I have criticized economists for oversimplifying issues,[1] but I must say that sometimes they cut through the Gordian knot of difficult historical questions. That has just happened with an article by Joseph Connors, James D. Gwartney, and Hugo M. Montesinos.[2]
For decades, almost since Arnold Toynbee coined the term, there has been a debate over whether the Industrial Revolution increased or reduced the standard of living, especially for workers. Was the nineteenth century a period of “massive and continuous” progress, or were the Marxists right in saying that “capitalism both in its evolution and present form must be evil”?[3]
Connors et al. will have none of that debate because they have come up with a revolution that, by important measurements, has had even more impact than the Industrial Revolution. It is happening now around the world, affecting nearly everybody, not just those in England or Western Europe.
They call it the Transportation-Communication Revolution, and it started in the 1950s. (I hope they will come up with a snappier name.) Very simply, transportation and communication costs have tumbled. For example, revenue per ton-kilometer for air cargo went down 94 percent from 1955 to 2019. The cost of shipping by ocean fell more than 50 percent between 1974 and 2016. In 1995, 524 million people traveled between countries; in 2017, 1.3 billion did (an increase of 148 percent).
Many factors caused this revolution in trade. Cargo shipping containers, jet engines, the Internet, and cellphones have all contributed. Add to that the entrepreneurship that put these inventions to use and you have a revolution that builds on itself by stimulating trade, improving economic institutions, and even increasing the share of working-age population. The result is economic growth.
To show the impact of these changes Connors et al. divided 134 countries into three groups: high-income countries; developing countries that suffer from geographic disadvantages (they are distant from ports and trade centers and have unfavorable climate); and developing countries that don’t have those disadvantages.[4] The economies in all sets of countries grew over the past half-century, but the geographically advantaged developing countries grew the most.
Between 1985 and 2005, the GDP of the geographically advantaged group of 73 developing countries grew by an average of 3.4 percent each year, compared with 2.1 percent for the high-income countries. Between 2000 and 2016, the rate was 4.96 percent for those countries, compared to .76 percent for high-income countries.
Now, back to the Industrial Revolution. Yes, the Industrial Revolution “transformed subsistence living into sustained growth, but only for about 15 percent of the world’s population,” they write. “Throughout the rest of the world, change was minimal.”[5] But today, 70 percent of the world’s population has been dramatically affected by this revolution, transforming “even more rapidly than the Industrial Revolution transformed the West between 1820 and 1950.”[6]
So how did these economists cut the Gordian knot? By shrinking the Industrial Revolution. They acknowledge that the Industrial Revolution did raise the standard of living, but they imply that the squabbles over when and how much are trivial compared to today’s news. That news is the worldwide spread of economic growth thanks to the Transportation-Communication Revolution.
Notes
[1] “Theories and Facts,” Oct. 9, 2018, commenting on Robert K. Ekelund, Jr., Robert F. Hébert, and Robert Tollison, “An Economic Analysis of the Protestant Reformation,” Journal of Political Economy 62, no. 2 (June 2002).
[2] Joseph Connors, James D. Gwartney, and Hugo Montesinos, “The Transportation-Communication Revolution: 50 Years of Dramatic Change in Economic Development,” Cato Journal 40, no. 1 (Winter 2020), 153-198.
[3] R. M. Hartwell, “Interpretations of the Industrial Revolution in England: A Methodological Inquiry.” Journal of Economic History 19, no. 2 (June 1959) 229-249, at 240.
[4] They are adopting the designation of geographical disadvantages in Jeffrey Sachs, “Institutions Don’t Rule: Direct Effects of Geography on Per Capita Income,” NBER Working Paper No. 9490, 2003.
[5] Connors et al., 195.
[6] Connors et al., 196.
Image by Steve Howard from Pixabay.
Well, this might come as a shocker, but there is an academic sub-discipline known as transportation geography… https://transportgeography.org/?page_id=40
They even have their own journal https://www.journals.elsevier.com/journal-of-transport-geography/
It is true that many technological advances have come through the search for military success, but not this one. Malcom McLean owned a trucking company, He was about 24 years old when, while waiting at a port for his truck to be unloaded, it occurred to him that perhaps the whole truck could be lifted onto the ship. He invented the shipping container, which does just that. It drastically reduced the cost of shipping and made international trades possible that would never have been considered before.
I was tempted to say that the communications-transportation revolution has also brought Covid-19, but there was the pandemic disaster of Spanish flu of 1918 even before commercial air travel. Because of the biological equivalent of compound interest, a little transportation has a huge affect.
Which brings us to the dark potential of the new revolution–new forms of warfare. I don’t subscribe to conspiracy theories, but new technologies enabled by global scientific communication, rapidly falling prices of biotech, and the spread of education means that THE most powerful weapons are now biologically engineered, microscopic, and easily transported. Covid-19, with just accidental spread, illustrates the potential–more powerful weapons, more difficult to detect and defeat, more easily acquired and deployed by relatively unsophisticated non-state agents. Meanwhile, let’s enjoy the positives.