Samuel Brittan reviews Road to Riches or the Wealth of Man, Peter Jay, 383pp, 20, Weidenfeld and Nicolson

The late Anthony Crosland, one of the earliest and still the most incisive of Labour revisionist writers, once remarked in conversation that economic history was a great bore.

It is easy to sympathise. For generations bored teachers have given bored pupils lists of the key inventions of the Industrial Revolution. But I should doubt if, until the rise of museums of industrial archaeology, either the teachers or the taught would have recognised a spinning jenny if they had seen one.

Even at a more ambitious level, economic historians tended to concentrate on topics like the rise and decline of traditional British industries such as cotton and steel, and their replacement first by the electrical industry and motors and more recently by electronics and information technology. Although obviously important to those unfortunate enough to be affected by relative decline, these did not seem very exciting compared with the big themes of war, depression, human rights or the battle of political ideas. Moreover, issues such as the origins of depression or runaway inflation were left to squabbling macro or monetary economists.

All that has changed in the last few decades with the rise of new schools of historians, mainly but not entirely based in the United States, interested in the bigger themes of human development, and in why as well as how, things happen.

Peter Jay's book originated in a mammoth television series to go out on BBC Two later this summer. But it is far from being just the "book of the series". Even if it had no other merit, it would be worth its price several times over as a synthesis of these new historians for the 99 per cent of even the educated public who are unlikely to go very far into the originals.

It goes beyond economic history in being an analytical account of the history of human civilisation, with the boring bits missed out when this can justifiably be done. An example is the detail of the wars and dynastic conflicts between the nation states which emerged between 1500 and 1800 which have done so much to put students off international as well as economic history. As a small conceit, Jay avoids the use of the vertical pronoun (that is "I") by referring to himself as "the historian".

The scope is breathtaking. His story exists on two different levels. There is the account of how human beings and their artifacts not only came to dominate the planet but in the last couple of hundred years increased their output per head in the more advanced countries by a factor of 12. Twelve is the factor by which real income per head exceeds that around 1780 in Britain and other advanced countries.

But at another level there is an attempt at a Darwinian perspective. The narrative starts with the origin of homo sapiens - or as Jay rightly insists homo sapiens, sapiens - and ends with the prospects for the human race. The real story begins in Jay's view about 40,000 years ago when the human brain emerged in something like its present form.

Much later, the clergyman-economist Robert Malthus scandalised progressive thinkers at the beginning of the 19th century by insisting that food production increased arithmetically while population - unless checked by war, disaster or famine - tended to increase geometrically, or in simple terms much faster. Malthus was unaware of the agricultural revolution taking place even when while he was writing, let alone of the Green Revolution which was to come in the last few decades of the 20th century.

Until recently the population threat seemed very much alive in the third world, even while European countries were complaining of population ageing and decline. But human females have been taking advantage of new techniques and higher living standards to restrict the birth rate and enjoy more affluence and leisure. The latest projections show world population leveling out by the middle of the 21st century.

There is, however, a buoyant pessimism running through Jay's admittedly speculative final chapter where he doubts if the Malthusian spectre has really been banished. He rests his case on the Darwinian proposition that populations tend to increase up to the limits of subsistence. On the other hand Richard Dawkins at the end of his famous book, The Selfish Gene, has speculated that the human animal has developed a new product known as culture, which might enable it to escape from the genetic imperative. It will be fascinating to see what other social biologists - and not just economic writers and historians - make of this debate.

For the more conventional reader, the key arguments relate to a smaller time span. Coming to his subject from philosophy and economics, Jay has the advantage of being much more self-conscious about his methodology than historians usually are. "In practice they rely on implicit and usually rather banal generalisations which most readers might be expected to assume without recognising them as anything so suspect as theories or laws." Jay's basic hypothesis is that economic advance "is a natural proclivity of mankind" unless frustrated by natural disasters or collective predation.

This brings one to his already famous waltz motif. This is not strictly a falsifiable theory but a way of organising the historical material, what Karl Popper would have called a historical interpretation. The thought is that economic advance almost always gives rise to perverse reactions - that is one step forward and a second step sideways or backwards. The crucial step is the third one in which societies can either tackle these disturbances and move further forward or alternatively stagnate or regress as the traditional civilisations of China and India did, even though they were just as advanced as the West until surprisingly recently - say around 1750-1800.

The interpretation is similar to Arnold Toynbee's "challenge and response". Some might prefer to see it in Hegelian terms as thesis, antithesis and synthesis. But Jay tries to avoid the metaphysical overtones of both interpretations.

On Jay's view, economic advance is natural. The real events requiring explanation are stagnation and retrogression. These are often due to the jealousies of those who are left behind, whether in national or personal terms, and who obstruct the normal process of improvement by inefficient or unprincipled redistribution or (in my view more often) by the kind of economic nationalism that sees trade and economic activity as a zero-sum act of warfare instead of as a game from which all can benefit. The decisive element is how societies react to these challenges.

Jay's thesis is likely to be summarised under the slogan "government matters", which, however unintentionally, sounds like a New Labour sound bite. But many of the examples suggest that government matters for the harm it can do. His real view is that economic advance requires "positive action to supply certain conditions such as monetary stability, physical security and a predictable and accessible legal system that protects the person and his property, settles his disputes and upholds agreements". In addition it requires "abstention by political authority from the suppression of freedom and incentives".

The author does not give us any criterion for distinguishing between the kind of intervention which appeases popular passions and allows economic progress to continue and that which stultifies it. He would have done well to have taken seriously, but critically, the contributions made by "Austrian" economists like Hayek, or the Virginia public choice school and also the "ordo" theories behind the original social market economy of Ludwig Erhard, the inspirer of the post-war German economic miracle, which are very different from the ideas which have usurped this label today.

The best chapters are on the "causes" of the Industrial Revolution in Britain and the related subject of the emergence of Europe as the key economic actor from a world in which it was only one of several leading civilisations. The author has no difficulty in showing that most of the purported causes of the Industrial Revolution do not really work, by a careful comparison with other countries and other times.

He has no simple replacement but suggests "a self-propelling cycle of expansion, population growth and industrialisation" for which a necessary condition was the earlier 18th century agricultural revolution which came first to Britain. Mathematical theorists talk about "sensitive dependence on initial conditions", which Jay paraphrases as "a matter of the right place, the right time and the right luck". China , which was the worlds largest one country economy at least until 1800 fails to make the breakthrough partly because of the accident of the absence of convenient coal supplies and partly because of the structure of Chinese society.

Jay does indeed give us the conventional list of 18th and early 19th century inventions, but hived off in a table where it does not disturb the main narrative. In general the book could have done with a few more tables - for instance to help us distinguish between the various Chinese dynasties and those which held back or promoted economic growth - and also some maps. These would have been better use of the publisher's resources than the charming, but not strictly essential, still photographs taken by the author of various sites which presumably are going to feature in the TV series.

Perhaps the biggest omissions are science and culture. Indeed in some ways Jay is too kind to the influence of the market, which depends not only on reasonable government but on a number of other background factors if it is to work its magic. The second industrial revolution, unlike the first, was made possible by the progress of science. There are already many studies of how and why this progress took place. But to omit a summary is a bit like Hamlet without the Prince of Denmark.

The cultural aspect is more elusive. But clearly a civilisation in which ascetic contemplation is the highest ideal unlikely to advance materially. Less obviously, a culture which under both the tsars and the Soviet regime depended on power relations rather than mutual exchange is all too likely to develop into a mafia capitalism.

Experts in particular periods will no doubt nitpick as they always do with the work of anyone who tries to look at the bigger picture. I was myself disappointed that Jay reproduces the conventional Keynesian view of the interwar return to the gold standard. Keynes was right about the folly of Winston Churchill's return to gold at pre-war parity in 1925, which directly produced the General Strike of the following year. But Keynes never explained why a very much larger reduction of the price level in 1919-20 than that required to validate the gold parity caused so much less trouble. The Chicago-type thesis, which sees the difference in the higher floor to money wages provided by the dole in the later period, at least deserves investigation.

The author has an ambivalent attitude to the 19th century pillars of economic orthodoxy such as the gold standard, free trade and balanced budgets or their modern equivalents, recently known as "the Washington consensus". On the whole he approves of them, despite their faults, in the 19th century but not in the 20th where he fears that they have been an influence for deflation and depression. He likes these ideas when they emerge, as they did after Bretton Woods, from some rudimentary system of world institutions, but dislikes them when they are part of the political armoury of politicians such as Thatcher and Reagan. Some more principled sorting out is called for. The debating point about Thatcher and Friedman on page 223 is beneath the author and I suspect originates from some researcher.

When it comes to the late 20th century, some of the most illuminating sections relate to the enormous differences between economic liberalisation in China and Russia. As far as one can make sense of the figures, real output fell by the staggering amount of nearly 50 per cent in Russia in the last decade of the 20th century while China became the fastest growing economy in the world.

Jay is also entirely right about globalisation where he says more in two or three pages than most author say in large volumes. Globalisation as such is simply an extension of the one world economy which has been developing for centuries. But because we are approaching a single labour market, the less skilled workers in the older industrial countries are likely to suffer. The rich in the rich countries will get richer; so will both the rich and the poor in the poor countries. But the poor in the rich countries could suffer without adequate measures of redistribution - the R word which even Gordon Brown dare not pronounce too loudly. But "it is anyway an error to regret what we have done and a misconception to recreate the predominant power of the autarkic nation state" or group of states.