One of the biggest and most pernicious myths about economic development is that capitalism or, as I prefer to call it, economic freedom, benefits the few, while impoverishing the many. The origins of this myth go back to Karl Marx, who thought that, under capitalism, competition would drive down profits, thus necessitating greater exploitation of the workers.
The mistaken theorizing of the German economist – in fact, real average global income per person rose by factor of 10 over the last 200 hundred years – was then updated by Vladimir Lenin.
The update was necessary because by Lenin’s time, the workers in the western industrialized countries were unambiguously better off than in Marx’s time. And so, in his Imperialism, the Highest Stage of Capitalism, the first dictator of the Soviet Union invented a new thesis. Contra Marx, the living standards of the western workers continued to improve because of the riches that flowed to the West from the exploited colonies. Lenin’s thesis had a profound effect on generations of African nationalists, who rejected capitalism and embraced Soviet socialism instead.
But economic freedom not only continued to improve the lives of the workers in capitalist countries, it also improved the lives of the workers under socialism. Freedom, in other words, benefits everyone – even people who don’t have it.
Here is how the Nobel Prize-winning Austrian economist Friedrich Hayek put it in his 1960 magnum opus, The Constitution of Liberty:
What is important is not what freedom I personally would like to exercise but what freedom some person may need in order to do things beneficial to society. This freedom we can assure to the unknown person only by giving it to all. The benefits of freedom are, therefore, not confined to the free-or, at least, a man does not benefit mainly from those aspects of freedom which he himself takes advantage of. There can be no doubt that in history unfree majorities have benefited from the existence of free minorities and that today unfree societies benefit from what they obtain and learn from free societies. Of course, the benefits we derive from the freedom of others become greater as the number of those who can exercise freedom increases. The argument for the freedom of some therefore applies to the freedom of all.
When Hayek wrote those words, the struggle between the communist and capitalist worlds was at its height, and the developing “third” world was caught in the middle of that contest.
Let us now look at a concrete example of what Hayek meant when he wrote that “unfree societies benefit from what they obtain and learn from free societies.”
In 2002, Stephen Van Dulken, an expert curator in the Patents Information Service of the British Library, published a well-reviewed book called Inventing the 20th Century: 100 inventions that shaped the world. The Wall Street Journal described it as “remarkable”, while the Boston Globe credited the author with assembling “a panoramic snapshot of the century”. In his book, Van Dulken identified the 100 most important inventions of the 20th century. One per year. Almost all have originated in the free countries.
Looking at the birthplace of the inventor, I counted 47 Americans, 30 Britons, 4 French citizens, 3 Canadians, 3 Germans, and 2 Swedes. Argentina, Austria, Denmark, Finland, Hungary, Ireland, Israel, Italy, Japan, Soviet Union, and Switzerland produced one inventor each.
Looking at the jurisdiction where these inventors decided to patent their inventions, the picture changes somewhat, but not too much. The United States has patented 46 inventions, Great Britain 29 and World Intellectual Property Organisation patented 11. Germany patented 5, France 2, and the European Union as a whole patented 2. Canada, Denmark, Hungary, Japan, and Switzerland patented one each.
Some readers might object that Van Dulken’s choices were, by necessity, subjective. True, but I suspect that the airplane, air conditioning, the electric washing machine, tarmac road surfacing, the vacuum cleaner, neon lighting, stainless steel, rapid freezing of food, television, traffic lights, Nylon, Radar, Teflon, bar codes, the computer, the ballpoint pen, the microwave oven, the microchip, Kevlar and so on would have made anyone’s list.
In other words, it is unlikely that, looking back at the 20th century, others would pick a dramatically different list of the most important inventions. Needless to say, Van Dulken’s innovators did not only benefit their native countries. The benefits of their inventions spread across the globe and improved the lives of all people – including many of those who live or lived under tyranny.
Once again, consider a concrete example. Between 1960, the year of African independence, and 2015, the income gap between sub-Saharan Africa (SSA) and the United States has actually widened. In 1960, average GDP per person in SSA amounted to 6.31 percent of the same in the United States. Conversely, an average GDP per person in the United States amounted to 1,586 per cent of that in SSA.
Over the next 55 years, incomes in SSA adjusted for inflation grew by 55 per cent. But, they grew by 203 per cent in America. That meant that in 2015, SSA amounted to 3.21 per cent of American income and American income amounted to 3,111 percent of SSA income. Or, to put it in terms of dollars and cents, SSA income rose from $1,075 to $1,660. American income rose from $17,037 to $51,638 (all figures are in 2010 dollars).
However, the gap in life expectancy, which is the best indicator of the overall standard of living, between the two has shrunk! In 1960, SSA life expectancy was 58 per cent that of the United States. The converse percentage is 174. Over the next 55 years, SSA life expectancy grew by 47 per cent, while American life expectancy grew by 14 per cent. So, in 2015, SSA life expectancy rose to 75 per cent that of the United States, while American life expectancy fell to 134 per cent that of SSA. To put it in terms of years, SSA life expectancy rose from 40.17 years to 59 years, while US life expectancy rose “only” from 69.77 years to 79.16 years.
Africans, in other words, did not have to become rich in order to start experiencing longer and better lives. Indeed, it would be surprising if they did get wealthier, considering that since independence, many African countries have experimented with socialism and other forms of protectionism. Some, like Zimbabwe, still do.
Instead, all of Africa benefited from the technological advances that occurred in free, which is to say, capitalist countries. The airplane, an American invention, flies life-saving medicines into the deepest Congo. Synthetic insulin, a Canadian invention, saves lives in South Africa. The photocopier, another American discovery, is making it easy for poor kids to learn how to read in Angola.
Over the last few years, signs have emerged of a small, but ominous, decline in political and economic freedom in the world. Was Francis Fukuyama wrong when he predicted the triumph of liberal democracy and capitalism in his thesis, The End of History? I certainly did not think so, when I defended it in 2014.
I am still hopeful that Fukuyama is right and that the recent negative trends will be reversed. That said, what matters most for the continued progress of humanity is, as Hayek put it, that at least a minority of people on this planet remain free. And that, I think, remains a pretty safe bet.
Côte D’Ivoire’s Land Reforms Are Unlocking Jobs and Growth
“Secure land tenure transforms dormant assets into active capital—unlocking access to credit, encouraging investment, and spurring entrepreneurship. These are the building blocks of job creation and economic growth.
When landowners have secure property rights, they invest more in their land. Existing data shows that with secure property rights, agricultural output increases by 40% on average. Efficient land rental markets also significantly boost productivity, with up to 60% productivity gains and 25% welfare improvements for tenants…
Building on a long-term partnership with the World Bank, the Government of Côte d’Ivoire has dramatically accelerated delivery of formal land records to customary landholders in rural areas by implementing legal, regulatory, and institutional reforms and digitizing the customary rural land registration process, which is led by the Rural Land Agency (Agence Foncière Rurale – AFOR).
This has enabled a five-fold increase in the number of land certificates delivered in just five years compared to the previous 20 years.”
100 Million Fewer Children Are in Child Labour Today than in 2000
“While the elimination of child labour remains an unfinished task, the latest global estimates bring some welcome news. After a concerning rise in child labour captured by the global estimates for 2020, a feared further deterioration in the wake of the COVID-19 pandemic has not materialized, and the world has succeeded in returning to a path of progress. There are over 100 million fewer children in child labour today than in 2000, even as the child population increased by 230 million over the same period.”
Grim Old Days: Virginia Postrel’s Fabric of Civilization
Beneath today’s abundance of clothing lies a long and brutal history.
Chelsea Follett —
Summary: Virginia Postrel’s book weaves a sweeping history of textiles as both drivers of innovation and toil. From ancient women spinning for months to make a single garment to brutal sumptuary laws and dye trades steeped in labor and odor, it is revealed how fabric shaped the foundations of human society.
Virginia Postrel’s The Fabric of Civilization: How Textiles Made the World is the riveting story of how humanity’s quest for thread, cloth, and clothing built modern civilization, by motivating achievements from the Neolithic Revolution to the Industrial Revolution and more. While much of the book contains inspiring tales of innovation, artistry, and entrepreneurship, the parts of the book about the preindustrial era also reveal some dark and disturbing facts about the past.
In the preindustrial era, clothing was often painstakingly produced at home. Postrel estimates that, in Roman times, it took a woman about 909 hours—or 114 days, almost 4 months—to spin enough wool into yarn for a single toga. With the later invention of the spinning wheel, the time needed to produce yarn for a similarly sized garment dropped to around 440 hours, or 50 days. Even in the 18th century, on the eve of industrialization, Yorkshire wool spinners using the most advanced treadle spinning wheels of the time would have needed 14 days to produce enough yarn for a single pair of trousers. Today, by contrast, spinning is almost entirely automated, with a single worker overseeing machines that are able to produce 75,000 pounds of yarn a year—enough to knit 18 million T-shirts.
Most preindustrial women devoted enormous amounts of time to producing thread, which they learned how to make during childhood. It is not an exaggeration to say, as Postrel does, “Most preindustrial women spent their lives spinning.” This was true across much of the world. Consider Mesoamerica:
At only four years old, an Aztec girl was introduced to spinning tools. By age six, she was making her first yarn. If she slacked off or spun poorly, her mother punished her by pricking her wrists with thorns, beating her with a stick, or forcing her to inhale chili smoke.
These girls often multitasked while spinning: “preindustrial spinners could work while minding children or tending flocks, gossiping or shopping, or waiting for a pot to boil.” The near-constant nature of the task meant that prior to the Industrial Revolution, “industry’s visual representation was a woman spinning thread: diligent, productive, and absolutely essential” to the functioning of society, and from antiquity onward cloth-making was viewed as a key feminine virtue. Ancient Greek pottery portrays spinning “as both the signature activity of the good housewife and something prostitutes do between clients,” showing that women of different social classes were bound to spend much of their lives engaged in this task.
Women of every background worked day and night, but still, their efforts were never enough. “Throughout most of human history, producing enough yarn to make cloth was so time-consuming that this essential raw material was always in short supply.”
Having sufficient spun yarn or thread was only the beginning; it still had to be transformed into cloth. “It took three days of steady work to weave a single bolt of silk, about thirteen yards long, enough to outfit two women in blouses and trousers,” although silk-weavers themselves could rarely afford to wear silk. According to Postrel, a Chinese poem from the year 1145, paired with a painting of a modestly dressed, barefoot peasant weaving silk, suggests that “the couple in damask silk . . . should think of the one who wears coarse hemp.”
Subdued colors often defined the clothing of the masses. “‘Any weed can be a dye,’ fifteenth-century Florentine dyers used to say. But that’s only if you want yellows, browns, or grays—the colors yielded by the flavonoids and tannins common in shrubs and trees.” Other dye colors were harder to produce.
In antiquity, Tyrian purple was a dye derived from crushed sea snails, and the notoriously laborious and foul-smelling production process made it expensive. As a result, it became a status symbol, despite the repulsive stench that clung to the fabric it colored. In fact, according to Postrel, the poet Martial included “a fleece twice drenched in Tyrian dye” in a list of offensive odors, with a joke that a wealthy woman wore the reeking color to conceal her own body odor. The fetor became a status symbol. “Even the purple’s notorious stench conveyed prestige, because it proved the shade was the real thing, not an imitation fashioned from cheaper plant dyes.” The color itself was not purple, despite the name, but a dark hue similar to the color of dried blood. Later, during the Renaissance, Italian dyers yielded a bright red from crushed cochineal insects imported from the Americas, as well as other colors that were created by using acidic bran water that was said to smell “like vomit.”
Numerous laws strictly regulated what people were allowed to wear. Italian city-states issued more than 300 sumptuary laws between 1300 and 1500, motivated in part by revenue-hungry governments’ appetite for fines. For example, in the early 1320s, Florence forbade women from owning more than four outfits that were considered presentable enough to wear outside. Postrel quotes the Florentine sumptuary law official Franco Sacchetti as writing that women often ignored the rules and argued with officials until the latter gave up on enforcement; he ends his exasperated account with the saying, “What woman wants the Lord wants, and what the Lord wants comes to pass.” But enough fines were collected to motivate officials to enact ever more restrictions.
In Ming Dynasty China, punishment for dressing above one’s station could include corporal punishment or penal servitude. Yet, as in Florence, and seemingly nearly everywhere that sumptuary laws were imposed, such regulations were routinely flouted, with violators willing to risk punishment or fines. In France in 1726, the authorities harshened the penalty for trafficking certain restricted cotton fabrics, which were made illegal in 1686, to include the death penalty. The French law was not a traditional sumptuary law, but an economic protectionist measure intended to insulate the domestic cloth industry from foreign competition. Postrel quotes the French economist André Morellet lamenting the barbarity of this rule, writing in 1758,
Is it not strange that an otherwise respectable order of citizens solicits terrible punishments such as death and the galleys against Frenchmen, and does so for reasons of commercial interest? Will our descendants be able to believe that our nation was truly as enlightened and civilized as we now like to say when they read that in the middle of the eighteenth century a man in France was hanged for buying [banned cloth] to sell in Grenoble for 58 [coins]?
Despite such disproportionate punishments, the textile-smuggling trade continued.
Postrel’s book exposes the brutal realities woven into the history of textiles; stories not just of uplifting innovation, but of relentless toil, repression, and suffering. Her book fosters a deeper appreciation for the wide range of fabrics and clothes that we now take for granted, and it underscores the human resilience that made such abundance and choice possible.
“The total number of jobs remained largely stable in the U.S.—and even slightly increased—as people adapted to competition from Chinese trade. Trade-exposed places recovered after 2010, primarily by adding young-adult workers, foreign-born immigrants, women and the college-educated to service-sector jobs.
Lost in the alarm over jobs is that trade with China delivered substantial benefits to the U.S. economy. Most obvious are the lower prices Americans pay for everything from clothing and electronics to furniture. One study found that a 1 percentage point increase in imports from China led to about a 1.9% drop in consumer prices in the U.S. For every factory job lost to Chinese competition, American consumers in aggregate gained an estimated $411,000 in consumer welfare. This so-called Walmart effect disproportionately helped middle- and lower-income families, who spend a bigger share of their budget on the kinds of cheap goods China excels at producing.
U.S. businesses also reaped advantages. Manufacturers who use imported parts or materials benefited from cheaper inputs, making them more competitive globally. An American appliance company, for example, could buy low-cost Chinese components to lower its production costs, keep its product prices down and potentially hire more workers.”
