Stross on development economics

by Paul Krugman on January 27, 2009

My mission, should I choose to accept it – and I have – is to talk about the Merchant Princes novels. For anyone who’s reading this without having read the full Stross collection, the MP novels concern a group of related individuals – the Clan – from an alternate universe, the Gruinmarkt, with a more or less medieval society, who have the ability to world-walk between that universe and our own. They use their base in their home world to make money in our world by smuggling drugs where the DEA can’t go, and are rich and powerful at home because of the high-tech goodies they can bring back from America. The protagonist, a thirtysomething tech journalist named Miriam Beckstein, has been raised in our world – but unknown to herself, she’s actually the child of a countess in the other world. Many complications ensue.

Before I get all analytical about these books, let me say that they are, first and foremost, great fun. Stross could have made this almost like a dissertation: given the premise of world-walking, what follows? Instead we’ve got a rollicking plot, full of high-Victorian deus ex machina stuff: the first pawnbroker Miriam encounters in New Britain (a third alternative world that pops up in novel #2) just happens to be the quartermaster for that world’s revolutionary movement, and so on. While the character of Miriam herself is fairly realistic (and appealing), there seem to be a remarkable number of attractive young women who are also skilled assassins. And a good time is had by all (except Miriam.)

Also, you have to love a series of novels in which Dick Cheney, referred to by one and all as Daddy Warbucks, is a major though offstage villain – in fact, there turns out to be literally a whole other dimension to his villainy, besides the stuff we already know about.

But OK, enough preliminaries: what are these novels about?

As Stross notes in his acknowledgements, they’re part of a genre; he gives props to Roger Zelazny and H. Beam Piper, who both wrote walking-between-alternative-universe novels. Actually, though, I think Stross is only half right. Aside from the interuniverse thing, I don’t see anything in the Merchant Princes that reminds me of Zelazny’s Amber books. Piper’s stories, on the other hand, in which a modern American state trooper finds himself in a quasi-medieval alternative reality, do bear an obvious resemblance.

But so do some other novels. I’d argue that the real story Stross is telling is that of the person from a modern, high-tech society who finds himself/herself in a much lower-tech society, and tries to make use of his/her knowledge. So L. Sprague de Camp’s old novel Lest Darkness Fall, which is about an archaeologist transported to Ostrogothic Rome, is really in the same genre. So is David Weber’s Off Armageddon Reef, where an elaborate plot puts an android with the memories of a high-tech human in a position to remake a neo-medieval society – plus get to refight Trafalgar and the Battle of the Nile. (Weber’s novel also fits into a genre that seems oddly widespread in SF: the evil-future-Catholic-Church literature.)

But what makes Stross’s version different from everyone else’s is that he’s noticed something: the fantasy thought experiment, in which someone brings modern science and technology to a backward society, isn’t a fantasy. It is, instead, something that’s been tried all across the very real Third World, as businessmen and aid workers fanned out across nations in which the typical person, two generations ago, lived no better than a medieval peasant. And you know what? Modernization turns out to be pretty hard to do.

I may have a better sense of this than most, because I’m an economist of a certain age. When I went to grad school in the mid-70s, I thought about doing development economics – but decided not to, because it was too depressing. Basically, circa 1975 there weren’t any success stories: poor countries remained obstinately poor, despite their access to 20th-century technology.

Since then the success stories have multiplied, with China and India finally emerging as the economic superpowers they ought to be – though if truth be told, we really don’t know why development economics started working better around 1980. Even now, however, there are lots of places that have access to modern technology, and use it – but remain, in the ways that matter most, firmly stuck in the poverty trap. Feudalism with cell phones is still feudalism.

That’s the situation Miriam literally falls into in The Family Trade, the first Merchant Princes novel. The Clan – her relatives – know all about modern technology, and they’re even able to bring gadgets across. But while contact with America has shifted the balance of power in the Gruinmarkt – a fact that leads to bloody civil war later in the series – it has not led to either economic or social transformation. The analogy Stross puts into Miriam’s head is with Saudi royals, who have townhouses in London but are, in essence, still the tribal chieftains they always were.

And I guess that’s enough for one post! More thoughts in the next round.

{ 31 comments }

1

John Quiggin 01.27.09 at 8:01 pm

Even more to the point, I guess, the ruling elite gets access to first-world education, goods and services, while maintaining the absolute power over others of a medieval aristocracy. It’s not surprising they don’t want to change.

2

Henry Farrell 01.27.09 at 8:02 pm

Surely the granddaddy of this mini-genre is Mark Twain’s _Connecticut Yankee in the Court of King Arthur_ (although it doesn’t talk so much about the development stuff). I’d also put in a good word for Fritz Leiber’s _Gather Darkness_.

_Lest Darkness Fall_ doesn’t do the development stuff in the same way as The Merchant Princes of course, but it does have one nice economic touch – that the first major innovation which Padway introduces to Roman society is double-entry book-keeping.

3

John Quiggin 01.27.09 at 8:03 pm

I remember the scene presumably from this story where the guard commander (or similar) is caught with his hands in the till, having no notion of accounting, but I can’t remember any of the rest of it. I guess it’s the economist mind at work.

4

Jason M. Robertson 01.27.09 at 9:04 pm

Edit error it looks like, the first para is doubled up.

5

Jason M. Robertson 01.27.09 at 9:18 pm

You know, I read Off Armageddon Reef quite recently and I was struck by the apparent issues with Catholicism, but I wondered how much of it I was projecting. I’m glad it wasn’t something that was only happening in my own head.

6

LizardBreath 01.27.09 at 11:15 pm

The Merchant Princes series bothered me; it seemed inexplicable that the Gruinmarkt hadn’t developed more before Miriam got started. The worldwalkers have access to all the technology of our world in principle, but can only bring over to their world what they can carry — wouldn’t the idea of bringing over experts (or reference materials with which to train experts) so that they could make stuff locally that they wouldn’t have to lift have hit fairly quickly? It’s not clear how much that’s supposed to have happened in the history of the Gruinmarkt, but it clearly hasn’t turned into paved roads or cars.

To the extent that I understand what goes wrong in development economics, a large part of it is that underdeveloped countries can’t compete on price of manufactured goods with developed countries — they have no incentive to make what they can import more cheaply. The Gruinmarkt, on the other hand, has what is in essence an really high tariff — no one from our world is exporting to them deliberately, and the worldwalkers can only bring in what a couple of hundred people can lift. This seems like a recipe for local manufacture of consumer goods. I can’t really see why this didn’t happen, except that no one but Miriam got the idea.

7

JulesLt 01.28.09 at 2:58 am

Not sure if Charles has thought it through completely, but the comparison of Gruinmarkt and New Britain suggests it has to some degree – Miriam’s basically able to start exporting ideas / manufacturing locally as New Britain’s had it’s industrial revolution, and indeed has a capitalist system that made it easy for her to rapidly set up a business.

If you consider what would be required to start local manufacture in the Gruinmarkt, you’d be starting from a far lower starting point – if you think about the gap between where they are, developmentally, and the car, you’d need to bootstrap precision metalworking, sheet steel, oil refining, mining, transport of raw materials (canals???). And all this in a nation where you still need guards to travel between towns, and an aristocracy who want to turn the clock backwards.

Where this ties in to comparisons with the House of Saud, or certain African countries, is that basically the Clan have very little motivation to develop the economy in Gruinmarkt – they can import the luxuries they need, while the feudal system gives them a lavish lifestyle in terms of property, status, servants, clothing, etc.

(One thing that is notable is that Gruinmarkt doesn’t really have any rivals or threats that might drive local development. It would be interesting to know more about Europe in that world, and how it has developed – evidently not enough for a Spanish or British naval empire, but equally it seems that there is no Viking equivalent. And it seems to me that improvements in ship-building and cartography should be enabling better travel).

8

Jackmormon 01.28.09 at 3:22 am

KJ Parker’s Engineer Trilogy addresses some of the bootstrapping questions JulesLT suggests above. It’s a less satisfying read than Stross’s books are, less rollicking, as it were, but it does present some of the immense difficulties of trying to reproduce high-tech precision engineering in a massively less developed society. Some of the problems with Parker trilogy arise in trying to create reasons the main character doesn’t just give up and die.

9

The Raven 01.28.09 at 4:59 am

Does perhaps family and trust outside of the family make a difference in development? Nations with problems developing, so far as I know, invariably are places where the only trustworthy social connections are within families. There’s no way that industrial capitalism can emerge under those conditions: it becomes impossible to trade in volume, impossible to organize anything large-scale without coercion, impossible to gain the trust to found and maintain centers of learning.

The “Merchant Princes” books are, among other things, family novels. In fact, they’re a kind of family novel that occur only in sf, one where well-defined, important abilities are passed down in families. The sort of genetic reasoning that is exploded in our world is valid in these books. Eugenics plausible and, in some circumstances, necessary.

Turning back to economics–could we measure this? Would it be possible to estimate the number of social connections outside of family or clan within a society, and compare it to some measure of economic order?

10

LizardBreath 01.28.09 at 2:53 pm

If you consider what would be required to start local manufacture in the Gruinmarkt, you’d be starting from a far lower starting point – if you think about the gap between where they are, developmentally, and the car, you’d need to bootstrap precision metalworking, sheet steel, oil refining, mining, transport of raw materials (canals???).

This is all true — local manufacture of late 20th century technology would take an awfully long time to get to. What puzzles me is that there doesn’t seem to be local manufacture of 18th century technology: worldwalker nobles who have gotten locally rich by, e.g., importing a couple of mining engineers to introduce horse-drawn railroads and similar not-terribly high tech but more efficient practices; a real textile industry (water-powered looms or whatever), and so on.

It’s not that I’d have expected technology levels to even out between our world and the Gruinmarkt, but it seems strange that there’s been almost no transfer other than the importation of finished goods. The worldwalkers seem not to perceive the rest of the population of their world as a market at all.

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LizardBreath 01.28.09 at 3:00 pm

And this:

the Clan have very little motivation to develop the economy in Gruinmarkt – they can import the luxuries they need, while the feudal system gives them a lavish lifestyle in terms of property, status, servants, clothing, etc.

It’s not really about motivation to develop the economy, it’s about individual motivation for getting rich. The books don’t imply that each worldwalker has everything they could materially desire in terms of local property, status, and so on; wouldn’t it seem that someone would have wanted to get richer off setting up a 17th/18th century textile industry?

12

chris y 01.28.09 at 5:08 pm

The books don’t imply that each worldwalker has everything they could materially desire in terms of local property, status, and so on; wouldn’t it seem that someone would have wanted to get richer off setting up a 17th/18th century textile industry?

There are possible counter-examples on Earth. The Qing ruling class rejected large parts of western technology which they could have imported without any difficulty, and which would have made China an economic (and military) match for any single European state. Why? Ask a Chinese historian, I dunno. I believe the Tokugawa regime actually walked back aspects of technology that had already been acquired, apparently out of sheer conservative prejudice.

13

LizardBreath 01.28.09 at 5:21 pm

Yeah, I’m not saying it’s impossible, just that it seems underexplained. I’d want a really strong central government that had adamantly rejected specific imported technologies (horse-drawn railroads, water-powered looms), rather than just that no one ever thought of raising the level of what could be produced locally.

14

JulesLt 01.28.09 at 9:25 pm

We do know that the Clan clamps down on any world-walkers not following the family trade – as Miriam has discovered through the series, there is a lot of conservative opposition to change from within the Clan itself, and one would guess that they would frown, very much, on anyone pursuing personal wealth rather than Clan wealth.

However, you could widen out your question to include non-Clan members of the feudal aristocracy, some of whom have visited the contemporary world, and who would presumably see an advantage in not being dependent on the Clan. One question is – could you actually get ‘rich’ if you transported a C18th textile mill or printing press, back to C11th? Is there actually much of a market? What does ‘rich’ mean when status relates more to family and title anyway?

Most importantly, there are plenty of examples in our own world where exactly this type of situation has occurred – where the local elite have been happy to trade advanced technology but shown no curiosity whatsoever about making it.

15

LizardBreath 01.28.09 at 9:47 pm

One question is – could you actually get ‘rich’ if you transported a C18th textile mill or printing press, back to C11th? Is there actually much of a market?

Well, yes. There has to be a market, there’s a world full of people who wear clothes that are now made slowly and expensively by handweaving. Low-tech and poor though they are, if you can sell them all machine-loomed cloth, you can make money.

Most importantly, there are plenty of examples in our own world where exactly this type of situation has occurred – where the local elite have been happy to trade advanced technology but shown no curiosity whatsoever about making it.

But aren’t those mostly circumstances where the market was being served by high-tech imports? Local elites getting rich from selling raw materials to more developed countries, and buying manufactured goods in return? Gandhi wasn’t trying to develop the Indian textile industry because Indians hadn’t previously had access to machine-woven cloth, he was trying to develop it so they would buy Indian manufactures rather than English manufactures.

The thing about the Gruinmarkt is that they’re protected against competition from high-tech imports except for the very small amount a couple of hundred people can lift; it seems really weird (not impossible, but needing explanation) that they wouldn’t have turned to exploiting their local markets more than they seem to have.

(By the way, I’m nitpicking this because I found the books thought-provoking, and I’m really fond of Stross’s work generally. I don’t think my comments are successfully conveying the delight with which I’m commenting on a post by Paul Krugman (!!!) about Stross’s work (!!!) which one or both of them might actually read(!!!).)

16

Rick York 01.29.09 at 12:31 am

I think one important concept is missing so far in this discussion. Up till now it’s all about economics. But, isn’t the underlying issue power, not economics? The Clan, by virtue of its supposedly exclusive world walking ability, is able to maintain a stranglehold on new technologies.

In the final analysis, wealth is good for one thing, power. The power to control one’s life and, where necessary or desired, the lives of others. In feudal societies land was the “coin of the realm”. One’s wealth and standing were a function of the amount of property one owned. Titles were useless if not accompanied by land.

Today, monetary wealth is the primary measure of authority. The Clan maintains its power by limiting access to technologies it finds in our more technologically advanced culture. It maintains is power in our world by increasing its monetary wealth.

The fundamental purpose of conservatism is to maintain a status quo in which those in power stay in power.

Of course, the irony in all of this (one which Stross seems to recognize) is that technological progress is difficult in an oligarchy. Technological progress generally upsets the staus quo. Even the technology of war has strengthened the individual.

Miriam becomes the monkey wrench in the finally tuned mechanism the Clan have created.

17

Gerald Fnord 01.29.09 at 1:51 am

I’m currently working for a mega-corporation. I asked my immediate boss, a brilliant guy, why it was so hard to get anything done there; he answered, ‘They’re doing very well here with things the way they are, any innovation is a threat.’

Similarly, our dominant cat (who runs the universe) hates strangers; the other one considers them all potential food and affection suppliers.

18

Cosma 01.29.09 at 2:54 am

For whatever it’s worth, I’m with LB. Gruinmarkt has access to all the water-power which started the New England industrialization — and water-powered looms would make a big difference! Would it really have been that hard to have brought over usable plans, or even an expert? I doubt it.

19

shah8 01.29.09 at 3:03 am

The Shogunate banned guns, which became prominent in the Korean Invasion before the Shogunate politics took over. Make of that what you will.

Besides, people like the world travelers trafficed in *things* and not fashion, markets, industry or anything else. It’s kinda hard to do that other stuff safely and reliably when you’re “witches” who’s got the King’s ear.

20

Brad Holden 01.29.09 at 7:12 am

It seems straightforward to me that a group of people with a lock on wealth and power would be hesistant to import a new technology that would threaten that. Their whole system of generating wealth has a self-limiting and monopoly built in. Anyone who knows any history would see what happened to the nobility of England with the industrial revolution. Industrialization would be a huge threat to these folks.

21

LizardBreath 01.29.09 at 3:56 pm

I guess part of what I’m complaining about (in two threads at once), is that the worldwalkers seem too insulated from the Gruinmarkt economy, as if they could live entirely off imports. They’re feudal lords, living in castles. They have to build castles locally, out of local materials — timber, stone: it’d be crazy to be building out of materials handcarried from the other side. They need to burn fuel to keep their castles warm; wood or coal. They need to have armies of peasants farming their land so they have food, and not just food for the nobles, food for the peasants. And those peasants have to wear clothes, which they have to handweave if there’s no textile industry. And so on. There are all sorts of absolutely necessary things that the worldwalkers really need to make or buy in their own world — bulky materials that can’t be substituted for by the supply of manufactured goods handcarried from our world.

So, even if they weren’t trying to develop the Gruinmarkt economy, or to become rich by marketing products to the rest of their world, where’s the water-powered sawmill for lumber for the worldwalkers’ own use? Where’s the coal mines, and the horsecars to bring coal to the castles? Where’s the Bessemer converters, so they could build with steel, armor stuff, whatever? Where’s the McCormick’s Patent Reaping and Mowing Machine? All of these seem to be in the realm of what you could do with medieval craftsmen led by experts with plans, and they’d all make a huge difference in terms of comfort, lifestyle, and military power for the worldwalkers. And once they were in use, it seems as if they’d spread to the non-worldwalker nobles.

Now, you’re right that introducing higher (18th, 19th C) technology for local use mightn’t be in the worldwalkers’ interests long-term, but I don’t recall it being treated as a temptation they had to resist, or that there was a serious ban on. It was just something that hadn’t come up.

22

JulesLt 01.30.09 at 12:55 am

To carry on playing devil’s advocate, I would presume that they could trade high-value imported goods for as much local material, food, etc, from nearby ‘backward’ lords – imagine the mark-up on very light-weight items like disposable pens, lighters, razors, etc.

There’s also evidence that the world-walkers deliberately hide a lot of the levels of technological advancement (for instance, they only dress in ‘modern’ clothing in their own privacy, the microlight couldn’t be used, and they don’t seem to have offered electrical systems to even the King). It’s the proverbial ‘advanced alien technology’.

Actually, that gives me another train of thought – surely someone would have thought of moving out of the courier business into producing drugs? Even if you had to move it along the coast from Southern growing latitudes, it should be worthwhile.

Well, if you want the thing that nags at me, it’s the timeline . . . at what date did the ability to walk between the two worlds actually become something they could turn into power??? The contraband trade has to have been relatively recent – opium not having been that popular in America, I’d say the Prohibition was probably the first point that side of the business would have become lucrative.

The ability to move post faster across America could only have dated back to the railways / telegraph, and if we step back much further, well C18th New England was barely more settled than Niewejn (sp??) itself, and potentially more dangerous – the technological gap far closer (if we presume the culture in Gruinmarkt to be ‘stuck’ at a certain point, rather than being 600 years behind).

I would guess that the ability becomes really useful sometime in the C19th, whereas all the stuff about twining and breeding and outer families and the numbers involved suggests something much older – when did the ability become something worth breeding for? How long before that did it appear? The original ‘tinkers’ would have had some idea about how the ability would be inherited, but how would they have kept the bloodline alive until it started to become useful?

23

LizardBreath 01.30.09 at 1:19 am

To carry on playing devil’s advocate, I would presume that they could trade high-value imported goods for as much local material, food, etc, from nearby ‘backward’ lords – imagine the mark-up on very light-weight items like disposable pens, lighters, razors, etc.

Could be, but that puts them in an awfully vulnerable position in case of holdups; it’s a lot easier cutting back on your usage of ballpoints and lighters than of food. While they could always import food and fuel, etc., from our side in an emergency, their local suppliers could mess with them very easily.

But I suppose it could be made to work. That would put them in an awfully

24

LizardBreath 01.30.09 at 1:21 am

I would guess that the ability becomes really useful sometime in the C19th, whereas all the stuff about twining and breeding and outer families and the numbers involved suggests something much older – when did the ability become something worth breeding for? How long before that did it appear?

I thought I remembered a fairly short history for the worldwalkers — didn’t they start up in the late 19thC sometime? I’d have to flip through the books to remember. Which supports your point.

25

LizardBreath 01.30.09 at 1:23 am

Drat, ignore the hanging half-sentence in my 23. Editing error; I was going to drone on at additional length, and then thought better of it.

26

Tracy W 01.30.09 at 9:50 am

In the final analysis, wealth is good for one thing, power. The power to control one’s life and, where necessary or desired, the lives of others.

But this power to control your own life also includes things like being able to be warm, to have lots of water for washing, being able to banish the dark of night, to surround yourself by beautiful things, to have ample space for your hobbies, etc.

Nowadays I get heat, light and hot water at the flick of a switch, in the past you could achieve similar effects by being able to hire lots of servants. Both solutions cost money. Adding on an extension to your house so you could pursue your hobby of growing exotic flowers costs money.

Also, wealth is good for being able to impress other people, even if that doesn’t directly translate into pwower.

In feudal societies land was the “coin of the realm”. One’s wealth and standing were a function of the amount of property one owned. Titles were useless if not accompanied by land.

Titles may have been worthless if not accompanied by land, but that doesn’t mean that money was useless if not accompanied by land. If you live in an economy where labour can be hired for money, coins are important and they bring you wealth and standing, after all you can always hire soldiers. Consider the Italian bankers, or the City of London merchants in medieval times, or Jews in medieval Europe. The Crown would typically borrow from bankers, despite that the king owned heaps of land in his own right.

Anyone who knows any history would see what happened to the nobility of England with the industrial revolution.

The English nobility got really rich from mines on their land. Oh yes, they also got railways so they could move around the country faster, steamships so they could move around the world faster, telegrams, gas heating, electricity, etc (just to label the infrastructure goods that can’t be imported piecemeal). The experience of the nobility of England strikes me as a strong argument for other nobles to start their own industrial revolution. Also, rich countries appear far less likely to have Communist revolutions or violent peasant revolts than poor rural countries, while correlation is not causation, I find it entirely plausible that a nobility would decide that an industrial revolution was a good way of protecting itself and increasing its power. Having to ennoble a few successful merchants strikes me as a small price to pay.

27

Peter Erwin 01.30.09 at 12:20 pm

Re: the Tokugawa Shogunate and guns:

The Tokugawa banned muskets after they took over[*] largely, I think, because they perceived muskets as an enabler for rebellions. This was because the introduction of muskets during the 16th Century transformed Japanese warfare from an affair of small armies dominated by mounted samurai (expensive, years of training required) to one of large armies dominated by peasant musketeers (cheap, significantly less training required). Widespread availability of muskets made it easy for an ambitious feudal lord to quickly build a large, formidable army (as, I believe, the Tokugawa themselves had done).

There may also have been an element of cultural conservatism at work, in that mass armies of lower-class musketeers seemed to render the samurai less significant and even allowed for peasant upstarts like Hideyoshi… but I think the primary worry was what rebellious daimyo could do with musket-armed armies.

[*] Or, more precisely, they gradually restricted gun manufacture by first requiring licenses and then reducing the number of licenses over time.

28

Alex 01.30.09 at 1:43 pm

29

Tracy W 01.30.09 at 2:21 pm

Alex- Decline and Fall argues that the fall in the power of the British Aristocracy was because they were too reliant on agriculture, not because of the Industrial Revolution per se. It strikes me as entirely likely that a member of the nobility considering whether or not to support a local Industrial Revolution could decide that the advantages should be pursued (massive increase in wealth, infrastucture like railways and steamships) while seeking to avoid the mistakes of the English nobility (too much investment in land).
Of course a member of the nobility could believe that their heirs will inevitably make the mistake of putting too much money into land. But if you believe that your heirs in two or three generations are going to make bad decisions, what does that tell you about what policy you should support now? If anything, a policy that you think will increase general wealth overall becomes even more attractive if you assume your heirs will be foolish, as this will provide the greatest cushion against foolishness (Please read wealth in the broadest sense of the term, not in terms of just GDP here).

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Tracy W 01.30.09 at 2:26 pm

And while I think of it, I note the downside of no Industrial Revolution is that if any other group on your planet does go down the Industrial Revolution route, they will gain power as a country, and thus could decide to invade and overthrow you. What is the power of the Indian or Japanese nobility nowadays?

31

soru 01.31.09 at 5:08 pm

The Crown would typically borrow from bankers

Yes, but would it typically pay them back?

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