What Delayed Human Prosperity

In a comment to part 4 of the essay on poverty, Shri Kalra asked, “if just existence of markets and process of exchange brings prosperity, why societies did not become prosperous soon after agriculture came to be practised and exchange markets came up to trade the surplus? Why is it that prosperity started coming in only around 18th century?”

Indeed it is true that for nearly all of human history that stretches back at least 200 to 300 thousand years, there was little improvement in the material prospects of life. The total output of the world economy for the last 2000 years was nearly flat until around the year 1500, and then it slowly started creeping up before it took the hockey stick shape around the year 1800, when it crossed one trillion international dollars.

Figure 1 Click on image to visit the source site Our World in Data.

Given that the scale on the horizontal axis is 2000 years, it appears that total world GDP took off vertically life a rocket. And seen from the perspective of thousands of years, it was indeed a sheer climb. A related graph about world population is instructive. Continue reading “What Delayed Human Prosperity”