I’ve been an avid reader of Niall Ferguson’s books ever since he wrote the definitive history of the Rothschild banking family in 1999, The House of Rothschild. He’s a prolific writer and I haven’t read all his books, but most of them — sufficient for me to keep in touch with the gradual development of his thinking. However, as his scope became increasingly world-wide in successive books, I’m no longer an admirer. I think he has gone increasingly awry. In his latest book, Civilisation: The Six Ways the West beat the Rest, he has gone badly wrong.
His basic assumption is that powerful empires or countries (modern America is his principal target) may take a relatively long time to reach their zenith but they can crash very quickly. I don’t quarrel with him there. The main message of his book, though, is that, since the 17th century, the West came to the fore, as against Asia, for six main reasons — “killer applications” as he calls them. These are, in brief, the following: 1. A fractured Europe produced a more competitive culture; 2. The Scientific Revolution occurred in Europe; 3. The Rule of Law and Representative Government were more advanced in Europe (and then in America); 4. The development of Modern medicine; 5. The development of the Consumer Society; 6. The Work Ethic.
I don’t quarrel that all six were important. However, just as all six enabled Europe to establish a 400-year clear lead over Asia, Niall Ferguson hasn’t explained why England was enabled to establish something like a 200-year clear lead over the rest of Europe and America in the 17th and 18th centuries. It was only until the last few decades of the 18th century and the early decades of the 19th century that Europe (principally Germany) started catching up. To be more rigorous and comprehensive, he ought also to have explained our particular lead over the rest of Europe.
The reason is that England had a high density of provincial banks as well as a high density of merchant banks in its principal port-city, London. As to merchant banks, Europe had several port-cities with many of them (e.g. Amsterdam, Stockholm, Hamburg, Gdansk), but no European country had any provincial banks worth speaking of. The reason is that the European countries, living cheek by jowl with one another, were constantly at war. Banks in the countryside were never safe. Most folk with money, rich landowners or middling farmers, kept their money under the mattress. It was only a few port-cities that were rich enough to afford their own private armies for protection which had banks. In continental Europe there was never enough money heaped together as capital in countryside banks able to invest in any local industrial projects that might arise because of the growing scientific revolution. In England, there were not only plenty of provincial banks able to invest in local projects but they were also able to tap into further rich sources of funds of the merchant banks of London. This reason should have been added to Ferguson’s “killer apps” as the absolutely necessary precursor to the other six.
But this then leads Ferguson to a more serious error in his final verdict. This is that several Asian countries will now overhaul the West in every way (once again, America being his principal target). He advances several reasons. What makes one instantly suspicious is that he too frequently compares various inferiorities of the West with Hong Kong and Singapore rather than compared with South Korea, China or Japan. But Hong Kong and Singapore are city-states which are not fully typical of Asia. They both still have a strong residual English culture which was implanted 200 years ago. They’re much more Chinese than English, of course, but, nevertheless, they are not typical of the growth countries of Asia. Even Hong Kong remains distinct from mainland China in many ways.
Ferguson lays great emphasis on the high scores of Asian schoolchildren in mathematical tests — as though these were the only criteria of future economic success. He doesn’t mention that both the Chinese and Japanese governments happen to be deeply worried that their authoritarian teaching methods also severely cramp the creative abilities of their young people. They’d dearly love to be able to transplant Western schools into their country. Ferguson also cites the large and growing number of patent applications by China, Japan and South Korea. He doesn’t realise that 99% of all patent applications are not new ideas at all but merely refinements of existing products and methods, usually carried out within large corporations. He says that the overwhelming number of Nobel prizes won by America, Germany and the UK don’t count for all that much because the recipients are old men by the time they receive them. This is a poor argument. Also, he doesn’t mention that although China, Japan and South Korea have been industrialized for a century, none of them have initiated any brand new technologies as America, Germany and the UK have done. Nor has any Asian country opened up any brand new scientific disciplines.
Many brilliant, creative young Asian scientists are coming well to the fore in research and are increasing their appearance in heavyweight scientific journals in the more complex scientific subjects such as particle physics and genetics but almost all of these are second-generation Asians born in the West or are post-doc graduates who’ve lived in the West for a number of years and absorbed our culture. Thousands of rich Chinese are now migrating every year to the West in order that their children will be given a freer, more liberal education; and scores of thousands more rich and middling Chinese are sending their children to Western schools and universities.
In short, although China, Japan and South Korea may yet supply the whole world with all the consumer goods that it can afford (and probably will), they will still be deficient in new ideas, fundamental research and advanced technologies. Until their authoritarian cultures change, these countries will be followers, not leaders. This is not to say that America will never crash. I think it will suffer a major currency catastrophe as the dollar becomes increasingly inflated, but so will Western Europe and China at the same time because we’re so interlinked by trade. When a new world trading currency is devised (and this will have to be done within days) then maybe the chastised governments of all nation-states, particularly America, will become a great deal more modest in the monetary and economic control they think they have now.
Altogether in his latest book, Niall Ferguson has become much too simplistic and, in particular, much too harsh about the country which a few years ago offered him a much larger salary than he was earning at Oxford. His is the classic Aesop’s tale of the traveller who took pity on a frozen snake and put it near his camp fire to warm up.