Downward Mobility
And The Rise of The Affluent Society

Posted by John Carney, Aug 07, 2007, 3:52pm

wealthindustrialrevolution.jpgFor much of history, the rich really were different. They had more descendants, for one thing. And they tended to prize thrift, prudence, negotiation and hard work over more fun things like being spendthrift, impulsive, violent and leisure loving. And their children were downwardly mobile, poorer than they were.

Those differences may explain why the surge in economic growth that historians call the Industrial Revolution occurred, economic historian Gregory Clark argues in his forthcoming book, A Farewell To Alms. According to Clark, it was the spread of people descended from British nobility that hatched the Industrial Revolution.

Today Nicholas Wade of the New York Times' Science Section describes Clark's thesis.

Generation after generation, the rich had more surviving children than the poor, his research showed. That meant there must have been constant downward social mobility as the poor failed to reproduce themselves and the progeny of the rich took over their occupations. “The modern population of the English is largely descended from the economic upper classes of the Middle Ages,” he concluded.

As the progeny of the rich pervaded all levels of society, Dr. Clark considered, the behaviors that made for wealth could have spread with them. He has documented that several aspects of what might now be called middle-class values changed significantly from the days of hunter gatherer societies to 1800. Work hours increased, literacy and numeracy rose, and the level of interpersonal violence dropped.

Another significant change in behavior, Dr. Clark argues, was an increase in people’s preference for saving over instant consumption, which he sees reflected in the steady decline in interest rates from 1200 to 1800.

In short, the downward mobility of British upper classes gave rise to the Industrial Revolution that resulted in a dramatic upward mobility for much of the world. To put it slightly differently, just because money can't buy you love doesn't mean loving can't make you richer.

In Dusty Archives, a Theory of Affluence [New York Times]

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Posted in: Economics

Comments

Posted by LDN PE, Aug 07, 2007 4:19PM

For a second I thought I was reading one of the few good posts at EquityPrivate. Great post Carney.

Posted by anon anon anon, Aug 07, 2007 4:29PM

''..as the poor failed to reproduce themselves and the progeny of the rich took over their occupations.'' Pure BS. Bill Gates' etc. kids can take over the jobs/occupations of the poor working in McDonalds and get really rich. Yea, jerk. Get a real job.

Posted by er, Aug 07, 2007 4:35PM

anon^3, you obviously didn't RTFA.

Posted by Prince Charles, Aug 07, 2007 4:35PM

Between 1200 and 1800 you could have ' instant consumption'? Maybe instant sex, but that was it.

Posted by , Aug 07, 2007 4:41PM

No the point is people didn't save they just spent whatever they had as soon as it was available (at the local tavern most likely)

Posted by , Aug 07, 2007 4:47PM

Didn't read the original article yet, but is this supposed to be a counter-arguement to universal healthcare?

Posted by anon anon anon, Aug 07, 2007 4:48PM

er, I read the fucking book. And I get the Clark's point. It's still BS. Anyone for a pint after work?

Posted by mini ballerette., Aug 07, 2007 4:59PM

i would tend to agree with anon*3...this makes zero sense. If anything inheritors of wealth lose the industriousness of their forefathers as it ceases to be a necessity element of their survival (that's put nicely. in reality we become entitled self pitying lushes)

Posted by PIKme, Aug 07, 2007 5:03PM

Mini ballerette, you're assuming that yesterday's inheritors of wealth have the same lifetsyle and values of todays heirs

Posted by mini ballerette., Aug 07, 2007 5:09PM

surely its an assumption as i cant speak first hand but i reckon they aren't all that different. human nature doesn't change so drastically though it comforts us to think that at one point people did have a sense of honour and duty

Posted by PIKme, Aug 07, 2007 5:21PM

Me being an optimist, I think man and human nature can evolve.

""If you ask me to name the proudest distinction of Americans, I would choose--because it contains all the others--the fact that they were the people who created the phrase 'to make money.' No other language or nation had ever used these words before; men had always thought of wealth as a static quantity--to be seized, begged, inherited, shared, looted or obtained as a favor. Americans were the first to understand that wealth has to be created. The words 'to make money' hold the essence of human morality. " - Ayn Rand

Posted by EV, Aug 07, 2007 5:43PM

Dr. Clark's thesis is interesting, but it has a few fatal flaws, most notably that Values of "thrift, prudence, negotiation and hard work" were never proclivities of the nobility.

To be part of the "gentleman" upper class in Europe from the middle ages through the 18th century was to be a man of leisure and letters, not industry. Hard work was the lot of the poor...they worked because they were a step away from starvation. Thomas Hutchinson, King George's pet governor of Massachussets, wrote in 1761 that "Poverty will produce industry and frugality." Merchants and landowners who actually had anything to do with their farms or businesses were looked down upon as uncouth and destructive to the hierarchy of patronage and deference that ruled the British economy. Locke warned, "Trade is wholly inconsistent with a gentleman's calling." The noblest men consumed well beyond their means, didn't work a day in their lives, and were deeply and profoundly in debt as they sat on their silk-clothed asses and read philosophy...anyone who tried to work harder to get out of their assigned station was looked upon with complete disdain. So long as we're talking about values of the "nobility", we all still know what it means to be randolf and mortimer, cruel intentions rich as opposed to "my dad owns a dealership" rich.

The genesis of the middle class in Europe was purely, logically, economic. The political and moral definition of the amorphous "protestant work ethic" is even more bullshit. It was the velocity of the securities markets that changed the world, driven by 1) the changing nature of debt and 2) the radical market revolutions of pesky Americans. An 18th century worldwide lack of hard specie led to more sophisticated, impersonal, contractual debt instruments replacing the traditional credit agreements between patron and subject, offering increasingly efficient ways for the everyday merchant to speculate - as well as lower interest rates as these markets became more accessible.

The stakes were higher, markets and information moved faster, investment opportunities increased (thanks to zero regulation in the States and outright piracy of European technology) and this meant the radical "values" of middle-class industry - investment opportunities for the rich, not upward movement for the poor - took over from previous hierarchies of title, land and gentlemanly duty.

Genetic explanations for the "values" of a population have been proposed before, right? Sometime around the second world war, maybe?

Posted by mini ballerette., Aug 07, 2007 5:53PM

very well said, EV, and all of it true. respect.

Posted by PIKme, Aug 07, 2007 6:21PM

I agree with the securities markets revolution playing a role if not the primary role in bringing the industrial revolution.

"So long as we're talking about values of the "nobility", we all still know what it means to be randolf and mortimer, cruel intentions rich as opposed to "my dad owns a dealership" rich." I wasn't a Euro history major, but I think that a small majority of the upper class population were land-owning nobles. I thought the majority of the upper-class were "my dad owns a dealership rich," and were the merchants, bankers, business owners, etc. You may be right about securities playing a primary role, but I think it would be wrong to completely ignore Clark's theory based on rich = noble.

Posted by "shirtsleeves to shirtsleeves in three generations", Aug 08, 2007 7:36AM

EV that may have been true in the 1800's but *not* the 1200's which is the entire reason why the revolution was possible to begin with, because the upper class BECAME what we know it is today

Posted by Migster, Aug 08, 2007 9:38AM

I do think EV makes a number of very good points. As I see it, it was the very absence of an American entranched feudal system that allowed for upward mobility and the creation of a meritocracy (in its true sense of the word, based on the value added of an individual rather than its cast).

Furthermore, the wealth creation process in both the US and Europe was directlly linked to the emergence of non agricultural value added products, which as Locke and EV aptly point out are "wholly inconsistent with a gentleman's calling." It was the very absence of the rent based upper class from this area of the economy that allowed the formation of meritocracies and later on merchant and middle classes.

Posted by Anon, Aug 08, 2007 10:11AM

The conclusions made in this book is not based on any scientific fact, but rather a lot of loose connections and speculations. Anyone who takes this book at face value without investigating the scientific facts is making a mistake. The book looks more to be a work of Nationalism and Pride for the english people than a scientific piece of literature.

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