Preface 1 Preface The twentieth century began in the years just after the end of the American Civil War in 1865. The twentieth century came to an end in the years around the chronological beginning of the third millennium. The twentieth century began in the years just after America’s Civil War because it was then that three of the most important trends that were to make the twentieth century what it was took their shape. In 1867 the Pacific Mail Steamship company began regularly-scheduled service between San Francisco and Hong Kong. In 1881 the world’s first steelhulled ocean liner—Cunard’s S.S. Servia—entered service.1 It was in those years immediately after 1865 the metal-hulled steam-powered transoceanic passenger and cargo ships began the large-scale intercontinental movement of people and of staple goods—not preciosities like ivory, apes, and peacocks, but instead goods like flour, meat, machines, furniture, and textiles.2 It was in those years, also, that the first reliable and durable transoceanic telegraph cables were laid.3 The near-instantaneous transmission of information around the globe made possible by the longdistance telegraph—and its successors in communications technologies— had profound impact on economics, technology, and culture. The largescale flows of goods, people, and information around the entire world have been the heart of the twentieth-century process now called “globalization.” However, it is the third of the important trends that took shape immediately after the Civil War that is probably the most important of all. 1 See William H. Miller (1997), The Liners: A Voyage of Discovery (New York: Motorbooks International: 0760304653). 2 See Kevin O’Rourke and Jeffrey Williamson (1998), Globalization and History: The Evolution of a Nineteenth Century Atlantic Economy (Cambridge: MIT Press: 0262650592). 3 The first transatlantic cable laid in 1858 barely functioned at all, and was completely useless within months. See “History of the Atlantic Cable and Submarine Telegraphy” <http://www.atlantic-cable.com/ (December 23, 2001)>, Tom Standage (1999), The Victorian Internet (London: Berkley Pub Group: 0425171698), and Neal Stephenson (1996), “Mother Earth, Mother Board,” Wired 4:12 (December). Preface 2 They saw the invention of invention. As of the middle of the nineteenth century, it was not at all clear that the pace of productivity growth and technological change seen in the classic British Industrial Revolution could be sustained. That century-long burst of technological progress in steam, textile machinery, and metalworking might have been nearing its end. But technological progress did not slow. The leading sectors of the first half of the nineteenth century were replaced by others—steelmaking, chemistry, electricity, the internal combustion engine—and it became clear that the Industrial Revolution had seen not just the invention of a few interesting and productive new technologies but the invention of a scientific-social-economic system that generated a sustained and so-far permanent chain of inventions, innovations, and productivity improvements that extended across virtually the entire economy.4 The burst of textile, metalworking, and steam-related inventions of the British classic Industrial Revolution were no flash in the pan. The sustained and interlocking processes of scientific research, technological development, and industrial innovation that have been most important of all in shaping the history of the twentieth century.5 How much larger is GDP per capita in the world today than it was back in the twentieth century? Is the world sevenfold richer? Fourteenfold richer? Twentyonefold richer? Does the question have any meaning?6 That the twentieth century has seen the collective wealth of humankind increase so much is primarily due to the magic of these interlocking rings of scientific research, technological development, industrial innovation—and the market economies that have made industrial innovation so profitable and directed so much energy and effort toward it. The twentieth century came to an end at the chronological beginning of the 4 See W. Arthur Lewis (1978), Growth and Fluctuations 1870-1913 (London: Allen and Unwin). 5 See David Mowery and Nathan Rosenberg (1998), Paths of Innovation: Technological Change in Twentieth Century America (Cambridge: Cambridge University Press: 0521641195). 6 For some reflections, see William Nordhaus (1997), “Do Real Output and Real Wage Measures Capture Reality? The History of Lighting Suggests Not,” in Timothy Bresnahan and Robert Gordon, eds., The Economics of New Goods (Chicago: University of Chicago Press), and Richard Easterlin (1998), Growth Triumphant? The Twenty-First Century in Historical Perspective (Ann Arbor: University of Michigan Press: 0472085530). Preface 3 third millennium because it was then that the key dilemmas that appear likely to shape the history of the twenty-first century took their form. The East Asian, Argentinian, and other financial crises of the late 1990s broke confidence in both the East Asian state-led and the neoliberal openness-led development models. The belief that economic development would be rapid and straightforward once an economy had managed to successfully replicate the institutional structures and development strategies of the East Asian economies went down in flames in 1997-1998. The belief that economic development would be rapid and straightforward once an economy had managed to successfully adopt the neoliberal advice of the “Washington consensus” went down in flames in the other financial crises of the 1990s. A country like Argentina had successfully implemented perhaps 80% of the neoliberal development agenda, and yet it ended 2001 in deep economic trouble. No international financial and political architecture can be viewed with approval and confidence if 80% implementation is not enough for development success. The triple environmental scares of large-scale deforestation, ozone depletion, and global warming that struck in the 1990s were a firebell in the night underlying the urgency of the need to develop global environmental property and commons management institutions. We can— perhaps—rely on democratic politics and voter education to produce an acceptable level of environmental quality within a nation’s borders (although perhaps only if the nation is a rich industrial democracy). But elementary economics teaches us that global public goods can be produced and global commons managed only by global institutions which the twentieth century never built and never had. Last, but not least, September 11, 2001 saw the first of the long-forecast large-scale wholesale act of non-state terrorism with the terror attack on and destruction of New York's World Trade Center. The acts of terror and genocide with which the twentieth century was filled were all carried out by states: national governments. Such actors could be restrained (somewhat) by threats of deterrence. Over the course of the twentieth century the ability of non-state actors—which could not be deterred—to conduct retail-scale terrorism grew: the Irish Republican Army, the Stern Gang, Black September, the Baader-Meinhof Gang, and so many others. Now with Al-Qaeda we have crossed a line, and on the far side of this line Preface 4 the security challenges of the twenty-first century are different. A naive individual of two centuries ago, or of one century ago, would wonder at the events, patterns, and problems that brought the twentieth century to its end. Why does such a rich and powerful world still have problems? Saudi Arabia is rich and powerful beyond the imaginings of any of the great-great-great grandfathers of the fifteen Saudi citizens who tried to and did fly airplanes into buildings on September 11, 2001. So why did they believe that it was a matter of urgent necessity to die and kill on a wholesale scale in order to try to set in motion a chain of events that would lead to the restoration of the Medieval Caliphate? That is indeed one of my principal themes in this book. If our increased wealth and extraordinary production capabilities are helping us move toward utopia, our motion is not a gallop or a trot but an awkward, slouching movement. And it is not at all clear that we will recognize our destination when we arrive at it. That the explosion of material wealth we have seen in the twentieth century has not solved our human problems—that the spread of ample material plenty to virtually the entire globe that the twenty-first century may see will not solve our human problems—is indeed one of the major themes of this book. It is the reason for the subtitle: “Slouching Towards Utopia.” I have acquired many debts in the writing of this book. I am most indebted to my best of wives, Ann Marie Marciarille. I am indebted to my children, Michael M. DeLong and Gianna D. Marciarille, to whom I dedicate this book. I am indebted to the National Science Foundation, the Alfred P. Sloan Foundation, the National Bureau of Economic Research, and the University of California at Berkeley Institute of Business and Economic Research for financial assistance at various points during this project. My list of intellectual debts, especially, is extremely long, getting longer, and too long to list in total. But the ten most weighty intellectual debts to Lawrence Summers, Barry Eichengreen, Jeffrey Williamson, Andrei Shleifer, David Landes, Christina Romer, Claudia Goldin, Robert Waldmann, Peter Temin, David Romer, Jeffrey Weintraub, Paul Krugman, Paul Romer, Joel Mokyr, David Cutler, Larry Katz, Jan de Vries, Greg Mankiw, Robert Barro, and Richard Sutch (yes, I know that’s twenty) cannot be evaded. Last but not least, one more comment: this—by which I mean our Preface 5 collective understanding of the history of the twentieth century—is far from finished. It is still our collective work-in-progress. So comments, criticisms, and contradictions are very welcome: I look forward to them eagerly. from “The Second Coming” by W.B. Yeats ...Things fall apart; the center cannot hold; Mere anarchy is loosed upon the world, The blood-dimmed tide is loosed, and everywhere The ceremony of innocence is drowned; The best lack all conviction, while the worst Are full of passionate intensity. Surely some revelation is at hand; Surely the Second Coming is at hand... The Second Coming!... ... now I know That twenty centuries of stony sleep Were vexed to nightmare by a rocking cradle, And what rough beast, its hour come round at last, Slouches towards Bethlehem to be born? —J. Bradford DeLong, Waltham, Massachusetts, November 1991Monterey, California, February 2002.