A Short History of Man: Progress and Decline
II. Economic History: The Problem
The problem to be explained in the following has been captured by two charts depicting world population growth on the one hand and the development of per capita income (average living standards) on the other.
The first chart, taken from Colin McEvedy and Richard Jones,3 shows human population growth from 400 BC until the present (2,000 AD). The population size was about four million at the beginning of the Neolithic Revolution. But up until about 7,000 years ago (5,000 BC) the area under crops (first merely in the region of the Fertile Crescent and then also in northern China) was too small to have much of an effect on the global population size. By then the population had grown to about five million. But since then, population growth increased rapidly: 2,000 years later (3,000 BC) it had almost tripled to fourteen million, 3,000 years ago (1,000 BC) it had reached fifty million,4 and only some 500 years later, when the chart sets in, the world population size stood at about 100 million. Since then, as the chart indicates, the population size has continued to increase slowly but more or less steadily up until about 1800 (to about 720 million), when a significant break occurred and the population growth sharply increased to presently, only some 200 years later to reach seven billion.
Figure I : Total World Population (Millions) Units—Measured in Millions of People
The second chart, taken from Gregory Clark,5 shows the development of per capita income from the beginning of recorded human history to the present. It too shows a significant break occurring at around 1800. Until that time, i.e., for most of recorded human history, real income per capita (in terms of food, housing, clothing, heating, and lighting) did not rise. That is, average living standards in eighteenth century England were not significantly higher than those in ancient Babylon, where the oldest records of wage rates and various consumer goods prices could be found. Naturally, with sedentary life and private landownership distinct differences in wealth and income came into existence. There existed large landowners (lords) who lived in enormous luxury, even by today’s standards, almost from the beginnings of settled life. Nor were average living standards always and everywhere equally low. There existed pronounced regional differences between, for instance, English, Indian, and West African real incomes in 1800. And of course, as far as cross-time comparisons are concerned, many technologies existed in 1800 England, which were unknown in ancient Rome, Greece, China, or Babylon. Yet in any case, everywhere and at all times the overwhelming majority of the population, the mass of small landowners and most laborers, lived near or only a little bit above subsistence level. There were ups and downs in real incomes, due to various external events, but nowhere was there a continuous upward trend in real income per person discernable until about 1800.
Figure II: World Economic History in One Picture. Incomes Rose Sharply in Many Countries After 1800 but Declined in Others.
In combination, both charts capture the world-historic significance of the so-called Industrial Revolution, which occurred some 200 years ago, as well as the significance—and in particular the length—of the previous, Malthusian stage of human development. Until sometime around 1800, little difference in the economies of humans and nonhuman animals existed. For animals (and plants) it is always and invariably true that an increase in their number will encroach upon the available means of subsistence and eventually lead to overpopulation, to “supernumerary specimens,” as Mises has called them, which must be “weeded out” due to a lack of sustenance. Today, we know that as far as humans are concerned, this must not be so: no supernumerary specimens who are thus weeded out exist in modern, western societies. But for most of human life this was indeed the case.
To be sure, the population size could grow, mostly because more land was taken into possession for agricultural use, and partly because of better technology incorporated in producer goods and an extended and intensified division of labor. But all such economic “gains” were always eaten up quickly by a growing population that again encroached upon the available means of subsistence and led to overpopulation and the emergence of the “supernumerary specimen” for whom there was no space in the division of labor and who consequently had to die out silently or become a menace (an economic “bad”) in the form of beggars, vagrants, plunderers, bandits, or warriors. Throughout most of human history, then, the iron law of wages held sway. Income and wages were held down near subsistence level owing to the existence of a substantial class of supernumerary specimens.
