These “wheels of change” have been key drivers of technological progress since the dawn of time, argues economist Oded Galor in his new book, “Humanity’s Journey: The Origins of Wealth and Inequality.” For most of our history, however, our species has been trapped in poverty. Technological innovation led to increased food production, which led to higher population growth – until the extra mouths to feed offset productivity gains, bringing living standards back to subsistence levels. In the 19th century, however, the inexorable march of technology reached a tipping point. With the industrial revolution, according to Galor, the value of human capital reached the point where parents chose to have fewer children and invest more in their education. Longer life expectancy made human capital even more important. As women’s wages began to approach those of men, it became more expensive for them to leave the workforce to have children, further reducing birth rates. This demographic transition has allowed technological progress to far outpace population growth, producing our present world of material abundance.
Unprecedented in its scope and ambition, “The Journey of Humanity” explains all of human history as an inevitable progression from primitive early tools to supercomputers in every pocket. At the same time, the book explains why this progression has made some parts of the world so much richer than others.
All humans are descended from people who migrated out of East Africa in successive waves beginning over 60,000 years ago. At each point in the migration chain, only a subset of the population has chosen to move. Since a subset of a group is likely to be less diverse than the whole group, populations became more homogeneous as they traveled: before recent centuries, the highest levels high levels of genetic diversity were found in East Africa and the lowest levels in South America (because people only arrived in South America after crossing all of Asia and North America) . According to Galor, diversity can inhibit economic growth by reducing social cohesion, but it can also increase growth by promoting specialization and innovation; therefore, regions with an intermediate level of diversity have the highest levels of economic development.
Geography was also an important factor in economic development. The Fertile Crescent, from northern Egypt to the Persian Gulf, had the easiest grains and animals to domesticate, and the lack of barriers to east-west travel in Eurasia facilitated the spread of farming techniques. Populations that domesticated animals developed greater resistance to infectious diseases earlier. Diversity and geography were the main drivers of regional economic differences; culture and politics played less important roles.
According to Galor, economic development is driven by the interaction between technological innovation and the evolution of societies in ways that foster innovation. Global inequality is the product of five factors (in decreasing importance): migratory distance, geography, disease, culture and political institutions. The author covers it all in a beautifully concise 240-page text. All readers will learn something, and many will find the book fascinating.
For Galor, this very long-term perspective is the only way to separate the driving forces behind the story from thousands of individually compelling episodes. “It’s easy to drift in this ocean of detail, tossed about by the waves and unaware of the powerful currents below,” he writes. But without a good understanding of the undercurrents, “it is virtually impossible to understand the history of mankind”.
It is hard to dispute the assertion that today’s prosperity results from accumulated technological progress and that investment in human capital promotes technological development. But that still leaves the crucial question of why things happened when and where they happened. Take the age-old question of why Europe has become the wealthiest part of the world. According to Galor’s account, Europe escaped the poverty trap in the 19th century thanks to increased investment in education and a narrowing of the gender wage gap. But according to statistics compiled by eminent economic historian Angus Maddison, gross domestic product per capita in Western Europe more than doubled from 1000 to 1600. Something was happening long before the invention of the steam engine.
The commercial revolution of Italian cities, the first link in the chain of economic, political and social transformations that created the modern world, began in the 11th century. By 1000, however, the population of Europe was essentially the same as a millennium before and only a fraction of the population of what is now India or China. Europe was also poorer and less technologically advanced than China and especially the Islamic states of Egypt and the Middle East. If the virtuous circle of technological development and population density is the underlying cause of economic growth, Europe should have remained a backwater.
Galor cites a number of reasons why the economic take-off occurred first in Europe and not in Asia: The English Glorious Revolution guaranteed the property rights and political power of the merchant class; the Reformation led to higher levels of literacy and entrepreneurship in Protestant parts of the continent; the Enlightenment encouraged an empirical mindset favorable to scientific and technological progress. But these institutional and cultural factors are products of the sixteenth and seventeenth centuries. Galor also argues that Europe’s lower agricultural productivity—compared to other parts of Eurasia that had converted to agriculture earlier—became an advantage around 1500 when cities became the center of the economic activity. But that only begs the question of why Europe developed self-governing city-states with thriving merchant sectors over the previous half-millennium.
None of this contradicts the invisible wheels of Galor history, pushing humanity inexorably forward from behind the scenes, all kings and queens only toying with their exits and entrances. But even if an industrial revolution was predicted by our great brains, it could have happened a thousand years ago, or even a thousand years in the future. To understand why this happened in the 18th century in a cold, damp corner of Europe, we need to understand who factors are influential at particular times and places and Why. In this case, we must understand why, from the 11th century, a handful of Italian cities became flourishing commercial centers of Mediterranean commerce, laying the foundations for the advances of the following centuries that would eventually give rise to capitalism and the industrial revolution.
But the reward, for Galor, is not just interpreting the past. The hidden drivers of human history, he argues, show us how to tackle the challenges we face today, climate change foremost. The solution is to bet on the forces that have brought us to where we are today: falling birth rates will reduce the environmental impact of our species, buying time for technological innovation to away from fossil fuels. Together, these factors “should enable the timely advancement of the game-changing technologies that will be needed, turning this climate crisis into a fading memory for centuries to come.”
Well…yes, it’s likely that at least some people will survive climate change, and in 1,000 years their gadgets will make ours look primitive. Galor may be right that the long-term history of mankind is and will continue to be an unbroken march of technological progress. But there are details that are hard to see from the perspective of 300,000 years of all human history. Sometimes those details matter a lot.
James Kwak is a research fellow at the University of Connecticut School of Law, where until earlier this year he was Jesse Root Professor of Law.
The origins of wealth and inequality