Enlightenment Now: The Case for Reason, Science, Humanism, and Progress

The endurance of poverty and the transition to modern affluence can be shown in a simple but stunning graph. It plots, for the past two thousand years, a standard measure of wealth creation, the Gross World Product, measured in 2011 international dollars. (An international dollar is a hypothetical unit of currency equivalent to a US dollar in a particular reference year, adjusted for inflation and for purchasing-power parity. The latter compensates for differences in the prices of comparable goods and services in different places—the fact that a haircut, for example, is cheaper in Dhaka than in London.)

The story of the growth of prosperity in human history depicted in figure 8-1 is close to: nothing . . . nothing . . . nothing . . . (repeat for a few thousand years) . . . boom! A millennium after the year 1 CE, the world was barely richer than it was at the time of Jesus. It took another half-millennium for income to double. Some regions enjoyed spurts now and again, but they did not lead to sustained, cumulative growth. Starting in the 19th century, the increments turned into leaps and bounds. Between 1820 and 1900, the world’s income tripled. It tripled again in a bit more than fifty years. It took only twenty-five years for it to triple again, and another thirty-three years to triple yet another time. The Gross World Product today has grown almost a hundredfold since the Industrial Revolution was in place in 1820, and almost two hundredfold from the start of the Enlightenment in the 18th century. Debates on economic distribution and growth often contrast dividing a pie with baking a larger one (or as George W. Bush mangled it, “making the pie higher”). If the pie we were dividing in 1700 was baked in a standard nine-inch pan, then the one we have today would be more than ten feet in diameter. If we were to surgically carve out the teensiest slice imaginable—say, one that was two inches at its widest point—it would be the size of the entire pie in 1700.

Figure 8-1: Gross World Product, 1–2015

Source:Our World in Data, Roser 2016c, based on data from the World Bank and from Angus Maddison and Maddison Project 2014.

Indeed, the Gross World Product is a gross underestimate of the expansion of prosperity.⁶ How does one count units of currency, like pounds or dollars, across the centuries, so they can be plotted in a single line? Is one hundred dollars in the year 2000 more or less than one dollar in 1800? They’re just pieces of paper with numbers on them; their value depends on what people can buy with them at the time, which changes with inflation and revaluations. The only way to compare a dollar in 1800 with a dollar in 2000 is to look up how many one would have to fork over to buy a standard market basket of goods: a fixed amount of food, clothing, health care, fuel, and so on. That’s how the numbers in figure 8-1, and in other graphs denominated in dollars or pounds, are converted into a single scale such as “2011 international dollars.”

The problem is that the advance of technology confounds the very idea of an unchanging market basket. To start with, the quality of the goods in the basket improves over time. An item of “clothing” in 1800 might be a rain cape made of stiff, heavy, and leaky oilcloth; in 2000 it would be a zippered raincoat made of a light, breathable synthetic. “Dental care” in 1800 meant pliers and wooden dentures; in 2000 it meant Novocain and implants. It’s misleading, then, to say that the $300 it would take to buy a certain amount of clothing and medical care in 2000 can be equated with the $10 it would take to buy “the same amount” in 1800.

Also, technology doesn’t just improve old things; it invents new ones. How much did it cost in 1800 to purchase a refrigerator, a musical recording, a bicycle, a cell phone, Wikipedia, a photo of your child, a laptop and printer, a contraceptive pill, a dose of antibiotics? The answer is: no amount of money in the world. The combination of better products and new products makes it almost impossible to track material well-being across the decades and centuries.

Plunging prices add yet another complication. A refrigerator today costs around $500. How much would someone have to pay you to give up refrigeration? Surely far more than $500! Adam Smith called it the paradox of value: when an important good becomes plentiful, it costs far less than what people are willing to pay for it. The difference is called consumer surplus, and the explosion of this surplus over time is impossible to tabulate. Economists are the first to point out that their measures, like Oscar Wilde’s cynic, capture the price of everything but the value of nothing.⁷