02 December 2010

What Is Modern About Modern Humans?

What did modern humans do that Neanderthals didn't that allowed modern humans to become a dominant species on the planet, while Neanderthals filled an economic niche not much different from other top predators like Siberian tigers (each of which had a very similar population density)?

Matt Ridley makes the case that one of the most important things that modern humans did and Neaderthals didn't was to trade good with each other. Neanderthal tools, even ca. 30,000 years ago, were made with local materials (and no non-hominins engage in cross group trade of goods). Homo Erectus also didn't engage in trade. He even casts doubt on the extent to which there was even specialization of labor and trade between men and women in the same Neanderthal tribes, something present in even the earliest hunter-gatherer societies of modern humans where, to oversimplify, men tend to hunt, while women tend to gather. Modern humans in the same era (i.e. 30,000 years ago), in contrast, engaged in considerable trade between groups, securing materials for their tools from distance places. He notes that trade is at least ten times as old as farming.

He also notes that the discontinuation of trade causes not just slow economic growth, but a decline in technology and a decline in standard of living. The example that he uses is that of the four thousand people who were isolated in Tasmania when sea levels rose. In contrast, he notes that this didn't happen in Tierra del Feugo, where a population was isolated on an island due to rising sea levels, but trade continued since the strait was navigable.

There are other famous historical examples that he doesn't cite (because they are less dramatic and more complex) that are also commonly offered in support of this proposition. China's civilization, which had been the most technologically advanced in the world at the time, stagnated when it dramatically reduced its trade with the outside world via the Haijin laws adopted in 1371 at the start of the the Ming Dynasty. The Smoot-Hawley Tariff Act of 1930, which reduced foreign trade by more than 50% is widely believed to have made the Great Depression more severe. Communist Albania and North Korea are 20th century examples of countries that declined markedly when they closed themselves to most international trade.

Why does isolation lead to stagnation? Because the exchange of ideas and specialization of labor, empirically, turn out to be critical to the good functioning and advance of civilization as we know it, economic prosperity and technological advance.

As Ridley puts it, self-reliance is another name for poverty. Trade, exchange and specialization are at the heart of what makes our society prosperous and technologically advanced. Closing yourself or your society to the outside world is a well proven way to create economic stagnation and technological decline.

In his view, the ideas of comparative advantage (which is the well established principle in economics that a society that is better at every task and one that is worse at every task can still mutually benefit from trade with each other if one society is better at a task relative to other things it can do than the other), and the importance of trade as opposed to individual effort in economic advances and technology, also imply that concepts like a country's average IQ or the number of geniuses it has aren't that important. Since no one knows everything needed to make modern civilization function, the fact that it may take a few more people to store the same amount of knowledge than it would in a society where people were smarter isn't that important. Instead, what matters is how functional the society as a whole is in a collective sense.


Razib Khan said...

China's civilization, which had been the most technologically advanced in the world at the time, stagnated when it dramatically reduced its trade with the outside world via the Haijin laws adopted in 1371 at the start of the the Ming Dynasty.

this is not true. china underwent a massive demographic expansion between 1400 and 1800. part of this was due to the introduction of crops from the new world.

Andrew Oh-Willeke said...

The conventional account says that this is what happened. The existence of a massive demographic expansion between 1400 and 1800 may not be fine grained enough to capture its effect, however. In the two hundred year period from when the laws first took effect until when the laws were repealed for good, there was a significant hiatus when they were suspended in the middle, and in the 1600s, the Manchus arrived on the scene and up ended things ago, installing a dynasty to replace the Ming that did not share these policies.

The Manchus were able to take power, among other reasons, because China were overcome by repeated famines not long after the laws were reinstated.

So, if the suspension of trade was harmful, you'd look to one episode in the late 14th and early 15th century, and another in the late 16th century, with a scale of decades, rather than centuries.

Of course, while this analysis make a case that the reasons that you've identified don't prove that shutting down trade don't themselves prove this argument to be false, that doesn't necessarily mean that the claim is correct, either. I cite it, without a lot of careful analysis, because it is one of the best known and commonly cited examples of a case where shutting down trade did economic harm, popularized particularly by Jared Diamond.