Monday, July 15, 2013

The Great Degeneration: How Institutions Decay and Economies Die by Niall Ferguson

By Professor Jeffery Atik

This review was originally posted on Jeff Atik's Blog, Attraverso.

The civilized world is falling apart in Niall Ferguson's view. The world of Ferguson's concern comprises the United Kingdom and the United States, which (in sequence) have enjoyed long periods at the top. In The Great Degeneration, Ferguson signals the decay afflicting our central and defining institutions. Ferguson mixes nostalgia with alarm: nothing is as it was. Unlike Acemoglu and Robinson, who give an institutional account of why poor countries remain poor in Why Nations Fail (reviewed here), Ferguson tells us why great nations decay, why ours is degenerating.

Although Ferguson distances himself from those who give a purely cultural account for the rise of British and American prominence, he celebrates the particular constellation of democracy, capitalism, rule-of-law and voluntarism found nowhere else. A sequence of accidents may have created our cheerful and wealthy societies. The reduction in the Great Divergence seems to concern Ferguson most: the ratio of our well-being to that enjoyed by the rest of the world (as if a more equitable distribution were a bad thing).

If great (though quirky) institutions served us in the past, their present 'degeneration' is a cause for concern. Ferguson divides The Great Degeneration into four short essays, each devoted to an institutional category displaying distinctly Anglo-American characteristics. These are democracy, capitalism, rule-of-law and a civil society marked by voluntarism. The book is a write-up of a series of lectures Ferguson presented on the BBC, summarizing and synthesizing his earlier work. Ferguson's argues that institutions and not culture were the central determinants of the Great Divergence. Yet he also sees the 'intergenerational partnership,' the awareness and the willingness to act publicly on behalf of future generations, as foundational. The better democracy we practiced in the past was wiser; perhaps we didn't think about our neighbor, but we certainly thought about our grandchildren. (Fear not - the last thing Ferguson will address is climate change - he supposedly believes it a hoax.)

Ferguson's second essay is dedicated to the economy. He recognizes the mess we're in - but offers some rather provocative speculation on how we got here. We Americans are not as thrifty as we once were (undoubtedly true) - and in our desire to outpace our limited means, we bought too many, too big houses and crashed the world economy. And the financial crisis certainly isn't the fault of the bankers (what else were they to do?) - rather it is due to how badly they were regulated. Things were better, he tells us, during earlier days when the old Bank of England had been charged with pulling a nation out of financial difficulty. Reasonable men quietly assembled and simply did the right thing. Ferguson gets pretty ideological through most of this treatment - he may well have thoughtful arguments, but given the thinness of the presentation, his tone is conclusory and his assertions unconvincing.

Ferguson is even less persuasive when he moves on to the law. Now there are many wonderful things about the Anglo-American legal system - and each can find there features that accord with his or her worldview. Still I found it a bit jarring to hear the English way of law praised for its 'home is a castle' principle. I suppose it is a neat way of expressing the liberty we feel in conducting our private lives, but the formulation suggests (to me, at least) gun-toting homeowners firing away at suspicious shadows. And at times Ferguson is mean and jingoistic - to describe the European Convention on Human Rights as "Napoleon's revenge" is breathtakingly bigoted.

But Ferguson is positively charming when he talks about cleaning the beach in his adopted town in South Wales. Plastic bottles, beer cans and "crisp packets" spoil the seaside. And the solution that works to clean it up is old-fashioned voluntarism. Ferguson asks a few friends to help at first, then levers up the effort by enlisting the local Lions Club. The shore is now kept clean "without any public sector involvement, without any profit motive, without any legal obligation or power." Great Britain and the United States are distinguished by the vigorous action of private organizations: schools and churches to be sure, but also social clubs, industrial and commercial associations, libraries and hospitals. Even bowling leagues (Ferguson cites Robert Putnam's Bowling Alone to suggest all these institutions are in decline).

Civic participation did more than meet social needs - by serving, we multiplied our various stakes in the community. Today we give much less: less of our time, less of our money. And as we grow more isolated, we grow more selfish.

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