Niall Ferguson: Will The Rest Of The World Catch Up To The West? Historian Niall Ferguson explains why, when it comes to amassing wealth, it's been the West versus the rest. He suggests six killer apps that promote wealth and innovation — are now shareable.

Will The Rest Of The World Catch Up To The West?

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OK. Really rich people, but what about really rich countries? Well, for the past 500 years, the story has basically been the West and then the rest.

NIALL FERGUSON: People in the West, meaning Western Europe and places where West Europeans settled, got a lot richer than everybody else.

RAZ: This is Niall Ferguson. He's an economic historian at Harvard and he says that people who live in the West today...

FERGUSON: Have two-thirds of the private wealth, and the great majority of people who live elsewhere make do with the rest.

RAZ: So the question is why? What happened in the last 500 years to create such a huge gap and why did western countries suddenly begin to pull away from the rest? Well, here's Neil's explanation from his TED Talk.


FERGUSON: This wasn't just an economic story. If you take the 10 countries that went on to become the Western empires, in 1500, they were really quite tiny - five percent of the world's land surface, 16 percent of its population, maybe 20 percent of its income. By 1913, these 10 countries plus the United States controlled vast global empires. Now you can't just blame this on imperialism, though many people have tried to do so. Samuel Johnson, the great lexicographer, posed it through his character Rassellas in his novel "Rassellas, Prince of Abissinia," published in 1759. "By what means are the Europeans thus powerful or why, since they can so easily visit Asia and Africa for trade or conquest, cannot the Asiatics and Africans invade their coasts, plant colonies in their ports and give laws to their natural princes? The same wind that carries them back would bring us thither." That's a great question.

And you know what? It was also being asked at roughly the same time by the Resterners - by the people in the rest of the world. Like Ibrahim Muteferrika, an Ottoman official, the man who introduced printing, very belatedly, to the Ottoman Empire - who said in a book published in 1731, why do Christian nations, which were so weak in the past compared with Muslim nations, begin to dominate so many lands in modern times and even defeat the once victorious Ottoman armies. Unlike Rassellas, Muteferrika had an answer to that question, which was correct. He said it was because they have laws and rules invented by reason.

RAZ: Not geography, not imperialism. The West won, at least according to Neil Ferguson, because of its ideas and institutions. Six of them he calls killer apps.

FERGUSON: I called them the killer apps because it seemed like a way of annoying academics who hate that kind of thing. So the killer apps were, number one, competition, science in the sense of the scientific method, the rule of law based on private property rights, modern medicine, the consumer society and the work ethic. Those six things arose in the West first. They explain why the West got so much richer. But here's the killer app of the argument, once non-western societies began to copy those ideas and institutions, once they downloaded the killer apps, low and behold, they started to experience growth.


FERGUSON: Let me very briefly tell you what I mean by this, synthesizing the work of many economic historians in the process. Competition means, not only were there a hundred different political units in Europe in 1500, but within each of these units, there was competition between corporations as well as sovereigns. The ancestor of the modern corporation, the City of London Corporation, existed in the 12th century. Nothing like this existed in China where there was one monolithic state covering a fifth of humanity. And anyone with any ambition had to pass one standardized examination, which took three days and was very difficult, and involved memorizing vast numbers of characters and very complex, Confucian essay writing. The scientific revolution was different from the science that had been achieved in the Oriental world in a number of crucial ways, the most important being that through the experimental method, it gave men control over nature in a way that had not been possible before. Example, Benjamin Robins's extraordinary application of Newtonian physics to ballistics. Once you do that, your artillery becomes accurate.

Think of what that means. That really was a killer application. Property rights - it's not the democracy, folks. It's having the rule of law based on private property rights. Most people in rural North America owned some land by 1900. Hardly anyone in South America did. That's another killer app. Modern medicine in the late 19th century, began to make major breakthroughs against the infectious diseases that killed a lot of people. And this was another killer app, the very opposite of a killer because it doubled and then more than doubled human life expectancy. The consumer society is what you need for the industrial revolution to have a point. You need people to want to wear tons of clothes. You've all bought an article of clothing in the last month, I guarantee it. That's the consumer society and it propels economic growth more than even technological change itself. Japan was the first non-western society to embrace it. The alternative, which was proposed by Mahatma Gandhi, was to institutionalize and make property permanent. Very few Indians today wish that India had gone down Mahatma Gandhi's road.

Finally, the work ethic. Any culture can get the work ethic if the institutions are there to create the incentive to work. Who's got the work ethic now? You probably assume that because the iPhone was designed in California but assembled in China that the West still leads in terms of technological innovation. You're wrong. In terms of patents, there's no question that the East is ahead. Not only has Japan been ahead for some time, South Korea has come into third place and China is just about to overtake Germany. Why? Because the killer apps can be downloaded. It's open source. Any society can adopt these institutions and when they do, they achieve what the West achieved after 1500, only faster. This is the Great Reconvergence and it's the biggest story of your lifetime 'cause it's on your watch that this is happening. The average American used to be more than 20 times richer than the average Chinese. Now it's just five times and soon it will be 2.5 times. And this is part of a really extraordinary phenomenon and that is the end of the Great Divergence.

RAZ: When you think about this gap that's closing and this reconvergence, where are we going to be in 10 or 20 or 50 years? Will we eradicate poverty?

FERGUSON: I think it's a plausible future, at the moment, that the Great Reconvergence will continue, but I find it very hard to believe that we will get to unity. In other words, that per capita GDP in China will end up being the same as per capita GDP in the United States. And the reason I doubt that is that if the Chinese lived the way we do, it's highly unlikely that the world would be able to sustain the environmental outcome. There's another future in which China, because it hasn't really achieved a full transition to free political and legal institutions, falls apart. So before we simply conclude that history is a one-way bet on convergence or re-convergence, we need to consider these other scenarios in which things go wrong in China and they go right here.

RAZ: When you look at the world through the prism of history, which is the way you do look at the world 'cause of course you're a historian, do you ever think that because of the way it worked out, the haves - countries that have things - have a responsibility to sort out the rest or to help get them to a better place?

FERGUSON: I believe they have a moral responsibility, but they also have self-interests. It's not advantageous for the wealthy countries of the west to inhabit a planet alongside impoverished countries. The growth of China has been enormously beneficial to the United States and, indeed, to Europe over the last 30. Indeed, had it not been for China's sustained growth, the financial crisis would've been a great deal worse. There is no reason why we should want the world to stay the way it is with a fifth of the world's population owning two-thirds of the wealth. There's no moral reason and there's no rational justification for that inequality. It's just the legacy of the past.

RAZ: Naill Ferguson. His most recent book is called "The Great Degeneration." Find his full talk at Our show this week, the haves, the have-nots, what explains inequality and ideas for how to fix it. I'm Guy Raz. Stay with us. You're listening to the TED Radio Hour from NPR.

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