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The Great Miracle of Industrialization

Blog Post | Adoption of Technology

The Great Miracle of Industrialization

Why the world stopped having to be poor.

Our species is 300,000 years old. For the first 290,000 years, we were foragers, subsisting in a way that’s still observable among the bushmen of the Kalahari and the Sentinelese of the Andaman Islands. Even after Homo sapiens embraced agriculture, progress was painfully slow. A person born in Sumer in 4,000 b.c.e. would find the resources, work, and technology available in England at the time of the Norman Conquest or in the Aztec Empire at the time of Columbus quite familiar. Then, beginning in the mid 18th century, many people’s standard of living skyrocketed. What brought about this dramatic improvement, and why?

Our story has to begin with income, for, as Oxford economist Paul Collier has noted, economic “growth is not a cure-all, but lack of growth is a kill-all.” The history of economic growth, as Angus Maddison and his team at the University of Groningen found, resembles a hockey stick. For thousands of years, growth was negligible. This period is represented by the shaft of the stick. Toward the end of the 18th century, however, economic growth started to accelerate, first in Great Britain and then in the rest of the world. The blade represents this sharp upward turn.

As measured in 2011 U.S. dollars, the global income per person per day in the first year of the Common Era stood at $2. That’s also where it stood when William the Conqueror set sail in 1066 to claim the crown of England. This income stagnation does not imply that no economic growth happened over that approximate millennium. Growth did occur, but it was low, localized, and episodic. In the end, the gains always petered out.

In 1800, the average income was $2.80. In the 18 centuries that separated the emperorship of Caesar Augustus and the presidency of Thomas Jefferson, per capita income rose by less than 40 percent. Again there were regional differences, but they were not great. At the start of the 19th century, average Americans and Britons were twice as prosperous as the global average, roughly speaking.

Then industrialization changed everything. Between 1800 and 1900, GDP per person per day doubled. In other words, income grew over twice as much in one century as it had over the preceding 18 combined. By 2016, the number had risen to $40. In the United States, it stood at $145, and in Africa, the world’s poorest continent, at $13. In other words, global and American standards of living rose twelve-fold and 24-fold respectively over the course of the last two centuries.

Global income per person per day rose at a compounded rate of about 1.8 percent per year over the last hundred years. It will reach $166 per person per day in 2100 — if the trend continues. In the United States, it will reach $605 per person per day.

One might object that GDP figures are not the same as take-home pay. Unfortunately, a global hourly wage is tough to calculate — people work different numbers of hours, economies are composed of different kinds of workers, the proportion of non-wage compensations differs, etc. But we do know how American workers fared over the course of the last 200 years?

According to Lawrence H. Officer of the University of Illinois at Chicago and Samuel H. Williamson of Miami University, nominal hourly wages of unskilled U.S. laborers increased 31,627 percent between 1800 and 2016. The nominal hourly compensation of production workers rose 79,775 percent over the same time period. Adjusting for inflation, Gale Pooley, an economist at Brigham Young University, Hawaii, estimates that production-worker compensation rose by a factor of 40.2, and unskilled wages by a factor of 16.3, between 1800 and 2017.

What was responsible for these unprecedented improvements? Scholars offer different, though related, explanations. The Nobel-prize-winning economist Douglass North argues that the evolution of institutions including constitutions, laws, and property rights was instrumental to economic development. Deirdre Nansen McCloskey, an economist at the University of Illinois at Chicago, attributes the origins of the “great enrichment” to changing attitudes about markets and innovation. Harvard University psychologist Steven Pinker contends that material and spiritual progress are rooted in the Enlightenment and the concomitant rise of reason, science, and humanism.

Whatever its exact causes, the Industrial Revolution, which started in the mid 18th century, brought widespread changes, including new fuels, such as coal and petroleum; new motive power, such as the steam engine and the internal-combustion engine; new machines, such as the spinning jenny and the power loom; and the factory system, which reorganized work and required much greater division of labor and specialization of function. These changes increased the use of natural resources and enabled the mass production of manufactured goods.

The Industrial Revolution also led to fundamental non-economic changes. Improvements in agricultural productivity allowed a larger population to eat. That, along with new opportunities for factory work, increased urbanization and contributed to the development of political awareness among the “lower orders.” At the same time, wealth became more widely distributed, as landed interests gave way to the interests of the nouveau-riche bourgeoisie. All in all, old patterns of authority were eroded and society became more democratic.

Important political developments, such as the liberalization of trade, allowed the benefits of industrialization to spread globally. Trade volumes rose and, through the process of price convergence, costs fell. The gold standard and the invention of the telegraph made capital transfers easier. Attracted by higher profits, investment flowed from more developed to less developed countries.

Income growth, it is true, is only one of many indicators of human well-being. After all, Alexander the Great, who was the richest and most powerful man in the world, died at the age of 32 from typhoid fever — a disease that is easily curable today. But a wealthy society can support more scientists, pay for advanced medicine, and build better sanitation infrastructure. Wealth makes (almost) everything easier.

It is noteworthy that income growth over the last two centuries went hand in hand with other salutary developments.

As late as 1870, life expectancy in Europe, the Americas, and the world was 36, 35, and 30 years. Today, it is 81, 79, and 72 years.

In 1820, 90 percent of humanity lived in extreme poverty. Today, less than 10 percent does.

In 1800, 88 percent of the world’s population was illiterate. Today, 13 percent of the world’s population is illiterate.

In 1800, 43 percent of children died before their fifth birthday. Today, less than 4 percent does.

In 1816, 0.87 percent of the world’s population lived in a democracy. In 2015, 56 percent did.

In 1800, food supply per person per day in France, which was one of the most advanced countries in the world, was a mere 1,846 calories. In 2013, food supply per person per day in Africa, the world’s poorest continent, amounted to 2,624 calories.

Conflict, which was the default state of humanity for millennia, has declined. In the early 1800s, the combined military and civilian death rate from conflicts was about 65 per 100,000 people. By 2000 that rate had fallen to about two per 100,000. The last great-power conflict, which pitted China against the United States over the future of the Korean Peninsula, ended in 1953.  

Slavery, which was rampant in most parts of the world in 1800, is now illegal in every country.

Finally, for the first time since the start of industrialization, global inequality is declining as developing countries catch up with the developed world. Between 1990 and 2017, argues Branko Milanovic from City University of New York, the global Gini coefficient, which measures income inequality among all of the world’s inhabitants, decreased from 0.7 to 0.63.

Today, it is de rigueur to focus on the negative aspects of industrialization, but contemporary observers understood that they were living at a time of unprecedented improvement in the human condition. Karl Marx and Friedrich Engels observed in The Communist Manifesto (1848):

The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces to man, machinery, application of chemistry to industry and agriculture, steam-navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalization of rivers, whole populations conjured out of the ground — what earlier century had even a presentiment that such productive forces slumbered in the lap of social labor?

If progress is to continue, it is vital that people throughout the world, including socialists in America, better understand the vast extent of the improvements in human well-being over the last two centuries and the reasons for those improvements.

This first appeared in the National Review.

Blog Post | Food Prices

Eight Centuries of Increasing Food Abundance in England: Summary

Basic food commodities have become far cheaper, and virtually all workers have reaped the benefits.

Human progress is often incremental, but many positive trends have become clearly visible over time. One of these trends is the growing abundance of food. My recent series of articles looked at the affordability of food relative to wages in England between the 13th century and the present. It covered dairy (milk, butter, and cheese), meat (pork, mutton, and beef), baking (flour, sugar, and eggs), and grains (wheat, rice and oats).

Professor Gregory Clark of the University of California, Davis, has conducted extensive research into the economic history of England. As part of his research into the condition of the working class in England, Clark has developed an extensive data set containing nominal prices of goods and nominal wages of skilled and unskilled workers in England between the 13th and 19th centuries. Note: Clark assumes a 10-hour workday before 1720.

Using the concept of time prices developed by Marian L. Tupy and Gale L. Pooley, we calculated the number of hours that someone must work to earn enough money to buy a particular food item.

In this analysis, Clark’s nominal prices of food items served as the nominator, and nominal hourly wages, which come from Clark and from the UK Office of National Statistics’ Annual Survey of Hours and Earnings, served as the denominator.

Figure 1: Compound annual growth rates for skilled and unskilled workers

For unskilled laborers, the compound annual growth rate of all the items analyzed increased from 0.19 percent on average before the 1860s (going back to 1200s for some commodities) to 1.38 percent since the 1860s.

Similarly, for skilled laborers, the compound annual growth rate increased from 0.17 percent on average before the 1860s (going back to 1200s for some commodities) to 1.37 percent since the 1860s.

Over the course of this series, we showed how workers have benefited hugely from the growth in wages since the Industrial Revolution. However, this growth has accelerated since the end of World War II. When basic food commodities became cheaper, all workers saw the benefits.

Many compare their circumstances in the present to others who are relatively better off. However, compared to almost any period in history, everyone has benefited as basic commodities became far more affordable.

Blog Post | Wellbeing

Is This the Best Time to Be Alive?

Overwhelming evidence shows that we are richer, healthier, better fed, better educated, and even more humane than ever before.

Imagine, if you will, the following scenario. It is 1723, and you are invited to dinner in a bucolic New England countryside, unspoiled by the ravages of the Industrial Revolution. There, you encounter a family of English settlers who left the Old World to start a new life in North America. The father, muscles bulging after a vigorous day of work on the farm, sits at the head of the table, reading from the Bible. His beautiful wife, dressed in rustic finery, is putting finishing touches on a pot of hearty stew. The son, a strapping lad of 17, has just returned from an invigorating horse ride, while the daughter, aged 12, is playing with her dolls. Aside from the antiquated gender roles, what’s there not to like?

As an idealized depiction of pre-industrial life, the setting is easily recognizable to anyone familiar with Romantic writing or films such as Gone with the Wind or the Lord of the Rings trilogy. As a description of reality, however, it is rubbish; balderdash; nonsense and humbug. More likely than not, the father is in agonizing and chronic pain from decades of hard labor. His wife’s lungs, destroyed by years of indoor pollution, make her cough blood. Soon, she will be dead. The daughter, the family being too poor to afford a dowry, will spend her life as a spinster, shunned by her peers. And the son, having recently visited a prostitute, is suffering from a mysterious ailment that will make him blind in five years and kill him before he is 30.

For most of human history, life was very difficult for most people. They lacked basic medicines and died relatively young. They had no painkillers, and people with ailments spent much of their lives in agonizing pain. Entire families lived in bug-infested dwellings that offered neither comfort nor privacy. They worked in the fields from sunrise to sunset, yet hunger and famines were common. Transportation was primitive, and most people never traveled beyond their native villages or nearest towns. Ignorance and illiteracy were rife. The “good old days” were, by and large, very bad for the great majority of humankind. Since then, humanity has made enormous progress—especially over the course of the last two centuries.

How much progress?

Life expectancy before the modern era, which is to say, the last 200 years or so, was between ages 25 and 30. Today, the global average is 73 years old. It is 78 in the United States and 85 in Hong Kong.

In the mid-18th century, 40 percent of children died before their 15th birthday in Sweden and 50 percent in Bavaria. That was not unusual. The average child mortality among hunter-gatherers was 49 percent. Today, global child mortality is 4 percent. It is 0.3 percent in the Nordic nations and Japan.

Most of the people who survived into adulthood lived on the equivalent of $2 per day—a permanent state of penury that lasted from the start of the agricultural revolution 10,000 years ago until the 1800s. Today, the global average is $35—adjusted for inflation. Put differently, the average inhabitant of the world is 18 times better off.

With rising incomes came a massive reduction in absolute poverty, which fell from 90 percent in the early 19th century to 40 percent in 1980 to less than 10 percent today. As scholars from the Brookings Institution put it, “Poverty reduction of this magnitude is unparalleled in history.”

Along with absolute poverty came hunger. Famines were once common, and the average food consumption in France did not reach 2,000 calories per person per day until the 1820s. Today, the global average is approaching 3,000 calories, and obesity is an increasing problem—even in sub-Saharan Africa.

Almost 90 percent of people worldwide in 1820 were illiterate. Today, over 90 percent of humanity is literate. As late as 1870, the total length of schooling at all levels of education for people between the ages of 24 and 65 was 0.5 years. Today, it is nine years.

These are the basics, but don’t forget other conveniences of modern life, such as antibiotics. President Calvin Coolidge’s son died from an infected blister, which he developed while playing tennis at the White House in 1924. Four years later, Alexander Fleming discovered penicillin. Or think of air conditioning, the arrival of which increased productivity and, therefore, standards of living in the American South and ensured that New Yorkers didn’t have to sleep on outside staircases during the summer to keep cool.

So far, I have chiefly focused only on material improvements. Technological change, which drives material progress forward, is cumulative. But the unprecedented prosperity that most people enjoy today isn’t the most remarkable aspect of modern life. That must be the gradual improvement in our treatment of one another and of the natural world around us—a fact that’s even more remarkable given that human nature is largely unchanging.

Let’s start with the most obvious. Slavery can be traced back to Sumer, a Middle Eastern civilization that flourished between 4,500 BC and 1,900 BC. Over the succeeding 4,000 years, every civilization at one point or another practiced chattel slavery. Today, it is banned in every country on Earth.

In ancient Greece and many other cultures, women were the property of men. They were deliberately kept confined and ignorant. And while it is true that the status of women ranged widely throughout history, it was only in 1893 New Zealand that women obtained the right to vote. Today, the only place where women have no vote is the Papal Election at the Vatican.

A similar story can be told about gays and lesbians. It is a myth that the equality, which gays and lesbians enjoy in the West today, is merely a return to a happy ancient past. The Greeks tolerated (and highly regulated) sexual encounters among men, but lesbianism (women being the property of men) was unacceptable. The same was true about relationships between adult males. In the end, all men were expected to marry and produce children for the military.

Similarly, it is a mistake to create a dichotomy between males and the rest. Most men in history never had political power. The United States was the first country on Earth where most free men could vote in the early 1800s. Prior to that, men formed the backbone of oppressed peasantry, whose job was to feed the aristocrats and die in their wars.

Strange though it may sound, given the Russian barbarism in Ukraine and Hamas’s in Israel, data suggests that humans are more peaceful than they used to be. Five hundred years ago, great powers were at war 100 percent of the time. Every springtime, armies moved, invaded the neighbor’s territory, and fought until wintertime. War was the norm. Today, it is peace. In fact, this year marks 70 years since the last war between great powers. No comparable period of peace exists in the historical record.

Homicides are also down. At the time of Leonardo Da Vinci, some 73 out of every 100,000 Italians could expect to be murdered in their lifetimes. Today, it is less than one. Something similar has happened in Belgium, the Netherlands, Switzerland, Germany, Scandinavia, and many other places on Earth.

Human sacrifice, cannibalism, eunuchs, harems, dueling, foot-binding, heretic and witch burning, public torture and executions, infanticide, freak shows and laughing at the insane, as Harvard University’s Steven Pinker has documented, are all gone or linger only in the worst of the planet’s backwaters.

Finally, we are also more mindful of nonhumans. Lowering cats into a fire to make them scream was a popular spectacle in 16th century Paris. Ditto bearbaiting, a blood sport in which a chained bear and one or more dogs were forced to fight. Speaking of dogs, some were used as foot warmers while others were bred to run on a wheel, called a turnspit or dog wheel, to turn the meat in the kitchen. Whaling was also common.

Overwhelming evidence from across the academic disciplines clearly shows that we are richer, live longer, are better fed, and are better educated. Most of all, evidence shows that we are more humane. My point, therefore, is a simple one: this is the best time to be alive.

The Human Progress Podcast | Ep. 42

David Ansara: Unlocking Africa’s Potential

David Ansara, the Chief Executive of the Free Market Foundation, a South African think tank, joins Chelsea Follett to discuss progress and problems in Africa.