First, the twentieth century has seen the material wealth of humankind explode beyond all previous imagining. Before the industrial revolution of the eighteenth and nineteenth centuries, there had been slow technological progress but such progress had led to little if any improvement in the material standard of living of the average human being: the Malthusian dynamics of birth and death led improvements in technology and productive power to show up primarily as increases in the numbers of the human race, not as increases in the average material standard of living.
The eighteenth and nineteenth centuries saw the beginnings of change, as the technologies of the industrial revolution outran population growth and natural resource scarcity. By the last quarter of the nineteenth century, the average citizen of one of the world's leading economies--a Briton, a Belgian, a Hollander, an American, a Canadian, or an Australian, say--had perhaps three times the purchasing power and material standard of living of the average citizen of a leading-edge pre-industrial revolution economy.
But if standards of living rose in the eighteenth and nineteenth centuries, they exploded in the twentieth century. The goods that the average worker of the late nineteenth century produced in an hour have the same value as the goods that an average worker in a leading economy today produces in seven minutes: by this measure we today have some eight and a half times the material prosperity and standard of living of our counterparts of a century ago.
However, this measure is surely a substantial underestimate of the boost to productivity and material prosperity of the past century. We today are not only better at making the goods of a century ago--so much better that what took them an hour takes us seven minutes--we also make an enormously expanded range of goods and services from videocassettes and antibiotics to airplane flights and plastic bottles. We today would feel, and would be, enormously impoverished if our incomes and prices remained the same, but if we were suddenly forbidden to spend our money on any commodity that was not produced in 1870. The tremendous expansion in the range of our production possibilities is an additional multiplier of material well-being. Perhaps the best estimate is that we today are twelve to twenty-four times as rich in a material sense as our predecessors of the late nineteenth century.
From near-stagnation in the centuries between the invention of agriculture and the industrial revolution, to perhaps a tripling of material wealth in the century and a half before 1900, to a twelve- to twenty-four-fold multiplication of material wealth in the twentieth century. This is the first--and perhaps the most important--major part of the economic history of the twentieth century.
Second, the twentieth century has seen the most brutal and more barbaric tyrannies ever. In this century governments and their soldiers have killed perhaps forty million people in war--either soldiers unlucky enough to have been drafted into the mass armies of the twentieth century, or civilians killed in the course of operations for which the claim that they were directed at reducing the enemy's war-making potential was not completely implausible.
But wars have been less than a quarter of this century's violent death toll. In this century, governments and their policemen have killed perhaps one hundred and forty million people in time of peace: class enemies, race enemies, political enemies, economic enemies, imagined enemies--you name it, governments have killed them on a previously unseen scale.
Let's call those political leaders whose followers and supporters have slaughtered more than ten million of their fellow humans "members of the Ten-Million Club." All pre-twentieth century history may (but may not) have seen two members of the Ten-Million Club: Chingis (Ghengis) Khan, the ruler of the twelfth century Mongols, the launcher of tremendously bloody invasions of Central Asia and China, and the founder of China's ruling Yuan Dynasty (Marco Polo's travels were to the court of the Yuan Emperor Kubulai Khan); and Hong Xiuquan, the mid-nineteenth-century Chinese intellectual who declared himself Jesus Christ's younger brother and launched the Taiping Rebellion.
By contrast, the twentieth century has seen perhaps five members join the Ten Million Club: in alphabetical order, Adolf Hitler, Chiang Kaishek, Vladimir Lenin, Joseph Stalin, and Mao Zedong. Hitler, Stalin, and Mao have credentials that may well make them the charter members of the Thirty Million Club as well--perhaps the Fifty Million Club. A regime whose hands are as bloody as those of the Suharto regime in Indonesia--with the blood on its hands of perhaps 450,000 communists, suspected communists, and others who simply were in the wrong place at the wrong time at its creation in 1965, and perhaps 150,000 inhabitants of East Timor since the Indonesian takeover in the mid-1970s--barely makes the twentieth century's top twenty list of civilians massacred.
What does this--bloody--political and secret police history have to do with economic history, with the story of how people produced, distributed, and consumed the commodities needed and desired for their material well-being? First, most economic activity is directed at extending and improving life--and the possibility that the secret police will knock at your door and drag you off for torture and death is a serious threat to your material well-being. The seventeenth-century political philosopher Thomas Hobbes wrote that people are motivated by sticks and carrots: "the fear of violent death, and the desire for commodious living." In a century where the chance that a randomly-selected person will be shot or starved to death by his or her own government approaches two percent, the fact of large scale political murder becomes a very important aspect of everyday life and material well beign.
Second, the twentieth century is unique in that its wars, purges, massacres, and executions were part of struggles over economics. Before the twentieth century people killed each other over theology--eternal paradise or damnation. Before the twentieth century people killed each other over power--who gets to be top dog, and to command the material resources of society. These motives are, to some extent, comprehensible.
But only in the twentieth century have people killed each other on a large scale in disputes over the economic organization of society. The Communist Party chief of a Ukrainian village is boss whether or not the cattle are owned by individual farmers or by the village collective. Fidel Castro rules in Havana whether or not farmers are allowed to sell their crops in roadside stands. Power, personal status, and eternal salvation had little to do with the Soviet collectivization of agriculture, the Cuban suppression of small-scale markets, or the disaster of Mao's Great Leap Forward. All of these were in large part and certainly appeared on the surface to be attempts to guide and shift the economy. And other twentieth century disasters had equally strong roots in economic ideas: it is hard to see World War II in the absence of Adolf Hitler's insane idee fixe that the Germans needed a better land-labor ratio--more "living space"--if they were to be a strong nation; beliefs that overseas colonies provided powerful economic advantages fueled great power rivalries before World War I.
So a very important part of the second feature of the twentieth century, the twentieth century as the century of blood, is the fact that the causes of most of the bloodshed were economic ideologies: beliefs about how the world worked, and how the economy should be organized.
Third, the twentieth century has seen a growing economic gulf between nations. Those nations and economies that were relatively rich at the start of the twentieth century have by and large seen their material wealth and prosperity explode. Those nations and economies that were relatively poor have grown richer--but for the most part slowly. And the relative gulf between rich and poor economis has grown steadily so that today it is larger than at any time in humanity's previous experience, or at least larger than at any time since there were some tribes that had discovered how to use fire and other tribes that had not.
This particular glass can be viewed either as half empty or as half full. Half empty: we live today in the most unequal, in terms of the divergence in the life prospects of children born into different economies, world ever. Half full: most of the world has already made the transition to sustained economic growth; most people live in economies that, while far poorer than the leading-edge post-industrial nations of the world's economic core, have successfully climbed onto the escalator of economic growth and thus the escalator to modernity. The economic transformation of most of the world is less than a century behind the economic transformation of the leading-edge economies--only an eyeblink behind, from a millennial perspective.
On the other hand, one and a half billion people live in economies that have not made the transition to economic growth, and have not climbed onto the escalator to modernity. It is very hard to argue that the median inhabitant of Africa is any better off in material terms than his or her counterpart of a generation ago.
The existence, persistence, and increasing size of large gaps in productivity levels and living standards acros nations is, in a sense, extraordinarily bizarre. The source of the material prosperity seen today in leading-edge economies is no secret: it is the storehouse of technological capabilities that have been invented since the beginning of the industrial revolution. This storehouse is no one's property. Most of it is accessible to anyone who can read, and almost all of the rest is accessible to anyone who can obtain an M.S. in Engineering. Governments, entrepreneurs, and individuals in poor economies should be straining every muscle--should have long ago strained every muscle--to do what Japan began to do immediately after the mid-nineteenth century political coup called the Meiji Restoration, and to acquire and apply everything in humanity's storehouse of technological capabilities.
So the third important aspect of twentieth century economic history is divergence: the fact that economies are, by almost every measure, less alike today than a century ago in spite of a century's worth of revolutions in transportation and communication.
Fourth, the twentieth century did not know how to manage its economies very well. The twentieth century sees the century-long economic disaster of Communism, and the quarter-century-long disaster of Fascism. It also sees governments that appear singularly inept at managing market economies--or inept at coping with economic shocks that threaten to cause mass unemployment or raging hyperinflation. Some of it is because twentieth century economists did not know what to prescribe: the history of economic policy reads like alchemy, not chemistry, and often the proposed remedies made economic problems worse. Some of it is that politicians did not like to follow their economists' advice, or at least sought for a more complaisant set of economists.
The overall impression is of a tremendously powerful, efficient, and productive social mechanism--the market economies--that no one knows how to operate or fix. The story of how governments have managed or mismanaged their economies, and how knowledge and ignorance of how the economic system works have been painfully gained and painfully lost, is a fourth important strand in the economic history of this century.
There, at least, is my vision of what a millennial perspective will see as the important aspects of twentieth century economic history: the tremendous surge of material prosperity, the coupling of productive power and economic ideology with mass murder, the bizarrely uneven distribution of economic growth and prosperity around the world, and the failure of economic policy to advance from the stage of alchemy to chemistry. And I think that we get a better view of twentieth century economic history if we take such a millennial perspective.
Thus the first segment of this course, running from today through two weeks from now, will take a millennial perspective: a class each on each of what I see as the four major themes of the twentieth century.
Only afterwards will we drop back into narrative--spending two weeks on the state of the economy at the end of the nineteenth century and developments up through World War I, two weeks on the 1920s, three weeks on the Great Depression and World War II (finishing up with a midterm), two weeks on the Great Keynesian Boom of the generation after World War II, and two weeks on the more troubled economic period since 1973 or so, before finishing up with a class in which I will bravely extrapolate trends into the future and make nonsensical and surely erroneous projections.
5. Policy and Prosperity: The Political Management of Industrial
Economies
Hong Xiuquan; Taiping Rebellion
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Send e-mail to Brad DeLong at delong@econ.berkeley.edu