More power to more people

In developed nations, more citizens soar than skimp.

A.D. 1500 Workers' Top Concern -- Sure I'm the best blacksmith in the land, but I wish my patron would let me pick my own path. I want to paint!

When the last millennium began about 1,000 years ago, the average global citizen made $133 a year - a marginal existence.

Life was no better 1 million years ago, when humans got by on the equivalent of $92 worth of goods and services a year.

This year, the average Earth dweller - from prosperous Palm Beach to the slums of Calcutta - will make about $6,539.

Those statistics come from J. Bradford DeLong, an economist at the University of California at Berkeley. They are, to say the least, estimates.

But they illustrate a point. From an economic standpoint, the last hundred years or so of the second millennium was historically extraordinary.

"The greatest century that ever was," proclaim Cato Institute economist Stephen Moore and the late Julian Simon of the University of Maryland.

The documentable improvement in the quality of human life in the 20th century, they write, "has been nothing short of miraculous.... Almost every indicator of health, wealth, safety, nutrition, affordability and availability of consumer good and services, environmental quality, and social conditions indicate rapid improvement over the past century."

Professor DeLong makes a similar point: "The 20th century saw the material wealth of humankind explode beyond all previous imagining. We - at least those of us who belong to the upper-middle class and live in the industrial core of the world economy - are now far richer than the writers of previous centuries' utopias could imagine."

For the first nearly 900 years of the millennium, economic factors changed only slowly. European feudalism with its lords and vassals, and system of land tenure, began in the Frankish kingdom in the 8th century and spread. It came under attack in the 12th century with the growth of centralized states and sovereigns and their subjects. Towns grew in power. By the end of the 14th century, feudalism was no longer a force in most of Europe.

Mercantalism, which promoted government regulation of a nation's economy to augment state power at the expense of rival powers, was common in Europe from the 16th to the 18th century. It was the economic equivalent of political absolutism.

Since change was slow, the functioning of the economy at the end of any given century was pretty close to what it had been at the beginning. If a time machine had brought a grandfather forward 100 years to see his grandchildren's grandchildren, he wouldn't have felt out of place. The economy - how people made, distributed, and consumed the material necessities and conveniences of their lives - was in the background, but not where the action of history took place, DeLong notes in the draft of a book to be published next year.

That changed in the 20th century. "Everything happens faster," notes Joel Mokyr, an economic historian at Northwestern University in Evanston, Ill.

"The pace of economic change has been so great as to shake the rest of history to its foundation," writes DeLong.

In looking at economics, historians discuss many periods of progress.

There was an age of discovery that included the voyage of Columbus to America in 1492. Better ships and more adventurous captains opened up the world to Western European commerce.

It led to economic globalization as the costs and difficulties of transportation and communication decreased. In 1500, less than 1 percent of output crossed national borders - but by 1850, something under 5 percent was exported, DeLong estimates. Today, some 10 percent of world output moves nation to nation.

Britain's Industrial Revolution began in the 18th century. It was at first limited to a small part of the economy and perhaps 10 percent of the labor force. "As late as 1830, one could travel through the vast part of Britain and never see a factory chimney," writes Mr. Mokyr.

But British technological superiority in the cotton mills, the iron works, coal mines, the steam engine (first built in the early 1700s), the linen and rope industries, and the manufacture of toys, belts, buttons, paper, and pins began to pay off in improved living standards by about 1840, Mokyr reckons.

Pre-industrial technology - windmills and dikes in Holland, the watermill, the heavy plow - did little to raise human affluence. They had "by and large raised the numbers of the human race, not its material standard of living," DeLong concludes.

At last, however, technological capability outran population growth and the scarcity of natural resources. Mass production and interchangeable parts were introduced in Britain. Gas lamps broke the tyranny of darkness in homes and streets. Food canning limited the danger of food spoiling. Medical advances helped put the brakes on infectious diseases. Railroads and the telegraph were developed in the 1830s. Electricity began to spread widely only as the 20th century began.

By the latter part of the 1800s, most of those living in Britain, Belgium, the Netherlands, the United States, Canada, and Australia enjoyed material wealth and living standards perhaps three times that of the typical inhabitant of the preindustrial age, figures DeLong. That was the first time such substantial and sustained economic progress was seen in 1,000 years, if not 7,000.

In the 20th century, living standards exploded at a time of rapid technology and education gains.

"Ours is the first age in which affluence has been enjoyed by more than just a tiny fraction of the population," note Moore and Simon in a Cato report. "In previous times, even in the great empires, at least 90 percent of the population remained at a Malthusian level of subsistence. Never before have improvements in quality of life been spread to virtually every segment of the population, as has happened in the United States and the developed world in this century."

DeLong calculates that Americans today have some eight times the material prosperity of their counterparts a little more than a century ago. What took a worker in 1890 an hour to produce takes only seven minutes today.

Montgomery Ward offered a one-speed bicycle for $65 in 1895. It took perhaps 260 hours worth of the average American worker's efforts to save enough to buy that bicycle. Today, an average worker can buy a higher-quality bike with less than eight hours of his pay.

Moreover, today's technology provides a vastly expanded range of goods and services, from CDs, to computers, to airplane flights, to cellphones, to plastic bottles, to fax machines, and so on.

Moore and Simon argue that today's official "poor" have "routine access to a quality of food, healthcare, consumer products, entertainment, communications, and transportation that even the Vanderbilts, the Carnegies, the Rockefellers, and 19th-century European royalty, with all their combined wealth, could not have afforded."

Management consultant Peter Drucker points out that in the past 100 years, for the first time in history, many people have had choices in managing their lives. Prior to about 1900, if your father was a peasant farmer, so were you; if a craftsman, so were you. Now many people manage their own careers.

Why has this economic revolution taken place? And why have so many 20th century advances taken place in the US?

Moore and Simon tip their hat to freedom. "The unique American formula of individual liberty and free enterprise has encouraged risk-taking, experimentation, innovation, and scientific exploration of a magnitude that is unprecedented in human history," they write.

Economic freedom goes back to the Scottish moral philosopher Adam Smith who, in 1776, argued that a competitive market promoted the general good: "... Every individual ... endeavors as much as he can ... to direct ... industry so that its produce may be of the greatest value ... neither intend[ing] to promote the public interest, nor know[ing] how much he is promoting it.... He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end that was no part of his intention.... By pursuing his own interest, he frequently promotes that of society more effectually than when he really intends to promote it."

That idea has led to the promotion of free trade, an aversion to price controls, the freedom to choose an occupation and a home, and more freedom to launch and expand an enterprise.

In turn, the success of free enterprise has contributed to the demise of communism and the trimming back of socialism and social democracy.

Fans of Adam Smith argue that the best thing government can do for the economy is to leave it alone. To what degree the government needs to intervene to offset market failures - say, a poor distribution of income, is often debated.

Many economic historians also credit recent technological advances for the astonishing economic times.

Moore and Simon mention modern medicine, the harnessing of electrical power, and the invention of the microchip as a "passport to a whole new universe of knowledge."

A $799 Pentium chip in a laptop computer puts more computing-power at the owner's fingertips than was held in all the world's computers in World War II.

Mokyr holds that technological progress in the 18th century was not based on a deep understanding of the physical or chemical principles involved. It was essentially empirical and nonscientific, with progress slow and invention inefficient.

Today, science has a better grip on underlying principles, and research is better organized within firms or by government and university laboratories.

DeLong holds that relatively good government in many nations has aided today's prosperity. Under the influence of British economist John Maynard Keynes, governments have generally accepted the thesis that they should strive for full employment and price stability.

****A.D. 1900

Workers' Top Concern

Mass production? That just means they're pushing me harder down at the factory. And pushing me around. ****

Mokyr sees the combination of technology and changes in human institutions - free markets, access to capital, enforcement of contracts, protection of property - as the causes of the acceleration in economic progress.

Sadly, all this extraordinary progress has left a half-full, half-empty world. Most people live in nations that have made the transition to sustained economic growth - "stepped on the escalator of modernity," says DeLong.

But 1.5 billion people live in economies that have not climbed on that escalator. Today's average African may not be better off in material terms than his counterpart of 25 years ago, reckons DeLong.

Despite modern telecommunications and the great repositories of technical knowledge, DeLong suspects that this awful divergence in living standards and productivity levels could worsen.

Poor nations could be held back by high rates of population growth, which make it difficult to find adequate capital for schools, factories, and healthcare. Also, some governments are focused on survival and perks of office, or controlled by traditional and religious elites that fear modernity.

DeLong discusses another phenomena of the 20th century - brutal and barbaric tyrannies that originated in economic discontents and economic ideologies. Wars killed perhaps 40 million in the 1900s. Governments and their police killed perhaps 160 million as enemies for reasons of class, race, politics, economics, or merely imagined offenses.

Five leaders were each held responsible for the deaths of at least 10 million people through violence and starvation: Chiang Kaishek and Mao Zedong of China, Vladimir Lenin and Joseph Stalin of the Soviet Union, and Germany's Adolf Hitler with his desire for more living space.

In the past, people slaughtered each other over theology and power. "But only in the 20th century have people killed each other on a large scale in disputes over the economic organization of society," writes DeLong.

DeLong calls this contrast of previously unimaginable slaughter and inconceivable prosperity "slouching towards utopia."

(c) Copyright 2000. The Christian Science Publishing Society

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