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In-Take: 1870 as the Inflection Point
:
2698
words
DRAFT
4.01 July 15, 2018
In-Take from
Slouching Towards
Utopia?
<>
3.
0
: 1870 as the Inflection Point
As of 1870 the smart money was still placed on the bet that the British Industrial
Revolution would not mark a permanent divergence of human destiny from its
agricultural-age pattern. All agreed that the Industrial Revolution had produced
marvels of science and technology. All agreed that it allowed the world to support a
much greater population than had previously been deemed possible. All agreed that
it gave the world’s rich capabilities that, along many dimensions, fell little short of
those previously attributed to gods. All agreed that it had greatly multiplied the
numbers of the comfortable
—
that there were now many more people felt the bite
of insuffi cient food, insuffi cient clothing, and insuffi cient shelter.
But had the Industrial Revolution lightened the toil of the overwhelming majority
of humanity
—
even in Britain, the country at the leading edge? No. Had it
materially raised the living standards of the overwhelming majority--even in
Britain? Doubtful. Would it do either of these in the future? You had to be
somewhat utopian to be confi dent that it would be so.
But that changed. Each year after 1870 John Stuart Mill’s belief that the progress
of science and technology, of industry and enterprise had not
lightened the day’s
toil of any human being
or effected great changes in human destiny
1
became less
and less credible and less and less true, and by the time World War I began in 1914
had become more-or-less completely false.
For, in comparative perspective with respect to all previous ages, 1870-1914 was
indeed, as John Maynard Keynes wrote looking back at it from his World War I-era
viewpoint: “economic Eldorado… economic Utopia… the earlier economist would
have deemed it… an unprecedented situation… an extraordinary episode in the
economic progress of [hu]man[ity]”. Human numbers increased, and increased
more rapidly than ever before, from about 1.3 billion in 1870 to 1.75 billion in
1914, and yet food became cheaper and easier and not harder and more expensive
1
1
John Stuart Mill
(1871):
Principles of Political Economy: with Some of Their Applications to Social Philosophy
(7th Ed.) (New York: Prometheus Books:
1591021510
) <
http://www.gutenberg.org/ebooks/30107
>, p. 516.
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to secure. In terms of the “bare-bones subsistence basket”
2
, real wages of unskilled
workers by the eve of World War I look like they stood more than 50
%
above their
levels of 1870 or so
3
—a world-wide reduction in potential Malthusian pressures
never before seen.
How did the world accomplish its further threefold leap, relative to what had taken
place in the British Industrial Revolution era of 1800-1870, in the underlying
fundamentals of economic growth? And how did what was originally a
geographically-concentrated surge become global, albeit unevenly global? Why,
instead of the British Industrial Revolution growth surge petering out and being
followed by a return to the Commercial Revolution era—itself a positive historical
anomaly—did the rate of human progress leap ahead at a tenfold pace? Why does
one year since 1870 see the relative technological and organizational progress of
three years over 1800-1870, of ten years over 1500-1800, and of a hundred years
over 1-1500? Just what happened around 1870 to make this shift? And what has
happened between then and today to sustain it?
1870, you see, marked an inflection point in
four
important aspects of material life:
transportation (with implications not just for goods traffi c but for human migration
as well; communication (with implications for fi nance and organization);
openness
(of societies and polities to fi nancial, trade, and migration flows); and
invention
(with its implications for innovation and productivity growth)
:
1.
Globalization in goods transport, in the form of the iron-hulled screw-
propellered ocean-going steamship linked to the railroad network, and
subsequent developments.
2.
Globalization in communication, in the form of the global submarine telegraph
network linked to landlines, and subsequent developments.
2
2
Each day: 1657 calories of grain, 187 calories of beans, 34 calories of meat, 60 calories of butter, for a total of
1938 calories and 89 grams of protein; plus per year: 1.3 kg of soap, 3 meters of linen or cotton, 1.3 kg of candles,
1.3 liters of lamp oil, and 2 million BTU of fuel. See Robert Allen: Global Economic History: A Very Short
Introduction (Oxford:)
3
These comparisons across countries are little more than guesses, but in terms of the ability of wages to purchase
the local bare-bones subsistence basket jump in London from 1.6 to 2.8, in Amsterdam from 1 to 2.5, in Leipzig
from 1 to 2.2, in Beijing from 0.4 to 0.6, and in Milan from 0.4 to 0.9. (The Chinese countryside, however, sees no
increase.) See
Robert C. Allen
,
Jean-Pascal Bassino
,
Debin M
,
a Christine Moll-Murata
, and
Jan Luiten van
Zanden
(2005):
Wages, Prices, and Living Standards in China, Japan, and Europe, 1738-192
5
<
https://
www.nuffi eld.ox.ac.uk/users/allen/unpublished/group-1.pdf
>.
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3.
The openness of the world—most important, perhaps, the open borders
4
in
migration, as one in fourteen humans changed their continent between
1870-1914. But also and closely linked to the other forms of openness that
allowed transport and communications to produce globalization; that allowed
research and development to diffuse throughout the world, albeit slowly; and
that made the Long 20th Century the American Century.
4.
The development of the industrial research laboratory of Thomas Edison and
Nikola Tesla, and its subsequent bureaucratization and generalization
These all four together were, I think, more likely than not enough to be a tipping
point. I wish that I could do more in this book to explain why they together were a
tipping point, but I do not know enough to do so. I can, however, trace their
consequences.
The fi rst two created the possibility of making the world economy, for the fi rst
time, a single system: the earnings of a rubber tapper in Brazil would be
powerfully influenced by things happening continents away—by the economic
growth and demand for rubber in North America and in western Europe and by the
success of the British imperial project in Malaya and the Belgian in the Congo, to
name four. The third realized the possibility of an integrated world economic
system. Moreover, it transformed the U.S. from likely fi fth fi ddle to lead violin
among the Long 20th Century’s global powers.
This chapter will focus on
this
“globalization”.
The fourth greatly increased the pace of technological growth as inventors and
innovators were no longer forced to be both lone wolves and to also be promoters,
projectors, fi nanciers, and managers.
We postpone Thomas and Nikola, their
industrial research labs, and their consequences to the next chapter.
What drove the world-wide surge in real wages over 1870-1914? That the surge
was world-wide rather than confi ned to where industrial civilization had already
taken root was due to the globalization of the economy of the railroad, the wharf
and crane, the iron-hulled screw-propellered, ocean-going steamship, and openness
to trade, fi nance, and migration—save that the pampas and the prairies and the
other temperate climates were largely reserved for those of recent European
3
4
Note that the temperate migration-receiving regions of Australasia, the southern cone of Latin America, and North
America were, by and large, open only to migrants originating in Europe. This played perhaps
the
major role in
making globalization over 1870-1914 a force making the world more unequal. See
W. Arthur Lewis
(1978):
The
Evolution of the International Economic Order
(Princeton: Princeton University Press) <
https://books.google.com/
books?id=FrNEAAAAIAAJ
>.
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descent.
5
The bringing new products—oil palms and nuts to west Africa, rubber to Malaysia,
coffee to Brazil and central America, wheat and sheep to Australia, and many many
more—and extracting resources from all around the globe was fueled by 100
million people leaving their continent of origin to live and work elsewhere:
50
million from China and India to places from South Asia and Africa to the
Caribbean and the highlands of Peru
; 50 million from Europe mainly to the
Americas and Australasia but also to South Africa, the highland of Kenya, the
black-earth western regions of the Pontic-Caspain steppe, and elsewhere.
These migrants and their descendants made a lot of our history:
•
One of these migrants—one whose move proceeded the great 1870-1914 wave as
migration became really cheap—was Andrew Carnegie (1835-1919), immigrated
to America from Scotland in 1848. He was perhaps the champion of upward
mobility: his father was a subsistence-level handloom weaver, and he become the
world’s premier steelmaster and perhaps the second richest person in the world.
We will see a lot of Andrew Carnegie later on in this book.
•
Another migrant was Mohandas Gandhi (1869-1948), who migrated from India
to Britain to study at the Inner Temple from 1888-1891 and then to South Africa
in 1893, where he stayed for 21 years. Only then did he return to lead the
movement to win independence from the British Empire for India. The claim is
that he sailed to South Africa thinking of himself as a British Empire citizen fi rst
and an Indian second, and returned convinced that the British Empire
must
end
and willing to do something about it.
6
We will see a lot of Mohandas Gandhi later
on in this book.
•
A third was
David Leontyevich Bronstein (1847–1922)
, who with his wife
Anna
Lvovna Zhivotovskaya
(1850-1910) crossed the the greatest river he had ever
seen and moved 200 miles out of the forest and into the grasslands—which had
been horse-nomad lands within historical memory—to pioneer one of the richest
agriculture soils in the world: it was fi fteen miles from his farm in Yanovka to the
nearest post offi ce. We will see a lot of David and Anna’s fi fth child,
Lev
Davidovich Bronstein
(1879-1940)
, later on in this book.
4
5
See
W. Arthur Lewis
(1978):
The Evolution of the International Economic Order
(Princeton: Princeton University
Press) <
https://books.google.com/books?id=FrNEAAAAIAAJ
>.
6
Arthur Herman
(2008):
Gandhi & Churchill: The Epic Rivalry that Destroyed an Empire and Forged Our Age
(New York:
Bantam Books
: 9780553804638) <
http://books.google.com/books?isbn=9780553804638
>
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•
A fourth was Jennie Jerome (1854-1921), who made a reverse migration: from
Brooklyn, New York, United States to Westminster, England to marry Lord
Randolph Spencer Churchill, becoming engaged in 1873 three days after their
fi rst meeting at a sailing regatta on the Isle of Wight. Their marriage was then
delayed for seven months while her father Leonard the fi nancier and speculator
and her father John Winston the seventh Duke of Marlborough argued over how
much money she would bring to the marriage, and how it would be safeguarded.
We will see a lot of her son, Winston Leonard Spencer Churchill (1874-1965),
born eight months after their marriage later on in this book.
•
A fi fth was Nikola Tesla (1856-1943), who left Croatia and his wished-for
parental destiny as a Serbian Orthodox priest to Graz, Austria, Budapest, Paris,
and then New York to become the most brilliant electrical engineer ever. We will
see a lot of him later on in this book.
The industrialization of western Europe and of the east and midwest of North
America provided enough workmen to make the industrial products to satisfy
global demands, and also to build the railways, ships, ports, cranes, telegraph lines,
and other pieces of transport and communications infrastructure to make the fi rst
global economy a reality. The 1870-1914 world economy was a high—in historical
5
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comparative perspective—investment economy.
7
Today there are 1 million miles of
railroad in the world. There were 20 thousand miles of railways in the world when
the U.S. Civil War ended in 1865. There were 300 thousand miles in 1914. (There
are a million miles today.) In 1850 about 4
%
of all goods and services produced
and marketed crossed national borders; in 1880 it was 11
%
; and by 1913 17
%
.
(Today it is 30
%
.)
8
The upshot was indeed that for the world’s middle and upper classes, by 1914 “
life
offered, at a low cost and with the least trouble, conveniences, comforts, and
amenities beyond the compass of the richest and most powerful monarchs of other
ages
…”
9
And for the working classes of the globe, an increasing margin between
living standards and bare subsistence emerged. All around the world over
1870-1914 there were fi ve people where there had been four a generation before—
half a century thus saw more population growth than had 400 years of the Han and
Roman empires of earlier millennia. Underpinning this growth in human numbers
6
7
John Maynard Keynes
(1919):
The Economic Consequences of the Peace
: “
Europe was so organized socially and
economically as to secure the maximum accumulation of capital
….
Society was so framed as to throw a great part of
the increased income into the control of the class least likely to consume it. The new rich of the nineteenth century
…
preferred the power which investment gave them to the pleasures of immediate consumption. In fact, it was
precisely the inequality of the distribution of wealth which made possible those vast accumulations of fi xed wealth
and of capital improvements which distinguished that age from all others. Herein lay, in fact, the main justifi cation
of the Capitalist System. If the rich had spent their new wealth on their own enjoyments, the world would long ago
have found such a régime intolerable. But like bees they saved and accumulated, not less to the advantage of the
whole community because they themselves held narrower ends in prospect
….
“T
his remarkable system depended for its growth on a double bluff or deception. On the one hand the laboring
classes accepted from ignorance or powerlessness, or were compelled, persuaded, or cajoled by custom, convention,
authority, and the well-established order of Society into accepting, a situation in which they could call their own
very little of the cake
…. T
he capitalist classes were allowed to call the best part of the cake theirs and were
theoretically free to consume it, on the tacit underlying condition that they consumed very little of it
.…
The duty of
"saving" became nine-tenths of virtue and the growth of the cake the object of true religion. There grew round the
non-consumption of the cake all those instincts of puritanism which in other ages has withdrawn itself from the
world and has neglected the arts of production as well as those of enjoyment. And so the cake increased
… [but]
the
cake was
…
never to be consumed, neither by you nor by your children after you
….
“
In writing thus I do not necessarily disparage the practices of that generation. In the unconscious recesses of its
being Society knew what it was about
….
Society was working not for the small pleasures of to-day but for the future
security and improvement of the race
…
If only the cake were not cut but was allowed to grow in the geometrical
proportion predicted by Malthus of population, but not less true of compound interest
…
a day might come when
there would at last be enough to go round
…
overwork, overcrowding, and underfeeding would have come to an end,
and men, secure of the comforts and necessities of the body, could proceed to the nobler exercises of their faculties.
One geometrical ratio might cancel another, and the nineteenth century was able to forget the fertility of the species
in a contemplation of the dizzy virtues of compound interest
…”
8
Esteban Ortiz-Ospina and Max Roser
(1017):
Our World in Data
<
https://ourworldindata.org/international-
trade
>. Quoted in
J. Bradford DeLong
(2017): When Globalization Is Public Enemy Number One”,
MIlken Review
<
http://www.milkenreview.org/articles/when-globalization-is-public-enemy-number-one
>
9
John Maynard Keynes
(1919):
The Economic Consequences of the Peace
(London: Macmillan) <
http://
oll.libertyfund.org/titles/keynes-the-economic-consequences-of-the-peace/simple
>
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were women who were better nourished and so could reliably ovulate, children
who were better nourished so that their immune systems were less compromised,
and the beginnings of effective public health.
7
