There has been a massive increase in wealth throughout the world in the last two centuries.
Marian L. Tupy —
Jonathan Haidt, the well-known psychologist from New York University, started as a “typical” liberal intellectual, but came to appreciate the awesome ability of free markets to improve the lives of the poor. Earlier this year, he penned an essay in which he pointed to what he called “the most important graph in the world.” The graph reflected Angus Maddison’s data showing a massive increase in wealth throughout the world over the last two centuries and which is reproduced, courtesy of Human Progress, below.
The “great enrichment” (Deirdre McCloskey‘s phrase) elicits different responses in different parts of the world, Haidt noted. “When I show this graph in Asia,” Haidt writes, “the audiences love it, and seem to take it as an aspirational road map… But when I show this graph in Europe and North America, I often receive more ambivalent reactions. ‘We can’t just keep growing forever!’ some say. ‘We’ll destroy the planet!’ say others. These objections seem to come entirely from the political left, which has a history, stretching back centuries, of ambivalence or outright hostility to capitalism.”
Haidt’s experience mirrors my own. When giving talks about the benefits of free markets, audiences in Europe and America invariably note the supposedly finite nature of growth and express worry about the environmental state of the planet. Why? In Haidt’s view, capitalist prosperity changes human conscience. In pre-industrial societies, people care about survival. “As societies get wealthier, life generally gets safer, not just due to reductions in disease, starvation, and vulnerability to natural disasters, but also due to reductions in political brutalization. People get rights.”
This more prosperous generation, then, starts caring about such things as women’s rights, animal rights, gay rights, human rights, and environmental degradation. “They start expecting more out of life than their parents did.” All that is fine, of course, so long as the pampered youth in the West and newly empowered youth in the Far East remember that roughly 800 million people in the world, many of them in Africa, still live in absolute poverty and experience the kinds of existential challenges that only free markets can solve. Denying dirt-poor people access to cheap fossil fuel energy, for example, can mean a death sentence to a newborn child on life support in an electric-powered incubator in rural Africa.
Let me conclude with two final thoughts. First, there is no obvious reason why growth should not continue indefinitely—although future growth will likely be more dependent on technological change than in the past. In the West, for example, we cannot replicate the growth boost that resulted from the entry of large number of women (50 percent of the population) into the labor force. Second, let’s not fall into the trap of thinking that, because the initial stage of industrialization was bad for the environment, pre-industrial society saw man and nature coexist in harmony. Part of the reason why the Industrial Revolution started in England was that the country had to switch from almost depleted wood to coal as a source of energy. Industrialization, and subsequent enrichment, saved European forests, and it can do so in Africa as well.
How did the modern dynamist economy of wealth and opportunity come about? Author and Head of Education at the Institute of Economic Affairs Stephen Davies joins Chelsea Follett to discuss his book "The Wealth Explosion: The Nature and Origins of Modernity."
Centers of Progress, Pt. 22: Manchester (Industrialization)
Introducing the city at the heart of the first Industrial Revolution.
Chelsea Follett —
Today marks the twenty-second installment in a series of articles by HumanProgress.org called Centers of Progress. Where does progress happen? The story of civilization is in many ways the story of the city. It is the city that has helped to create and define the modern world. This bi-weekly column will give a short overview of urban centers that were the sites of pivotal advances in culture, economics, politics, technology, etc.
Our twenty-second Center of Progress is Manchester during the first Industrial Revolution (1760-1850). Sometimes called “the first industrial city,” Manchester epitomized the rapid changes of an era that transformed human existence more than any other period in history. Manchester was among the earliest cities to experience industrialization. The city’s metamorphosis wasn’t easy, as it entailed working and living conditions far below those that we are used to today. But Manchester ultimately helped to uplift humanity by paving the way to the post-industrial prosperity that so many of us now enjoy.
Today, Manchester is the fifth most populous city in the United Kingdom. The city is famous for its soccer team, Manchester United, which has won more trophies than any other English football club (i.e., soccer team). Nicknamed the Red Devils, Manchester’s is among the world’s most popular and highest-earning soccer teams. Manchester is also known for its large research university, where the atom was first split in 1917. The University of Manchester operates the Jodrell Bank Observatory, a designated UNESCO World Heritage Site due to its substantive impact on research during the start of the Space Age. Manchester has also made notable contributions to music, producing groups such as the Bee Gees, who were among the best-selling musical artists in history. Much of the city’s architecture dates to the industrial era, with many prominent warehouses, factories, railway viaducts, and canals still remaining.
The area where Manchester now stands has been inhabited since at least the Bronze Age, originally by ancient Celtic Britons. Around the 70s CE, Romans conquered the area. They called the outpost Mamucium. That is thought to be a Latinization of the prior name for the settlement in Old Brittonic, which likely meant “breast-shaped hill.” Mamucium eventually became known as Manchester, with the Old English -chester suffix coming from the Latin castra, meaning “fortified town.” After the Romans departed Britain, the settlement of Manchester changed hands among several kingdoms during the middle ages and the Norman conquest of the area. Manchester first became known for the cloth trade in the 14th century, when a wave of Flemish immigrant weavers who produced linen and wool settled in the town. By the 16th century, Manchester’s economy revolved around the wool trade. A cottage industry, wool production was a slow and painstaking process that took place within individual households.
Manchester was a flourishing but small market town before the Industrial Revolution, with a population of fewer than ten thousand people at the start of the 18th century. As technological advances increased the efficiency of the cloth business, the city’s growth began to take off in the 1760s. The city’s canals, cotton-friendly climate, and location allowing for easy transport of goods into and out of the city, all destined Manchester to become a key industrial center once the right technology arose.
The Industrial Revolution is often said to have begun when the spinning jenny was invented in Oswaldtwistle, 25 miles northwest of Manchester, in 1764 or 1765. The spinning jenny was a frame for spinning wool or cotton with increased speed by using multiple spindles. It represented the first fully mechanized production process. Then, in 1771, another new invention, the water frame, was installed in a Cromford factory 50 miles southeast of Manchester. That invention used a water-wheel to power a spinning frame. Around 1779, in Bolton, which is located 15 miles northwest of Manchester, the inventor Samuel Crompton combined aspects of the spinning jenny and the water frame into the “spinning mule.”
The spinning mule greatly sped up the process of producing yarn. In fact, versions of the spinning mule are still used today in the production of yarns from certain delicate fibers such as alpaca hair. Water-powered textile mills making use of the new technology soon popped up across the region.
In 1781, just two years after the spinning mule’s introduction, the development of viable steam engines then enabled the growth of larger, more powerful, steam-powered textile mills. Steam power was a game-changer. While humanity had known about steam power since Hero of Alexandria (mentioned in our eighth Centers of Progress installment) demonstrated the phenomenon as a novelty in the first century CE, finally gaining the ability to harness steam in a practical way was the pivotal moment of the Industrial Revolution. Improved steam engines led to the swift industrialization of England’s cloth industry, allowing the spinning and weaving of textiles with a rapidity never before achieved.
Manchester opened its first cotton mill in 1782—the five-story Shudehill Mill that is also sometimes called Simpson’s Mill. It made use of a thirty-foot water-wheel and cutting-edge steam power. By the year 1800, Manchester was described as “steam mill mad,” with over forty mills. By that same year, the city’s population had grown almost tenfold from the start of the 18th century, reaching around eighty-nine thousand souls. Between 1801 and the 1820s the population doubled. By 1830, Manchester boasted ninety-nine distinct cotton-spinning mills.
That year, the world’s first modern railway, “the Liverpool and Manchester” (L&MR) opened and supercharged Manchester’s already-booming textile industry. It did so by speeding up the importation of raw materials from Liverpool’s ports into Manchester’s factories, as well as the export of finished textile products out of Manchester. The 31-mile-long L&MR was both the first railway to exclusively serve steam-powered automotives and the world’s first inter-city railway. It was also the first railway to use a double track, operate fully on a regular time-table, employ a signaling system, and transport mail. By the end of the first Industrial Revolution in 1850, Manchester was home to some 400,000 people. The erstwhile obscure market town had become second only to London in importance within Britain and came to be called that nation’s “second city.”
The swelling of the population was driven by an inpouring of young men and women from the English countryside and from Ireland, drawn by the promise of work in the new factories and mills. Compared to back-breaking agricultural labor or lives of domestic servitude (in an era when many employers beat their servants with impunity), many people found even the famously harsh working conditions within the mills to be preferable to their other options. Mills paid high wages compared to opportunities in rural areas, and most migrants to the city saw an appreciable rise in their incomes. Gradually, and for the first time in history, a large middle class emerged.
That is not to make light of the working environment within early Industrial Revolution-era Manchester’s factories, which saw long hours, high rates of injury and the frequent use of child labor. Although it must be noted that child labor was not an innovation of the Industrial Revolution—it had tragically existed since time immemorial among the poor. In fact, it was only during the Industrial Revolution that living conditions improved so much that child labor began to come under scrutiny, resulting in Britain’s 1833 Factory Act. The Act is thought to be the world’s first anti-child labor legislation. Other acts followed.
If you could visit Manchester during the first Industrial Revolution, you would probably enter the city via steam-powered locomotive and your first sight of the city would be its bustling train station. You would emerge from the station into a city defined by a skyline of industrial smokestacks that the poet William Blake famously described as “dark Satanic mills.” In 1814, the British civil servant Johann May described that skyline as a sign of technological progress:
Manchester [has] hundreds of factories … which tower up to five and six storeys in height. Huge chimneys at the side of these buildings belch forth black coal vapours, and this tells us that powerful steam engines are used. The clouds of vapour can be viewed afar. The houses are blackened by it.
The sound might have been deafening. The French political philosopher Alexis de Tocquevillle described Manchester in 1835 by noting that the “crunching wheels of machinery, the shriek of steam from boilers, the regular beat of the looms… are the noises from which you can never escape.” And among the people in the streets you might have observed various protestors. The city was at the vanguard of radical political movements ranging from women’s suffrage and anti-Corn Law advocacy to communism.
The German political philosopher Friedrich Engels came to Manchester in 1842. He worked there as a cotton merchant by day and opined about the state of the city’s poor by night, culminating in the publication of The Condition of the Working Class in England in 1844. One passage on Manchester’s slums reads,
In a rather deep hole … surrounded on all four sides by tall factories … stand two groups of about 200 cottages, built chiefly back to back, in which live about 4,000 human beings, most of them Irish. The cottages are old, dirty, and of the smallest sort, the streets uneven, fallen into ruts and in part without drains or pavement; masses of refuse, offal, and sickening filth lie among standing pools in all directions.
What Engels failed to notice was that for the first time in history, such abject levels of poverty were actually in decline—within his own lifetime the average Englishman became three times richer.
Penury had always been the default state for the vast majority of humanity. Then, suddenly, average incomes not only began to rise, but rose exponentially. The famous hockey-stick chart, perhaps the most important graph in the world, illustrates the dramatic shift. Humanity has produced more economic output over the last two centuries than in all of the previous centuries combined. That explosion of wealth-creation soon led to a massive decrease in the rate of poverty and improvements in living standards. Not long after incomes took off, life expectancy followed. The economic historian Deirdre McCloskey calls the change the “Great Enrichment.”
Engels lived in Manchester on-and-off for three decades. In Manchester, he was visited multiple times by his friend and fellow German philosopher, Karl Marx. Moved by the state of the poor in Manchester and other factory cities, and failing to recognize the ongoing Great Enrichment, the two men developed a political philosophy that aimed to create a workers’ paradise.
Their proposed solutions tragically led to far worse suffering—including food shortages, gulags, 100 million deaths, and psychological scars that still echo to this day, with heightened dishonesty and lower trust persisting in formerly communist areas. Ironically, Marx and Engels’ goals of shorter work-days and higher incomes have been achieved within a market economy .
As the quintessential industrial city, there is no doubt that Manchester earned its nickname, “the workshop of the world.” As a key early center of industrialization, Manchester underwent an at-times difficult transition with profound effects. The unprecedented prosperity created by industrialization eventually allowed for the improvement of working conditions and the heightened living standards that characterize post-industrial affluence. For helping to weave the fabric of the modern world, Manchester is deservedly our twenty-second Center of Progress.
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.
