[LINK] "History 101: Have capitalism, will prosper"

[rfmcdonald]

Neil Reynolds' article "History 101: Have capitalism, will prosper," included in today's Globe and Mail, has some interesting statistics about world economic rankings alongside a relatively conventional thesis about economic change.

Great Britain was not the world's No. 1 economy in 1850 - no matter how imperially it ruled the waves. Though growing quickly, Britain's economy was one-quarter the size of China's economy, half the size of India's economy.

Expressed in 1990 "international dollars," these top three economies boasted gross domestic products midway through the 19th century as follows: China, $247-billion; India, $120-billion; Britain, $63-billion.

In the top 10, the U.S. ranked a remote seventh ($42-billion), behind France, Russia, and Germany, but ahead of Italy (No. 8), Japan (No. 9), and Spain (No. 10).

Fifty years later, in 1900, Britain still ranked No. 3. The U.S. had increased its economy more than sevenfold and had passed six other countries to become No. 1 (GDP: $312-billion) - the position it held throughout the 20th century.

[. . . I]n 2000, the world's biggest economies assumed rankings that confirmed the end of the socialist century and the arrival of freer markets and global trade.

The U.S. economy had expanded fivefold in the previous half century (GDP: $7.9-trillion). China had regained the No. 2 rank it held a century earlier (GDP: $4.3-trillion). In the most remarkable economic advance of the half century, though, Japan had increased its economy 16-fold to take the No. 3 position (GDP: $2.6-trillion). India took No. 4 (GDP: $1.9-trillion), the same position it held in 1900. Britain fell to No. 7, Russia to No. 10.

[. . .]

In assembling the rankings cited here, economic historian Joseph Martin notes that the rise and fall of economies demonstrates that countries become wealthier "only when they introduce capitalist reforms."

Mr. Martin, the director of business history at the University of Toronto's Rotman School of Management, cites especially the evidence of the most recent half century: "On balance, the world was much better off in 2000 than it had been in 1950," he says in an unpublished paper.

"While population had grown 2.4 times (to more than six billion), the wealth created had grown nearly seven times. As a consequence, the average citizen of the world was nearly three times as well off as he or she had been half a century earlier."

[. . .]

On the basis of per capita GDP, of course, China remains a poor country. In contrast, Mr. Martin says, the U.S. continued throughout the 20th century to improve its position as the richest country in the world.

"At mid-century, the U.S. had been only 5.5 per cent wealthier (per capita) than second-place Switzerland," he says. "By 2000, the U.S. was 15 per cent richer than oil-rich Norway. Indeed, there was greater distance between the U.S. and Norway than there was between Norway and Hong Kong, the 10th-richest country."