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Excerpt: The Birth of Plenty

Introduction

The captain of HMS Centurion had every reason to thank watchmaker John Harrison, who had accompanied his H-1 marine chronometer--a large and extremely accurate clock used to compute longitude--on its first sea trials in the late spring of 1737. As the faint line of the English coast rose above the horizon, Centurion's navigator, relying on traditional dead reckoning, calculated that the ship was sailing in safe waters south of Dartmouth. Harrison disagreed. His clock placed them about eighty miles from Dartmouth, in hazardous waters just off the Lizard, a peninsula at the far southwestern tip of England. Taking no chances, the captain, a line officer named Proctor, turned east and confirmed a few hours later that Harrison's computation had been dead on.

Proctor's caution would have been readily understandable to any seafaring contemporary. Thirty years earlier, Admiral Sir Clowdisley Shovell, making the same navigational error, drove his fleet onto the Scilly Isles, drowning over two thousand men. That catastrophe riveted British public attention on the need for improved navigational techniques. Seven years later, in 1714, Parliament passed the Longitude Act, establishing a board of longitude and offering a prize of £ 20,000--roughly $1 million in today's money--to anyone able to provide a method of determining east-west position to within half a degree (about 30 miles) of accuracy.1

Aside from possibly owing his life to Harrison, Proctor had also unknowingly witnessed one of history's great turning points, ranking with the invention of the steam engine, the development of representative democracy, or the battle of Waterloo. The advent of a reliable marine chronometer helped transform maritime trade from an uncertain and often deadly venture into a reliable wealth machine.

Two and a half centuries later, Harrison's clock, on display at the National Maritime Museum in Greenwich and still keeping accurate time to within a fraction of a second per day, is a marvel. But it was, in fact, the least conspicuous of the technologic advances of the remarkable era that ran from 1730 to 1850. Few ordinary citizens ever saw a marine chronometer, whereas the other great advances of that period--the modern canal system, the steam engine, and the telegraph--were readily visible to everyone.

Since the dawn of the modern era, it has been the conceit that the technologic advances of the day are unique and revolutionary--certainly, the thinking in our time is no exception. This is, however, an illusion. To see the full effect of scientific progress on human affairs, we have to look to the technologic explosion that occurred in those 120 years and transformed life from the top to the bottom of the social fabric. At a stroke, the speed of transportation increased tenfold, and communication became almost instantaneous. As recently as the turn of the nineteenth century, it took Thomas Jefferson ten days to travel from Monticello to Philadelphia, with considerable attendant expense, physical pain, and peril. By 1850, the steam locomotive made the same journey possible in one day, and at a tiny fraction of its former price in money, discomfort, and risk. Consider this passage from Stephen Ambrose's Undaunted Courage:

A critical fact in the world of 1801 was that nothing moved faster than the speed of a horse. No human being, no manufactured item, no bushel of wheat, no side of beef, no letter, no information, no idea, order or instruction of any kind moved faster. Nothing had moved any faster, and, as far as Jefferson's contemporaries were able to tell, nothing ever would.2

With the invention of the telegraph by William Fothergill Cooke and Charles Wheatstone in England in 1837, instantaneous communication abruptly altered the face of economic, military, and political affairs in ways that dwarf the changes wrought in this century by the airplane and the computer. Before the telegraph, the primitive state of communication routinely yielded tragedy, both great and small. Andrew Jackson's victory over the British at New Orleans in 1815, for example, occurred two weeks after the signing of a peace treaty at Ghent.

Since 1850, the pace of technological progress has been slowing, not accelerating. The average inhabitant of the Western world alive in 1950 would have no trouble grasping the technology of the year 2000. On the other hand, a citizen from 1800 would have been completely disoriented by everyday life fifty years later.

The qualitative examination of history and culture teaches only so much. In the end, the ultimate measure of progress is statistical: What measurable improvements have been made in a nation's literacy, longevity, and wealth? When we look at the numbers, it becomes crystal clear that something happened at some point in the early nineteenth century. Before then, the rate of improvement in the lot of mankind was small and stuttering, and after, substantial and steady.

This does not devalue the intellectual and scientific advances during the three centuries after the Renaissance. But the bald fact is, the Renaissance and the early Enlightenment only minimally elevated the lot of the average person. How do we know? From the study of economic history. The best way to measure the impact of intellectual and scientific progress is to examine its footprint at ground level. Just how did the per capita economic output of Italy, France, Holland, and Great Britain grow over the centuries? What happened to life expectancies? Educational levels?

Thanks to the efforts of economic historians over the past several decades, this quantitative portrait of mankind's progress has slowly come into focus. The numbers tell a striking story. Until approximately 1820, per capita world economic growth--the single best way of measuring human material progress--registered near zero. In the centuries after the Fall of Rome, Europe's wealth actually declined, as numerous critical technologies simply disappeared, the most important being cement, which would not be rediscovered for thirteen centuries.

The great tragedy of the premodern era was that large bodies of knowledge would be lost for millennia. Before Gutenberg and Bacon, inventors lacked two critical advantages that we take for granted today: robust information storage and a firm foundation of scientific theory. The lack of a scientific method meant that technological advances relied purely on trial and error and were thus few and far between. Further, inventors and manufacturers could record their work in only a few places, if at all. Consequently, inventions were frequently "lost," and the technological and economic condition of the ancients retrogressed almost as often as it advanced.

True, beginning about A.D. 1000, there had been improvement in human well-being, but it was of a sort so slow and unreliable that it was not noticeable during the average person's twenty-five-year life span. Then, not long after 1820, prosperity began flowing in an ever-increasing torrent; with each successive generation, the life of the son became observably more comfortable, informed, and predictable than that of the father.

This book will examine the nature, causes, and consequences of this transformation. The first section will unfold the compelling narrative told by these new data. I will identify the points in both time and space where economic growth sprang alive after millennia of slumber. I will also describe and examine the history of the four factors--property rights, scientific rationalism, capital markets, and improvements in transport and communication--that are the essential ingredients for igniting and sustaining economic growth and human progress.

The second section tells the story of when and how these factors came into play: first in Holland, then in England and its cultural offspring, followed in turn by the rest of Europe, Japan, and, finally, the remainder of East Asia. In each case, I will dissect the takeoff in growth and find that not until all four factors mentioned above are in place can a nation prosper.

Although I try to maintain a global perspective throughout this book, many readers will find its focus overly Eurocentric. Were not the Chinese--the inventors of paper, the printing press, and gunpowder--the great innovative engineers of the premodern world? Were not the early Arab empires oases of learning and culture during a time when Europe was mired in the Dark Ages? Did not mathematicians in India devise a numerical system, incorporating the concept of zero, that was far more advanced than the Greco-Roman letter-based system? To all these questions a resounding yes. Yet not one of these societies was able to turn the modern Western trick of continuously and permanently raising its citizens' standard of living. Further, the four factors responsible for modern wealth--property rights borne on the common law, scientific rationalism, advanced capital markets, and the great advances in transport and communication--were largely European in origin. Although prosperity has become a global phenomenon, there is no escaping the fact that the nursery of modern wealth lies in the area between Glasgow and Genoa.

Finally, the book's third section will plumb the sociological, political, economic, and military consequences of the great discrepancies in personal and national wealth that have arisen from this birth of plenty, and what the consequences of growth hold in store for the future.

Recent advances in the social sciences provide us with a fascinating window on the complex interaction of societal values, wealth, and politics. First, the bad news. In a world growing more and more prosperous, people are not necessarily becoming happier, particularly in the West. But the good news is that substantial improvements in individual well-being are occurring in developing nations. As nations pass from the third world to the first, their citizens do indeed become more satisfied. We'll find, moreover, that it is economic development that produces democracy, not the other way around--"too much" democracy may actually be bad for economic growth. The rule of law is the essential bulwark of a robust system of property rights. Property rights, in turn, are essential to prosperity. In turn, prosperity is the essential fertile soil in which democracy flourishes. Thus, optimism about democratic development in a nation whose traditional cultural values are antithetical to the rule of law--such as Iraq or Afghanistan--is likely to prove costly and dangerous.

I will argue that the destinies of nations are determined far more by their economic dynamism than by the vagaries of war, culture, and politics. The current world hegemony underwritten by American military might is no accident. History teaches that the fate of all great world powers is decay and downfall, but this will not occur to the United States until other nations both surpass American economic productivity and take an interest in projecting power--something that will not likely come to pass anytime soon.

By examining how our world prospered when and where it did, we just may be able to better divine where it is we are going.

A Brief Note on Currencies

This book, as any financial history must, deals in the currencies of the time--English pounds, Spanish pesos, Venetian ducats, Florentine florins, and French livres, to name a few. I've chosen not to sully the text with translations of each and every amount into modern currency--always an inexact exercise.

For readers wishing to have this information, the following rough approximation will serve. Throughout European history, the standard unit of currency of most nations was a small gold coin, such as the guinea (slightly more than a pound), livre, florin, or ducat, weighing about an eighth of an ounce and worth approximately $40 in current value. Between 1500 and 1800, the living expenses of an English gentleman might total £ 300 per year, while farmers and laborers made do with £ 15 to £ 20. However, currency debasement renders even this approximation wildly inaccurate with alarming frequency.

The major European exception is the Dutch guilder, which was worth approximately half as much as the guinea and the livre. Finally, the drachma of ancient Greece was the rough equivalent of a day's wage for a laborer or farmer.

Notes:

1. Dava Sobel, Longitude (New York: Penguin, 1995), 11-14, 57-59.

2. Stephen E. Ambrose, Undaunted Courage (New York: Simon and Schuster, 1996), 52.