An Economic History Of The Twentieth Century

I just finished reading a book titled Slouching Towards Utopia. The book explores the history of what author J. Bradford DeLong calls a long twentieth century. He views the 140-year period between 1870 and 2010 as the most consequential years of all humanity’s centuries. In an earlier book by Robert J. Gordon, he told a similar story of a special century between 1870–1970. The common denominator is the starting point of 1870, or the start of the second industrial revolution. Both books tell a compelling story about a period of economic prosperity never seen in human history.

This historical perspective is critical as we look towards the future. Readers of my Blog know that I believe we have a lot to learn from history. In his analysis of this 140-year period, Mr. DeLong shows us how the events of earlier periods drove outcomes in later periods. For example, the effectiveness of a command-and-control economy during World War I, convinced some that the market was not the most effective way to run an economy.

The example of the German war economy made some, such as Vladimir Lenin, believe that a “command economy” was possible. You could run a socialist economy not through the market but by using the government as a command-and-control bureaucracy-and not just during a national emergency, but as a matter of course

J. Brad DeLong — Slouching Towards Utopia

The war and following depression drove some individuals to pursue alternative governance models. While Lenin pursued a socialist economy, Benito Mussolini pursued Fascism. As the author states, “In much of continental Europe, the Depression reinforced reaction — which is to say, it reinforced the sense that Mussolini in Italy had it right, and that fascism was the way of the future and the best way to organize industrial societies.” Per Wikipedia, Fascism is a far-right, authoritarian, ultranationalist political ideology and movement, characterized by a dictatorial leader, centralized autocracy, militarism, forcible suppression of opposition, belief in a natural social hierarchy, subordination of individual interests for the perceived good of the nation and race, and strong regimentation of society and the economy. Another example of how events of earlier periods drove specific outcomes is the role of a Hegemon.

The world lacked a single power to serve as hegemon. The state whose citizens play the largest role in the world economy — who ship the most exports, consume the most imports, and lend and borrow the most capital — winds up playing the leading role in the management of the international economy. Before 1914, Britain could play this role, and it did. After 1919, the British couldn’t, and the United States wouldn’t

J. Brad DeLong — Slouching Towards Utopia

In the seventeenth century much of Europe looked to Holland as the Hegemon; in the nineteenth century it was Britain. After World War II, the world looked to America. The gap after World War I provides a lesson: when every country turned to protect its national private interest, the world public interest went down the drain, and with it the private interests of all. A very important message to reflect on in our current world.

We can go further back to understand how the past drove the future. Economic historian Joel Mokyr describes how the habits of thought and intellectual exchange developed during the European Enlightenment laid the groundwork for the communities of engineering practice upon which the North Atlantic industrial power was based. In other words, a reason that drove the winners of the industrial era dates to the 17th and 18th century enlightenment. One last historical perspective: this 140-year period was driven by: the ideology and policy of an open world, new forms of transportation, faster communications, research laboratories, and the large corporation. As the author states, collectively, those drivers more than doubled the pace of invention and greatly sped the deployment of new technologies.

A very good book and a must read. I have added it to my library. Here is the Amazon abstract.

AMAZON ABSTRACT

An instant New York Times and Wall Street Journal bestseller from one of the world’s leading economists, offering a grand narrative of the century that made us richer than ever, yet left us unsatisfied.

“A magisterial history.”-​Paul Krugman

Before 1870, humanity lived in dire poverty, with a slow crawl of invention offset by a growing population. Then came a great shift: invention sprinted forward, doubling our technological capabilities each generation and utterly transforming the economy again and again. Our ancestors would have presumed we would have used such powers to build utopia. But it was not so. When 1870–2010 ended, the world instead saw global warming; economic depression, uncertainty, and inequality; and broad rejection of the status quo.

Economist Brad DeLong’s Slouching Towards Utopia tells the story of how this unprecedented explosion of material wealth occurred, how it transformed the globe, and why it failed to deliver us to utopia. Of remarkable breadth and ambition, it reveals the last century to have been less a march of progress than a slouch in the right direction.

Originally published at http://frankdiana.net on October 7, 2022.