This may have been a good book for the summer holiday reading: Niall Ferguson, “The Great Degeneration: How Institutions Decay and Economies Die” (Allan Lane, London 2012), another “decline of the West book”. China and India are vibrant and rising but the West is stagnant with low wages for the majority of the people and the system is ladened with “a corrupt and monopolistic elite” that exploits “the system of law and administration to their own advantage”. (p.9) The West is now in the position which China once was in, as described by Adam Smith in “The Wealth of Nations” (book l, chapter 8), a “stationary state” because of defective laws and institutions.
The West’s problems are many including a lack of effective representative government, growing inequality and a legal system out of control. A decline of social capital has produced an uncivil society. Things are indeed grim for the West.
“The Great Degeneration” has an interesting discussion of urban breakdown. Ferguson introduces the physicist Geoffrey West’s idea that urbanisation has economies of scale and increasing returns to scale with respect to human creativity. However megacities will face collapse if innovation does not keep up. But for rising innovation, there needs to be a vibrant West. IN any case in Geoffrey West’s paper “Why Cities Keep Growing, Corporations and People Always Die, and Life Gets Faster”, Edge, July 17, 2011. West shows that open-ended growth ultimately leads to a “finite times singularity” and systems collapse. (p.141) Urban networks become fragile, lack resilience in the face of systems perturbations and “they can collapse in the face of a relatively small shock”. (p.142)
The “great degeneration” has made the world a more dangerous place than during the Cold War, Ferguson claims, not only because of nuclear proliferation, but because of the threat of pandemic disease, now readily spread in our globalised, interconnected world. Ferguson, like many of us here, does not see any sort of soft landing for the West. Crash landing, it must be.