CHAPTER SEVEN
How the West Became Rich

Study
Chapter 7 explores a variety of explanations for the West's historical economic dominance. Why did Europe—not Africa, Asia, or the Middle East—grow wealthy after 1500? According to identity perspectives, the reasons are rooted in ideas that blossomed in Europe; the Renaissance, the Reformation, and the Enlightenment all contributed to scientific, technological, and commercial advances that allowed Europe to accumulate wealth. The realist perspective, for its part, turns to explanations that hinge on geography, demography, and the decentralized distribution of power. Such things as dense and burgeoning populations, agricultural products that required large amounts of space to cultivate, and a spirit of competition between states all led Europe to expand and thereby accumulate wealth. Finally, the liberal perspective points to new technology, increased specialization, and the development of new and complex institutions—such as state bureaucracies—as the best explanations for Europe's wealth.

Study Questions

1. What does the realist perspective emphasize when explaining how the West became wealthy? How does this differ from explanations coming out of the other perspectives?
   



2. What were the Bretton Woods institutions? Why were they created?
   



3. What are the differences between Keynesian economics and the Chicago School? How did these ideas impact economic development in the twentieth century?