C&B Notes

2,000 Years of Economic History

JP Morgan’s graph shows the major powers’ share of world GDP over the past two millennia.  The timing of industrialization has been history’s most significant economic dynamic both in terms of % of world GDP and GDP per capita.

Before the Industrial Revolution, there wasn’t really any such thing as lasting income growth from productivity.  In the thousands of years before the Industrial Revolution, civilization was stuck in the Malthusian Trap.  If lots of people died, incomes tended to go up, as fewer workers benefited from a stable supply of crops.  If lots of people were born, however, incomes would fall, which often led to more deaths.  That explains the “trap,” and it also explains why populations so closely approximated GDP around the world.

The industrial revolution(s) changed all that.  Today, the U.S. accounts for 5% of the world population and 21% of its GDP.   Asia (minus Japan) accounts for 60% of the world’s population and 30% of its GDP.