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Free Minds & Free Markets

Data as History: Charting the Last 2000 Years of Human Progress

The historical evidence in favor of “free minds and free markets,” is there for everyone to see.

Angus Maddison, the late professor of economics at the University of Groningen, never won a Nobel Prize for economics, but he did leave behind an enduring legacy in the form of his income estimates going back to the time of Christ (or, for the secularly-inclined, Caesar Augustus). On a previous occasion, I discussed the graph below, which shows the painfully slow (almost non-existent) growth in average per capita incomes prior to the Industrial Revolution and the extraordinary growth that humanity has experienced over the last two-and-half centuries. Adjusted for inflation, an average inhabitant of the planet is today roughly ten times as rich as she or he was just two centuries ago.

Considering that Homo sapiens only emerged as a unique species of hominids some 200,000 years ago, our experience with prosperity is incredibly short, amounting to no more than 0.1 percent of our time on Earth. The remarkable novelty of our present abundance may, perhaps, explain our unease with it ("all good things must come to an end") and our eschatological obsessions ranging from overpopulation to out-of-control global warming.

Continued human progress does, of course, depend on maintaining policies, institutions and ideas (intellectual enlightenment, classical liberalism and free exchange) that made it possible in the first place.

I was reminded of that fact on the death of my grandfather who, having been born in 1922, frequently mused about the relative prosperity of his native Czechoslovakia between the wars. A life-long anti-communist (for decades, he was prevented from practicing law, because he married the wrong kind of a girl; no, not a prostitute, but the daughter of a wealthy family), he always maintained that Czechoslovakia could have been as wealthy as Austria "if it hadn't been for the Bolshevik putsch of 1948."

Maddison's remarkable data allows us to see such "what ifs" very clearly. Czechoslovakia emerged as an independent nation from the ruins of the Austro-Hungarian Empire following the conclusion of the Great War in 1918. In 1920, the country's per capita income was 80 percent of that of Austria (the industrialized Czech lands were probably as wealthy as Austria, but the average was brought down by rural and poorer Slovakia) and kept up with Austria until the early 1950s. During the communist period, Czechoslovakia fell far behind Austria. When communism fell, income in the former amounted to a mere 54 percent of the latter.

Similar comparisons can be made between North and South Korea, East and West Germany, Argentina and Chile, or Zimbabwe and Botswana. The historical evidence in favor of "free minds and free markets," is there for everyone to see. Unfortunately, evidence does not appear to be sufficient to prevent socialism's continued appeal, as witnessed by the humanitarian catastrophe unfolding in Venezuela or periodic outbreaks of stupidity on American campuses.

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  • Fist of Etiquette||

    But we don't all have the same income. That's a problem. Any gap means that we haven't yet achieved the true utopian enlightenment of the New Man.

  • ||

    That's a pretty lame hockey stick.

  • Fist of Etiquette||

    You know who else played hockey and was the worst person in the world? That's right. Sean Avery.

  • AlmightyJB||

    I don't really differentiate between Canadians.

  • Get To Da Chippah||

    Silly Marian. The only reason GDP has ever gone up is because governments raise the minimum wage.

  • Shirley Knott||

    It's well worth taking a longer term look as well.
    Aldo Schiavone's The End of the Past and Mark Koyama's commentary thereon (Notes on Liberty blog) extend these queries back to the Roman Empire.
    Consider that the Roman economy may well have matched that of the Dutch in 1600. Why was there no industrial revolution in Hong China or the Roman Empire?
    Deirdre McCloskey speaks to these points, at least indirectly. It's an interesting prism through which to view the problem set.

  • Libertarian||

    Is D. McCloskey easy to read? Don Boudreaux constantly lavishes her with praise, but I haven't bought any of her books yet.

  • Shirley Knott||

    I'd say so. I'm looking forward to spending time with Schiavone's book. The parallels between Rome and the US are a bit scary. Well, between Rome and "Western Civilization" or "Enlightenment Civilization". It may be that in another few hundred years all of this gets treated as the breakdown of the British Empire.
    But for me one of the key points is that it is the 'free minds' part that really matters. The cultural traditions, their ebb and flow, and their impacts on markets really matter a whole lot. Culture drives the economy, although there are many feedback loops. Rome had the economy, Hong China had the economy (in terms of wealth, the existence of 'professionally produced goods', leisure time and a leisure class, etc) but neither developed robust free markets, with the consequent (subsequent?) failure of their cultures.
    We face similar challenges.

  • SamHell||

    Just looking at reviews it sounds like Aldo's downplaying Roman innovation and saying slavery played a bigger role. Does he argue that the slaves were the geniuses behind all the inventions and engineering? Damnit I might have to find a copy of this...

  • mashed potatoes||

    What was the method for calculating GDP per capita in 100 AD? Genuinely curious.

  • pan fried wylie||

    (average daily ration * 365) + the value of a hut and 2 goats.

  • JWatts||

    I'm guessing there is some humor there. I would think that, even in 100 AD, the average peasant was wealthier than that. At the very least, shouldn't you count the value of cities. Just the value of Rome alone would substantially add to the calculation.

    Also, your average person, probably had some pottery, clothing, farm implements, jewelry and weapons that would substantially add to that valuation.

    However, the calculation you show, as simple as it is, probably does come close to approximating the median human wealth of the era.

  • AlmightyJB||

    Having fresh water and sufficient sanitation to not die was the equivalent of living in a gated community in the Hamptons today.

  • Animal||

    "Dennis, there's some lovely filth down here!"

  • mortiscrum||

    I tried to explain this on Facebook to what turned out to be a group of commies and leftist anarchists. I got back a Sonic the Hedgehog meme saying "There's no such thing as a moral transaction under capitalism."

  • Libertarian||

    So basically they were right, i.e. you learned something and they didn't. (the fact that what you learned was "don't argue politics with lefties on Facebook" is irrelevant).

  • mortiscrum||

    It was a learning experience, no doubt about that. And based on how much I agonized over it afterwords, one could make the argument I was "traumatized." On a related note, I don't go on Facebook any more.

  • RRiver||

    The real question is, did you need a safe space to desensitize, and get over your traumatic experience?

  • MSimon||

    There are no safes in safe spaces. I checked.

  • Brandybuck||

    Which is truly sad, because even Marx could understand the hockey stick. He even wrote about it. His error, due to a fixation on pre-marginalist calculation, was thinking that capitalism was standing in the way of even greater progress.

  • RRiver||

    The real question is then. Did you need a safe space to desensitize and and get over your traumatic experience?

  • RRiver||

    Sorry about the double post, the first didn't show when I posted it.

  • MSimon||

    There are no safes in safe spaces. I checked.

  • I am the 0.000000013%||

    My mom always told me to check things twice

  • timbo||

    The evidence will always be there.

    unfortunately, so will politicians and cronyist losers who use the alternative propaganda to play class warfare against the successes of free market capitalism.

    Capitalism will succeed because it is the only thing that works but in the next 100 years, a lot of people are going to die thinking capitalism is the devil.
    Meaning of course that we are nearing the far end of pendulum of totally corrupted governments that abandoned the fantastic successes of capitalism and the great prosperity it showered upon people all over the globe.

  • Gracchus||

    While I can't argue with Tupy's facts, I don't understand why she keeps posting this shit and expects ordinary people to have an epiphany and suddenly think "everything's fine." GDP per capita has been rising consistently for about 4-5 centuries; taking her argument to its logical conclusion, humanity should have established a utopian society around 1900. In reality, we've gone through some of the most horrifying crises in the history of our species (the Holocaust, the Holodomor, the Great Depression, etc). Economic prospects for working-class people in the developed world have shrunk dramatically with no commensurate change in cultural expectations or norms. I just don't get how these people can just go about saying everything's dandy.

  • ColoradoKook||

    Marian's a dude.

  • ColoradoKook||

    If it's a Marian Tupy article (I'm a big fan, by the way), is it even necessary to include "charting" in the headline? I mean, that's a given, right?

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