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Breadtag Sagas ©: Author Tony, 4 May 2020
What is History 11: World Economic History to 1990
What is History: Richard Baldwin The Great Convergence 2016
Introduction
I was planning to write the next Jared Diamond Guns, Germs and Steel articles following on from Guns, Germs and Steel: Overview and Polynesia A Natural Experiment of History and I will soon. I accidentally picked up a second hand copy of The Great Convergence by Richard Baldwin 2016 from Canty’s bookshop and decided that it had important information that couldn’t wait.
I usually don’t have much time for macroeconomists and rarely read economics books. But, at least Baldwin is interested in economic history and covers a period from 200,000 years ago to the present, which is extraordinary, certainly a much longer period than most economists ever think about. He has some quite important things to say about the early history of humankind and on the development of world economics up to the modern era.
I had been introduced to Kondratiev cycles (or waves) some time ago by Fred Emery (See Future Predicting and Q Research methods). Fred was interested in the modern modifications of the cycles (see Wikipedia below). He was also interested in the energy implications of the following:
- Industrial Revolution (1771)
- Age of Steam and Railways (1829)
- Age of Steel and Heavy Engineering (1875)
- Age of Oil, Electricity, the Automobile and Mass Production (1908)
- Age of Information and Telecommunications (1971)
(Wikipedia, Kondratiev Wave)
But, Fred thought the new forms of energy or ways of using new technologies were still intricately tied up in the Kondratiev idea of 40-60 year cycles of expansion, stagnation and recession, with their impacts on labour, production and prosperity.
Richard Baldwin is also interested in phases (cycles) in economic history but not wedded to equal time periods. Phase 1 Humanising the globe is from 200,000 years ago to around 12,000 years ago. Phase 2 Agriculture and the first bundling is from 12,000 years ago to around 200 years ago. Phase 3 is from around 1820 to 1990, the industrial revolution, the age of steam and globalisation’s first unbundling. Phase 4 is from 1990 and begins with the ICT revolution (information, communications technology) and is the second unbundling.
Some of this is complex stuff and Baldwin’s main interest as an economist is what happened from 1990 onwards and why. And, what the implications are for future economic policy. From my point of view as a non-economist, while the overview of phase 4 is fascinating, I’m not particularly interested in the nitty gritty or in developing economic theory on what happens next in terms of economic policy implications.
First, although I am interested in the future and predicting the future in a generalist sense, economics is not my focus. Second, in the context of my what is history series I am much more interested in events pre-1990 and earlier, particularly much earlier. And, third I do not think I have the competence to judge Baldwin’s economic theory ideas on what we should do next in the twenty-first century.
Therefore, I am only interested in the early chapters of Baldwin’s book and leave the rest to those more competent to evaluate the complex economic theory of the remainder of the book.
Nevertheless, I don’t want to leave you in the lurch should you wish to pursue this further and provide a video of Baldwin discussing his book and answering questions from other economists in the Further information section as a resource. I found the video fascinating and recommend it to you.
Overview of The Great Convergence
Baldwin’s thesis of what happened from 1820 to 1990 and post-1990 is shown in figure one. The critical period is from 1820 to today. Economists have sound reasons to date the industrial revolution from 1820, though of course elements began earlier and historians would probably date the beginnings earlier too.
Between 1820 and 1990 he defines as the industrial revolution period where the G7 nations gained most over the rest of the world in economic growth. He calls this the great divergence or the first unbundling and the first stage of globalisation. I won’t go into bundling and unbundling as it is technical and not necessary to the overview.
He says that there are three binding (or cascading constraints) that prevented economic growth and globalisation pre-the steam age, which meant that production and consumption were limited to local regions. These are as shown in Diagram 1:
- High trade costs,
- High ICT costs (information & communication),
- High face-to-face costs.
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