The Romantic Idea of a Plentiful Past Is Pure Fantasy
The evidence does not support Hickel's assertion that people in the past "lived well" without much monetary income.
Marian L. Tupy —
On January 29, The Guardian ran a column that sparked an interesting debate on two continents. Jason Hickel from the University of London rejected the generally-accepted estimate of reduction in absolute poverty “from 94 percent in 1820 to only 10 percent today.” In “Bill Gates says poverty is decreasing. He couldn’t be more wrong,” Hickel critiqued academics, like Max Roser from Oxford University and Steven Pinker from Harvard University, journalists, like Nick Kristof from The New York Times and philanthropists, like Bill Gates, for suggesting that “global extension of free-market capitalism has been great for everyone.”
Hickel’s critique of the claim that absolute poverty in the world has drastically declined over the last 200 years rests on his belief that monetary income overestimates poverty in the past, when people enjoyed a lot of non-monetary benefits “from abundant commons” (more on that below) and underestimates poverty today. Incremental growth of income at the bottom of the global income ladder (the absolute poverty level is set at $1.90 per person per day), Hickel contends, falls far short of what’s needed for human flourishing. As such, he prefers poverty measure of at least $7.40 per person per day. As Hickel put it,
What Roser’s numbers actually reveal is that the world went from a situation where most of humanity had no need of money at all to one where today most of humanity struggles to survive on extremely small amounts of money… [Roser’s] graph casts this as a decline in poverty, but in reality what was going on was a process of dispossession that bulldozed people into the capitalist labor system, during the enclosure movements in Europe and the colonization of the global south.
Prior to colonization, most people lived in subsistence economies where they enjoyed access to abundant commons – land, water, forests, livestock and robust systems of sharing and reciprocity. They had little if any money, but then they didn’t need it in order to live well – so it makes little sense to claim that they were poor… In other words, Roser’s graph illustrates a story of coerced proletarianisation.
It is not at all clear that this represents an improvement in people’s lives, as in most cases we know that the new income people earned from wages didn’t come anywhere close to compensating for their loss of land and resources, which were of course gobbled up by colonisers. Gates’s favorite infographic takes the violence of colonization and repackages it as a happy story of progress.
I shall leave the mixed legacy of colonialism for another day. For now, let me suggest that many ex-colonies, including the United States, Canada, Australia, New Zealand, Hong Kong, Botswana and Singapore, and ex-poor countries, including China, Chile, Mexico, South Korea, Thailand and Taiwan, have done rather well – a point emphasized by a number of conservative critics of globalization, who believe that it is the Western worker who is being shafted by international capitalism.
Instead, I wish to focus on Hickel’s assertion that people in the past didn’t need money “in order to live well.” In fact, lives of ordinary Western Europeans prior to the Industrial Revolution were dismal and fully in accord with Roser’s definition of “absolute poverty.” Put differently, poverty was widespread and it was precisely the onset of industrialization and global trade that Hickel bemoans, which led to poverty alleviation first in the West and then in the Rest.
There is, perhaps, no greater symbol of early industrialization and break with Western Europe’s not-so-bucolic agricultural past than the “satanic mills” that in the view of the English poet William Blake, pockmarked the face of the English countryside. As he wrote in his 1808 poem Jerusalem,
And did the Countenance Divine,
Shine forth upon our clouded hills?
And was Jerusalem builded here,
Among these dark Satanic Mills?
The main products of these mills (i.e., buildings that housed spinning or weaving machinery producing yarn or cloth from cotton) were easily washable cotton clothes and underclothes. That was revolutionary. In his Before the Industrial Revolution: European Society and Economy 1000-1700, Carlo Cipolla noted,
In preindustrial Europe, the purchase of a garment or the cloth for a garment remained a luxury the common people could only afford a few times in their lives. One of the main preoccupations of hospital administration was to ensure that the clothes of the deceased should not be usurped but should be given to lawful inheritors. During epidemics of plague, the town authorities had to struggle to confiscate the clothes of the dead and to burn them: people waited for others to die so as to take over their clothes – which generally had the effect of spreading the epidemic.
Up to the 19th century, poor people wore woolen clothes and underclothes that itched and did not wash easily. That practice or, to be more precise, necessity, exacerbated the across-the-board problem of poor hygiene. Lest we forget, most people lived, and slept with, their domestic animals, including chickens, cows and pigs (to guard the livestock from thieves and predators). Eggs, milk and occasional meat enriched the usually bland diet of bread, and animal waste was needed to fertilize crops. The dangers inherent in using waste as fertilizer were compounded by the fact that people seldom washed their hands and clothes. That led to epidemics, and contributed to sky-high mortality rates among our ancestors.
As late as the Battle of Waterloo in 1815, during which 55,000 men were either killed or wounded, the dead soldiers were stripped before burial. Why would anyone bother stripping the dead, when every hour increased the danger of putrefaction and spread of disease? The most likely reason for the practice was that clothing was still very expensive and the uniforms were washed, patched up and reused.
Jules Michelet, a 19th century French historian, who was a ferocious critic of capitalism, was honest enough to recognize the material benefits of the Industrial Revolution. In his 1846 book Le Peuple, he noted,
This [i.e., industrialization] was a revolution in France, little noted, but a great revolution nonetheless. It was a revolution in cleanliness and embellishment of the homes of the poor; underwear, bedding, table linen, and window curtains were now used by whole classes who had not used them since the beginning of the world. … Machine production … brings within the reach of the poor a world of useful objects, even luxurious and artistic objects, which they could never reach before. … Every [non-rich] woman used to wear a blue or black dress that she kept for ten years without washing, for fear it might tear to pieces. But now her husband, a poor worker, covers her in a robe of flowers [i.e., flowery designs] for the price of a day’s labor.
Karl Marx and Friedrich Engels were no less fawning with regard to the material improvements taking place all around them. In the Communist Manifesto, which the two writers penned in 1848, they noted,
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?
In The Housing Question, which Engels wrote in 1872, the German businessman observed,
[The] industrial revolution…has raised the productive power of human labor to such a high level that–for the first time in the history of humanity–the possibility exists, given a rational division of labor among all, to produce not only enough for the plentiful consumption of all members of society and for an abundant reserve fund, but also to leave each individual sufficient leisure so that what is really worth preserving in historically inherited culture–science, art, human relations is not only preserved, but converted from a monopoly of the ruling class into the common property of the whole of society, and further developed.
The evidence from contemporary accounts and academic research does not support Hickel’s assertion that people in the past “lived well” without much monetary income. Compared to today, Western European living standards prior to industrialization were miserably low.
“Household incomes rose last year for the first time since the Covid-19 pandemic began, reflecting the effects of easing inflation and a strong job market.
The new data from the U.S. Census Bureau on Tuesday signaled an improvement in 2023 after inflation that spiked to a 40-year-high the prior year swallowed up household income gains.
Inflation-adjusted median household income was $80,610 in 2023, up 4% from the 2022 estimate of $77,540, the bureau said in its annual report card on households’ financial well-being. This move returned incomes to about where they were in 2019, the peak that was hit just before the pandemic.”
“The median household net worth of older millennials, born in the 1980s, rose to $130,000 in 2022 from $60,000 in 2019, according to inflation-adjusted data from the Federal Reserve Bank of St. Louis. Median wealth more than quadrupled to $41,000 for Americans born in the 1990s, which includes the generation’s youngest members, born in 1996.
The turnaround has been so dramatic that millennials—mocked at times for being perpetually behind in building wealth, buying homes, getting married and having children—now find themselves ahead.
In early 2024, millennials and older members of Gen Z had, on average and adjusting for inflation, about 25% more wealth than Gen Xers and baby boomers did at a similar age, according to a St. Louis Fed analysis.”
The Earth was 509.4 percent more abundant in 2023 than it was in 1980.
Marian L. Tupy, Gale L. Pooley —
The Simon Abundance Index (SAI) quantifies and measures the relationship between resources and population. The SAI converts the relative abundance of 50 basic commodities and the global population into a single value. The index started in 1980 with a base value of 100. In 2023, the SAI stood at 609.4, indicating that resources have become 509.4 percent more abundant over the past 43 years. All 50 commodities were more abundant in 2023 than in 1980.
Figure 1: The Simon Abundance Index: 1980–2023 (1980 = 100)
The SAI is based on the ideas of University of Maryland economist and Cato Institute senior fellow Julian Simon, who pioneered research on and analysis of the relationship between population growth and resource abundance. If resources are finite, Simon’s opponents argued, then an increase in population should lead to higher prices and scarcity. Yet Simon discovered through exhaustive research over many years that the opposite was true. As the global population increased, virtually all resources became more abundant. How is that possible?
Simon recognized that raw materials without the knowledge of how to use them have no economic value. It is knowledge that transforms raw materials into resources, and new knowledge is potentially limitless. Simon also understood that it is only human beings who discover and create knowledge. Therefore, resources can grow infinitely and indefinitely. In fact, human beings are the ultimate resource.
Visualizing the Change
Resource abundance can be measured at both the personal level and the population level. We can use a pizza analogy to understand how that works. Personal-level abundance measures the size of an individual pizza slice. Population-level abundance measures the size of the entire pizza pie. The pizza pie can get larger in two ways: the slices can get larger, or the number of slices can increase. Both can happen at the same time.
Growth in resource abundance can be illustrated by comparing two box charts. Create the first chart, representing the population on the horizontal axis and personal resource abundance on the vertical axis. Draw a yellow square to represent the start year of 1980. Index both population and personal resource abundance to a value of one. Then draw a second chart for the end year of 2023. Use blue to distinguish this second chart. Scale it horizontally for the growth in population and vertically for the growth in personal resource abundance from 1980. Finally, overlay the yellow start-year chart on the blue end-year chart to see the difference in resource abundance between 1980 and 2023.
Figure 2: Visualization of the Relationship between Global Population Growth and Personal Resource Abundance of the 50 Basic Commodities (1980–2023)
Between 1980 and 2023, the average time price of the 50 basic commodities fell by 70.4 percent. For the time required to earn the money to buy one unit of this commodity basket in 1980, you would get 3.38 units in 2023. Consequently, the height of the vertical personal resource abundance axis in the blue box has risen to 3.38. Moreover, during this 43-year period, the world’s population grew by 3.6 billion, from 4.4 billion to over 8 billion, indicating an 80.2 percent increase. As such, the width of the blue box on the horizontal axis has expanded to 1.802. The size of the blue box, therefore, has grown to 3.38 by 1.802, or 6.094 (see the middle box in Figure 2).
As the box on the right shows, personal resource abundance grew by 238 percent; the population grew by 80.2 percent. The yellow start box has a size of 1.0, while the blue end box has a size of 6.094. That represents a 509.4 percent increase in population-level resource abundance. Population-level resource abundance grew at a compound annual rate of 4.3 percent over this 43-year period. Also note that every 1-percentage-point increase in population corresponded to a 6.35-percentage-point increase in population-level resource abundance (509.4 ÷ 80.2 = 6.35).
Individual Commodity Changes: 1980–2023
As noted, the average time price of the 50 basic commodities fell by 70.4 percent between 1980 and 2023. As such, the 50 commodities became 238.1 percent more abundant (on average). Lamb grew most abundant (675.1 percent), while the abundance of coal grew the least (30.7 percent).
Figure 3: Individual Commodities, Percentage Change in Time Price and Percentage Change in Abundance: 1980–2023
Individual Commodity Changes: 2022–2023
The SAI increased from a value of 520.1 in 2022 to 609.4 in 2023, indicating a 17.1 percent increase. Over those 12 months, 37 of the 50 commodities in the data set increased in abundance, while 13 decreased in abundance. Abundance ranged from a 220.8 percent increase for natural gas in Europe to a 38.9 percent decrease for oranges.
Figure 4: Individual Commodities, Percentage Change in Abundance: 2022–2023
Conclusion
After a sharp downturn between 2021 and 2022, which was caused by the COVID-19 pandemic, government lockdowns and accompanying monetary expansion, and the Russian invasion of Ukraine, the SAI is making a strong recovery. As noted, since 1980 resource abundance has been increasing at a much faster rate than population. We call that relationship superabundance. We explore this topic in our bookSuperabundance: The Story of Population Growth, Innovation, and Human Flourishing on an Infinitely Bountiful Planet.
Appendix A: Alternative Figure 1 with a Regression Line, Equation, R-Square, and Population
Appendix B: The Basic 50 Commodities Analysis: 1980–2023
Appendix C: Why Time Is Better Than Money for Measuring Resource Abundance
To better understand changes in our standard of living, we must move from thinking in quantities to thinking in prices. While the quantities of a resource are important, economists think in prices. This is because prices contain more information than quantities. Prices indicate if a product is becoming more or less abundant.
But prices can be distorted by inflation. Economists attempt to adjust for inflation by converting a current or nominal price into a real or constant price. This process can be subjective and contentious, however. To overcome such problems, we use time prices. What is most important to consider is how much time it takes to earn the money to buy a product. A time price is simply the nominal money price divided by the nominal hourly income. Money prices are expressed in dollars and cents, while time prices are expressed in hours and minutes. There are six reasons time is a better way than money to measure prices.
First, time prices contain more information than money prices do. Since innovation lowers prices and increases wages, time prices more fully capture the benefits of valuable new knowledge and the growth in human capital. To just look at prices without also looking at wages tells only half the story. Time prices make it easier to see the whole picture.
Second, time prices transcend the complications associated with converting nominal prices to real prices. Time prices avoid subjective and disputed adjustments such as the Consumer Price Index (CPI), the GDP Deflator or Implicit Price Deflator (IPD), the Personal Consumption Expenditures price index (PCE), and the Purchasing Power Parity (PPP). Time prices use the nominal price and the nominal hourly income at each point in time, so inflation adjustments are not necessary.
Third, time prices can be calculated on any product with any currency at any time and in any place. This means you can compare the time price of bread in France in 1850 to the time price of bread in New York in 2023. Analysts are also free to select from a variety of hourly income rates to use as the denominator when calculating time prices.
Fourth, time is an objective and universal constant. As the American economist George Gilder has noted, the International System of Units (SI) has established seven key metrics, of which six are bounded in one way or another by the passage of time. As the only irreversible element in the universe, with directionality imparted by thermodynamic entropy, time is the ultimate frame of reference for almost all measured values.
Fifth, time cannot be inflated or counterfeited. It is both fixed and continuous.
Sixth, we have perfect equality of time with exactly 24 hours in a day. As such, we should be comparing time inequality, not income inequality. When we measure differences in time inequality instead of income inequality, we get an even more positive view of the global standards of living.
These six reasons make using time prices superior to using money prices for measuring resource abundance. Time prices are elegant, intuitive, and simple. They are the true prices we pay for the things we buy.
The World Bank and the International Monetary Fund (IMF) track and report nominal prices on a wide variety of basic commodities. Analysts can use any hourly wage rate series as the denominator to calculate the time price. For the SAI, we created a proxy for global hourly income by using data from the World Bank and the Conference Board to calculate nominal GDP per hour worked.
With this data, we calculated the time prices for all 50 of the basic commodities for each year and then compared the change in time prices over time. If time prices are decreasing, personal resource abundance is increasing. For example, if a resource’s time price decreases by 50 percent, then for the same amount of time you get twice as much, or 100 percent more. The abundance of that resource has doubled. Or, to use the pizza analogy, an individual slice is twice as large. If the population increases by 25 percent over the same period, there will be 25 percent more slices. The pizza pie will thus be 150 percent larger [(2.0 x 1.25) – 1].
“We find that each of the past four generations of Americans was better off than the previous one, using a post-tax, post-transfer income measure constructed annually from 1963-2022 based on the Current Population Survey Annual Social and Economic Supplement.”
