What I call the “long 20th century” started with the watershed-crossing events of around 1870 — the triple emergence of globalization, the industrial research lab and the modern corporation — which ushered in changes that began to pull the world out of the dire poverty that had been humanity’s lot for the previous 10,000 years since the discovery of agriculture. And what I all the “long 20th century” ended in 2010, with the world’s leading economic edge, the countries of the North Atlantic, still reeling from the Great Recession that had begun in 2008, and thereafter unable to resume economic growth at anything near the average pace that had been the rule since 1870. The years following 2010 were to bring large system-destabilizing waves of political and cultural anger from masses of citizens, all upset in different ways and for different reasons at the failure of the system of the 20th century to work for them as they thought it should.
In between, things were marvelous and terrible, but by the standards of all of the rest of human history, much more marvelous than terrible. The 140 years from 1870 to 2010 of the long 20th century were, I strongly be-lieve, the most consequential years of all humanity’s centuries. And it was the first century in which the most important historical thread was what anyone would call the economic one, for it was the century that saw us end our near-universal dire material poverty.
My certainty that history should focus on the long 20th century stands in contrast to what others — most notably the Marxist Brit-ish historian Eric Hobsbawm — have focused on and called the “short 20th century,” which lasted from the start of World War I in 1914 to the fall of the Soviet Union in 1991. Such others tend to see the 19th century as the long rise of democracy and capitalism from 1776 to 1914, and the short 20th century as one in which socialism and fascism shook the world.
Histories of centuries, long or short, are by definition grand narrative histories, built to tell the author’s desired story. Setting the years 1914-1991 apart as a century makes it easy for Hobsbawm to tell the story he wants to tell. But it does so at the price of missing much of what I strongly believe is the bigger, more important story. It is the one that runs from about 1870 to 2010, from humanity’s success in unlocking the gate that had kept it in dire poverty up to its failure to maintain the pace of the rapid upward trajectory in human wealth that the earlier success had set in motion.
What follows is my grand narrative, my version of what is the most important story to tell of the history of the 20th century. It is a primarily economic story. It naturally starts in 1870. I believe it naturally stops in 2010.
As the genius, Dr. Jekyll-like, Austro-English- Chicagoan moral philosopher Friedrich August von Hayek observed, the market economy “crowdsources” — incentivizes and coordinates at the grassroots — solutions to the problems it sets. Back before 1870, humanity did not have the technologies or the organizations to allow a market economy to pose the problem of how to make the economy rich. So even though humanity had had market economies, or at least market sectors within its economies, for thousands of years before 1870, all that markets could do was to find customers for producers of luxuries and conveniences, and make the lives of the rich luxurious and of the middle-class convenient and comfortable.Things changed starting around 1870. Then we got the institutions for organization and research and the technologies — we got full globalization, the industrial research laboratory and the modern corporation. These were the keys, unlocking the gate that had previously kept humanity in dreadful poverty. The problem of making humanity rich could now be posed to the market economy, because it now had a solution. On the other side of the gate, the trail to utopia came into view, and everything else good should have followed from that. Much good, indeed, did follow.
My estimate, or perhaps my very crude personal guess, of the average worldwide pace of what is at the core of humanity’s economic growth — the proportional rate of growth of my index of the value of the stock of useful ideas about manipulating nature and organizing humans that were discovered, developed and deployed into the world economy — shot up from about 0.45 percent per year before 1870 to 2.1 percent per year afterward, truly a watershed boundary-crossing difference. A 2.1 percent average growth for the 140 years from 1870 to 2010 is a multiplication by a factor of 21.5. That was very good: the growing power to create wealth and earn an income allowed humans to have more of the good things, the necessities, conveniences and luxuries of life. This does not mean that humanity in 2010 was 21.5 times as rich in material-welfare terms as it had been in 1870: there were six times as many people in 2010 as there were in 1870, and the resulting increase in resource scarcity would take away from human living standards and laborproductivity levels.
As a rough guess, average world income per capita in 2010 was 8.8 times what it was in 1870, meaning an average income per capita in 2010 of perhaps $11,000 per year. Hold these figures in your head as a very rough guide to the amount by which humanity was richer in 2010 than it was in 1870 — and never forget that the riches were vastly more unequally distributed around the globe in 2010 than they were in 1870.
A 2.1 percent per year growth rate is a doubling every 33 years. That meant the technological and economic underpinnings of human society in 1903 were profoundly different from those of 1870 — underpinnings of industry and globalization as opposed to agrarian and landlord-dominated. The massproduction underpinnings of 1936, at least in the industrial core of the global north, were profoundly different also. But the change to the mass consumption and suburbanization underpinnings of 1969 was as profound, and that was followed by the shift to the information- age, microelectronic-based underpinnings of 2002. A revolutionized economy in every generation cannot but revolutionize society and politics. And a government trying to cope with such repeated revolutions cannot help but be greatly stressed in its attempts to provide for its people in the storms....
....MUCH MORE
We have quite a few links to Professor DeLong going back to 2009 when he wrote that Paul Krugman was wrong, up through 2011'sMF Global: What Were They Thinking? Brad DeLong Explains
Brad DeLong On Equity Valuations
