We have seen how prosperity, measured in terms of long life, is spreading throughout most of the planet. Yet when most people of think of disparity between nations, they usually think in terms of levels of income. Income is correlated with other factors that empower us to not only survive but thrive.
The common refrain we hear today is “The rich are getting richer and the poor are getting poorer” and that perspective is present in Brian McLaren's Everything Must Change. N. T. Wright, a theologian whose work I’ve found very helpful, writes:
And now we have the new global evils: rampant, uncaring, and irresponsible materialism and capitalism on the one hand; raging unthinking religious fundamentalism on the other. As one famous book puts it, we have ‘Jihad versus McWorld.” (Whether there is such a thing as caring capitalism, or for that matter thoughtful fundamentalism, isn’t the point at the moment.) …. It doesn’t take a Ph.D in macroeconomics to know that if the rich are getting richer by the minute, and the poor poorer, there is something badly wrong. (Simply Christian, 8)
It also doesn’t take a Ph.D. in macroeconomics to verify such claims either. :) What can we say about per capita income on an historic basis?
Comparing income across eras is difficult. Inflation and other variables make direct comparison impossible. Furthermore, comparing contemporary currency based economies to barter economies will not work. To aid in this comparative analysis, economic historians have developed a concept called “purchasing power parity” (PPP). The value of a dollar at a fixed point in time is chosen and the value of income at all other points in time is pegged to the purchasing power of the fixed dollar. For our purposes, we will be using a PPP measure of “1990 International Dollars” (I$). Annual per capita Gross Domestic Product (the total market value of all final goods and services produced within a given country in a given period of time, usually a year) will be used as a proxy for income.
Not all economists agree on how to achieve parity between the present and more distant eras. Angus Maddison, one of the foremost authorities on this topic, suggests that I$400 per capita is a subsistence level of income and was typical of subsistence living prior to the industrial revolution. However, economist Brad Delong, who has done his own analysis, claims:
“A large proportion of our high standard of living today derives not just from our ability to more cheaply and productively manufacture the commodities of 1800, but from our ability to manufacture whole new types of commodities, some of which do a better job of meeting needs that we knew we had back in 1800, and some of which meet needs that were unimagined back in 1800.” (Brad DeLong)
Therefore, DeLong puts historic subsistence living at I$90, but both scholars end up with similar income estimates in recent eras.
Another difference is that while Maddison has tended to focus his analysis on the past two millennia, DeLong has analyzed more ancient eras. Either way, when you plot their data over the past few millennia on a chart, you get this:
DeLong reports that it took from 10,000 BCE until 1750 for per capita GDP to double from I$90 to I$178. (I$109 in year 1 CE.) Maddison reports a per capita GDP of I$467 in 1 CE and I$616 in 1700. The following chart shows their estimates between 1600 and 2003:
You can see that the growth accelerates beginning in the early nineteenth century. Many have suggested that the industrial revolution began not long after 1750 and it is true that many inventions came in to being not long after that time. However, there was a lag time of a few decades between the advent of various technologies and the placement of them in productive use. Maddison argues for a beginning point of 1820 (as do other economic historians.) Whichever the case, keep in mind that the world population grew more than sixfold from less than 1 billion to more than 6.6 billion from 1750 to 2000 during this explosion in per capita income.
So in the aggregate, we can see that growth in worldwide per capita income is astounding. But who broadly spread is the economic expansion?