(Roughly) Daily

“If you would define the future, study the past”*…

The global economy and living standards have, Rafael Guthmann suggests, have had three “supercycles” of rise and fall over the past 4,000 years…

Economists often state that economic growth simply did not exist before recent times. The orthodox view that I was taught as an undergrad is that sustained economic growth began in the late 18th century. This view is articulated by economic historians like Clarke (2007). DeLong (2022) goes even further. He claims that modern economic growth only began in earnest in 1870, with the growth from 1770 to 1870 being very small in comparison, and that there was absolutely no growth in real incomes for ordinary people before 1770 (but he admits that living standards could have varied over pre-modern history for a tiny elite).

The data, however, shows that this model of economic history is plain wrong. Instead, over the last four thousand years, we can identify that there have been three major very-long-run economic cycles in the Western world that featured increasing incomes and then very long periods of decreasing incomes. These cycles of expansion and contraction lasted for several centuries.

As described by Bresson (2016), the first cycle corresponded to the rise and fall of Bronze Age civilizations, such as the Minoan and Mycenean cultures in Greece, the first literate civilization in Europe which developed writing around 2000 BC and collapsed towards the end of the 2nd millennium BC. The second cycle corresponded to the rise of Classical Greco-Roman civilization over the 1st millennium BC and its collapse during the 1st millennium AD. The third and present cycle began in the late 1st millennium AD and continues today. In this wider context, the industrial revolution beginning in the late 18th century was just an acceleration of the rate of economic development of the third cycle and did not really represent a discontinuity with past economic history…

He makes his case: “The Great Waves in Economic History,” @GuthmannR. (Note that, if one includes, for example, the long histories of the Chinese and African economies, the pattern of cycles of development and decline is further reinforced.)

Brad DeLong answers.

* Confucius

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As we contemplate cyclicality, we might recall that it was on this date in 12 CE– in the middle of the second wave identified above– that the Roman emperor Augustus (AKA, Caesar Augustus, Caesar, and Octavian) was named Pontifex Maximus (chief high priest of the College of Pontiffs (Collegium Pontificum) in ancient Rome, this was the most important position in the ancient Roman religion), incorporating the position into that of the emperor.

Written by (Roughly) Daily

March 6, 2023 at 1:00 am

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