Rethinking Productivity Growth

BERKELEY – Today, the world’s population is, on average, about 20 times richer than it was during the long Agrarian Age. Between 7000 BC and AD 1500, resources were scarce, technological progress was slow, and Malthusian pressures kept almost all human populations at a near-subsistence level, with per capita daily income of less than $1.50 in today’s terms.

In 2017, only around 7% of the world’s population is that poor. Consider a scenario in which we took the total monetary value of what we currently produce, and used it to purchase the types of goods and services that people living on $1.50 per day consume. The average daily global-output value would be $30 per person (at current prices).

That is our roughly $80 trillion of annual global income today. And while the fruits of global productivity are not equally distributed by any stretch, our society’s overall wealth today would leave our Agrarian Age predecessors dumbstruck.

Moreover, we do not produce and consume the same things that our near-subsistence ancestors did. In 2017, 40 kilocalories a day in basic grains wouldn’t do anyone much good. Meanwhile, analogues to common goods and services that we now consume would have been absurdly expensive in the Agrarian Age. And in many cases, such analogues couldn’t even be considered. Tiberius Claudius Nero could not have dined on strawberries and cream during the first century BC, because nobody thought to put those two items together until the Tudor courtier Cardinal Thomas Wolsey’s cooks served it in the sixteenth century.