Preface

Franklin Delano Roosevelt, perhaps the greatest of all of America’s presidents, loved stories about himself. One of his favorites went like this: During the Great Depression of the 1930s, one Wall Street commuter had a daily morning ritual. He would buy the newspaper on the way into the train station. He would glance only at the front page and then, without taking another look, hand it back to the newsboy and board the train. Eventually, the boy got up the courage to ask him why he read only the front page. The commuter explained that he bought it solely for the obituaries. The newsboy pointed out that the obituaries were at the back. “Boy,” the man said, “the son of a bitch I’m interested in will be on page one.”

At the time, Roosevelt was busy trying to save the U.S. economy in the face of a colossal global dislocation. He was working to preserve the most powerful engine for creating wealth in the history of the world. To do so, he expanded radically the frontiers of American government. And a decade later, at the end of his presidency—and his life—he would help to create the institutions that led a global economy shattered by war and by misguided isolationism back on the road to openness and prosperity.

And yet he was vilified by some, like that New York commuter, who would continue to benefit from the success that FDR helped to restore. Roosevelt was trying to save capitalism from itself, and some of the capitalists were resisting. Knowing the right thing to do to enrich your nation and the world is hard enough. Bringing people with you to get it done is even harder.

The financial crisis that started in 2007 and exploded around the world in 2008 was a reminder of how fragile and reversible is the history of human progress. But it should also remind us that our future is in our own hands. We created this mess and we can get ourselves out of it.

To do so involves confronting a false economy of thought—namely, that our economic future is predestined and that we are helplessly borne along by huge, uncontrollable, impersonal forces. To explain the vast complexity of the economic history of the world, there is a rich variety of fatalistic myths on hand: that some economies (the United States, Western Europe) were always going to get rich and that others (Africa) were always going to stay poor; that certain religions are intrinsically bad for growth; that market forces are unstoppable; that the strutting vanguard of globalization cannot be routed and driven into retreat.

The aim of this book is to explain how and why countries and societies and economies got to where they are today—what made cities the way they are; why corruption destroyed some nations but not others; why the economy that fed the Roman empire is now the world’s biggest importer of grain. But it will reject the idea that the present state of those economies, countries, and continents was predetermined. Countries have choices, and those choices have substantially determined whether they succeeded or failed.

Economic history is a challenging thing to explain, and to read, for two reasons. First, it involves forcing together disciplines that naturally fall out in different directions. History, in its most traditional form, lives on specifics and particularities—what the historian Arnold Toynbee (disapprovingly) called the study of “one damned thing after another.” It stresses the importance of narrative in the way that countries develop, the role played by chance and circumstance, and the influence of important characters and events. Economics, by contrast, seeks to extract universal rules from the mess of data that the world provides—providing reliable and testable predictions that economies run in a particular fashion, or that starting off from a particular point, they will end up a particular way. Both approaches have risks. If history can become the undisciplined accumulation of a random heap of facts, economics risks descending into the pseudoscientific compression of a complex reality into a simplistic set of fixed categorical molds.

Second, economic history is vulnerable to fatalism. Any study that takes as its endpoint the present day is always vulnerable to arguing backward from the conclusion. History is so rich in scope and detail that it is always possible to pick a particular constellation out of the galaxy of facts to explain clearly and precisely why things are as they are. Yet such reasoning is frequently proven wrong by subsequent history. Or it completely fails to explain why other, similar, countries and economies came to a different end.

If we are going to learn from history rather than just record it, we need to stop explanations from becoming excuses. Drill too far down into explanations of how things turned out the way they did and you risk hitting a bedrock of determinism. There are plenty of reasons why countries have made mistakes. Often their decisions are driven by a particular interest group, or a coalition of them, whose short-term gains stand at odds with the nation’s long-term interests. But such interests can be overcome. Similar countries facing similar pressures can take meaningfully different decisions. Most nations that discover oil and diamonds in their ground suffer as a consequence, but not all do. Some interest groups have captured countries and dragged them down; some have been resisted. Islamic beliefs have proved a drag on certain economies at certain times, but they do not have to. Some economies have managed to capture great benefits from the globalization of markets in goods and services; some have missed out.

History is not determined by fate, or by religion, or geology, or hydrology, or national culture. It is determined by people. This book is not a whimsical set of disconnected stories. It is an explanation of how human beings have shaped their own destiny. It also shows how decisions being taken now are determining our future. Nothing can call back the finger of history to cancel even half a line of what has been written. But still we can compose the script for the remainder of our lives, and beyond.