Slouching Towards Utopia: An Economic History of the Twentieth Century

If we have grown so rich so fast, why do so few of us think we’re living in utopia?

Something started during The Enlightenment, but everything really changed between 1870-2010, what has been called “the long twentieth century.” The world got richer and more technologically advanced at a rate many times faster than in any period of human history.

That’s the focus from economics historic Bradford deLong’s 2022 book “Slouching Towards Utopia: An Economic History of the Twentieth Century.” This extends Robert Gordon’s effective 2016 book The Rise and Fall of American Growth.

What happened in 1870? Well, deLong argues that we “invented invention,” with the help of the research lab and the corporation. Globalization happened too because, by 1870, “ it became more expensive to conquer than to trade.”

The book is well regarded in economics and history communities that I follow, so I eagerly read and enjoyed it. I recommend it for anyone as nerdily interested as I am. Below I share my notes for future reference.

My notes:

1870-2010: “long twentieth century”
“Things are marvelous and terrible, but by the standards of all the rest of human history, much more marvelous than terrible. The 140 years from 1870 to 2010 of the long 20th century were, I strongly believe, the most consequential years of all humanity’s centuries”
We ended “near universal dire material poverty” with globalization, the industrial research lab and the modern corporation “: the long 20th century was the first century in which the most important thread was an economic one
In contrast to noted historian-Marxist Eric Hobsbsawm and others use short twentieth century of 1914-1991, to follow rise of democracy and capitalism in 1776-1914, this author takes a long 20th century
Hayek: market economy crowdsources solutions for the problems it sets
“My estimate- or perhaps my very crude personal guess of the average worldwide pace of what is at the core of humanity’s economic growth, the proportional rate of growth of my index of the value of the stock of useful ideas about manipulating nature and organizing humans that were discovered, developed, and deployed into the world economy, shot up from about 0.45 percent per year before 1870 to 2.1 percent per year afterward, truly a watershed boundary-crossing difference. A 2.1 percent average growth for the 140 years from 1870 to 2010 is a multiplication by a factor of 21.5. That was very good: the growing power to create wealth and earn an income allowed humans to have more of the good things, the necessities, conveniences, and luxuries of life, and to better provide for themselves and their families. This does not mean that humanity in 2010 was 21.5 times as rich in material-welfare terms as it had been in 1870: there were six times as many people in 2010 as there were in 1870, and the resulting increase in resource scarcity would take away from human living standards and labor-productivity levels. As a rough guess, aver age world income per capita in 2010 would be 8,8 times what it was in 1870, meaning an average income per capita in 2010 of perhaps $11,000.
2.1 means doubling every 33 years, though those riches were vastly more unequally distributed globally in 2010 than in 1870
“The market was made for man, not man for the market” Hungarian anthropologist Karl Polanyi (1886-1964)
Wittgenstein says narratives are “nonsense” but we can use them as steps “to climb beyond them,” then “throw away the ladder” to “see the word aright”
“Citing a quotation from the eighteenth-century philosopher Immanuel Kant- “Out of the crooked timber of humanity no straight thing was ever made” the philosopher-historian Isaiah Berlin concluded, “And for that reason no perfect solution is, not merely in practice, but in principle, possible in human affairs.
Berlin went on to write, “Any determined attempt to produce it is likely to lead to suffering, disillusionment, and failure.” This
Hayek argued we couldn’t interfere with market economy (author says “bind ourselves to the mast”) but the market only recognizes property rights and stuff rich people want but Karl Polanyi said we believe other rights exist
Daily wages of unskilled male worker in London in 1600 would buy 3k calories; by 1870, 5k calories and today it would buy 2.4m calories
All the world’s wealth creation started in The Enlightenment (1685-1815) and picked up 1770 and then 1870-2010 marked 4 themes: US as superpower, the nation state, corporations and widespread suffrage
1770-1879 began to see productive capability outrun population growth and natural scarcity
John Stuart Mill (1806-1873) in his Principles book (1848): Far from lightening humanity’s daily toil, the era’s technology merely “enabled a greater population to live the same life of drudgery and imprisonment, and an increased number of manufacturers and others to make fortunes.”
“The economic historian Richard Easterlin helps explain why. The history of the ends humans pursue, he suggests, demonstrates that we are ill-suited for utopia. With our increasing wealth, what used to be necessities become matters of little concern–perhaps even beyond our notice. But conveniences turn into necessities. Luxuries turn into conveniences. And we humans envision and then create new luxuries. (33)
Easterlin, bemused, puzzled over how “material concerns in the wealthiest nations today are as pressing as ever, and the pursuit of material needs as intense.” He saw humanity on a hedonic treadmill: “Generation after generation thinks it needs only another ten or twenty percent more income to be perfectly happy. … In the end, the triumph of economic growth is not a triumph of humanity over material wants; rather, it is the triumph of material wants over humanity. We do not use our wealth to overmaster our wants. Rather, our wants use our wealth to continue to overmaster us. And this hedonic treadmill is one powerful reason why, even when all went very well, we only slouched rather than galluped toward Utopia. Nevertheless, getting off the treadmill looks grim.”
His book’s five themes: history became economic; the world globalized; technology was the driver; governments mismanaged markets (too much and too little control); tyrannies intensified
Greg Clark estimated English construction worker real wages: value of 100 in 1800, 1650, 1340, 1260, 1230, the highest was 150 in 1450 after the black plague had killed a third of the European population, by 1870 it was 170
Malthus wrote his famous Essay on Population at a time that invention just couldn’t keep pace with population growth, which kept everyone poor. (The Malthusian curse)
Author’s rate of innovation stood at 0.04% for centuries starting in around Year 1 onward; in 1500 the Industrial-Commercial Revolution jumped to 0.15%; in 1770 jumped to 0.45 and then the third watershed in 1870 jumped wildly up to 2.1%, when technology far outpaced population growth and eventually population growth declined
What did the 1500-1770 period bring? “The oceangoing caravels, new horse breeds, cattle and sheep breeds (the Merino sheep, especially), invention of printing presses, recognition of the importance of restoring nitrogen to the soil for staple crop growth, canals, carriages, cannons, and clocks that had emerged by 1650 were technological marvels and were with the exception of cannons, and for some people caravels great blessings for humanity. But this growth was not fast enough to break the Devil of Malthus’s spell trapping humanity in near-universal poverty. Population expansion, by and large, kept pace with greater knowledge and offset it. Globally, the rich began to live better.* But the typical person saw little benefit- or perhaps suffered a substantial loss. Better technology and organization brought increases in production of all types- including the production of more effective and brutal forms of killing, conquest, and slavery.”
“Individual stories are only important if they concern individuals at a crossroads, his actions end up shaping humanity’s path, or if they concern individuals who are especially representative of the great swath of humanity.”
William Stanley Jevons 1865 Coal question: England will run out of coal!
“Why has every year since 1870 seen as much technological and organizational progress as was realized every four years from 1770 to 1870? Or as much progress as was realized every 12 years from 1500 to 1770? Or every 60 years before 1500? And how did what was originally a geographically concentrated surge in and around parts of Europe become a global albeit unevenly distributed phenomenon?… I think the answer lies in the coming of the industrial research laboratory, the large, modern corporation and globalization… All of which, then proceeded to solve the problems that the economy set itself.”
That let Edison and Tesla to become inventors
Globalization: 1800, 6% in international trade (3% export and 3% import in a given region) ; 9% in 1870 and 15% in 1914
Canal and rail made transit powerful but the progressives of the day didn’t like it:
“The mid-nineteenth-century Massachusetts transcendentalist author and activist Henry David Thoreau’s response to the railroad was: “Get off my lawn!” Men have an indistinct notion that if they keep up this activity of joint stocks and spades long enough all will at length ride somewhere in next to no time and for nothing, but though a crowd rushes to the depot and the conductor shouts “All aboard!” when the smoke is blown away and the vapor condensed, it will be perceived that a few are riding, but the rest are run over- and it will be called, and will be, “a melancholy accident.”
The Oceanic iron hulled ship in 1870 from Belfast made 9 days Liverpool to NYC in what would have taken a month in 1800 sparked mass immigration; 50m people left Europe for americas and Australia and South Africa in 1870-1914
Winston Churchill, Ghandi and Deng Xiaopaing were all immigrants for a time (or Churchill was half American), which speaks to the importance
Roger Baldwin: “the first unbundling” of 1870-1914 saw shipping costs go down so much that where something was made didn’t havent to be where it was produced; in 1500 global trade was 1.5% of world production; by 1700 it was 3%, by 1850 it was 4%, 1880 11%, 1913 17% and today it is 30%
Why didn’t other parts of the world copy the North Atlantic corridor between the United States UK Canada, etc before 1914? Author is unsure but tends to say it would have required tariffs to let domestic industries develop but everyone was already opposed to a Hamiltonian “practical political economy” for a “developmental state” and so empires wouldn’t let tariffs go up
“Unmanaged, a market economy will strive to its utmost to satisfy the desires of those who hold the valuable property rights”
The Market undervalues a community of practice, where like minded workers commiserate. No one gets money flow from the version of Silicon Valley’s Wagon Wheel bar (so the market doesn’t think it cares but it should)

Why did everything develop in Global North, not South?

Robert Allen: imperialism, since they held back their colonies without building ports and railroad and schools
W Arthur Lewis thought migration and global commodity trade, where cheap China and India labor went to other peripheral global south countries and all kept labor down without letting a middle class grow
Joel Mokyr says Enlightenment ideas and networks set foundation
Raul Prebisch: landlord aristocracies Des needed from Castilian conquistadores kept factories with luxuries would Be better oceans away

Why did invention change in 1870? Why not the Roman 3,600 solider legion or the printing press or Portuguese Caravel and musket or the horse collar and heavy plow that moved European settlement northward? “What changed after 1870 was that the most advanced North Atlantic economies had invented invention” not just textile manufacturing and railroads but the research lab and corporation created the machine of growth
Bessemer steel
Our electrical grid way more teslas (AC) than Edison (DC)
Germany was a third superpower but in 1939 4/5 of Hitler’s wheeled and tracked vehicles were powered by horse and mules: the works still straddled modernity and past
A third of households in 1900 had boarders (mostly young men)
Leon Trotsky, who spent 10 weeks in NYC before he changed his name, recounted later in life while living in exile and before his assassination about his leaving NYC in 1917: “ I was leaving for Europe, with the feeling of a man who has had only a peek into the furnace, with the future is being forged.”
“There was more proportional, techno economic progress and change in a single year over the 1870 to 2010 period than in 50 years before 1500, in more than 12 years over the period from 1500 to 1770, in more than four years over 1770 to 1870.”
Of Schumpeter’s creative destruction the author writes: “Great wealth is created by the creation. Poverty is imposed by the destruction. And uncertainty and anxiety are created by the threat.”
Over 2006-2016 real GDP per capita grew at just 0.6%; over 1996-2006 it had been 2.3%, 1976-1996 had been 2%, over The Thirty Glorious Years after WW2 it has been 3.4%
Hayek’s whole thing was that any central planning was a “road to serfdom”; egalitarianism led to permissiveness
Why does Hayek matter? He’s influential (because rich and powerful love him); (2) he’s not wrong that a free market is better than confiscation and redistribution for political gain and (3) the market order of property rights, contracts and exchange can distribute information and price signals effectively , and though he ignored market limitations what he got right is necessary to understand the long 20th century success as these systems became more widespread
Authors synopsis of Karl Polanyi in Great Transformation: “The market economy believes that the only rights that matter are property rights, and the only property rights that matter are those that produce things for which the rich have high demand. The people believe that they have other rights.” Namely those in land, labor and finance that warrant a fair shake
He criticizes the “rootless cosmopolite” financiers, who have no connection to community — he drifts into antisemitism here but is the concept still powerful. What do you do with that?
Chicago in pre WW1 was like Shenzen today : in 1840 Chicago was 4K people, by 1885 they had 2 million and 70% were foreign born
Booker T Washington wanted to trade the vote to end white terror and allow them to get a vocational education and earn wealth — Dubois broke and pushed for more aggressive equality after seeing the knuckles of Sam Hose being sold (having been violently lynched and dismembered). Dubois wanted full education for his Talented Tenth. “Education must not simply teach work – it must teach life.”
“Let’s strangle the last king with the guts of the last priest, “ said philosopher Denis Diderot (1713-1784)
Spain and Portugal started imperialism because of their interlocking systems of political religious and economic: “ Spain’s conquistadors set out to serve the king, to spread the word of God, and to get rich.”
Portuguese went to Malaysia, which were opposed by local sultans, Islamic communities and Chinese merchants but they were not a codified unit. “the Portuguese — and Spanish, and later, the Dutch, French and British — had it all, gold, guns, God, and kings working together.”
By 1870, “ it became more expensive to conquer than to trade.”
20th century Socialist economist Joan Robinson: the only thing worse than being exploited by the capitalists, was not being exploited by the capitalists
Why did industry stay in global north? Took engineering community; literate workforce and capital to fund it all
In late 1500s, Japan watched Philippines: first came merchants, then missionaries and then soldiers. By 1600, Spain ruled the Philippines
How did Japan industrialize and not get colonized? It violently shut down outsiders via execution (even former citizens who returned); they were urban and literate (in 1868, 2 million people lived in Kyoto, Osaka and Tokyo and Half all Japanese men were literate)
Robert Allen: old industrial economies had only four institutional prerequisites: railways and ports; education; banks and tariffs on what could be their comparative advantage (Japan was in transition so missed the Great Depression
In 1909, Norman Angel’s Great illusion: it’s cheaper to trade than to build an army so they’ll stop war. (Uh and then WW1)
“Material interests may drive the trains down the track,” Max Weber liked to say, “but ideas are the switchmen” meaning even if you want war, most people gotta be on board
1870-1914: an economic El dorado: Keynes
Charmie Kindleberger (authors teacher) who coined “hegemon” noted that after 1919, “the British couldn’t and the United States wouldn’t” play the role of global power to maintain peace
Eli Whitney: 1/4 inventor, 1/4 salesman, 1/4 maniac and 1/4 fraud: every entrepreneur? He led the “American system of manufactures” idea of interchangeable parts, which drove higher paid workers and fewer lower paid ones, and more automation/machines and organizational efficiency than Britain
Mass production and mass consumption created middle class (Ford and Brave New World started something but Alfred P Sloan and General Motors saw the adverts side of it)
Say’s Law (Jean-Baptiste say in 1803): aggregate production won’t consistently overmatch aggregate planned purchases because we only make what we want to buy
(Marx: “the childish babble of Say”)
Say was wrong: excess demand for money can exist with excess supply of everything else. People sometimes want money as a store of value rather than a means of exchange, and to get more money you can work more but you can also do less (spend less, which hurts others)
Roosevelt was center left while Europe went fascist right; Roosevelt spent where Hoover was balancing budgets wirh austerity
Frances Perkins
Keynes famous economic dreams for our grandchildren essay
Joseph’s Weydemeyer coins “dictatorship (of proletariat); it was meant to be temporary
Marx: “the forest of uplifted arms”
Marx was primarily informed by Britain and In 1840 many working class were worse off than In 1790 but by his death in 1883, that was no longer true as tech displacement created new things
Within market economies, the company does resemble a planned economy
Eisenhower: those who believe in the market enough to remove social programs are “stupid”
Soviet president Nikita Khrushchev (1894-1871) in 1959 argued the two American-Soviet systems should run side by side: “Let us try out and practice who’s system is better, let us compete without war. This is much better than competing in who will produce more arms, and who will smash him. We stand, and always will stand for such a competition as well, help to raise the well-being of the people to a higher level.”
“Really-existing socialism”
Marxist Paul Sweezy in 1942: “The socialist sector of the world would (after WW2) quickly stabilize itself, and push forward to higher standards of living, while the imperialist sector would floundering difficulties.“ Likewise, the British historian AJ P Taylor spoke in 1945 of how “nobody in Europe believes in the American way of life — that is, in private enterprise; or, rather those who believe it, are a defeated party in a party, which seems to have no more future.”
Patton wanted WW3 right after to fight communism; over time Truman invested in Europe to avoid communism’s spread
Would Allende in Chile been a more effective really existing socialism?
We thought discovery is harder than development is harder than deployment
Robert Allen’s checklist of what’s needed for prosperity, and colonizers didn’t leave their colonies with any of these. They started the system but never got the “Big Push”
In the 1950s, Zambia was more industrialized and nearly as rich as Portugal. Palm oil in Nigeria, ground nuts in Senegal, cotton, and Uganda and Coco and Ghana were once among the most prosperous industries in Africa. But in recent years, farmers of these crops often produced less, exported less and earned less.” written by scholar Robert Bates in the 1980s.
Why did Africa fall so far behind economically? Nathan Nunn argues the massive slave trade of 13m across Atlantic from 1600-1850, 5m across Indian Ocean from 1000-1900 and 3M carried north from Sahara from 1200-1900 and unknown number within Africa. Compare that total (21m+) to the 60m living in the continent in 1700, or the 360m born and who lived to at least age 5 from 1500-1800.
Bigger than Greece/Rome, Vikings and North African of European slave trades
Michael Kremer O ring theory of development
Governments were “extractive” rather than “developmental”
Robert Bates Ghana cocoa farmer: why don’t farmers encourage more effective government? Overregulation with licenses (World Bank paper)
Botswana has done ok as African countries go in part due to moderately effective leaders
Frant Pritchett: “There are a few things in the world that are worse than State-led development led by an anti-development state.”
There may be more genetic variation in a single baboon troop than the entire human race (a human from 75k years ago that has descendants today is more likely related than not)
After reconstruction, Philadelphia’s Robert Nix was one of only four Black Congressmen before the 1965 voting acts
What happened to the collapse of black earning? Declining demand for less educated workers; divorce and family structure did also play role
Moniyan’s Negro Family informed controversial Charles Murray and many others. But despite what Murray and Gilder argued in the 1990s, a two parent household is much more profitable than splitting up and collecting welfare
The “effective” rate of men 5000 years ago dropped and some bumped up
Claudia Goldin on gender pay gap
Why was FDR elected to office when there was a right wing response to Great Depression elsewhere? They conservatives were already in power in the US and so were blamed for the Depression. In pre New Deal America in 1931, federal spending was just 3.5% of the US budget and half of all federal employees worked for the Postal Service.
Hoover started the Federal Home Loan Bank which set many of our standards of government backstopping of private market lending, giving us the 30-year mortgage
In the 1950s, just 1% of federal transportation funding went to mass transit
1970s slowdown of growth (still high by historic standard, matching 1870-1914 era, but slower than 1945-1973 period) which we don’t exactly know specific balance of root causes brought about pushback on social democracy and early environmentalism, bringing in the neoliberal conservative reform
JP Grigg on the economy, a nation state cannot perpetually “live beyond its means on its wits”
Right wing: “the market cannot fail; it could only be failed
Reagan tax cuts created a half decade of deficit, boosting need for government debt which attracted foreign capital and helping to send a false signal to Midwest manufacturers to shrink starting the hollowing out of what became Rust Belt
Three criticisms of Milton and Rose Friedman’s 1979 book Free to Choose: first, that macroeconomic stress is only caused by governments not the instability of private markets, two, that externalities like pollution are small and better dealt via contracted, tort law, and three and most important in the absence of government mandated discrimination, the market economy would produce a sufficiently egalitarian distribution of income. Author says all three proved out to be wrong improved and entirely untrue by the great recession after 2007.
Social democracy in the 1970 and the neoliberal 1980s both failed to return to productivity of the thirty glorious years but the latter (austerity, privatization) became entrenched as conventional wisdom (neoliberals did beat back inflation
In 1917, Max Weber already says that wherever “bureaucracy gain the upper hand, as in China and Egypt, it did not disappear.” Communist withering away of the state would not happen
Rosa Luxembourg: “Without general elections, without unrestricted, freedom of press and assembly, without a free struggle of opinion, life dies out in every public institution.”
Oil embargoes of the 1970s extended the life of the Soviet empire but when Saudi Arabia began in 1985 to pump oil at capacity, the end began
Regan got boosted by Cold War and Thatcher by Falkland’s war, both got them re-election and popularity and extended neoliberalism
Americans in 2010 had AC, washing machines and microwaves, but income inequality does make people mad
Neoliberalism: “ This is sent as a puzzle. The neoliberal turn had failed to deliver higher investment, greater entrepreneurship, faster, productivity, growth, or the restoration of middle class wage income growth. The new policies had delivered massively, greater income and wealth inequality. What was the appeal? The neo liberal order hung on because it took credit for victory in the Cold War, because it took credit for making sure the undeserving didn’t get anything they did not deserve, and because the powerful use their megaphones to loudly and repeatedly tell others are they deserve the credit for whatever they claimed neoliberal policies had achieved achieved.”
The UN, EU, World Bank and IMF, with half-finished WTO all stood up after WW2
General purpose technologies: steam power on early 1800s; machine tools in mid 1800s; after 1870 came electricity , internal combustion, organic chemistry and more (Robert Gordon’s one big wave); microelectronics in 1950s to today
Richard Baldwin’s “second unbundling” and the “smile curve” or production
Communications helped manufacturing spread to Asia and global south
Why did hyper-globalization become such a simple group to blame for changing and shifting jobs? (Male jobs that benefited white working class men went away; new jobs for women and black people emerged). Big corporations
At end of the long 20th century: neoliberal had benefited global south and Great Moderation of business cycle
2007 semiconductor “Dennard scaling” problem was timed with a shift from providing information to capturing attention
John Cochrane those “pounding nails” needs something else to do; represented an neoliberal economist that recessions always make sense (the market cannot fail), but the Great Recession didn’t have to be so brutal
Monetarist depression vs Keynesian (like later in 2020-2022) vs Minskiyite recession (like Great Recession, shortage of safe stores of values )
Bagheot-Minsky style playbook : “ Lend freely at a penalty rate on a collateral that is good in normal times.”
But during Great Recession, leaders couldn’t get political support to issue debt at a penalty and Obama caved to austerity despite the lesson from 1937 that “ the boom, not the slump, is the right time for austerity at the treasury”
Wie es eigentlich gewesen vs sine ira et studio
History of long 20th: technology fueled growth; globalization; an exceptional America; and confidence in humanity at least slouching toward utopia
1870-1914 and 1945-1975 were remarkable

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