The entrepreneurial spirit and pastoralism, or how capitalism came from farmers and herders mixing their genes

Social scientists argue a lot over how capitalism, the Industrial Revolution, and related events developed -- especially why they began in Northwestern Europe in the 18th and 19th centuries, rather than in some other agricultural society or perhaps at some other date. I admit up front to having read a little but not a lot of this stuff, so for all I know the ideas below have already been proposed and refuted, although they cannot be very widely known or I would've come across them by now.

It's no surprise that capitalism had to await the adoption of agriculture, a certain level of technological development, and the rule of law. But these pre-conditions were in place in various parts of the world before 1750. The most obvious puzzle is why China never came close to Europe in entrepreneurship -- they'd been practicing farming for longer, for most of history they were more technologically savvy, and had more or less weeded out the bad apples from their society through a strong central government (the major exception was when they were invaded by a bunch of bad apples from Mongolia). For the recent past, and so probably back several centuries or so, Northeast Asians have had a higher average IQ, more of a future orientation, and again were more well behaved and law-abiding. For founding a capitalist society, what's not to love?

Social scientists have long pointed out that Europe has been more dynamic than static East Asia, and in recent times as East Asians have assimilated into Western societies, white people and Asian people acknowledge that European-descended people seem more risk-taking, trailblazing, creative, or something. That's the main ingredient that East Asia seems to have lacked, but that Europe had. Still, why this difference? I think the answer is that Europe had a much higher fraction of its population as pastoralists rather than farmers. (A quick way to see that is by looking at lactose tolerance -- it comes from pastoralists who started to rely on milk and dairy from their livestock rather than only killing them for their meat. Most of East Asia shows little to no lactose tolerance, while in Europe it is the norm.)

First we need to see what makes different ways of making a living so different. There are two traits each with two possibilities, giving four possible groups (although only three really exist). There is whether the group is sedentary or nomadic, and whether stuff can be accumulated or not. While these vary along a spectrum, we'll just chunk them into "more" or "less" true. This gives us:

Sedentary, Accumulation = farmers
Nomadic, No accumulation = hunter-gatherers
Nomadic, Accumulation = pastoralists (or simply "nomads")

There doesn't seem to be a type that is sedentary and where the accumulation of stuff is not possible.

It's the sedentary trait that gives agricultural groups higher IQ and a more future orientation -- farming is much tougher stuff to figure out and requires you make a substantial investment in the future. The reason is that if conditions turn bad and you're nomadic, you can simply go somewhere where they're better. If you're sedentary, you're stuck with having to figure out how to change the conditions for the better through your own devices.

(By the way, this applies across all life forms that have to deal with a changing environment -- one strategy is to leave for greener pastures, while the other is to stay and make things better yourself. So more sedentary species are smarter. Leaving for a better place is not cost-free, though, or else every species would have gone that way. The metabolic demands of wings, for example, are huge -- flying, let alone for that long and going that far, is not cheap.)

So for a society to become capitalist, they have to have a good history of farming. Europe and China both meet that, while Australian Aborigines and native North Americans generally do not, so this trait gets us part of the way to understanding the global pattern. But it doesn't tell us why Europe and not China.

That's where the accumulation of stuff comes in. This makes class distinctions possible -- one farmer may have tons more wheat than another, and one shepherd may have tens more sheep than another. Therefore natural selection will shape these people's personalities to accept class divisions and inequality, while hunter-gatherers will retain their disgust for social stratification. As noble as the latter mindset may be, it means they won't be able to start and run a capitalist society.

The key difference between pastoralists and farmers is the maximum level of inequality. The resources in question are both zero-sum -- land / food surplus / fortresses / etc. for farmers, and livestock for pastoralists. However, in a farming society the top of the class hierarchy can control a much larger fraction of all resources than could the top of a pastoralist society. For example, in a farming society it's possible that the top landowner might own 1,000 or 10,000 times as much land as the bottom landowner (ignoring the landless), or that he might have a storage of 1,000 to 10,000 times as much wheat / rice / corn / etc., or that he might have 1,000 to 10,000 times as much wealth in the form of jewels, precious metals, and so on, stored in his treasury. I don't know exactly how high these disparities could go, but they're pretty high.

A top-ranking pastoralist, however, can only look after -- I don't know -- several hundred livestock at most (probably more like dozens), compared to the lowest who might only own one. Females in pastoralist societies accumulate wealth in the form of jewelry, baubles, and fine clothing that they can carry around while re-locating. Here again the disparity cannot be so great as in a farmer society. The richest women may be carrying 10 to 100 times as much fancy junk as the poorest, but it will be nothing like the buildings full of treasure chests belching jewels that you see in advanced farming states.

Why this difference in how unequal the wealth distribution can be? Because pastoralists are nomadic, while farmers are sedentary. If you're on the move, the wealth you accumulate must be able to travel with you -- livestock and personal jewelry -- whereas if you're sedentary, you can amass more and more and more land to your fiefdom, and build larger and larger storehouses for grains and precious objects, given that you don't have to personally defend it against theft -- that's what your minions are there for, to guard it and manage it.

How does this make pastoralists more entrepreneurial than farmers? The premise of entrepreneurship is that someone begins somewhat low on the ladder, then through dogged effort, risk-taking, and cunning, rises to the top to rival or even displace the incumbent elite. That will be much easier to do in a pastoralist society where it means going from owning one goat as a teenager to overseeing a flock of dozens or hundreds of goats by the time you're a mature man, if you play all your cards right. It doesn't look like so intimidating of a goal. By contrast, when coming out on top means going from having a small shack and a backyard garden to controlling thousands of acres or more of land, you have to admit that this ambition seems a lot less realistic. For one thing, there is a much greater distance to traverse on the social ladder, and the incumbents are a lot stronger in protecting their stuff from falling into your hands. They have hired guards, men-at-arms, and so on, whereas the top shepherd has only himself and a few ill-equipped allies to make sure nothing bad happens to his flock.

Thus, a personality that makes you believe in and act on a "rags to riches" worldview is more likely to evolve among pastoralists than among farmers because it gives greater benefits to the former. The benefit is the effect on your genetic success, times the probability of actually making it from bottom to top. Obviously the success is greater if you go from a small farmer to a Pharaoh, than from a one-goat herder to a 100-goat herder. In terms of offspring, though, I think it would only be the difference between having dozens of children for the elite herder and hundreds of children for the elite farmer -- one order of magnitude difference. The probability of success in the farmer society, though, is I don't know how many orders of magnitude smaller than in a pastoralist society, but surely more than one. Look at all those low-ranking farmers who never came anywhere close to a rags-to-riches goal, and I'd say it's probably 100 or 1000 times more difficult to reach your ambitious goal as a farmer than as a pastoralist.

Both of these characteristics -- the intelligence and future orientation of farmers, as well as the entrepreneurial impulse of herders -- are necessary for a capitalist society to get started and run smoothly. As these two groups inevitably mix with each other -- say, by the charming herder sweet-talking one (or more) of the farmer's daughters -- we will find people who get the genetic variants that boost IQ and low time preferences, as well as those that boost an entrepreneurial spirit. These hybrids will be naturally suited to invention, starting up businesses, and blazing other economic trails. That's why it happened in Northwestern Europe rather than China.

Japan seems to have caught on pretty soon after it was introduced (whereas China continued in farmer poverty), so I'd guess that either recently or as far back as the settlers from the Asiatic mainland, they had a higher proportion of nomadic people. Korea seems to be that way to, if to a somewhat lesser extent. At the very least, I know that the modern-day Japanese are descended from those who were nomadic enough to leave the mainland and make a decent sea journey. Plus the Japanese were hunter-gatherers until much more recently than the Chinese, shifting to farming only within the past couple thousand years. The Chinese therefore will have minds more adapted to farming life than the Japanese will.

The other major apparent puzzle is Ashkenazi Jews -- they seem to be on top in lots of capitalist societies, yet they have lower rates of pastoralism than other Europeans. They came to Europe as farmers (and maybe herders?), then spent several hundred years forced into white collar professions such as money-lending and tax-farming. I don't think we have to invoke a greater entrepreneurial spirit to explain their success in capitalist societies, though -- remember that IQ plays a big role, too, and those brainy jobs they nearly exclusively held for centuries probably selected for higher IQ (see Cochran, Hardy, & Harpending, "Natural History of Ashkenazi Intelligence").

IQ is normally distributed, and Ashkenazi Jews appear to score on average 1 standard deviation above European Americans. They are about 2% of the population yet make up around 20-30% of the lists of eminent individuals -- leading CEOs, Nobel Prize winners, etc. Assume that such a level of eminence requires an IQ of 145, or 3 s.d. above the European average -- and that is not astronomical; it's probably close to the average Harvard undergrad's IQ. Also consider a world where Jews are 2% and other Europeans are 98% of the population (as blacks and Hispanics are not very competitive at these levels of eminence). Then at the elite level we expect to see 26% Jews and 74% other Europeans, which is exactly what we see in reality.

So I think the Ashkenazi pre-eminence in such entrepreneurial and creative fields is due mostly, perhaps entirely, to their higher average intelligence, not to a more entrepreneurial drive in their personality. Since they were shunted into their white collar professions for centuries, I'd bet that there was no increased selection for an "I'm gonna make it from rags to riches" impulse. That sector of the pre-modern economy was something like a hereditary caste. As personality traits go, they were probably selected more for whatever makes a good manager, rather than what makes a good entrepreneur.

These big looks at history always try to say something meaningful about the future, so here it is: the best way forward for China to found and maintain a proper capitalist society would be to take in a decent number of pastoralists and intermarry. There are plenty in Tibet, although that would probably look bad. Of course, the wealthy agricultural elites could always search for Hebridean shepherdesses or Alpine milkmaids and entice them to re-locate to Chinese palaces as their wives, although pastoralist people tend not to be so motivated by luxury. Well, they can figure it out for themselves, but they need more rowdy herder types.

By the way, that's one point in favor of India over China in the upcoming few centuries -- there are lots of herders in the Northwest, as well as in Pakistan and Afghanistan. I've heard Gujarat described as "the Texas of India." Combine that disposition with the big brains found more in the South, and there you go. Of course that would require a partial dissolving of the caste system, which luckily was not so strong in Europe. But at least the two main ingredients are there. Overall Indians seem more creative and rambunctious than the Chinese, so I'll bet on them for the next century, assuming no brain drain saps either country. (I don't think either will have to worry about a herding drain.)

Africa has both types of societies, but they're a lot more recent, unlike their longer established counterparts in South Asia. So it's not clear that the full potential of natural selection has been reached for both types in Africa. Also, the natural fights between nomadic pastoralists and sedentary farmers are particularly bloody in Africa -- the well known Rwandan genocide is a prime example -- and obviously inter-group violence needs to calm down before the two can mix.

The places I would be most pessimistic about are where people never developed farming or herding, such as Australian Aborigines. After that, where only one of the two newer types got going but not for very long, such as much of the indigenous Americas, where farming is pretty new and pastoralism is either absent or very recent.