Ron Findlay and Kevin O'Rourke join a select group of erudite, lucid, and entertaining global economic historians in this magnum opus. This takes the very long- run view and is extremely comparative in examining the relationship between “power,” international trade, and material standards of living. Starting from the end of the first millennium and charging forward into the post-World War II period, the authors critically review a vast literature regarding the last 1,000 plus years of human history.

Trade features large in this book. This is not surprising. The gains from trade are after all the fundamental object of analysis in neoclassical economics. Voluntary trade is the fundamental determinant of well-being and welfare. But unlike in neoclassical economics where trade is mutually beneficial and exchange is voluntary, the real world is a messy place where voluntary and involuntary trades both occur regularly. Findlay and O'Rourke unleash themselves from the constraints of research where all trade is voluntary and focus on invasion, conquest, and subjugation as interesting methods for the allocation of resources.

For noneconomists, this might seem natural. For those with a neoclassical bent, this book is sure to be a delightfully jarring experience. Over the course of several chapters, the authors analyze the era prior to modern economic growth. Before technological advance led to sustained increases in living standards, enhanced trade and conquest were the principal ways of allowing for improvements in living standards. Improvements there were. The victims of slave raids, Viking invasions, and Mongolian marauders might not have benefited, but the victors certainly did. Concurrent with these violent and anarchic episodes, the second millennium is rich in voluntary trade and Findlay and O'Rourke give glorious relief to the long-standing connections between the East and the West while not skimping on the histories of either region. Another interesting focus is the transmission of ideas, beliefs, and institutions. Much of interest in this regard is provided with a thorough examination of the literature on the medieval Muslim world and the ways in which the Middle East bridged the East and West. The Mongol invasions and the “Pax Mongolica” are also explored at length to highlight how Genghis Khan and his progeny mattered for global trade.

Geography is also a key determinant of trade and movement of people. So it is not surprising that this factor is also at the heart of Power and Plenty. Again, it is no coincidence that the Islamic world had ties with so many parts of the world since it is geographically in the middle of the Eurasian sphere. Western Europe, on the other hand, reaps an advantage by being far-flung and protected from Mongolian invasions. In this way, resources are not inefficiently burned building great walls or in incessant fighting.

When it comes to the period of the Industrial Revolution, they enquire as many have before: “Why Britain” and “Why Europe?” Findlay and O'Rourke believe that there was immense benefit to Europe of having access to the abundant land and resources of the Americas. Specifically, cheap cotton, sugar, and other commodities allowed for a competitive advantage. Cheap resources made for profitable and sustained growth in the modern industrial sector. Access to abundant land and slave labor was an advantage that East Asia never had. Prior to that, a development of the comparative advantage in violence was beneficial to Europe as well.

Up to this point, the book is largely descriptive interspersed with critical reviews of the literature. When critical, there is a measured use of the fragmentary existing data. There is also some exceptional deployment of deductive post-1950 marginalist economic reasoning. The latter is in evidence in the exploration of the impact of the Black Death on Western Europe on relative prices and living standards in the wake of this large shock.

But as the timeline marches on, more data become available and the heavy artillery of modern economics is deployed. To study the eighteenth century, Power and Plenty uses a model that even the most hardcore economic theorist might recognize as the current tools of the trade. The contours of a computable general equilibrium model of trade between Europe and the Americas are outlined, and the implications for British development of the global economy in the eighteenth and nineteenth century are discussed. Abundant raw material, relying on African slaves (i.e., cotton) raises the profitability of export of manufactures like textiles from Britain. Britain reaps a productivity advantage. This yields a rise in British incomes much as trade had led to higher living standards in the past for other trading nations. The difference this time around was that the process did not peter out.

The dynamics are not well integrated into the formal model but go roughly as follows. The market for British exports was growing due to the incessant urge in Britain to continually expand trade via colonization and so forth. Also helpful were declining transport costs, fewer pirates, and the market penetration of Asia via the East Asian companies. The growth of foreign markets made technological change more profitable leading to productivity advance. Findlay and O'Rourke then rely on the “well-known fact” that larger markets have larger (price) elasticities of supply and demand. With that idea in mind, a counterfactual world of domestic demand only for British goods lowers the profitability to technological change in the leading modern industries. In this case, prices would have fallen faster than output expanded, profits would fall, the costs of innovation would not have been supported. The British Industrial Revolution would have fizzled out like earlier surges involving expanded trade. Still, by the authors' own admission, a convincing theory of technological change does not exist. And surely these conclusions are sensitive to the way preferences are modeled. For it to be true, a necessary condition seems to be those increasing elasticities of demand. Klaus Desmet and Stephen Parente (“Bigger is Better: Market Size, Demand Elasticity, and Innovation.” International Economic Review, forthcoming), who use Lancaster-Hotelling preferences, find such a result. But Desmet and Parente and this reviewer would argue that their modeling of preferences is different from the vast majority of the growth and trade literature. The standard approach uses constant elasticity Dixit-Stiglitz type preferences. Preferences exhibit a constant elasticity of substitution between foreign and local goods independent of the size of integration. The 1970s and 1980s vintage clinometric models typically invoke even smaller elasticities using a Cobb-Douglass structure for preferences. This modeling approach might indeed be a game changer for our understanding of the process of trade and growth. However, further research will be needed to tell whether trade and global markets were the decisive force by analyzing this crucial aspect of the model.

This discussion also highlights the burden born by trade as the driver of episodic growth throughout the last millennium. The enlightenment, bourgeoisie values, biogenetics, and institutions and property rights are dismissed as at best supporting factors. Factor endowments and geography rule. And crucial in Britain was the policy of promoting trade and use of the military to defend their interests. Stripped down this way, the Power and Plenty thesis on the big picture of the Great Divergence has to be considered at best foundational or only one part of the proverbial elephant rather than an encompassing theory.

In the long run, the bottom line is that even geographic and resource constraints have to be endogenous. New shipping methods, modes of transportation, and communication can be discovered and innovated as necessary. And so they have been. Populations move and conquer new territory. The Mongol invasions, the Manchurian takeover of China, and the European settlement of the Americas are all examples. And even resource endowments can be ignored, exploited, discovered, or altered as fits the demands of relative prices, and most importantly the political and technological parameters. Afghanistan is sitting on rich reserves of rare minerals and ore and yet its key export continues to be narcotics. Trade they do, but only a certain kind of trade for the moment. And back to the Great Divergence: timing is important too. Why did Britain come to have a coalition that “combined since the time of Elizabeth to promote trade” (p. 347)? What forces made this a stable coalition and what allowed it to emerge? Were these institutional, geographic, cultural, or something else?

To be fair, this tome is healthily balanced in its examination of the evolution of the global economy. If a theoretical discussion of political and institutional change is missing, perhaps no such model exists yet. The book is replete with discussion of the aims of rulers, their coalitions, their interests, and their relations with other nations. In this regard, Power and Plenty is substantially more even-keeled than recent work that seems to me to push too far in one direction—the biogeographic determinism of Jared Diamond for instance, and mystic cycles of accumulation (e.g., Giovanni Arrighi, “The Long Twentieth Century.” New York: Verso, 1994), and superior institutions and property rights of the West (a la North and Thomas).

Findlay and O'Rourke's levelheaded review of events and their erudite, critical analysis of the voluminous scholarly literature is truly unique and massively impressive. This book will almost surely become a classic reference in economic history. It is a great step forward for research in modern economic history. This generation should consider itself lucky to have been present at the creation.