Posted by: CS | February 15, 2013

The Rise of the West: Niall Ferguson’s Six "Killer Apps." How Are They Working For Us Now?

China seems to have been long stationary, and had probably long ago acquired that full complement of riches which is consistent with the nature of its laws and institutions. But this complement may be much inferior to what, with other laws and institutions, the nature of its soil, climate, and situation might admit of.

Adam Smith, The Nature and Causes of the Wealth of Nations, 1776

How, by the end of the 19th century, did the West come to rule most of the Rest?

Not, according to Niall Ferguson, because those of the West were smarter that those of the Rest, or because they were more fortunately endowed by geography, climate or natural resources. The reason  he argues can be found in a difference in institutions, which is to say the political arrangements and social rules and traditions that shape human action.

In particular, Ferguson attributes the divergence in political and economic success between the West and the Rest to six features of Western society, which he identifies by reference to their impact on human behavior and economic productivity. These features he refers to as “killer apps.” by analogy with the programs that give functionality to computing devices.

Ferguson’s six “killer apps.” are: competition, science, property rights, medicine, the consumer society and the work ethic.

Briefly, here is how these institutional factors served the West in its rise to global dominance in the half-millenium to the beginning of the Twentieth Century.

The Great Exposition: London 1851. Image source.

Competition: By competition, Ferguson has in mind the competition that existed among Europe’s warring petty states during the West’s rise to global hegemony: a competition that drove innovation in the means and methods of warfare, both on land and at sea, and encouraged technological innovation in tradable goods, such as textiles and machinery, and services such as banking and ocean transportation. But competition existed on other levels too, for example, between national and civic governments, and among profit maximizing business enterprises.

Science: Western science differed from the science of the Rest by its commitment to empiricism. The idea that science can advance only through observation and experiment was not uniquely Western. The great Muslim scholar Alhazen, for example, wrote:

[T]he seeker after the truth is not one who studies the writings of the ancients and, following his natural disposition, puts his trust in them, but rather one who suspects his faith in them and questions what he gathers from them, the one who submits to argument and demonstration …

But it was in Western Europe that the pursuit of knowledge by submission of ideas to argument, particularly mathematical argument, and experimental demonstration became a passion, not only among scholars, but also among landowners and members of the clergy.

Property rights: Even today, citizens of Western states lack absolute rights to the ownership of property. In England, for example, the crown has alloidal title to all property, i.e., title subject to no superior authority. Thus all private property may be expropriated by the government in the name of the crown, although, today, this can no longer be done without payment of compensation.

What is, in effect, the near absolute right to property ownership that exists in the West arose as a result of the decline of absolute monarchy. In England, the end of the autocratic monarchy happened almost overnight as a result of the Glorious Revolution of 1688, which resulted in the creation of a parliamentary government under a constitutional monarch. The parliamentary government was largely comprised of great landowners (the House of Lords) and country gentlemen (in the House of Commons).

Between them, the Lords and country gentlemen, took steps to insure the legal protection of their property. Among other things, they were careful to limit the taxing power of the executive. The possession of these rights together with parliamentary influence made it both easier and more profitable to develop land for agriculture, mining, and industrial purposes, and the construction of canals and railways.

Medicine: The advance of medicine in the West, in particular the discovery of the role of microbes, rats and careless sewage disposal, in the causation and spread of disease, and the role of vitamins in deficiency diseases was no more than an aspect of the Western scientific revolution. Its effects was to greatly increase life expectancy, thus adding to the length of productive life relative to the unproductive years of childhood. Better health through limitation of disease and elimination of dietary deficiencies also enhanced the energy, physical strength and mental capacity of the population.

The Consumer Society: Increased consumption was a necessary concomitant of increased industrial production, and the relative freedom of trade among and within the European states, and the modification of sumptuary laws to promote the textile industry, insured that people were able to consume as much as they could afford.

The Work Ethic: The work ethic, like the consumer society, emerged as a result of commercial and industrial competition, and the establishment of property rights.The arrangements that made it possible for individuals to rise in wealth and political influence through competitive business activities and the exploitation of land — that is to say, the emergence of full-fledged capitalism — provided the incentive for individuals to display what is referred to as the work ethic.

So How Are the Six “killer Apps.” Working For the West Today?

Competition: In Europe, the cradle of the Western world, political competition is in sharp decline. Much of Europe is now ruled by an unelected committee, the European Council, and its great bureaucracies. Within what remains of the nation states, independent centers of political power are being progressively eliminated. Under the influence of the EU, British governments since the time of Prime Minister Edward Heath have engaged in the demolition of local governments, including ancient corporations dating back to the 12th Century, and replacing them with larger units, the aim eventually being to abolish England’s 48 county councils and replace them by nine regions reporting not to the government in London but to the EU. An apparent counter trend, in the creation of national assemblies in Scotland and Wales, serve not to promote local autonomy, but rather to diminish the only real power center in the United Kingdom, which is the parliament in Westminster.

In the worlds of finance, commerce and manufacturing, there is a similar trend to giantism and monopoly, facilitated by governments under the influence of special interests that both fund election campaigns and provide lucrative business and employment opportunities for politicians who have served the special interests while in government. 

The era of globalization has embarked the world on a new form of competition whereby not only goods flow among nations in accordance with supply, quality, novelty and demand, but labor, capital and technological know-how flows freely across international borders too.

The result is that a large proportion of the the workforce of the West has been brought into direct competition with the workforce of the Rest, with catastrophic consequences for tens of millions of workers in the US and Europe whose jobs have been off-shored to the Rest, together with the capital and technology to make those off-shored jobs as productive, and thus as difficult to repatriate, as possible.

Science: The West still does science. In fact, science has now become a huge industry, consuming approximately 3% of the GDP of the Western nations. However, much science is government directed, government direction itself being dictated by special interests, drug companies, arms makers, etc.

This arrangement is very different from that which prevailed during the heyday of Western Science, between the sixteenth and early twentieth century, when science was mainly the preoccupation of private individuals or scholars at privately funded institutions of learning.

How productive this kind of science will prove to be in the long-run remains to be seen. It is already apparent, however, that in this new and politicized environment powerful forces for the corruption of science are at work. Thus billions and tens of billions go toward research on politically favored diseases such as AIDS, and on politically favored industries, e.g., pharmaceuticals, and the verification of predetermined public policy on issues such as climate change, the pressures that are brought to bear encouraging bias and fraud in published science. The probability would appear to be that the types of unusually creative mind that propelled Western science since the time of Isaac Newton will be driven from the field by heavy-handed bureaucratic management and political meddling, when they are not simply elbowed aside by the often aggressive mediocrities that populate so many laboratories.

Property rights: Westerners still have the right to the ownership of real property. However, over the last hundred years Western governments have hugely expanded and now consume around half of all national income, up from less than 10% a hundred years ago. This transformation in the scale of government has been achieved by expropriation of the majority of the income, i.e., intangible property of the more successful members of society, income that is then used to support a huge welfare system that rewards malingering and idleness, promotes crime and kills the work ethic.

Medicine: In the West, the greatest gains in human longevity and health from advances in medicine had already been achieved by the early decades of the last century. But since then, the cost of medicine has escalated as governments have assumed the role of healthcare provider. That there has been no great benefit from state intervention in medicine is evident from international comparisons. For example, in the US, where state mandated medical insurance (Obamacare) will amount to about 10% of GDP, with private medicine adding another 5%, for a total cost of around $7,500 per person, life expectancy at 78 years is two years less less than in Jordan, where GDP, at $6000 per person is substantially less than US medical expenditure per person.

We can say, therefore, that Western medicine is now a parasite that weighs heavily upon Western prosperity and competitiveness. Moreover, insofar as medicine extends life beyond the years of productive work, it only adds to the drag it imposes on Western prosperity.

The Consumer Society: Westerners have certainly not lost their inclination to consume. And with globalization and the development of consumer credit the consumer society has placed the West in massive debt to the Rest, particularly China, now the workshop of the World.

The Work Ethic: The work ethic is an emergent phenomenon, dependent on the existence of opportunities for self-advancement by hard work. For tens of millions in the West, and perhaps for the great majority, opportunities for substantial upward mobility, either social ord financial do not exist. The West is now an elitist society where connections, private schools and inherited wealth generally count for more than merit. Meritocracy, a prerequisite of the work ethic, has moved East, while it has largely died in the West.

In a talk about the six “killer apps.” Ferguson ends with the words: “The great divergence [between the West and the Rest] is over, folks.” Judging by the way the six “killer apps.” are working for the West now, a new “Great divergence” is about to open up, as the vast intellectual resources, ambitions and energy of the Rest are applied with growing effectiveness to the goal of World domination, economic, political and military.

See also

U.S. ranks first in healthcare spending but last in life expectancy

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Responses

  1. […] Asia is rising while the West stagnates, that is the inevitable consequence of Asia having adopted the institutions that made the West great, namely, competition, science, property rights, medicine, the consumer society and the work […]


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