Sources of Progress
When it comes to the standard of living, human history resembles a hockey stick, with a long straight shaft and an upward-facing blade. For thousands of years, economic growth was negligible (resembling that long straight shaft). At the end of the 18th century, however, economic growth and, consequently, the standard of living, started to accelerate in Great Britain and then in the rest of the world (resembling that upward-facing blade). What was responsible for that acceleration?
The Nobel Prize–winning economist Douglass North, for example, argued that changing institutions, including the evolution of constitutions, laws, and property rights, were instrumental to economic development. The University of Illinois at Chicago economist Deirdre McCloskey attributed the origins of "the great enrichment" to changing attitudes about markets and innovation. The Harvard University psychologist Steven Pinker contended that material and spiritual progress were rooted in the Enlightenment and the concomitant rise of reason, science and humanism.
Whatever the case may be, a confluence of fortuitous events allowed for the breakout of the industrial revolution and enhanced the process of globalization. Let us look at those two in greater detail. According to Encyclopedia Britannica, the industrial revolution was “the process of change from an agrarian, handicraft economy to one dominated by industry and machine manufacture.” It started in Great Britain in the 18th century and then spread to other parts of the world.
“The technological changes included the following: (1) the use of new basic materials, chiefly iron and steel, (2) the use of new energy sources, including both fuels and motive power, such as coal, the steam engine, electricity, petroleum, and the internal-combustion engine, (3) the invention of new machines, such as the spinning jenny and the power loom that permitted increased production with a smaller expenditure of human energy, (4) a new organization of work known as the factory system, which entailed increased division of labor and specialization of function. . . . These technological changes made possible a tremendously increased use of natural resources and the mass production of manufactured goods. . . . There were also many new developments in nonindustrial spheres, including the following: (1) agricultural improvements that made possible the provision of food for a larger nonagricultural population, (2) economic changes that resulted in a wider distribution of wealth, the decline of land as a source of wealth in the face of rising industrial production, and increased international trade, (3) political changes reflecting the shift in economic power, as well as new state policies corresponding to the needs of an industrialized society, (4) sweeping social changes, including the growth of cities, the development of working-class movements, and the emergence of new patterns of authority, and (5) cultural transformations of a broad order.”
Not everyone was happy about the industrial revolution, however. Contemporary observers such as Charles Dickens commented on the squalor of 19th-century cities and the backbreaking labor of the people, including children, in the factories in much the same way that our journalists today comment on the squalor of the rapidly industrializing Indian cities and the backbreaking labor of people, including children, in Bangladeshi factories.
But things should be kept in a proper perspective. Life on an 18th-century farm was extremely difficult, and the city offered the former country dwellers higher wages and new opportunities. In time, sanitation, health care, and other benefits of civilized life caught up with the cities’ rising population, giving us the modern metropolis. In a similar vein, legislation caught up with rising standards of living and codified in law what already was happening in practice—as productivity increased and wages rose, fewer children were needed to supplement their parents’ incomes. Increased productivity of workers led to greater competition for workers, and factory owners started taking better care of their employees. Working conditions improved, and work injuries declined.
Another major criticism of the industrial revolution concerns the spoliation of the environment and exploitation of natural resources. In his famous 1808 poem Jerusalem, for example, William Blake bemoans the “satanic mills” (i.e., factories) that in his view pockmarked the bucolic face of the English countryside. But, as was the case with other writers of the Romantic era, Blake’s description of pre-industrial society was highly idealized. The reality, alas, was much less appealing. Most pre-industrial societies, Great Britain included, were heavily dependent on agricultural output. Agricultural production was labor intensive, but productivity was very low. Before the arrival of machines powered by steam and combustion engines, agriculture depended on much less efficient human and animal labor. People and animals had to be fed, which meant that most of the calories produced on the farm were immediately consumed by the laborers.
Before the industrial revolution, there were no synthetic fertilizers, such as nitrogen, and crop yields were much lower than what they are today. As a consequence, more land was required to feed people and pack animals. Land clearing was usually accomplished by the burning of forests. Yet more trees were cut down to heat houses and to cook food. Environmental damage aside, a major reason for switching from wood to coal was the simple fact that there were very few trees left. Thanks to the use of fossil fuels, global forest coverage has stabilized and is expanding in the world’s richest and most industrial countries.
Let us now turn to globalization, which the Organisation for Economic Co-operation and Development defines as “an increasing internationalization of markets for goods and services, the means of production, financial systems, competition, corporations, technology, and industries. Amongst other things this gives rise to increased mobility of capital, faster propagation of technological innovations, and an increasing interdependency . . . of national markets.”
Contrary to the common misperception, globalization is not a new phenomenon. The trade links between the Sumer and Indus Valley civilizations go back to the third millennium BCE. Then there was the Silk Road between Europe and Asia, and European voyages into India and the Americas. Clearly, trade has been fundamental to the process of globalization from antiquity. But, why do people trade?
Trade delivers goods and services to people who value them most. An additional ton of corn produced in Kansas may be of little importance to the people in the American Midwest, but it can be crucial to the people living in drought-stricken East Africa. Trade, to use economic jargon, improves efficiency in the allocation of scarce resources. Another reason for trade is the principle of comparative advantage. As the Nobel Prize–winning economist Paul Samuelson noted,
“The gains from trade follow from allowing an economy to specialize. If a country is relatively better at making wine than wool, it makes sense to put more resources into wine, and to export some of the wine to pay for imports of wool. This is even true if that country is the world’s best wool producer, since the country will have more of both wool and wine than it would have without trade. A country does not have to be best at anything to gain from trade. The gains follow from specializing in those activities which, at world prices, the country is relatively better at, even though it may not have an absolute advantage in them. Because it is relative advantage that matters, it is meaningless to say a country has a comparative advantage in nothing. The term is one of the most misunderstood ideas in economics, and is often wrongly assumed to mean an absolute advantage compared with other countries.”
Moreover, trade allows consumers to benefit from more efficient production methods. For example, without large markets for goods and services, large production runs would not be economical. Large production runs are instrumental to reducing product costs. For example, early cars had to be individually handcrafted. The Model T assembly line revolutionized car manufacturing and allowed the Ford Motor Company to slash the price of the Model T from $850 in 1909 to $260 in the 1920s. Lower production costs, in other words, lead to cheaper goods and services, and that raises real living standards.
Besides better resource allocation and greater specialization and economies of scale, trade encourages technological and cultural exchanges between previously disconnected civilizations. It is for those reasons that great commercial cities like Florence and Venice during the Renaissance, and London and New York today, also tend to be centers of cultural life and technological progress.
The development of the steam engine and the opening of the Suez Canal in the 19th century made seafaring faster and cheaper. The volume of traded goods greatly increased. Through the process of price convergence, prices fell and consumers benefited. The gold standard and the invention of the telegraph—and later the telephone—also allowed for massive transfers of capital. Attracted by higher profits, capital flowed from more developed to less developed countries, thus stimulating global economic development. As the British economist John Maynard Keynes recalled, before World War I,
“The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth. . . . He could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages. . . . He could secure . . . cheap and comfortable means of transit to any country or climate without passport or other formality.”
This “golden age” of globalization ended with the outbreak of World War I and the concomitant disruption of world trade. By some estimates, globalization did not reach its pre–World War I levels until the 1970s or even 1980s. In fact, it was the 1980s that marked the beginning of the period of globalization that we live in today. Spurred by economic deregulation within countries, trade liberalization between countries, privatization of state-owned companies, further improvements in transport, and the arrival of the internet, globalization got a new lease on life.
The World Is Getting Better, But Skepticism Remains
As can be seen, Europe and America and, later, other regions of the world, experienced previously unimaginable improvements in standards of living. The process of rapid improvement that started in the early 1800s continues to this day. Accordingly, historical evidence makes a potent case for optimism. Yet optimism about the current state and future well-being of humankind is difficult to come by. As author Matt Ridley writes in his book, The Rational Optimist,
“If . . . you say catastrophe is imminent, you may expect a MacArthur genius award [the MacArthur Fellowship or Genius Grant] or even the Nobel Peace Prize. The bookshops are groaning under ziggurats of pessimism. The airwaves are crammed with doom. In my own adult lifetime, I have listened to the implacable predictions of growing poverty, coming famines, expanding deserts, imminent plagues, impending water wars, inevitable oil exhaustion, mineral shortages, falling sperm counts, thinning ozone, acidifying rain, nuclear winters, mad-cow epidemics, Y2K computer bugs, killer bees, sex-change fish, global warming, ocean acidification, and even asteroid impacts that would presently bring this happy interlude to a terrible end. I cannot recall a time when one or other of these scares was not solemnly espoused by sober, distinguished, and serious elites and hysterically echoed by the media. I cannot recall a time when I was not being urged by somebody that the world could only survive if it abandoned the foolish goal of economic growth. The fashionable reason for pessimism changed, but the pessimism was constant. In the 1960s the population explosion and global famine were top of the charts, in the 1970s the exhaustion of resources, in the 1980s acid rain, in the 1990s pandemics, in the 2000s global warming. One by one these scares came and (all but the last) went. Were we just lucky? Are we, in the memorable image of the old joke, like the man who falls past the first floor of the skyscraper and thinks ‘So far so good!’? Or was it the pessimism that was unrealistic?”
Ridley’s recollection raises an interesting question: Why are we as a species so willing to believe in doomsday scenarios that never quite materialize in practice?
In their 2012 book, Abundance: The Future Is Better Than You Think, Peter H. Diamandis and Steven Kotler offer one plausible explanation. Human beings are constantly bombarded with information. Because our brains have a limited computing power, they have to separate what is important, such as a lion running toward us, from what is mundane, such as a bed of flowers. Because survival is more important than all other considerations, most information enters our brains through the amygdala—a part of the brain that, as Diamandis and Kotler write, is “responsible for primal emotions like rage, hate, and fear.” Information relating to those primal emotions gets our attention first because, as the authors write, the amygdala “is always looking for something to fear.” Our species, in other words, has evolved to prioritize bad news.
As Harvard’s Pinker writes in his 2018 book Enlightenment Now: The Case for Reason, Science, Humanism, and Progress, “the nature of news . . . interact[s] with the nature of cognition to make us think that the world is getting worse. News is about things that happen, not things that don’t happen. We never see a journalist saying to the camera, ‘I’m reporting live from a country where a war has not broken out. . . .’” (p. 44). Consequently, newspapers and other media tend to focus on the negative. As the old saying among journalists goes, “If it bleeds, it leads.” To make matters worse, social media makes bad news immediate and more intimate. Until relatively recently, most people never learned about the countless wars, plagues, famines, and natural catastrophes that happened in distant parts of the world. Contrast that with the 2011 Japanese tsunami disaster, which people throughout the world watched unfold as it was happening on their smart phones.
The human brain also tends to overestimate danger because of what psychologists call “the availability heuristic.” Simply put, “people estimate the probability of an event by the ease with which instances come to mind. . . . But whenever a memory turns up high in the result list of the mind’s search engine for reasons other than frequency—because it is recent, vivid, gory, distinctive, or upsetting—people will overestimate how likely it is in the world. . . . People rank tornadoes (which kill about 50 Americans a year) as a more common cause of death than asthma (which kills more than 4,000 Americans a year), presumably because tornadoes make for better television” (Pinker, p. 44).
Another bias “can be summarized in the slogan ‘Bad is stronger than good.’ . . . How much better can you imagine yourself feeling than you are feeling right now? How much worse can you imagine yourself feeling? The answer to the second question is: it’s bottomless. The asymmetry in mood can be explained by an asymmetry in life. . . . How many things could happen to you today that would leave you much better off? How many things could happen that would leave you much worse off? The answer to the second question is: it’s endless. . . . The psychological literature confirms that people dread losses more than they look forward to gains, that they dwell on setbacks more than they savor good fortune, and that they are stung more by criticism than they are heartened by praise” (Pinker, p. 50).
Furthermore, good and bad things “unfold on different timelines” (Pinker, p. 44). Bad things, such as plane crashes, can happen quickly. Good things, such as humanity’s struggle against HIV/AIDS, tend to happen incrementally and over a long period of time. As Kevin Kelly, founding executive editor of Wired magazine, wrote, "Ever since the Enlightenment and the invention of Science, we’ve managed to create a tiny bit more than we've destroyed each year. But that few percent positive difference is compounded over decades in to what we might call civilization. . . . [Progress] is a self-cloaking action seen only in retrospect” (The Inevitable: 12 Technological Forces That Will Shape Our Future, p. 13).
Clearly, humanity suffers from a negativity bias. Consequently, there is a market for purveyors of bad news, be they doomsayers who claim that overpopulation will cause mass starvation or scaremongers who claim that we are running out of natural resources. Politicians, too, have realized that banging on about “crises” increases their power and can get them reelected and may also lead to prestigious prizes and lucrative speaking engagements. Thus politicians on both left and right play on our fears—from crime supposedly caused by playing violent computer games to health maladies supposedly caused by the consumption of genetically modified foods.
By definition, a world that is populated by flawed human beings cannot be a perfect place. As long as there are people who go hungry or die from preventable diseases, there will always be room for improvement. To that end, everyone has a role to play in helping those in need. By focusing on long-term trends and comparing living standards between two or more generations, however, it is possible to observe much improvement. That improvement is not linear or inevitable, but it is real.