Free markets have allowed the West to have huge economic growth and send standards of living up and up, year after year. We often forget that things that we consider everyday items now, not even the richest among us possessed 100 years ago.
John D. Rockefeller was one of the richest men to ever live, possibly the richest. His adjusted net worth, while varying from source to source, is several hundred billion dollars. However, John D. Rockefeller never once in his life ever owned a cellphone. Only towards the end of his life in the 1930s did TV even start to come into existence, and it was vastly different than the TV we enjoy today.
The Internet has changed our world, but poor Rockefeller never once in his life used an instant messenger to talk to friends and family. You could probably look around you and see numerous things that didn’t exist in his lifetime (Rockefeller passed away in 1936).
Taking off to new heights mean that some things are left behind. Existential crises that threatened the survival of man hundreds of years ago are unknown in the West today. One of these forgotten horrors is famine. During a famine, not only do lack food, but even your neighbors and friends are lacking. Fields are empty. Pastures are empty. Silos are empty. Markets are empty. Stomachs are empty. This situation could persist for several months at a time before more food would start coming in from the harvest. Until then, empty.
Cornelius Walford wrote a book in 1879 titled, “The Famines of the World.” It gives us a brief but harrowing glimpse into what into what the past looked like. The beginning of the book gives us a list of every famine recorded to the point up publication, starting all the way 1708 B.C. A brief description is provided with each entry into the list of famines. An early record goes: “436…Famine Thousands threw themselves into the Tiber.” Most of the early entries are lacking in details consider the only info we have on the famine might be a small entry somewhere, but once you hit the middle ages, details start to emerge. Here’s a few highlights:
- Ireland 963–64: An intolerable famine, “so that parents sold their children for food.”
- England 1073: Famine, followed by mortality so fierce that the living could take no care of the sick, nor bury the dead.
- Ireland 1586: “Human flesh is said to have been eaten.”
Cannibalism is reported in several entries.
This is probably one of the more depressing books that you could ever read, but it serves as a valuable reminder. I only picked a few examples above, but there are hundreds of famines listed by Walford. Their great number is understandable. All it takes is one bad harvest to effectively wreck a society for several years. If agriculture fails, other industries will start to follow. Economic free-fall is not far behind.
To our modern minds and modern comforts, it is hard to imagine that you could at any time be one bad harvest away from having your world thrown upside down. In our world, food is just there. Other than some occasional events, such as a natural disaster that clears off grocery store shelves, we never even think about if we can get food or not.
To state the obvious, something changed from then to now. How did we get from the past realities of Walford’s history to the present reality of comfort?
Obviously, we have more food now than we did then. Are we just planting more food? Well, yes, but it is much more complicated than that. We have in our age transportation, infrastructure, technology, and equipment necessary to sustain vast numbers of people. Not only just for the process of growing the food itself, but for packaging, transportation, preservation, and everything in between that gets it from the land to the aisle in the store. Where did all of this come from?
Is it just better and more technology? After all, we live in an age of technological miracles. I’ll avoid repeating myself, but we can do things today that seemed impossible a hundred years ago. Why can’t technology just give us more food?
Technology, however, is a fundamentally empty answer to this question. Technology in it’s purest form, knowledge, is simply theoretical. Having the blueprint to be able to build a house does not give you a house. What is necessary is the actual materials to build it. An increase the amount of materials is what is really needed to help increase real wealth. How does this occur?
What is necessary is what economists refer to as capital. Capital can mean lots of different things in different contexts, but for our purposes here it simply refers equipment or tools. Capital is used in production to help increase the productivity of labor. Ever tried hammering a nail without a hammer? The magic of capital is that with the same amount of labor, I can be more efficient than I was before. This means that with the same amount of labor, I can squeeze more goods out of my labor than I could before.
Capital is accumulated by saving. If I decide to spend all my time and labor on consumption goods, than my labor will always yield the same amount of goods. However, if I decide to spend part of my labor on a tool or some time of equipment rather than something I can directly consume, than the labor on consumer goods becomes more productive from that point on.
Why was capital not being accumulated in eons past? It certainly was, but the process of building up more and more capital was often frustrated by the lack of property rights. If I spend time and energy to create more capital, but it is taken or destroyed because of property rights violations, what’s the point? Why would I even go through the hassle if I can’t even enjoy the end benefit of increased productivity of labor?
It is only when property rights are firmly established that capital can begin to accumulate and build up. Classical Liberalism rose to predominance in the 18th and 19th centuries, leading to strong property rights and mostly laissez-faire policies. Predictably, this led to an increase in capital stocks, and a concomitant rise in the standard of living. This is often referred to as the “Industrial Revolution”.
The riches enjoyed by us today are not permanent. If a regression in property rights occurs, then we will slowly start to regress back into the life of our ancestors. It is a curse of the economically prosperous that we often forget how we became so prosperous in the first place. Accumulation of capital under strong property rights gave us what we have today, and without it, we would still be living in the past realities of famine, sickness, and living at all times only several degrees from death.
Americans would do well to not take this prosperity for granted. If we have a famine in sound economic thought, famines in our fields will come once more.
Originally published at https://www.thejwrich.com on October 18, 2019.
