In a certain sense, the failure of the Industrial Revolution to bring about a broadly shared prosperity is a puzzle. Technological ideas really do cross borders pretty freely, and did so long prior to the internet. Why weren’t industrial technologies universally adopted? If it takes less human labour to make more goods and services, why don’t we just create so many goods and services that all the labour is still absorbed and we are all phenomenally wealthy? That’s (roughly) what happened in the postwar prosperous West. Why didn’t it happen everywhere?
The current fashion is to blame ‘bad institutions’, a phrase so vague as to be indistinguishable from confirmation bias. The losers lost because they had bad institutions, which no true Scotsman would abide. Empirical work on the subject finds that the best operationalisation of ‘good institutions’ has nothing to do with what most people think of as institutions, but instead measures the degree of sociocultural connectedness with ex post winners, specifically the degree to which colonisers intended to actually live in the countries they now dominated. When colonisers colonised merely to extract, the story goes, they imposed bad institutions. When they planned to reside in the colonies, they erected good ones. But that story invites a more parsimonious account, the
sociocultural winners won and the losers lost, regardless of the geographies they ultimately inhabited. In places where losers mixed with winners, some crumbs fell from the table.
Plus, there is an obvious point that is rarely discussed among polite economists. Given the Earth’s resources and technology as it existed in the mid–to–late twentieth century, it would have been physically impossible for the entire world to have enjoyed the standard of living that prevailed in the United States, Western Europe, Australia, and Japan. Three–quarters of the Earth’s population were effectively excluded from modernity. For that not to have occurred, we would have required roughly four times the oil, steel, etc., than we actually extracted. It is a mistake to assume, as the 1970s ‘limits to growth’ movement did, that resource constraints permanently bind. Technologies, of extraction, efficiency, or substitution can and usually do relax them, eventually. But that sort of progress takes time, usually a few human generations, and the mechanism by which it is propelled is high prices. In a counterfactual twentieth century during which industrial development was universally shared, the prosperous West would not so quickly have achieved the standard of living it did achieve. Instead, resource prices would have shot upwards and much more attention would have been devoted much earlier to efficiencies and alternatives that in actual historical fact we are only now beginning to explore.
Technological development is, in econospeak, an asymmetric shock. Somebody does it first. The relatively small community of ‘first–movers’ enjoy an odd sort of paradise, for a time. They get to implement the possibilities opened up by the new technology under the resource prices that prevail prior to widespread adoption of the invention. ‘Rock oil’, before kerosene lamps and then internal combustion engines, was a cheap resource whose prevalence or limits were not of great concern. In economies at the technological frontier, internal combustion engines became a centerpiece of industrial development based on prices that could not have survived universal adoption. Lifestyles and habits and long–lived physical infrastructures were transformed based on prices that, from a certain perspective, ought to have been understood as ephemeral and anomalous. In actual fact, low resource prices were not so ephemeral. Petroleum was as cheap in the 1990s as it had been in the 1890s (adjusting for inflation, of course). One response to that, common on the economic right, is to laud markets and
Part 4. Robots and Justice
human ingenuity. The doomsayers were wrong! Resource scarcities failed to appear because new sources were continually discovered. Unfortunately, in arithmetic terms, the ‘decision’ by three–
quarters of humanity not to industrialise over the period played a much larger role in stabilising oil prices than the recruitment of new oilfields. The process by which oilfields were discovered and brought into production for global markets was a mix of decentralised, emergent market activity and intentional action by governments and large corporations. The process by which most of the world chose not to industrialise was perhaps much the same.
So here is a tragic and sadly realistic account of sociotechnological development: something is invented. ‘First–movers’ rush in to exploit the invention. In doing so, they become very wealthy. They gain market power (by virtue of superior experience, networks effects, etc.), and political power. The communities in which they reside and the lives of individuals within them are transformed by the new wealth and technology in ways that would be painful to reverse. Without malicious intent, these communities then deploy their wealth, power, and prowess to secure low–cost access to the resources on which they depend, access which in practice would be threatened by universal replication of their own experience. The result is a highly polarised, zero–sum world, in which the prosperity of outsiders must be suppressed if the lifestyles of insiders — now embedded in everything from habits to physical infrastructure — is to be sustained.