THE WEALTH AND POVERTY OF NATIONS: Why Some Are So Rich and Some So Poor.<i> By David S. Landes</i> .<i> W.W. Norton: 650 pp., $30</i>

There is no thinking adult anywhere on the globe who has not wondered in the words of the subtitle of David Landes’ powerful and lucid book: “Why some are so rich and some so poor.” This includes not only the poor, the majority of the human species, but also governments of rich countries, including even the United States. Nothing in history is forever, certainly not the ranking order of nations by wealth or power. In “The Wealth and Poverty of Nations,” Landes, a veteran economic historian of great distinction, tries his hand at an answer. Because the present distribution of wealth is rooted in the past, however much it may change in future, a historian is needed for the job.

Landes has good qualifications for it. As a historian, he has an enviably wide range, based on research, common sense and practical experience. His works range from a study of the early “Bankers and Pashas,” which linked the history of business, finance and 19th century imperialism, to the splendid “Revolution in Time: Clocks and the Making of the Modern World.” He is probably best known for the classic “The Unbound Prometheus,” never out of print since 1969, which analyzes technological change and industrial development in Europe since 1750. Landes belongs to the generation that knew languages, countries and literature as well as economic theory. How many economic historians quote Virgil? He knows that novels like “Il Gattopardo” and memories like those in Mikiso Hane’s “Peasants, Rebels and Outcasts” tell us more about Sicily and Japanese modernization than statistics.

What is more, he can write with style and is a good hand with the epigram: “The two essentials of successful banking are, first, other people’s money, and second, lending to the rich.” “Other things equal, it is the rich who poison the earth.” “You can fool some businessmen some of the time; politicians much of the time; and voters almost all the time.” “An old story: privatize the gains, socialize the costs.” “In big things, history abhors accident.” The ideas may not always be easy, but for a serious book, the reading is.

When all the world was poorer, it was also less unequal. The gap in mean per capita share of gross domestic product between the richest and poorest countries today (Switzerland and, say, Mozambique) is 400 to 1. Angus Maddison estimates that 150 years ago it was maybe 3 to 1 between the richest and poorest global regions (Western Europe and Africa). It is probably still increasing, although one or two recent industrializations have begun to close the income gap between rich and poor countries. None, of any size, has yet closed it.

This, Landes holds, is because of the uneven global spread of the kind of economy that for the first time in history made enormous and constantly growing social wealth possible. It was pioneered in parts of Europe and from this base conquered and transformed the world. It is, as he rightly says, “ideological fantasy” to pretend otherwise, although this “Eurocentrism” applies not to history, as a whole, that is the 10 millenniums since the invention of agriculture but only to the last 600 or at most 1,000 years, and may not outlast our millennium much.

There is no serious disagreement about this among historians, only some argument whether any other region might have developed a similar cultural-economic dynamism to Europe’s. (Landes thinks Tokugawa Japan might but, in an interesting excursus on India, gives reasons why industrial revolution was not generated there.) The monarchies in the belt from the Pacific to the Mediterranean, which gave birth to civilization and organized empires, invented writing and world religions when there were only tribesmen and barbarians north of the Mediterranean. All reached a plateau--often, as in China, of impressive height--and then stopped or even regressed. The Chinese, as Landes notes with surprise, even managed to forget superior technologies they once knew. One of Europe’s advantages, he argues, was that the most western of these empires, Rome, fell and was never reconstituted.

Why? Landes offers a political and a cultural explanation. When rulers appropriate social wealth by sheer power, their economies “were characteristically squeeze operations. When elites wanted more, they did not think in terms of gains in productivity,” and those they dominated neither could nor had any interest in doing so. This also applies to the coercive power of men over women, to which he pays more attention than most historians: The macho ideal was one in which the women did all the work. Conversely, “the best clue to a nation’s growth and development potential is the status and role of women.” On the other hand, culture, and notably authoritarian religions--Islam, Roman Catholicism--have their own anti-innovative, and economically counterproductive, impetus. (It is not made clear why Islam, after centuries of teaching the heritage of science to the backward West, switched to obscurantism.)

On the positive side, he mobilizes the usual suspects: the fragmentation of power after the fall of Rome, the unique guarantee of property rights in the West by “an amalgam of classical legacy, Germanic tribal laws and customs and what we now call the Judaic-Christian tradition,” all of which provided support for such rights. These produced not only the motivations for an innovative enterprise economy but “the inner values and attitudes” that make it work, such as Max Weber’s Protestant ethic and its equivalents. In this sense, “if we learn anything from the history of economic development, it is that culture makes all the difference.” These are old and debatable arguments. It is not yet clear how much of their force derives from hindsight.

Landes’ account of what the West did with its supposedly unique advantages follows very much the traditional path of economic history. He rightly refuses to be too impressed by the statistical aggregates of the so-called cliometricians. Professionals will recognize some of the intramural arguments among the experts; lay readers can be assured that most of what he says is very sound--which does not mean that this reviewer agrees with all of it. Furthermore, he deserves credit for paying proper attention to the social and human costs of the ruthless conquests of the West and the rise of the capitalist world economy. Landes is not what he calls a “celebratory historian,” even though he shows little sign of appreciating the full scale of the catastrophe that the sudden imposition of capitalism from above has meant, after the catastrophic decades of revolution, wars and an imposed command socialism, for the great collective victims of the 20th century, the unhappy peoples of the former Soviet Union.

The uniqueness of the West, however, raises another question. Why, until the late 20th century, and in spite of trying hard for more than a century, have so few countries succeeded in following the proven Western road to wealth and progress? Here Landes is less convincing, if only because the “Asian miracle,” including Japan, is too recent to be assessed historically. Indeed, his treatment of the “Asian tigers” is cursory. Moreover, the state as a generator and director of economic growth does not quite fit into his argument. He mentions it, even emphasizes it, both in the run-up to industrialization in the West and in his discussion of the “triggering, sheltering and guiding nominally free market enterprise” in East Asia, though he probably underestimates its role (though not its bureaucratic limits) in the industrialization of such states as Mexico and Brazil. However, basically he thinks the historic “great leap forward” of the economy did not start here, and it should not start here today. Still, analysis can do better than just to say of state intervention, as of the little girl in the rhyme, “when she was good, she was very very good and when she was bad she was horrid.”

Here we come to what is both the strength and the weakness of Landes’ book: It is a polemical tract for the times. He has two major targets in his sights, apart from the surviving believers in a state-socialist economy: the ideological zealots of political correctness and the theologians of economic orthodoxy. Living amid the culture wars of fin de siecle America, he spends much time on controverting the first, though unfortunately not on controverting the even more dangerous fashion for the neo-Darwinian reduction of history to genetically determined sociobiology. This is understandable, but constantly fending off the unconvincing contentions of people who would want history to have been different from what it was may have narrowed and diverted the intellectual course of a powerful book.

The economic theologians are more serious adversaries, especially as their theology has become the policy orthodoxy of national governments and international institutions. As Landes points out, the neoclassical belief that no signals are more reliable than market signals flies in the face of experience, not to mention Adam Smith’s views of public policy. Time and again, he tries to demonstrate that the fundamental assumption of the economic globalizers, the doctrine of “comparative advantage” and “the sacred certainty of gains from trade for all” are baseless in theory and, insofar as they occur, are historically contingent. In the real world, few things happen just because theory says they should and none happens all the time. Right now, he points out, what globalization entails in the richer countries is a leveling of wages, growing inequality of incomes and/or mass unemployment, whether transitional or not. He is right to point out not only that nations have played a significant part in the rise of the modern economy but that states retain a central economic function because power and wealth are not the same thing and there are other ideals than the optimal use of the factors of production--for instance, “distributive justice.”

And yet, in his brief final chapter, Landes comes to few conclusions and no positive recommendations. In one sense, this is the historian’s limitation. He or she can say little more than: This is what happened. This is what worked, this is what didn’t. The Dutch reversed the relative decline of their economy; the British haven’t so far done so. These are the realities of the past and the various historically rooted realities of the present, to which policymakers, public or private, national or transitional, must pay attention, like it or not. Paying attention to these is a better long-term guide to policy than computer-modeling.

Perhaps. But for a world history--and at no time do we need one more than we do today--sensible pragmatism is not enough. Because his book is primarily an intervention into the ideological and policy debates of the 1990s, Landes has written something less than the history of the world’s economic development, which he is one of the few living historians qualified to write. All the same, there are few historians who would not be proud to be the author of this book.