THE NEW PLENTY

Population and urbanization dynamics both imply a huge growth in world resources. To simplify the question ruthlessly, though many have starved, many more have lived. Millions may have died in famines, but there has so far been no worldwide Malthusian disaster. If the world had not been able to feed them, human numbers would be smaller. Whether this can continue for long is another question. Experts have concluded that we can for a good while to come provide food for growing numbers. There is still hope, too, that population policy may help to stabilize demand. But in such matters we enter the realms of speculation, though the very existence of such hopes interests the historian, for they say something about a present and actual state of the world where what is believed to be possible is important in settling what will happen. In considering that, we have to recognize the major economic fact of modern history, and especially of the last half-century: that it brought about an unprecedented production of wealth.

Readers of this book are probably used to seeing harrowing pictures of famine and deprivation on their television screens. Yet over much of the world since 1945, continuing economic growth has, for the first time, come to be taken for granted. It has become the ‘norm’, in spite of hiccups and interruptions along the way. Any slowing down in its rate now provokes alarm. What is more, as population figures show, in gross terms real economic growth has been the story in most of the underdeveloped world. Against the background of the way the world still thought, even in 1939, this can be accounted a revolution. Yet that story does not just begin with the decades since the end of the Second World War, the golden age of unprecedented growth. The appropriate historical background for the surge in wealth creation, that has successfully carried the burden of soaring world population, is much deeper. One way of measuring it is to reflect that the average human being today commands about nine times the wealth of an average human being in 1500. The world’s Gross Domestic Product (GDP) has risen from a base of 100 five centuries ago to a figure of more than 11,600 today - but has, of course, to be shared between many more people.

Changes in per capita GDP in US (1988) dollars

Country

1900

1988

Brazil

436

2451

Japan

677

23,325

Italy

1343

14,432.

Sweden

1482

21,155

France

1600

17,004

UK

2798

14,477

USA

2911

19,815

Wealth and human numbers, indeed, tended to rise more or less in parallel until the nineteenth century. Then some economies began to display much faster growth than others. Even at the beginning of the twentieth century, a new intensification of wealth creation was already under way which, though badly set back by two world wars and the upheavals caused by the depression of the 1930s, was to be resumed after 1945 and has barely ceased since, in spite of serious challenges and striking contrasts between different economies. GDP rose almost everywhere after 1960 and, generally, per capita, too. For all the huge disparities and setbacks in some countries, economic growth has taken place more widely than ever before.

Selected figures like those in the table above must be interpreted cautiously, and they can change very quickly, but they give a truthful impression of the way in which the world has become richer in a century. Yet some of humanity still remains woefully poor:

Poor countries in the 1990s: per capita GDP in US dollars

Afghanistan

(1996)

70

Mozambique

(1996)

88

Ethiopia

(1998)

101

Madagascar

(1996)

132

Cambodia

(1996)

143

Tanzania

(1996)

167

If the overriding fact is one of wealth creation, it must have helped that the major powers were at peace with one another for so long. The years since 1945 have, of course, been studded with many bloody smaller-scale or incipient conflicts, while men and women have died every day of them, hundreds of thousands in warlike operations or their aftermath. The great powers have had much fighting done for them by surrogates. Yet no such destruction of human and economic capital as that of the two world wars took place. The international rivalry that underlay often notable tension tended, rather, to sustain or provoke economic activity in many countries. It provided much technological spin-off and led to major capital investments and transfers for political motives, some of which did much to increase real wealth.

The first such transfers took place in the later 1940s, when American aid made possible the recovery of Europe. For this to be successful, the American dynamo had to be available to promote recovery, as it had not been after 1918. The enormous wartime expansion of the American economy that had at last brought it out of the pre-war Depression, together with the immunity of the American home base from physical damage by war, had ensured that it would be. Explanation for the deployment of American economic strength as aid has to be sought in circumstances (of which the Cold War was an important part). International tension made it seem in America’s interest to behave as it did; an imaginative grasp of opportunities was shown by many of its statesmen and businessmen; there was for a long time no alternative source of capital on such a scale; finally, it helped that men of different nations, even before the end of the war, had already set in place institutions for regulating the international economy in order to avoid any return to the near-fatal economic anarchy of the 1930s. The story of the reshaping of the economic life of the world thus begins before 1945, in the wartime efforts that produced the International Monetary Fund, the World Bank and the General Agreement on Tariffs and Trade (GATT). The economic stability they provided in the noncommunist world after 1945 underpinned two decades of growth in world trade at nearly 7 per cent per annum in real terms. Between 1945 and the 1980s the average level of tariffs on manufactured goods fell from 40 per cent to 5 per cent, and world trade multiplied more than fivefold.

Over a longer term still, scientists and engineers were making their contribution to economic growth in less formal, often less visible, ways. The continued application of scientific knowledge through technology, and the improvement and rationalization of processes and systems in the search for greater efficiency, were all very important before 1939. They came more dramatically to the fore and began to exercise even greater influence after 1945. What they meant in agriculture, where improvement had begun long before industrialization was a recognizable phenomenon, is one of the clearest examples of their effects. For thousands of years farmers edged their returns upwards almost entirely by ancient methods, above all by clearing and breaking in new land. There is still a lot left that, with proper investment, could be made to raise crops (and much has been done in the last twenty-five years to use such land, even in a crowded country like India). Yet this does not explain why world agricultural output has recently risen so dramatically. The root explanation is a continuation and acceleration of the agricultural revolution that began in early modern Europe and has been visible at least from the seventeenth century. Two hundred and fifty years later, it was vastly speeded up, thanks, largely, to applied science.

Well before 1939, wheat was being successfully introduced to lands in which, for climatic reasons, it had not been grown hitherto. Plant geneticists had evolved new strains of cereals, one of the first twentieth-century scientific contributions to agriculture on a scale going far beyond the trial-and-error ‘improvement’ of earlier times; only much later did genetic modification of crop species begin to attract adverse criticism. Even greater contributions to world food supplies had by then been made in areas already growing grain by using better chemical fertilizers (of which the first had become available in the nineteenth century). An unprecedented rate of replacement of nitrogen in the soil underlay the larger yields that have now become commonplace in countries with advanced agriculture. Their costs include huge energy inputs, though, and fears of ecological consequences began to be expressed in the 1960s. By then better fertilizers had been joined by effective herbicides and insecticides, too, while the use of machinery in agriculture had grown enormously in developed countries. England had in 1939 the most mechanized farming in the world in terms of horsepower per acre cultivated; English farmers nonetheless then still did much of their work with horses, while combine harvesters (already familiar in the United States) were rare. But not only were the fields mechanized. The coming of electricity brought automatic milking, grain-drying, threshing, the heating of animal sheds in winter. Now, the computer and automation have begun to reduce dependence on human labour even more; in the developed world the agricultural workforce has continued to fall while production per acre has risen and genetically modified crops promise even greater yields.

WORLDWIDE STATISTIC

For all that, paradoxically, there may well be more subsistence farmers in the world today than in 1900, just because there are more people. Their share of cultivated land and of the value of the crops produced, though, has fallen. The 2 per cent of the farmers who live in developed countries now supply about half the world’s food. In Europe the peasant is fast disappearing, as he disappeared in Great Britain two hundred years ago. But this change has been unevenly spread and easily disrupted. Russia was traditionally one of the great agricultural economies, but as recently as 1947 suffered famine so severe as to provoke outbreaks of cannibalism once more. Local dearth is still a danger in countries with large and rapidly growing populations where subsistence agriculture is the norm and productivity remains low. Just before the First World War, the British yield of wheat per acre was already more than two and a half times that of India; by 1968 it was roughly five times. Over the same period the Americans raised their rice yield from 4.25 to nearly 12 tons an acre, while that of Burma, once the ‘rice bowl of Asia’, rose only from 3.8 to 4.2. In 1968, one agricultural worker in Egypt was providing food for slightly more than one family, while in New Zealand each farm employee was producing enough for forty.

Countries economically advanced in other ways show the greatest agricultural productivity. Countries in greatest need have found it impossible to produce crops more cheaply than can leading industrial economies. Ironic paradoxes result: the Russians, Indians and Chinese, big grain and rice producers, have found themselves buying American and Canadian wheat. Disparities between developed and undeveloped countries have widened in the decades of plenty. Roughly half of mankind now consumes about six-sevenths of the world’s production; the other half shares the rest. The United States has been the most extravagant consumer by far. In 1970 the half-dozen or so Americans in every 100 human beings used about 40 of every 100 barrels of oil produced in the world each year. They each consumed annually roughly a quarter-ton of paper products; the corresponding figure for China was then about twenty pounds. The electrical energy used by China for all purposes in a year at that time would (it was said) just have sustained the supply of power to the United States’ air conditioners. Electricity production, indeed, is one of the best ways of making comparisons, since relatively little electrical power is traded internationally and most of it is consumed in the country where it is generated. At the end of the 1980s, the United States produced nearly 40 times as much electricity per capita as India, 23 times as much as China, but only 1.3 times as much as Switzerland.

In all parts of the world the disparity between rich and poor nations has grown more and more marked since 1945, not usually because the poor have grown poorer, but because the rich have grown much richer. Almost the only exceptions to this were to be found in the comparatively rich (by poor world standards) economies of the USSR and Eastern Europe, where mismanagement and the exigencies of a command economy imposed lower growth rates, or even no growth at all. With these exceptions, even spectacular accelerations of production (some Asian countries, for example, pushed up their agricultural output between 1952 and 1970 proportionately more than Europe and much more than North America) have rarely succeeded in improving the position of poor countries in relation to that of the rich, because of their rising populations - and rich countries, in any case, began at a higher level.

Although their rankings in relation to one another may have changed, those countries that enjoyed the highest standards of living in 1950 still, by and large, enjoy them today (and have been joined by Japan). These are the major industrial countries. Their economies are today the richest per capita, and their example spurs poorer countries to seek their own salvation in economic growth, which is too often read as industrialization. True, major industrial economies today do not much resemble their nineteenth-century predecessors. The old heavy and manufacturing industries, which long provided the backbone of economic strength, are no longer simple and satisfactory measures of it. Once-staple industries in leading countries have declined. Of the three major steel-making countries of 1900, the first two (the USA and West Germany) were still among the first five world producers eighty years later, but in third and fifth places respectively; the United Kingdom (third in 1900) came tenth in the same world table - with Spain, Romania and Brazil close on her heels. Nowadays, Poland makes more steel than did the USA a century ago. What is more, newer industries often found a better environment for rapid growth in some developing countries than in the mature economies. Thus the people of Taiwan came by 1988 to enjoy per capita GDP nearly eighteen times that of India, while that of South Korea, too, was fifteen times as big.

Twentieth-century economic growth has often been in sectors - electronics and plastics are examples - which barely existed even in 1945 and in new sources of power. Coal replaced running water and wood in the nineteenth century as the major source of industrial energy, but long before 1939 it was joined by hydro-electricity, oil and natural gas; very recently, power generated by nuclear fission was added to these. Industrial growth has raised standards of living as power costs have come down and with them those of transport. One particular innovation was of huge importance. In 1885 the first vehicle propelled by internal combustion was made - one, that is to say, in which the energy produced by heat was used directly to drive a piston inside the cylinder of an engine, instead of being transmitted to it via steam made in a boiler with an external flame. Nine years later came a four-wheeled contraption made by the French Panhard Company, which is a recognizable ancestor of the modern car. France, with Germany, dominated the production of cars for the next decade or so and they remained rich men’s toys. This is automobile pre-history. Automobile history began in 1907, when Henry Ford, an American, set up a production line for what became famous as his ‘Model T’. Planned deliberately for a mass market, its price was low. By 1915 a million Ford cars were being made each year and by 1926 the Model T cost less than $300 (about £60 in British money at rates then current). An enormous commercial success was underway.

So was a social and economic revolution. Ford changed the world. By giving the masses something previously considered a luxury, and a mobility unavailable even to the millionaire fifty years earlier, his impact was as great as the coming of railways. This increase in amenity was to spread around the world, too, with enormous consequences. A worldwide car manufacturing industry was one result, often dominating domestic manufacturing sectors and bringing, eventually, large-scale international integration; in the 1980s eight large producers made three out of four of the world’s cars. The industry stimulated huge investment in other sectors, too; only a few years ago, half the robots employed in the world’s industry were welders in car factories, and another quarter painted their products. Over a similarly long term, car production enormously stimulated demand for oil. Huge numbers of people came to be employed in supplying fuel and other services to car owners. Investment in road-building became a major concern of governments, as it had not been since the days of the Roman Empire.

WORLD ENERGY RESOURCES

Ford, like many other great revolutionaries, had brought other men’s ideas to bear on his own. In the process he also transformed the workplace. Stimulated by his example, assembly lines became the characteristic way of making consumer goods. On those set up by Ford, the motor car moved steadily from worker to worker, each one of them carrying out in the minimum necessary time the precisely delimited and, if possible, simple task in which he (or, later, she) was skilled. The psychological effect on the worker was soon deplored, but Ford saw that such work was very boring and paid high wages (thus also making it easier for his workers to buy his cars). This was a contribution to another fundamental social change, with cultural consequences of incalculable significance - the fuelling of economic prosperity by increasing purchasing power and, therefore, demand.

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