Lecture 2: Slow Growth and Poverty in the North Atlantic, 1800-1870 For Tuesday September 1, 2009 J. Bradford DeLong Professor of Economics, U.C. Berkeley Research Associate, NBER
Start in 1870 • Why 1870? Three Reasons: – Transport – Communication – Invention
• You can argue when the change came – But 1870 is a much better date than almost any other you can name…
The North Atlantic Before 170 • “Lightening the Toil” – “Hitherto it is questionable if all the mechanical inventions yet made have lightened the day's toil of any human being…”
– The Limited Impact of the First Industrial Revolution – The Malthusian Era and Its End
In the Shadow of Malthus Figure 6.1: Clark始s Estimates of Population and Working-Class Real Wages in England, 1250-1870
Source: Gregory Clark (2008), A Farewell to Alms (Princeton: Princeton University Press).
Escape from the Shadow of Malthus Figure 6.2: Working-Class Real Wages in England, 12502007
Source: Measuring Worth.
The Late Coming of ‘Modernity’ Table 6.1 Social Statistics during the British Industrial Revolution i
Life Expectancy Literacy Primary School Enrollment Secondary School Enrollment Agricultural Employment
i
1780 35 50%
45%
1820 39 54% 36%
35%
1870 41 76% 76%
1913 53 96% 100%
1.7%
5.5%
23%
12%
The Drive to High Mass Consumption • John Stuart Mill was effectively right—for when he wrote. – Daily wage: from 5K to 2.4M wheat calories – What Marx saw in 1850… • • • •
Before 1800; labor productivity growth: 0.1%/yr 1800-1870: 0.4%/yr 1870-1950: 1.2%/yr 1950-today: 1.9%/yr
• Lifestyles of the Rich • Lifestyles of the Poor
The Consumption Basket and Economic Growth Table 6.2: The Multiplication of Productivity, 1895-2007 Time Needed for an Average Worker to Earn the Purchase Price of Various Commodities Commodity Horatio Alger (6 vols.) One-speed bicycle Cushioned office chair 100-piece dinner set Hair brush Cane rocking chair Solid gold locket Encyclopedia Britannica Steinway piano Sterling silver teaspoon
Time-to-Earn in Time-to-Earn in Productivity 1895 (Hours) 2007 (Hours) Multiple 21 0.6 35.0 260 7.2 36.1 24 2.0 12.0 44 3.6 12.2 16 2.0 8.0 8 1.6 5.0 28 6.0 4.7 140 33.8 4.1 2400 1107.6 2.2 26 34.0 0.8
Source: 1895 Montgomery Ward Catalogue
“The Summit of Human Felicity” I • “Are you fond of music?” • William Nordhaus – The Price of Light
“The Summit of Human Felicity” II • “[immediately the room was] filled with music; filled, not flooded, for, by some means, the volume of melody had been perfectly graduated to the size of the apartment. ‘Grand!’ I cried. ‘Bach must be at the keys of that organ; but where is the organ?’ (pp. 88-89) • “[I]f we [in the nineteenth century] could have devised an arrangement for providing everybody with music in their homes, perfect in quality, unlimited in quantity, suited to every mood, and beginning and ceasing at will, we should have considered the limit of human felicity already attained…”