J. Bradford DeLong's Blog, page 340

Cedar Brook Notes: The principal use of ���neoliberalis...

Cedar Brook Notes: The principal use of ���neoliberalism��� as a word is to erase the difference between the Mussolini-love of Ludwig von Mises and center -left technocratic economists who want to get the incidence of policies right. Why? So you can then have more freedom to propose policies that do not make technocratic sense...

Needed: A Better Karl Polanyi: Cedarbrook Notes

Cedar Brook Notes: I have two hobbyhorses I promised I would ride at this conference:

First hobbyhorse: I wondered coming up here whether this conference would turn into Karl Polanyi bingo. I am now confident that it will. Indeed, it has. As someone who thinks the master social theorists for the mid-21st century are likely to be Foucault, Keynes, Polanyi, this is not unwelcome. And this opens an opportunity for us here to actually do something constructive: Polanyi writes horribly. I want to beg for someone here to rewrite Polanyi well���to do for Karl Polanyi what Charlie Kindleberger did for Hyman Minsky, in the sense of explaining what Polanyi meant and applying it to cases. And someone needs to raise the money and run the celebration of the 75 anniversary of The Great Transformation...

Cedar Brook Notes: The late Rudi Dornbusch liked to say...

Cedar Brook Notes: The late Rudi Dornbusch liked to say that: ���German ordoliberalism was something an economist could recognize if there was a benevolent Kindlebergian hegemon stabilizing the global system.��� But if not, not.

Cedar Brook Notes: Becky Henderson to me: You need to r...

Cedar Brook Notes: Becky Henderson to me: You need to read moar Stiglitz on environmental degradation and nature capital...

Convergence Weighting by People Divergence Weighting by Nations: Cedarbrook Notes

Cedar Brook Notes: LYes, the world as a whole has become more equal over the past generation. This is overwhelmingly because two very large countries���India and China���have harvested a great deal of the low-hanging fruit of development because of better policies. If you think they will continue to do so, well and good: then you can be optimistic. If you think they will or may well not, then globalization and the rise of a global overclass augur for a future in which the rise of the Second Gilded Age is truly global rather than nationally American.

Cedar Brook Notes: On My Grand Counterfactuals: The mos...

Cedar Brook Notes: On My Grand Counterfactuals: The most interesting question is not ���do you know?��� But ���does Dora Costa know?���, which is very close to ���is it knowable���?

Gender Issues: Relatively Recent and Worth Reading...

Increasingly it looks to me like a career-interruption and child-raising penalty, as if institutions designed to figure out which men are committed to the job and are thus worth paying to keep are misapplied to women. Alan Greenspan a generation and a half ago saw a market opportunity for his forecasting firm to get more productive workers for the salary dollar. But it looks as though he was and is a substantial exception: Sarah Jane Glynn: Gender wage inequality: What we know and how we can fix it: "Women are still severely limited by gender pay inequality.... Close to half of all currently employed workers (46.7 percent), yet... average earnings of... full time, year round is 80.5 percent of men..."

Anecdotes trump data for what I wish were a surprisingly large proportion of male American economists: Economist: Barriers to entry: "In economics, men receive tenure at a rate 12 percentage points higher than women do, after controlling for family circumstances and publication records...

The very sharp Alexandra Petri's work about feminism always works on two levels: Alexandra Petri: Famous quotes, the way a woman would have to say them during a meeting: "'Woman in a Meeting' is a language of its own...

Susan Dynarski retweeted: The Harvard Crimson: "The Faculty of Arts and Sciences has filed a formal Title IX complaint against Government Professor Jorge I. Dominguez, according to correspondence obtained by The Crimson...

Emily Eisner: Women in Economics at Berkeley: "However in order to turn bold ideas into a reality, the AEA needs to establish institutions and systems that will incentivize the behavior they endorse...

Highlighted: Suzanne Scotchmer: There were no tenured women at all. Suzanne was consistently professional, and a much appreciated resource for the women who came after her...

A Question About the Future of Work...: I have no sense of what kinds of things the masses of displaced workers will do in the future at the level of "microprocessor", "robot", "accounting software 'bot"...

Pamela Jakiela and Owen Ozier: : "Gender languages assign many���sometimes all���nouns to distinct sex-based categories, masculine and feminine...

Susan Pfeiffer et al.: Discernment of mortality risk associated with childbirth in archaeologically derived forager skeletons: "An obstetric dilemma may have been a persistent characteristic of human evolution...

Tom Bartlett and Nell Gluckman: She Left Harvard. He Got to Stay: "[Jorge] Dom��nguez steadily climbed the ladder at Harvard. In 1995, he was selected as director of the Weatherhead Center...

Henrik Kleven, Camille Landais, and Jakob Egholt S��gaard: CHILDREN AND GENDER INEQUALITY: EVIDENCE FROM DENMARK: "Despite considerable gender convergence over time, substantial gender inequality persists in all countries...

Susan Pedersen: Reviews ���Bread for All���: "The welfare state emerges in this account as the culmination of a series of individual, sometimes problematic and sometimes heroic, engagements and commitments...

Claudia Goldin: Harvard economist Claudia Goldin studies why women earn less than men: "If there���s one thing men can do to improve women���s life at work, it would be���

Nick Bunker: Weekend reading: ���A jolt in the markets��� edition: "This week marks the 25th anniversary of President Bill Clinton���s signing the Family and Medical Leave Act into law...

Bridget Ansel: The gender gap in economics has ramifications far beyond the ivory tower: "Given the extent to which every individual���s life is intertwined with the economy...

Heather Boushey: Gaps in the Market: "it���s not about the math. Women account for more than 40 percent of undergraduate math majors...

Think Tank Watch: Sex Scandal Rocks Cato Institute: "Here is more from Politico...

Paul Krugman: Monopsony, Rigidity, and the Wage Puzzle: "...

Paul Krugman: Monopsony, Rigidity, and the Wage Puzzle: "(1) The wage puzzle:F rom the mid-1990s until the 2008 financial crisis, it looked as if there was a fairly stable Phillips curve...

...a relationship between unemployment and the rate of wage growth. This wasn���t the ���accelerationist��� Phillips curve that underlies the concept of the natural rate of unemployment���there was no sign that low unemployment led to accelerating inflation. It was, instead, a neo-paleo-Keynesian relationship between unemployment and wages. After the crisis, wage growth dropped ��� but only about as much as it dropped in the early 2000s slump, despite much higher unemployment. And it has increased only modestly since then, to levels well below pre-crisis growth, despite unemployment rates as low as we���ve seen in a very long time...

#shouldread

We Know Little About the Origins of High Patriarchy and the Extinction of Most Y-Chromosome Lineages ca. 5000 Years Ago, But...

Comment of the Day: Interesting from Graydon. But I do not see textiles as the problem. Yes, in the Odyssey Penelope, Kalypso, the 50 maidservants of Alkinous, Kirke, and the nymphs who are called Naiads are all spoken of as at their looms. Yes, the mother of Nausikaa, the 50 maidservants of Alkinous (again), Penelope (again), and the maidservants of Odysseus are all spoken of as at their spindles. Yes, in the Iliad Khryseis, Helen, Andromakhe, "a woman" are all spoken of as at their looms. yes, Andromakhe (again), "the fair spinster", and Kritheis are all spoken of as at their spindles. Textile work is (or does not have to be) not drudgery���it is (or can be) a very social activity, for to an experienced seamstress or spinner of weaver the cognitive load of the task is not large enough to discourage conversation.

Instead, I blame the Yamnaya: the Aryans, the Indo-Europeans, the Masters of the sword, the wheel, and the bow, who spread fire and sword and the chariot and the steed from Gibraltar and Cape Finisterre to the Deccan and even to the upper reaches of the Yellow River: Graydon: Feminism in the Long 20th Century: An In-Take from "Slouching Towards Utopia: The Economic History of the Long 20th Century": "If you look at the DNA information and compare it to historical timelines, patriarchy comes in after a period of clan-based warfare that wipes out most Y-chromosome lineages and does nothing to the diversity of X-chromosome lineages...

...It does this everywhere there's genetic data. The human trick is ganging up on problems, and there has obviously been heavy social selection for forms which create legitimacy for mass violence by elevating men as a category. This is not so much the invention of the idea of kings (there are a lot of ideas of kings) as the invention of the social notion of a father-of-all, extending the senior man in the clan to the senior man of a not-necessarily-related group.

What it's done economically is redefine women as slaves; you might (e.g., "white women") have a "may legitimately get an heir upon" and a "may not get an heir upon" category split, or you might not. This is of enormous economic value (e.g., childcare is still something no one will pay appropriately for if you consider the degree of skill and responsibility, not even as much as nursing gets (under) paid). This is where the whole concept of chattel slavery comes from; the idea that you could treat some male captives as though they were women comes later and is modeled on the status of women.

Why? Because what came through about that time is textiles. You need someone to do the unremitting drudgery, you need a very simple set of rules (because you're doing this with an illiterate society where a thousand people is a big settlement and ten thousand is a major city), and you need to be able to reward the enforcers (with an absolute right to sex without having to consider consent). The system perpetuates itself amazingly well for thousands of years.

It starts to change only when a machine-based textile industry breaks the economic relation between having clothing and consigning the female of the species to spinning.

Post-20th century creates a flexibility of co-operation contest, but it also creates a movement to forcibly simplify society back into women-as-chattel because all the existing power networks both assume and require that condition.

: Who We Are and How We Got Here: Ancient DNA and the New Science of the Human Past (New York: Pantheon: 9781101870334: "In mitochondrial DNA data, all the studies found that most couples living in a population today have a very low probability of sharing a common ancestor along their entirely female line in the last ten thousand years... as expected if population sizes were large throughout this period...

...But on the Y chromosome, the studies found a pattern that was strikingly different. In East Asians, Europeans, Near Easterners, and North Africans, the authors found many Star Clusters with common male ancestors living roughly around five thousand years ago... the period in Eurasia that the archaeologist Andrew Sherratt called the ���Secondary Products Revolution,��� in which people began to find many uses for domesticated animals beyond meat production, including employing them to pull carts and plows and to produce dairy products and clothing such as wool. This was also around the time of the onset of the Bronze Age.... The Y-chromosome patterns reveal that this was also a time of greatly increased inequality, a genetic reflection of the unprecedented concentration of power in tiny fractions of the population that began to be possible during this time due to the new economy. Powerful males in this period left an extraordinary impact on the populations....

From ancient DNA combined with archaeology, we are beginning to build a picture of what this inequality might have meant. The period around five thousand years ago north of the Black and Caspian seas corresponds to the rise of the Yamnaya, who, as discussed in part II, took advantage of horses and wheels to exploit the resources of the open steppe for the first time.... Marija Gimbutas has argued that Yamnaya society was unprecedentedly sex-biased and stratified. The Yamnaya left behind great mounds, about 80 percent of which had male skeletons at the center, often with evidence of violent injuries and buried amidst fearsome metal daggers and axes. Gimbutas argued that the arrival of the Yamnaya in Europe heralded a shift in the power relationships between the sexes. It coincided with the decline of ���Old Europe,��� which according to Gimbutas was a society with little evidence of violence, and in which females played a central social role as is apparent in the ubiquitous Venus figurines....

Any attempt to paint a vivid picture of what a human culture was like before the period of written texts needs to be viewed with caution. Nevertheless, ancient DNA data have provided evidence that the Yamnaya were indeed a society in which power was concentrated among a small number of elite males. The Y chromosomes that the Yamnaya carried were nearly all of a few types, which shows that a limited number of males must have been extraordinarily successful in spreading their genes.... The descendants of the Yamnaya or their close relatives spread their Y chromosomes into Europe and India, and the demographic impact of this expansion was profound, as the Y-chromosome types they carried were absent in Europe and India before the Bronze Age but are predominant in both places today.

This Yamnaya expansion also cannot have been entirely friendly, as is clear from the fact that the proportion of Y chromosomes of steppe origin in both western Europe and in India today is much larger than the proportion of steppe ancestry in the rest of the genome. This preponderance of male ancestry coming from the steppe implies that male descendants of the Yamnaya with political or social power were more successful at competing for local mates than men from the local groups. The most striking example I know of is from Iberia in far southwestern Europe, where Yamnaya-derived ancestry arrived at the onset of the Bronze Age between forty-five hundred and four thousand years ago. Daniel Bradley���s laboratory and my laboratory independently produced ancient DNA from individuals of this period.28 We found that approximately 30 percent of the Iberian population was replaced along with the arrival of steppe ancestry. However, the replacement of Y chromosomes was much more dramatic: in our data around 90 percent of males who carry Yamnaya ancestry have a Y-chromosome type of steppe origin that was absent in Iberia prior to that time. It is clear that there were extraordinary hierarchies and imbalances in power at work in the expansions from the steppe....

When whole-genome data are used to reconstruct the size of the ancestral population of most agricultural groups in the last ten thousand years, they document population growth throughout this period, with no evidence of the Bronze Age population bottlenecks detected from Y chromosomes. This is not what one would expect from averaging the mitochondrial DNA and Y chromosomes. Instead, it is clear that the Y chromosome was a nonrepresentative part of the genome where certain genetic types were more successful at being passed down to later generations than others.... In this period, it began to be possible for single males to accumulate so much power that they could not only gain access to large numbers of females, but they could also pass on their social prestige to subsequent generations and ensure that their male descendants were similarly successful. This process caused the Y chromosomes these males carried to increase in frequency generation after generation, leaving a genetic scar that speaks volumes about past societies...

#shouldread
#commentoftheday
#inequality
#patriarchy

Implications of the Acceleration of the Pace of Growth of the Value of Human Knowledge: An In-Take from "Slouching Towards Utopia: The Economic History of the Long 20th Century"

With November 8, 2016, the Long 20th Century comes to an end. It began in 1870, when the combination of the development of the industrial research lab, the screw-propellered iron-hulled steamship, the submarine telegraph network, and America's openness to (European) immigration brought the world out of the age of gunpowder empires and set it on the escalator to prosperous modernity. It ended in 2016, when the U.S. abandoned its role as Kindlebergian hegemon and as the, at least in its own mind, City Upon a Hill.

So it is time to finish my twentieth century history book, which has been hanging fire for two decades now as the 20th Century seemed to refuse to stop���as things kept happening that seemed to be the continuation of 20th Century processes.

Right now I am working on Chapter 2: Themes. I am making a hash of it. This part of it does not say what I want it to say, and I am not sure that what I want to say is what I should say. Advice, anybody?

2.3: The Advance of Technological and Organizational Knowledge

Enabling and powering the enormous increase in material wealth���its essential prerequisite, in fact���has been the explosion in human technological knowledge, the creation of this explosion requiring not just scientists and engineers and means of communication, but also a market economy that made it worth people���s while to funnel resources to scientists and engineers so that they could do their jobs. We, however, have had not just technological breakthroughs, but a breakthrough in the creation of the research laboratory���a breakthrough in that we have now routinized the process of creating constant and successive technological breakthroughs.

The consequences have been overwhelming.

Growth economists make truly heroic assumptions to construct very rough estimates of a quantitative index of the value of the human race���s collective knowledge of technology and organization in the broadest sense���the value of the ideas about how to manipulate nature, about what people find useful for life or entertaining or useful for status, and about how humans either as individuals or production teams or societies can productively organize to make and distribute. In the framework I find most useful, they calculate output per worker Y/L as an increasing function of the capital stock per worker K/L ���how much in the way of produced means of production the typical worker is assisted by���and the efficiency of labor E. Holding the capital-output ratio K/Y constant, a 1% increase in the efficiency of labor E drives a 1% increase in production per worker Y/L . Holding the efficiency of labor E constant, a 1% increase in the capital-per-worker K/L ratio drives an 0.4% increase in production per worker Y/L.

They���we���then posit that the efficiency of labor E is itself a function of the value of the human race���s collective knowledge H and of the natural resources at the disposal of the typical worker N/L. The baseline assumption I use is that natural resources are half as important as knowledge: a fall of 3% in the natural resources at the disposal of the typical worker if balanced by a 1% increase in the value of knowledge leaves the efficiency of labor unchanged; and a 1% increase in both the value of knowledge and in resources per worker raises the efficiency of labor by 1%.

This strikes most people���this strikes me���as a somewhat odd way to proceed. The real value of production per worker and of natural resources per worker seem to be somethings we could measure and get our hands dirty calculating. But efficiency of labor? Value of ideas? Eighty years ago John Maynard Keynes warned us economists against excessive quantification of the not properly quantifiable that would make a mockery of true quantitative analysis:

Approximate statistical comparisons depending on some broad element of judgment rather than of strict calculation��� may possess significance and validity within certain limits. But the proper place for such things as net real output and the general level of prices lies within the field of historical and statistical description, and their purpose should be to satisfy historical or social curiosity.��� To say that net output to-day is greater, but the price-level lower, than ten years ago or one year ago, is a proposition of a similar character to the statement that Queen Victoria was a better queen but not a happier woman than Queen Elizabeth���a proposition not without meaning and not without interest, but unsuitable as material for the differential calculus. Our precision will be a mock precision if we try to use such partly vague and non-quantitative concepts as the basis of a quantitative analysis���

Real scientists calculate quantitative values for abstract things that cannot be seen: the change in momentum is the force times the time over which it is applied; the change in kinetic energy is the force times the distance over which its is applied; an electron or positron absorbs or generates a photon (and a photon either splits into an electron and a positron or an electron and a position collide and annihilate each other, producing a photon) in a process governed by the fine structure constant, which is a value estimated by experiment of 0.007297351 �� 0.000000006. These laws hold, as best as we can tell, exactly: they are inscribed in the deep structure of the universe, and hold for all forces, all momentums, all kinetic energies, and all photon-electron-positron interactions.

By contrast, the claim that output-per-worker Y/L varies systematically with capital-per-worker K/L with a quantitative coefficient of 0.4 is a rough rule of thumb. The claim that, holding the capital-output ratio K/Y constant, the efficiency of labor E is proportional to production-per-worker Y/L is a definition. The claim that labor efficiency E, the value of knowledge H, and natural resources per worker N/L are such that if the second and third grow at the same rate the first grows at the same rate as well is a definition. And the claim that knowledge H is thrice as important as resources N/L in advancing the efficiency of labor E is not even a rough rule of thumb: it is a guess.

There is no machine buried deep inside the earth emitting some kind of force field penetrating the universe that generates as a natural law the aggregate production function which growth economists like me like to write as:

with ��=0.4 and ��=3. And so any quantitative conclusions reached by using them should be taken with many, many grains of salt. Nevertheless, I find the framework very useful in organizing my thoughts, in generating questions to investigate, and, yes in producing very rough approximate magnitude. Queen Victoria does not appear to have been a much better queen than Queen Elizabeth. But from all historical accounts Gloriana appears to have been a much happier woman than the Widow at Windsor.

So set our quantitive index of the global value of human knowledge H equal to a value of 1 back 10000 years ago, at the end of the Gatherer-Hunter and the beginning of the Agrarian Age. Then by the year 1 this value index stood 3.5. By the year 1500 the index of the value of knowledge stood at 4.75: given similar resources, because of more knowledge about how to use nature and organize humans one worker in the year 1500 could produce things of the value it would have taken 4.75 typical workers of 8000 BC to produce.

Calculating the average rate of growth of the value of the knowledge gets us a growth rate of 0.02% per year���0.5% per generation���for the entire span years from 1 to 1500. We also see an average population growth rate for the world over this time span of 0.06% per year���1.5% per generation���as increases in technological prowess were soaked up by higher populations and thus greater resource scarcity, leaving little or none to improve humanity���s lot.

From 1500 to 1800 to 1870 our quantitative index H grows from 4.75 to 9 to 16���average proportional rates of annual increase in H of 0.2% per year over 1500-1800 and of 0.8% per year over 1800-1870. These are vastly greater than the 0.02% per year of 1-1500 or the 0.035% per year of 1000-1500. However, even the 0.8% per year of growth in human knowledge over 1800-1870 did little to raise human material well-being. Humans were perhaps 40% better off in 1870 on average than they had been in 1800���a growth rate of 0.48% per year. And, as John Stuart Mill had observed, little of this increase in production per worker trickled down to the working classes of Britain, and still less trickled down to the working classes of the rest of the world.

To a large extent, Malthus still ruled the human world of 1870. World population had grown from perhaps 900 million in 1800 to 1.3 billion in 1870���an average growth rate of 0.5% per year���and was about to grow from 1.3 billion in 1870 to 1.625 billion in 1900���an average growth rate of 0.75% per year. Contrast these population growth rates to the 0.25% per year of 1500-1800 and the 0.06% per year of 1000-1500, and see that the somewhat richer world of the Commercial Revolution and British Industrial Revolution eras was producing a substantial population response. People still had little access to effective family limitation planning. And for most people the need and desire to have surviving descendants was driving a plan to have many children���and in the richer world more of these children were surviving.

What would the world today look like if the British Industrial Revolution had not happened���if the rate of growth of the value of human knowledge H had remained after 1800 at its rate of 0.2% per year that it had attained over 1500-1800? We cannot know, but my view is that the balance of the probabilities is that the world today would look at lot like the world of 1800, or 1500, or even 1000. There would have been continued technological development at a pace four times that of 1000-1500: a rate of progress that took 100 years in the Middle Ages would have been accomplished in 25. But the world would never have become rich enough for people to begin thinking in large numbers and to substantial degrees that they should make more serious efforts to limit their fertility. And it is likely the global population growth would have reached the 0.6% per year at which essentially all of technological improvement would have gone to increasing human populations, and next to none to raising output-per-worker. Picture a world today of 3.3 billion people, a little less than half of our current population. Picture a world today with a value-of-knowledge index of 14: the level attained, historically, in 1865���a steampunk world. And picture a poor steampunk world: human real income per capita would then have been on the order of a thousand dollars per year. It would have been a world where the average person lived on 3 dollars a day, rather than our world where the average is ten thousand dollars per year and 30 dollars a day.

What would the world today look like if the British Industrial Revolution had been what there was���if the rate of growth of the value of human knowledge H had remained at its rate of 0.8% per year that it had attained over 1800-1870? We cannot know, but we can project forward. We would then see a a world today with a value-of-knowledge index of 50���the level of technology and organization that the world, roughly, attained in 1930: automobiles, not Ford���s Model T but his Model A; rural electrification a pressing issue in the United States; home appliances���even washing machines���as unusual things; radio as high-tech; radar as the frontier; the build-out of public utility networks in an attempt to capture economies of scale the hot sector for investment banking and Wall Street; no jet aircraft; no antibiotics.

How rich would such a world be? Perhaps the most relevant economist would still be Malthus. At living standards of two dollars a day with pre-industrial public health conditions human populations appear essentially stagnant. At the living standards of three dollars a day of 1800 or so human populations appear to have grown at 0.5% per year. At the living standards of four dollars a day of 1870 or so human populations appear to have grown at 0.75% per year. By the time average living standards hit 10 dollars a year after World War II the global population growth rate was 1.85% per year. Only thereafter, since 1975, have we seen population growth rates begin to slow.

In our counterfactual world with no acceleration in technological and organizational progress after 1870, does the world as a whole ever get rich enough for population growth to begin to slow? Perhaps. Perhaps not. We can construct scenarios, the more pessimistic of which would see a counterfactual world today with our value-of-knowledge index at 50 and with 6 billion people on it. That would generate standards of living averaging perhaps 6 dollars a day: the level of prosperity the world saw in 1900. And that world might then have a future in which subsequent growth in living standards was slow, as global populations continued to grow rapidly and yet technological progress was not fast enough to leap far ahead. At a rate of growth of the value of ideas of 0.8% per year and a relative salience of ideas relative to resources parameter ��, that rate of discovery, invention, and innovation would be neutralized in its effect on the efficiency of labor by population growth of 2.4% per year.

At the 1800-1870 rate of increase of the global knowledge stock, the world would not attain today���s actual level of the value of knowledge until 2360. If the world had never grown rich enough to set the demographic transition in motion, what would the corresponding population be? How scarce would natural resources be? How rich could the world be?

But that is not the world we live in. In 1870, our economists��� heroic-assumptions index of the value of knowledge index stood at 16 for the 1.3 billion people alive then. And human life was still overwhelmingly, in Thomas Hobbes���s phrase: ���nasty, brutish, and short���. The Agrarian Age that had begun with the development of agriculture and the domestication of the goat 10000 was still a reality for most of the world.

Then came the explosion. Our 7.5 billion people today have a global value of knowledge index of 421 and an average income of 30 dollars a day���10000 dollars per capita per year. The value of knowledge about technology and organization grew at an average rate of 2.3% per year over the Long 20th Century. And it is still growing. Meanwhile, humans appear to be converging on a fertility of two children per potential mother, or fewer. And human population appears to be headed for a peak around 2050 of between 9.5 and 10 billion.

That something truly big was going on was not obvious to mid-19th century economist John Stuart Mill or to late-19th century economist Alfred Marshall. But it had become very obvious by the team early-20th century economist John Maynard Keynes sat down to write, looking backward from 1919 at the pre-World War I era 1870-1914:

After 1870��� developed��� an unprecedented situation���. The pressure of population on food��� became for the first time in recorded history definitely reversed. As numbers increased, food was actually easier to secure���. With the growth of the European population there were more emigrants on the one hand to till the soil of the new countries, and, on the other, more workmen were available in Europe to prepare the industrial products and capital goods which were to maintain the emigrant populations in their new homes, and to build the railways and ships which were to make accessible to Europe food and raw products from distant sources���. In this economic Eldorado, in this economic Utopia, as the earlier economists would have deemed it, most of us were brought up. That happy age lost sight of a view of the world which filled with deep-seated melancholy the founders of our Political Economy���. Malthus disclosed a Devil. For half a century��� he was chained up and out of sight���.

What an extraordinary episode in the economic progress of man that age was!��� The greater part of the population, it is true, worked hard and lived at a low standard of comfort, yet were, to all appearances, reasonably contented with this lot. But escape was possible, for any man of capacity or character at all exceeding the average, into the middle and upper classes, for whom life offered, at a low cost and with the least trouble, conveniences, comforts, and amenities beyond the compass of the richest and most powerful monarchs of other ages. The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; 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���

Keynes feared, in 1919, that World War I had broken this marvelous machine of economic growth and human happiness, and that the world might face a reversion to some Malthusian dystopia. 11 years later he had seen the demographic transition coming and was pleased by the progress of technology, and had veered to optimism. He then foresaw that we today would be���in material things���in utopia:

Let us, for the sake of argument, suppose that a hundred years hence we are all of us, on the average, eight times better off in the economic sense than we are to-day���. The needs of human being��� fall into two classes���those needs which are absolute in the sense that we feel them whatever the situation of our fellow human beings may be, and those which are relative in the sense that we feel them only if their satisfaction lifts us above, makes us feel superior to, our fellows. Needs of the second class��� may indeed be insatiable���. But this is not so true of the absolute needs���. Assuming no important wars and no important increase in population, the economic problem may be solved, or be at least within sight of solution, within a hundred years. This means that the economic problem is not���if we look into the future���the permanent problem of the human race���.

Will this be a benefit? If one believes at all in the real values of life, the prospect at least opens up the possibility of benefit. Yet I think with dread of the readjustment of the habits and instincts���. To use the language of to-day-must we not expect a general ���nervous breakdown���? We already have a little experience of what I mean -a nervous breakdown of the sort which is already common enough in England and the United States amongst the wives of the well-to-do classes, unfortunate women, many of them, who have been deprived by their wealth of their traditional tasks and occupations���who cannot find it sufficiently amusing, when deprived of the spur of economic necessity, to cook and clean and mend, yet are quite unable to find anything more amusing���.

I see us free, therefore, to��� once more value ends above means and prefer the good to the useful. We shall honour those who can teach us how to pluck the hour and the day virtuously and well, the delightful people who are capable of taking direct enjoyment in things, the lilies of the field who toil not, neither do they spin.

But beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to every one that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight���

How did the world accomplish its further threefold leap, relative to what had taken place in the British Industrial Revolution era of 1800-1870 in the underlying fundamentals of economic growth? Why, instead of the British Industrial Revolution growth surge petering out and being followed by a return to the Commercial Revolution era���itself a positive historical anomaly���did the rate of human progress leap ahead at a tenfold pace? Why does one year since 1870 see the relative technological and organizational progress of three years over 1800-1870, of ten years over 1500-1800, and of a hundred years over 1-1500? Just what happened around 1870 to make this shift? And what has happened between then and today to sustain it?

I see four factors as key:

The development of the industrial research laboratory of Edison and Tesla, and its subsequent bureaucratization and generalization
Globalization in goods transport, in the form of the iron-hulled screw-propellered ocean-going steamship linked to the railroad network, and subsequent developments.
Globalization in communication, in the form of the global submarine telegraph network linked to landlines, and subsequent developments.
The openness of the world���most important, perhaps, in migration, as one in seven humans changed their continent between 1870-1914, but this was closely linked to the other forms of openness that allowed transport and communications to produce globalization and that allowed research and development to diffuse throughout the world, albeit slowly.

These all four together were, I think, more likely than not enough to be a tipping point. I wish that I could do more in this book to explain why they together were a tipping point, but I do not know enough to do so. I can, however, trace their consequences.