The Rational Optimist (22 page)

Trade, for example, could transform Africa’s prospects. China’s purchases from Africa (not counting its direct investments there) quintupled in the Nineties and quintupled again in the Noughties, yet they still account for just 2 per cent of China’s foreign trade. China may be about to repeat some of Europe’s colonial exploitative mistakes in Africa, but in terms of being open to trade from the continent it puts Europe and America to shame. Farm subsidies and import tariffs on cotton, sugar, rice and other products cost Africa $500 billion a year in lost export opportunities – or twelve times the entire aid budget to the continent.

Yes, of course, trade is disruptive. Cheap imports can destroy jobs at home – though in doing so they always create far more both at home and abroad, by freeing up consumers’ cash to buy other goods and services. If Europeans find their shoes made cheaply in Vietnam, then they have more to spend on getting their hair done and there are more nice jobs for Europeans in hair salons and fewer dull ones in shoe factories. Sure, manufacturers will and do seek out countries that tolerate lower wages and lower standards – though, prodded by Western activists, in practice their main effect is then to raise the wages and standards in such places, where they most need raising. It is less of a race to the bottom, more of a race to raise the bottom. Nike’s sweatshops in Vietnam, for example, pay wages three times as high as local state owned factories and have far better facilities. That drives up wages and standards. During the period of most rapid expansion of trade and out-sourcing, child labour has halved since 1980: if that is driving down standards, let there be more of it.

The apotheosis of the city

Trade draws people to cities and swells the slums. Is this not a bad thing? No. Satanic the mills of the industrial revolution may have looked to romantic poets, but they were also beacons of opportunity to young people facing the squalor and crowding of a country cottage on too small a plot of land. As Ford Madox Ford celebrated in his Edwardian novel
The Soul of London
, the city may have seemed dirty and squalid to the rich but it was seen by the working class as a place of liberation and enterprise. Ask a modern Indian woman why she wants to leave her rural village for a Mumbai slum. Because the city, for all its dangers and squalor, represents opportunity, the chance to escape from the village of her birth, where there is drudgery without wages, suffocating family control and where work happens in the merciless heat of the sun or the drenching downpour of the monsoon. Just as Henry Ford said he was driven to invent the gasoline buggy to escape the ‘crushing boredom of life on a midwest farm’, so, says Suketa Mehta, ‘for the young person in an Indian village, the call of Mumbai isn’t just about money. It’s also about freedom.’

All across Asia, Latin America and Africa, a tide of subsistence farmers is leaving the land to move to cities and find paid work. To many Westerners, suffused with
nostalgie de la boue
(nostalgia for mud), this is a regrettable trend. Many charities and aid agencies see their job as helping to prevent subsistence farmers having to move to the city by making life in the countryside more sustainable. ‘Many of my contemporaries in the developed world,’ writes Stewart Brand, ‘regard subsistence farming as soulful and organic, but it is a poverty trap and an environmental disaster.’ Surely a Nairobi slum or a São Paolo favela is a worse place to be than a tranquil rural village? Not for the people who move there. Given the chance they eloquently express their preference for the relative freedom and opportunity of the city, however poor the living conditions. ‘I am better off in all facets of life compared to my peers left behind in the village,’ says Deroi Kwesi Andrew, a teacher earning $4 a day in Accra. Rural self-sufficiency is a romantic mirage. Urban opportunity is what people want. In 2008 for the first time more than half the people in the world lived in cities. That is not a bad thing. It is a measure of economic progress that more than half the population can leave subsistence and seek the possibilities of a life based on the collective brain instead. Two-thirds of economic growth happens in cities.

Not long ago, demographers expected new technology to hollow out cities as people began to telecommute from tranquil suburbs. But no – even in weightless industries like finance people prefer to press into ever closer contact with each other in glass towers to do their exchanging and specialising, and they are prepared to pay absurdly high rents to do so. By 2025, it looks as if there will be five billion people living in cities (and rural populations will actually be falling fast), and there will be eight cities with more than twenty million people each: Tokyo, Mumbai, Delhi, Dhaka, São Paolo, Mexico City, New York and Calcutta. As far as the planet is concerned, this is good news because city dwellers take up less space, use less energy and have less impact on natural ecosystems than country dwellers. The world’s cities already contain half the world’s people, but they occupy less than 3 per cent of the world’s land area. ‘Urban sprawl’ may disgust some American environmentalists, but on a global scale, the very opposite is happening: as villages empty, people are living in denser and denser anthills. As Edward Glaeser put it, ‘Thoreau was wrong. Living in the country is not the right way to care for the Earth. The best thing that we can do for the planet is build more skyscrapers.’

After a ‘stinking hot’ evening in a taxi in central Delhi in the 1960s, the ecologist Paul Ehrlich had an epiphany. ‘The streets seemed alive with people. People eating, people washing, people sleeping. People visiting, arguing, and screaming. People thrusting their hands through the taxi window, begging. People defecating and urinating. People clinging to buses. People herding animals. People, people, people, people.’ It was then that Ehrlich, like so many Westerners with culture shock, decided that the world had (to quote his chapter title) ‘too many people’. However good life might get, perhaps in the end it is all in vain because of population growth. Was he right? It is time to understand old ‘Population Malthus’.

The great question is now at issue, whether man shall henceforth start forwards with accelerated velocity towards illimitable, and hitherto unconceived improvement; or be condemned to a perpetual oscillation between happiness and misery.

T. R. M
ALTHUS
Essay on Population

Since human beings are just another kind of animal, the story of population should be a simple one. Give us more food and we will have more babies until we reach the density at which starvation, predators and parasites crash the system. In some episodes of human history something like this has indeed happened. Yet often, after the crash, population density settles at a higher level than before. The subsistence level keeps on rising, erratically, but inexorably. In terms of power and relative wealth, modern Egypt may be a shadow of its pharaonic self, but it is much more heavily populated today than it was in Ramses II’s day.

There is another odd feature. On the way up the graph, abundant food encourages some people to specialise in something other than growing or catching food, while others produce food for sale not for self-sufficiency. The division of labour increases. But when the food supply becomes tight, near the top of the graph, fewer people will be prepared to sell their food or will have a surplus to sell. They will feed it to their families and make do without the goods they were wont to buy from others. The non-farmers, finding both food and customers for their services harder to come by, will have to give up their jobs and return to growing their own food themselves. So there is a cycle of rising and falling specialisation in human populations. The economist Vernon Smith, in his memoirs, recalls how in the Depression his family moved in the 1930s from Wichita, Kansas, to a farm when his father was laid off as a machinist, because ‘we could at least grow most of our own food and participate in a subsistence economy.’ This return to subsistence happens often in human history.

In the animal world, this is unique. In no animal species do individuals become more specialised as population is rising, nor less specialised as population is stalling or falling. In fact, the whole notion of specialised individuals is rare outside the human race, and where specialisation does happen – in ants, for example – it does not wax and wane in this way.

This suggests that good old-fashioned Malthusian population limitation does not really apply to human beings, because of their habit of exchange and specialisation. That is to say, instead of dying from famine and pestilence when too numerous for their food supply, people can increase their specialisation, which allows more to subsist on the available resources. On the other hand, if exchange becomes harder, they will reduce their specialisation, which can lead to a population crisis even without an increase in population. The Malthusian crisis comes not as a result of population growth directly, but because of decreasing specialisation. Increasing self-sufficiency is the very signature of a civilisation under stress, the definition of a falling standard of living. Until 1800 this was how every economic boom ended: with a partial return to self-sufficiency driven by predation by elites, or diminishing returns from agriculture. It is hard to be sure given the patchy information that this is what happened to Mesopotamia and Egypt after 1500
BC
, or India and Rome after
AD
500, but it is pretty clear that it happened to China and to Japan in later centuries. As Greg Clark puts it, ‘In the preindustrial world, sporadic technological advance produced people, not wealth.’

The medieval collapse

Robert Malthus and David Ricardo, though they were good friends, disagreed on much. But in one respect they were entirely aligned – that unchecked population could drive down the standard of living.

Malthus: ‘In some countries, the population appears to have been forced, that is, the people have been habituated by degrees to live upon the smallest possible quantity of food ... China seems to answer this description.’

Ricardo: ‘The land being limited in quantity, and differing in quality, with every increased portion of capital employed on it there will be a decreased rate of production.’

At first glance, medieval England furnishes a tidy example of such diminishing returns. The thirteenth century, a time of mild weather across Europe, saw a prolonged expansion of the population, which then crashed in the following century as the weather deteriorated. The 1200s were the golden high-water mark of the Middle Ages. Courts were richly furnished; monasteries flourished; cathedrals rose towards the sky; troubadours strutted their stuff. Watermills, windmills, bridges and ports were built all over England. Fairs and markets proliferated and thrived: there was an unprecedented surge in commercial activity between 1150 and 1300. A good part of it was driven by the wool trade. As Flemish merchants sought out more and more English wool to supply the cloth makers of Flanders, so they provided livelihoods for ship owners, fullers and above all sheep farmers. The national sheep flock boomed to perhaps ten million animals, more than two sheep per person. The English had found a comparative advantage in their mild, wet, grass-growing climate – a gain from trade – supplying Europe’s fibre. Specialisation and exchange fuelled population growth.

For example, in 1225, of the 124 people assessed for a survey in the Wiltshire village of Damerham, fifty-nine owned sheep, with a combined flock of 1,259 animals. That meant they sold wool for cash rather than strove for self-sufficiency. They presumably used that cash to buy bread from the baker who bought flour from the miller, who bought grain from other farmers, who therefore got cash too. Instead of self-sufficiency, everybody was now in the market and had disposable income. People wanted to travel to the market in nearby Salisbury to buy things: so the carter was doing well, too, and the merchants in Salisbury. In 1258 a spectacular cathedral began to take shape in Salisbury, on the back of the wool boom, because the Church was coining it in tithes and taxes. Put yourself in the shoes of a grain farmer in Damerham. The miller wants all you can grow, so you encourage both your sons to marry early and rent a few acres off you. The carter, the miller, the baker, the merchant and the shepherds are all doing the same: setting their children up in business. Family formation – which had always been as much an economic as a biological decision – increased markedly in the thirteenth century. The consequence of all this early and frequent marriage was fecundity. In the thirteenth century the population of England seems to have doubled, from over two million to something like five million people.

Inevitably, and gradually, the population boom overtook the economy’s productivity. Rents inflated and wages deflated: the rich were bidding up land prices while the poor were bid ding down wages. By 1315 real wages had halved in a century, although because of family formation, family income was probably not falling as fast as individual wages. For example, a miller in Feering in Essex in the 1290s agreed to halve his wage when his employer took on another employee. Chances are the new employee was the miller’s son and they were simply sharing the same income within the family. None the less, as pay packets shrank, demand for the goods supplied by merchants must have begun to stall. To feed the growing population, marginal land was being ploughed, and was yielding fewer and fewer grains for each grain sown. Diminishing returns dominated. Predatory priests and chiefs did not help.

Before long hunger was a real risk. It came suddenly in the sodden summers of 1315 and 1317, when wheat yields more than halved all across the north of Europe. The crops rotted in the fields; some people were forced to eat their own seed corn. Mothers abandoned their babies. There were rumours of fresh corpses of criminals pulled from gallows for food. In the years that followed, with continuing poor harvests and unusually cold winters, a fatal murrain spread among hungry oxen, and that left some land unploughed, further exacerbating the food shortage. The population then stagnated for three decades until the Black Death arrived in the 1340s and caused a crash in human numbers. The plague returned in the 1360s, followed by more bad harvests and more plague outbreaks. By 1450, the population of England had been reduced to roughly where it had been in 1200.

Yet neither the boom of the thirteenth century, nor the bust of the fourteenth, can be described in simplistic Ricardian and Malthusian terms. The carrying capacity of the land was not much increased in the first period by Ricardian technological change, nor much diminished in the second by Malthusian falls in yield. What changed was the economy’s, rather than the land’s, capacity to support so many people. After all, the Black Death was not caused by overpopulation, but by a bacterium. Ironically, the plague may have been one of the sparks that lit the Renaissance, because the shortage of labour shifted income from rents to wages as landlords struggled to find both tenants and employees. With rising wages, some of the surviving peasantry could once more just afford the oriental luxuries and fine cloth that Lombard and Hanseatic merchants supplied. There was a rash of financial innovation: bills of credit to solve the problem of how to pay for goods without transporting silver through bandit country, double-entry book-keeping, insurance. Italian bankers began to appear all across the continent, financing kings and their wars, sometimes at a profit, sometimes at a disastrous loss. The wealth that the Italian trading towns had generated soon found its way into scholarship, art or science, or in the case of Leonardo da Vinci, all three. Per capita income in England was probably higher in 1450 than it would be again before 1820.

The point is this. In 1300, Europe was probably on a trajectory towards a labour-intensive ‘industrious’ revolution of diminishing returns. Remember the miller of Feering who halved his wage by sharing his job with his son in the 1290s? Or consider the women who were paid half what their menfolk earned when they carried water (for making mortar) to the site of a new windmill being constructed at Dover Castle in 1294. No doubt they were delighted to have a job and earn a little cash, but they came so cheap they provided their employer with an incentive not to buy a cart and bullock. Yet by 1400, Europe had partly switched to a labour-saving ‘industrial’ trajectory instead, and the pattern was repeated after the cold and brutal seventeenth century, when famine, plague and war once more reduced the European population: in 1692–4, perhaps 15 per cent of all French people starved to death. Unlike Mesopotamia, Egypt, India, Mexico, Peru, China and Rome, early modern Europe became capital-intensive, not labour-intensive. That capital was used to get work out of animals, rivers and breezes, rather than people. Europe was, in Joel Mokyr’s words, ‘the first society to build an economy on non-human power rather than on the backs of slaves and coolies’.

The industrious revolution

To imagine what would have happened to Europe without the Black Death, consider the case of Japan in the eighteenth century. In the 1600s Japan was a relatively prosperous and sophisticated country with a population the size of France and Spain combined, and a strong manufacturing industry, especially in paper products, cotton textiles and weapons – much of them for export. In 1592, the Japanese had conquered Korea carrying tens of thousands of home-made arquebuses copied from Portuguese designs. Japan was none the less mainly an agrarian economy with plentiful herds of sheep and goats, lots of pigs, some cattle and oxen and quite a few horses. The plough was in common use, both ox-drawn and horse-drawn.

By the 1800s, domestic farm animals had virtually disappeared. Sheep and goats were almost unknown, horses and cattle were very rare and even pigs were few in number. As the traveller Isabella Bird remarked in 1880, ‘As animals are not used for milk, draught or food and there are no pasture lands, both the country and the farm-yards have a singular silence and an inanimate look.’ Carriages, carts (and even wheelbarrows) were scarce. Instead the power needed for transport came from human beings carrying goods hung from poles on their shoulders and racks on their backs. Watermills, though the technology had been known for a long time, were little used; rice was threshed and ground by hand querns or stone-weighted trip hammers, powered by treadle. Human rice pounders could be heard toiling away, naked behind a curtain, for hours at a time, even in cities like Tokyo; the irrigation pumps needed for the rice fields were often driven by pedalling coolies. Above all, the plough was now virtually unknown in the entire country. Fields were cultivated by men and women with hoes. Where Europeans used animal, water and wind power, the Japanese did the work themselves.

What seems to have happened is that some time between 1700 and 1800, the Japanese collectively gave up the plough in favour of the hoe because people were cheaper to hire than draught animals. This was a time of rapid population expansion, made possible by the high productivity of paddy rice, naturally fertilised by nitrogen-fixing cyanobacteria in the water and therefore needing little manure (though human night soil was assiduously collected, carefully stored and diligently applied to the land). With abundant food and a fastidious approach to hygiene, the Japanese population boomed to the point where land was scarce, labour was cheap and it was literally more economic to use human labour to hoe the land than to set aside precious acres for pasture to support oxen or horses to draw a plough. So the Japanese, to a spectacular extent, retreated from technology and trade and reduced their demands on merchants as they became more self-sufficient. The market for technology of all kinds atrophied. They even gave up capital-intensive guns in favour of labour-intensive swords. A good Japanese sword had a blade of strong though soft steel, but with a brittle, hard edge made lethally sharp by incessant hammering.