Near the end of his The Great Degeneration, Niall Ferguson quotes Geoffrey West’s analysis of the increasing economies of scale that come with urbanization. West argues,

“the bigger the city, the more wages you can expect, the more educational institutions in principle, [the] more cultural events, [the] more patents are produced . . . . all to the same degree. . . . If you double the size of a city from 50,000 to a hundred thousand, a million to two million, five million to ten million . . . systematically, you get a roughly 15 per cent increase in productivity, patents, the number of research institutions, wages . . . and you get systematically a 15 per cent saving in length of roads and general infrastructure” (quoted on p. 140).

But, Ferguson cautions, these benefits come only when the cities operate within the proper institutional frameworks, institutional frameworks that “evolve in ways that are not only resilient in the face of perturbations, but actually gain strength from them” (142)

This caution is at the core of Ferguson’s book, which is at one level a meditation on the wealth of nations. What made the West take off was not, he argues, culture or natural resources or even technology, but rather institutions. Good institutions encourage invention, cooperation, efficiency, work. Bad institutions incentivize “bad behaviour like killing people who annoy us, or stealing property we covet, or idling away our time” (18). What makes for a wealthy nation is minimal but enforced regulation on finance and business, the rule of law, a vibrant civil society. 

Absent these, civilizations decay and economies grow stagnant and die. And he’s not talking about the developing world. At the beginning of the book, Ferguson quotes Adam Smith’s analysis of the “stationary state” of China, and observes: “if Smith could revisit these same places, he would behold an extraordinary reversal of fortunes. It is we Westerners who are in the stationary state, while China is growing faster than any other major economy in the world.” Our recent recession is only the tip: “Our laws and institutions are the problem,” and Great Degeneration that results from these institutional failures is a far deeper and more significant problem than the “Great Recession” (10).

It’s gloomy prospect, and Ferguson is relentless. But the church has survived great degenerations before, and lived to tell and rebuild.