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« Krugman On Health Care | Main | A Piece in Forbes . . . »


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I wonder if Smith wasn't thinking of Hume's History. Hume makes a big deal out of the fact that the French and low countries were way ahead of England, which was kind of a backwater, until sometime after 1500. Part of the catchup process, Hume says, was emulation of French and others by the English who thereby acquired a taste for refinements that they otherwise knew nothing of.

Anyway, isn't the context of Smith comments different than Arrighi seems to have in mind? Wasn't Smith talking about development from primitive conditions? There's been plenty of cities in China for some time now! Indeed, China was a big example of a developed economy for Smith.

I would think Adam Smith is discussing the proximity of commerce. You begin employing most of your initial capital in agriculture for your own sustenance. Later, advances generate surplus to commerce and so forth until you have the capacity to move your produce farther and farther away.

In regard to the capacity of some cities to invert the production pyramid and generating through commerce advances, just indicates how port cities (Amsterdam, London, etc.) could generate the commercial force needed to generate knowledge through trade.

You will always be interpreting texts in such a manner which benefits your point of view. Beauty is in the eye of the beholder.

In what sense is Britain development supposed to have been "unnatural"? Do you know that Smith is referring to Britain in that second paragraph.

Are you saying that you weren't a farmer before you became an economist? How unnatural of you.

...many people don’t understand the way American health care works right now.

Krugman knows less about insurance that the average first year insurance agent, who knows a lot less than an insurance executive or actuary.

At least he is right that government is deeply involved in insurance markets, which is why they
don't function as well as many others.
And Medicare is a horror story, as many doctors know all too well.

Remind me again what this guy does for a living?

Maybe Smith isn't entirely correct when he speaks of the "retrograd" or "unnatural order of England," or maybe Prychitko and Giovanni are not using the same defintions (as has been the cuase of much economic confusion since the 17th century classical econmists)? I think that Smith is focusing on the 18th century specifically and Europe broadly, as opposed to, say, the Celtic invaders of the British Isles in the fifth century BC, followed by the Romans, then the Angles, Saxons and Jutes, then the Scandanavians, and then the Normans. Each invasion led to successive improvements in agro first (but never final). However, foreign commerce or industrialization is hard to determine which precedded which, as it depends on your definition and it also depends if you consider trade between British conquered lands during British imperialism as foreign or not. If no, then the British industrialization proceeded foreign commerce, and if yes, then vice versa. I have not thought this out completely yet, but maybe this is part of the confusion?
Either way, I don't think the latter two can be so clear cut as one came before the other. All three are not single instances, but a process, and it is hard for anyone to say which started first. However, I think it is safe to say that in all Euro societies, some form of agro proceeded both industrialization and foreign commerce.

NRH: Both Arrighi and Smith are using the same definitions. I spent the time re-reading Smith and posting it in order to show our blog readers precisely how Smith uses the term, the term which Arrighi accepts.

I myself don't find value in "natural" and "unnatural" development as theoretical concepts. In short, I don't use them.

Professor Prychitko. First, I apologize. I actually just spouted that off really quickly after reading your quotes from Smith, and I, incorrectly, assumed I knew where the rest of the post was leading. I apologize for my misjudgement. Thanks for all your input, and keep the informative posts coming!

NRH -- no problem.


The heart of Smith's claim is that agriculture must precede urbanization. An antidote to this conventional wisdom is chapter 1 of Jane Jacobs's second book, _The Economy of Cities_ (1969), which is titled, "Cities first -- rural development later."

She argues, to paraphrase, agricultural development has to overcome two problems (1) the lack of opportunities to experiment and the staggering costs of experimenting in rural, low-density settlements and (2) the very low likelihood that any discovery that might be made will be diffused across society. Cities overcome both problems.

In other words, agriculture and related practices (also writing, numeracy, organized religion and eduction -- ie, culture) could only have emerged spontaneously in large, dense settlements established by hunter-gatherers looking to trade their goods. The "natural" course of development is thus the reverse of the received view.


Thanks. I was going to mention Jacobs in the original post but I thought it was growing too long as it was. Jacobs is indeed the antidote.

I may be wrong, but didn't Smith refer to the economies of the Far East as being stagnate? I'll have to get my copy of 'Wealth of Nations'...

Smith mentions the Dutch Republic many times in "Wealth" as the best example of his system of natural liberty. The Dutch developed agriculture first, then commerce and manufacturing.

Developing ag first is important because in developing nations it employs the largest share of people. Improving ag releases workers for manufacturing and creates demand for manufactured goods by increasing incomes and reducing food costs, the biggest costs for poor people in poor nations. Because of the size of ag in most poor countries, you get the biggest bang for your buck by focusing there.

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