Introduction to “History of Economic Growth”

Let me talk for 15 minutes, and then let’s see if we can have a discussion here:

I take 1870 to be the hinge of history.

Starting in 1870 it became clear—with human technological competence deployed-and-diffused worldwide (not just in the southern part of one small island) doubling every generation—that humanity was on the way to solving the problem of baking, a sufficiently large economic pie for everyone to potentially have enough. Up until 1870 there had been no possibility of humanity baking such a sufficiently large economic pie. Technological progress was simply too slow. Human fecundity—and the desire to have surviving children, especially sons—was just too great.

The slowness pre-1870 of technological advance had two major consequences:

First, it meant that Malthusian pressures kept humanity desperately poor. Take slow technological progress. Add the necessity under patriarchy of having at least one surviving son in order to give one durable social power. Reflect that under conditions of slow technology and thus slow population growth, one-third of humans will wind up without surviving sons. to have more sons in the hope that at least one would survive, and natural resource scarcity—those put mankind under the Malthusian harrow, in dire poverty.
Second, it meant that politics and governance were a poisonous weed. In a world in which there cannot be enough, at the foundation politics and governance can be nothing else than an élite, elbowing competitors out of the way and running a force-and-fraud exploitation game on the rest of humanity. This élite of thugs-with-spears (and later thugs-with-gunpowder-weapons) and their tame accountants, bureaucrats, and propagandists could have enough. And with their enough they could build and enjoy their high culture. But that those who controlled and those who spoke were hard men, who reaped where they did not sow and gathered where they did not scatter, made human life fairly dystopian, even after taking account of the general poverty.

However, after 1870 it rapidly became clear that things could be very different: “Economic Eldorado”, as John Maynard Keynes put it, was on the way.

In 1870 the last pieces of the institutional complex that supported what Simon Kuznets labelled “Modern Economic Growth”—average real income and productivity levels doubling every generation, growing at an average rate of 2%/year or more—fell into place. The addition to the institutions that were there before pushed humanity across a watershed boundary with the coming of

the industrial research lab,
the modern corporation, and
the globalized market economy

These revolutionized the discovery, development, deployment, and diffusion of human technologies useful for manipulating nature and cooperatively organizing ourselves. There was as much global technological advance from 1870 to 2010 as there had been from -6000 to 1870. Humanity’s deployed-and-diffused technological prowess in 2023 stood at a level at least 25 times its level as of 1870. And although there was a population explosion—humanity’s numbers rose from about 1.3 billion in 1870 to 8 billion in 2022—that explosion soon ebbed with the coming of the demographic transition, the rise of feminism, and the shift from high to low fertility. While before 1870 humanity’s ingenuity in technological discovery had lost its race with human fecundity, afterwards it decisively won it.

And yet, while things were different after 1870, they were not different enough. Finding the solution to that problem of baking a sufficiently large economic pie did not get us very far, because the problems of slicing and tasting the pie—of equitably distributing it, and of utilizing our wealth so humans could live, lives in which they felt safe and secure, and were healthy and happy—continued to completely flummox us.

At this point the flow of my thoughts divides into at least five rivers:

I find myself looking backward from 1870 earlier in time to understand how the pre-1870 impoverished Malthusian human economy worked—as a-mode-of-production, -distribution, -domination, -communication, and -innovation.
I find myself looking backward from 1870 earlier in time to trace how there was no alternative hinge. How was it that the Devil of Malthus had so ensorcelled humanity before 1870? How was it that its spell had been so powerful from -6000 to 1870?
I find myself looking at 1870 to trace how the hinge that 1870 was was the hinge happened. Given the pre-1870 power of humanity’s ensorcellment by the Devil of Malthus, how could we then wreak the miracle of breaking it? Why did no one think to gather communities of engineering practice to supercharge economic growth before 1870? How exactly did the research lab and the corporation in the context of the global market economy empower us to accomplish these tremendous feats? Was the explosion of wealth and productivity of 1870 causally-thin, in the sense that institutions had to evolve then in a way that was unlikely to get the explosion? Or was the growth acceleration of the Second industrial Revolution, the one big wave of Robert Gordon, causally-thick—largely baked in the cake, while the causally-thin nexus or nexuses came earlier? These are very hard and deep questions indeed.
I find myself looking forward from 1870 later in time to trace how the research lab-, corporation-, and global market economy-enabled discovery, development, deployment, and diffusion of technologies at an unprecedented, revolutionary, Schumpeterian creative-destruction, pace worked itself out, leading sector by leading sector and trailing sector by trailing sector. The David Landes-Joseph Schumpeter-Vaclav Smil book
I find myself looking forward from 1870 later in time to trace the political-economy consequences for human society of this unprecedented advance toward technology revolution-driven material cornucopia. Why, given that the solution to the problem of baking came within our grasp, did the second-order problems of slicing and tasting continue to elude us?

Plus, we need to always remember that humans do not just do, they think about what they are doing. We must cover not only what the economy in the process of economic growth or non-growth was, but also what people thought they were doing—and what they thought their options and possibilities were.

Now it is no secret that I have already set out my take on (5). It is my book: Slouching Towards Utopia: The Economic History of the 20th Century<bit.ly/3pP3Krk>.

The other four, however—well, economic historian Eric Jónes has a line:

Oscar Wilde expected to be met at the Pearly Gates by St Peter bearing an armful of sumptuously bound volumes and declaring, “Mr Wilde, these are your unwritten works”… [The European Miracle: Environments, Economies and Geopolitics in the History of Europe and Asia]

I find myself almost unmanned at the thought of the task of trying to write them.

But we do what we can. I draw inspiration from Will MacAskill’s whose very nice book What We Owe the Future is really six 50-page book prospectuses stapled together. I think: I can do that—I can provide you with lecture notes at that length (plus my Slouching Towards Utopia book) to guide our explorations this semester of these topics (1) through (5).

And throughout, I will structure what we do around this table of my guesses as to the shape of the human economy—how many people P, roughly what their average real income in today’s dollars happens to be y, and then this measure of mine H, which is average real income times the square root of population which I will assert is a rough measure of human ideas about “technology”: our capability to manipulate nature and productively organize ourselves. And population, average real income, and human ideas P, y, and Hhave their proportional annual growth rates n, g, and h, respectively: