Posts Tagged ‘economic history’
“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.)
* 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.
“Almost everybody today believes that nothing in economic history has ever moved as fast as, or had a greater impact than, the Information Revolution. But the Industrial Revolution moved at least as fast in the same time span, and had probably an equal impact if not a greater one.”*…
Dylan Matthews talks with Jared Rubin and Mark Koyama, the authors of an ambitious new economic history…
You can crudely tell the story of our species in three stages. In the first, which lasted for the vast majority of our time on Earth, from the emergence of Homo sapiens over 300,000 years ago to about 12,000 years ago, humans lived largely nomadic lifestyles, subsisting through hunting and foraging for food. In the second, lasting from about 10,000 BC to around 1750 AD, humans adopted agriculture, allowing for a more secure supply of food and leading to the establishment of towns, cities, even empires.
The third period, in which we all live, is characterized by an unprecedented phenomenon: sustained economic growth. Quality of life went from improving very gradually if at all for the vast majority of human history to improving very, very quickly. In the United Kingdom, whose Industrial Revolution kicked off this transformation, GDP per capita grew about 40 percent between 1700 and 1800. It more than doubled between 1800 and 1900. And between 1900 and 2000, it grew more than fourfold.
What today we’d characterize as extreme poverty was until a few centuries ago the condition of almost every human on Earth. In 1820, some 94 percent of humans lived on less than $2 a day. Over the next two centuries, extreme poverty fell dramatically; in 2018, the World Bank estimated that 8.6 percent of people lived on less than $1.90 a day. And the gains were not solely economic. Before 1800, average lifespans didn’t exceed 40 years anywhere in the world. Today, the average human life expectancy is more like 73. Deaths in childhood have plunged, and adult heights have surged as malnutrition decreased.
The big question is what drove this transformation. Historians, economists, and anthropologists have proposed a long list of explanations for why human life suddenly changed starting in 18th-century England, from geographic effects to forms of government to intellectual property rules to fluctuations in average wages.
For a long time, there was no one book that could explain, compare, and evaluate these theories for non-experts. That’s changed: How the World Became Rich, by Chapman University’s Jared Rubin and George Mason University’s Mark Koyama, provides a comprehensive look at what, exactly, changed when sustained economic growth began, what factors help explain its beginning, and which theories do the best job of making sense of the new stage of life that humans have been experiencing for a couple brief centuries…
Two economic historians explain what made the Industrial Revolution, and modern life, possible: “About 200 years ago, the world started getting rich. Why?,” from @dylanmatt @jaredcrubin @MarkKoyama in @voxdotcom.
* Peter Drucker
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As we contemplate change and its causes, we might spare a thought for Charles Francis Jenkins; he died on this date in 1934. An engineer and inventor, he is rightly remembered for his contributions to film and television: he invented a film projector and sold the rights to Thomas Edison, who marketed it as the Vitascope, the projector that Edison used in paid, public screenings in vaudeville theaters; and he opened the first television broadcasting station in the U.S. (W3XK in Washington, D.C.).
But Jenkins also pioneered in other areas. He was the first to move an automobile engine from under the seat to the front of the car; he invented the automotive self starter (replacing the crank) and an improved altimeter for aviation; and he created the cone-shaped drinking cup.
“Anyone who lives within their means suffers from a lack of imagination”*…
A remarkable true tale from the always-illuminating folks at Planet Money…
This is a story about how an economist and his buddies tricked the people of Brazil into saving the country from rampant inflation. They had a crazy, unlikely plan, and it worked.
Twenty years ago, Brazil’s inflation rate hit 80 percent per month. At that rate, if eggs cost $1 one day, they’ll cost $2 a month later. If it keeps up for a year, they’ll cost $1,000…
“How Fake Money Saved Brazil,” from @planetmoney and @NPR.
For an even more complete telling, listen to the podcast: “How Four Drinking Buddies Saved Brazil.”
* Oscar Wilde
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As we follow the money, we might recall that it was on this date in 1941, in his State of the Union Address, the president Franklin D. Roosevelt outlined the Four Freedoms— the fundamental values of democracy: freedom of speech, freedom of worship, freedom from want, freedom from fear. These precepts were furthered by Eleanor Roosevelt, who incorporated them into the Preamble to the United Nations Universal Declaration of Human Rights.
“The darkest thing about Africa has always been our ignorance of it”*…
Aristotle held that philosophising begins with wonder. The African philosopher Jonathan Chimakonam suggested that, while wonder might have instigated Western philosophy, it was frustration that spurred African philosophy, with the emergence of radically Afrocentric nationalist philosophers such as Léopold Sédar Senghor, Aimé Césaire and Kwame Nkrumah who saw in philosophy an ideological weapon for attacking those who sought to denigrate and subjugate Africans culturally and politically. What is needed now is a 21st-century African synthesis that can help to resolve this struggle. ‘Consolation philosophy’ – spurred by both wonder and frustration – attempts to do just that.
The idea of ‘consolation’ philosophy does not imply an attempt to comfort philosophers. Rather, it suggests a philosophy of life, a project similar to the human-centred philosophical projects of Western existentialists such as Martin Heidegger, Jean-Paul Sartre, Friedrich Nietzsche, Gabriel Marcel, Søren Kierkegaard, Miguel de Unamuno, Emmanuel Levinas and German idealists such as Arthur Schopenhauer. Here I offer a brief presentation of this African philosophical synthesis, which I hope will help to resolve the dilemma eloquently put forward in 1997 by professor of philosophy at Penn State University Robert Bernasconi: ‘Either African philosophy is so similar to Western philosophy that it makes no distinctive contribution and effectively disappears; or it is so different that its credentials to be genuine philosophy will always be in doubt.’…
“Consolation philosophy” understands the human being as a unity of feeling and reason, in a cosmos rich with primal emotion. The provocative– and timely– essay in full at “A truly African philosophy.”
See also “Philosophy is the new battleground in South Africa’s fight against colonialism.”
[Image above: source]
* Geographer George Kimble
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As we take our wisdom where we find it, we might recall that it was on this date in 1899 that the Boer regime in (what we now call) South Africa issued an ultimatum to the British government, declaring that a state of war would exist between Britain and the two Boer republics if the British did not remove their troops from along the border.
The British had challenged the Dutch settlers for a variety of reasons, probably main among them for control of the gold deposits in the region. It was the largest gold-mining complex in the world at a time when the world’s monetary systems, preeminently the British, were increasingly dependent upon gold.
The British ignored the ultimatum, and what we now call the Boer War (actually the second Boer War, as there has been an earlier skirmish) broke out. The two colonialists slugged it out until 1902, when the British took control.
Boer and British troops at the battle of Belmont, Nov. 23, 1899
“The prevailing ideology of the modern west – which is political economy – is in the doghouse”*…
This weekend marks the 10th anniversary of the collapse of Lehman Brothers (the largest bankruptcy in U.S.history) and the start of the Great Recession. We took a look at the crisis, it’s dimensions, and its aftermath last month (“Not every business cycle has a financial crisis. Frequently they do“); but there’s so much to remember– and so many may smart folks from whom to learn…
In “From Trump to Trade, the Financial Crisis Still Resonates 10 Years Later,” Andrew Ross Sorkin thinks about the consequences of the crash still unfolding. In “Can We Survive the Next Financial Crisis?,” Bloomberg’s Yalman Onaran, considers both the ways in which the system that led to the last crisis has become safer and also the pockets of risk that have grown since 2008. (Keep your eyes on CLOs– collateralized loan obligations– this decade’s version of the CDOs that tanked the economy in 2008…)
The always-illuminating Matt Levine, considering John Cassidy’s review of Adam Tooze’s new history of the financial crisis/crises, Crashed, highlights Tooze’s central argument: that much of our current geopolitical situation — the nativism and fragmentation and general rejection of decades of stability and elite consensus — is a consequence of the 2008 financial crisis and the flawed response to it. Levine concludes with a striking observation…
Finally here is a passage I found interesting from Tooze’s “Crashed,” on quantitative easing, political volatility, and the U.S.’s flirtation with defaulting on its debt in 2013:
That the astonishing events in Congress in 2013 did not lead to an immediate crisis in the bond market pointed to the resilience of the US Treasurys as the global safe asset of choice. Though the Chinese and Germans might complain and the market blipped, demand for US Treasurys quickly recovered. Ultimately, the market for IOUs drawn on the American taxpayer was underwritten by the Fed. Unlike the ECB, America’s central bank left no doubt that it backed its governments’s debt. QE3 bond purchases provided immediate support, keeping prices up and rates down. This provided at least one point of stability for global investors. But after the events of 2013 questions could no longer be avoided. Was one of the unintended side effects of the stability generated by the Fed to free politics from market constraints and thus enable Republican extremism? Did America’s ability to ride out short-term budget crises like those of 2011 and 2013 lead contemporaries to underestimate the future dangers that the degeneration of American democracy might bring with it? And how long would the Fed’s technocratic interventions compensate for America’s lackluster economic recovery and the shambles in the legislative branch?
Obviously one can disagree with some of the characterizations there. But one thing that we used to talk about a lot around here was that people were worried that people weren’t worried enough: Financial-market volatility seemed eerily low given the apparent instability of, you know, the world. That worry turned out to be overstated — volatility picked back up without causing any particular crisis — but it really was a bit eerie: Apparent actual volatility in the world kept not causing volatility in asset prices. But an implication of Tooze’s argument is that some of the causality went the other way: Because financial markets were calm in the face of geopolitical instability, they enabled more geopolitical instability. If you don’t have bond vigilantes checking up on you, then you can get up to a lot of weird stuff.
[image above: source]
* James Buchan
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As we try to keep cause and effect straight, we might recall that it was on this date in 1920 that the biggest incidence of domestic terrorism in U.S. history to that date occurred: the Wall Street bombing. At noon, a horse-drawn wagon passed by lunchtime crowds on Wall Street and stopped across the street from the headquarters of the J.P. Morgan bank at 23 Wall Street, on the Financial District’s busiest corner. Inside the wagon, 100 pounds of dynamite with 500 pounds of heavy, cast-iron sash weights exploded in a timer-set detonation, sending the weights tearing through the air. 30 people were killed immediately, and another eight died later of wounds sustained in the blast. There were 143 seriously injured; the total number of injured was in the hundreds.
Though investigators and historians believe the bombing was carried out by Galleanists (an anarchist group responsible for a series of bombings the previous year), the attack– which was a part of postwar social unrest, labor struggles and anti-capitalist agitation in the U. S.– was never officially solved.
The aftermath of the explosion
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