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Agrarian to Industrial Economy · Acedra
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Agrarian to Industrial Economy
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0:01
Until recently, the vast majority of the world population worked on farms and the total production of the world's economy was mostly the total agricultural output. And this output was limited by the fixed size of the land. The total output of the economy did not change a lot year by year. The size of the pie was fixed; the world was a zero-sum game. In such a stagnating world, the only way to get better off is if someone else gets worse off.
0:31
if you take a bigger piece of the pie, someone else's gets smaller. If you want more food, then conquering, plundering, and stealing are great strategies. Your neighbors loss is your gain. This was the state of things for thousands of years. Societies invaded each other constantly to get more pie. Economic inequality was extreme. Some had all the pie they wanted, while others had to live with the crumbs. Then, the Industrial Revolution happened and everything changed.
1:04
We developed machinery, better crops, better fertilizers. Agricultural output skyrocketed, but we didn't just produce more food - every industrial sector exploded in terms of productivity. From 1700 to 1870, the production of iron in Britain increased 137 fold. The Industrial Revolution led to a previously unimaginable increase in economic output. This altered the nature of our societies. Economic growth changed the world from a zero-sum game to a positive-sum game.
1:40
We had found a way to create a bigger pie - but not only a bigger pie, but a pie that was growing bigger each year. More people could have more at the same time. This development is spreading and continuing today. Antibiotics kill bacteria. Power plants deliver energy. Cell phones connect us. Planes let us travel cheaply. Fridges store food. Continuous progress in all sectors of the economy seems normal to us today,
2:07
but the change from stagnation to economic growth really was the most drastic shift in human history. How was this possible? At the very core of this massive transformation stand new ideas that lead to innovation. Innovation has many different definitions, but in the context of this video, we mean better solutions to existing problems and solutions to problems we didn't know we had. The more you innovate, the more complex and interesting problems you discover as your wishes and needs evolve.
2:41
The average citizen in Norway 250 years ago might have wanted some really good shoes. 150 years ago, maybe a bicycle. 80 years ago, a car. 30 years ago, cheap air travel. And so on. Once we get what we want, we don't stop; we can see how we can improve things even more, and how to make things even better. The new positive-sum world has existed for 0.1% of human history and we have yet to get used to it. It has a consequence that feels really unintuitive. In a positive-sum world,
3:16
it's in your personal selfish best interest that every human on planet earth is well off. It's good for you if people in obscure parts of countries you've never heard of are prospering.
3:30
There is a genuine selfish argument for making the world a better place. In a positive-sum world, the more people are well-off, the better your own life is. This is because of the nature of innovation; it is fundamentally driven by supply and demand. The supply increases when more people have the freedom and education to contribute. They become inventors, researchers, engineers or thinkers that come up with new ideas.
3:59
The demand for ideas increases as people get richer, and can pay for new solutions. They increase the size of the market for innovations. Innovation follows incentives. So naturally, if many people want and can pay for something, it will get the innovators attention and energy. Improving the lives of those who are worst off has a multiplying effect. It increases demand for ideas while at the same time, making it easier for ideas to be produced.
4:31
Let's take an example that interests all of us - a cure for cancer. If there are 1 billion people in the world that have the wealth to pay for cancer treatments, innovation will follow this demand. So hundreds of billions of dollars have been invested in medical research. This had a huge effect, but we're still nowhere near to curing all forms of cancer. Today, every sixth person in the world dies of cancer, and you might be one of them. Now, imagine if demand were higher.
4:59
Imagine instead of 1 billion people being able to pay for a cure for cancer, there were 4 billion or 7 billion. Imagine how far medicine could have developed if we'd invested 7 times as much in curing cancer. On top of that, there's so much human potential being wasted right now. The work of a poor farmer in a developing nation is not useful to you. But if he becomes better off, his children might spend their time in university developing things that are useful to you.
5:29
Instead of having some hotspots of innovation in the developed world, we would have many hotspots all over the world. The research output of humanity would be many times what it is right now. Could we have cured cancer by now if that were the case? Well maybe. If we spent 7 times as much on research, had 7 times as many people working on it, and a global network of medical research, things would certainly be further ahead than they are now. And this is the core of the argument:
5:59
the more people want the same thing that you want, the more likely you are to get it. That is what it means to live in a positive-sum world. You don't gain more pie if poor places stay poor. Instead, you get more pie if poor places get richer, contribute ideas, and grow the global pie. Do you like space travel? Imagine there were billions of people in Africa and Asia with their own space programs, and demand for satellites and moon bases and cities on Mars. Do you like being alive?
6:32
A few billion people paying for medical research could literally save your life. It's in your interest for people around the world to become better off. The faster we get to this version of the world, the better for you personally. No matter what your motivation is, working on a better world is a very good thing to do - for others, and for you.
6:55
This video was a collaboration with Max Roser and Our World in Data, and supported by the Bill and Melinda Gates Foundation. If you want to help us stay afloat and make more videos, you can support us on Patreon or get some of our fancy posters.
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