We are making inroads

Derek Thompson has a sequence of three posts (The Economic History of the Last 2,000 Years in 1 Little Graph, The Economic History of the Last 2000 Years: Part II, and The Economic History of the Last 2000 Years: Part III) that are pertinent to my argument that current prosperity is a function of the compound interest effects of historical events, cultural values and productivity. The three posts all leverage the information and implications of this graph.



There are all sorts of scale issues and legitimate concerns about accuracy of data, etc. It does not lend itself to hyper-precise analysis though it does tend to incite hyper-precise interpretation. That said, it is broadly consistent with other data and graphics I have reviewed over the years.

The patterns I see, some of which Thomspon touches on, are the prevalence of the Mathusian Trap until circa 1700. Since the graph only starts in 0 AD, it misses the first two big ratchets that occured in human productivity which were the agricultural revolution and the first cities.

The second pattern that I look for, and which this doesn't really tease apart, is the distinction between productivity increases arising from type of economy (agricultural versus industrial) versus productivity increases arising from improved governance, degree of connectedness (links and communication capacity), and obviously technological dissemination. You can see some of those patterns in the second and third post.

The final pattern that I look for is cultural evolution. I view cultures as being subject to the same evolutionary pressures as biology. There are long runs of continuity interspersed by sharp points of disruption. Clearly the portfolio of cultural values, knowledge, and behaviors are necessarily radically different in a hunter gather society, in a settled agricultural society, in a mercantile urban society, in an industrial society and in a knowledge society. And of course each of these reflects a dramtically different rise in productivity. At each new point of economic equilibrium, there are a different set of values, knowledge and behaviors that will allow individuals and groups to optimize their producitivity (short and long term).

What we do not know is what are those critical values, knowledge and behaviors for each point of equilibrium nor can we really accurately forecast how changes in those portfolios will affect productivity. We are simply at the frontier of our knowledge, but we are making inroads.