Poverty prior to progress and prosperity

Some thoughts compiled from notes from fifty years of college, including forty-six years of college teaching, thousands of students and hundreds of courses.

To understand business, management and leadership you need to understand how and why these concepts and practices emerged. In examining the ‘why’ question, we have to come to grips with the history of human developmentwhich can best and simplest be characterized as the progression from global poverty to global prosperity. This progression has been marked by (1) unprecedented, unrelenting increases in the creation of multiple forms of wealth, (2) tremendous reductions in absolute poverty, and (3) massive resulting increases in income and wealth inequality. Real, significant progress started about the time of the Industrial Revolution. The driving force was free-market capitalism. The development of entrepreneurial business, modern management practices, and enlightened forms of leadership provided the basis for sustaining and increasing the initial spurt of industrial growth that also guided us from the industrial age to the service economy and to the modern information economy to today’s knowledge- and data-based network economy.

Reflect back two hundred years and the dilemma is clear: 94% of the world’s one billion people live in absolute poverty, living on a very real edge, and threatened on a daily basis by natural forces, e.g., disease, starvation, pestilence, extreme weather. War was often the means to secure limited resources and to subjugate people for the benefit of nobility. Wealth was almost a surreal concept for all but the world’s one percent, and wealth was almost exclusively natural wealth, mostly limited and hoarded whenever possible. What natural wealth that could be created and renewed by human effort, e.g., crops, forests, were unproductive, labor intensive, and subject to the whims of Mother Nature. Life itself was “nasty, brutish and short,” with infant mortality above 50% and life expectancy less than forty years.

The world was in a precarious state. Half of all newborns died before reaching the age of five. Plagues had the possible of wiping out entire countries. Changes in the climate could make food production highly unpredictable. There was little room for error, little savings (and almost no personal wealth), and little resistance to the natural forces of Mother Nature. Malthus’ forecast was that people would continue to populate faster than food production could increase, producing even more dire circumstances for those fortunate (or unfortunate) enough to survive childhood.