Million years logic.

Imagine compressing the last million years of human history into just one year. Three thousand years would pass each day, or two years each minute. On this compressed timescale, our ancestors first used fire sometime in spring. Despite this early breakthrough, new ideas were slow to arrive on the scene. Until late October, our ancestors were still wielding the most basic stone tools; humans biologically like us, Homo sapiens, appeared around mid-November. About 19-December, the beginnings of civilizations were visible: cave paintings and burial sites. It wasn’t until 27 December that there was much evidence of sewing needles, spear-throwers, or the bow and arrow. We don’t know much about our economic prehistory, but we know that it was story with all the action packed into the final scene.
But economic growth didn’t simply different gear once we entered recorded history. Zoom in on those last few days and you’ll see that the rate of innovation and growth continued speed up. The world economy was ten times larger at the end of 30 December than twenty-four hours earlier, a time span bridged by the epic rule of the Egyptian pharaohs. Imperial China lasted for most of 31 December, during which time the Roman Empire rose and fell, and Europe then moved through the middle Ages. Meanwhile, the size of the world economy increased in size another ten times between the star of New Year’s Eve and 7.30 p.m. and 11.20 p.m., when the First World began.
That growth was astonishing by historical standards, but puny by the standards of the twentieth century, because in the last forty minutes- the rest of the twentieth century- the world economy expanded tenfold yet again. If current growth rates are sustained, the next tenfold increase will be completed by about twenty-five past midnight.
There might not seem to be any rational explanation as to why economics growth took off in such dramatic way. If you credit anything, I suspect you’d be inclined to a point to the people who embody scientific and technological genius: Galileo and Curie, New cowmen and Edison. But leaving it at that would make the take-off a matter of pure luck: luck that we live after such brilliant minds and not before them, and luck that their achievements fell upon a fertile culture was open to innovation.
I will argue that stellar economic growth across the globe. Whether you look at the individual innovators or step back and survey the broad sweep of economic growth all the way back to the Paleolithic era, you find a common thread: neither progress not stagnation is an accident. Both rapidly growing economies and stuttering ones are full of individuals rationally responding to the incentives they face.
This is detective story, and as it takes us further and further into the past, it will necessarily become speculative. I’ll begin by looking at the work of economist who tried to recreate old technologies in an effort to workout how much richer have really become- a surprisingly difficult question. Then I’ll uncover evidence to show that the moment of ‘take-off’, the Industrial revolution, wasn’t based on scientific genius at all, but rather on rational, carefully planned responses to simple economic incentives.
The search of economic incentives then leads us to ask why some countries were fertile ground for economic revolution. I argue that the answer lies in the age of European exploration and conquest – not, as is often believed, because the exploitation of Africa and the New World directly enriched Europe, but because the very strong interest in creating laws and institutions that provided incentives for economic growth. Speculative stuff, as I say, even if it is based on some ingenious work, still, I do not want to finish this book by proclaiming all the answers, but by showing that economists are asking the right questions.
Before we start our journey into the past, though, perhaps you’re thinking that it’s hard to estimate economic growth for all of human prehistory and much of human history. You’d be correct. So perhaps you’re also thinking that this tale of incredible growth acceleration sounds a bit wild-eyed. You’d be wrong.
In fact, my estimate of growth is conservative because it doesn’t take full account of the way that the quality of products is improving. When economists try to compare our material standard of living with that of our predecessors, they have to calculate the extent to which prices have changed. A dollar in 1900 brought more than a dollar today – how much more? Its an impossible comparison, because we don’t spend our money on the same things as we did in 1900.