Beginning in 1848 a new theory of economic growth began to proliferate. The massive extension of the division of labor and exchange, capital accumulation, and improvement of institutions that Hume, Smith, Ricardo and others identified as being key ingredients to economic growth, it seems, were only made possible because of an increase in the exploitive relationships between the haves and the have-nots.
Historically of course the problem with this theory is that there has been exploitation of the ruled by rulers for thousands of years, slavery was with us for thousands of years, class distinctions were with us for thousands of years, etc. so it remains somewhat of a mystery using this exploitation theory as to why the particular forms of exploitation the Marxists and modern disciples think about flourished where they did and when they did. There are countless other problems with such a theory, including the inconvenient fact that in 1800, as the Industrial Revolution dawned on the western world, total global GDP was estimated to be around $1 trillion.
If the exploitation story were true, then the only way countries could have gotten rich is by taking from others – so we should see a sloshing around of this $1 trillion from one place to the next. But global GDP today is $65 trillion – over sixty times larger in gross terms, and over a dozen times larger in per capita income. OK, so the western nations stole all the wealth in the world. Where did the other $64 trillion come from? I suppose you might argue: well, yeah, so more stuff is around today, but the only reason it is around is because someone exploited someone else to produce more stuff. Fine, take that position, we can blog it another day.
Which got me thinking of a happy thought. One of the happiest trends in the last half-decade to decade has been the growth take-off in many African countries – long thought to be incapable of growth. The following chart displays annual average GDP growth rates between 2006-2010, with the darker red shades showing growth and the lighter ones showing less growth or even declines. I have the raw data, but the chart (via the World Bank) is easier to read:
Countries in sub-Saharan Africa are experiencing growth rates like we’ve never seen there before. And the growth is not merely coming from exploitation of extracted resources, but seems to be coming from a more broad based development of their economies. Countries like Ethiopia, Tanzania, Uganda and Mozambique are experience declines in the absolute number of people living at $1.25 per day or less (the same is true for other poverty metrics). So as they grow and as their population grows, fewer individuals in those countries are mired in desperate poverty.
Which leads to an obvious question … just exactly who are they exploiting to be getting this rich? After all, the growth record of those countries has been miserable for hundreds of years. Maybe they are exploiting the United States and Western Europe (look at the shades in the chart)? Or do I hear you saying, “well, SOME people in those countries are getting rich, and THEY are exploiting the poorest within their own countries.” To which I say, but the poverty data do not tell that story. And to which I also say, “what’s that you are saying, “countries” are not sentient entities? We need to look at the individuals within those countries to really say something meaningful!” Yes, I hear that loud and clear. Be sure you keep that in mind the next time you want to tell me that, “the United States needs to …”
Question: is the estimate of global GDP for 1800 adjusted for inflatoion? I assume it is, according what a dollar or a pound, or whatever would fetch then and recently. And I assume the white areas indicate where no meaningful data are available.
In any event, the chart shows that growth is present in some of the most miserable parts of the World. Surely the people who live there are hungry for betterment.
Those who celebrate the liberation of Zaire by Robert Mugabe should notice where Zaire stands on the World Bank map. Mugabe is the poster boy for taking property from colonialist farmers and doing his version of “land reform” by giving all the land to himself and his friends, a principle embraced in practice by strongmen throughout history and, presently, well, you know their names.
Another question: how come Argentina looks more robust than Chile? How does one calculate anything about Argentina?
One of the most interesting annual reports I’ve read over the years is that of Coca Cola. They often show a map depicting the growth of sales around the world and to show where there is great opportunity to sell Coca Cola, a product recognized around the world as the first luxury one buys when one takes significant steps to rise from poverty.
Now, a Marxist might look at that annual report and see exploitation by Coca Cola to be most rampant in the Third World countries. The Marxist might also see opportunity for political revolt in those countries, thereby fulfilling the promise of dialectical materialism.
BTW, consumers in far-off places do not desire Pepsi the way they desire Coke. Coke Classic, not Cherry Coke (popular in Rochester?)
[…] which Picketty admits. So, much like Kapital in the 19th century, Kapital in the 21st century assumes its conclusion and is build not just on shaky theoretical grounds, but on internally contradictory grounds. And […]