In What Sense Was þe Pre-Industrial Economy “Malthusian”?, &

BRIEFLY NOTED: For 2022-07-08 Fr

I greatly enjoy and am, in fact, driven to write Grasping Reality. I am incredibly grateful that (the great bulk of) it goes out for free to what is now well over ten-thousand subscribers around the world. And if you find this useful or interesting, please subscribe:

FIRST: In What Sense Was the Pre-Industrial Economy “Malthusian”?

Consider smart young thirty-something whippersnapper Rafael Guthman:

He has been taking aimed sniper shots at the idea that the pre-industrial economy was in any sense “Malthusian”. He makes lots of good points:

Rafael R. Guthmann: Beware the GDP: ‘The 1937 German worker could rent 181% as many rooms as an American worker today, buy 99% as many potatoes, 42% as much bread, 47% as much “natural” cheese, and 26% as much beef. Compare these figures to the 13.5% per capita GDP “measured” in the Maddison dataset. Note also that the relative prices between rent and beef are different by a factor of eight. This is so thanks to technological change: US real estate became expensive over time as other goods became relatively cheaper, which means that estimated variation in GDP changes a lot depending on the method used to estimate it.

We measure nutritional standards using height data. In the US today, the average adult male height is 175.3 cm, in India average adult male heights are 10 cm shorter, at 165 cm. However, Indian men from the upper classes are 174.4 cm tall, and less than 1 cm shorter than Americans, which suggests the difference is not genetic but nutritional. For comparison, German 17–18 year old schoolkids were reaching 175 cm just before WW2…. The Maddison dataset claims the GDP per capita of Greece two thousand years ago was about 1,300 dollars, which is about 1/5 of the level of GDP per capita of India and about 1/4 of Pakistan or Nigeria today. However, skeletons from Hellenistic Greece suggest an average height of 172 cm, which is much closer to current American heights than to heights in India (165 cm) or Pakistan (165.8 cm) today.

Also, the Maddison dataset claims incomes in Ancient Greece two thousand years ago were only 30% higher than in Iron Age Belgium (around the same time). Houses in Iron Age Belgium… houses in Greece… these houses do not appear very consistent with a [mere] 30% difference in per capita GDP…. The people living in Greco-Roman city-states had the perception that they were sophisticated civilized folk and their neighboring tribal populations were uneducated and ferocious barbarians. Perhaps, this perception was not only due to delusional ethnocentric beliefs but instead a consequence of the very concrete difference in the material sophistication of their societies?

“Economic growth began recently and everybody in the past—even Europeans less than a century ago—consisted of peasants living under minimum subsistence”—or is it just that the lack of evidence combined with the spurious application of platonic theoretical constructs such as GDP that make us think that way?…

LINK:

Beware the GDP

But I cannot buy the full package.

So let me try to explain in what sense I think that pre-1500 Agrarian-Age (and 1500-1770 Imperial-Commercial Age, and 1770-1970 Industrial-Revolution Age, in fact all pre-demographic transition economies) were Malthusian.

The problem is that I want to start from a basecamp: the Solow-Malthus economic-growth model. So I send you off to read my background theory lecture notes on the Solow-Malthus economic-growth model:

2022 07 08 Solow Malthus Model

3.25MB ∙ PDF file

Download

Download

Back? Angry that I made you march through 14 pages of algebra? Contemptuous and we economists’ inclination to use math serves as an entry barrier meaning that we only have to talk to ourselves, and not to people trained in other disciplines who are unable or unwilling to follow what happens when you start taking the derivative of a logarithm?

Sorry: then I really cannot help you.

But if you are merely annoyed because you refused to be marched through 14 pages of algebra? If you are willing to take what I have to say about Solow-Malthus economic-growth theory provisionally on faith if only I give you a quick precis to get you to the bottom line?

Then I can help you. Here we go:

If we are willing to assume that:

1. A society’s productivity depends primarily on (a) its willingness to save and invest, and (b) the efficiency of its workers, which is in turn a function of (c) its level of technology—its useful ideas about manipulating nature and organizing humans—and (d) its natural resources per worker.

2. A society’s population growth rate depends on (a) its level of consumption of necessities that make you biologically fit to reproduce relative to (b) its sociologically-determined familial and other institutions that potentially curb the rate of reproduction.

3. Societies differ in the proportion of their productive resources they allocate to necessities vis-à-vis luxuries.

4. Technological progress before the Industrial-Revolution Age proceeded at a slow average proportional growth rate h measured in hundredths of a percent per year.

Then we get:

• The right-hand side of the slide above: the society’s level of productivity per worker will head for and then tend to oscillate around a Malthusian level equal to (a) the society’s taste for non-necessities (which include such things as having a rapacious and greedy upper class, and liking to live in cities), times (b) its sociologically-determined subsistence level of necessities consumption (which can be raised by things like a late age of first female marriage, large-scale female infanticide, or frequent chevauchées), times quantitatively unimportant nuisance terms.

• The left-hand side of the slide above: the society’s population density will head for and then tend to oscillate around a Malthusian level equal to (a) the quality and abundance of natural resources per acre, times (b) the ratio of the technology level to the “subsistence” level of necessities consumption at which the population barely replaces itself, times (c) the propensity to save and invest in everything that makes humanity more productive (from tools to liming the soil to building commercial networks), (d) a chief boost to which its the provision of a pax imperia, times (e) the inverse of the taste for non-necessities, all (e) raised to the power that is the extent that higher population induces resource scarcity and thus lower productivity, times quantitatively unimportant nuisance terms.

As the centuries and millennia pass, the Malthusian equilibrium level of population density will slowly rise as technology improves.

And as the centuries and millennia pass, the Malthusian level of typical human living standards will slowly rise even as necessities-valued production per worker does not to the extent that there is faster technological progress in making middle-class conveniences than in making true bioreproductive necessities.

But even though a society tends to go back to its Malthusian equilibrium, it does not have to be there: all kinds of shocks can knock it away.

Moreover, and more important, the Malthusian equilibrium can and does shift. There are BigTime changes across societies and over time as polity and sociology shift in:

• the subsistence level of necessities consumption

• the taste for luxuries

• the incentives to save and invest

These drive big differences in how societies look and are, and big differences in how societies’ economies grow and shrink: truly dire Dark Ages like post-Roman Britain or the early-Iron Age Ægean; truly magnificent (if often cruel and astonishingly unequal) civilizational “efflorescences” as Jack Goldstone has taught us to call them. Establish a pax imperia, with associated protection of commerce and industry from freelance expropriation by thugs with spears through a government that controls its own functionaries and so generate lots of savings, investment, and an increased division of labor; acquire a taste for luxuries, especially living in cities and upper-class and even middle-class display of comfort; and generate sociological institutions that curb and control female fertility and female-child survival, and watch what happens. On the other side, have barbarians within the gate so that as much wealth as possible is immediately turned into silver and buried, establish a sociology of very early female first marriage, and have little taste for or indeed specialization in producing non-necessities—and your Malthusian equilibrium can shift to something of interest to archæologists, but not of interest to artists or indeed to connoisseurs of material culture.

Moreover, remember this always: the gulf between the standard of living of the upper and even the middle class (who leave the major archæological footprint) on the one hand and the peasant-craftsman-servant working class on the other, whose reproduction generates the resource scarcity that anchors the Malthusian equilibrium—that can and does vary widely and wildly as well.

That pre-Industrial Revolution Age history was “Malthusian” does not mean that nothing interesting happened, or that everything was the same.

---

One Video:

Aimee Mann: 4th of July <https://www. youtube.com/watch?v=7cgoGd1jpNY&t=45s>:

---

One Image, Again:

---

Very Briefly Noted:

• Shoshana Zuboff (2015): Big Other: Surveillance Capitalism & the Prospects of an Information Civilization<https://na.eventscloud.com/file_uploads/ddd02aa5285f2e887012880914650f28_ZuboffBigOther.pdf>

• William D. Cohan: The Bull Case for Netflix: ‘Yes, the stock is down 70 percent and there are legitimate frets about an emerging ad-tier, churn, and increased competition. But the company is only trading at about 4x EBITDA while Tesla is trading at, um, 55x. This is not investment advice, but something weird is going on here… <https://puck.news/the-bull-case-for-netflix/>

• Serguey Braguinsky & al. (2015): Acquisitions, Productivity, & Profitability: Evidence from the Japanese Cotton Spinning Industry: ‘After acquisitions, less profitable acquired plants saw drops in inventories and gains in capacity utilization that raised both their productivity and profitabilit… <https://na.eventscloud.com/file_uploads/5c0f2ac943bea68410b1d9f69c8ecdae_aer.20140150.pdf>

• Eric J. Hobsbawm: The Age of Empire, 1875–1914 <https://archive.org/details/ageofempire187510000hobs/page/n10/mode/1up?view=theater>

• David A. Wells: Recent Economic Changes & Their Effect on the Production & Distribution of Wealth & the Well-Being of Society<https://archive.org/details/recenteconomicc00wellgoog/page/n4/mode/1up?view=theater>

• Joe Weisenthal & al.: Podcast: How to Spot a Fraud When Everyone’s Against You: ‘The journalists who brought down Wirecard explain just how crazy things got… <https://www.bloomberg.com/news/articles/2022-07-01/how-to-spot-a-fraud-when-everyone-s-against-you?cmpid=BBD070122_oddlots#xj4y7vzkg>

• Duncan Black: Right Wing “Populism”: ‘They seem… unable to do it even though it is the easiest thing… moderately charismatic figure, enough bread and circus, a little bit of competence. Evil, racist, and corrupt but also just “nice” enough to 65% of the population…. Why they are unable to be “nice” to a decent majority of the population while s—ting on the rest… <https://www.eschatonblog.com/2022/07/right-wing-populism.html>

• Jonathan M. Gitlin: Volkswagen Starts Building the First of Six Battery Gigafactories: ‘Investing $20.4 billion between now and 2030 for a capacity of 240 GWh/year… <https://arstechnica.com/cars/2022/07/volkswagen-starts-building-the-first-of-six-battery-gigafactories/>

• David Autor, Anna Salomons, & Bryan Seegmiller: New Frontiers: The Origins & Content of New Work, 1940–2018 <http://economics.mit.edu/files/21810>

• Zeynep Tufekci: How Social Media Took Us from Tahrir Square to Donald Trump <https://www.technologyreview.com/2018/08/14/240325/how-social-media-took-us-from-tahrir-square-to-donald-trump/>

• Lucan Way: Volatile Compounds: ‘A developing fear among Republicans that they won’t be able to win a presidential election democratically… <https://www.thesgnl.com/2022/07/american-democracy-crisis-lucan-way/>

---

Twitter & ‘Stack:

• Claudia Sahm: Boom. not a recession. Payroll employment rises by 372,000 in June; unemployment rate remains at 3.6% <http://go.usa.gov/vrK> Jobs Report BLS data…

Claudia Sahm @Claudia_Sahm

boom. not a recession.

BLS-Labor Statistics @BLS_gov

Payroll employment rises by 372,000 in June; unemployment rate remains at 3.6% https://t.co/1Y9cSWKsy9 #JobsReport #BLSdata

• Branko Milanovic: Chateaubriand & Inequality: Two Centuries Later <

Chateaubriand and inequality: two centuries later

• Razib Khan: Eternal as the Nile

Eternal as the Nile

I greatly enjoy and am, in fact, driven to write Grasping Reality—but its long-term quality (if not viability) do depend on voluntary subscriptions from paying supporters. I am incredibly grateful that (the bulk of) it goes out for free to what is now well over ten-thousand subscribers around the world. But if you are enjoying the newsletter enough to wish to join the group of paying supporters, please press the button below and sign up for a paid subscription:

Director’s Cut PAID SUBSCRIBER ONLY Content Below:

Paragraphs:

A very nice way of putting the tech-driven hollowing out of the middle:

David Autor, Anna Salomons, & Bryan Seegmiller: New Frontiers: The Origins & Content of New Work, 1940–2018: ‘We estimate that the majority of contemporary employment is found in new job tasks added since 1940 but that the locus of new task creation has shifted—from middle-paid production and clerical occupations in the first four post-WWII decades, to high-paid professional and, secondarily, low-paid services since 1980….. Leveraging proxies for output-augmenting and task-automating innovations built from a century of patent data and harnessing occupational demand shifts stemming from trade and demographic shocks, we show that new occupational tasks emerge in response to both positive demand shifts and augmenting innovations, but not in response to negative demand shifts or automation innovations…. These two faces of innovation have strongly countervailing relationships with occupational labor demand…

LINK: <http://economics.mit.edu/files/21810>

---

OK, Zeynep. You have put your finger on it. But what do we do next? Writing a ‘Stack is me playing my position. But what else?

Zeynep Tufekci: How Social Media Took Us from Tahrir Square to Donald Trump: ‘In 2012… I talked about the role of social media in breaking down what social scientists call “pluralistic ignorance”—the belief that one is alone in one’s views when in reality everyone has been collectively silenced. That, I said, was why social media had fomented so much rebellion…. Power always learns, and powerful tools always fall into its hands. This is a hard lesson of history but a solid one…. In seven years, digital technologies have gone from being hailed as tools of freedom and change to being blamed for… increased polarization, rising authoritarianism, and meddling in national elections by Russia and others…. The handful of giant US social-media platform… [were] left to deal as they saw fit…. Unsurprisingly, they prioritized their stock prices and profitability…. YouTube’s recommendation algorithm tended to drive viewers toward extremist content by suggesting edgier versions of whatever they were watching… lucrative for YouTube but also a boon for conspiracy theorists…. Twitter played an outsize role…. Twitter’s pithy, rapid-fire format also suits anyone with a professional or instinctual understanding of attention, the crucial resource of the digital economy. Say, someone like a reality TV star. Someone with an uncanny ability to come up with belittling, viral nicknames for his opponents, and to make boastful promises that resonated with a realignment in American politics—a realignment mostly missed by both Republican and Democratic power brokers…

LINK: <https://www.technologyreview.com/2018/08/14/240325/how-social-media-took-us-from-tahrir-square-to-donald-trump/>

---

The idea that you had to reward the “job creators” with fortunes or they would sit on their hands and the economy would tank is, in many ways, the religion of the neoliberal era:

Branko Milanovic: Chateaubriand & Inequality: Two Centuries Later: ‘Chateaubriand’s… Memoirs Beyond the Grave…. While Chateaubriand was in favor of the Bourbons, he was quite aware that the revolution and afterwards Napoleon broke the back of hereditary monarchy and destroyed that mythical link between people and its monarch. Republic was henceforth inevitable…. Issues that concern us today… three…. [1] The role of true believers in politics…. Chateaubriand was infatuated with the idea of “legitimate monarchy”… [so] contemporary people, including kings and would-be kings, invariably fell short of that high, imagined, standard…. Those whom he was supporting… [thus] found Chateaubriand troublesome… perhaps even insufferable, silently critical…. [2] What are the circumstances, giving right to higher income, that we find acceptable?… Chateaubriand… believed that the heir to the throne, in virtue of his birth, had special and unique rights…. We are not different today in our rather arbitrary inclusion or exclusion of circumstances…. Why does equality of opportunity so blatantly stop?… Why does the desire for equality of opportunity stop at national borders?… [3] Religion and economic inequality…. Chateaubriand… has of the use of religion the same opinion as Marx…. So long as either (1) large disproportions in income and wealth are not seen, or (2) religion is there to “explain” them away, the very unequal order to things can continue…

LINK:

Chateaubriand and inequality: two centuries later

---

Increasingly, the evidence is mounting up that cultures and technologies move easily, but that large-scale demographic replacement of populations by immigrants is extremely rare in human history. In other words, throughout Eurasia, Africa, and Latin America, most claims of ancestral kinship that assert that “we”, whoever we are living in one place, came from elsewhere are fictitious:

Razib Khan: Eternal as the Nile: ‘Science, archaeology and history are converging on a clear conclusion: the ancient Egyptians are still with us, their direct descendants navigating Cairo’s bustling street… while others till the Nile Valley’s eternally rich soil as their forebears have…. Ancient Rome… might have changed the world, but left… little imprint on modern Italian genetics…

LINK:

Eternal as the Nile

---

I do not think we have powerful resilience in the system. In the 1990s I used to hear from Republicans that Clinton was not a legitimate president first because he had only won 43% of the vote (as Ross Perot split the real and rightful Republican majority), and second that the democratic party had forfeited its right to have a place at the table when they decided to back him during the Monica Lewinsky scandal. Then in the early 2010s I heard not from Republicans I talked to, but in whispers, that a Black man could not legitimately govern a white nation. Now again I hear the whispers that Biden is too old to be a legitimate president. Democracy requires a loyal opposition, or it breaks down. And there is no loyal opposition on the Republican side anymore—there is only the Trumpist Party, and the whimpering Never Trump remnant:

Lucan Way: Volatile Compounds: ‘A developing fear among Republicans that they won’t be able to win a presidential election democratically…. They… now… feel this growing threat to their survival as a party… [unless they] move into authoritarian territory…. Trump… pushed them over the line…. They’ve made a commitment to this… electorate that feels a demographic threat from immigration. This commitment turns everything in politics into an existential threat…. U.S. democracy is declining, yes, but… the resilience in the system is ultimately very powerful…

LINK: <https://www.thesgnl.com/2022/07/american-democracy-crisis-lucan-way/>