And yet the last third of Mr DeLong’s long 20th century was coloured by disappointments. The union bore fruit, in the form of a three-decade post-war run of torrid growth never matched before or since. In the aftermath of the second world war, though, the mix of a market economy and a generous safety-net made for a happy marriage of Hayek and Polanyi-“blessed by Keynes” (as Mr DeLong puts it), who provided the insight that governments should act to prevent recessions. After the war, both the Polanyian and Hayekian impulses contributed to disasters: in the totalitarian socialism of the Soviet Union on the one hand, and, on the other, in the Depression, which persisted and deepened until politicians eventually abandoned laissez-faire orthodoxy. People pushed back, demanding greater political rights, which they used to pursue regulation of the economy and social insurance. In the years before the first world war, markets generated rapid growth-but also soaring inequality and jarring disruption. #Humankind be both freeMr DeLong frames this history as a duel between the insights of Friedrich von Hayek, an Austrian economist who extolled the power of the free market, and Karl Polanyi, a Hungarian thinker who warned that the market was there to serve man, not man the market. Yet building harmonious societies out of material abundance has proved maddeningly difficult. Had the denizens of the 19th century known how fantastically wealthy their descendants would become, many would have supposed those heirs lived amid peace and contentment. It was economic magic, which allowed living standards to rocket even as the global population swelled to 7bn. Thereafter, it rose at a pace of just over 2% per year, which equates to a roughly 20-fold rise in productive power over 140 years. Over the following 370 years, that productive power doubled again. For roughly 10,000 years before 1500, humankind’s productive potential (meaning the stock of useful knowledge, roughly corresponding to real output) doubled about once every three millennia. Mr DeLong-an economist after all-helpfully quantifies the dramatic change in economic fortunes. Thanks to these, a widening part of humankind hurtled towards “economic El Dorado”, a land of plenty that prior generations could scarcely have imagined. The step-change in growth stemmed from technological advances, specifically three meta-innovations that drove rapid and sustained progress: the modern corporation, the research laboratory and globalisation. Yet from around 1870, growth found a new gear, and incomes in leading economies rose to unprecedented levels, then kept climbing. Incomes had stuck close to subsistence levels. At its outset, despite the Industrial Revolution, even the most prosperous parts of Europe and North America still had one foot firmly planted in a Malthusian world-in which, for millennia, technological improvements never yielded enough new production to outrun population growth.
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