I enjoyed reading this book. It is an entirely sensible take on catch-up growth, a topic which is lacking a good popular treatment and yet deserves one. I found each of the short chapters well-written and to the point. Yet I came away from the work with a strange feeling: I don’t have a good sense of why Spence wrote the book. It doesn’t flex his Nobel-quality analytic mental abilities (unlike this recent piece he wrote), nor is it a rank popularization. It doesn’t promote a “big idea” that his name will be attached to, nor is Spence moving in the Stiglitz or Krugman directions, either politically or in terms of level of pitch. I don’t understand what the book is supposed to be signaling.
Spence’s use of data and history is as impressive as his avoidance of empty sloganeering. Rather than offer deterministic and hopelessly naive bromides, Spence offers deep insights with a winning, refreshing humility rarely seen in Nobel Prize-winning economists. He seems to have taken to heart the advice of another Nobel laureate, the Danish physicist Neils Bohr, who famously said, “Prediction is very difficult, especially about the future.” While Spence has written a book about what will happen in 2050, he concludes by similarly conceding that all crystal balls are hazy. “We do not know, and probably cannot calculate, what the medium-term destination will be,” he writes. “It is not that the principles and forces aren’t understood. It is rather that the system is too complex to lend itself to forecasting.”
I greatly admire the lucidity, scope and tone of the book. Readers will learn a great deal. But that does not mean I agree with everything.
Prof Spence believes, for example, that emerging market economies have insured themselves by accumulating the liabilities of western governments. This is a strange form of insurance! He also underplays the role of such reserve accumulations in the imbalances that helped create the conditions for the financial crisis.
More important, the analysis of the resource requirements of a world in which 6bn-7bn people live as 1bn people do now is superficial and over-optimistic. True, he is in good company. But I wonder whether such a world will prove sustainable. Certainly, far more rigorous analysis is needed.
Finally, while I want to be optimistic about the capacity of emerging countries to sustain rapid growth and of high-income countries to accommodate their rise, much can go wrong. As the book concludes: “We, and future generations, will have to invent our way through and around the potential roadblocks along the way.” Is humanity capable of such wisdom? I too hope so. But hope is very far indeed from confidence.