History: Niall Ferguson – The 6 killer apps of prosperity

We finally found some time to watch Niall Ferguson’s Ted Talks presentation on the “killer applications” he also describes in his latest book Civilization The West and the Rest

Niall Ferguson starts his presentation outlining his playing field, pointing us to the facts that more than 106 billion people have walked this planet and 94% of those are already dead. Out of those 106 billion 60% were or are Asian and most of them were or are very poor (shortening their life span / economic output). He then bridges over to explain the concept of the “Great Divergence“, that the majority of today’s wealth (US$195 Trillion) was made after 1800 by so-called Westerners and till today 66% of the world’s wealth is owned by these Europeans, North-Americans and Austral-Asians that only make up 19% of the world’s population.

Prof. Angus Maddison’s data sets are used to visualize how this divergence has almost exponentially grown since the 1800 until the late 1970s while running parallel for centuries before.

He then continues explaining how this divergence is not rooted in empires by drawing a line across centuries from Samuel Johnson’s History of Rasselas, the Ottoman Ibrahim Muteferrika, the “ideas and institutions” of Adam Smith’s Wealth of Nations, continuing via John Locke’s property rights to W. Churchill definition of civilization in 1938 – freedom, comfort and culture.

This creates the foundation for what he calls “killer apps” that have set the “West” apart from the “Rest”:

  1. Competition
  2. The Scientific Revolution
  3. Property rights
  4. Modern medicine
  5. The consumer society
  6. The work ethic

To spice up the presentation with the latest buzz words, this half dozen items, his “the killer apps of culture” are then compared to apps on smartphones. Looks like he has not fully understood the concept of applications (at least with regards to smartphones). Each of the “items” he mentions actually forms pillars, pre-requisites or features, that when applied together in the right way, form culture. Culture is the application of society and not each of its building blocks.

Later comparisons are then juggled around – between East & West Germany, North & South Korea, North and South America to rehash that totalitarian states and totalitarian communism were not successful. It has seemingly slipped him completely that it were the same empires and the same means (land grab for his example) that created the divergence between the Northern and Southern Americas (and their different developments over these last 200 years). North America has thrown out the then leading empires earlier and could therefore profit from the industrial revolution that replaced the land based economies previously dominant in both of these continents.

His understanding of work ethics is bound to the numbers of hours worked p.a. by each member of the work force – a rather limited one-sided and biased understanding of this term.

Next comes the visualization of the “end of western predominance of the last centuries” with the same per capita GDP ratios, this time the graphs extended to the 2000s with the West falling back to pre-1900 levels.

He ends his presentation with “…the great divergence is over, folks

Those of us fortunate enough to study at prime US/UK universities are well aware that many of the professors there are also great entertainers in the way they transport their message to the audience. Niall Ferguson’s presentation for most of its reasoning and in general remains just that – a nice piece of entertainment. It lacks the core elements to explain most of the forces and underlying causes for this western dominance of the last two centuries. Like a fable of history – it has its parts of truth but overall remains merely a tale to sell his message.

While the “laws and rules invented by reason“, the ideas and reforms of the “Age of Enlightenment” and their western beginning in 18th-century Europe might have made changes like the industrial revolution possible in the first place, people are not driven by altruistic motives in general, they are mostly motivated by direct incentives like for example money.

The “laws and rules of reason” were certainly important to unlock the human potential & capital of the western countries, but it was that drive for incentives that made them successful. Thus creating the core of this change since the 1800s – what made the western empires more successful than their historic predecessors at least in the near-time historic look of today – were the application of new and disruptive technologies for profit, the so-called industrial and other technology based revolutions beginning with the invention of the steam engine in western countries around the 1800s. It should be noted that after the hight of the “Age of Reason” around 1790 -1800, Romanticism with its emphasis on emotions and it’s moves to balance rationality against intuition and the sense of justice often understood as counter-enlightments became the dominant cultural movement in Europe and other western countries. Both of these cultural movements have influenced our societies till today, even if you don’t want to go as far as linking the first to authoritarian states and the second to liberalism. But neither of them per-se was the reason for the dominance of western empires over most of the world’s population for the last 200 years. It was the successful transformation of the land based economies into technology based ones.

This transformation also better explains the exponential growth of the per capita GDP figures that Niall Ferguson so happily provides throughout his presentation. The GDP totals do look quite different (he does not even mention those) – not surprisingly – as due to their much larger populations the economies of China and India have always been multiples of those from so-called Western (European) territories for the last 4000 years up until the 1800s. Another strongly supporting argument that the successful use of technology was what actually made the difference.

George Washington’s wealth for example, still considered to have made him one of the richest American presidents till today, was landbased or landlocked. This means that his annual economical output (actually the results he owned) – besides factors like weather – was defined by the size and quality of his land together with the number of people working it. This limitation was true for all land-based economies and empires including those in Asia or even medieval Europe. There was always a threshold that could not be overcome no matter how many people would be employed on a piece of land and may those been slaves, serfs, peasants or free people. You could only increase your economic output by the use of more land and / or more people.

Most of Jean-Baptiste Colbert’s ideas we attacked by Adam Smith in his “Wealth of Nations“, but it was one of these ideas of the European mercantilism – its early pre-industrial manufacturies particularly in France during the 17th century that started the break-away from these land based economies. Together with the arrival of companies that enabled multi-person ownership, these changes created the Bourgeoisie, the new wealthier members of the “Third Estate” that – out of self interest and to gain more power – strongly contributed to change the feudal order that was the foundation for most European and non-European empires for thousands of years. While those manufacturies optimised and automated many of the production processes, these first non-land based parts of the economy were still limited in scale by the number of hands (manu factum) that were available to be employed.

The true disruptive change came with the arrival of the machines in the 1800s – the Archeiropoieta (made without hands) – that was suddenly possible and could theoretically be scaled limitless.

One machine allowing to replace hundreds of farm workers, one factory worker together with machines being able to create more economical output per year than hundreds of manual workers. A few soldiers with machine guns and cannons created in these high-tech factories being able to control thousands of indigenous warriors in Africa, the Americas, India and Asia – thus allowing the new western empires to exploit merely the rest of the world latest from 1800 onwards for the resources needed to keep their machines and economies running. And here we do believe it does not really matter that some of the underlying physics, like the one Ferguson mentioned to build more accurate guns & cannons, were derived or discovered with logical reasoning rooted in the “Age of Enlightenment” – those were used as instruments of war and oppression, as means of exploitation to maximize the profits of the dominant elites in western societies (they were equally used against their own citizens for the same reasons).

It was this technology based superiority together with centuries of exploitation of half of the world for resources that created the per capita GDP exponential growth of the West, limiting such growth for those exploited and strongly increasing it for those exploiting.

None of that has ever contributed to better work ethics as we latest know from early industrial times when workers were often treated worse than slaves until checks and regulations were brought in to stop social turmoils close to civil wars. It was the drive of few powerful players in our societies that assured the survival of these systems predominantly done to guarantee the continuation of their powers and wealth.

Similar can be said for competition. Almost all key players in western trade or industry were continuously trying to create monopolies, cornering markets and blocking competition. Like with the other of Niall Ferguson’s “killer apps” competition is also not a build-in feature, it had most of the time be recreated after society as a whole suffered long enough or disruptive events brought an end to one of the newly created monopolies. From the spice trade wars of the Portuguese vs the Dutch, the trade, patent and IP wars between the UK and the newly raising Prussia that later became the German Reich, the radio communication monopolies, the electricity and telephone monopolies to the commodity and financial speculations of today – it looks more like the quest for becoming a monopoly, dominating or cornering markets seems to be build into our current economical system than the opposite that Niall Ferguson assumes. These drivers then quickly get participants from private, public and other areas of society to form what might best be euphemized as “special interest groups” or “lobbying” – by definition knowingly and intentionally working against the common interest of society as a whole to better themselves.

Niall Ferguson’s six “killer apps” have certainly contributed to “freedom, comfort and culture” for an elite group within western societies, have helped to sustained their “western empires” and for some years during the 19th and 20th century broad groups of society might have benefited as well, but will those help to sustain or rebuild our societies into the future.

With disparities in most western countries between the majority of people and the few rich ones having during the last years again reached levels beyond Victorian times, “property rights” having again become the rights of the few who own most of the western countries (and previously most of the World), the “scientific revolution” and “modern medicine” being limited, hindered or blocked by patent and IP battles, lack of access for many within deteriorating health systems or simply already happening somewhere else (not invented here), the “consumer society” running out of steam since years with most not having access to the financial means to actually consume beyond their bare necessities and more and more of the aging western society slowly gliding into the poverty bracket, all of Niall Ferguson’s “killer apps” seem to have lost their ground.

Niall Ferguson concludes by claiming the western decline is not inevitable because history does not work in life cycles. With regards to an inevitable decline of the West, we believe he might be right, but for other reasons. And it is already late in the game – it will now need major events to stop these processes, a few words and small steps will not change it anymore. With the trillions of Euros, created or to be created by generations of people, so willfully handed over by politicians to extend the current dealings for a few more years and protect the card houses they have built, it is now becoming more and more like a train accelerating to full speed on its way into the abyss.

After the fall of the communist empires and the exponentially increased financial speculation of the last decades that now in some western countries amounts for up to 40% of their GDP, a new disruptive phase for the existing empires has started. The continued and till today unchallenged support of this “part of the economy” by politics across all western countries with bills already run up beyond dozens of trillions – amounts that can by definition not be recreated by their real-world economies, is further accelerating this drive. Soon when the deleveraging will become more visible and completely inevitable, all those economies will have to shrink by at least the size of those bubbles. Then it will be “last man standing” or the “winner takes it all” – the U.S. and China currently having the best chances to win that trophy. Europe – at least for the moment – seems to be engrossed in burning the ground she is standing on and if continued for longer might sooner or later diminish to its previous level of importance – when the Mongols stopped their westwards raids before the Western European countries because they considered those countries not worth raiding as there was nothing there worth stealing for them.

Such processes of decline and decay in previous centuries often took decades or even centuries. Now with the much increased speed of worldwide life, having reduced the time-spans for acting often from days to minutes, we might not have that luxury of time left. Or as the Chinese say – we are living in interesting times.

Note: The video is also available as CC BY-NC-ND 3.0 on the TED talks site

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