Slouching Towards Utopia? The Economic World of the Twentieth Century: Chapter 7.1: The World in 1900: The View from 1900

7.1: The World in 1900: The View from 1900

The View from 1900

What did the world look like in the last generation of the nineteenth century? It was a much emptier world: 1.2 to 1.5B people instead of our 6.4B. It was a much poorer world--of the 1.2B people in 1870 perhaps 1.0B lived like our preindustrial ancestors because they were our pre-industrial ancestors. It was a much less technologically-advanced world: the technological-industrial frontiers of that age were the oil well, the internal combustion engine and the electric light. Nevertheless, six processes were ongoing--not, from out perspective, in full swing but definitely ongoing--that were changing the world: industrialization, urbanization, globalization, marketization, colonization, and democratization.

Let's for a moment take a broader view, and pretend we are not just studying the past of our great-grandparents but take the perspective of a seventh-millennium professor teaching his or her class (or, perhaps more probably, downloading avatars into xe’s students’ personal AIs), with a very limited amount of time and attention span in which to flag key concepts and ideas. What would such a professor think were the things that students should remember about the world economy at the start of the twentieth century?

At most, seven things:

First, that the world at the start of the twentieth century–even the most advanced economies at the start of the twentieth century–were very, very poor relative to how they would be at the century’s end. But that was about to change.

Second, that the spread of ploughs that pulled themselves and looms that wove by themselves was about to end the pre-industrial era, and promise to make the world amazingly rich by all previous standards.

Third, that the ten thousand years in which people had lived largely in small groups in villages was about to end: people were starting to live in large groups in cities.

Fourth, that in the late nineteenth century transportation costs had finally fallen low enough and transport speeds had become high enough to make mass intercontinental shipment of goods and people possible: a global economy and, because of telegraph and all the rest, a global polity too. This fall in transportation costs had for the first time created the possibility of a global economy–an economy in which movements of people and goods across oceans and between continents were central to how the economy worked, rather than mere precious and luxury froth on the surface of a deep ocean.

Fifth, that this global economy was on its way to becoming a global market. The era in which goods were either consumed at home, consumed by you relatives, traded among your neighbors, or offered up to keep the thugs with spears or the thugs with quills from killing you was also coming to an end. Supply and demand would rule--which does not mean that thugs would not use force to manipulate supply and demand.

Sixth, that the fall in transport costs and rise in transport speeds had come about when the military-force gap between the North Atlantic and the rest of the world was at its maximum--which meant imperialism, formal or informal, and colonialism, open or masked.

Seventh, that the people were standing up politically. In proportion as populations became urbanized and as rural populations became commercialzed and plugged into the global communications network, politics became democratized: rulers found themselves depending in fact as well as in noble flights of fancy on the consent of the governed--a consent that could be extracted for a while at gunpoint or gramophonepoint.

Much of the economic history of the several decades around 1900--the period immediately before World War I--can be read as the working-out of the economic, political, and technological logic of the–relatively sudden--creation of the first true global economy. In the long run, however, the patterns of migration, of international investments, of the international division of labor, and of economic growth established in the decades before World War I would not last. They were destroyed by wars, politics, and changes in technology in the three decades after 1914. When the global economy and polity was knit back together in the decades after World War II, it was knit back together in a different pattern–and now it is reweaving itself into yet a different pattern still.

Comments

[Bloix]

I would add that the greatest difference between the world of the nineteenth century and the world of the present is that in 1900 parents expected that at least some of their children would die. Global infant mortality was between 200 and 300 per thousand. And this is infant mortality only - deaths from the diseases of childhood and young adulthood, such as scarlet fever, polio, and tuberculosis, and from accidents, were in addition. In a really bad year - one of famine, war, or epidemic - every single child in a town or village might die.

To take one industrial city:

"In 1870 ... a Chicago child had a 50% chance of reaching the age 5... By 1900... the odds of surviving to the age 5 had increased to 75%. Today the odds are better than 98%." http://www.chipublib.org/004chicago/disasters/infant_mortality.html

Well into the 20th century, parents could expect their children to die. Worldwide, "in 1955, 148 of every thousand children died before their first birthday... By 1980, improved clean water and vaccination policies had brought the figure down to 79 per thousand; as of 2002 it was 55." http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=108&subsecID=900003&contentID=253035

In most developed countries today, the figure is 4 per 1000 or lower.

The wealthy of the last century had some advantages over the poor in safeguarding their children's lives, but not much. Abraham Lincoln, William Tecumseh Sherman, Robert E. Lee, and Jefferson Davis all had children who died before they did. William McKinley had two daughters. Both died in childhood. Even the wealthiest could not buy the medical care necessary to save the lives of their children.

There is no change over the past one or two hundred years greater than the alteration in our emotional and family lives occasioned by our newly acquired certainty that our children will live.

[vtcodger]

Overall, it reads well and seems accurate. A couple of minor points.

Cost effective intercontinental shipment of goods and people really started as early as the seventeenth Century. That's how the Europeans expropriated the Americas and Australia. If I recall correctly from our visit to Plimouth Plantation many years ago, the settlers there were dependent on England for shipments of virtually everything except food. Indeed, I believe that England's keeping the colonies on a tight leash with regard to local manufacturing was one of the causes of the American revolution (anyone know for sure?) Example: the weaponry used by the colonists in the unpleasantness of 1775 and the following years was, I believe, almost entirely expropriated from HRM George III, not made in America.

Second, I think you could emphasize more the rapidity of the transition to the modern world. I'm just barely old enough to remember the last vestiges of an earlier time. When I was very young, a guy used to come by two or three times a week and dump a 25 pound block of ice down a chute in the side of the house. Because World War II sidetracked production of consumer goods for much of a decade, it's a little hard to tell what things might have looked like without the war -- even in the US which was lucky enough not to be a battleground.

But my point is that when the US transitioned back to normality in the late 1940s, we transitioned back to a world that was overall very like the modern world. We had cars, electricity, supermarkets, telephones, running water, outboard motors, some drugs that worked (more now of course), air travel (expensive, but flights mostly left on time and your luggage almost always arrived at the same destination that you did), movies, radio and a few green tinged TV channels (with fewer commercials and perhaps marginally better programming). Except for computers and medicine, it wasn't that different a world.

So, I think that the transition from a relatively pre-industrial world to a relatively modern world didn't take a century. It took no more than 40 years 1910-1950 in the luckiest countries. Without the trio of tragedies that afflicted much of the world -- World War I, The Great Depression, World War II -- it might have been faster.

Two other points perhaps. Maybe eighth and ninth things.

The 'Green Revolution' of the 1950s and 1960s had relatively modest impact in North America, Europe and Australia who were able to feed their populations without it. So the advent of effective birth control in those regions was largely a social issue, not an economic issue. But for the countries of East and South Asia, it allowed countries that appeared to be economic basket cases that would always have to work as hard as they could just to feed their ever-growing populations to become self sufficient in food and even to be food exporters. Breathing room for much of the human race to at least take a shot at transitioning to a modern world.

[jbr613]

Prof. DeLong, I disagree with your statement that students of the future should remember "at most, seven things" about the world economy at the start of the twentieth century.

Given the inextricable tie between economics and politics, an eighth key concept that the professor would certainly flag would be the industrialization of warfare. At the start of the twentieth century, the major powers took the lessons learned from the American Civil War and the Franco-Prussian War of 1870 to invent unlimited, mechanized war. An estimated 8.5 million combatants and 13 million soldiers died in Word War I ("World War I." Encyclopædia Britannica. 2007. Encyclopædia Britannica Online. 30 Aug. 2007, http://search.eb.com/eb/article-9110198). The best estimates for World War II are 20 million combatants and 17 million civilians. ("World War II." Encyclopædia Britannica. 2007. Encyclopædia Britannica Online. 30 Aug. 2007, http://search.eb.com/eb/article-9110199). These figures do not include, of course, the dozens of smaller conflicts that scarred the last century.

Nor do they include the twentieth century's spate of ethnic, social and political cleansings, the greatest of which, perpetrated by Stalin, Hitler, Mao Zedong, and Pol Pot, accounted for over 40 million deaths (sources: Encyclopedia Brittanica Online, passim), and which could sadly represent the ninth "key concept" of the twentieth century.

Not having personally lived through any of these tragedies, I'm glad I live in this age of relative affluence and knowledge. Had I suffered through those devastations, I might be less sanguine.

[Mr Punch]

I agree with Bloix, but would make the point more general. Especially in view of your attention to demography, the improvements in life expectancy and health status that were spreading over the globe, related to but not the same as increasing wealth, merit attention.

[French lurker]

To add to Bloix and Punch, and related to the other post about the industrial revolution.
Educated in France -sorry for my English -, I too learned that the industrial revolution was more or less started in GB, but that France was not so far behind. So I get some new perspective when I read your posts. I understand that as a child and later not going into economics, I got my impression more from the tales of the technological advances and story of science. Like the US, the French have a home-bred inventor for almost any new technology before world war I. It now makes me laugh when I see some American or French Invention book for kids, but objectively the differences along that line do not seem to have been so marked between GB, F, DE and the US.

My point is the following: I learned also that there was a big difference in the demographic transition, which took place much earlier in France than anywhere, its economic benefits were just wasted by the Napoleonic wars. And I understood that the demographic transition was one of the component of the rocket-like development of occidental societies also known as industrial revolution.
I am curious to learn how one reconciles the demographic aspect and the technology side with your analyse "Economy first" and "it all started in Britain". Minor points? significant? hen or egg?

[andres]

Bloix: "There is no change over the past one or two hundred years greater than the alteration in our emotional and family lives occasioned by our newly acquired certainty that our children will live."

I wish I could concur, but we're not quite there yet, unless you're talking about simply surviving to teenage years. Even rich parents have to worry about DWI, overdoses, and psychotic high school or college kids with access to firearms. And being poor brings in a host of other hazards for teens and pre-teens, most having to do with crime and lack of health insurance. Children are obviously better off today than in the 19th century, but way too many parents still end up burying their adult children, or even pre-adult children.

[anne]

French Lurker:

"Educated in France -sorry for my English -, I too learned that the industrial revolution was more or less started in GB, but that France was not so far behind. So I get some new perspective when I read your posts. I understand that as a child and later not going into economics, I got my impression more from the tales of the technological advances and story of science. Like the US, the French have a home-bred inventor for almost any new technology before world war I. It now makes me laugh when I see some American or French Invention book for kids, but objectively the differences along that line do not seem to have been so marked between GB, F, DE and the US.

"My point is the following: I learned also that there was a big difference in the demographic transition, which took place much earlier in France than anywhere, its economic benefits were just wasted by the Napoleonic wars. And I understood that the demographic transition was one of the components of the rocket-like the development of occidental societies also known as the industrial revolution."

Interesting; please continue the argument underlying this comment.

[Western Dave]

Re: points 3 and 4. I'm a follower of the "Globablization of the economy is old hat" school. (For those unfamiliar with the argument, it's most accessible in "The World that Trade Created" by Pomeranz and Topik). If I remember the argument correctly; it basically runs that by WWI the world had reached unprecedented levels of economic integrations and that WWI, the Great Depression, WWII, the Cold War, and decolonization basically decimated that and only recenlty have we acheived similar levels of economic integration. Under this theory, much of the 20th century would be a regressive blip in the larger post-Mongol drive toward economic integration that defined the world after 1400.

[andres]

Western Dave: true, but there are other such blips, which are not only important in themselves but also a telling reminder that without such items as justice, sustainable income distribution, universal access to good health care, and a liberal skepticism of religion and ideology (all things which the average businessman regards as luxuries rather than necessities), the train of global integration and wealth accumulation tends to take sudden leaps backwards. The other blips include:

(1) The Black Death and the Hundred Years' War/Papal Schism in 14th century Europe.

(2) The Thirty Years war from 1618-1648, which gutted central Europe. France was physically unscathed, but had to put up with the long-term curse of Colbertism. Only the English got off free, though Charles I might beg to differ.

(3) The Second Thirty Years' War, from 1914-1945 (though some would extend that to 1991) is the biggest blip, and it's highly important to understand how it came about--through the growth of corporate control of national governments aiding an already incipient nationalism and also braking social and political reforms.

In all three blips, the four horsemen always ride in tandem, typified by the coexistence of continental war and anti-scientific ideology with pandemics. If 14th century Europe had had physicians such as Galen or Hippocrates, then obviously the Black Death would not have been cured or prevented, but I sincerely believe that the transmission vector--fleas--would have been discovered and the spread of the disease arrested. It was not to be, for Europe was still mired in religious ignorance and the work of the classical era physicians was forgotten. Similarly the Spanish flu of 1917-1920 was aided by the collapse of preventive health care in Europe and Mexico during and after the war years.

[Supreeth Kini]

Prof. DeLong, I would not completely agree with your 1st point
First, that the world at the start of the twentieth century–even the most advanced economies at the start of the twentieth century–were very, very poor relative to how they would be at the century’s end

Which countries are you refering to here? Is this after adjusting for inflation?