1820, Again

In response to yesterday’s blog post “SOMETHING happened in 1820 . . .,” my friend and colleague Ed Snow called my attention to another set of passages in the paperback edition of William J. Bernstein, The Birth of Plenty: How the Prosperity of the Modern World Was Created (New York: McGraw-Hill, 2004):

Beginning around 1820, the pace of economic advance picked up noticeably, making the world a better place to live in.  What happened?  An explosion in technological innovation the likes of which had never before been seen.  (15)

On page 15, Bernstein, a Ph.D./M.D. neurologist and the co-founder of the investment management firm Efficient Frontier Advisors, identifies the emergence of four factors as crucial to the “explosion” that he identifies:

• Property rights
• Scientific rationalism
• Capital markets
• Fast and efficient communications and transportation

Not until all four of these factors — property rights, scientific rationalism, effective capital markets, and efficient transport and communication — are in place can a nation prosper.  These four factors first coalesced, briefly, in sixteenth century Holland but were not securely in place in the English-speaking world until about 1820.  Not until much later did the four factors begin to spread over the rest of the globe.  (16-17)

Is it too obvious to mention that the Restoration commenced on the frontier of the United States in 1820, that the Church of Jesus Christ of Latter-day Saints was founded in April of 1830, that our first major international missionary effort was very successfully launched in Great Britain in 1837, and that the British migration of Latter-day Saints was a major factor in the growth of the Church for the remainder of the nineteenth century?

Before 1820, there had been only minuscule material progress from decade to decade and century to century.  After 1820, the world steadily became a more prosperous place.

The data are “noisy” enough that identifying 1820 as the annus mirabilis of world economic growth is more than a little arbitrary.  The British data, as we shall see, put the ignition of growth a bit later; the American data, a bit earlier.  Whatever date is chosen, however, it is clear that sometime in the first half of the nineteenth century, growth of the global economy took off, bringing prosperity, despite the repeated devastation of war, civil strife, and revolution.  (19)

These things are always bound to be a bit fuzzy, I suppose.  But I’m very struck by the choice of the date 1820.  And the charts on pages 18-19 — Figure 1-4 World Per Capita GDP (Inflation-Adjusted) and Figure 1-5 Annualized Per Capita World GDP Growth (Inflation-Adjusted) — are simply stunning.