Population, Income and Growth: "Is the Semi-Permanent "Gunpowder Empire" Historical Scenario Plausible? Perhaps Not..."

From Brad DeLong:

Riffing off of yesterday's: : "'Gunpowder Empire': Should We Generalize Mark Elvin's High-Level Equilibrium Trap?"...

A generation ago Michael Kremer wrote a superb paper: Michael Kremer (1993): "Population Growth and Technological Change: One Million B.C. to 1990", Quarterly Journal of Economics 108:3 (August), pp. 681-716 http://tinyurl.com/dl20160727a.

Kremer saw human populations as growing at an increasing rate over time. Population reached approximately 4 million by 10000 BC, 50 million by 1000 BC, and 170 million by the year 1. Population then reached 265 million by the year 1000, 425 million by 1500, and 720 million by 1750 before the subsequent explosion of the British Industrial Revolution and the subsequent spread of Modern Economic Growth.

Michael Kremer then developed this association between higher global population levels and faster population (and global real GDP, and global total factor productivity) growth into a "two heads are better than one" theory of long-run economic growth:

No matter where the economy starts, it winds up in region B.... Once the trajectory is in region B, it remains there, with population and income both increasing indefinitely.

Income must eventually reach y*, the [demographic transition] level above which population growth slows.... As income rises above y*, population growth rates decline. If Φ = 1, so that the level of technology enters the research production function linearly, growth rates of technology continue to increase because population continues to increase.

If 1 > Φ... growth rates of technology are likely to continue to increase for some period.... In summary, if population adjusts to income at finite speed... income will gradually rise over time... there will eventually be a demographic transition... [followed by] steady state growth rates of population, technology, and income...

In Kremer's model, population will grow and eventually population will be high enough that research and development will proceed fast enough to push income per capita high enough to trigger the demographic transition and thus break the Malthusian proportional link between resources and technology on the one hand and population on the other. After that link is broken, economic growth will predominantly take the form not of Malthusian increases in population but rather Industrial Revolution and Modern Economic Growth increases in living standards and labor productivity.

The breakthrough to an Industrial Revolution, Modern Economic Growth, and our present prosperous global post-industrial economy is therefore baked into the cake. It is an all-but-inevitable event in human history produced by the simple fact that when it comes to generating useful ideas two heads are better than one: "the fundamental nonrivalry of technology as described by Paul Romer (1986)..."

The alternative view to the inevitability of the breakthrough is that the breakthrough to the Industrial Revolution and the subsequent knock-on transition to Modern Economic Growth was a lucky throw of the historical dice--that while Kremer's model has something like our economic world today as our inevitable destiny, the world might well be substantially otherwise and remain substantially otherwise for millennia if not longer. The current poster child for British-Industrial-Revolution-a-lucky accident is Robert Allen, and his excellent "The British Industrial Revolution in Global Perspective":

It was not Newtonian science that inclined British inventors and entrepreneurs to seek machines that raised labour productivity but the rising cost of labour... due to... Britain’s success in the global economy... in part the result of state policy... [and] Britain['s] vast and readily worked coal deposits.... The necessary R&D was profitable in Britain (under British conditions) but unprofitable elsewhere....

The theory advanced here explains the technological breakthroughs of the industrial revolution in terms of the economic base of society–natural resources, international trade, profit opportunities. Through their impact on wages and prices, these prime movers affected both the demand for technology and its supply...

Why did the industrial revolution lead to modern economic growth?... Wouldn’t the French, or the Germans, or the Italians, have produced an industrial revolution by another route? Weren’t there alternative paths to the twentieth century?... The nineteenth century engineering industry was a spin-off of the coal industry.... The British inventions of the eighteenth century–cheap iron and the steam engine, in particular–were so transformative... because of the possibilities they created for the further development of technology. Technologies invented in France–in paper production, glass, knitting–did not lead to general mechanization or globalization....

There is no reason to believe that French technology would have led to the engineering industry, the general mechanization of industrial processes, the railway, the steam ship, or the global economy. In other words, there was only one route to the twentieth century–and it went through northern Britain...

Allen may be right and he may be wrong. But let's explore what the consequences are of assuming that he is right--that the British Industrial Revolution was a lucky, discontinuous break. Suppose that without the British Industrial Revolution global economic history would have continued along a business-as-usual track, suppose that the British Industrial Revolution required British commitment to its fiscal-military state followed by the victories at sea that wound up funneling the globe's mercantile profits into the island, and so raising wages. What would the world have looked like had the Protestant Winds of 1588 and 1689 not blown, and Britain been ruled by a Catholic Stuart Dynasty French- or Spanish-subsidized client dynasty unwilling to fight the Second Hundred Years War?

Kremer's (1993) model then allows us to ask the question: How long would it have taken--in the absence of eighteenth century Britain--to get the ball rolling....MUCH MORE