The Economic History of the Last 2,000 Years in 1 Little Graph | The Atlantic - http://www.theatlantic.com/busines...
Jun 19, 2012
from
Stephen Mack,
Mahdi,
Ken Morley,
Aryo,
Kevin Johnson,
Sir Vali,
Medad Rangi,
etesien,
WoH: Professor MOTHRA,
Ale Roots,
Dario Gomez,
؛ patrick,
murat.kgirgin,
الک دخت,
Victor Ganata,
Gökhan Birlik,
Sepi ⌘ سپی,
Goran Zec,
Maхx Tee,
Adriano,
Big Joe Silenced,
and
Todd Hoff
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"In Year 1, India and China were home to one-third and one-quarter of the world's population, respectively. It's hardly surprising, then, that they also commanded one-third and one-quarter of the world's economy, respectively.
Before the Industrial Revolution, there wasn't really any such thing as lasting income growth from productivity. In the thousands of years before the Industrial Revolution, civilization was stuck in the Malthusian Trap. If lots of people died, incomes tended to go up, as fewer workers benefited from a stable supply of crops. If lots of people were born, however, incomes would fall, which often led to more deaths. That explains the "trap," and it also explains why populations so closely approximated GDP around the world.
The industrial revolution(s) changed all that. Today, the U.S. accounts for 5% of the world population and 21% of its GDP. Asia (minus Japan) accounts for 60% of the world's population and 30% of its GDP.
So, one way to read the graph, very broadly speaking, is that everything to the left of 1800 is an approximation of population distribution around the world and everything to the right of 1800 is a demonstration of productivity divergences around the world -- the mastering of means of manufacturing, production and supply chains by steam, electricity, and ultimately software that concentrated, first in the West, and then spread to Japan, Russia, China, India, Brazil, and beyond."
- Amira
The turning point was when agricultural man progressed from taming animals (qua biological batteries) to domesticating other humans into specializations -- sociologically evolving from slavery to efficient top-down economic hierarchies.
- Adriano
This is described by the Unified growth theory http://en.wikipedia.org/wiki... which states that the transition from a “Malthusian Trap” in the pre-industrial economy, to a modern growth path has been an inevitable outcome of the process of development. But there are still many places on Earth today (e.g. much of Africa) which are trapped in its Malthusian world. Check out also http://www.econ.brown.edu/fac... (pdf)
- Amira
this ∑ kind of recursively rings true: "technological progress does not encourage population growth but human capital accumulation instead which then further spurs technological progress."
- Adriano
I've always found Malthus's conclusions suspect in the first place.
- Victor Ganata
Oded Galor described it better than Wikipedia editor :-) --
"The inherent Malthusian interaction between the level of technology and the size and the composition of the population accelerated the pace of technological progress, and ultimately raised the importance of human capital in the production process. The rise in the demand for human capital in the second phase of industrialization, and its impact on the formation of human capital as well as on the onset of the demographic transition, brought about significant technological advancements along with a reduction in fertility rates and population growth, enabling economies to convert a larger share of the fruits of factor accumulation and technological progress into growth of income per capita, and paving the way for the emergence of sustained economic growth."
- Amira
2000 years? really? where are Mongolians, Ottomans, etc. in the graph?
- ؛ patrick
Malthusian economics is basically proven. Malthus himself was incorrect, but the area of economics named after him is about as proven as evolution is.
- Dario Gomez
Sure, Malthusian economics can model the known data points decently, but I'll give it more credence once it actually starts making accurate predictions.
- Victor Ganata
Ok, I don't want it to. Theoretically, it only works well once the populace density of a civilization reaches the maximum of it technical know how. Which would mean terrible conditions for all those involved. o.0 So let's not test the theory ok?
- Dario Gomez
So, essentially, it's never been tested. So I'm not sure what you mean by "proven"
- Victor Ganata
It works for all data prior to the industrial revolution. In economic circles it's as good as proven. If you have an issue with that I can refer you to economic history professor at UC Davis. But that field, as the best to my knowledge as a person who actually has an econ degree, is as good as it gets.
- Dario Gomez
Granted, economics is not typically regarded as a science, but for me, it's not enough to explain existing data, it also has to make testable predictions. I realize it does seem to undergird a lot of discussions of economic models, but more as an ideal baseline which one can compare the predictions of other more realistic theories, rather than as an actual model of reality. What would you consider to be a good primer in current Malthusian economic theory? (Since, to me, it doesn't seem like anyone really takes Malthus himself all that seriously anymore.)
- Victor Ganata
Econometric "predictions" are usually conditional in the sense that tests do well if limited to economic regimes within the in-sample data. As a general rule, performance becomes dismal as more out-of-sample data enters a model -- which is a fail in explanatory science.
- Adriano
Ignore Malthus himself, he was clearly wrong, but many good researchers (if you don't want use scientists) were wrong and still made contributions to their fields. Economics is tough, because people are not 100% rational, and you cannot predict changes to taste and preference. But the reason mathusian economics works so well is because it is so simple. Taste and preference does not matter. It simply states populations will grow until a steady state of population will be reached. Just like the natural sciences, there is a carrying compacity for any given species. Malthusian economics incorporates the fact that an economy will grow until it can only support on average two births per woman. When the economy hits that level it at a steady state until something dirupts, like the black plague. Now the issue today even if an economy is labeled Malthusian, it is not as no country is a closed system today. The US has a tendency to help out in other countries, exporting food, money and technologies so the steady state is never maintained. Even North Korea takes in food help on occasion.
- Dario Gomez