This is great! I've been trying to find a comprehensive debunk of Hickel for a while. If this is meant to be a two-parter, I'm pumped for the degrowth debunk!
Thanks for taking the time to rebut Hickel's argument! (Going to have to read "How Asia Works.")
Odd Arne Westad observes in "Restless Empire" that when China made the transition to capitalism in the 1990s, it adopted the American dog-eat-dog model rather than the social-democratic model of Western Europe.
Rise of China's Industrial Policy is a really interesting read, thanks.
I worry we all bucket too large. Places like China, India, the US, Brazil, should arguably be broken up into regions or provinces for analysis instead of treating them like blocks.
Western China specifically saw huge levels of industrial investment under and since Mao, they have abundant natural resources, and the central government had bold aspirations for various internal areas becoming specific hubs of things that never fully materialized. The development stats there, though improving, still lag the coasts. There's a clear gradient based on proximity to ocean.
Maybe geography, containerization, and demographics explain everything? Liberalization and state industrial policy just operate on very narrow margins? Welcome your pushback on this half serious flirtation with policy nihilism. :D
(I see that Barry Naughton simply defines "investments" and "local policies" out of consideration completely. I'm... still processing that. It's such a bold carve out it's hard to digest on first glance.)
Regardless whether I 40% seriously or 60% seriously adopt policy nihilism, I sincerely believe we should all talk much less about "China" and "India" and much more about "Gansu" and "Uttar Pradesh.“
To be a bit of a contrarian, I'd like to recommend Eric Hobsbawn's long 19th century trilogy as a counterwieght to the narrative of how Asia works, insofar as my read of it is that is offers different development models to those in how Asia works which are more free markety (which is interesting given that Hobsbawn is an original tankie.)
Not sure. The 19th century Listian programme of: 1. abolishing internal tariffs and erecting external tariffs; 2. state financing of railways and other infrastructure; 3. creating national banks and state investment banks to distribute capital; and 4. mass public education, was very interventionist for its time. It makes up half of Marx and Engels' ten point programme in the Communist Manifesto!
The problem is that the Listian strategy is simply not enough to become First World rich now, because the most advanced sectors of the economy are extremely capital intensive.
That's only the case from about 1875 onwards. From 1830ish-1875ish when the industrial revolution kicked off in the region that went down the Rhine from Ghent to Milan the changes were around the reduced power of the guilds, the import of British industrial expertise and the reduction of tariffs, for instance within the German confederation in 1843 (I think.) The railways were also only state finnaced in Britian, the ones in the rest of the world were finnaced by the glut of savings and profits in Britain.
The model you're describing is Germany and the US 1880-1890 (at least broadly, but the instituions of mass public eduction leading to firms making products via technical improvements directly imported from advances in natural sciences looks, with firms funded by investment banks and organised as LLCs looks like Germany in 1890.)
Agriculture stuff is also intersting in that the French, British, Prussian and American models all look different and only the French model looks like the East Asian development state model but all were able to increase yeilds - the core thing to me looks like the transition to a capitalist mode of production.
Yeah it's interesting the capital intensiveness argument. I think the experiences of Poland, Hungary and Ireland are pretty interesting in seeing how middle income countries become high income following the neoliberal model. The comparison of Latin America to Australia and NZ is also interesting and I think is a really compelling case for the importance of institutions in that in 1900 both had economies dominated by agaculture for export to Europe.
Great post! The only question/concern I have is that I never interpreted Pinker as being as much of a dogmatic lover of free markets as you suggest he is. In the later chapters of Enlightenment Now (sorry I don't have page numbers on hand) Pinker repeatedly criticizes libertarian and dogmatic free-market-lovers. I have my disagreements with Pinker and he does simplify (which tbf he has to because of the scope of Enlightenment Now is too broad and not singularly focused on poverty reduction) but I didn't take him to be endorsing something as simplistic as 'Neo-liberal markets are the single source of poverty reduction'. Pinker's arguments give a staring role to effective government so I think the charitable view is that he would accept some nuance here?
Then again he has been occasionally known to be dead wrong on some topics (cough, cough, AI) so maybe I'm being overly charitable? Anyway, great piece!
Indeed, Aidan: on pp109-110 (paperback), Pinker is clear about ‘the benefits of social transfers’ and quotes ‘Wagner’s Law’ that as countries get wealthier they get more munificent. He seems satisfied with de la Escosura’s finding that there is a correlation between social spending and social well-being that levels off at about 25% of GDP: he criticises libertarianism in more than one place. He really lays into libertarianism, conservatism and Marxism on pp364-5: “the empirical picture at present suggests that people flourish most in liberal democracies with a mixture of civic norms, guaranteed rights, market freedom, social spending, and judicious regulation” (p365). Noah: I can DM photos of the pages (@DavidAlcock1) and I recommend reading the book. (Many of Pinker’s critics haven’t read it either!) OK, it is not perfect but it is well worth a read.
- Again, good post. I'm getting to use to saying this. I'd really like to be more of a contrarian in this comment section.
- Maybe I'm misinterpreting your point, but it really feels like this ideological battle between left-right leads to a lot of dumb takes.
- When I lived in Beijing, my roommate had a buddy visit from the states once. He had a fashion magazine he brought with him - to this day I can't recall the name - with a series of pieces about China. The line that stuck out the most from me reading through all the articles was something to the effect of: "China is simultaneously the biggest capitalist and communist country in the world today." It seemed paradoxical, but I think you're point about China's reform shows how it can be true.
Just out of curiosity-what sort of free trade policies should actually be adopted? Clearly trade is mostly a good, but how do we ensure that you get the benefits without the drawbacks you mention?
So correct me if I'm wrong on this, but it seems like the real lesson here is that "Capitalism caused a big reduction in global poverty" is:
false if by "capitalism" you mean "something like total laissez-faire markets," which is how you're using the word
but
true if by "capitalism" you mean "market-based pro-business policies," which is what Hickel himself seems to mean by "capitalism" (and is probably what Pinker means too?).
Pinker actually talks about "doux commerce" wich is more close to your second option. It is the psicological fact that, when a market relationship is established, our enemies become clients and so yhey become more valuable alive than dead...
I mean, this is just poorly argued on so many levels. You're missing large swathes of Hickel's argument. Also, sorry, but a graph showing how many people worldwide make above $2 a day doesn't mean anything when it doesn't take into account inflation.
Since 1990, the top 1% in the US has grown richer by something like $30 trillion, while the bottom 50% has LOST several trillion in wealth. The poor are only getting poorer, the ruling class is only exploiting the third world more intensely, and people like you and the others in this comment section (who gleefully celebrate the 'facts' you give them as fodder for future arguments that things are actually getting better for poor people) are serving as bootlicking apologists. Pathetic.
Is this you doing the "Billy has taken on $1M of debt when buying a house, and therefore his net worth shows up as having gone down by $1M" kind of accounting? Because that's what it looks like. Do I need to inform you that this doesn't make any sense, or can you figure that part out yourself?
Hi Noah! Looking forward to your article on degrowth. I'm having debates with friends and they're convinced that degrowth is the only way not to have catastrophic climate change. I'm trying to change their minds but going nowhere. There's a strong historical link between CO2 emissions and economic growth, therefore if CO2 emissions go to zero, it's unavoidable that economic growth will fall strongly as well. Rich countries have started to decouple, but if you look at global GDP and CO2 emissions, they're as correlated as ever. In France, Jean-Marc Jancovici is very influential on that front. I have to say - I think they have a point. Even if the energy intensity of GDP goes down, struggling to see how we can entirely decarbonize quickly while growing GDP. I'd love to be more optomistic and as I said - looking forward to your article!
Am a bit late to comment, but last year there was this report by the outgoing "UN Special Rapporteur on extreme poverty and human rights" which, in my reading, is in more agreement with Hickel's views than yours:
Skimming through the report, it seems to be saying that many of these measures, like $5.50 per day, actually are too low for even a basic existence. It does not seem to say anything about the shift in the distribution you talk about in your post, though perhaps the point is that, while the shift is certainly a good thing, it's not yet at a level where people are able to leave a state of terrible existence.
What does the phrase "poverty has declined" means?
If your real income grows from the most absolute misery and deprivation ($1 a day) to *barely enough to survive* ($5.5-$7.4 a day), you likely still consider yourself poor!
This kind of growth isn't "enough". But *it matters*.
It's good that the people who live in the most absolute poverty are getting less poor, even if sadly they're just getting a *little less* poor.
When we say that "poverty has declined", I suspect that in most places it means that the poor have been getting less poor, without actually getting into the "middle class". However, I think that in China and other countries of southeast Asia, people HAVE actually been getting out of poverty and into the "middle class".
I think that when Hickels and many like him say that this growth is *irrelevant* and capitalism must go, it's akin to someone who, when asked by a beggar for a penny, instead of giving him, steal one from him.
Certainly any decline matters, and is a good thing, while at the same time not being sufficient. I think Hickel's thesis (not saying it is correct as I don't know enough) is that in the absence of free market strictures, there would have been a greater decline in poverty, mainly because there would have been a more equitable distribution of the economic prosperity. Which is to say, he is not simply saying that the growth is irrelevant and capitalism must go, but suggesting an important connection between the two, in that he is focused on capitalism as a cause of the *lowness* of the decline in poverty rather than as a cause of the *decline* independent of its amount.
I think there is a distinction between this statement and the statement that the decline is irrelevant because it's not big enough.
In the context of this article "communism" is an irreverent straw man that isn't in the conversation.
Read "free market structures" as "Chicago-school style neoliberal economic policies" and the absence of free market structures as industrial development and strong social programs, which both sides in this argument appear to be in favor of.
This is great! I've been trying to find a comprehensive debunk of Hickel for a while. If this is meant to be a two-parter, I'm pumped for the degrowth debunk!
Oh yeah! That's coming next.
:D
that's a great icon
Thanks for taking the time to rebut Hickel's argument! (Going to have to read "How Asia Works.")
Odd Arne Westad observes in "Restless Empire" that when China made the transition to capitalism in the 1990s, it adopted the American dog-eat-dog model rather than the social-democratic model of Western Europe.
Yeah.
Really great piece. I’d be interested in hearing more about what aspects of development and industrial policy worked so well.
Oh yes, I'll write many posts about that!
Rise of China's Industrial Policy is a really interesting read, thanks.
I worry we all bucket too large. Places like China, India, the US, Brazil, should arguably be broken up into regions or provinces for analysis instead of treating them like blocks.
Western China specifically saw huge levels of industrial investment under and since Mao, they have abundant natural resources, and the central government had bold aspirations for various internal areas becoming specific hubs of things that never fully materialized. The development stats there, though improving, still lag the coasts. There's a clear gradient based on proximity to ocean.
Maybe geography, containerization, and demographics explain everything? Liberalization and state industrial policy just operate on very narrow margins? Welcome your pushback on this half serious flirtation with policy nihilism. :D
(I see that Barry Naughton simply defines "investments" and "local policies" out of consideration completely. I'm... still processing that. It's such a bold carve out it's hard to digest on first glance.)
Regardless whether I 40% seriously or 60% seriously adopt policy nihilism, I sincerely believe we should all talk much less about "China" and "India" and much more about "Gansu" and "Uttar Pradesh.“
To be a bit of a contrarian, I'd like to recommend Eric Hobsbawn's long 19th century trilogy as a counterwieght to the narrative of how Asia works, insofar as my read of it is that is offers different development models to those in how Asia works which are more free markety (which is interesting given that Hobsbawn is an original tankie.)
Not sure. The 19th century Listian programme of: 1. abolishing internal tariffs and erecting external tariffs; 2. state financing of railways and other infrastructure; 3. creating national banks and state investment banks to distribute capital; and 4. mass public education, was very interventionist for its time. It makes up half of Marx and Engels' ten point programme in the Communist Manifesto!
The problem is that the Listian strategy is simply not enough to become First World rich now, because the most advanced sectors of the economy are extremely capital intensive.
That's only the case from about 1875 onwards. From 1830ish-1875ish when the industrial revolution kicked off in the region that went down the Rhine from Ghent to Milan the changes were around the reduced power of the guilds, the import of British industrial expertise and the reduction of tariffs, for instance within the German confederation in 1843 (I think.) The railways were also only state finnaced in Britian, the ones in the rest of the world were finnaced by the glut of savings and profits in Britain.
The model you're describing is Germany and the US 1880-1890 (at least broadly, but the instituions of mass public eduction leading to firms making products via technical improvements directly imported from advances in natural sciences looks, with firms funded by investment banks and organised as LLCs looks like Germany in 1890.)
Agriculture stuff is also intersting in that the French, British, Prussian and American models all look different and only the French model looks like the East Asian development state model but all were able to increase yeilds - the core thing to me looks like the transition to a capitalist mode of production.
actually that's an oversimplification on agriculture, the Prussian and American models (outside the South) had definite similarities.
Yeah it's interesting the capital intensiveness argument. I think the experiences of Poland, Hungary and Ireland are pretty interesting in seeing how middle income countries become high income following the neoliberal model. The comparison of Latin America to Australia and NZ is also interesting and I think is a really compelling case for the importance of institutions in that in 1900 both had economies dominated by agaculture for export to Europe.
Great piece! Thanks for bringing the proper nuance to this debate - the developmental state concept does not get the attention it deserves.
Thanks!!
Another great read. Thanks.
I try!!
Great post! The only question/concern I have is that I never interpreted Pinker as being as much of a dogmatic lover of free markets as you suggest he is. In the later chapters of Enlightenment Now (sorry I don't have page numbers on hand) Pinker repeatedly criticizes libertarian and dogmatic free-market-lovers. I have my disagreements with Pinker and he does simplify (which tbf he has to because of the scope of Enlightenment Now is too broad and not singularly focused on poverty reduction) but I didn't take him to be endorsing something as simplistic as 'Neo-liberal markets are the single source of poverty reduction'. Pinker's arguments give a staring role to effective government so I think the charitable view is that he would accept some nuance here?
Then again he has been occasionally known to be dead wrong on some topics (cough, cough, AI) so maybe I'm being overly charitable? Anyway, great piece!
Ahh, I was going by his blog post that Hickel was responding to. I haven't read Enlightenment Now. I did read The Better Angels, which was good.
Indeed, Aidan: on pp109-110 (paperback), Pinker is clear about ‘the benefits of social transfers’ and quotes ‘Wagner’s Law’ that as countries get wealthier they get more munificent. He seems satisfied with de la Escosura’s finding that there is a correlation between social spending and social well-being that levels off at about 25% of GDP: he criticises libertarianism in more than one place. He really lays into libertarianism, conservatism and Marxism on pp364-5: “the empirical picture at present suggests that people flourish most in liberal democracies with a mixture of civic norms, guaranteed rights, market freedom, social spending, and judicious regulation” (p365). Noah: I can DM photos of the pages (@DavidAlcock1) and I recommend reading the book. (Many of Pinker’s critics haven’t read it either!) OK, it is not perfect but it is well worth a read.
Three Things:
- Again, good post. I'm getting to use to saying this. I'd really like to be more of a contrarian in this comment section.
- Maybe I'm misinterpreting your point, but it really feels like this ideological battle between left-right leads to a lot of dumb takes.
- When I lived in Beijing, my roommate had a buddy visit from the states once. He had a fashion magazine he brought with him - to this day I can't recall the name - with a series of pieces about China. The line that stuck out the most from me reading through all the articles was something to the effect of: "China is simultaneously the biggest capitalist and communist country in the world today." It seemed paradoxical, but I think you're point about China's reform shows how it can be true.
Just out of curiosity-what sort of free trade policies should actually be adopted? Clearly trade is mostly a good, but how do we ensure that you get the benefits without the drawbacks you mention?
Great question. I think "export discipline" is a good modification to free trade.
fantastic. exactly the kind of econ writing i like, filled with juicy truth nuggets i can burn people with:))
One thing:
- Haven't read the post yet, but you're posting with an impressive tempo. Hell yeah!
Thanks! Took a couple days off this week, and built up a backlog of stuff to write!!
Don't reveal your secrets. ;)
Haha it's just reading Twitter and having a lot to say :-)
So correct me if I'm wrong on this, but it seems like the real lesson here is that "Capitalism caused a big reduction in global poverty" is:
false if by "capitalism" you mean "something like total laissez-faire markets," which is how you're using the word
but
true if by "capitalism" you mean "market-based pro-business policies," which is what Hickel himself seems to mean by "capitalism" (and is probably what Pinker means too?).
Pinker actually talks about "doux commerce" wich is more close to your second option. It is the psicological fact that, when a market relationship is established, our enemies become clients and so yhey become more valuable alive than dead...
I mean, this is just poorly argued on so many levels. You're missing large swathes of Hickel's argument. Also, sorry, but a graph showing how many people worldwide make above $2 a day doesn't mean anything when it doesn't take into account inflation.
Since 1990, the top 1% in the US has grown richer by something like $30 trillion, while the bottom 50% has LOST several trillion in wealth. The poor are only getting poorer, the ruling class is only exploiting the third world more intensely, and people like you and the others in this comment section (who gleefully celebrate the 'facts' you give them as fodder for future arguments that things are actually getting better for poor people) are serving as bootlicking apologists. Pathetic.
Is this you doing the "Billy has taken on $1M of debt when buying a house, and therefore his net worth shows up as having gone down by $1M" kind of accounting? Because that's what it looks like. Do I need to inform you that this doesn't make any sense, or can you figure that part out yourself?
Hi Noah! Looking forward to your article on degrowth. I'm having debates with friends and they're convinced that degrowth is the only way not to have catastrophic climate change. I'm trying to change their minds but going nowhere. There's a strong historical link between CO2 emissions and economic growth, therefore if CO2 emissions go to zero, it's unavoidable that economic growth will fall strongly as well. Rich countries have started to decouple, but if you look at global GDP and CO2 emissions, they're as correlated as ever. In France, Jean-Marc Jancovici is very influential on that front. I have to say - I think they have a point. Even if the energy intensity of GDP goes down, struggling to see how we can entirely decarbonize quickly while growing GDP. I'd love to be more optomistic and as I said - looking forward to your article!
Am a bit late to comment, but last year there was this report by the outgoing "UN Special Rapporteur on extreme poverty and human rights" which, in my reading, is in more agreement with Hickel's views than yours:
https://chrgj.org/2020/07/05/philip-alston-condemns-failed-global-poverty-eradication-efforts/
Skimming through the report, it seems to be saying that many of these measures, like $5.50 per day, actually are too low for even a basic existence. It does not seem to say anything about the shift in the distribution you talk about in your post, though perhaps the point is that, while the shift is certainly a good thing, it's not yet at a level where people are able to leave a state of terrible existence.
Would be interested to hear your thoughts!
I am (not) Noah.
What does the phrase "poverty has declined" means?
If your real income grows from the most absolute misery and deprivation ($1 a day) to *barely enough to survive* ($5.5-$7.4 a day), you likely still consider yourself poor!
This kind of growth isn't "enough". But *it matters*.
It's good that the people who live in the most absolute poverty are getting less poor, even if sadly they're just getting a *little less* poor.
When we say that "poverty has declined", I suspect that in most places it means that the poor have been getting less poor, without actually getting into the "middle class". However, I think that in China and other countries of southeast Asia, people HAVE actually been getting out of poverty and into the "middle class".
I think that when Hickels and many like him say that this growth is *irrelevant* and capitalism must go, it's akin to someone who, when asked by a beggar for a penny, instead of giving him, steal one from him.
Certainly any decline matters, and is a good thing, while at the same time not being sufficient. I think Hickel's thesis (not saying it is correct as I don't know enough) is that in the absence of free market strictures, there would have been a greater decline in poverty, mainly because there would have been a more equitable distribution of the economic prosperity. Which is to say, he is not simply saying that the growth is irrelevant and capitalism must go, but suggesting an important connection between the two, in that he is focused on capitalism as a cause of the *lowness* of the decline in poverty rather than as a cause of the *decline* independent of its amount.
I think there is a distinction between this statement and the statement that the decline is irrelevant because it's not big enough.
In the absence of the free market, poverty would have declined more? How has Communism worked out?
In the context of this article "communism" is an irreverent straw man that isn't in the conversation.
Read "free market structures" as "Chicago-school style neoliberal economic policies" and the absence of free market structures as industrial development and strong social programs, which both sides in this argument appear to be in favor of.