united, too self-sufficient (and so with scant interest in the outside world) and too successfully centralised. Thus when coastal traffic was obviated by the building of the Grand Canal, the navy was simply abolished, though it had explored and dominated the seas as far as Africa in the fourteenth century. Unlike Europe, whenever China did fragment, it either descended into anarchy until reunited, or the successor states kept the old ethos. Technologically, it could have achieved “take-off”; it had, for example, discovered coke-smelting in the eleventh century, and it produced more, and cheaper iron then than Europe managed to do until the end of the eighteenth century. This situation, “one of the great historical problems” is known as the “Needham problem”, forced upon, and named after, the biochemist turned historian, whose massive, multivolume work costs more in price and time than the general reader would be willing to spend on it (p. 42). It can only have been the mindset of the Chinese governing class, a high-prestige, meritocratic, self-recruiting bureaucracy, that prevented the population it ruled, with its inventiveness, political security and size, from exploding into Promethean growth. In a later chapter (Ch. 8) Lal explains the Smithian growth of an even more isolated Japan and how its decentralised social structure prepared it for imitative Promethean growth when it encountered the West.
When he comes to consider Europe, Lal prefers to identify this ultimately successful civilization with Christendom, and Western Christendom at that, as distinct from the Eastern Orthodox branch. His search for the origins of its success goes further back than “that moment of self-generating expansion … in the late eleventh century” (p. 81), to an imposition of papal dominance which, in safeguarding church property, altered the structure of the family from the extended type to the nuclear. “The temporary or permanent delay in marriage … allowed the West uniquely to have some economic surplus available for investment growth, however small, which was not eaten up by population growth” (p. 87). One of the many myths that Marx and Engels helped put into circulation (p. 86) was that the Industrial Revolution brought the nuclear family into existence; in fact, it seems more likely that the reverse was the case. The evolution of the nuclear family led to Individualism, a social concept Lal considers sufficiently important to merit a whole chapter (Ch. 6), though it might be seen to be a portmanteau for all philosophical changes brought about by the Renaissance and Reformation. In a fairly long discussion (pp. 89-94) Lal also involves the Western guilt” culture as another (and related) factor in our progress to Promethean growth, for “without the fear of purgatory and the hope of the Last Judgment, the Western legal tradition could not have come into existence” (p. 94).
While such sociological factors are valuable insights, the practical, commercial reasons for the safeguarding of property rights are not emphasised, and such discussion as there is on the emergence of states solidly based on their financial and mercantile classes is relegated to a very technically-worded Appendix. Florence and Venice do not appear in the Index, or any of their rivals, and while the Spanish and the Portuguese never developed commercial empires, since their bureaucracies successfully suppressed their mercantile classes, the Dutch and the English certainly did. It may be that Lal considers these empires to be merely products of Smithian growth, with their own high equilibrium traps and the “predatory state” apparatuses for diverting profits away from further useful investment; if so, he has failed to describe and explain the Promethean growth that followed. I cannot help feeling that this is a serious omission, for it implies that Lal believes that the Western European civilization he has designated as successful moved smoothly, uninterruptedly and uniformly from Smithian to Promethean growth. This was definitely not the case, and the origin of the Industrial Revolution in Great Britain, precursor of Promethean growth worldwide, requires some explanation which is not given here. This is surely important even though, as Lal points out, the growth mechanism can be adapted to other societies with different Cosmological Beliefs (p. 175). And, it must be said, without undergoing the painful journey of discovery.
Leaving this aside, or taking it for granted, Lal examines the prospects for proper, capitalist advance in the economies of India and China, following the demonstrated failure of Fabian socialism in the one and Communism in the other. For this Lal borrows a catchphrase from The Economist: “commitment [by the people at the top], competence [enough educated people] and consensus [the general population willing to try or put up with change]” (p. 131). “Competence” is the only component undoubtedly present in both. Lal notes that: “It might appear that a dictatorship committed to reform would find it easier to do so that a democracy” a situation that favours China. For the political and intellectual elite of India there is a sort of nostalgic “Nehruvianism”, less likely to be paralleled by nostalgic Mao-ism in China. Again, the general population in China may be open to change, while in India the horde of small bureaucrats, linked to caste and status, will be more recalcitrant in accepting redundancy. The remaining East Asian economies are dealt with only in passing.
It must be said that there are considerable, presumably deliberate, omissions. Islam does not come in for a second look after its original historical analysis, beyond Lal’s pointing out that where progress has occurred – Malaysia, Egypt and Turkey – the state has been separated from religion, and everywhere there are signs of an Islamic backlash. Africa, with four references in the index to mere mentions, is not discussed at all. Latin America has produced many examples of efforts repeatedly aborted for reasons crying out to be explained or even discovered. It may be that in a book and lecture series dealing with reasons for economic progress and success, a digression into stagnation and failure would merely distract the reader from its basically constructive, even optimistic message.
Perhaps too optimistic? No misgivings are expressed about the results of Promethean growth, and by these I do not mean the jeremiads of those Lal dismisses as Ecofundamentalists. Yet success brings its problems, just as does failure. Some are hinted at, such as the claim for “rights” (p. 157) and the weakening of the concept of individualism. The modern “predatory state” can be just as predatory in the guise of the welfare state, abetted by a democratic process which tends to hoodwink the voter into believing he can get someone else to pay the expenses for his health, education and old age. It may even be that the abolition of the extended family so long ago may be exacting a penalty at last in enforcing the perception on parents that the rearing of children brings no direct benefits, resulting in the withering away of the very society, the welfare state, to which they look instead for support. An “Unintended Consequence” indeed! Remember: the Greeks had a word for it – Irony.