ISBN-10:
0472085530
ISBN-13:
9780472085538
Pub. Date:
12/01/1998
Publisher:
University of Michigan Press
Growth Triumphant: The Twenty-first Century in Historical Perspective / Edition 1

Growth Triumphant: The Twenty-first Century in Historical Perspective / Edition 1

by Richard A. Easterlin

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Product Details

ISBN-13: 9780472085538
Publisher: University of Michigan Press
Publication date: 12/01/1998
Series: Economics, Cognition, and Society
Edition description: New Edition
Pages: 216
Product dimensions: 6.00(w) x 9.00(h) x 0.70(d)

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Growth Triumphant

The Twenty-first Century in Historical Perspective


By Richard A. Easterlin

The University of Michigan Press

Copyright © 1996 University of Michigan
All rights reserved.
ISBN: 978-0-472-10694-3



CHAPTER 1

Historical Overview


Since the mid-eighteenth century the defining feature of human history has been the phenomenon of modern economic growth. In the areas where it started, such growth has raised the material living standard of the average person more than tenfold and has totally transformed everyday life. At the same time, however, the spread of modern economic growth has upset the balance of political power within and among nations and has spawned major world conflicts. The spread of growth is transforming so-called primitive and traditional societies and is establishing a homogeneous world culture.

In this same period, and especially since the mid-nineteenth century, world population has grown at an unprecedented rate. The moving force has been a remarkable reduction in human mortality, which has resulted in a doubling or more of average life expectancy at birth, from around thirty-five to seventy years. This "Mortality Revolution" is not simply another manifestation of modern economic growth. Rather, modern economic growth and the rapid decline of mortality stem from the same root causes — the explosion of science and technology in the last three centuries.

This book is about these two phenomena — modern economic growth and population growth. It analyzes their nature, causes, and effects; their interrelations; and the outlook for the future implied by past experience.

This introductory chapter brings together some of the main ideas that follow. The perspective is long term, that is to say, generalizations typically relate to periods of a half century or more. In the everyday state of social crisis in which we live, there is a need for a longer-term sense of where we have come from and where we may be headed. The disciplines I draw upon are primarily economic history, demography, and economics, with economics providing many of the basic concepts as well as the theoretical framework for cause/effect analysis. Economic theory has its limitations, and my analysis draws at various points from other disciplines, including sociology, political science, psychology, and the history of science. Of all the social sciences, however, economics represents the best starting point for analyzing modern historical experience because so much of this history has been dominated by economic change.

More than is usually the case, I attempt here to use quantitative data. In the absence of such data, the historical record is prone to loose interpretation. Although quantitative data are far from perfect and often only fragmentary, they provide an essential check on interpretation. For example, even an elementary knowledge of the quantitative facts of nineteenth-century trade and capital movements must raise doubts about the popular version of the theory of economic imperialism found in many history texts. As will be seen in chapter 3, colonies accounted for only a minor share of the trade and investment of developed countries in the nineteenth century, and most of the greatly expanded world trade and investment was carried on within the developed bloc itself.

The first section of this chapter presents an overview of modern economic growth. The second traces the spread of modern economic growth and notes its international ramifications. The third turns to the revolution in life expectancy. The fourth takes up the rapid growth in population induced by mortality decline, dealing first with implications for fertility and then with cause/effect relations between population growth and economic growth. The final section outlines the remainder of the study.


The Nature of Modern Economic Growth

By almost any measure the economic transformation that started in Great Britain around 1750 marks a new economic epoch. This transformation, which by 1950 embraced a third of the world's population and is today engulfing the rest, encompasses the entire economic system — production and consumption, the allocation of resources, and the distribution of income. Never before in human history has economic life been so rapidly and totally changed. Among the leading nations in modern economic growth, real output per capita has grown at an unprecedented rate — averaging about 20 percent per decade since 1820. That such a long-term rate could not have prevailed earlier is easily demonstrated. Projecting real per capita output backward from 1820 at this rate would in a matter of a few centuries yield income levels well below the margin for physical survival.

Before modern economic growth most societies throughout the world were agrarian, although hunter-gatherer activity still prevailed in some places. Today, in societies where modern economic growth has gone furthest, only a small fraction (less than 5 percent) of the economy's resources are engaged in agriculture. The rest are deployed across a wide spectrum of specialized industries. Manufacturing accounts for something like a fourth of a society's labor force; trade and transportation, for another fourth; and service industries — ranging from finance to health and education to urban services and government — for most of the remainder. The primary location of economic activity has shifted from rural villages and scattered farmsteads to large urban centers with vast suburban and exurban appendages. The jobs that people do have changed dramatically, with white-collar work coming to the fore and manual labor, especially unskilled labor, declining.

The end products of economic activity have expanded not only in quantity but in variety as well. Automobiles and electrical appliances — goods unheard of only a century ago — are now commonplace items of everyday life. As the eminent scholar Dorothy Brady has pointed out, the average American today enjoys a material level of living comparable to that of the wealthy two centuries ago — what may be lacking in servants is made up for by ease of travel and range of recreational opportunities.

Simply stated, the basis for modern economic growth is a rapid and sweeping change in the methods by which goods are produced. During the course of the eighteenth century in Great Britain there was a marked upsurge in the rate and scope of invention, which has traditionally been termed the First Industrial Revolution. Inventions in steam power and wrought iron laid the basis for the gradual emergence of a new general purpose technology applicable in sector after sector throughout the economy — from manufacturing, transportation, and communications to agriculture and construction. Toward the end of the nineteenth century new inventions in power and materials gave birth to a Second Industrial Revolution, another general purpose technology based on electricity, the internal combustion engine, steel, nonferrous metals, and plastics. Like the first, the Second Industrial Revolution gradually transformed methods of production in industry after industry. In every country that has developed, essentially the same methods of production have been employed, marked by the use of inanimate energy, mechanization, growth of scale in many industries, and high transportation and communications density.

This new technology imposed major constraints on the form that the economic system might take. Of particular importance was the fact that economical use of the new techniques required a sizable increase in the optimum scale of production in many industries. In manufacturing, the result was that the factory establishment came to replace shop or household manufacture. Also, with growing scale, the requirements gradually grew for administrative and clerical workers relative to production workers; hence the demand for white-collar labor rose relative to that for blue collar. The financing needed for large-scale undertakings, especially in transportation, increased beyond the resources of an individual proprietorship or partnership, leading eventually to the growing dominance of corporate limited liability organizations. Associated with the spread of the corporation was a marked expansion of financial security markets, or, in some countries, a growth in the financing of industry via the public sector. In addition, whereas manufacturing production had been previously widely dispersed among towns, villages, and homes, growth of scale together with the shift in the composition of final demand away from relatively less desired food products led increasingly to concentration in urban centers. One result of this was that the need for moving and storing goods rose relative to that of manufacture, and labor in the trade and transport sector expanded relative to labor directly engaged in goods production. None of these developments needed to have occurred if the new inventions had been economically usable in the home or shop. But they were not. The fact that most or all of the changes enumerated above tend to be replicated in country after country experiencing modern economic growth is testimony to the similarity among countries of the new technology being employed, as well as to the basic similarity in human preferences.


International Impact of Modern Economic Growth

From the late eighteenth century down to World War I, modern economic growth gradually spread from its area of origin, Great Britain, southward and eastward across the face of Europe, reaching Russia in the latter part of the nineteenth century. A concurrent expansion took place in overseas areas where migrants from Europe had settled or were settling in substantial numbers — namely, Northern America, parts of Latin America, Australia, New Zealand, and the Union of South Africa. Because the technology of modern economic growth requires substantial investment in physical capital and education, the spread of modern economic growth depended on the existence of institutional conditions favorable to such investment. When the new technology first emerged, these conditions varied greatly among the countries of the world. In the Third World — the less developed countries of Africa, Asia, and Latin America — illiteracy was widespread. Economic opportunity was quite limited, as the populations were under regimes of absolute monarchy or colonial rule. As a result the initial spread of modern economic growth was confined to a relatively small number of countries. Institutional conditions in Japan in the latter part of the nineteenth century were an exception to the general Third World picture, and, in consequence, modern economic growth started there at that time.

The slackening of the world economy in the interwar period seriously interrupted the spread of modern economic growth. Since World War II, however, most parts of Asia and Latin America have entered the process, with the establishment of more favorable institutional conditions. So too has Northern Africa, but substantial parts of sub-Saharan Africa continue to lag behind.

The emergence and spread of modern economic growth has led to an enormous expansion of the physical volume of world trade, and the peoples of the world, as never before, have become economically interdependent. This expansion in world trade has been driven (1) by a massive reduction in transportation costs, reflecting the impact of the new technology on internal and external transport, (2) by growing demand as per capita incomes rose rapidly in areas undergoing modern economic growth, (3) by shifts in comparative advantage associated with technological change and differences in factor endowments, and (4) by temporary new product monopolies enjoyed by various countries due to technological innovation. The principal participants in this trade expansion were those areas undergoing modern economic growth itself — indeed, the developed countries have invariably accounted for seven-tenths or more of world trade. Throughout much of the nineteenth century, international trade took the form chiefly of an exchange of manufactured products produced in Western Europe for primary products produced in Eastern Europe and overseas areas settled chiefly by Europeans — the United States, Canada, Australia, New Zealand, Argentina, and Chile. Areas in the Third World in which modern economic growth had not yet taken hold also participated in the expansion of world trade prior to World War I, chiefly via tropical products or minerals in which these areas enjoyed a natural advantage. But the principal exports of these Third World areas were typically marginal to the process of modern economic growth in the developed countries. As in the case of trade, the major share of international capital movements, which also reached new highs in the century before World War I, was among the areas experiencing modern economic growth.

The central role of agricultural expansion in the early development of overseas areas settled by Europeans contradicts the view common among the older generation of economic historians that equated modern economic growth with industrialization. This notion was based on the experience of a few countries, especially Great Britain, France, and Germany. But growth rates of real per capita income comparable to or higher than those in northwestern Europe were achieved by overseas areas settled by Europeans in conjunction largely with the expansion of primary product exports based on new production methods. Although there was also development of modern factory industry in these overseas areas, it did not involve heavy industry nearly as much as in northwestern Europe, except in the United States. Modern economic growth in some European areas, such as Denmark and parts of Eastern Europe, was similarly premised primarily on the expansion of agricultural exports using new techniques.

As time wore on, the onset and spread of modern economic growth increasingly dominated the world political scene, upsetting the balance of power between developed and less developed areas and within the developing group itself. Modern economic growth endowed the developed nations with technological superiority, not only in economic productivity but also in military capacity, and shifted the balance of power sharply in favor of the developed group. The result was an expansion of political control by the developed over the developing countries, most notably from the mid-nineteenth century to World War I. This was the so-called second wave of imperialism, the first having occurred in conjunction with Western Europe's expansion into the New World several centuries earlier.

Differences in the time of onset of modern economic growth led also to shifts in the balance of power within the group of countries experiencing development. Modern economic growth initially bestowed world political dominance on the leader, Great Britain, so much so that nineteenth-century political relations are often denoted by the term Pax Brittanica. But as modern economic growth occurred in other populous states, challenges to British leadership were mounted, most notably by Germany. Two major world conflicts erupted, in which the leading contenders were the major populous areas experiencing modern economic growth — namely, Great Britain, Germany, France, Russia, Italy, Japan, and the United States. If the lessons of the last two centuries have anything to teach, it is that the balance of power will continue to shift toward newer, populous developing countries as modern economic growth forges ahead in these areas. This shift need not inevitably lead to armed conflict, but the potential is there.

There is a noticeable parallel between many of the characteristics of international relations in the period after 1750 and those in the preceding two-and-a-half centuries. From the late fifteenth century on, technological advances in seagoing vessels, navigation out of sight of land, and weaponry endowed a small group of countries in Western Europe with increased military and political power. An expansion of world trade took place as transportation costs were reduced. Colonial expansion by the European powers benefiting from the new technology also occurred — into the Americas, and to a lesser extent, Asia and Africa — the "first wave" of imperialism. In addition, rivalry among the leading powers — Portugal, Spain, France, Holland, and England — led to military conflict and shifts in leadership within this group.

In both periods, the key to understanding the course of international relations is technological change, the technological leaders being those that enjoyed a relative expansion in political power. In the period before 1750, the crucial technological changes were much more limited in scope than later, being chiefly concentrated in oceangoing and military technology. In the period after 1750, economy-wide technological change occurred at a rapid pace in areas experiencing modern economic growth.


(Continues...)

Excerpted from Growth Triumphant by Richard A. Easterlin. Copyright © 1996 University of Michigan. Excerpted by permission of The University of Michigan Press.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Table of Contents

Contents

Tables,
Figures,
Preface,
Chapter,
1. Historical Overview,
Part 1. Modern Economic Growth,
2. Revolution or Evolution? The Epoch of Modern Economic Growth,
3. The International Impact of Modern Economic Growth,
4. Modern Economic Growth and the National Economy,
5. Why Isn't the Whole World Developed? Institutions and the Spread of Economic Growth,
Part 2. Population Growth,
6. The Nature and Causes of the Mortality Revolution,
7. Malthus Revisited: The Economic Impact of Rapid Population Growth,
8. The Fertility Transition: Its Nature and Causes,
9. Secular Stagnation Resurrected: Population and the Economy in Developed Countries,
Part 3. Implications for the Future,
10. Does Satisfying Material Needs Increase Human Happiness?,
11. The Next Century in Historical Perspective,
Appendix A: Major Economic Inventions,
Appendix B: Health Technology,
Notes,
References,
Index,

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