Last week I wrote about the Transportation-Communication Revolution that has fostered economic growth around the world.[1] Yes, it may have sped up the international spread of the coronavirus but, if so, that is a short-run effect. Prosperity has been the long-run result.
In the late nineteenth century another transportation-communication revolution took place, as railroads enabled products to be sold over vast geographical distances.[2] In the United States this led to the emergence of mass marketers like Montgomery Ward and Sears, which sent catalogs, products and even kits for building houses all around the country.
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. Continue reading “Forget the Industrial Revolution”
As I have stated before, historians are often influenced by what’s going on around them when they write about the past. In the 1950s and 1960s, the newly-independent countries looked as though they might experience their own industrial revolutions. That led to an interest among historians in the early Industrial Revolution. [1]
Economists caught the enthusiasm, too. They viewed the great potential of these countries and expected an Industrial Revolution—what W. W. Rostow called these countires’ “take-off.” [2] But that period of enthusiasm was followed by disillusionment. It turned out that many countries failed to achieve the take-off that seemed right at their doorstep.
I suggest that the economists were looking at the wrong things.
More than 20 years ago in an article for the Journal of Private Enterprise [3] I wrote about economists’ views of development as reflected in Paul Samuelson’s famous textbook. (That’s the one you probably read in your first economics class if you are of a certain age.)
I looked at Samuelson’s treatment of international development in four editions of the textbook, 1951, 1961, 1964, 1985. In them he reveals both his own views and those of other leading development economists.
You probably have heard of Robert Owen. He was a nineteenth-century British political activist (1771-1858) known for his “utopian socialism.“[1] He started communities that eschewed private property, including a colony in New Harmony, Indiana.
In those communities, he said, “the necessaries and comforts of life [will be] enjoyed by all in abundance,” and they “will ever be the abode of abundance, active intelligence, correct conduct, and happiness.”[2]
“Owenite” communities didn’t last for long.
Owen is rightly admired, however. He had a simple philosophy. He believed that all people are the products of both their inherited characteristics and their environment. If the environment is nurturing, they will develop into worthwhile beings, no matter what their economic surroundings. He held this view so strongly that, as a manager, he never punished anyone (except possibly for drunkenness) and was never visibly angry toward people. He knew their circumstances had made them as they were.
Had he stuck with being a businessman, he might have changed the world.
