Why the world became rich

Two hundred years ago, the acceleration of global wealth began. Here's why.

Dylan Matthews

What is economic growth? What is this phenomenon you’re trying to explain?

Jared Rubin

Economic growth occurs when there is a sustained increase in economic prosperity, which we can measure by the total number of goods and services produced in the economy. The world we know today is a direct result of the economic growth that began in Britain in the 19th century, quickly spread to parts of Europe and North America, and has continued unabated since. It has since raised living standards in East Asia, Eastern Europe, and parts of Latin America. There is real hope to believe this will continue into South Asia, the Middle East, and sub-Saharan Africa in our lifetime.

We are trying to explain how this came about in the first place. Why didn’t growth happen before the 19th century? What were the preconditions that Britain had that allowed it to take off first? Why did some countries follow Britain’s lead and others did not? What can this history tell us about how wealth can spread to the rest of the world in the 21st century?

Dylan Matthews

Early in the book you write, “Most people who ever lived — at least, prior to the 20th century — lived in conditions very similar to those of the very poorest in the world today.” This is a common starting point in economic history, but I find it’s rather unintuitive to many laypeople; the people we read about from ancient Rome don’t seem like the poorest people today. There’s even been some claims recently that medieval peasants lived better than 21st-century American workers. How do we know humanity was so poorly off, for so long?

Mark Koyama

Certainly, when we look at the ruins of the Roman Coliseum or Pompeii or indeed read about Cicero’s property investments, it looks like a sophisticated economy and one that generated considerable amounts of prosperity. And in some sense this impression is right. The work of scholars like Kyle Harper, Peter Temin, and Willem Jongman does indicate that the Roman economy was highly commercialized and urbanized (for preindustrial standards).

But this impression is also misleading. The Roman world was extremely unequal, so we can’t infer much about average living standards from reading about the consumption patterns of senators. And as Kyle Harper summarizes in his book The Fate of Rome, commercial prosperity brought with it disease, and all the evidence suggests that ordinary Romans, perhaps living in the tenement flats or insulae, died young, had bad nutrition, and high levels of exposure to epidemic disease.

Now, the example of the medieval peasant is an interesting counterpoint. Unlike ancient Rome, the medieval economy (outside of places like Florence) wasn’t especially commercialized or sophisticated. Levels of urbanization in, say, 15th-century England, were low. So, our impression would be one of widespread poverty.

But the research of economic historians suggests that this impression is wrong on at least some dimensions. Now, the claim that medieval peasants were better off than 21st-century Americans is palpable nonsense. But as measured by proxies such as real wages, an English peasant in 1450 was in all likelihood better off than the median Roman. The English peasant would likely have consumed more meat and alcohol, enjoyed more leisure, and possessed more durable clothes.

One reason for this which we discuss in chapter five of our book was demographic. In a world governed largely by Malthusian forces, shocks like the Black Death — which killed between one-third and one-half of Europe’s population — meant that the survivors had plentiful amounts of land per person.