July 28, 2010

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.


  1. But, China (especially Northern China) did have intermixture between farmers and pastoralists --- precisely as a result of the Mongolian (Yuan Dynasty) invasion you mentioned, and the earlier Khitan (Liao Dynasty) wars too, and most recently the Qing Dynasty (also run by pastoralists, namely Manchus, who are distantly related to the famous reindeer-herding tribes of Siberia). The latter prohibited Chinese from settling in the homelands of the pastoralist Manchus or Mongolians, let alone intermarrying with them --- but those restrictions broke down in a huge way in the final days of the dynasty as they tried to bulk up the population in their borderlands to prevent them from being snatched away by Russia. In pretty much any Chinese city with a non-Chinese name (Ordos, Hulunbuir, Harbin, etc.) you'll find lots of people with farmer grandmas and pastoralist grandpas.

    These cities definitely aren't the centre of Chinese entrepreneurialism (to the extent that such a beast exists). This may simply be an overhang from communism (all the heavy state-owned industry was located in the North), but I doubt it. You can identify the most restless, entrepreneurial places in China mainly by looking at where all the emigrants came from --- Fujian and Guangzhou (to Southeast Asia and the US), Wenzhou (to Europe), and Shandong (to Korea and Japan). These are coastal places with little to no pastoralism in recent memory ...

  2. Is pastoralism low among Jews?

    A lot of biblical figures were pastoral. David was a shepherd before king. Not that that is evidence, but maybe there is a strong pastoral culture inherent in Judaism that survives.

  3. something not to forget about asian society is that entrepreneurial spirit was dampened by confucian social values. businessmen and merchants were considered one step above parasites in society b/c they produced nothing. they weren't scholars, peasant farmers (which was not then something to be looked down upon), or laborers. they simply transferred value from one group to the next.

    they were rich of course, but they didn't have their kids follow their footsteps. instead they often pushed their kids to become part of the scholar class.

  4. I don't think genetic exchange between steppe people and the Han Chinese ever really stopped. There are a lot more steppe dynasties than just the Mongols as all.

    Plus, is lactase persistance really a good proxy for pastoralism? Sedentary dairy farmers exist (unless I'm wrong and this is very new) and many steppe peoples who live off herds don't seem to have very high percentages of lactase persistence.

    Having said both of these things, you might still be right about relative scale.

    Mongolians also have a pretty high IQ, at least by European standards, so unless they lack future orientation (probably the best way to check this is to look at Mongolian savings rates - this link indicates it's pretty high: http://www.prosperity.com/country.aspx?id=MN), it seems like you can't reduce the rise of capitalism to those these two and pastoralist entrepreneurial spirit (since the Mongolians didn't have it).

    Also I wonder where East Asian swiddening hill peoples fit in all this. They're another group I'd expect to have more opportunity for accumulation and stratification than hunter gatherers, but less than settled intensive agriculturalists, but with more opportunity than the settled world to go from zero to hero by winning local struggles. Of course, they don't have any military advantage, so they'd be recipients of genes from the settled world, rather than donors.

  5. Pastoralism probably hasn't existed as long in Northern China because lactase persistance is under selection there but is not like the 70-80-90% you see in Europe. But as of 1984, it was at 12% in Chinese Mongols, 24% in Chinese Kazaks, and 8% in the Han. Short article on this (Table 3):

    Lactose and northern China

    This is a good proxy for history of pastoralism because it tracks the abrupt change in the diet as you go from hunting animals to keeping them alive for a lot longer. It appeared independently in Western Eurasia (possibly the Indo-European people who drove horses), the dester nomads of Arabia (who drove camels), and the pastoralists of East Africa (who drive cattle). And it appears to have also evolved in Central Asian herders.

    Here we look at genetic signatures of recent natural selection. The gene involved in lactase persistance, LCT, is under heavy selection in Europe and Central / South Asia (mostly the northwestern region of the Subcontinent), but not at all in East Asia -- except for Mongols:

    Global LCT selection

    The vertical axis is standard deviations, so anything that's 2 or above is a strong signal. Also not under selection in the Americas or Oceania. It's not under selection in the African grouped they studied, but they didn't include pastoralists I don't think, like the Maasai.

  6. So, I think either Asian pastoralism hasn't developed long enough to really adapt their minds to the way of life that we see in, say, European pastoralists, and/or there hasn't been much flow of pastoralist-adaptive genes into the Han.

    True I'm basing that on lactase persistance, but that's one of the strongest proxies for adaptation to pastoralism or having interbred with them and getting their advantageous genes. Give them a thousand or so years, and those Asian nomads will probably have as high a frequency of lactase persistance as Europeans do today.

    That may apply to other pastoralist traits -- on the way there, but not fully adapted just yet. So maybe it wouldn't matter too much if the Han interbred with the nomads -- there's not as much to get from them as, say, from European herder groups.

    Re: reducing capitalism to only two traits, I didn't say they were sufficient, but necessary. I noted all sorts of other necessary conditions that a society must have -- certain level of tech development and the rule of law. And nomads of Northern China don't seem to have those, not like Europeans did in the 18th C. anyway.

    As for Jews, I'm talking only about the Ashkenazim, who for many centuries were white collar professionals (then later a tiny amount of farmers). They could have kept some pastoralist genetic influence from their Near Eastern origins, but what molded them into who they are today is mostly their white collar niche in Medieval Europe.

  7. That seems like a stronger case than I thought you'd have, but still, these people, East Asian steppe/pastoral peoples, replaced Indo-European pastoralist peoples like the Indo-Iranians and the Tocharians. So I'm skeptical that their way of doing things is much less efficient in terms of calories, and consequently that there would be as strong a selection pressure for lactase persistance among them. Lactase persistence doesn't seem to have helped any of the Indo-European peoples who they faced. It also seems like the people less suited (mentally or physically) to pastoralism shouldn't win their wars against other pastoral people who are more suited to pastoralism - though maybe that's a simplification as there's ample room for other factors in there or maybe winning large scale conflicts with other pastoralists isn't a sign of superior adaptation to pastoralism.

    I think the historical record certainly supports a younger date for pastoralism in East Asia relative to West Eurasia.

  8. @Matt: Mongolians also have a pretty high IQ, at least by European standards

    Some data for you, courtesy of Richard Lynn.

    IQ of Mongolians

    This paper summarizes the results of two studies of the intelligence of Mongolians. Both studies were published in Chinese in Chinese journals that are difficult or impossible for Western scholars to access and read. In both studies the IQ scores of Mongolian children were compared with those of Han Chinese children living in the same communities in Inner Mongolia and Xinjiang Province. The IQ of Mongolian children was found to be approximately 5 IQ points lower than that of Han Chinese children.

    IQ and Mathematics Ability of Tibetans and Han Chinese

    The intelligence and mathematical ability of Tibetan and Han Chinese junior and senior secondary school and college students in Tibet was assessed by a modified version of the Standard Progressive Matrices and a mathematics test. Among junior secondary school students, the Tibetans obtained a lower IQ than the Chinese by 12.6 IQ points, and also scored lower on mathematics. Tibetan senior secondary school students and college students also obtained lower IQs and lower scores on mathematics tests than the Chinese.

  9. Lactase persistence obviously isn't the only thing that matters for which group wins, but it's huge. The signature of genetic natural selection in Mongols was about 4 standard deviations above the average signature -- imagine a white American man who is 6'10" tall!

  10. W.D. Hamilton talked about this in his paper "Innate Social Aptitudes of Man"


    "The incursions of barbaric pastoralists seem to do civilizations less harm in the long run than one might expect. Indeed, two dark ages and renaissances in Europe suggest a recurring pattern in which a renaissance follows an incursion by about 800 years. It may even be suggested that certain genes or traditions of pastoralists revitalize the conquered people with an ingredient of progress which tends to die out in a large panmictic population for the reasons already discussed. I have in mind altruism itself, or the part of the altruism which is perhaps better described as self-sacrificial daring. By the time of the renaissance it may be that the mixing of genes and cultures (or of cultures alone if these are the only vehicles, which I doubt) has continued long enough to bring the old mercantile thoughtfulness and the infused daring into conjunction in a few individuals who then find courage for all kinds of inventive innovation against the resistance of established thought and practice. Often, however, the cost in fitness of such altruism and sublimated pugnacity to the individuals concerned is by no means metaphorical, and the benefits to fitness, such as they are, go to a mass of individuals whose genetic correlation with the innovator must be slight indeed. Thus civilization probably slowly reduces its altruism of all kinds, including the kinds needed for cultural creativity (see also Eshel 1972)."

  11. The IQ of Mongolian children was found to be approximately 5 IQ points lower than that of Han Chinese children.

    Yeah, it looks like Mongolians have the same average IQ as the West European populations that gave rise to capitalist societies.

    Probably the last thing I'll say about this, but one thing I would question (though it's probably stretching the idea here to breaking point and seeing relationships where there aren't any) is how fishing communities might fit in. Looking at a world map, it seems like fishing might have a better correlation with capitalism than herding. Fishing is basically hunting and gathering, after all. Europe is a lot more coastal than East Asia, Japan is very coastal (it's an island) and very fishing dependent and the areas of China that have most capitalist success are also coastal.

  12. An important note about the Mongolian IQ -- they score 10 points below the Han on verbal IQ, and that's what seems to matter more for economic / business development.

    And the East Asians are already a bit below Europeans on verbal IQ (making up for it with a vastly higher spatial IQ), so I'd ballpark Mongolians as 12-15 points below Europeans in verbal IQ.

    That's the opposite of Ashkenazi Jews, who do a little worse than Europeans on spatial IQ but have a huge advantage on verbal IQ.

  13. Maybe there's something different to the Mongolian environment that depresses their verbal IQ, relative to Han Chinese. Cultural bias seems a plausible explanation for the verbal section.

  14. Re: Hamilton quote, sounds like he's talking about the theory of Ibn Khaldun, popularized and expanded on in the U.S. by Peter Turchin, about nomads developing higher solidarity and thus being able to overwhelm the settled societies.

    Doesn't sound like he got at what differences between H-G vs. herder vs. farmer made the pastoralists more entrepreneurial... but it's Hamilton, so maybe it's there in one of his writings.

    Like I said, I'm not sure how original the idea is. If I turn out to have been scooped, it's better that it's by Hamilton than someone else.

  15. The ancient Hebrews were pastoralists, the Ashkenazi worked as middlemen though. Derbyshire finds it odd that the story of Cain v. Abel sides with farmers against pastoralists though.


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